EXHIBIT 2.1
MERGER AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF NOVEMBER 27, 2001
BY AND BETWEEN
USA Dealers Xxxxxxx.xxx, Inc.
and
Brands Shopping Network, Inc.
TABLE OF CONTENTS
Page
ARTICLE I ..............................................................1
THE MERGER ..............................................................1
SECTION 1.1 THE MERGER....................................................1
SECTION 1.2 EFFECTIVE TIME OF THE MERGER..................................1
SECTION 1.3 NAME CHANGE...................................................2
SECTION 1.4 ARTICLES OF INCORPORATION; BYLAWS.............................2
SECTION 1.5 DIRECTORS AND OFFICERS........................................2
ARTICLE II ..............................................................2
CONVERSION AND PURCHASE OF SHARES..............................................2
SECTION 2.1 CONVERSION OF BRANDS SHARES IN THE MERGER.....................2
SECTION 2.2 EXCHANGE OF CERTIFICATES......................................2
SECTION 2.3 CANCELLATION OF OPTIONS AND WARRANTS..........................3
SECTION 2.4 NO FRACTIONAL SECURITIES......................................3
SECTION 2.5 DISSENTING SHARES.............................................3
SECTION 2.6 NO FURTHER OWNERSHIP RIGHTS IN BRANDS CAPITAL STOCK...........4
SECTION 2.7 DISSENTING SHARES AFTER PAYMENT OF FAIR VALUE.................4
SECTION 2.8 TAX AND ACCOUNTING CONSEQUENCES...............................4
SECTION 2.9 CLOSING.......................................................4
ARTICLE III ..............................................................6
REPRESENTATIONS AND WARRANTIES OF BRANDS.......................................6
SECTION 3.1 ORGANIZATION AND QUALIFICATION................................6
SECTION 3.2 CAPITALIZATION................................................6
SECTION 3.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.......................6
SECTION 3.4 REPORTS AND FINANCIAL STATEMENTS..............................7
SECTION 3.5 ABSENCE OF UNDISCLOSED LIABILITIES............................8
SECTION 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS..........................8
SECTION 3.7 LITIGATION....................................................8
SECTION 3.8 NO VIOLATION OF LAW...........................................8
SECTION 3.9 MATERIAL AGREEMENTS, CONTRACTS AND COMMITMENTS................9
SECTION 3.10 TAX MATTERS..................................................10
SECTION 3.11 EMPLOYEE BENEFIT PLAN; ERISA.................................12
SECTION 3.12 INVESTMENT COMPANY ACT.......................................12
SECTION 3.13 LABOR CONTROVERSIES..........................................12
SECTION 3.14 INTERESTED PARTY TRANSACTIONS................................13
SECTION 3.15 INSURANCE....................................................13
SECTION 3.16 REPRESENTATIONS COMPLETE.....................................13
ARTICLE IV .............................................................14
REPRESENTATIONS AND WARRANTIES OF USA DEALERS.................................14
SECTION 4.1 ORGANIZATION AND QUALIFICATION...............................14
SECTION 4.2 CAPITALIZATION...............................................14
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SECTION 4.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS......................15
SECTION 4.4 REPORTS AND FINANCIAL STATEMENTS.............................16
SECTION 4.5 ABSENCE OF UNDISCLOSED LIABILITIES...........................16
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.........................16
SECTION 4.7 LITIGATION...................................................16
SECTION 4.8 NO VIOLATION OF LAW..........................................16
SECTION 4.9 MATERIAL AGREEMENTS, CONTRACTS AND COMMITMENTS...............17
SECTION 4.10 TAX MATTERS..................................................18
SECTION 4.11 EMPLOYEE BENEFIT PLAN; ERISA.................................20
SECTION 4.12 INVESTMENT COMPANY ACT.......................................20
SECTION 4.13 LABOR CONTROVERSIES..........................................20
SECTION 4.14 ENVIRONMENTAL MATTERS........................................20
SECTION 4.15 INSURANCE....................................................21
SECTION 4.16 REPRESENTATIONS COMPLETE.....................................21
ARTICLE V .............................................................22
CONDUCT PRIOR TO THE EFFECTIVE TIME...........................................22
SECTION 5.1 CONDUCT OF BUSINESS OF USA DEALERS AND BRANDS................22
ARTICLE VI .............................................................22
ADDITIONAL AGREEMENTS ........................................................22
SECTION 6.1 ACCESS TO INFORMATION........................................22
SECTION 6.2 BRANDS AND THE BRANDS PRINCIPAL STOCKHOLDERS' APPROVAL.......23
SECTION 6.3 USA DEALERS' SHAREHOLDERS' APPROVAL..........................23
SECTION 6.4 EXPENSES.....................................................24
SECTION 6.5 AGREEMENT TO COOPERATE.......................................24
SECTION 6.6 PUBLIC STATEMENTS............................................24
SECTION 6.7 INDEMNIFICATION..............................................24
ARTICLE VII .............................................................25
CONDITIONS .............................................................25
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...25
SECTION 7.2 CONDITIONS TO OBLIGATION OF USA DEALERS TO EFFECT THE MERGER.25
SECTION 7.3 CONDITIONS TO OBLIGATION OF BRANDS TO EFFECT THE MERGER......26
ARTICLE VIII .............................................................26
POST-CLOSING AGREEMENTS.......................................................26
SECTION 8.1 POST CLOSING AGREEMENTS......................................26
ARTICLE IX .............................................................27
TERMINATION, AMENDMENT AND WAIVER.............................................27
SECTION 9.1 TERMINATION..................................................27
SECTION 9.2 EFFECT OF TERMINATION........................................28
SECTION 9.3 AMENDMENT....................................................28
SECTION 9.4 WAIVER.......................................................28
ARTICLE X .............................................................28
GENERAL PROVISIONS ...........................................................28
SECTION 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................28
SECTION 10.2 BROKERS......................................................28
SECTION 10.3 NOTICES......................................................28
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SECTION 10.4 INTERPRETATION...............................................29
SECTION 10.5 MISCELLANEOUS................................................29
SECTION 10.6 COUNTERPARTS.................................................29
SECTION 10.7 PARTIES IN INTEREST..........................................30
SECTION 10.8 GOVERNING LAW................................................30
SECTION 10.9 ENTIRE AGREEMENT.............................................30
SECTION 10.10 SEVERABILITY.................................................30
EXHIBITS
A Form of Merger Agreement
B Form of Consulting Agreement
C Form of Warrant
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MERGER AGREEMENT AND PLAN OF REORGANIZATION
MERGER AGREEMENT AND PLAN OF REORGANIZATION, dated as of November 27,
2001 (the "Agreement") is entered into by and among Brands Shopping Network,
Inc., a Nevada corporation ("Brands") and the stockholders of Brands set forth
on the signature pages hereof (the "Brands Principal Stockholders") on the one
hand, and USA Dealers Xxxxxxx.xxx, Inc., a Nevada corporation ("USA Dealers") on
the other hand.
R E C I T A L S
WHEREAS, the Boards of Directors of Brands and USA Dealers have
approved the merger of Brands with and into USA Dealers pursuant to this
Agreement (the "Merger") and the transactions contemplated hereby upon the terms
and subject to the conditions set forth herein; and
WHEREAS, it is intended that Brands and USA Dealers and their
respective stockholders will recognize no gain or loss for federal income tax
purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations there under as a result of the consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER.
