SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") dated this ___ day of
October, 2005, by and among AMERICAN RACING CAPITAL, INC., a Nevada corporation
(the "ARC"), and ARC DEVELOPMENT CORPORATION, a Nevada corporation (the
"Company"), and the Shareholders of the Company listed on Exhibit A attached
hereto (the "Company Shareholders").
RECITALS:
A. The Company Shareholders own all of the outstanding capital stock of
the Company. The authorized capital stock of the Company consists of Fifty
Million (50,000,000) shares of common stock, par value $0.001 per share, of
which Two Million (2,000,000) of these shares are issued and outstanding (the
"Company Common Stock").
B. The Company Shareholders desire to transfer and exchange Two Hundred
Thirty Five Million (235,000,000) shares of common stock, par value $0.001 per
share, of ARC (the "ARC Common Stock") and One Million (1,000,000) shares of
Preferred Stock, par value $0.001 per share (the "ARC Preferred Stock"), for a
total number of 236,000,000 shares on the terms and conditions set forth herein
and ARC desires to consummate such transfer and exchange pursuant to the terms
and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises herein set forth
and certain other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. THE SHARE EXCHANGE AND RELATED TRANSACTIONS.
1.1. Share Exchange. In accordance with the provisions of this Agreement,
the Nevada Revised Statutes (the "NRS") and other applicable law, on the Closing
Date (as defined below), the Company Shareholders shall exchange with, and
deliver to, ARC, the Company Common Stock, and in exchange therefore, ARC shall
issue, and deliver, to the Company Shareholders in the denominations set forth
opposite the name of each Company Shareholder on Schedule A attached hereto, Two
Hundred Thirty Five Million (235,000,000) shares of common stock, par value
$0.001 per share, of ARC (the "ARC Common Stock") and One Million (1,000,000)
shares of Preferred Stock, par value $0.001 per share (the "ARC Preferred
Stock"), (the exchange transaction is referred to herein as the "Share
Exchange"). The total number of shares of ARC Common Stock and ARC Preferred
Stock to be issued to the Company Shareholders shall be equal to Two Hundred
Thirty Six Million (236,000,000) shares. The shares of ARC Common Stock and the
ARC Preferred Stock to be issued as part of the Share Exchange are referred to
herein as the "ARC Shares," also sometimes referred to hereinafter as the
"Exchange Consideration."
1.2. Closing. The parties to this Agreement shall file Articles of
Exchange (as defined below) pursuant to the NRS, cause the Share Exchange to
become effective and consummate the other transactions contemplated by this
Agreement (the "Closing") no later than October 31st, 2005; provided, in no
event shall the Closing occur prior to the satisfaction of the conditions
precedent set forth in Sections 6, 7 and 8 hereof. The date of the Closing is
referred to herein as the "Closing Date." The Closing shall take place at the
offices of counsel to ARC, or at such other place as may be mutually agreed upon
by ARC and the Company Shareholders. At the Closing, (i) the Company
Shareholders shall deliver to ARC the original stock certificates representing
the Company Common Stock, together with stock powers duly executed in blank; and
(ii) the ARC shall deliver to the Company Shareholders stock certificates
representing the ARC Shares.
1.3. Plan of Exchange; Articles of Share Exchange. The parties to this
Agreement shall cause ARC and the Company to enter into a plan of exchange on
the date hereof, substantially in the form attached hereto as Exhibit "B" (the
"Plan of Exchange"), and, at the Closing, to execute the Articles of Exchange,
substantially in the form attached hereto as Exhibit "C" (the "Articles of
Exchange"). The Articles of Exchange shall be filed with the Secretary of State
of Nevada on or shortly after the Closing Date in accordance with the NRS.
1.4. Approval of Share Exchange. By execution of this Agreement, the
Company Shareholders hereby ratify, approve and adopt the Share Exchange and the
Plan of Exchange for all purposes under the NRS. On or before the execution of
this Agreement, the respective Boards of Directors of ARC and the Company shall
have approved this Agreement, the Plan of Exchange and the transactions
contemplated hereby and thereby.
2. ADDITIONAL AGREEMENTS.
2.1. Access and Inspection, Etc. Each party to this Agreement has allowed
and shall allow the other party and its authorized representatives full access
during normal business hours from and after the date hereof and prior to the
Closing Date to all of its properties, books, contracts, commitments and records
for the purpose of making such investigations as the other party may reasonably
request in connection with the transactions contemplated hereby, and shall cause
the other party to furnish such information concerning its affairs as reasonably
requested. Each party to this Agreement has caused and shall cause its personnel
to assist the other party in making such investigation and shall use his best
efforts to cause its counsel, accountants, and other non-employee
representatives to be reasonably available to the other party for such purposes.
2.2. Confidential Treatment of Information. From and after the date
hereof, the parties hereto shall and shall cause their representatives to hold
in confidence all data and information obtained with respect to the other
parties or their business, except such data or information as is published or is
a matter of public record, or as compelled by legal process. In the event this
Agreement is terminated pursuant to Section 10 hereof, each party shall promptly
return to the other(s) any statements, documents, schedules, exhibits or other
written information obtained from them in connection with this Agreement, and
shall not retain any copies thereof.
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2.3. Public Announcements. After the date hereof and prior to the Closing,
none of the parties hereto shall make any press release, statement to employees
or other disclosure of this Agreement or the transactions contemplated hereby
without the prior written consent of the other parties, except as may be
required by law. Neither the Company nor the Company Shareholders shall make any
such disclosure unless ARC shall have received prior notice of the contemplated
disclosure and has had adequate time and opportunity to comment on such
disclosure, which shall be satisfactory in form and content to ARC and its
counsel.
2.4. Securities Law Compliance. The issuance of the ARC Shares to the
Company Shareholders hereunder shall not be registered under the Securities Act
of 1933, as amended, by reason of the exemption provided by Section 4(2)
thereof, and such shares may not be further transferred unless such transfer is
registered under applicable securities laws or, in the opinion of ARC's counsel,
such transfer complies with an exemption from such registration. All
certificates evidencing the ARC Shares to be issued to the Company Shareholders
shall be legended to reflect the foregoing restriction.
