CONTRIBUTION AGREEMENT
Exhibit 10.4
This
Contribution Agreement (this “Agreement”)
is
entered into as of August ___, 2006 (the “Contribution
Date”)
by and
among Pacific Spirit Inc., a Nevada corporation (the “Company”),
Summit Trading Limited, a Bahamian corporation (“Summit”),
and
Consolidated National, LLC, a California limited liability Company
(“CNL”)
(each,
a “Party”
and
collectively, the “Parties”).
A. Summit
has entered into a Stock Purchase Agreement to purchase from Xxxxx Xxxxxx
400,000 shares of the common stock of the Company, par value $0.001 per share
(the “Common
Stock”).
B. The
Parties desire that, subject to the terms and conditions in this Agreement,
CNL
contribute certain assets to the Company in exchange for the issuance by the
Company to CNL of 9,600,000 shares of the Common Stock as a qualified exchange
pursuant to Section 351 of the Internal Revenue Code of 1986.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto hereby agree
as
follows:
1.
Contribution
of the Assets.
A. Contribution
of the Assets.
Subject
to the terms and conditions of this Agreement, CNL hereby assigns, transfers,
and delivers to the Company, as a contribution, all right, title, and interest
of CNL in and to all of the following assets and properties (the “Assets”):
(i) The
name “Xcorporeal, Inc.”; and
(ii) That
certain Irrevocable Option Agreement dated August 11, 2006 by and among
CNL, National Quality Care, Inc., a Delaware corporation (“NQCI”),
and
certain of the stockholders of NQCI (the “Option”).
B. Conveyance
Instruments.
To
effectuate the contribution of the Assets as contemplated by Section 1.A,
CNL
has, or will hereafter, execute and deliver, or cause to be executed or
delivered, all such documents or instruments of assignment, transfer, or
conveyance, in each case dated the Contribution Date, (collectively, the
“Conveyance
Instruments”),
as
CNL and the Company and their respective counsels shall reasonably deem
necessary or appropriate to vest in or confirm title to the Assets to the
Company.
2.
Events
Occurring on the Contribution Date.
A. Deliveries
by the Parties.
Each of
the Parties shall deliver an original of this Agreement fully executed by such
Party to each of the other Parties.
B. Deliveries
by CNL.
Simultaneously with the execution hereof, CNL has delivered to the Company
the
following:
1
(1) The
Conveyance Instruments to effect the contribution of the Assets to the Company,
such Conveyance Instruments to be those reasonably deemed necessary by, and
to
be in form and substance reasonably satisfactory to, the respective counsels
to
CNL and the Company; and
(2) All
other previously undelivered documents, instruments and writings required to
be
delivered by CNL to the Company hereunder or otherwise required in connection
herewith.
C. Consideration
for Contribution.
In
exchange for the Contribution of the Assets, the Company shall issue to CNL
on
the Contribution Date an aggregate of Nine Million Six Hundred Thousand
(9,600,000) shares of the Common Stock.
D. Deliveries
By Summit.
Simultaneously with the execution hereof, Summit has delivered to CNL the
following all other documents, instruments, and writings required to be
delivered by Summit to CNL hereunder or otherwise required in connection
herewith.
D. Additional
Deliveries.
In
addition to the deliveries set forth in Section 2.A
and 2.C,
the
Company shall have delivered to CNL each of the following:
(1) An
indemnity executed by Xxxxx Xxxxxx in favor of CNL with respect to certain
representation and warranties regarding the Company in substantially the form
attached hereto as Exhibit A;
(2) All
minute books, stock books, ledgers and registers, if any, and other records
relating to the organization, ownership and maintenance of the Company;
(3) All
books and records of the Company, including, without limitation, all work papers
and other backup materials used in the preparation of the Company’s federal,
state and local tax returns for each of the Company’s last five (5) fiscal
years;
(4) A
copy of the articles of incorporation of the Company, certified by the Secretary
of State of Nevada and a certificate of good standing from the Secretary of
State of Nevada and each jurisdiction in which the Company is duly qualified
to
transact business, in each case, dated within fifteen (15) days of the
Closing;
(5) Copies
of the resolutions duly adopted by the Company’s directors authorizing the
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby, and the consummation of all transactions contemplated
hereby and thereby, certified by the Secretary of the Company; and
(6) A
copy of the bylaws of the Company, certified by the Secretary of the Company.
D. Corporate
Documents and Review; Financial Statements.
The
Company shall have delivered to CNL or its counsel copies of all corporate
documents of the Company as CNL shall have reasonably requested. The unaudited
balance sheet of the Company as of the Contribution Date prepared in accordance
with GAAP shall be substantially similar or in the
2
aggregate
no less favorable to the Company than the balance sheet of the Company included
within the unaudited Financial Statements.
3.
Antidilution
Protection; Registration Rights.
A. Antidilution
Protection.
In the
event the Company shall issue shares of the Common Stock pursuant to the
transactions contemplated by the Option, then the Company shall issue to Summit
an additional 400,000 shares of the Common Stock, or such other number of shares
such that, after giving effect to the additional issuances, Summit will be
the
holder of four percent (4%) of the Company’s then issued and outstanding capital
stock.
B. Piggyback
Rights.