Upon the terms and subject to the conditions of this Agreement, at the
Effective Time (as defined in Section 1.2) and subject to and upon the terms and
conditions of Nevada law, Brands shall be merged with and into USA Dealers and
the separate existence of Brands shall thereupon cease. USA Dealers shall be the
surviving corporation in the Merger (after the Merger, referred to as the
"Surviving Corporation").
SECTION 1.2 EFFECTIVE TIME OF THE MERGER.
Unless this Agreement is earlier terminated pursuant to Section 8.1,
the Merger shall become effective at such time (the "Effective Time") as the
Merger Agreement, in the form set forth as Exhibit A-1 hereto, is filed with the
Secretary of State of the State of Nevada (the "Merger Filing"); such filing
shall be made simultaneously with or as soon as practicable after the closing of
the transactions contemplated by this Agreement in accordance with Section 2.10.
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SECTION 1.3 NAME CHANGE.
Immediately following the Effective Time, USA Dealers shall amend its
Articles of Incorporation to change its name to "Brands Holdings, Inc.".
SECTION 1.4 ARTICLES OF INCORPORATION; BYLAWS.
(a) At the Effective Time, the Articles of Incorporation of USA Dealers
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Articles of Incorporation.
(b) The Bylaws of USA Dealers, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
SECTION 1.5 DIRECTORS AND OFFICERS.
The directors of USA Dealers after the Merger shall be Art Xxxxxxxxxx,
Xxx Xxxxxxxxx, and Xxxx Xxxxxxx, each to hold the office of director of USA
Dealers in accordance with the provisions of the applicable laws of the State of
Nevada and the Articles of Incorporation and Bylaws of the Surviving Corporation
until their successors are duly qualified and elected. The officers of USA
Dealers immediately after the Effective Time shall be Art Xxxxxxxxxx, Chief
Executive Officer and President, Xxxx Xxxxxx, Chief Financial Officer and
Treasurer, and Xxxxx Xxxxxx, Secretary, each to hold office in accordance with
the provisions of its Bylaws.
ARTICLE II
CONVERSION AND PURCHASE OF SHARES
SECTION 2.1 CONVERSION OF BRANDS SHARES IN THE MERGER.
At the Effective Time, by virtue of the Merger and without any action
on the part of any holder of any capital stock of Brands each issued and
outstanding share of Common Stock of Brands ("Brands Common Stock"), shall,
subject to Section 2.3 hereof, be converted into the right to receive, and
become exchangeable for, one share of common stock of USA Dealers ("USA Dealers
Common Stock").
SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) From and after the Effective Time, each holder of an outstanding
certificate which immediately prior to the Effective Time represented shares of
Brands Common Stock shall be entitled to receive in exchange therefore, upon
surrender thereof to USA Dealers or to an exchange agent selected by USA Dealers
(the "Exchange Agent"), a certificate or certificates theretofore representing
the number of whole shares of USA Dealers Common Stock to which such holder is
entitled pursuant to Section 2.1.
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(b) Promptly after the Effective Time, USA Dealers shall make available
to the Exchange Agent the certificates representing shares of USA Dealers Common
Stock required to effect the exchange referred to in Section 2.2(a).
SECTION 2.3 CANCELLATION OF OPTIONS AND WARRANTS.
At the Effective Time, each option, warrant or other right to acquire
or purchase shares of Brands Common Stock (the "Options") granted by Brands
shall automatically, and without any action required by the holders thereof, be
cancelled and terminated.
SECTION 2.4 NO FRACTIONAL SECURITIES.
Notwithstanding any other provision of this Agreement, no certificates
or scrip for fractional shares of USA Dealers Common Stock shall be issued in
the Merger and no USA Dealers Common Stock dividend, stock split or interest
shall relate to any fractional security. In lieu of any such fractional shares,
each holder of Brands Common Stock who would otherwise have been entitled to
receive a fraction of a share of USA Dealers Common Stock upon surrender of
Brands Common Stock certificates for exchange pursuant to this Article II shall
be entitled to receive from USA Dealers a stock certificate representing the
next highest whole number of shares.
SECTION 2.5 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Brands Common Stock issued and outstanding immediately prior to
the Effective Time that are held by a shareholder who has exercised and
perfected dissenters rights for such shares in accordance with Section 300 et
seq. of Chapter 92A of the Nevada Revised Statutes and who, as of the Effective
Time, has not effectively withdrawn or lost such dissenters rights ("Dissenting
Shares"), shall not be converted into or represent a right to receive USA
Dealers Common Stock pursuant to Section 2.1, but the holder thereof shall only
be entitled to such rights as are granted by Nevada law.
(b) Notwithstanding any provision of this Agreement to the contrary,
any shares of USA Dealers Common Stock issued and outstanding immediately prior
to the Effective Time that are held by a shareholder who has exercised and
perfected dissenters rights for such shares in accordance with Section 300 et
seq. of Chapter 92A of the Nevada Revised Statutes and who, as of the Effective
Time, has not effectively withdrawn or lost such dissenters rights ("Dissenting
Shares"), shall be converted into such rights as are granted by Nevada law.
(c) Notwithstanding the provisions of subsection (a) or (b), if any
holder of Dissenting Shares shall effectively withdraw or lose (through failure
to perfect or otherwise) his or her appraisal rights, then, as of the later of
the Effective Time and the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
shares of USA Dealers Common Stock to which such shareholder would otherwise be
entitled under Section 2.1 upon surrender of the certificate representing such
shares.
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(d) Brands shall give USA Dealers (i) prompt notice of any written
demand for appraisal received by Brands pursuant to the applicable provisions of
Nevada law and (ii) the opportunity to participate in all negotiations and
proceedings with respect to such demands. USA Dealers shall not, except with the
prior written consent of Brands, voluntarily make any payment with respect to
any such demands or offer to settle or settle any such demands.
SECTION 2.6 NO FURTHER OWNERSHIP RIGHTS IN BRANDS CAPITAL STOCK.
All shares of USA Dealers Common Stock issued upon the surrender for
exchange of shares of Brands Common Stock in accordance with the terms hereof
shall be deemed to be in full satisfaction of all rights pertaining to such
shares of Brands Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Brands Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates representing Brands Common Stock are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article II.
SECTION 2.7 DISSENTING SHARES AFTER PAYMENT OF FAIR VALUE.
Dissenting Shares, if any, after payments of fair value in respect
thereto have been made to dissenting shareholders of either Brands or USA
Dealers, as the case may be, pursuant to Nevada Law, shall be canceled.
SECTION 2.8 TAX AND ACCOUNTING CONSEQUENCES.
It is intended by the parties hereto that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Code. Each party has
consulted with its own tax advisors and accountants with respect to the tax and
accounting consequences, respectively, of the Merger.
SECTION 2.9 CLOSING.
(a) TIME AND PLACE. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Xxxxxxx, Xxxxx
& Xxxx, LLP, on the business day immediately after the last of the conditions
set forth in Article VII hereof is fulfilled or waived, or at such other time
and place as Brands and USA Dealers shall agree (the date on which the Closing
occurs being the "Closing Date").