2.5. Best Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties shall use its best efforts in good faith to take
or cause to be taken as promptly as practicable all reasonable actions that are
within its power to cause to be fulfilled those conditions precedent to its
obligations or the obligations of the other parties to consummate the
transactions contemplated by this Agreement that are dependent upon its actions.
2.6. Further Assurances. The parties shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Agreement, including,
without limitation, all necessary stock powers and such other instruments of
transfer as may be necessary or desirable to transfer ownership of the Company
Common Stock and to consummate the transactions contemplated by this Agreement.
2.7. Certain Tax Matters.
(a) Cooperation on Tax Matters.
(i) ARC, the Company and the Company Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of tax returns pursuant to this Section 2.7 and
any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Company and the Company Shareholders agree
(A) to retain all books and records with respect to tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by ARC
or the Company Shareholders, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests, the Company or the Company Shareholders, as the
case may be, shall allow the other party to take possession of such books and
records.
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(ii) ARC and the Company Shareholders further agree, upon
request, to use their commercially reasonable efforts to obtain any certificate
or other document from any governmental authority or any other person as may be
necessary to mitigate, reduce or eliminate any tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
2.8. Release of Claims By the Company Shareholders. Effective as of the
Closing Date, and except for any obligations arising out of this Agreement, the
Company Shareholders, and its successors, predecessors, assigns, agents,
advisors, legal representatives, partners and all persons acting by, through or
under it, hereby release the Company and each of their successors, predecessors,
assigns, agents, advisors, officers, directors, employees, legal
representatives, partners and all persons acting by, through or under each of
them, from any and all claims, obligations, causes of action, actions, suits,
contracts, controversies, agreements, promises, damages, demands, costs,
attorneys' fees and liabilities of any nature whatsoever from the beginning of
time up to and including the Closing Date, in law or at equity, whether known
now or on the Closing Date, anticipated or unanticipated, suspected or claimed,
fixed or contingent, liquidated or unliquidated, arising out of, in connection
with or relating to any matter, cause or thing whatsoever.
2.9 Waiver of Claims with Respect to Name Change. Effective as of the
Closing Date, the Shareholders of ARC, their successors, predecessors, assigns,
agents, advisors, legal representatives, partners and all persons acting by,
through or under it, hereby release ARC and each of ARC's successors,
predecessors, assigns, agents, advisors, officers, directors, employees, legal
representatives, partners and all persons acting by, through or under each of
them, from any and all claims, obligations, causes of action, actions, suits,
contracts, controversies, agreements, promises, damages, demands, costs,
attorneys' fees and liabilities of any nature whatsoever from the beginning of
time up to and including the Closing Date, in law or at equity, whether known
now or on the Closing Date, anticipated or unanticipated, suspected or claimed,
fixed or contingent, liquidated or unliquidated, arising out of, in connection
with ARC's change of name from Altrimega Health Corporation to American Racing
Capital, Inc. prior to the Closing Date.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE COMPANY, THE SUBSIDIARIES
AND THE COMPANY SHAREHOLDERS.
To induce ARC to enter into this Agreement and to consummate the
transactions contemplated hereby, the Company, its Subsdiaries and the Company
Shareholders jointly and severally represent and warrant to and covenant with
ARC as follows:
3.1. Organization; Compliance. Each of the Company and each of the
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of Nevada. Each of the Company and each of the
Subsidiaries is: (a) entitled to own or lease its properties and to carry on its
business as and in the places where such business is now conducted, and (b) duly
licensed, in good standing and qualified in all jurisdictions where the
character of the property owned by it or the nature of the business transacted
by it makes such license or qualification necessary, except where the failure to
do so would not result in a material adverse effect on the Company or the
subsidiaries. Schedule 3.1 lists all locations where the Company and each
Subsidiary has an office or place of business and the nature of the ownership
interest in such property (fee, lease, or other).
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3.2. Capitalization and Related Matters of the Company.
(a) The authorized capital stock of the Company consists Fifty
Million (50,000,000) shares of common stock, par value $0.001 per share, of
which Two Million (2,000,000) of these shares are issued and outstanding. No
shares of the Company Common Stock (i) were issued in violation of the
preemptive rights of any shareholder, or (ii) are held as treasury stock. All of
the shares of the Company Common Stock to be delivered under the terms of this
Agreement are owned of record, legally and beneficially by the Company
Shareholders. The shares of the Company Common Stock are free and clear of any
and all security interests, encumbrances, and rights of any kind or nature
whatsoever (collectively, "Encumbrances"), and upon delivery of the Company
Common Stock hereunder, ARC and its assigns will acquire title thereto, free and
clear of any and all Encumbrances. Other than voting rights, redemption rights
and such other rights conferred by the Company's charter documents and by
applicable Nevada statutes, there exist no Securities Rights (as defined herein)
with respect to the Company Common Stock. All rights and powers to vote the
shares of the Company Common Stock are held exclusively by the Company
Shareholders. All of the Company Common Stock is validly issued, fully paid and
nonassessable, were not issued in violation of the terms of any agreement or
other understanding, and were issued in compliance with all applicable federal
and state securities or "blue sky" laws and regulations. The certificates
representing the Company Common Stock to be delivered to ARC at the Closing are,
and the signatures and endorsements thereof or stock powers relating thereto
will be, valid and genuine. For the purposes of this section, "Securities
Rights" means, with respect to the Company Common Stock (whether issued or
unissued) or any other securities convertible into or exchangeable for the
Company Common Stock, and includes all written or unwritten contractual rights
relating to the issuance, sale, assignment, transfer, purchase, redemption,
conversion, exchange, registration or voting of the Company Common Stock and all
rights conferred by the Company's governing documents and by any applicable
agreement.
(b) There are not outstanding any securities convertible into
capital stock of the Company nor any rights to subscribe for or to purchase, or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, such capital stock or securities convertible into such
capital stock. The Company: (i) is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any of its capital
stock; or (ii) has no liability for dividends or other distributions declared or
accrued, but unpaid, with respect to any capital stock.