If the
Company shall determine to register any of its securities either for its own
account or the account of a security holder or holders, other than a
registration relating solely to employee benefit plans, a registration relating
to the offer and sale of debt securities, a registration relating to a corporate
reorganization or other Rule 145 transaction, or a registration on any
registration form that does not permit secondary sales, the Company will
(i) promptly give written notice of the proposed registration to Summit;
and (ii) use its commercially reasonable efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance) any shares issued to Summit pursuant to Section
3.B.
above
as requested by Summit to be included in such registration.
4.
Miscellaneous.
A. Expenses.
Each
Party hereto shall bear all of his, her or its expenses (including fees and
expenses of legal counsel, investment bankers, brokers or other representatives
or consultants) incurred in connection with the negotiation, preparation and
execution of this Agreement and the transactions contemplated by this Agreement.
B. Further
Assurances.
From
time to time after the Closing, without the payment of any additional
consideration except as otherwise set forth in this Agreement, each Party hereto
will execute all such instruments and take all such actions as the other Parties
shall reasonably request in connection with carrying out and effectuating the
intent and purpose hereof and all transactions and things contemplated by this
Agreement.
C. Notices.
All
notices, requests, demands, and other communications (collectively,
“Notices”)
given
or made pursuant to this Agreement shall be in writing and shall be deemed
to
have been duly given or made as follows: (1) if sent by registered or
certified mail in the United States return receipt requested, postage and fees
prepaid, upon receipt; (2) if sent by reputable overnight air courier (such
as Federal Express), one business day after sending; or (3) if otherwise
actually personally delivered, when delivered. All Notices shall be delivered
to
the following addressees:
3
If
to
Company:
Pacific
Spirit Inc.
00000
00X
Xxxxxx
Xxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
Attn:
Xxxxx Xxxxxx
Fax:
With
a
copy (which shall not constitute notice) to:
Attn:
Fax:
If
to
Summit:
Summit
Trading Limited
000
Xxxxxxx Xxxxxx
Xxx
Xxxxxx Xxxxx, XX 00000
Attn:
President
Fax:
With
a
copy (which shall not constitute notice) to:
Attn:
Fax:
If
to
CNL:
Consolidated
National, LLC
c/o
Greenberg Xxxxxxx, LLP
0000
Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn:
Xxxxxx X. Xxxxxx
Fax:
(000) 000-0000
4
With
a
copy (which shall not constitute notice) to:
Xxxxxxxxx
Xxxxxxx, LLP
0000
Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx X. Xxxxxxxx, Esq.
Fax:
(000) 000-0000
or
to
such other address as a Party may from time to time designate in writing in
accordance with this Section.
D. Assignment.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the Parties hereto and their respective successors and permitted
assigns; provided,
however,
that
neither this Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any of the Parties hereto without the prior written
consent of the other Parties.
E. Governing
Law.
This
Agreement will be governed by and construed in accordance with the domestic
laws
of the State of California without giving effect to any choice or conflict
of
law provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California.
F. Arbitration.
Any
dispute, controversy or claim arising out of or relating to this Agreement,
shall be resolved by final and binding arbitration before a retired judge at
JAMS or its successor in Santa Monica, California. The expenses of arbitration,
the reasonable fees and costs of legal counsel, experts, and evidence shall
be
awarded to the prevailing Party. Any interim or final award of the arbitrator
may be entered in any court of competent jurisdiction.
G. Waiver
of Provisions.
The
provisions, terms, covenants, representations, warranties, and conditions of
this Agreement may be waived only by a written instrument executed by the Party
hereto waiving compliance. The failure of any Party hereto at any time or times
to require performance of any provision of this Agreement shall in no manner
affect the right of such Party at a later date to enforce the same. No waiver
by
any Party hereto of any condition or the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement, whether
by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation, or warranty
of
this Agreement.
H. No
Third Party Beneficiary.
This
Agreement is for the sole benefit of the Parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person any legal or equitable right,
benefit, or remedy of any nature whatsoever under or by reason of this
Agreement.
I. No
Presumption.
With
regard to each and every term and condition of this Agreement and any and all
agreements and instruments subject to the terms hereof or referred to herein,
the Parties hereto understand and agree that the same have or has been mutually
negotiated, prepared, and drafted, and if at any time the Parties hereto desire
or are required to interpret or construe any such term or condition or any
agreement or instrument subject hereto, no consideration shall be given to
the
issue of which Party hereto actually prepared, drafted, or requested any term
or
condition of this Agreement or any agreement or instrument subject hereto.
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J. Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction will not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction.
K. Counterparts.
This
Agreement may be executed in one or more counterparts, including by means of
facsimile, each of which will be deemed an original, and all of which together
will constitute one and the same instrument.
L. Entire
Agreement; Amendment.
This
Agreement constitutes the entire agreement between the Parties and supersedes
and cancels any and all prior representations, agreements and understandings
between them relating to the subject matter hereof and may not be amended or
modified except by a written agreement signed by Purchaser, Shareholder and
the
Company.
IN
WITNESS WHEREOF, the Parties hereto have caused this Contribution Agreement
to
be duly executed as of the day and year first above written.
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COMPANY:
PACIFIC
SPIRIT INC.
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By:
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Xxxxx
Xxxxxx
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President
and Sole Director
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CNL:
CONSOLIDATED
NATIONAL, LLC
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By:
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Xxxxxx
X. Xxxxxx
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Managing
Member
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SUMMIT:
SUMMIT
TRADING LIMITED
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By:
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Xxxxxxx
X. Xxxxxxx
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Attorney
in fact
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6
Exhibit A
Form
of Indemnity