(b) DELIVERIES BY USA DEALERS TO BRANDS. On the Closing Date, USA
Dealers will deliver to Brands the following:
(i) a certificate from the Nevada Secretary of State as to the
good standing of USA Dealers, as of a date within five (5) days of the Closing
Date;
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(ii) copies of the resolutions or consents of the Board of
Directors of USA Dealers approving the Merger and the other agreements and
transactions contemplated hereby, certified by the corporate secretary or
assistant corporate secretary of USA Dealers, and certified copies of the
resolutions or consents, in form and substance reasonably satisfactory to
Brands, certified by the corporate secretary or assistant corporate secretary of
USA Dealers, constituting shareholder approval of the Merger and all other
agreements and transactions contemplated hereby by a majority of the
shareholders of USA Dealers;
(iii) the officers' certificate referred to in Section 7.3(a)
hereof;
(iv) a certificate of the corporate secretary or an assistant
corporate secretary of USA Dealers certifying the name, title and true signature
of each officer of USA Dealers executing any of the other documents and
certificates to be delivered pursuant to or in connection with this Agreement,
as applicable; and
(v) such other documents as are required to be delivered prior
to or on the Closing Date pursuant to this Agreement or as may reasonably be
requested by Brands.
(c) DELIVERIES BY BRANDS TO USA DEALERS. On the Closing Date, Brands
will deliver to USA Dealers the following:
(i) a certificate from the Nevada Secretary of State as to the
good standing of Brands, as of a date within five (5) days of the Closing Date;
(ii) copies of the resolutions or consents of the Board of
Directors of Brands approving the Merger and the other agreements and
transactions contemplated hereby, certified by the corporate secretary or
assistant corporate secretary of Brands, and certified copies of the resolutions
or consents, in form and substance reasonably satisfactory to USA Dealers,
certified by the corporate secretary or assistant corporate secretary of Brands,
constituting shareholder approval of the Merger and all other agreements and
transactions contemplated hereby by a majority of the shareholders of Brands;
(iii) the officers' certificate referred to in Section 7.2(a)
hereof;
(iv) a certificate of the corporate secretary or an assistant
corporate secretary of Brands certifying the name, title and true signature of
each officer of Brands executing any of the Agreements and the other documents
and certificates to be delivered pursuant to or in connection with this
Agreement;
(v) the executed Consulting Agreement
(vi) all Approvals from third parties as are required for
Brands to consummate the Merger and the other transactions contemplated by the
Agreements hereto; and
(vii) such other documents as are required to be delivered
prior to or on the Closing Date pursuant to this Agreement or as may be
reasonably requested by USA Dealers.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BRANDS
Brands represents and warrants to USA Dealers that on the date hereof
and at the Effective Time as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION.
Brands is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Brands is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary. True, accurate and complete copies of
Brands' Articles of Incorporation and Bylaws, in each case as in effect on the
date hereof, including all amendments thereto, have heretofore been delivered to
USA Dealers.
SECTION 3.2 CAPITALIZATION.
(a) The authorized capital stock of Brands consists of 25,000,000
shares of Brands Common Stock, $0.001 par value per share and 5,000,000 shares
of preferred stock, $0.001 par value per share. As of the date hereof, there
were 17,435,000 shares of Brands Common Stock issued and outstanding as set
forth on Schedule 3.2(a) hereto and no shares of preferred stock issued and
outstanding. All of the issued and outstanding shares of Brands Common Stock are
validly issued, fully paid, non-assessable and free of preemptive rights.
(b) As of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement obligating Brands
or any subsidiary of Brands to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of Brands or
obligating Brands or any subsidiary of Brands to grant, extend or enter into any
such agreement of commitment, except for this Agreement. There are no
outstanding or authorized stock appreciation, phantom stock, stock
participation, or other similar rights with respect to Brands. There are no
voting trusts, proxies or other agreements or understandings to which Brands or
any subsidiary of Brands is a party or is bound with respect to the voting of
any shares of capital stock of Brands, except as set forth on Schedule 3.2(c)
hereto.
SECTION 3.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Brands has full corporate power and authority to enter into this
Agreement and, subject to Brands' stockholders' approval, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement,
and the consummation by Brands of the transactions contemplated hereby, have
been duly authorized by Brands' Board of Directors and no other corporate
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proceedings on the part of Brands are necessary to authorize the execution and
delivery of this Agreement and the consummation by Brands of the transactions
contemplated hereby, except for Brands' Stockholders' Approval. This Agreement
has been duly and validly executed and delivered by Brands and, assuming the due
authorization, execution and delivery hereof by USA Dealers constitutes a valid
and binding agreement of Brands, enforceable against Brands, in accordance with
its terms, except that such enforcement may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (b) general equitable
principles.
(b) The execution and delivery of this Agreement by Brands does not,
and the consummation by Brands of the transactions contemplated hereby will not,
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Brands or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or bylaws of Brands or any of its subsidiaries, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
Brands or any of its subsidiaries or any of their respective properties or
assets, or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument obligation or
agreement of any kind to which Brands or any of its subsidiaries is now a party
or by which Brands or any of its subsidiaries or any of their respective
properties or assets may be bound or affected, excluding from the foregoing
clauses (ii) and (iii) such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances that would not in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Brands and its subsidiaries, taken as a
whole.
(c) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by
Brands or the consummation by Brands of the transactions contemplated hereby,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not, in the aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of Brands and its subsidiaries, taken as a whole.
SECTION 3.4 REPORTS AND FINANCIAL STATEMENTS.
Brands shall deliver to USA Dealers copies of its financial statements
for the October 31, 2001 (the "Brands Financial Statements"). The Brands
Financial Statements shall have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and shall fairly present the
financial position of Brands and its subsidiaries as of the dates thereof and
the results of the operations and changes in financial position for the periods
then ended, subject, to normal year-end adjustments and any other adjustments
described therein.
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SECTION 3.5 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as expressly disclosed and described in the Brands Financial
Statements, Brands does not have at October 31, 2001, nor has it incurred since
that date, any liabilities, indebtedness, expense, claim deficiency, guarantee
or obligations of any type (whether absolute, accrued, contingent, matured,
unmatured or otherwise) of any nature, except liabilities, obligations or
contingencies which were incurred in the ordinary course of business and as
found on Exhibit 1 Liabilities.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
From October 31, 2001 through the date hereof, there has not been any
material adverse change in the business, operations, properties, assets,
liabilities, condition (financial or other), results of operations or prospects
of Brands and its subsidiaries, taken as a whole.
SECTION 3.7 LITIGATION.
There are no claims, suits, actions or proceedings pending or, to the
knowledge of Brands, threatened against, relating to or affecting Brands or any
of its subsidiaries, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator, except as disclosed on
Schedule 3.7 hereto. Neither Brands nor any of its subsidiaries is subject to
any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Brands and its subsidiaries.
SECTION 3.8 NO VIOLATION OF LAW.
Neither Brands nor any of its subsidiaries is in violation of, or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance, or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
do not have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
Brands and its subsidiaries, taken as a whole. As of the date of this Agreement,
to the knowledge of Brands, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same.