3.3. Subsidiaries. The Company owns (a) no shares of capital stock of any
other corporation, including any joint stock company, and (b) no other
proprietary interest in any company, partnership, trust or other entity,
including any limited liability company.
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3.4 Execution; No Inconsistent Agreements; Etc.
(a) This Agreement is a valid and binding agreement of the Company
and the Company Shareholders, enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy or similar laws affecting the
enforcement of creditors' rights generally, and the availability of equitable
remedies. The Company and the Company Shareholders have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the documents to be delivered by them in connection with the
Closing and to perform their obligations under this Agreement.
(b) The execution and delivery of this Agreement by the Company and
the Company Shareholders does not, and the consummation of the transactions
contemplated hereby will not, constitute a breach or violation of the charter or
bylaws of the Company, or a default under any of the terms, conditions or
provisions of (or an act or omission that would give rise to any right of
termination, cancellation or acceleration under) any note, bond, mortgage,
lease, indenture, agreement or obligation to which the Company or the Company
Shareholders is a party, pursuant to which the Company and the subsidiaries or
the Company Shareholders otherwise receives benefits, or to which any of the
properties of the Company or the Company Shareholders is subject, or violate any
judgment, order, decree, statute or regulation applicable to the Company or the
Company Shareholders or by which any of them may be subject.
3.5. Articles of Incorporation and By-Laws. The Company has heretofore
made available and delivered to ARC a complete and correct copy of the articles
of incorporation and the by-laws of the Company and each of the Subsidiaries.
Such Articles of Incorporation and By-Laws are in full force and effect and have
not been amended or modified.
3.6. Corporate Records. The statutory records, including the stock
register and minute books of the Company and each of the Subsidiaries, fully
reflect all issuances, transfers and redemptions of its capital stock, currently
show and will correctly show the total number of shares of its capital stock
issued and outstanding on the date hereof and on the Closing Date, the charter
or other organizational documents and all amendments thereto, the bylaws as
amended and currently in force. To the knowledge of the Company Shareholders,
the books of account, minute books, stock record, books, and other records of
the Company and the Subsidiaries, all of which have been made available to ARC,
are complete and correct and have been maintained in accordance with sound
business practices. The minute books of the Company and the Subsidiaries contain
accurate and complete records of all meetings held of, and corporate action
taken by, the Company Shareholders, the Board of Directors, and committees of
the Boards of Directors of the Company and each of the Subsidiaries, and no
meeting of any such Company Shareholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Company.
3.7. Financial Statements.
(a) The Company and the Company Shareholders have delivered to ARC
the balance sheet of each of the Subsidiaries as of December 31, 2004 (the
balance sheets as of December 31, 2004 are hereinafter referred to as the
"Balance Sheet") and the related statements of income, shareholders' equity and
cash flows of each of the Subsidiaries for the fiscal year ended December 31,
2004. In addition, the Company has delivered to ARC the Balance Sheet of each of
the Subsidiaries as of August 31, 2005, and the related statements of income,
shareholders' equity and cash flows of each of the Subsidiaries for the month
ended August 31, 2005. All the financial statements pursuant to this Section 3.7
are referred to herein collectively as the "Financial Statements."
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(b) The Financial Statements have been and will be prepared in
accordance with applicable GAAP throughout the periods involved, subject, in the
case of interim financial statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the Balance Sheet), applied on a consistent
basis, and fairly reflect and will reflect in all material respects the
financial condition of each of the subsidiaries as at the dates thereof and the
results of the operations of each of the subsidiaries for the periods then
ended, and are true and complete and are consistent with the books and records
of each of the Subsidiaries.
3.8. Liabilities. Except as set forth on Schedule 3.8, the Company has no
debt, liability or obligation of any kind, whether accrued, absolute, contingent
or otherwise, except: (a) those reflected on the Balance Sheets, including the
notes thereto, and (b) liabilities incurred in the ordinary course of business
since August 31, 2005, none of which have had or will have a material adverse
effect on the financial condition of the Company or the Subsidiaries.
3.9. Absence of Changes. Except as disclosed on Schedule 3.9, from August
31, 2005 to the date of this Agreement:
(a) there has not been any adverse change in the business, assets,
liabilities, results of operations or financial condition of the Company or the
Subsidiaries; and
(b) there has not been any: (i) change in the Company's or the
Subsidiaries' authorized or issued capital stock; (ii) a declaration or payment
of any dividend or other distribution or payment in respect of shares of capital
stock; or (iii) amendment to the Articles of Incorporation or Bylaws of the
Company or the Subsidiaries.
3.10. Title to Properties. Each of the Company and the Subsidiaries has
good and marketable title to all of its properties and assets, real and
personal, free and clear of all encumbrances, liens or charges of any kind or
character.
3.11. Compliance With Law. The business and activities of the Company and
the Subsidiaries has at all times been conducted in accordance with its Articles
of Incorporation and Bylaws and any applicable law, regulation, ordinance,
order, License (as defined in Section 3.18), permit, rule, injunction or other
restriction or ruling of any court or administrative or governmental agency,
ministry, or body, except where the failure to do so would not result in a
material adverse effect on the Company or the Subsidiaries.
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3.12. Taxes. Except as stated on Schedule 3.12, each of the Company and
the Subsidiaries has duly filed all federal, provincial, and material local and
foreign tax returns and reports, and all returns and reports of all other
governmental units having jurisdiction with respect to taxes imposed on it or on
its income, properties, sales, franchises, operations or employee benefit plans
or trusts, all such returns were complete and accurate when filed, and all taxes
and assessments payable by the Company and the Subsidiaries have been paid to
the extent that such taxes have become due. All taxes accrued or payable by the
Company and the Subsidiaries for all periods through December 31, 2004, have
been accrued or paid in full, whether or not due and payable and whether or not
disputed. Each of the Company and the Subsidiaries has withheld or collected and
paid over to the appropriate governmental authorities (or is properly holding
for such payment) all Taxes required by law to be withheld or collected, except
for amounts which would not, individually or in the aggregate, have a material
adverse effect on the Company or the Subsidiaries. For purposes of this
Agreement, "Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature or
excise, withholding, ad valorem, stamp, transfer, value added or gains taxes,
license, registration and documentation fees, and custom duties, tariffs and
similar charges.
