EX-10.1
2
v116573_ex10-1.htm
SHARE
EXCHANGE AGREEMENT
BY
AND BETWEEN
FUTURE
NOW GROUP, INC.
AND
XXXX
XXXXXX, XXXXX XXXXXXX, XXXX XXXXXXX, XXXX XXXX
AND
XXXXXXX X. XXXXXX
AND
ELEMENTAL
BUSINESS, INC.
DATED
AS OF MAY 29, 2008
STOCK
EXCHANGE AGREEMENT
This
is a
Stock Exchange Agreement (this “Agreement”) dated as of May 29, 2008 between
Future Now Group, Inc., a Nevada corporation with an address of 00 Xxxxxxx
Xx,
Xxxxxxxxx, XX. 00000 (“FNG”), Xxxx Xxxxxx (“Xxxxxx”), Xxxxx Xxxxxxx (“Xxxxxxx”),
Xxxx Xxxxxxx (“Xxxxxxx”), Xxxx Xxxx (“Xxxx”) Xxxxxxx X. Xxxxxx (“Xxxxxx”) and
Elemental Business, Inc., a Utah corporation (“EBI”).
RECITALS
A.
FNG is
a Nevada corporation and acts as a holding company to its two wholly-owned
subsidiaries, Future Now, Inc. and Intellectual Property Licensing Group, Inc
which are in the business of Internet Marketing Software development and
professional services that desires to acquire a 100% interest in
EBI.
B.
EBI is
a Utah corporation in the business of on-line marketing optimization utilizing
the elitics tool set.
C.
The
Shareholders collectively own 100% of the issued and outstanding stock of
EBI.
D.
Subject to the terms and conditions set forth in this Agreement, the
Shareholders desire to sell to FNG and FNG desires to purchase from the
Shareholders, all of the shares of stock of EBI in exchange for Three Million
Seven Hundred Thousand shares of the common stock of FNG.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
promises contained herein, the parties hereto agree as follows:
ARTICLE
1
Definitions
As
used
in this Agreement, the following terms shall have the following
meanings:
(a)
“Assets” shall mean the assets of EBI and shall include the Contracts, Customer
List, Inventions, Equipment, Licenses, and Names.
(b)
“Closing” shall mean the consummation of the transactions contemplated in this
Agreement in accordance with Article VIII.A.
(c)
“Closing Date” shall mean the date of the Closing established pursuant to
Article VIII.A hereof.
(d)
“Contracts” shall mean the agreements, arrangements, commitments and contracts
to which EBI is a party described on Disclosure Schedule 3.9
hereof.
(e)
“Customer List” shall mean the list of EBI’s customers.
(f)
“Effective Date” shall mean May __, 2008 or such other date as the parties shall
agree to in writing.
(g)
“EBI
Financial Statements” shall have the meaning given to it in Section 3.6 of this
Agreement.
(h)
“Equipment” shall mean all equipment used by EBI in the conduct of its business
as set forth on Disclosure Schedule 3.22 to this Agreement.
(i)
“FNG
Shares” shall mean shares of the common stock of FNG.
(j)
“Instrument of Transfer” shall mean the instrument of transfer pursuant to which
each Shareholder shall transfer such Shareholder’s Shares to FNG, and shall
include such stock powers, certificates and endorsements as are customary and
FNG shall reasonably require.
(k)
“Inventions” shall mean all ideas, inventions, ideas, procedures, drawings, and
plans, including any patents and patent applications owned by EBI and described
on Disclosure
Schedule 3.14
of this
Agreement.
(l)
“Licenses” shall mean the licenses, permits, authorizations, certificates and
registrations set forth on Disclosure
Schedule 1.(l)
of this
agreement.
(m)
“Names” shall mean the name Elemental Business, Inc., any derivation thereof
(such as EBI), and any other name or xxxx used in the business or operation
of
EBI, whether or not registered or trademarked.
Page
2 of 43 |
Share Exchange Agreement | Final Execution
Copy
(n)
“Purchase Price” shall have the meaning given it in Section 2.2.
(o)
“Shareholder” shall mean each of Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxx and
Xxxxxx.
(p)
“Shares” shall mean all of the shares of stock of EBI owned by the Shareholders,
which is and shall at Closing be 100% of the outstanding stock of EBI.
(q)
“Tax”
or “Taxes” means any and all taxes, charges, fees, levies, duties or other
assessments whether federal, state, local or foreign, based upon or measured
by
income, capital, net worth or gain and any other tax including, recapture,
gross
receipts, profits, sales, use, occupation, use and occupancy, value added,
ad
valorem, customers, transfer, franchise, shares, withholding, payroll,
employment, excise, or property taxes with respect to EBI, together with any
interest, fines, penalties and additions to tax imposed with respect
thereto.
Other
terms used in this Agreement with initial capital letters, to the extent not
defined in this Article I, shall have such meanings ascribed thereto by this
Agreement or, if no meaning is ascribed, such terms shall have the ordinary
and
customary used in connection therewith.
(r)
“Permitted Liens” shall mean:
(i)
carriers', warehouseman's, mechanics, material men's, repairmen's or other
like
liens arising in the ordinary course of business and consistent with past
practice which are (i) not overdue for a period of more than thirty (30) days
or
(ii) which are being contested in good faith and by appropriate proceedings;
and
(ii)
liens for taxes, assessments, levies, fees or governmental changes not yet
due
and payable.
(s)
“Shareholders’ Knowledge” means the actual knowledge of the Shareholders, or in
the absence of actual knowledge of a matter a Shareholder shall be deemed to
have knowledge if a reasonable person would have investigated and could
reasonably be expected to have learned of such matter following a reasonable
investigation.
ARTICLE
II
Sale/Exchange
of Stock
2.1
Agreement
to Sell and Buy.
Subject
to the terms and conditions set forth in this Agreement, the Shareholders agree
to sell the Shares to FNG and FNG agrees to buy the Shares from the
Shareholders.
2.2
Purchase
Price.
In
consideration for the Shareholders transfer of the Shares to FNG, FNG shall
issue to the Shareholders the aggregate amount of Three Million Seven Hundred
Thousand (3,700,000) FNG Shares (the “Purchase Price”). The Purchase Price shall
be allocated among the Shareholders as follows:
|
Name
| |
No. of FNG Shares to be Received
| |
|
Xxxxxx
| | |
833,431
| |
|
Xxxxxxx
| | |
833,431
| |
|
Xxxxxxx
| | |
833,431
| |
|
Hall
| | |
1,031,586
| |
|
Xxxxxx
| | |
168,121
| |
| | | | | |
|
Total
FNG Shares
| | |
3,700,000
| |
2.3.
Consideration;
Share Exchange.
At the
Closing, upon surrender of the certificates evidencing the Shares duly endorsed
for transfer to FNG, FNG will cause one-half of the Purchase Price (1,850,000
Shares) to be issued to the Shareholders, as detailed prior to the Share
Exchange under Disclosure
Schedule 2.3.
Until
the EBI Financial Statement audits have been completed, the second one-half
of
the Purchase Price represented in FNG Shares, (1,850,000 shares) will be held
in
escrow (the “Escrow Arrangement”) by FNG’s counsel. Under such Escrow
Arrangement, all remaining shares will be released only upon the completion
and
issuance by the Independent Accountants of the audit and the payment of audit
fees as described in Section 13.2 of this Agreement, on the EBI Financial
Statements, which statements FNG will exercise commercially reasonable efforts
to cause to be completed and issued on or before 71 days after Closing. In
the
event that such Audit is not completed by the 72nd
day
following the closing of the transaction, any remaining shares being held in
escrow by any escrow agent shall thereafter be released to the
Shareholders.
Page 3
of 43 |
Share Exchange Agreement |
Final Execution Copy
2.4.
Subsidiaries. EBI does not have any subsidiaries.
ARTICLE
III
Representations
and Warranties of Shareholders
The
Shareholders and EBI, individually, jointly and severally represent and warrant
to FNG – and the Shareholders acknowledge that FNG is relying on the
complete accuracy of such representations and warranties in connection with
the
execution delivery and performance of this Agreement – as follows:
3.1
Corporate
Standing/Authority.
EBI is
a corporation duly organized and validly existing under the laws of the State
of
Utah. EBI is qualified to do business in all jurisdictions where the failure
to
qualify will not have a material adverse effect on the business of EBI. EBI
has
all corporate power necessary to (i) conduct its business as presently
conducted, (ii) own or lease its real, personal and mixed property as currently
owned and leased, and (iii) to execute and perform all obligations required
of
it under any agreements to which it is a party.
3.2
Capitalization.
The
entire authorized capital stock and equity ownership of EBI consists of 50,000
shares of common stock of which 27,533 shares of common stock are outstanding,
with split of such ownership details on Disclosure
Schedule 2.3.
The
Shares are all of the outstanding shares of stock or equity ownership of EBI.
Except as set forth on Disclosure
3.2,
there
are no agreements purporting to restrict the transfer of the Shares, nor any
voting agreements, voting trusts or other arrangements restricting or affecting
the voting of the Shares. There are no subscription rights, options, warrants,
convertible securities, or other rights (contingent or otherwise) presently
outstanding, for the purchase, acquisition, or sale of the capital stock of
EBI,
or any securities convertible into or exchangeable for capital stock of EBI
or
other securities of EBI, from or by EBI. There are no stock appreciation rights,
phantom stock, or similar rights in existence with respect to EBI.
3.3
Ownership
of Shares.
Each of
the Shareholders owns, and shall transfer to FNG, his Shares free and clear
of
any and all liens, claims and encumbrances. The Shares are duly and validly
issued, fully paid and non-assessable, and issued in full compliance with all
federal and state securities laws, rules and regulations.
3.4
Assets.
The
Assets are all of the assets of EBI. Except for Permitted Liens and as set
forth
on Disclosure
Schedule 3.4,
EBI has
good and marketable title to the Assets. Except as set forth on Schedules 3.4
or
3.7 and except for Permitted Liens, the Assets are not encumbered in any manner.
To the Shareholder’s Knowledge, any receivables of EBI are fully collectible.
The Shareholders agree that where any portion of any balance of the Accounts
Receivable reflected on Disclosure Schedule 3.4 remain unpaid following 120
days
after the Closing date, the Shareholders will be required to pay to FNG the
entire amount of such balance(s) still owed FNG within 30 days of written
request for payment of the same. None of the Shareholders has knowledge of
any
imminent or proposed change in any ordinance, regulation or law which would
materially detract from the value or materially impair the use of any of the
Assets for the purpose for which it is currently used. The Shareholders do
not
makes any representation or warranty as to the physical condition of any of
the
Assets, and FNG accepts the Assets in “as is” condition.