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SECTION 3.9 MATERIAL AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except for the agreements set forth on Schedule 3.9, neither Brands
nor any of its subsidiaries is a party to nor is it bound by:
(i) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm or other
organization;
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property with fixed annual rental
payments in excess of $10,000;
(v) any agreement, contract or commitment containing any
covenant limiting the freedom of Brands or any of its subsidiaries to engage in
any line of business or to compete with any person;
(vi) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $10,000 either
individually or in the aggregate;
(vii) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
outside the ordinary course of Brands' business;
(viii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit;
(ix) any purchase order or contract for the purchase of
materials involving in excess of $10,000 either individually or in the
aggregate;
(x) any construction contracts;
(xi) any dealer, distribution, joint marketing or development
agreement;
(xii) any sales representative, original equipment
manufacturer, value added, remarketer or other agreement for distribution of
Brands' products or services; or
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(xiii) any other agreement, contract or commitment that
involves $1,000 or more or is not cancelable without penalty within thirty (30)
days.
(b) Each of Brands and its subsidiaries is in compliance with and has
not breached, violated or defaulted under, or received notice that it has
breached, violated or defaulted under, any of the terms or conditions of any
agreement, contract, covenant, instrument, lease, license or commitment to which
each of Brands and its subsidiaries is a party or by which it is bound
(collectively, a "Contract"), nor is Brands or the Brands Principal Stockholders
aware of any event that would constitute such a breach, violation or default
with the lapse of time, giving of notice or both. Each Contract is in full force
and effect and is not subject to any default there under by any party obligated
to Brands or its subsidiaries pursuant thereto. Brands and its subsidiaries have
obtained, or will obtain prior to the Closing Date, all necessary consents,
waivers and approvals of parties to any Contract as are required there under in
connection with the Merger or for such Contracts to remain in effect without
modification after the Closing. Following the Effective Time, Brands and its
subsidiaries will be permitted to exercise all of its rights under the Contracts
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Brands or its subsidiaries would
otherwise be required to pay had the transactions contemplated by this Agreement
not occurred.
SECTION 3.10 TAX MATTERS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "Tax" or,
collectively, "Taxes," means (i) any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts; (ii) any liability for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii) any liability
for the payment of any amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other person or as
a result of any obligations under any agreements or arrangements with any other
person with respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) Tax Returns and Audits.
(i) As of the Effective Time, Brands and its subsidiaries will
have prepared and timely filed all required federal, state, local and foreign
returns, estimates, information statements and reports ("Returns") relating to
any and all Taxes concerning or attributable to Brands or its operations and
such Returns are true and correct and have been completed in accordance with
applicable law.
10
(ii) As of the Effective Time, Brands and its subsidiaries (A)
will have paid all Taxes it is required to pay and will have withheld with
respect to its employees all federal and state income taxes, Federal Insurance
Contribution Act ("FICA"), Federal Unemployment Tax Act ("FUTA") and other Taxes
required to be withheld, and (B) will have accrued on the Brands Financial
Statements all Taxes attributable to the periods covered by the Brands Financial
Statements and will not have incurred any liability for Taxes for the period
prior to the Effective Time other than in the ordinary course of business.
(iii) Neither Brands nor any of its subsidiaries has not been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, assessed or proposed against Brands or any of its subsidiaries, nor
has Brands or any of its subsidiaries executed any waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(iv) No audit or other examination of any Return of Brands or
any of its subsidiaries is presently in progress, nor has Brands or any of its
subsidiaries been notified of any request for such an audit or other
examination.
(v) No adjustment relating to any Returns filed by Brands or
its subsidiaries has been proposed formally or informally by any Tax authority
to Brands or its subsidiaries or any representative thereof.
(vi) Neither Brands nor any of its subsidiaries have any
liabilities for unpaid federal, state, local and foreign Taxes which have not
been accrued or reserved against in accordance with GAAP on the Brands Financial
Statements, whether asserted or unasserted, contingent or otherwise, and neither
Brands nor any of its subsidiaries have incurred any liability for Taxes since
the date of the Brands Financial Statements other than in the ordinary course of
business.
(vii) Brands and its subsidiaries have made available to USA
Dealers or its legal counsel, copies of all foreign, federal and state income
and all state sales and use Returns for Brands and its subsidiaries filed for
all periods since its inception.
(viii) There are (and immediately following the Effective Time
there will be) no liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort (collectively,
"Liens") on the assets of Brands or its subsidiaries relating to or attributable
to Taxes other than Liens for Taxes not yet due and payable.
(ix) Neither Brands nor the Brands Principal Stockholders have
knowledge of any basis for the assertion of any claim relating or attributable
to Taxes that, if adversely determined, would result in any Lien on the assets
of Brands.
(x) None of Brands' or its subsidiaries assets is treated as
"tax-exempt use property," within the meaning of Section 168(h) of the Code.
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(xi) As of the Effective Time, there will not be any contract,
agreement, plan or arrangement, including but not limited to the provisions of
this Agreement, covering any employee or former employee of Brands or its
subsidiaries that, individually or collectively, could give rise to the payment
of any amount that would not be deductible by Brands or its subsidiaries as an
expense under applicable law.
(xii) Neither Brands nor any of its subsidiaries have filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(4) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Brands or its subsidiaries.
(xiii) Neither Brands nor any of its subsidiaries is a party
to any tax sharing, indemnification or allocation agreement nor does Brands or
any of its subsidiaries owe any amount under any such agreement.
(c) Executive Compensation Tax. There is no contract, agreement, plan
or arrangement to which Brands or any of its subsidiaries is a party, including
but not limited to the provisions of this Agreement, covering any employee or
former employee of Brands or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
SECTION 3.11 EMPLOYEE BENEFIT PLAN; ERISA.
At the date hereof, Brands and its subsidiaries do not maintain or
contribute to any material domestic employee benefit plans, programs,
arrangements or practices (such plans, programs, arrangements or practices of
Brands and its subsidiaries being referred to as the "Brands Plans"), including
employee benefit plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or other
similar material arrangements for the provision of benefits (excluding any
Multiemployer Plan within the meaning of Section 3(37) of ERISA or a "Multiple
Employer Plan" within the meaning of Section 413(c) of the Code). Neither Brands
nor its subsidiaries have any obligation to create any such plan.
SECTION 3.12 INVESTMENT COMPANY ACT.
Brands and each of its subsidiaries either (a) is not an "investment
company", or a company "controlled" by, or an "affiliated company" with respect
to, an "investment company", within the meaning of the Investment Company Act of
1940 (the "Investment Company Act") or (b) satisfies all conditions for an
exemption from the Investment Company Act, and, accordingly, neither Brands nor
any of its subsidiaries is required to be registered under the Investment
Company Act.
SECTION 3.13 LABOR CONTROVERSIES.
There are no significant controversies pending or, to the knowledge of
Brands, threatened between Brands or its subsidiaries and their employees, to
the knowledge of Brands, there are no material organizational efforts presently
being made involving any of the presently unorganized employees of Brands and
its subsidiaries, Brands and its subsidiaries have, to the knowledge of Brands,
12
complied in all material respects with all laws relating to the employment of
labor, including, without limitation, any provisions thereof relating to wages,
hours, and the payment of social security and similar taxes, and no person has,
to the knowledge of Brands, asserted that Brands or any of its subsidiaries is
liable in any material amount for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing.
SECTION 3.14 INTERESTED PARTY TRANSACTIONS.