3.13. Assets.
(a) Each of the Company and the Subsidiaries owns, leases or has the
right to use all the properties and assets, including, without limitation, the
real property and personal property, used in the conduct of its business or
otherwise owned, leased, or used, and, with respect to contract rights, is a
party to and enjoys the right to the benefits of all contracts, agreements and
other arrangements used or intended to be used by the Company or the
Subsidiaries or in or relating to the conduct of its business (all such
properties, assets and contract rights being the "Assets"). Each of the Company
and the Subsidiaries has good and marketable title to, or, in the case of leased
or subleased Assets, valid and subsisting leasehold interests in, all the
Assets, free and clear of all encumbrances.
(b) The Assets constitute all the properties, assets and rights
forming a part of, used or held in, and all such properties, assets and rights
used in the conduct of, the business of the Company and the Subsidiaries as it
is currently conducted. All of the Assets are in good operating condition and
repair, normal wear and tear excepted.
3.14. Leases of Real Property. All leases pursuant to which the Company or
the Subsidiaries are a lessee of any real property (the "Leases") are listed in
Schedule 3.14 and are valid and enforceable in accordance with their terms.
There is not under any of such Leases any material default or any claimed
material default or any event of default or event which with notice or lapse of
time, or both, would constitute a material default by the Company or the
Subsidiaries. The copies of the Leases heretofore furnished to ARC are true,
correct and complete, and such Leases have not been modified in any respect
since the date they were so furnished, and are in full force and effect in
accordance with their terms. The Company and the Subsidiaries are lawfully in
possession of all real properties of which they are a lessee (the "Leased
Properties").
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3.15. Contingencies. Except as disclosed on Schedule 3.15, there are no
actions, suits, claims or proceedings pending, or to the knowledge of the
Company Shareholders threatened against, by or affecting, the Company or the
Subsidiaries in any court or before any arbitrator or governmental agency that
may have a material adverse effect on the Company or the Subsidiaries or which
could materially and adversely affect the right or ability of the Company
Shareholders to consummate the transactions contemplated hereby. To the
knowledge of the Company Shareholders, there is no valid basis upon which any
such action, suit, claim, or proceeding may be commenced or asserted against the
Company or the Subsidiaries. There are no unsatisfied judgments against the
Company or the Subsidiaries and no consent decrees or similar agreements to
which the Company or the Subsidiaries is subject and which could have a material
adverse effect on the Company or the Subsidiaries.
3.16. Employee Benefit Matters. There are no employee benefit plans (as
defined in Section 3(3) of ERISA), bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements to which the Company is a party, with respect to which the
Company has any obligation, or which are maintained, contributed to, or
sponsored by the Company for the benefit of any current or former employee,
officer, or director of the Company.
3.17. Intellectual Property. Each of the Company and the Subsidiaries is
the owner of the entire, title and interest in and to the intellectual property
used by them in the conduct of their businesses, free and clear of all
Encumbrances, and has the right to use, all the such intellectual property in
the continued operations of the Company and the Subsidiaries.
3.18. Possession of Franchises, Licenses, Etc. Each of the Company and the
Subsidiaries: (a) possess all material franchises, certificates, licenses,
permits and other authorizations (collectively, the "Licenses") from
governmental authorities, political subdivisions or regulatory authorities that
are necessary for the ownership, maintenance and operation of its business in
the manner presently conducted; (b) are not in violation of any provisions
thereof; and (c) have maintained and amended, as necessary, all Licenses and
duly completed all filings and notifications in connection therewith. Schedule
3.18 sets forth a list of all of the Company's Licenses.
3.19. Agreements and Transactions with Related Parties. Except as
disclosed on Schedule 3.19, and except as disclosed in the Financial Statements,
neither the Company nor the Subsidiaries are a party to any contract, agreement,
lease or transaction with, or any other commitment to, (a) any ARC Shareholder,
(b) any person related by blood, adoption or marriage to any ARC Shareholder,
(c) any director or officer of the Company or the Subsidiaries, (d) any
corporation or other entity in which any of the foregoing parties has, directly
or indirectly, at least five percent (5.0%) beneficial interest in the capital
stock or other type of equity interest in such corporation or other entity, or
(e) any partnership in which any such party is a general partner or a limited
partner having a five percent (5%) or more interest therein (any or all of the
foregoing being herein referred to as a "Related Party" and, collectively, as
the "Related Parties").
3.20. Litigation. Except as disclosed on Schedule 3.20, there is no suit,
action or proceeding pending, and no person has overtly-threatened in a writing
delivered to the Company or the Company Shareholders to commence any suit,
action or proceeding, against or affecting the Company nor the Subsidiaries, nor
is there any judgment, decree, injunction, or order of any governmental entity
or arbitrator outstanding against, or, to the knowledge of the Company, pending
investigation by any governmental entity involving, the Company, the
Subsidiaries or the Company Shareholders.
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3.21. Material Contracts. Schedule 3.21 contains a complete list of all
contracts of the Company or the Subsidiaries, which involve consideration in
excess of the equivalent of $10,000 or have a term of one year or more (the
"Material Contracts"). The Company has delivered to ARC a true, correct and
complete copy of each of the written contracts, and a summary of each oral
contract, listed on Schedule 3.21. Except as disclosed in Schedule 3.21: (a)
each of the Company and the Subsidiaries has performed all material obligations
to be performed by it under all such contracts, and is not in material default
thereof, and (b) no condition exists or has occurred which with the giving of
notice or the lapse of time, or both, would constitute a material default or
accelerate the maturity of, or otherwise modify, any such contract, and (c) all
such contracts are in full force and effect. No material default by any other
party to any of such contracts is known or claimed by the Company or the
Subsidiaries or any ARC Shareholder to exist.