3.5 Noncontravention.
To the
knowledge of the Shareholders, except as set forth on Disclosure
Schedule 3.5;
neither
the execution, delivery and performance of the Transaction Documents, nor the
consummation of the transactions contemplated thereby nor compliance with the
provisions thereof, will:
(1) Conflict
with, cause a default under (with or without notice, lapse of time or both)
or
give rise to a right of termination, amendment, cancellation or acceleration
of
any obligation contained in or the loss of any material benefit under, or result
in the creation of any lien, security interest, charge or encumbrance upon
any
of the material properties or assets of EBI under any term, condition or
provision of any loan or credit agreement, note, debenture, bond, mortgage,
indenture, lease or other agreement, instrument, permit, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to EBI,
or
their respective properties or assets;
Page 4
of 43 |
Share Exchange Agreement |
Final Execution Copy
(2) Violate
any provision of the articles of incorporation or by-laws of EBI; or
(3) Violate
any order, writ, injunction, decree, statute, rule, or regulation of any court
or governmental or regulatory authority applicable to EBI or any of its
properties or assets.
3.6 Financial
Representations.
Attached
to this Agreement as Disclosure
Schedule 3.6,
The
balance sheet and related statements of income, cash flows, and changes in
shareholder’s equity for the years ended December 31, 2007 and December 31, 2006
of EBI are presently being audited (the “EBI Financial Statements”).
.
3.7
Liabilities.
Except
as set forth in Disclosure
Schedule 3.7,
EBI has
no material liabilities, obligations or commitments, whether direct or indirect,
mature or unmatured, contingent.
3.8
Taxes.
As of
the date hereof EBI has timely filed all Federal Income Tax returns and all
other material Tax returns which are required to be filed as of the Effective
Date of this Agreement. To the Shareholders’ Knowledge, all such returns are
true and correct in all material respects. EBI has paid all Material Taxes
that
have become or are due with respect to any period ended on or prior to the
date
hereof, and has established an adequate reserve on its balance sheet for those
Taxes not yet due and payable. For purposes of this Agreement “Material Taxes”
shall mean any obligation in the form of a tax or assessment by a governmental
entity in an amount greater than $500.00. To the Shareholder’s Knowledge, EBI is
not presently under, nor has EBI received notice of, any contemplated
investigation or audit by the Internal Revenue Service or any foreign or state
taxing authority concerning any fiscal year or period ended prior to the date
hereof. There are no liens for Taxes (other than Taxes not yet due and payable)
upon any of the assets of EBI, including without limitation, income Taxes,
social security Taxes, unemployment Taxes and other similar withholding Taxes.
EBI is not a party to any tax-sharing agreements or similar contracts or
arrangements.
3.9 Material
Contracts and Transactions. Disclosure
Schedule 3.9
contains
a list of all material contracts, agreements, licenses, permits, arrangements,
commitments, instruments, understandings or contracts, whether written or oral,
express or implied, contingent, fixed or otherwise, to which EBI is a party
(collectively, the “Contracts”).
(a) Except
as
listed on Disclosure
Schedule 3.9,
EBI is
not a party to any written or oral:
(1) contract
for the purchase, sale or lease of any capital assets, or continuing contracts
for the purchase or lease of any materials, supplies, equipment, real property
or services in excess of $5,000 per annum;
(2) agreement
regarding sales agency, distributorship, or the payment of commissions in excess
of $5,000 per annum;
(3) agreement
for the employment or consultancy of any person or entity that cannot be
terminated with or without notice within 30 days; or
(4) note,
debenture, bond, trust agreement, letter of credit agreement, loan agreement,
or
other contract or commitment for the borrowing or lending of money, or agreement
or arrangement for a line of credit or guarantee, pledge, or undertaking of
the
indebtedness of any other person in excess of $5,000 per annum;
(5) agreement,
contract, or commitment for any charitable or political contribution in excess
of $5,000 per annum;
(6) any
material agreement, contract, or commitment limiting or restraining EBI or
its
Subsidiaries, their business or any successor thereto from engaging or competing
in any manner or in any business or from hiring any employees;
(7) material
agreement, contract, or commitment that involves consideration in excess of
$5,000 not made in the ordinary course of business;
Page 5
of 43 |
Share Exchange Agreement |
Final Execution Copy
(8) agreement
establishing or providing for any joint venture, partnership, or similar
arrangement with any other person or entity;
(9) agreement
or contract that involves consideration in excess of $5,000 containing a “change
in control,” “potential change in control” or similar provision; or
(10)
power
of
attorney or similar authority to act.
(b) Each
Contract set forth in Disclosure
Schedule 3.9
(each a
“Material Contract”), is in full force and effect, and there exists no material
breach or violation of or default by EBI or its Subsidiaries under any such
Material Contract nor to the Shareholder’s Knowledge by any other party to such
Material Contract, or any event that with notice or the lapse of time, or both,
will create a material breach or violation thereof or default under any such
Material Contract by EBI, nor by any other party to such Material Contract.
The
continuation, validity, and effectiveness of each Material Contract will in
no
way be affected by the consummation of the transactions contemplated by this
Agreement. Except as listed on Disclosure
Schedule 3.12,
there
exists no actual or threatened termination, cancellation, or limitation of,
or
any amendment, modification, or change to any Material Contract. A true, correct
and complete copy (and if oral, a description of material terms) of each
Material Contract, as amended to date, has been furnished to FNG.
3.10. Labor
and Employment Matters.
(a) Neither
the Shareholders nor EBI is bound by any collective bargaining
agreement;
(b) To
its
knowledge, EBI has complied, and is currently in compliance, in all material
respects with applicable laws, rules and regulations relating to the employment
of labor, including without limitation those relating to wages, hours, unfair
labor practices, discrimination and payment of social security and similar
taxes;
(c)
EBI is
not, to the Shareholder’s Knowledge, liable for any unpaid wages, bonuses, or
commissions (other than those not yet due) or any tax, penalty, assessment,
or
forfeiture for failure to comply with any of the foregoing.
All
officers, employees, and agents of EBI are employees at-will, and for indefinite
terms and there is no outstanding agreement or arrangement with respect to
severance payments; and
(d) Disclosure
Schedule 3.10
contains
a complete and accurate list of the following information for each employee,
consultant, member Shareholder or director of EBI or its Subsidiaries that
receives annual compensation is excess of Twenty Thousand Dollars ($20,000.00),
including each employee on leave of absence or layoff status: name; job title;
hire date; current compensation paid or payable and any change in compensation
since March 31, 2008; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any of the Benefit Plans (as
defined in Section 3.25 of this Agreement).
3.11
Real
Property.
Disclosure
Schedule 3.11
contains
a true and correct list of each parcel of real property leased by EBI, detailing
the expiration date of each lease, and the monthly rent payable thereunder.
All
of the leases listed in Exhibit
3.11
are in
full force and effect, and to Shareholder’s Knowledge, no event has occurred
which with the passing of time, the giving of notice, or both, would constitute
a default under any of the leases. EBI has not received written notice of any
pending or threatened eviction proceedings, condemnations, planned public
improvements, annexation, special assessments, zoning or subdivision changes,
or
other adverse claims materially affecting the leased real property.
3.12
Litigation.
There
are no actions, suits, arbitration proceedings, or investigations, whether
civil
or criminal, pending or to Shareholder’s Knowledge or the knowledge of EBI,
threatened against EBI before any court, administrative agency or body which
would have any adverse effect on the Assets, nor does EBI or any of the
Shareholders have any knowledge of any such action, suit, arbitration,
proceeding or investigation. To the Shareholder’s Knowledge, no injunction
materially or adversely affecting the Assets or the business of EBI has been
entered against or served upon EBI which is presently in effect. At the time
of
the execution of this Agreement, to Shareholder’s Knowledge there is no action,
proceeding or investigation pending which challenges the validity of this
Agreement or the transactions contemplated by this Agreement, or which otherwise
seeks to prevent or has the effect of preventing the consummation of these
transactions. Disclosure
Schedule 3.12
lists
all pending legal claims or proceedings, whether or not such claim or proceeding
would result in a material adverse effect if decided against EBI to the
Shareholder’s Knowledge.
Page 6
of 43 |
Share Exchange Agreement |
Final Execution Copy
3.13
Governmental
Authorizations and Third Party Consents.
All
approvals, authorizations, consents, licenses or orders of any governmental
agency, whether federal, state or local, required for the operation of the
Assets or EBI’s business have been obtained and are in full force and effect;
except where the failure to obtain the same would not have a material adverse
effect on EBI. Except as set forth on Disclosure
Schedule 3.13,
there
are no consents, authorizations, approvals or waivers of any third party
necessary or appropriate for the consummation of the transactions contemplated
by this Agreement.
3.14
Inventions,
Copyrights and Trademarks.
EBI has
not patented any of its intellectual property. To Shareholder’s Knowledge, EBI
has full right to exploit the software it owns. To Shareholder’s Knowledge, EBI
has full right to use and operate under any and all of (i) the names and (ii)
copyrights used or distributed by EBI in its business. All the Intellectual
Property of EBI is identified on Disclosure
Schedule 3.14.
No
action or claim is pending or to Shareholder’s Knowledge, threatened, or has
been received by EBI alleging that the operation by EBI of its business
infringes in any way upon any patents, patent applications, trademarks, trade
names, copyrights, inventions, formula, methods or processes of any third
party.
3.15
No
Brokers.
Neither
the Shareholders nor EBI has incurred any obligation or liability to any party
for any brokerage fees, agent’s commissions, or finder’s fees in connection with
the transactions contemplated by this Agreement for which FNG would be
responsible.
3.16 Accounts.
Disclosure
Schedule 3.16
sets
forth and describes (a) all bank accounts owned or maintained by EBI and all
authorized signatories with respect thereto, and (b) all safety deposit boxes
maintained by EBI and all persons who have access thereto.
3.17
Disclosure
and Completeness of Statements.
No
representation or warranty made by the Shareholders or EBI in this Agreement
or
any Schedule or Exhibit attached to this Agreement, contains, or will as of
Closing contain, any untrue statement of a material fact or omits, or will
as of
Closing omit, to state a material fact which is necessary in order to make
the
statement contained herein or therein not misleading.