Neither Brands nor any of its subsidiaries is a party to any oral or
written (a) consulting or similar agreement with any present or former director,
officer or employee or any entity controlled by any such person, (b) agreement
with any executive officer or other key employee of Brands or any of its
subsidiaries the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Brands or any
of its subsidiaries of the nature contemplated by this Agreement, (c) agreement
with respect to any executive officer or other key employee of Brands or any of
its subsidiaries providing any term of employment or compensation guarantee or
(d) agreement or plan, including any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of the
transactions contemplated by this Agreement.
SECTION 3.15 INSURANCE.
Schedule 3.15 lists all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, employees, officers and
directors of Brands or any of its subsidiaries. There is no claim by Brands or
any of its subsidiaries pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such policies and
bonds have been paid, and Brands and its subsidiaries are otherwise in
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). Brands and the Brands
Principal Stockholders have no knowledge of any threatened termination of, or
premium increase with respect to, any of such policies.
SECTION 3.16 REPRESENTATIONS COMPLETE.
None of the representations or warranties made by Brands or the Brands
Principal Stockholders, nor any statement made in any Schedule or certificate
furnished by Brands or the Brands Principal Stockholders pursuant to this
Agreement or furnished in or in connection with documents mailed or delivered to
the USA Dealers Shareholders for use in soliciting their consent to this
Agreement and the Merger contains or will contain at the Effective Time any
untrue statement of a material fact, or omits or will omit at the Effective Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USA DEALERS
USA Dealers represents and warrants to Brands as follows:
SECTION 4.1 ORGANIZATION AND QUALIFICATION.
USA Dealers is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada and has the requisite
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. USA
Dealers is qualified to do business and is in good standing in each jurisdiction
in which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing will not, when taken together
with all other such failures, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of USA Dealers, taken as a whole. True, accurate and
complete copies of USA Dealers' Articles of Incorporation and Bylaws, in each
case as in effect on the date hereof, including all amendments thereto have
heretofore been delivered to Brands.
SECTION 4.2 CAPITALIZATION.
(a) The authorized capital stock of USA Dealers consists of 50,000,000
shares of USA Dealers Common Stock, $0.001 par value per share, and 5,000,000
shares of Preferred Stock, $0.001 par value per share. As of the date hereof and
before giving effect to the reverse stock split provided for in Section 7.1(b),
26,366,600 shares of Common Stock and no shares of Preferred Stock were issued
and outstanding. All of the issued and outstanding shares of USA Dealers Common
Stock are validly issued, fully paid and non-assessable, and were issued in
compliance with applicable federal and state securities laws.
(b) Except as set forth in Schedule 4.2(b) hereof, as of the date
hereof there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating USA Dealers or any subsidiary of USA
Dealers to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of USA Dealers or obligating USA Dealers
to grant, extend or enter into any such agreement or commitment. Except as set
forth in Schedule 4.2(b) hereof, there are no voting trusts, proxies or other
agreements or understandings to which USA Dealers is a party or is bound with
respect to the voting of any shares of capital stock of USA Dealers. The shares
of USA Dealers Common Stock issued to stockholders of Brands in the Merger will
be at the Effective Time duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights.
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SECTION 4.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) USA Dealers has full corporate power and authority to enter into
this Agreement and, subject to USA Dealers' stockholders' approval, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, and the consummation by USA Dealers of the transactions
contemplated hereby, have been duly authorized by USA Dealers' Board of
Directors and no other corporate proceedings on the part of USA Dealers are
necessary to authorize the execution and delivery of this Agreement and the
consummation by USA Dealers of the transactions contemplated hereby, except for
USA Dealers' stockholders' approval. This Agreement has been duly and validly
executed and delivered by USA Dealers, and, assuming the due authorization,
execution and delivery hereof by Brands, constitutes a valid and binding
agreement of USA Dealers, enforceable against USA Dealers in accordance with its
terms, except that such enforcement may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (b) general equitable
principles.
(b) The execution and delivery of this Agreement by USA Dealers does
not, and the consummation by USA Dealers of the transactions contemplated hereby
will not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of USA Dealers under
any of the terms, conditions or provisions of (i) the charter or bylaws of USA
Dealers, (ii) subject to the receipt of USA Dealers' stockholders' approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to USA
Dealers or any of its properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which USA
Dealers is now a party or by which USA Dealers or any of its properties or
assets may be bound or affected, excluding from the foregoing clauses (ii) and
(iii) such violations, conflicts, breaches, defaults, terminations,
accelerations or creation of liens, security interest, charges or encumbrances
that would not, in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospect of USA Dealers, taken as a whole.
(c) No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by USA
Dealers or the consummation by USA Dealers of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as the
case may be, would not, in the aggregate, have a material adverse effect on the
business, operations, properties assets, condition (financial or other), results
of operations or prospects of USA Dealers, taken as a whole.
15
SECTION 4.4 REPORTS AND FINANCIAL STATEMENTS.
USA Dealers has previously delivered to Brands copies of its financial
statements (balance sheets and statement of income) for the three months and
nine months ended September 30, 2001 (the "USA Dealers Financial Statements").
The USA Dealers Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
financial position of USA Dealers as of the dates thereof and the results of the
operations and changes in financial position for the periods then ended,
subject, to normal year-end adjustments and any other adjustments described
therein.
SECTION 4.5 ABSENCE OF UNDISCLOSED LIABILITIES.
Except as expressly disclosed and described in USA Dealers' Financial
Statements and on Appendix A hereto, USA Dealers did not have at September 30,
2001, and has not incurred since that date, any liabilities, indebtedness,
expense, claim deficiency, guarantee or obligations of any type (whether
absolute, accrued, contingent, matured, unmatured or otherwise) of any nature,
except liabilities, obligations or contingencies which are accrued or reserved
against in the USA Dealers' Financial Statements or reflected in the notes
thereto.
SECTION 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
From September 30, 2001, through the date hereof, there has not been
any material adverse change in the business, operations, properties, assets,
liabilities, condition (financial or other), results of operations or prospects
of USA Dealers, taken as a whole.
SECTION 4.7 LITIGATION.
There are no claims, suits, actions or proceedings pending or, to the
knowledge of USA Dealers, threatened against, relating to or affecting USA
Dealers, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator, except as disclosed on Schedule
4.7 hereto. USA Dealers is not subject to any judgment, decree, injunction, rule
or order of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator which prohibits or restricts the
consummation of the transactions contemplated hereby or would have any material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of USA Dealers.
SECTION 4.8 NO VIOLATION OF LAW.
USA Dealers is not in violation of, or been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance, or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority, except for violations which, in the aggregate, do not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of USA
Dealers, taken as a whole. As of the date of this Agreement, to the knowledge of
USA Dealers, no investigation or review by any governmental or regulatory body
or authority is pending or threatened, nor has any governmental or regulatory
body or authority indicated an intention to conduct the same.
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SECTION 4.9 MATERIAL AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except for the agreements set forth on Schedule 4.9 and on Appendix
A hereto, USA Dealers is not a party to nor is it bound by:
(i) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm or other
organization except for the remaining balance of $35,000 to Al Tamasebi under
his current consulting agreement paid at $5,000 per month.