3.22. Employment and Labor Matters. Schedule 3.22 sets forth the name,
position, employment date, and current compensation (base and bonus) of each
employee of the Company and the Subsidiaries. None of the Company nor the
Subsidiaries is a party to any collective bargaining agreement or agreement of
any kind with any union or labor organization.
3.23. Environmental Matters. Neither the Company nor the Subsidiaries are
in violation, in any material respect, of any Environmental Law (as defined
herein); the Company has received all permits and approvals with respect to
emissions into the environment and the proper collection, storage, transport,
distribution or disposal of Wastes (as defined herein) and other materials
required for the operation of its business at present operating levels; and they
are not liable or responsible for any clean up, fines, liability or expense
arising under any Environmental Law, as a result of the disposal of Wastes or
other materials in or on the property of the Company (whether owned or leased),
or in or on any other property, including property no longer owned, leased or
used by the Company or the Subsidiaries. As used herein, (a) "Environmental
Laws" means, collectively, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Superfund Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the
Toxic Substances Control Act, as amended, the Clean Air Act, as amended, the
Clean Water Act, as amended, any other "Superfund" or "Superlien" law or any
other federal, or applicable state or local statute, law, ordinance, code, rule,
regulation, order or decree (foreign or domestic) regulating, relating to, or
imposing liability or standards of conduct concerning, Wastes, or the
environment; and (b) "Wastes" means and includes any hazardous, toxic or
dangerous waste, liquid, substance or material (including petroleum products and
derivatives), the generation, handling, storage, disposal, treatment or emission
of which is subject to any Environmental Law.
3.24. Full Disclosure. No representation or warranty of the Company
Shareholders contained in this Agreement, and none of the statements or
information concerning the Company or the Subsidiaries contained in this
Agreement and the Schedules, contains or will contain as of the date hereof and
as of the Closing Date any untrue statement of a material fact nor will such
representations, warranties, covenants or statements taken as a whole omit 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 were made,
not misleading.
10
4. REPRESENTATIONS AND WARRANTIES OF ARC.
To induce the Company Shareholders to enter into this Agreement and to
consummate the transactions contemplated hereby, ARC represents and warrants to
and covenants with the Company Shareholders as follows:
4.1. Organization. ARC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada. ARC is entitled to
own or lease its properties and to carry on its business as and in the places
where such business is now conducted, and ARC is duly licensed and qualified in
all jurisdictions where the character of the property owned by it or the nature
of the business transacted by it makes such license or qualification necessary,
except where such failure would not result in a material adverse effect on ARC.
4.2. Capitalization and Related Matters.
(a) ARC has an authorized capital stock consisting of Five Hundred
Million (500,000,000) shares of common stock, par value $0.001 per share, of
which One Hundred Fourteen Million, One Hundred and Thirty Nine Thousand, Nine
Hundred and Fifty Dollars (114,139,950) shares are issued and outstanding.
Additionally, ARC has authorized the issuance of Ten Million (10,000,000) shares
of preferred stock, $0.001 per share, of which none are issued and outstanding.
(b) Except as disclosed in documents filed by ARC with the
Securities and Exchange Commission (the "SEC Documents"), and except for
employee stock options to purchase shares of the ARC Common Stock, ARC does not
have outstanding any securities convertible into capital stock, nor any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its capital stock or
securities convertible into its capital stock.
4.3. Execution; No Inconsistent Agreements; Etc.
(a) The execution and delivery of this Agreement and the performance
of the transactions contemplated hereby have been duly and validly authorized
and approved by ARC and this Agreement is a valid and binding agreement of ARC
enforceable against ARC in accordance with its terms, except as such enforcement
may be limited by bankruptcy or similar laws affecting the enforcement of
creditors' rights generally, and the availability of equitable remedies.
(b) The execution and delivery of this Agreement by ARC does not,
and the consummation of the transactions contemplated hereby will not,
constitute a breach or violation of the charter or bylaws of ARC or a default
under any of the terms, conditions or provisions of (or an act or omission that
would give rise to any right of termination, cancellation or acceleration under)
any material note, bond, mortgage, lease, indenture, agreement or obligation to
which ARC or any of its Subsidiaries is a party, pursuant to which any of them
otherwise receive benefits, or by which any of their properties may be bound.
11
4.4. Financial Statements. ARC has delivered to the Company the
consolidated audited balance sheets of ARC as of December 30, 2004, the
consolidated audited statement of income for the fiscal year ended December 30,
2004, and the consolidated unaudited balance sheet as of June 30, 2005,
collectively, the "ARC Financial Statements"). The ARC Financial Statements have
been prepared in accordance with GAAP, applied on a consistent basis (except
that the unaudited statements do not contain all the disclosures required by
GAAP), and fairly reflect in all material respects the consolidated financial
condition of ARC and its Subsidiaries as at the dates thereof and the
consolidated results of ARC's operations for the periods then ended. As of
December 30, 2004, ARC had no operations. Since June 30, 2005, or as disclosed
in the SEC Documents or press releases issued by ARC, there has been no material
adverse change in the assets or liabilities, in the business or condition,
financial or otherwise, of ARC, or in its results of operations.
4.5. Liabilities. Except as disclosed in the SEC Documents or press
releases issued by ARC or Schedule 4.5, ARC nor any of its Subsidiaries has any
material debt, liability or obligation of any kind, whether accrued, absolute,
contingent or otherwise, except (a) those reflected on the ARC Financial
Statements, including the notes thereto, and (b) liabilities incurred in the
ordinary course of business since June 30, 2005, none of which have had or will
have a material adverse affect on the financial condition of ARC and its
Subsidiaries taken as a whole.
4.6. Contingencies. Except as disclosed on Schedule 4.6, there are no
actions, suits, claims or proceedings pending or, to the knowledge of ARC's
management, threatened against, by or affecting ARC or any of its Subsidiaries
in any court or before any arbitrator or governmental agency which could have a
material adverse effect on ARC or its Subsidiaries or which could materially and
adversely affect the right or ability of ARC to consummate the transactions
contemplated hereby. To the knowledge of ARC, there is no valid basis upon which
any such action, suit, claim or proceeding may be commenced or asserted against
ARC or its Subsidiaries. There are no unsatisfied judgments against ARC and no
consent decrees or similar agreements to which ARC or its Subsidiaries is
subject and which could have a material adverse effect on ARC or its
Subsidiaries or which could materially and adversely affect the right or ability
of ARC to consummate the transactions contemplated hereby.