3.18 Absence
of Changes. Except
as
set forth in Disclosure
Schedule 3.17,
since
March 31, 2008, neither EBI nor, if applicable, its subsidiaries
have:
(a) incurred
any material liabilities, other than liabilities incurred in the ordinary course
of business consistent with past practice, or discharged or satisfied any lien
or encumbrance, or paid any liabilities, other than in the ordinary course
of
business consistent with past practice, or failed to pay or discharge when
due
any liabilities of which the failure to pay or discharge has caused or will
cause any material damage or risk of material loss to its or any of its assets
or properties.
(b) sold,
encumbered, assigned or transferred any material fixed assets or properties
which would have been included in any of the assets of EBI, or, if applicable
its subsidiaries if the closing had been held on March 31, 2008 or on any date
since then, except for ordinary course of business transactions consistent
with
past practice;
(c) created,
incurred, assumed or guaranteed any material indebtedness for money borrowed,
or
mortgaged, pledged or subjected any of the assets or properties of EBI, or
if
applicable, its subsidiaries to any material mortgage, lien, pledge, security
interest, conditional sales contract or other encumbrance of any nature
whatsoever;
(d) except
for as otherwise set forth in Schedule 3.7, those obligations identified therein
will be assumed, EBI has not made or suffered any amendment or termination
of
any material agreement, contract, commitment, lease or plan involving
consideration in excess of $5,000 and to which EBI is a party or by which it
is
bound, or cancelled, modified or waived any substantial debts or claims held
by
it or waived any rights of substantial value, whether or not in the ordinary
course of business;
Page 7
of 43 |
Share Exchange Agreement |
Final Execution Copy
(e) declared,
set aside or paid any dividend or made or agreed to make any other distribution
or payment in respect of its capital shares or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or acquire any of its capital shares
or
equity securities;
(f) suffered
any damage, destruction or loss, whether or not covered by insurance, materially
and adversely affecting its business, operations, and of the assets, properties
or prospects of EBI;
(g) suffered
any material adverse change in its business, operations, assets, properties,
prospects or condition (financial or otherwise);
(h) received
notice or had knowledge of any actual or threatened labor dispute, termination,
resignation, strike or other occurrence, event or condition of any similar
character which has had or might have an adverse effect on its business,
operations, assets, properties or prospects taken as a whole;
(i) made
commitments or agreements for capital expenditures or capital additions or
betterments exceeding in the aggregate $5,000.00, except such as may be involved
in ordinary repair, maintenance or replacement of any of the assets of
EBI;
(j) other
than in the ordinary course of business, increased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or made any
increase in, or any addition to, other benefits to which any of its employees
may be entitled;
(k) changed
any of the accounting principles followed or the methods of applying such
principles;
(l) entered
into any transaction other than in the ordinary course of business consistent
with past practice; or
(m) agreed,
whether in writing or orally, to do any of the foregoing.
3.18 Personal
Property.
Disclosure
Schedule 3.18
contains
a list of all material equipment, furniture, fixtures and other tangible
personal property and assets owned or leased by EBI, and, if applicable, its
Subsidiaries. All of such items are in good operating condition (normal wear
and
tear excepted).
3.19 Related
Entities. Except
as
set forth on Disclosure
Schedule 3.19,
neither
EBI nor any Stockholder, director, officer or employee of EBI or any member
of
his or her immediate family or any other of its, his or her affiliates, owns
or
has an ownership interest in any corporation or other entity that is or was
during the last three years a party to, or in any property which is or was
during the last two years the subject of, any material contract, agreement
or
understanding, business arrangement or relationship with EBI. Disclosure
Schedule 3.19
provides
a description of each such related entity and the interest held therein.
3.20
Insurance.
The
assets, properties and operations of EBI are not insured.
3.21 Benefit
Plans and Arrangements.
The
Company does not have any employee benefit plans (as defined in Section 3(3)
of
the Employee Retirement Income Security Act of 1974 (“ERISA”)), or other
deferred compensation or fringe benefit plans, or arrangements.
ARTICLE
IV
Representations
and Warranties of FNG
4.1
Organization
and Authority.
FNG is
a corporation duly organized, validly existing and in good standing under the
laws of Nevada. FNG has all necessary power and authority to execute, deliver
and perform this Agreement according to its terms. FNG’s subsidiaries are each
duly organized and validly existing and in good standing under the laws of
their
respective jurisdictions of organization. FNG and its subsidiaries each have
all
requisite power and authority (corporate and other) to own their respective
properties and to conduct their respective businesses as now being conducted,
are each duly qualified to do business and are in good standing in each
jurisdiction in which the character of the properties owned or leased by them
or
in which transaction of their respective businesses make such qualification
necessary, except where the failure to so qualify will not have a material
adverse effect on FNG and its subsidiaries. To their knowledge, FNG and its
subsidiaries are not transacting business, or operating any properties owned
or
leased by any of them in violation of any provision of federal or state law
or
any rule or regulation promulgated thereunder, which violation would have a
material adverse effect on FNG and its subsidiaries.
Page 8
of 43 |
Share Exchange Agreement |
Final Execution Copy
4.2
FNG
Capitalization.
The
authorized capital stock of FNG consists of 900,000,000 shares of common stock
of FNG, having a par value of $0.001 (“FNG
Common Stock”),
of
which, as of the date of this Agreement, 71,242,191 shares are issued and
outstanding. All outstanding shares of FNG Common Stock have been duly
authorized and validly issued in compliance with applicable laws, are fully
paid
and non-assessable and are not subject to any preemptive or subscription rights.
All of the issued and outstanding shares of FNG Common Stock were offered,
issued, sold and delivered in compliance with the registration requirements
of
the Securities Act and any applicable state securities act or an applicable
exception therefrom.
(a) Except
as
otherwise disclosed in all SEC filings and reports, there are no outstanding
warrants, options, rights, other securities, agreements, subscriptions or other
commitments, arrangements or undertakings pursuant to which FNG may become
obligated to issue, deliver or sell, or cause to be issued, delivered or sold,
any additional shares of FNG Capital Stock or other securities of FNG or to
issue, grant, extend or enter into any such warrant, option, right, security,
agreement, subscription or other commitment, arrangement or undertaking. Except
as otherwise disclosed in all SEC filings and reports, there are no outstanding
options, rights, other securities, agreements or other commitments, arrangements
or undertakings pursuant to which FNG is or may become obligated to redeem,
repurchase or otherwise acquire or retire any shares of FNG Capital Stock or
other securities of FNG.
There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to FNG.
(b) Except
as
otherwise disclosed in all SEC filings and reports, there are no voting trusts,
proxies, or other agreements or understandings with respect to the voting stock
of FNG. There are no bonds, debentures, notes or other indebtedness or
securities other than Common Stock of FNG having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote)
on
any matters on which stockholders of FNG may vote.
(c) Except
as
otherwise disclosed in all SEC filings and reports, there are no outstanding
rights which permit the holder thereof to cause FNG to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of FNG in a registration statement filed by FNG under the Securities
Act.
4.3
Authorization
and Validity of Agreement.
FNG has
the corporate power and authority to execute and deliver this Agreement. This
Agreement has been duly and validly approved by the Board of Directors and
shareholders of FNG, has been duly executed and delivered on its behalf, and
constitutes a valid and binding agreement of FNG, enforceable in accordance
with
its terms.
4.4
FNG
Reports.
Since
May 1, 2008, FNG have filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that were required
to be filed with (i) the SEC, including but not limited to Form 10-K, Form
10-Q,
Form 8-K and proxy statements, and (ii) other applicable state securities
authorities. All such reports and statements filed with the SEC and other
applicable state securities authorities are collectively referred to herein
as
the “FNG
Reports.”
As
of
their respective dates, to the best knowledge of the officers of FNG, the FSC
Reports complied in all material respects with all the statutes, rules and
regulations enforced or promulgated by the regulatory authority with which
they
were filed and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
are
made, not misleading.
Page 9
of 43 |
Share Exchange Agreement |
Final Execution Copy
4.5
FNG
Financial Statements; Tax Returns.
FNG’s
Consolidated Balance Sheets as of June 30, 2007 and June 30, 2006, and its
Consolidated Statements of Income and Consolidated Statements of Cash Flow
for
the years then ended, and its interim financial statements for the period ended
March 31, 2008, all heretofore delivered to EBI and its Shareholders
(collectively the “FNG Financial Statements”), were prepared in accordance with
generally accepted accounting principles consistently applied and present fairly
FNG’s consolidated financial condition, results of operations and changes in
financial position as of such dates and for such periods. FNG has filed all
federal, state and local tax returns and forms (including but not limited to
Forms 1099), which are required by law to be filed or delivered as of the date
hereof and have paid all taxes which have become due. Where payment of such
taxes is not required to be made as of the date hereof, FNG has set up an
adequate reserve or accrual for the payment of all taxes required to be paid
in
respect of the periods covered by such returns. Except as and to the extent
stated in the FNG Financial Statements provided by FNG to EBI and its
Shareholders and except for those liabilities incurred in the ordinary course
of
business, FNG and its consolidated subsidiaries do not have any material
liabilities or obligations, secured or unsecured (whether accrued, absolute,
contingent or otherwise).
4.6
Absence
of Material Adverse Changes.
Since
December 31, 2007, there has been no material change, and no development
involving a reasonably foreseeable prospective change, in or affecting the
financial condition (present or prospective), business, properties or operations
of FNG and its consolidated subsidiaries that either individually or in the
aggregate has had or is likely to have a material adverse effect on FNG and
its
consolidated subsidiaries.
4.7
Absence
of Defaults Under Agreements.
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with or result in a breach of
or
constitute a default under any provision of FNG’s Articles of Incorporation,
Bylaws, or any agreement to which FNG is a party or by which it is bound or
to
which any of its properties is subject, or result in the creation of any liens
or encumbrances upon its assets, and no consents or waivers thereunder are
required to be obtained in connection with the transactions contemplated
hereby.
4.8
Actions,
Proceedings, and Investigations.
Except
as set forth in FNG’s filings with the SEC, there are no actions, proceedings or
investigations pending, or to the knowledge of the executive officers of FNG,
threatened or contemplated, against or relating to FNG or any of its
consolidated subsidiaries, or any of their respective properties, which would
have a material adverse effect on the financial condition (present or
prospective), businesses, properties or operations of FNG and its consolidated
subsidiaries, or the ability of FNG to consummate the Transaction contemplated
hereby.
4.10
Periodic
Reports.
FNG
will use its best efforts to timely file all reports, registrations and
statements that it is required to file with the SEC, including, but not limited
to Form 10-K, Form 10-Q, Form 8-K and proxy statements, and other applicable
state securities or authorities as required under law for the three years
following Closing.