(ii) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property with fixed annual rental
payments in excess of $5,000;
(v) any agreement, contract or commitment containing any
covenant limiting the freedom of USA Dealers to engage in any line of business
or to compete with any person;
(vi) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $5,000 either
individually or in the aggregate;
(vii) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
outside the ordinary course of USA Dealers' business;
(viii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit;
(ix) any purchase order or contract for the purchase of
materials involving in excess of $5,000 either individually or in the aggregate;
(x) any construction contracts;
17
(xi) any dealer, distribution, joint marketing or development
agreement;
(xii) any sales representative, original equipment
manufacturer, value added, remarketer or other agreement for distribution of USA
Dealers' products or services; or
(xiii) any other agreement, contract or commitment that
involves $1,000 or more or is not cancelable without penalty within thirty (30)
days.
(b) USA Dealers is in compliance with and has not breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any agreement, contract, covenant,
instrument, lease, license or commitment to which USA Dealers is a party or by
which it is bound (collectively, a "Contract"), nor is USA Dealers aware of any
event that would constitute such a breach, violation or default with the lapse
of time, giving of notice or both. Each Contract is in full force and effect and
is not subject to any default there under by any party obligated to USA Dealers
pursuant thereto. USA Dealers has obtained, or will obtain prior to the Closing
Date, all necessary consents, waivers and approvals of parties to any Contract
as are required there under in connection with the Merger or for such Contracts
to remain in effect without modification after the Closing. Following the
Effective Time, USA Dealers will be permitted to exercise all of its rights
under the Contracts without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which USA Dealers
would otherwise be required to pay had the transactions contemplated by this
Agreement not occurred.
SECTION 4.10 TAX MATTERS.
(a) Tax Returns and Audits.
(i) As of the Effective Time, USA Dealers will have prepared
and timely filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("Returns") relating to any and
all Taxes concerning or attributable to it or its operations and such Returns
are true and correct and have been completed in accordance with applicable law.
(ii) As of the Effective Time, USA Dealers (A) will have paid
all Taxes it is required to pay and will have withheld with respect to its
employees all federal and state income taxes, Federal Insurance Contribution Act
("FICA"), Federal Unemployment Tax Act ("FUTA") and other Taxes required to be
withheld, and (B) will have accrued on the USA Dealers Financial Statements all
Taxes attributable to the periods covered by the USA Dealers Financial
Statements and will not have incurred any liability for Taxes for the period
prior to the Effective Time other than in the ordinary course of business.
(iii) USA Dealers has not been delinquent in the payment of
any Tax nor is there any Tax deficiency outstanding, assessed or proposed
against USA Dealers, nor has USA Dealers or any of its subsidiaries executed any
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
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(iv) No audit or other examination of any Return of USA
Dealers is presently in progress, nor has USA Dealers been notified of any
request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by USA Dealers
has been proposed formally or informally by any Tax authority to USA Dealers or
any representative thereof.
(vi) USA Dealers has no liabilities for unpaid federal, state,
local and foreign Taxes which have not been accrued or reserved against in
accordance with GAAP on the USA Dealers Financial Statements, whether asserted
or unasserted, contingent or otherwise, and USA Dealers has not incurred any
liability for Taxes since the date of the USA Dealers Financial Statements other
than in the ordinary course of business.
(vii) USA Dealers has made available to Brands or its legal
counsel, copies of all foreign, federal and state income and all state sales and
use Returns for USA Dealers filed for all periods since its inception.
(viii) There are (and immediately following the Effective Time
there will be) no liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort (collectively,
"Liens") on the assets of USA Dealers relating to or attributable to Taxes other
than Liens for Taxes not yet due and payable.
(ix) USA Dealers has no knowledge of any basis for the
assertion of any claim relating or attributable to Taxes that, if adversely
determined, would result in any Lien on the assets of USA Dealers.
(x) None of USA Dealers' assets are treated as "tax-exempt use
property," within the meaning of Section 168(h) of the Code.
(xi) As of the Effective Time, there will not be any contract,
agreement, plan or arrangement, including but not limited to the provisions of
this Agreement, covering any employee or former employee of USA Dealers that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible by USA Dealers as an expense under applicable law.
(xii) USA Dealers has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(4) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by USA Dealers.
(xiii) USA Dealers is not a party to any tax sharing,
indemnification or allocation agreement, nor does USA Dealers owe any amount
under any such agreement.
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(b) Executive Compensation Tax. There is no contract, agreement, plan
or arrangement to which USA Dealers is a party, including but not limited to the
provisions of this Agreement, covering any employee or former employee of USA
Dealers that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m)
of the Code.
SECTION 4.11 EMPLOYEE BENEFIT PLAN; ERISA.
At the date hereof, USA Dealers does not maintain or contribute to any
material domestic employee benefit plans, programs, arrangements or practices
(such plans, programs, arrangements or practices of USA Dealers being referred
to as the "USA Dealers Plans"), including employee benefit plans within the
meaning set forth in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or other similar material arrangements for the
provision of benefits (excluding any Multiemployer Plan within the meaning of
Section 3(37) of ERISA or a "Multiple Employer Plan" within the meaning of
Section 413(c) of the Code). USA Dealers has no obligation to create any such
plan.
SECTION 4.12 INVESTMENT COMPANY ACT.
USA Dealers either (a) is not an "investment company", or a company
"controlled" by, or an "affiliated company" with respect to, an "investment
company", within the meaning of the Investment Company Act of 1940 (the
"Investment Company Act") or (b) satisfies all conditions for an exemption from
the Investment Company Act, and, accordingly, USA Dealers is not required to be
registered under the Investment Company Act.
SECTION 4.13 LABOR CONTROVERSIES.
There are no significant controversies pending or, to the knowledge of
USA Dealers, threatened between USA Dealers and its employees, to the knowledge
of USA Dealers, there are no material organizational efforts presently being
made involving any of the presently unorganized employees of USA Dealers, USA
Dealers has, to the knowledge of USA Dealers, complied in all material respects
with all laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, and the payment of
social security and similar taxes, and no person has, to the knowledge of USA
Dealers, asserted that USA Dealers is liable in any material amount for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing.
SECTION 4.14 ENVIRONMENTAL MATTERS.
(a) Hazardous Material. USA Dealers has not: (i) operated any
underground storage tanks at any property that USA Dealers has at any time
owned, operated, occupied or leased; or (ii) illegally released any material
amount of any substance that has been designated by any Governmental Entity or
by applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, and urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
20
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws (a
"Hazardous Material"), but excluding office and janitorial supplies properly and
safely maintained. No Hazardous Materials are present as a result of the
deliberate actions of USA Dealers, or to USA Dealers' knowledge, as a result of
any actions of any other person or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water thereof,
that USA Dealers has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. USA Dealers has not transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Effective Time. USA Dealers has not disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (any or all of the
foregoing being collectively referred to as "Hazardous Materials Activities") in
violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. USA Dealers currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of Hazardous Material Activities, respectively, and
other businesses of USA Dealers as such activities and businesses are currently
being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or, to
USA Dealers' knowledge, threatened concerning any Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of the Company. USA
Dealers is not aware of any fact or circumstance that could involve USA Dealers
in any environmental litigation or impose upon USA Dealers any environmental
liability.
SECTION 4.15 INSURANCE.
Schedule 4.15 lists all insurance policies and fidelity bonds covering
the assets, business, equipment, properties, operations, employees, officers and
directors of USA Dealers. There is no claim by USA Dealers pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid, and USA Dealers is
otherwise in compliance with the terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage). USA
Dealers has no knowledge of any threatened termination of, or premium increase
with respect to, any of such policies.
SECTION 4.16 REPRESENTATIONS COMPLETE.