4.7. Full Disclosure. No representation or warranty of ARC contained in
this Agreement, and none of the statements or information concerning ARC
contained in this Agreement and the Schedules, contains or will contain as of
the date hereof and as of the Closing Date any untrue statement of a material
fact nor will such representations, warranties, covenants or statements taken as
a whole omit 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
were made, not misleading.
12
5. INTENTIONALLY NOT USED.
6. CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligation of the Company, the Company Shareholders and ARC to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, on or before the Closing, of each of the following conditions; any
or all of which may be waived in whole or in part by the joint agreement of ARC,
the Company and the Company Shareholders:
6.1. Absence of Actions. No action or proceeding shall have been brought
or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving ARC, any of its Subsidiaries, the Company Shareholders or the Company
when considered in light of the effect of the within transactions) shall
constitute a violation of law or give rise to material liability on the part of
the Company Shareholders, the Company or ARC or its Subsidiaries.
6.2. Consents. The parties shall have received from any suppliers,
lessors, lenders, lien holders or governmental authorities, bodies or agencies
having jurisdiction over the transactions contemplated by this Agreement, or any
part hereof, such consents, authorizations and approvals as are necessary for
the consummation hereof, including, without limitation, the consents listed on
Schedule 6.2.
7. CONDITIONS TO OBLIGATIONS OF ARC.
All obligations of ARC to consummate the transactions contemplated by this
Agreement are subject to the fulfillment and satisfaction of each and every of
the following conditions on or prior to the Closing, any or all of which may be
waived in whole or in part by ARC:
7.1. Representations and Warranties. The representations and warranties
contained in Section 3 of this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of the Company
Shareholders in connection with the transactions contemplated by this Agreement
shall be true, correct and complete in all material respects (except for
representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true, correct and complete at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
7.2. Compliance with Agreements and Conditions. The Company Shareholders
and the Company shall have performed and complied with all material agreements
and conditions required by this Agreement to be performed or complied with by
them and/or by the Company prior to or on the Closing Date.
7.3. Absence of Material Adverse Changes. No material adverse change in
the business, assets, financial condition, or prospects of the Company or the
Subsidiaries shall have occurred, and no event shall have occurred which has had
or will have a material adverse effect on the business, assets, financial
condition or prospects of the Company or the Subsidiaries.
13
7.4. Certificate of the Company Shareholders. The Company Shareholders
shall have executed and delivered, or caused to be executed and delivered, to
ARC one or more certificates, dated the Closing Date, certifying in such detail
as ARC may reasonably request to the fulfillment and satisfaction of the
conditions specified in Sections 7.1 through 7.3 above.
8. CONDITIONS TO OBLIGATIONS OF THE COMPANY SHAREHOLDERS.
All of the obligations of the Company Shareholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment and
satisfaction of each and every of the following conditions on or prior to the
Closing, any or all of which may be waived in whole or in part by the Company
Shareholders:
8.1. Representations and Warranties. The representations and warranties
contained in Section 4 of this Agreement and in any certificate, instrument,
schedule, agreement or other writing delivered by or on behalf of ARC in
connection with the transactions contemplated by this Agreement shall be true
and correct in all material respects (except for representations and warranties
which are by their terms qualified by materiality, which shall be true, correct
and complete in all respects) when made and shall be deemed to be made again at
and as of the Closing Date and shall be true at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
8.2. Compliance with Agreements and Conditions. ARC shall have performed
and complied with all material agreements and conditions required by this
Agreement to be performed or complied with by ARC prior to or on the Closing
Date.
8.3. Absence of Material Adverse Changes. No material adverse change in
the assets or financial condition, of ARC and its Subsidiaries, taken as a
whole, shall have occurred and no event shall have occurred which has had, or
will have a material adverse effect on the assets or financial condition of ARC
and its Subsidiaries, taken as a whole.
8.4. Certificate of ARC. ARC shall have delivered to the Company
Shareholders a certificate, executed by an executive officer and dated the
Closing Date, certifying to the fulfillment and satisfaction of the conditions
specified in Sections 8.1 through 8.3 above.
9. INDEMNITY.
9.1. Indemnification by Company Shareholders. Subject to Section 9.5, the
Company Shareholders (hereinafter, collectively, called the "Shareholder
Indemnitors") shall jointly and severally defend, indemnify and hold harmless
ARC and its direct and indirect Subsidiaries (including the Company after
Closing) and affiliates, their officers, directors, employees and agents
(hereinafter, collectively, called "ARC Indemnitees") against and in respect of
any and all loss, damage, liability, fine, penalty, cost and expense, including
reasonable attorneys' fees and amounts paid in settlement (collectively, "ARC
Losses"), suffered or incurred by any ARC Indemnitee by reason of, or arising
out of:
14
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of the Company Shareholders contained in this
Agreement or in any certificate, schedule, instrument or document delivered to
ARC by or on behalf of the Company Shareholders or the Company pursuant to the
provisions of this Agreement (without regard to materiality thresholds contained
therein); and
(b) any liabilities of the Company or the Subsidiaries of any nature
whatsoever (including tax liability, penalties and interest), whether accrued,
absolute, contingent or otherwise, (i) existing as of the date of the Balance
Sheet, and required to be shown therein in accordance with applicable GAAP, to
the extent not reflected or reserved against in full in the Balance Sheet; or
(ii) arising or occurring between August 31, 2005 and the Closing Date, except
for liabilities arising in the ordinary course of business, none of which shall
have a material adverse effect on the Company.