4.11
Notification
of Action.
FNG
covenants and agrees to immediately notify the Shareholders Representative
in
the event of the breach of any of the covenants set forth in this Article
VI.
4.12
Continuation
of O&D Indemnification.
FNG
agrees that all rights to indemnification or exculpation now existing in favor
of the directors and officers of EBI as provided in EBI’s charters, bylaws,
indemnification agreements or otherwise in effect as of the date hereof with
respect to matters occurring prior to the Closing shall, to the greatest extent
permitted by Nevada law and the organizational documents of FNG as in effect
prior to Closing, survive the Transaction and shall continue in full force
and
effect for that period of time during which Xxxx X. Xxxx shall serve as a member
of the FNG Board of Directors. If FNG or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) shall transfer all or substantially all of its properties
and
assets to any individual, corporation or other entity, then, and in each such
case, FNG shall use its commercially reasonable efforts to cause such successor
and assigns of FNG to assume the obligations set forth in this
Section.
Page 10
of 43 |
Share Exchange Agreement
| Final Execution Copy
4.13
Access
to Information.
Upon
reasonable request by EBI, and prior to the Closing of the transaction
contemplated herein, FNG shall make one or more executive officers available
in
a commercially reasonable manner, to EBI and its representatives, counsel,
accountants and agents to discuss FNG operations, and FNG shall provide to
EBI
and its representatives, at their request, copies of all filings made with
the
SEC between the date hereof and the Closing. EBI covenants and agrees that
it
and its representatives, counsel, accountants and agents will hold in strict
confidence all documents and information concerning FNG or any of its
subsidiaries so obtained (except to the extent that such documents or
information are a matter of public record or require disclosure in any
application required to be filed with any governmental or regulatory agency
to
obtain the approvals and consents required to effect the transactions
contemplated hereby), and if the transactions contemplated herein are not
consummated, such confidence shall be maintained and all such documents shall
be
returned to FNG.
4.14
FNG
Board Position.
FNG
hereby agrees to elect Xxxx X. Xxxx to serve as a member of the Board of
Directors of FNG for a term of at least one (1) year from and after the Closing.
FNG further agrees to take no action to remove Xx. Xxxx as a director during
such period unless such removal is for cause or results from Xx. Xxxx’x
inability to serve by reason of his physical or mental illness or
incapacity.
4.15
Governmental
Authorizations and Third Party Consents.
All
approvals, authorizations, consents, licenses or orders of any governmental
agency, whether federal, state or local, required for the acquisition of the
EBI
Shares by FNG and the issuance of the FNG Shares to the Shareholders have been
obtained and are in full force and effect. There are no consents,
authorizations, approvals or waivers of any third party necessary or appropriate
for the transfer to FNG of the EBI Shares and consummation of the transactions
contemplated by this Agreement that FNG is required to obtain, that has not
been
obtained.
4.16
Disclosure
and Completeness of Statements.
No
representation or warranty made by FNG in this Agreement, contains any statement
of a material fact known to be untrue or omits to state a material fact which
is
necessary in order to make the statement contained herein or therein not
misleading.
4.17 No
Knowledge of Inaccuracies.
FNG
represents and warrants that as of the date of this Agreement, it has no
knowledge that any of the representations made by the EBI or the Shareholders
contained herein are inaccurate.
ARTICLE
V
Covenants
of EBI and Shareholders
5.1
Affirmative
Covenants.
Between
the date hereof and the Closing, EBI shall, and the Shareholders shall cause
EBI
to:
(a)
Continue to operate the Assets and EBI’s business (i) in the usual and ordinary
course, and (ii) in conformity with all applicable laws, ordinances,
regulations, rules and orders;
(b)
Use
commercially reasonable efforts to preserve the business of EBI and maintain
the
Assets intact, and to preserve the good will and business of EBI’s customers,
suppliers and others having business relations with EBI, and continue to conduct
the financial operations of EBI, including its credit and collection policies,
with the same effort, to the same extent and in the same manner as in the prior
conduct of the business of EBI;
(c)
Provide FNG and representatives of FNG with reasonable access during normal
business hours to the properties, titles, contracts, books, files, logs, records
and affairs of EBI and furnish such additional information concerning EBI,
its
business or the Assets as FNG may from time to time reasonably request, provided
that such access and requests do not unreasonably interfere with EBI’s business
and operations;
Page 11
of 43 | Share Exchange Agreement
| Final Execution Copy
(d)
If
applicable, use commercially reasonable efforts to procure the consent of any
third parties necessary for the assignment to FNG of any contract, lease,
agreement or intellectual property interest to be conveyed hereunder, such
consents to include, without limitation, the consent of EBI’s software vendor,
if any, to the acquisition by FNG of EBI and to the potential assignment to
FNG
of all interest in EBI’s software or other intellectual property, to the extent
possible, without the requirement for further payment by FNG for such software
and intellectual property;
(e)
Exercise commercially reasonable efforts to continue EBI’s relationship with its
software developer;
(f)
Pay
all Taxes as they become due;
(g)
To
encourage all employees to continue their employment with EBI and not terminate
any employees without the prior written consent of FNG; and
(h)
between
the date of this Agreement and for a period of five years following the Closing
Date, EBI shall maintain in confidence, and cause
the
directors, officers, employees, agents, and advisors of EBI to maintain in
confidence, written, oral, or other information obtained in confidence (“FNG
Confidential Information”) from FNG in connection with this Agreement or the
transactions contemplated hereby, unless (a) such information is already known
to EBI or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of EBI, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transaction
contemplated by this Agreement, (c) the furnishing or use of such information
is
required by legal proceedings provided that the party making disclosure provides
reasonable advance notice to the other party, or (d) the furnishing of such
information is to
professional advisors under a duty of confidentiality, as necessary to
consummate the transactions contemplated by this Agreement. The Shareholders
and
EBI agree that the FNG Confidential Information will be used solely for the
purposes of evaluating and consummating this transaction and that such
information will not be used or disclosed other than in furtherance of such
purpose under the terms of this Agreement.
In the
event that this Agreement is terminated, EBI shall promptly return any
Confidential Information belonging to FNG.
5.2
Negative
Covenants.
(a)
Between the date hereof and the Closing, EBI shall not, and the Shareholders
shall cause EBI not to, without the prior written consent of FNG:
(1)
enter
into any agreements with employees to increase the compensation or bonuses
payable to or to become payable by EBI to any of the employees or effect any
changes in the management, personnel policies or employee benefits, except
in
accordance with the existing employment practices unless such can be
accomplished at EBI’s sole cost and expense ;
(2)
except in the ordinary course of business consistent with past practice, allow
the working capital, inventory, payables or receivables of EBI to change in
any
material respect;
(3)
create, assume or permit to exist any mortgage or pledge, lien or encumbrance
(other than a Permitted Lien or other obligations listed on any Disclosure
Schedule) of or on any of the Assets, whether now owned or hereafter acquired
except in the ordinary course of business;
(4)
sell,
assign, lease or otherwise transfer or dispose of any of the Assets except
in
the ordinary course of business;
(5)
acquire any assets not paid for in cash in full prior to the Closing Date except
in the ordinary of business; or
(6)
make
any material changes in the Assets or its business.
(b)
As a
material inducement to FNG entering into this Agreement and its acquisition
of
EBI, the Shareholders
agree
that for a period of two years following the Closing Date, without the prior
written consent of FNG, none of the Shareholders will, as a principal, agent,
or
employee, or through any person, company, partnership, association or other
entity:
(1)
Employ, engage
or seek
to employ or engage any person designated on Disclosure Schedule 3.10 who is
employed by EBI or FNG; or
Page
12 of 43 | Share Exchange Agreement |
Final Execution Copy
(2)
Cause
or attempt to cause any supplier, customer, client, employee, consultant,
officer, director or person having a business relationship with EBI or FNG
to
terminate
or
materially reduce its relationship with either EBI or FNG.
(3)
except for Xxxx X. Xxxx and Xxxxxxx X. Xxxxxx, participate or engage in (other
than through the ownership of 5% or less of any class of securities registered
under the Securities Exchange Act of 1934, as amended) or assist, financially
or
otherwise any person who participates or who is engaged in, any business,
wherever located, that competes with the business or activities EBI, including
but not limited to the activities of internet marketing software development,
consulting or licensing and other usual and customary internet marketing
activities or any activities engaged in by EBI on the Closing Date.
The
parties recognize that the law and public policies of the various states of
the
United States may differ as to the validity and enforceability of covenants
similar to those set forth in this Section 5.2 (c). It is the intention of
the
parties that the provisions of this Section 5.2 (c) be enforced to the fullest
extent permissible under the law and policies of each jurisdiction in which
enforcement may be sought, and that the unenforceability (or the modification
to
conform to such laws or policies) of any provisions of this section will not
render unenforceable, or impair, the remainder of the provisions of this
section. The parties further agree that any remedy at law for any violation
of
the provisions of this section would be inadequate, and the Shareholders hereby
consent to the granting by any court of an injunction or other equitable relief
without the necessity of actual monetary loss being provided, in order that
the
breach or threatened breach of such provisions may be effectively restrained.
ARTICLE
VI
Covenant
of FNG
Between
the date of this Agreement and for a period of either five years or until the
Closing, whichever occurs first, FNG shall maintain in confidence, and
cause
the
directors, officers, employees, agents, and advisors of FNG to maintain in
confidence, any written, oral, or other information obtained in confidence
(“EBI
Confidential Information”) from EBI in connection with this Agreement or the
transactions contemplated hereby, unless (a) such information is already known
to EBI or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of FNG, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the transaction
contemplated by this Agreement, (c) the furnishing or use of such information
is
required by legal proceedings provided that the party making disclosure provides
reasonable advance notice to the other party, or (d) the furnishing of such
information is to
professional advisors under a duty of confidentiality, as necessary to
consummate the transactions contemplated by this Agreement. FNG agrees that
the
EBI Confidential Information will be used solely for the purposes of evaluating
and consummating this transaction and that such information will not be used
or
disclosed other than in furtherance of such purpose under the terms of this
Agreement.
In the
event that this Agreement is terminated, FNG shall promptly return any EBI
Confidential Information belonging to EBI.