None of the representations or warranties made by USA Dealers, nor any
statement made in any Schedule or certificate furnished by USA Dealers pursuant
to this Agreement or furnished in or in connection with documents mailed or
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delivered to the Brands shareholders for use in soliciting their consent to this
Agreement and the Merger contains or will contain at the Effective Time any
untrue statement of a material fact, or omits or will omit at the Effective Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 5.1 CONDUCT OF BUSINESS OF USA DEALERS AND BRANDS.
During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, each of
USA Dealers and Brands agree (except to the extent that the other shall
otherwise consent in writing), to carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay the debts and their respective Taxes when due, to
pay or perform other obligations when due, and, to the extent consistent with
such business, use its reasonable best efforts consistent with past practice and
policies to preserve intact their respective present business organizations,
keep available the services of their respective present officers and key
employees and preserve their respective relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it,
all with the goal of preserving unimpaired their respective goodwill and ongoing
businesses at the Effective Time. Each party shall promptly notify the other of
any event or occurrence or emergency not in the ordinary course of business.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO INFORMATION.
(a) Brands and its subsidiaries shall afford to USA Dealers and its
accountants, counsel, financial advisors and other representatives (the "USA
Dealers Representatives") full access during normal business hours throughout
the period prior to the Effective Time to all of their respective properties,
books, contracts, commitments and records (including, but not limited to, Tax
Returns) provided that no investigation pursuant to this Section 6.1(a) shall
affect any representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the Merger. USA Dealers and
each of its subsidiaries shall hold and shall use their best efforts to cause
the USA Dealers Representatives to hold, and USA Dealers shall hold in strict
confidence all non-public documents and information furnished to USA Dealers and
its subsidiaries or to USA Dealers Representatives, as the case may be, in
connection with the transactions contemplated by this Agreement. In the event
that this Agreement is terminated in accordance with its terms, each party shall
promptly redeliver to the other all non-public written material provided
pursuant to this Section 6.1 and shall not retain any copies, extracts or other
reproductions in whole or in part of such written materials.
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(b) USA Dealers shall afford to Brands and its accountants, counsel,
financial advisors and other representatives (the "Brands Representatives") full
access during normal business hours throughout the period prior to the Effective
Time to all of their respective properties, books, contracts, commitments and
records (including, but not limited to, Tax Returns) provided that no
investigation pursuant to this Section 6.1(b) shall affect any representations
or warranties made herein or the conditions to the obligations of the respective
parties to consummate the Merger. Brands shall hold and shall use its best
efforts to cause the Brands Representatives to hold, and Brands and each of its
subsidiaries shall hold in strict confidence all non-public documents and
information furnished to Brands or any of its subsidiaries or to Brand
Representatives, as the case may be, in connection with the transactions
contemplated by this Agreement. In the event that this Agreement is terminated
in accordance with its terms, each party shall promptly redeliver to the other
all non-public written material provided pursuant to this Section 6.1(b) and
shall not retain any copies, extracts or other reproductions in whole or in part
of such written materials.
SECTION 6.2 BRANDS AND THE BRANDS PRINCIPAL STOCKHOLDERS' APPROVAL.
Both Brands and each of its subsidiaries shall promptly submit this
Agreement and the transactions contemplated hereby for the approval of its
stockholders at a meeting of stockholders or pursuant to written consent and,
subject to the fiduciary duties of the Board of Directors of both Brands and
each of its subsidiaries under applicable law, shall use its best efforts to
obtain stockholder approval and adoption (the "Brands and Subsidiary
Stockholders' Approval") of this Agreement and the transactions contemplated
hereby. Such meeting shall be held as soon as practicable following the date
hereof, but not later than the Closing Date. Subject to the fiduciary duties of
the Board of Directors of Brands and each of its subsidiaries under applicable
law, Brands and each of its subsidiaries shall, through their respective Board
of Directors, recommend to its stockholders approval of the transaction
contemplated by this Agreement.
SECTION 6.3 USA DEALERS' SHAREHOLDERS' APPROVAL.
USA Dealers shall promptly submit this Agreement and the transactions
contemplated hereby for the approval of its shareholders at a meeting of
shareholders or pursuant to written consent and, subject to the fiduciary duties
of the Board of Directors of USA Dealers and its subsidiaries under applicable
law, shall use its best efforts to obtain shareholder approval and adoption (the
"USA Dealers Shareholders' Approval") of this Agreement and the transactions
contemplated hereby. Such meeting shall be held as soon as practicable following
the date hereof, but not later than the Closing Date. Subject to the fiduciary
duties of the Board of Directors of USA Dealers and its subsidiaries under
applicable law, USA Dealers shall, through its Board of Directors, recommend to
its stockholders approval of the transaction contemplated by this Agreement.
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SECTION 6.4 EXPENSES.
Except as set forth herein, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
SECTION 6.5 AGREEMENT TO COOPERATE.
Subject to the terms and conditions herein provided, each of the
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents and approvals
and to effect all necessary registrations, filings and submissions and to lift
any injunction or other legal bar to the Merger (and, in such case, to proceed
with the Merger as expeditiously as possible), subject, however, to the
requisite votes of the stockholders of Brands and USA Dealers.
SECTION 6.6 PUBLIC STATEMENTS.
The parties shall consult with each other prior to issuing any press
release or any written public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press release or
written public statement prior to such consultation.
SECTION 6.7 INDEMNIFICATION.
(a) BY BRANDS. Brands agrees to indemnify and hold USA Dealers harmless
with respect to any and all claims, losses, damages, obligations, liabilities
and expenses, including without limitation reasonable legal and other costs and
expenses of investigating and defending any actions or threatened actions, which
USA Dealers or Brands may incur or suffer following the Closing by reason of any
breach of any of the representations and warranties of Brands contained herein.
(b) BY USA DEALERS. USA Dealers agrees to indemnify and hold Brands
harmless with respect to any and all claims, losses, damages, obligations,
liabilities and expenses, including without limitation reasonable legal and
other costs and expenses of investigating and defending any actions or
threatened actions, which USA Dealers or Brands may incur or suffer following
the Closing by reason of any breach of any of the representations and warranties
of USA Dealers contained herein.
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ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved and adopted by the affirmative vote of USA Dealers' shareholders
owning a majority of USA Dealers' Common Stock entitled to vote on the Merger;
(b) USA Dealers shall have taken all steps and filed all documents
necessary to have effected prior to the Effective Time a reverse stock split of
the outstanding USA Dealers Common Stock on an up to eighteen (18) to one (1)
basis so that the existing shares equal eight and one half percent (8 1/2 %) of
the total issued shares upon the consummation of the merger;
(c) No preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the Merger shall
have been issued and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted);
(d) No action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any state or federal government or governmental
agency in the United States which would prevent the consummation of the Merger;
and
(e) All governmental consents, orders and approvals legally required
for the consummation of the Merger and the transactions contemplated hereby
shall have been obtained and be in effect at the Effective Time, and all
consents, orders and approvals legally required for the consummation of the
Merger and the transactions contemplated hereby shall have become final orders.
SECTION 7.2 CONDITIONS TO OBLIGATION OF USA DEALERS TO EFFECT THE
MERGER.