9.2. Indemnification by ARC. Subject to Section 9.5, ARC (hereinafter
called the "ARC Indemnitor") shall jointly and severally defend, indemnify and
hold harmless the Company Shareholders (hereinafter called "Shareholder
Indemnitees") against and in respect of any and all loss, damage, liability,
fine, penalty, cost and expense, including reasonable attorneys' fees and
amounts paid in settlement (collectively, "Shareholder Losses"), suffered or
incurred by any Shareholder Indemnitees by reason of, or arising out of:
(a) any misrepresentation, breach of warranty or breach or
non-fulfillment of any material agreement of ARC contained in this Agreement or
in any other certificate, schedule, instrument or document delivered to the
Company Shareholders by or on behalf of ARC pursuant to the provisions of this
Agreement (without regard to materiality thresholds contained therein); and
(b) any liabilities of the Company of any nature whatsoever
(including tax liability, penalties and interest), whether accrued, absolute,
contingent or otherwise, arising from ARC's ownership or operation of the
Company after Closing, but only so long as such liability is not the result of
an act or omission of the Company or the Company Shareholders occurring prior to
the Closing. ARC Losses and Shareholder Losses are sometimes collectively
referred to as "Indemnifiable Losses."
9.3. Defense of Claims.
(a) Each party seeking indemnification hereunder (an "Indemnitee"):
(i) shall provide the other party or parties (the "Indemnitor") written notice
of any claim or action by a third party arising after the Closing Date for which
an Indemnitor may be liable under the terms of this Agreement, within ten (10)
days after such claim or action arises and is known to Indemnitee, and (ii)
shall give the Indemnitor a reasonable opportunity to participate in any
proceedings and to settle or defend any such claim or action. The expenses of
all proceedings, contests or lawsuits with respect to such claims or actions
shall be borne by the Indemnitor. If the Indemnitor wishes to assume the defense
of such claim or action, the Indemnitor shall give written notice to the
Indemnitee within ten (10) days after notice from the Indemnitee of such claim
or action, and the Indemnitor shall thereafter assume the defense of any such
claim or liability, through counsel reasonably satisfactory to the Indemnitee,
provided that Indemnitee may participate in such defense at their own expense,
and the Indemnitor shall, in any event, have the right to control the defense of
the claim or action.
15
(b) If the Indemnitor shall not assume the defense of, or if after
so assuming it shall fail to defend, any such claim or action, the Indemnitee
may defend against any such claim or action in such manner as they may deem
appropriate and the Indemnitees may settle such claim or litigation on such
terms as they may deem appropriate but subject to the Indemnitor's approval,
such approval not to be unreasonably withheld; provided, however, that any such
settlement shall be deemed approved by the Indemnitor if the Indemnitor fails to
object thereto, by written notice to the Indemnitee, within fifteen (15) days
after the Indemnitor's receipt of a written summary of such settlement. The
Indemnitor shall promptly reimburse the Indemnitee for the amount of all
expenses, legal and otherwise, incurred by the Indemnitee in connection with the
defense and settlement of such claim or action.
(c) If a non-appealable judgment is rendered against any Indemnitee
in any action covered by the indemnification hereunder, or any lien attaches to
any of the assets of any of the Indemnitee, the Indemnitor shall immediately
upon such entry or attachment pay such judgment in full or discharge such lien
unless, at the expense and direction of the Indemnitor, an appeal is taken under
which the execution of the judgment or satisfaction of the lien is stayed. If
and when a final judgment is rendered in any such action, the Indemnitor shall
forthwith pay such judgment or discharge such lien before any Indemnitee is
compelled to do so.
9.4. Waiver. The failure of any Indemnitee to give any notice or to take
any action hereunder shall not be deemed a waiver of any of the rights of such
Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
9.5. Limitations on Indemnification. Notwithstanding anything to the
contrary contained in this Agreement:
9.5.1. Time Limitation. No party shall be responsible
hereunder for any Indemnifiable Loss unless the Indemnitee shall have provided
such party with written notice containing a reasonable description of the claim,
action or circumstances giving rise to such Indemnifiable Loss within three (3)
years after the Closing Date (the "Indemnity Notice Period"); provided, however,
that:
(a) with respect to any Indemnifiable Loss resulting or arising from
any breach of a representation or warranty of the Company Shareholders relating
to taxes, or any tax liability of the Company arising or relating to periods
prior to the Closing Date, the Indemnity Notice Period shall extend for the full
duration of the statute of limitations; and
(b) there shall be no limit on the Indemnity Notice Period for
indemnity claims: (i) against the Company Shareholders for Indemnifiable Losses
arising or resulting from a breach of a representation or warranty relating to
Environmental Laws, or any liability which relates to the handling or disposal
of Wastes or the failure to comply with any Environmental Law; and (ii) against
any party based on fraud or intentional breach or misrepresentation.
9.5.2. Caps on Losses. The aggregate liability of the Company
Shareholders after the Closing for ARC Losses shall not exceed an amount equal
to the Exchange Consideration paid to the Company Shareholders. The aggregate
liability of ARC after the Closing for Shareholder Losses shall not exceed the
Exchange Consideration paid to the Company Shareholders.
16
9.5.3. Basket. No party shall have any liability hereunder for
Indemnifiable Losses after the Closing, with respect to a breach of the
representations and warranties contained herein, until the aggregate of all
Indemnifiable Losses for which the Shareholder or ARC as applicable, are
responsible under this Agreement exceeds Ten Thousand ($10,000) Dollars (the
"Basket"); provided that once such Basket is exceeded for the Company
Shareholders or ARC as applicable, the responsible party or parties shall be
responsible for all Indemnifiable Losses, from the first dollar as if such
Basket never existed; and further provided that this Section 9.5.3 shall not
limit in any respect indemnity claims: (a) based upon fraud or intentional
breach or intentional misrepresentation; (b) arising from a breach by the ARC
Indemnitor of any covenant contained in this Agreement; (c) arising from a
breach by the Company Shareholders of any representation or warranty contained
in Section 3.2 hereof; or (d) related to any tax or tax liability of the Company
for periods prior to the Closing Date.