ARTICLE
VII
Conditions
to Obligations of EBI and the Shareholders
The
obligation of EBI and the Shareholders to consummate the transactions
contemplated hereby is subject to the fulfillment prior to and at the Closing
of
each of the following conditions:
7.1
The
representations and warranties of FNG contained in this Agreement shall be
true
and correct in all material respects at and as of the Closing Date as though
such representations and warranties were made at and as of such
time;
Page
13 of 43 | Share Exchange Agreement |
Final Execution Copy
7.2
FNG
shall have in all material respects performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by it prior to and at the Closing Date;
7.3
All
necessary approvals and consents to issuance of the FNG shares shall have been
obtained;
7.4
FNG
shall have made all deliveries to EBI as set forth within this Agreement;
and
7.5
FNG’s
board of directors shall have adopted such resolutions as may be necessary
for
the board of directors to amend the number of directors of FNG to five, and
to
appoint Hall to such board of directors effective upon Closing, and shall,
upon
the Closing submit such actions to the stockholders of FNG for such approval
as
may be required of the stockholders;
7.6
No
material adverse change in the business, operations,
properties, prospects, assets, or condition of FNG will have taken place since
the date of the FNG Financial Statements, and no event will have occurred or
circumstance arise that may result in such a material adverse
change;
7.7
EBI
and the Shareholders shall have completed to their sole satisfaction a due
diligence investigation of FNG.
ARTICLE
VIII
Conditions
to Obligations of FNG
The
obligation of FNG to consummate the transactions contemplated hereby is subject
to the fulfillment prior to and at the Closing of each of the following
conditions:
8.1
The
representations and warranties of EBI contained in this Agreement shall be
true
and correct in all material respects at and as of the Closing Date as though
such representations and warranties were made at and as of such
time;
8.2
EBI
shall have in all material respects performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by it prior to and at the Closing Date;
8.3
All
necessary approvals and consents to the assignment to exchange of the Shares
for
the FNG shares shall have been obtained;
8.4
EBI
shall have entered into an agreement with its software developer in form and
substance satisfactory to FNG in its sole discretion.
8.5
EBI
shall have obtained consent to the change of control of EBI for any material
contract that requires such consent;
8.6
EBI
shall have made all deliveries to FNG set forth in the Agreement;
8.7
No
material adverse change in the business, operations,
properties, prospects, assets, or condition of EBI will have taken place since
the date of the EBI Financial Statements, and no event will have occurred or
circumstance arise that may result in such a material adverse change;
8.8
FNG
will be satisfied in all material respects with its due diligence review of
EBI.
Page 14
of 43 | Share Exchange Agreement
| Final Execution Copy
8.9
EBI
and
the Shareholders further agree and acknowledge that, effective as of the closing
of the transaction contemplated by this Agreement, Xxxxxx and Xxxx will have
contributed $1,929.26 and $11,843.30 in cash to the Company which amounts shall
be used for general working capital by EBI.
ARTICLE
VIII.A
Closing
and Closing Deliveries
8.1.A
Closing.
The
Closing shall be held at 10:00 a.m. MST on May ___, 2008 or on such later date
as the parties may agree (the “Closing Date”) via simultaneous facsimile
execution and immediate follow up with original documents via or as otherwise
agreed to by the parties to this Agreement.
8.2.A
Deliveries
by EBI and the Shareholders.
At the
Closing, EBI shall execute and deliver or cause to be delivered to FNG in form
and substance reasonably satisfactory to FNG and its counsel:
(a)
Instruments of Transfer signed by each of the Shareholders conveying to FNG
all
of the Shares, together with all original certificates representing the Shares,
in each case in proper form for transfer, with appropriate instructions or
agreements from the Shareholders to allow the Shares to be legally and
beneficially transferred into the name of FNG. Except for those Permitted Liens
and liens set forth or the Disclosure Schedule, FNG will receive evidence to
its
satisfaction that any liens or encumbrances on the Shares have been released
as
of the Closing Date.
(b)
signed employment agreements between FNG, on the one hand and Xxxx Xxxxxx,
Xxxxx
Xxxxxxx and Xxxx Xxxxxxx in form and substance mutually satisfactory to FNG
and
such employees in Form as provided under Exhibit A (collectively, the
“Employment Agreements”);
(c)
a
certificate of the Secretary of EBI, dated the Closing Date, containing (a)
a
copy of EBI’s articles of incorporation, as amended through the Closing Date
certified by the Department of Commerce, Division of Corporations and Commercial
Code of the State of Utah (b) a true and correct copy of EBI’s bylaws, as
amended and (c) true and correct copies of resolutions of EBI’s board of
directors and stockholders authorizing this Agreement and the transactions
contemplated herein; and (d) a certification of the incumbency and signatures
of
the officers of EBI executing this Agreement and the Closing Documents executed
by EBI on the Closing Date as contemplated by this Agreement;
(e)
such
other assignments, bills of sale or instruments of transfer, certificates of
officers and opinions of counsel as reasonably may be requested by FNG to
consummate the transactions contemplated by this Agreement;
(f)
the
deliver of a detail list of all historical clients of EBI, dates active, contact
information and the status of the business relationship; and
(g)
unless as otherwise provided for under Disclosure Schedule 3.7, at the Closing
EBI will not have any other liabilities, claims outstanding. FNG confirms that
it has received written confirmation that the following have been paid: (i)
Xxxxx Fargo Credit Line, (ii) America First Credit, and (iii) America First
Visa.
8.3.A
Deliveries
by FNG.
On the
Closing Date, FNG shall execute and deliver or cause to be delivered to EBI,
in
form and substance reasonably satisfactory to EBI and its counsel:
(a)
The
Purchase Price as set forth in Section 2 in the form of stock certificates
duly
issued by FNG in the name of each of the Shareholders in the amounts set forth
opposite their names in Section 2.2;
(b)
Signed Employment Agreements in the Form as provided under Exhibit
A;
(c)
a
certificate of an FNG’s Secretary, dated the Closing Date, containing; (a) a
copy of FNG’s certificate of incorporation, as amended through the Closing Date
certified by the Secretary of State of the State of Nevada, (b) a true and
correct copy of FNG’s bylaws, as amended and (c) true and correct copies of
resolutions of FNG’s board of directors and stockholders authorizing this
Agreement and the transactions contemplated herein; and (d) a certification
of
the incumbency and signatures of the officers of FNG executing this Agreement
and the Closing Documents executed by FNG on the Closing Date as contemplated
by
this Agreement; and
Page 15
of 43 | Share Exchange Agreement
| Final Execution Copy
ARTICLE
IX
Survival
of Representations
and
Warranties and Indemnification
9.1
Representations
and Warranties.
All
representations and warranties contained in this Agreement shall survive the
Closing Date for a period of one year.
9.2
Indemnification
by EBI and the Shareholders.
EBI and
the Shareholders, individually, jointly and severally hereby agree to indemnify,
defend and hold harmless FNG, its successors and assigns from and
against:
(a)
any
and all claims, demands, liabilities, obligations, actions, suits, proceedings,
losses, damages, costs, expenses, assessments, judgments, recoveries, and
deficiencies, including interest, penalties and reasonable attorneys’ fees, of
every kind and descriptions, contingent or otherwise (the foregoing, hereinafter
collectively referred to as “Damages”); occasioned by, arising out of or
resulting from the operation of the EBI’s business before the Closing,
including, but not limited to, any and all claims, liabilities and obligations
arising or required to be performed before the Closing under any contract,
agreement, lease or license assumed by FNG hereunder;
(b)
any
and all Dama ges occasioned by, arising out of or resulting from any
misrepresentation, breach of warranty or covenant, or default or non-fulfillment
of any agreement on the part of EBI under this Agreement set forth in Section
3,
or from any certificate, agreement, annex, schedule or other instrument
furnished to FNG pursuant to this Agreement or in connection with any of the
transactions contemplated hereby.
(c)
Notwithstanding any other provision in this Agreement to the contrary, no
Shareholders shall be liable for the inability or failure of any other
Shareholder to deliver the shares of EBI stock held by such other Shareholder
to
FNG free and clear of all liens and encumbrances. Except, in the event that
not
all Shareholders are willing or otherwise capable of transferring their shares
as described in this Agreement, and at its sole discretion, FNG may cancel,
rescind or terminate this Agreement without further obligation to EBI or any
Shareholder;
(d)
Except in the case of fraud or intentional misrepresentation or willful
misconduct FNG hereby agrees that its sole recourse for any indemnification
claims made under this Article 9 shall be the FNG shares issued to Shareholders
as the purchase price. The indemnification obligations of Hall and Xxxxxx shall
in no case exceed the value (at the time indemnification claims are made) of
the
FNG shares issued to them in connection with the Transactions contemplated
herein. Except in the case of fraud or intentional misrepresentation or willful
misconduct, the indemnification obligation of the other Shareholders shall
not
exceed the value (at the time indemnification claims are made) of the FNG shares
issued to such Shareholder in connection with the Transactions contemplated
herein
(e)
FNG
shall notify Shareholder’s Representative (as defined below) in writing within
thirty (30) days of the date FNG becomes aware of any event which in its opinion
entitle or may entitle it to indemnification under this Section 9.2; provided,
however, that failure to give such notice within such thirty (30) day period
shall not affect the liability of EBI or the Shareholders hereunder, except
to
the extent FNG is actually prejudiced thereby. With respect to threatened or
asserted claims of third parties, the Shareholders shall promptly defend such
claim by counsel of the Shareholder’s Representatives own choosing;
(f)
If
the Shareholders within a reasonable time after notice of a claim fails to
defend FNG, FNG shall be entitled to undertake the defense, compromise or
settlement of such claim at the expense of and for the account and risk of
the
Shareholders. Anything in this subsection to the contrary notwithstanding,
(i)
if there is a reasonable probability that a claim may materially and adversely
affect FNG, FNG shall have the right, at its own cost and expense to defend,
compromise or settle such claim; (ii) the Shareholders shall not, without FNG’s
written consent, settle or compromise any claim or consent to any entry of
judgment which does not include as an unconditional term thereof, the giving
by
the claimant or the plaintiff to FNG of a release from all liability in respect
to such claim;
(g)
Notwithstanding any of the foregoing, the Shareholders and EBI shall not have
any liability to indemnify FNG for any claim as to which FNG has not notified
the Shareholder’s Representatives within 18 months of the earlier of the Closing
Date or discovery of the facts or circumstances giving rise to the
claim.
Page 16
of 43 | Share Exchange Agreement
| Final Execution Copy
9.3
Indemnification
by FNG.
FNG
hereby agrees to indemnify, defend and hold harmless the Shareholders and their
successors and assigns from and against:
(a)
any
and all Damages occasioned by, arising out of or resulting from any
misrepresentation, breach of warranty or covenant, or default or non-fulfillment
of any agreement on the part of FNG under this Agreement, or from any
certificate, agreement, annex, schedule or other instrument furnished by FNG
to
EBI and/or the Shareholders pursuant to this Agreement or in connection with
any
of the transactions contemplated hereby, including, damages that may arise
from
the non payment of the VW Passat Lease.