Unless waived by USA Dealers, the obligation of USA Dealers to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:
(a) Brands shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the Closing
Date and the representations and warranties of Brands contained in this
Agreement shall be true and correct in all material respects on and as of (i)
the date made and (ii) the Closing Date, and USA Dealers shall have received a
certificate of the President and Secretary of Brands to that effect;
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(b) Brands has entered into a consulting agreement ("Consulting
Agreement") with BET Capital Corporation that shall become effective at the
Effective Time. The Consulting Agreement shall be for a period of two (2) years
at a rate of Ten Thousand Dollars ($10,000) per month, payable in registered
shares of USA Dealers Common Stock or the equivalent thereof;
(c) Since the date hereof, (i) there shall have been no changes that
constitute, and (ii) no event or events shall have occurred which have resulted
in or constitute, a material adverse change in the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Brands and its subsidiaries, taken as a whole (exclusive of changes
or events resulting from regulatory, business or economic conditions of general
applicability); and
(d) All governmental consents, orders, and approvals legally required
for the consummation of the Merger and the transactions contemplated hereby
shall have been obtained and be in effect at the Closing Date.
SECTION 7.3 CONDITIONS TO OBLIGATION OF BRANDS TO EFFECT THE MERGER.
Unless waived by Brands, the obligation of Brands to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
additional following conditions:
(a) USA Dealers shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of USA Dealers contained
in this Agreement shall be true and correct in all material respects on and as
of (i) the date made and (ii) the Closing Date, and Brands shall have received a
Certificate of the President and Chief Executive Officer or of a Vice President
of USA Dealers to that effect;
(b) Since the date hereof, (i) there shall have been no changes that
constitute, and (ii) no event or events shall have occurred which have resulted
in or constitute, a material adverse change in the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of USA Dealers, taken as a whole (exclusive of changes or events
resulting from regulatory, business or economic conditions of general
applicability); and
(c) All governmental consents, orders, and approvals legally required
for the consummation of the Merger and the transactions contemplated hereby
shall have been obtained and be in effect at the Closing Date.
ARTICLE VIII
POST-CLOSING AGREEMENTS
SECTION 8.1 POST CLOSING AGREEMENTS.
Following the Effective Time, the parties agree as follows:
(a) USA Dealers (i) agrees to arrange and pay for the filing of a
registration statement covering the resale by certain shareholders of two
million (2,000,000) shares, including shares owned by Ashford Capital or its
assignee (ii) arrange and pay for the preparation of USA Dealers' 10-QSB for the
quarter ended September 30, 2001 and the Form 8-K to be filed following the
Merger, and (iii) pay to Xxxxx Xxxxxxxxxxx the sum of Five Thousand Dollars
($5,000) as his consulting fee.
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(b) USA Dealers shall issue a warrant to BET Capital Corporation for
the purchase of 1,000,000 of USA Dealers Common Stock at a price equal to a
seventy-five percent (75%) discount from the average closing bid price of USA
Dealers Common Stock for the thirty (30) trading days following the Effective
Time (the "Warrant"). USA Dealers shall file a registration statement covering
the resale by BET Capital Corporation of the shares underlying the Warrant. The
form of warrant is attached as Exhibit C.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 TERMINATION.
This Agreement may be terminated at any time prior to the Closing Date,
whether before or after approval by the stockholders of USA Dealers or Brands:
(a) by mutual consent of Brands and USA Dealers;
(b) unilaterally by Brands if Brands is not in breach of any material
agreement, covenants or representation contained in this Agreement and USA
Dealers fails to perform or breaches any material agreement, covenant or
representation in this Agreement, and does not cure the failure in all material
respects within 30 business days after the terminating party delivers written
notice of the alleged failure or if any condition to the obligations of that
party is not satisfied (other than by reason of a breach by that party of its
obligations hereunder), and it reasonably appears that the condition cannot be
satisfied prior to January 15, 2002;
(c) unilaterally by USA Dealers if USA Dealers is not in breach of any
material agreement, covenants or representation contained in this Agreement and
Brands fails to perform or breaches any material agreement, covenant or
representation in this Agreement, and does not cure the failure in all material
respects within 30 business days after the terminating party delivers written
notice of the alleged failure or if any condition to the obligations of that
party is not satisfied (other than by reason of a breach by that party of its
obligations hereunder), and it reasonably appears that the condition cannot be
satisfied prior to January 15, 2002;
(d) by either party if any material adverse effect has occurred with
respect to the other party; or
(e) by either party if the Closing Date has not occurred by January 15,
2002; provided, however, that the right to terminate this Agreement under this
Section 9.1(e) shall not be available to any party whose action or failure to
act has been a principal cause of or resulted in the failure of the Merger to
occur on or before such date and such action or failure to act constitutes a
breach of this Agreement.
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SECTION 9.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either Brands or USA
Dealers, as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no further obligation on the part of either USA Dealers,
Brands, or their respective officers or directors. Nothing in this Section 9.2
shall relieve any party from liability for any breach of this Agreement.
SECTION 9.3 AMENDMENT.
This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto and in compliance with applicable
law.
SECTION 9.4 WAIVER.
At any time prior to the Effective Time, the parties hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties in this Agreement shall survive the
Merger for a period of one year.
SECTION 10.2 BROKERS.
USA Dealers represents and warrants that no broker, finder or
investment banker is entitled to any brokerage, finders' or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of USA Dealers.
Brands represents and warrants that no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Brands.
SECTION 10.3 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or certified
28
mail (return receipt requested) or sent via facsimile to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Brands to: 000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx
with a copy to: Xxxxxxx Xxxxx & Xxxx, LLP
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
(b) If to USA Dealers to: USA Dealers Xxxxxxx.xxx, Inc.
0000 Xxxxx Xxx
Xxx Xxxxxx, XX 00000
Attention: Ali Tamasebi
with a copy to: Xxxxxx X. Xxxxxxxx, Esq., LTD
Xxxxxxxxxx Xxxxxx Xx., Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
SECTION 10.4 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.
SECTION 10.5 MISCELLANEOUS.
This Agreement (including the documents and instruments referred to
herein) (a) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof; (b) shall not be assigned by
operation of law or otherwise; and (c) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
California (without giving effect to the provisions thereof relating to
conflicts of law).
SECTION 10.6 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement
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SECTION 10.7 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 10.8 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof. Each of the
parties hereto irrevocably consents to the exclusive jurisdiction and venue of
any court within Orange County, State of California, in connection with any
matter based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner authorized by
the laws of the State of California for such persons and waives and covenants
not to assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process.
SECTION 10.9 ENTIRE AGREEMENT.
This Agreement, the Exhibits hereto and the documents and instruments
and other agreements among the parties hereto referenced herein constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings both written and oral, among
the parties with respect to the subject matter hereof.
SECTION 10.10 SEVERABILITY.
In the event that any provision of this Agreement or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
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IN WITNESS WHEREOF, Brands and USA Dealers have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
USA DEALERS XXXXXXX.XXX, INC.
By: /s/ Al Tamasebi
--------------------------------
Name: Al Tamasebi
------------------------------
Title: President
-----------------------------
BRANDS SHOPPING NETWORK, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxxx
------------------------------
Title: President
-----------------------------
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EXHIBIT A
FORM OF MERGER AGREEMENT
A-1
EXHIBIT B
FORM OF CONSULTING AGREEMENT
B-1
EXHIBIT C
FORM OF WARRANT
C-1