(b)
the
Shareholder making such indemnity claim shall notify FNG in writing within
thirty (30) days of the date such Shareholder becomes aware of any event which
in his opinion entitles or may entitle him to indemnification under this Section
9.3; provided, however, that failure to give such notice within such thirty
(30)
day period shall not affect the liability of FNG hereunder, except to the extent
that FNG is actually prejudiced thereby. With respect to threatened or asserted
claims of third parties, FNG shall promptly defend such claim by counsel of
its
own choosing.
(c)
If
FNG within a reasonable time after notice of a claim fails to defend such
Shareholder, such Shareholder shall be entitled to undertake the defense,
compromise or settlement of such claim at the expense of and for the account
and
risk of FNG. Anything in this subsection to the contrary notwithstanding, if
there is a reasonable probability that a claim may materially and adversely
affect a Shareholder, such Shareholder shall have the right, at its own cost
and
expense to defend, compromise or settle such claim. Notwithstanding any
provision in this Agreement to the contrary, FNG shall not, without the
Shareholder’s Representative’s written consent, settle or compromise any claim
or consent to any entry of judgment which does not include as an unconditional
term thereof, the giving by the claimant or the plaintiff to FNG of a release
from all liability of all Shareholders in respect to such claim.
(d)
Notwithstanding any of the foregoing, FNG shall not have any liability to
indemnify a Shareholder for any claim as to which such Shareholder has not
notified FNG within one year of the Closing Date; provided, however, that such
limitation shall not apply to any matter pertaining to the issuance of the
FNG
shares to the representative Shareholder and title thereto or payment of the
VW
Passat Lease.
9.4
Limitations.
No
Shareholder shall have any liability to FNG under Article IX where any officer,
director, employee or representative of FNG had actual knowledge before closing
of a breach of a representation or warranty of EBI or the Shareholders and
where
FNG did not inform Xxxxxxx Xxxxxx in writing prior to Closing of such
breach.
ARTICLE
X
TERMINATION
10.1
Termination.
This
Agreement may be terminated at any time prior to the Closing Date
by:
(a) mutual
agreement of the Shareholders and FNG;
(b)
the
Shareholders, if there has been a breach by FNG of any material representation,
warranty, covenant or agreement set forth in this Agreement on the part of
FNG
that is not cured, to the reasonable satisfaction of the Shareholders, within
10
business days after notice of such breach is given
by the
Shareholders (except that no cure period will be provided for a breach by FNG
that by its nature cannot be cured);
(c)
FNG,
if there has been a breach by the any of the Shareholders or EBI of any material
representation, warranty, covenant or agreement set forth in this Agreement
on
the part of the Shareholders or EBI that is not cured by the breaching party,
to
the reasonable satisfaction of FNG, within 10 business days after notice of
such
breach is given by FNG (except that no cure period will be provided for a breach
by the Shareholders or EBI that by its nature cannot be cured);
(d)
the
Shareholders or FNG, upon notice to the other, if any permanent injunction
or
other order of a governmental entity of competent authority preventing the
consummation of the transactions contemplated by this Agreement has become
final
and non-appealable; or
(e)
either Shareholders of FNG if this transaction has not closed prior to June
30,
2008.
Page 17
of 43 | Share Exchange Agreement
| Final Execution Copy
10.2 Effect
of Termination.
In the
event of the termination of this Agreement as provided in Section 10.1, this
Agreement will be of no further force or effect; provided, however, that no
termination of this Agreement will relieve any party of liability for any breach
of this Agreement that is based on a wrongful refusal or failure to perform
any
obligations or for any covenant that by its nature survives termination of
this
Agreement.
ARTICLE
XI
Shareholders
Representatives
11.1 Designation
of Shareholders Representative.
Xxxxxxx
X. Xxxxxx (the “Shareholders Representative”) is hereby designated by each of
the Shareholders to serve as the representative of the Shareholders with respect
to the matters expressly set forth in this Agreement to be performed by the
Shareholders Representative.
11.2 Authority.
Each of
the Shareholders, by the execution of this Agreement, hereby irrevocably
appoints the Shareholders Representative as the agent, proxy and
attorney-in-fact for such Shareholder for all purposes of this Agreement
(including the full power and authority on such Shareholder’s behalf (i) to
consummate the transactions contemplated herein; (ii) to pay such Shareholder's
expenses incurred in connection with the negotiation and performance of this
Agreement (whether incurred on or after the date hereof); (iii) to disburse
any
funds received hereunder to such Shareholder and each other Shareholder; (iv)
to
endorse and deliver any certificates or instruments representing the EBI Stock,
to deliver any certificates representing the shares of EBI Stock, and to execute
such further instruments of assignment as FNG shall reasonably request; (v)
to
execute and deliver on behalf of such Shareholder any amendment or waiver
hereto; (vi) to take all other actions to be taken by or on behalf of such
Shareholder in connection herewith; (vii) to do each and every act and exercise
any and all rights which such Shareholder or the Shareholders, as applicable,
collectively are permitted or required to do or exercise under this Agreement;
(viii) to resolve indemnification claims; and (ix) to refrain from taking any
action that the Shareholders Representative is otherwise authorized hereunder
to
take. Each of the Shareholders agrees that such agency and proxy are coupled
with an interest, are therefore irrevocable without the consent of the
Shareholders Representative and shall survive the death, incapacity, bankruptcy,
dissolution or liquidation of any Shareholder. All decisions and actions by
the
Shareholders Representative (to the extent authorized by this Agreement) shall
be binding upon all of the Shareholders, and no Shareholder shall have the
right
to object, dissent, protest or otherwise contest the same.
11.3 Successor
Shareholders Representative.
If the
Shareholders Representative dies, resigns as Shareholders Representative,
becomes disabled or otherwise becomes unable to fulfill his responsibilities
hereunder, the Shareholders holding at least two-thirds of the outstanding
EBI
Stock sold to the FNG hereunder shall, within twenty (20) days of such death,
disability or resignation, appoint a successor to the Shareholders
Representative and immediately thereafter notify the FNG in writing of the
identity of the successor Shareholders Representative. Any such successor
Shareholders Representative shall succeed to all of the rights and obligations
of the Shareholders Representative hereunder.
ARTICLE
XII
Investment
Statements
12.1 Investment
Intent.
Each
Shareholder acknowledges that the FNG Common Stock being issued to such
Shareholder (including any and all shares of FNG Common Stock issued as
Contingent Consideration) are not registered under the Securities Act or the
securities laws of the United States or any state therein and that the
Shareholder is acquiring such FNG Shares for such Shareholder’s own account, not
as a nominee or agent, for investment, and not with a view to the distribution
or resale thereof. Such Shareholder is a sophisticated investor with (either
alone or with his, her or its Shareholder Representative, if any) such knowledge
and experience in financial and business matters that such Shareholder (either
alone or with his, her or its Shareholder Representative, if any), is capable
of
evaluating the risks and merits of such Shareholder’s investment in the FNG
Shares and has the capacity to protect such Shareholder’s own interests. Such
Shareholder is in a financial position to hold the FNG Shares for an indefinite
period of time and is able to bear the economic risk and withstand a complete
loss of his, her or its investment in the FNG Shares. Such Shareholder
acknowledges that the Buyer has given him, her or it (and such Shareholder’s
Advisor, if any) the opportunity to ask questions of and receive answers from,
the officers and management employees of the Buyer and its subsidiaries, and
to
obtain additional information about the assets, liabilities, prospects,
indebtedness, business and financial condition of the Buyer and its
subsidiaries, in order to evaluate the investment in the FNG Shares contemplated
hereby, and such Shareholder (and such Shareholder’s Advisor, if any) has
obtained, in the judgment of such Shareholder, sufficient information from
the
Buyer to evaluate the merits and risks of such investment.
Page 18
of 43 | Share Exchange Agreement
| Final Execution Copy
12.2 Restricted
Securities.
Each
Shareholder understands that the FNG Shares are being issued to such
Shareholder, are characterized as “restricted securities” under United States
securities laws inasmuch as they are being acquired from the Buyer in a
transaction not involving a public offering, and that under such laws and
applicable regulations such securities may not be resold without registration
under the Securities Act of 1933 unless an exemption from registration
thereunder is available. Such Shareholder represents that it is familiar with
Rule 144 and Regulation S, both promulgated under the Securities Act as
presently in effect, and understands the resale limitations imposed thereby
and
by the Securities Act.
12.3 Residence.
The
jurisdiction of organization of such Shareholder that is not a natural person
and the residence of such Shareholder that is a natural person are set forth
on
Disclosure
Schedule 12.3
hereto.
12.4 Accredited
Status.
Such
Shareholder, if listed on Disclosure
Schedule 12.3
under
the heading “Accredited Investors,” is an “accredited investor” as defined in
Rule 501(a) of Regulation D under the Securities Act. Such Shareholder, if
listed on Disclosure
Schedule 12.3
under
the heading “Non-Accredited Investors,” is not an “accredited investor” as
defined in Rule 501(a) of Regulation D under the Securities Act.
12.5 Shareholder
Investment Experience.
Except
as set forth on Disclosure
Schedule 12.5,
each
Shareholder, if any, listed on Disclosure
Schedule 12.5 believes
that he, she or it has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an investment
in
the FNG Shares, and he, she or it therefore does not plan to use the services
of
any Shareholder Advisor(as such term is defined in Rule 501(h) of Regulation
D
promulgated under the Securities Act) in connection with evaluating such merits
and risks. As evidence of his, her or its knowledge and experience in these
matters, such Shareholder agrees to execute an Offeree Questionnaire in a form
typical for transactions of such type and acceptable to Buyer in its sole
discretion. Shareholder understands that based upon Buyer’s review of such
information Buyer may differ with such belief, and may require, as a condition
to offering Shareholder an opportunity to invest in the FNG Shares, that
Shareholder engage the services of a Shareholder Advisor to advise him, her
or
it in a review of the transactions contemplated hereby.
ARTICLE
XIII
Miscellaneous
13.1
Brokerage
Fees.
The
parties hereto hereby represent and warrant to one another that there has been
no finder, broker or consultant involved in the negotiations leading up to
the
execution of this Agreement and no finder’s, broker’s or consultant’s fees or
commissions are payable in connection with the transactions contemplated
hereby.
13.2
Professional
Fees and Expenses.
Each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution and performance of this Agreement, including, without
limitation, all fees and expense of counsel, accountants, agents and
representatives. FNG acknowledges that a maximum of $10,000 in audit and
accounting fees are being paid by EBI for the audit necessary and required
under
this Agreement; such payment to be made upon invoice from the designated auditor
but in any event prior to the release of the remaining shares under the Escrow
Arrangement as set forth in Section 2.3. FNG agrees to pay any and all
reasonable fees and expenses for the conduct and performance of the audit which
may be above that amount.
Page 19
of 43 | Share Exchange Agreement
| Final Execution Copy
13.3
Notices.
(a) All
notices, demands, and requests required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed duly given
of sent by registered or certified mail, postage prepaid, addressed as
follows:
If
to EBI
to:
Elemental
Business, Inc.
E-Station
0000
Xxxxx Xxxxxx
Xxxxx,
Xxxx 00000
With
a
copy to:
Xxx
Xxxxxxx & Xxxxxxx P.C.
00
Xxxxx
Xxxxx Xx., Xxxxx 0000
Xxxx
Xxxx
Xxxx, Xxxx 00000
Attention:
R. Xxxx Xxxxxx, Esq.
If
to
FNG, to:
Future
Now Group, Inc.
00
Xxxxxxx Xx
Xxxxxxxxx,
XX. 00000
Attention:
Xxxxxxx X. Xxxxxxx
With
a
copy to:
Coles,
Xxxxxxx & Xxxxxx, LLC
0000
Xxxx
Xxxx
Xxxxxxxxx,
Xxxxxxxxxxx 00000
Attention:
Xxxx X. Xxxxxx, Esq.
If
to the
Shareholders, to:
Xxxxxxx
X. Xxxxxx
0000
Xxxxx Xxxxxxxx Xxxxx
Xxxxx,
XX
00000
or
any
such other addresses as the parties may from time to time designate in writing.
Notice shall be deemed given (i) when received by overnight mail or recognized
overnight courier, or (ii) four days after being placed in the United States
mail.
13.4
Benefit
and Binding Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns. This Agreement shall not be
assigned without the prior written consent of the other party
hereto.
13.5.
Exhibits
and Schedules.
All
Exhibits and Schedules attached to this Agreement shall be deemed a part of
and
incorporated into this Agreement as if set out in full wherever reference is
made thereto in this Agreement.
13.6
Governing
Law.
This
Agreement shall be governed, construed and enforced in accordance with the
law
of Utah.
Page
20 of 43 | Share Exchange Agreement |
Final Execution Copy
13.7.
Counterparts.
This
Agreement may be executed in any number of counterparts. Each such counterpart
shall be deemed an original, and it shall not be necessary in making proof
of
this Agreement to account for or produce more than one of such
counterparts.
13.8
Headings.
The
heading of the sections of this Agreement are included for ease of reference
only and shall not be deemed to be a part of this Agreement or used in its
interpretation or construction.
13.9
Entire
Agreement.
This
Agreement and all exhibits and schedules hereto and all agreements to be
delivered by the parties pursuant hereto, represent the entire understanding
and
agreement between the parties with respect to the subject matter hereof,
supersede all prior negotiations between the parties, and can be amended,
supplemented or changed only by an agreement in writing which makes specific
reference to this Agreement and which is signed by both of the
parties.
13.10
Severability.
If any
part, term or provision of this Agreement is held to be unenforceable or
prohibited by law, the rights or obligation of the parties shall be construed
and enforced with that part, term of provision limited so as to make it
enforceable to the greatest extent allowed by law, or, if it is totally
unenforceable, as if this Agreement contained a provision which as closely
as
possible resembles the non-enforceable provision without itself being
unenforceable.
13.11 Schedules
and Exhibits.
The
following schedules and exhibits are attached to this Agreement and incorporated
herein.
|
Disclosure
Schedule 1(l)
| |
Licenses
|
|
Disclosure
Schedule 2.3
| |
EBI
Original Stock Ownership
|
|
Disclosure
Schedule 3.2
| |
Transfer
Restrictions
|
|
Disclosure
Schedule 3.4
| |
Assets
|
|
Disclosure
Schedule 3.5
| |
Change
of Control; Noncontravention
|
|
Disclosure
Schedule 3.6
| |
EBI
Financial Statements
|
|
Disclosure
Schedule 3.7
| |
Undisclosed
and Assumed Liabilities
|
|
Disclosure
Schedule 3.9
| |
Material
Contracts and Transactions
|
|
Disclosure
Schedule 3.0
| |
Labor
and Employment
|
|
Disclosure
Schedule 3.11
| |
Real
Property
|
|
Disclosure
Schedule 3.12
| |
Actions
& Proceedings
|
|
Disclosure
Schedule 3.13
| |
Governmental
Authorities and Third Party Consents
|
|
Disclosure
Schedule 3.14
| |
Inventions
|
|
Disclosure
Schedule 3.16
| |
Bank
Accounts
|
|
Disclosure
Schedule 3.17
| |
Absence
of Changes and Events
|
|
Disclosure
Schedule 3.18
| |
Personal
Property
|
|
Disclosure
Schedule 3.19
| |
Related
Entities
|
|
Disclosure
Schedule 12.3
| |
Residence
|
|
Disclosure
Schedule 12.5
| |
Shareholder
Investment Experience
|
Exhibit
A Form
of
Employment Agreement
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the
date first set forth above by their duly authorized
representatives.
Page
21 of
43 | Share Exchange Agreement | Final Execution
Copy
|
FUTURE
NOW GROUP, INC.
| |
ELEMENTAL
BUSINESS, INC.
|
| | | | | |
|
By:
|
/s/
Xxxxxxx Xxxxxxxxx
| |
By:
|
/s/
Xxxx Xxxxxx
|
|
Name:
Xxxxxxx Xxxxxxxxx
| |
Name:
Xxxx Xxxxxx
|
|
Title:
President and CEO
| |
Title:
CEO
|
| | | |
|
/s/
Xxxx Xxxxxx
| |
/s/
Xxxxx Xxxxxxx
|
|
Xxxx
Xxxxxx
| |
Xxxxx
Xxxxxxx
|
| | | |
|
/s/
Xxxx Xxxxxxx
| |
/s/
Xxxx Xxxx
|
|
Xxxx
Xxxxxxx
| |
Xxxx
Xxxx
|
| | | |
|
/s/
Xxxxxxx X. Xxxxxx
| | |
|
Xxxxxxx
X. Xxxxxx
| | |
Page
22 of
43 | Share Exchange Agreement | Final Execution
Copy
Disclosure
Schedule 1.(l) Licenses
EBI
has
the following licenses. Each of these licenses provide enhanced functionality
within the Elitics toolset:
| |
-
|
FCK
Editor. Used by Elitics to provide enhanced email editor
functionality.
|
| |
o
|
License
fee was one-time only and has been
paid.
|
| |
-
|
ABC
PDF. Used by Elitics to provide ability to export reports to
PDF.
|
| |
o
|
License
fee was one-time only and has been
paid.
|
| |
-
|
Fusion
Charts. Used by Elitics to provide enhanced graphical
reports.
|
| |
o
|
License
fee was one-time only and has been
paid.
|
Page
23 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 2.3 Share Exchange
| | |
Shares
of
| |
Percentage
| |
FNG Shares to
| |
|
Shareholder
| |
Common Stock
| |
Owned
| |
be
Received
| |
|
Xxxxx
Xxxxxx
| | |
1,250
| | |
4.54
|
%
| |
168,121
| |
|
Xxxx
Xxxx
| | |
7,674
| | |
27.88
|
%
| |
1,031,586
| |
|
Xxxxxxx
Xxxxxxx
| | |
6,203
| | |
22.53
|
%
| |
833,431
| |
|
Xxxxx
Xxxxxxx
| | |
6,203
| | |
22.53
|
%
| |
833,431
| |
|
Xxxx
Xxxxxx
| | |
6,203
| | |
22.53
|
%
| |
833,431
| |
|
Totals
| | |
27,533
| | |
100
|
%
| |
3,700,000
| |
Page
24 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.2 Transfer
Restrictions
None
as
of the closing. Prior to the closing, EBI and/or the Shareholders were parties
to the following agreements which may be responsive to this Disclosure
Schedule.
| |
1.
|
The
Company is a party to an Investment Agreement dated July 15, 2005
with
Xxxx X. Xxxx that grants Xx. Xxxx a right of co-sale. Such Agreement
will
be terminated at Closing.
|
| |
2.
|
The
Company is a party to an Investment Agreement dated June 28, 2005
with
Xxxxxxx X. Xxxxxx that grants Xx. Xxxxxx a right of co-sale. Such
Agreement will be terminated at
Closing.
|
| |
3.
|
The
Company and all of its Shareholders are parties to a Shareholders
Agreement dated July 15, 2005, that restricts the rights of the
Shareholders to transfer their Shares. Such Agreement will be terminated
at Closing.
|
Page
25 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.4 Assets
| |
-
|
Elitics
Software Application and
Methodology
|
o
Independent
Contractor Agreement dated October 14, 2005 between EBI and Webline
India/Hypernet Solutions Pvt. Ltd.
o
Assignment
Agreements by and between each of Xxxx Xxxxxx, Xxxxxxx Xxxxxxx and Xxxxx
Xxxxxxx, each dated May, 2008;
o
Xxxxxxxxxxxxxxxxx.xxx
o
Xxxxxxx.xxx
o
Xxxxxxxxxxxxxxxxxxxxxxxxxxx.xxx
o
Xxxxxxxxxxxxxxxxxxxxxxx.xxx
o
Xxxxxxx0.xxx
o
Xxxxxxx0.xxx
o
Xxxxxxx0.xxx
o
Xxxxxxxxxx.xxx
o
Xx-xxxxxxx.xxx
o
Xxxxxxxxxxxxxxx.xxx
o
MarketStar
Corporation
- 12
month
contract ending January 31, 2009.
- Annual
Contract Value:~$10,000
o
LanDesk.(Humaniz)
- 12
month
contract ending January 31, 2009
- Annual
Contract Value:~$16,000
o
ClearOne
Communications
- Month-to-Month
Contract
- Annual
Contract Value: ~$6k ($500/mnth)
o
XX
Xxxxxx
- 12
month
contract ending October 31, 2008.
- Annual
Contract Value:~$12,000
o
United
Subcontractors, Inc.
- 12
month
contract ending December 31, 2008.
- Annual
Contract Value:~$30,000
o
Logitech
- 12
month
contract ending October 31, 2008.
- Annual
Contract Value: ~$1,200
|
Client
| | |
Balance at Closing
| |
|
Clear
One
| | |
500.00
| |
|
Humaniz
| | |
8,000.00
| |
|
MarketStar
| | |
2,000.00
| |
|
Nine
Pachyderms
| | |
172.00
| |
|
WebJam
Ads
| | |
3,000.00
| |
|
Wheelwright
Lumber
| | |
600.00
| |
|
Total
| |
$
|
14,272.00
| |
Encumbrances
on Assets.
See
liabilities set forth on Disclosure Schedule 3.7.
Page
26 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.5 Change
of Control; Noncontravention
See
Disclosure Schedule 3.2 (transfer restrictions).
Page
27 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.6 EBI
Financial Statements
Such
financial statements shall be completed within the required regulatory filing
period of seventy-one days following the closing of the transaction. As provided
under the Escrow Arrangement, one-half of the purchase price in FNG Shares
will
be held in escrow and be immediately released to the Shareholders upon the
satisfactory completion of the audit of the EBI Financial
Statements.
Page
28 of
43 | Share Exchange Agreement | Final Execution
Copy
Disclosure
Schedule 3.7 Undisclosed
and Assumed Liabilities
FNG
will
assume the following, and only the following obligations of EBI at and upon
the
closing:
| |
A.
|
Property
Leases and Related Loan:
|
Office
lease in Ogden, Utah with Grow Utah ventures for office space at 0000 Xxxxx
Xxx.
The lease term ended April 31, 2007. Currently in month-to-month arrangement
at
$880/month.
| |
B.
|
Equipment/Other
Operating Leases:
|
Lease
on
2007 Volkswagen Passat used as an employee incentive. 39 month lease term
starting 1/20/07 at $307.09/mnth.
| |
C.
|
Other
Obligations of EBI.
|
1.Revolving
Credit Facility:
EBI
currently has a Line of Credit with Zions Bank (the “Credit Line”). The
outstanding balance of the Credit Line shall be paid off as of Closing by
FNG.
2.
Assumed Accounts Payables:
As
part
of the Closing of the Transaction, FNG has agreed to assume the following
obligations of EBI (the balances as of the Closing Date are reflected below)
-
EBI expressly declares and warrants that as of the date of the Closing
obligations owed by EBI are as follows:
|
Vendor
| |
Balance Owed at Closing
| |
| | | | | |
|
DHC
| | |
299.00
| |
|
Grow
Utah Ventures
| | |
895.59
| |
|
Xxxx
CPA
| | |
90.00
| |
|
Xxxxxxx,
Xxxxxxxxx & Xxxxx Co
| | |
1,935.34
| |
|
WeblineIndia
| | |
19,342.00
| |
|
Zions
Bank
| | |
307.00
| |
|
Total
Accounts Payable Assumed
| | |
22,868.93
| |
Xxxx
Xxxxxx, Xxxxx Xxxxxxx and Xxxxxxx Xxxxxxx each owe taxes on stock issued to
them
in 2007 in lieu of cash compensation. EBI did not withhold any amount from
such
persons in connection with the issuance of share to them. If such persons fail
or refuse to pay taxes on such compensation EBI is potentially responsible
for
such taxes. Notwithstanding the foregoing, or any other provision in this
agreement to the contrary, Messrs Xxxxxx, Xxxxxxx and Xxxxxxx hereby agree
to
severally but not jointly indemnify and hold FNG and EBI harmless from the
payment of such taxes.
4. Messrs.
Xxxxxx, Xxxxxxx and Xxxxxxx shall assume the following obligations on or before
Closing:
America
First Credit:
America
First Visa
Page
29 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.9 Material
Contracts and Transactions
| |
1.
|
“At
-Will” Employment agreement with Xxxxx Xxxxxxxxxx to provide Sales Account
Management.
|
| |
2.
|
Service
and Equipment Lease Agreements entered by EBI, as further detailed
in
Disclosure Schedule 3.22, with the following
companies:
|
| |
a.
|
Office
lease in Ogden, Utah with Grow Utah ventures for office space at
0000
Xxxxx Xxx. The lease term ended April 31, 2007. Currently in
month-to-month arrangement at
$880/mnth.
|
| |
b.
|
Lease
on 2007 Volkswagen Passat used as an employee incentive. 39 month
lease
term starting 1/20/07 at
$307.09/mnth.
|
| |
3.
|
Xxxxxx
Aquilef was employed as an employee of the Company from April, 2007
thru
March, 2008. Mr. Aquilef’s services were subcontracted to Xxxx Xxxx, a
director and shareholder of the Company. Xx. Xxxx paid the Company
for Mr.
Aquilef’s services.
|
| |
4.
|
See
Disclosure Schedule 3.2 (Transfer
Restrictions)
|
Page
30 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.10 Labor
and Employment
|
Name
| |
Title
| |
Hire
Date
| |
Annual
Salary
| |
Commission
Paid
| |
Additional Detail of
Compensation
Structure
| |
|
Xxxxx
Xxxxxxxxxx
| | Sales
Account Manager | |
Feb. 2004
| |
$
|
23,000
| | |
10
|
%
| | | |
|
Xxxxxxx
Xxxxxxx
| | COO
and Vice President | |
7/31/03
| | |
*
| | | | | |
| |
|
Xxxx
Xxxxxx
| | CEO
and President | |
7/31/03
| | |
*
| | | | | | | |
|
Xxxxx
Xxxxxxx
| | Implementation
Manager/ Controller Treasurer/Secretary | |
1/1/02
| | |
*
| | | | | | | |
*
Each of
these persons received cash compensation less than $20,000. Each, however,
received compensation in the form of stock for the past two years. The
shareholders make no representation regarding the combined value of such
compensation for any purposes, including, without limitation, compensation
taxes. Xxxxxxx, Xxxxxx and Xxxxxxx shall cause the annual 1099 forms for all
applicable tax years relating to the receipt by the Shareholders of any stock
interest in EBI to be filed within 60 days from the date of
Closing.
Page
31 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.11 Real
Property
Real
Property Owned
None.
Real
Property Leases:
Page
32 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.12 Actions
& Proceedings
NONE.
Page
33 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.13 Governmental
and Third Party Consents
No
third party consents are required for a change in control of
EBI.
Page
34 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.14 Inventions
The
Shareholders represent that they own all intellectual property rights to such
inventions and such rights are being transferred in this Agreement to FNG.
The
inventions at issue are:
Description:
Elemental
Business currently produces one product - a software application named Elitics.
Elitics is a web-based software application specifically designed to help
companies increase website conversions (purchases, leads, etc.) by uncovering
the reasons why visitors aren’t converting today. Elitics achieves this by
combining proven sales and marketing methodologies with state of the art
technology. Elitics is a win-loss analytics tool.
EBI’s
Elitics Software was developed by Webline India/Hypernet Solutions Pvt. Ltd.
pursuant to an Independent Contractor Agreement dated October 14, 2005. Such
agreement provides that the software is a “work for hire”, which is “assigned”
to EBI. Xxxx Xxxxxx, Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxx developed the methodology
for the Software. Such persons have assigned any interest in the Elitics
Software and Methodology to EBI.
Page
35 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.16 Bank
Accounts
Zions
Bank – Visa
Account
#: XXXXXXXXXXXXXXXX
Zions
Bank – Checking
Account
#: XXXXXXXXX
Authorized
Signatories or all accounts:
Xxxxx
Xxxxxxx
Xxxx
Xxxxxx
Xxxxxxx
Xxxxxxx
-
No
Safety Deposit Accounts
Page
36 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.17 Absence
of Changes and Events
None.
Page
37 of
43 | Share Exchange Agreement | Final Execution
Copy
Disclosure
Schedule 3.18 Personal
Property
|
Computers
| |
Quantity
| |
|
Laptop –
Dell Inspiron 5160
| | |
1
| |
|
Laptop
– Dell Latitude
| | |
2
| |
|
Desktop
– Apple iMac
| | |
1
| |
|
Desktop
– Compaq Presario w/17’ CRT
| | |
1
| |
|
Server
– Net Integrator Lite
| | |
1
| |
|
Server –
Net Integrator Xxxx 1
| | |
1
| |
|
Bug
Server – Dell Dimension L100R
| | |
1
| |
| | | | | |
|
Network/Communications
| | | | |
|
Wireless
Buffalo Routers
| | |
3
| |
|
GE
Two-Line Telephones
| | |
5
| |
|
24
Port Switch
| | |
2
| |
|
APC
UPS – 350 Battery Backup
| | |
1
| |
| | | | | |
|
Printer
| | | | |
|
HP
Color LaserJet 4550
| | |
1
| |
| | | | | |
|
Office
Fixtures
| | | | |
|
4’
Long Table-Top Office Desk
| | |
5
| |
|
Office
Chairs
| | |
4
| |
|
Panasonic
Printable Whiteboard
| | |
1
| |
|
File
Cabinet
| | |
1
| |
|
Water
Cooler
| | |
1
| |
|
Mini-Fridge
| | |
1
| |
|
Microwave
| | |
1
| |
Page
38 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.19 Related
Entities
| |
-
|
EBI’s
largest shareholder is the founder and a director of MarketStar
Corporation, one of EBI’s significant clients.
|
| |
-
|
Web
Jam Ads is a potential client to whom EBI has provided services for
evaluation at no cost to Web Jam Ads. EBI has also provided Web Jam
Ads
with limited services that were invoiced. Xxxx Xxxx, a director and
significant shareholder of EBI has invested in Web Jam
Ads.
|
Page
39 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 3.20 Insurance
| |
-
|
State
of Utah Workers Compensation
Insurance.
|
Page
40 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 12.3 Residence
All
shareholders are natural persons residing in the state of Utah.
Accredited
Xxxx
X.
Xxxx
Xxxxxxx
X. Xxxxxx
Non-Accredited
Xxxx
X.
Xxxxxx
Xxxxx
X.
Xxxxxxx
Xxxxxxx
Xxxxxxx
Page
41 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 12.5 Shareholder
Investment Experience
No
exceptions for the following shareholders:
Accredited
Xxxx
X.
Xxxx
Xxxxxxx
X. Xxxxxx
Non-Accredited
Xxxx
X.
Xxxxxx
Xxxxx
X.
Xxxxxxx
Xxxxxxx
Xxxxxxx
Page
42 of
43 | Share Exchange Agreement | Final Execution Copy
Disclosure
Schedule 12.6
Form of Employment Contract:
Page
43 of
43 | Share Exchange Agreement | Final Execution
Copy