10. TERMINATION.
10.1. Termination. This Agreement may be terminated at any time on or
prior to the Closing:
(a) By mutual consent of ARC and the Company Shareholders; or
(b) At the election of ARC if: (i) the Company Shareholders have
breached or failed to perform or comply with any of his representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 7 is not satisfied as and when
required by this Agreement; or (iii) the Closing has not been consummated by
November 30, 2005.
(c) At the election of the Company Shareholders if: (i) ARC has
breached or failed to perform or comply with any of its representations,
warranties, covenants or obligations under this Agreement; or (ii) any of the
conditions precedent set forth in Section 6 or 8 is not satisfied as and when
required by this Agreement; or (iii) the Closing has not been consummated by
November 30, 2005.
10.2. Manner and Effect of Termination. Written notice of any termination
("Termination Notice") pursuant to this Section 10 shall be given by the party
electing termination of this Agreement ("Terminating Party") to the other party
or parties (collectively, the "Terminated Party"), and such notice shall state
the reason for termination. The party or parties receiving Termination Notice
shall have a period of ten (10) days after receipt of Termination Notice to cure
the matters giving rise to such termination to the reasonable satisfaction of
the Terminating Party. If the matters giving rise to termination are not cured
as required hereby, this Agreement shall be terminated effective as of the close
of business on the tenth (10th) day following the Terminated Party's receipt of
Termination Notice. Upon termination of this Agreement prior to the consummation
of the Closing and in accordance with the terms hereof, this Agreement shall
become void and of no effect, and none of the parties shall have any liability
to the others, except that nothing contained herein shall relieve any party
from: (a) its obligations under Sections 2.2 and 2.3; or (b) liability for its
intentional breach of any representation, warranty or covenant contained herein,
or its intentional failure to comply with the terms and conditions of this
Agreement or to perform its obligations hereunder.
17
11. MISCELLANEOUS.
11.1. Notices.
(a) All notices, requests, demands, or other communications required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given upon receipt if delivered in person, or upon the expiration of four (4)
days after the date sent, if sent by federal express (or similar overnight
courier service) to the parties at the following addresses:
(i) If to ARC: American Racing Capital, Inc.
0000 Xxxxxxxx Xxxxx Xxxxxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxx
with a copy to: Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx, LLP
000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx 0000, Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
(ii) If to the Company:
(iii) If to Company The name and address as listed on the Shareholders:
Exhibit A attached hereto.
(b) Notices may also be given in any other manner permitted by law,
effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
11.2. Survival. Except as provided in the next sentence, the
representations, warranties, agreements and indemnifications of the parties
contained in this Agreement or in any writing delivered pursuant to the
provisions of this Agreement shall survive any investigation heretofore or
hereafter made by the parties and the consummation of the transactions
contemplated herein and shall continue in full force and effect after the
Closing, subject to the limitations of Section 9.5. The representations,
warranties and agreements of the Company contained in this Agreement shall not
survive the Closing.
18
11.3. Counterparts; Interpretation. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument. This Agreement supersedes
all prior discussions and agreements between the parties with respect to the
subject matter hereof, and this Agreement contains the sole and entire agreement
among the parties with respect to the matters covered hereby. All Schedules
hereto shall be deemed a part of this Agreement. This Agreement shall not be
altered or amended except by an instrument in writing signed by or on behalf of
all of the parties hereto. No ambiguity in any provision hereof shall be
construed against a party by reason of the fact it was drafted by such party or
its counsel. For purposes of this Agreement: "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular section or paragraph. References to
"including" means including without limiting the generality of any description
preceeding such term. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person other than
the parties hereto any rights or remedies under or by reason of this Agreement.
11.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada. The parties hereto agree that
any claim, suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby shall be submitted for
adjudication exclusively in any state or federal court sitting in Miami-Dade
County, Florida, and each party hereto expressly agrees to be bound by such
selection of jurisdiction and venue for purposes of such adjudication. Each
party (a) waives any objection which it may have that such court is not a
convenient forum for any such adjudication, (b) agrees and consents to the
personal jurisdiction of such court with respect to any claim or dispute arising
out of or relating to this Agreement or the transactions contemplated hereby and
(c) agrees that process issued out of such court or in accordance with the rules
of practice of such court shall be properly served if served personally or
served by certified mail or other form of substituted service, as provided under
the rules of practice of such court.
11.5. Successors and Assigns; Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, legal representatives, and successors; provided, however, that
no Shareholder may assign this Agreement or any rights hereunder, in whole or in
part.
11.6. Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any terms of this Agreement not essential to the commercial
purpose of this Agreement shall be held to be illegal, invalid or unenforceable
by a court of competent jurisdiction, it is the intention of the parties that
the remaining terms hereof shall constitute their agreement with respect to the
subject matter hereof and all such remaining terms shall remain in full force
and effect. To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose of the illegal, invalid or
unenforceable provision.
11.7. Waiver. Any term or condition of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
a party hereto to exercise, and no delay in exercising, any right, power or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or remedy by any such party
preclude any other future exercise thereof or the exercise of any other right,
power or remedy. No waiver by any party hereto to any breach of or default in
any term or condition of this Agreement shall constitute a waiver of or assent
to any succeeding breach of or default in the same or any other term or
condition hereof.
19
11.8. Headings. The headings as to contents of particular paragraphs of
this Agreement are inserted for convenience only and shall not be construed as a
part of this Agreement or as a limitation on the scope of any terms or
provisions of this Agreement.
11.9. Expenses. Except as otherwise expressly provided herein, all legal
and other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by ARC or the Company
Shareholders as each party incurs such expenses, and none of such expenses shall
be charged to or paid by the Company.
11.10. Finder's Fees. ARC represents to the Company Shareholders that no
broker, agent, finder or other party has been retained by it in connection with
the transactions contemplated hereby and that no other fee or commission has
been agreed by the ARC to be paid for or on account of the transactions
contemplated hereby. The Company Shareholders represent to ARC that no broker,
agent, finder or other party has been retained by Shareholders or the Company in
connection with the transactions contemplated hereby and that no other fee or
commission has been agreed by the Company Shareholders or the Company to be paid
for or on account of the transactions contemplated hereby.
11.11. Gender. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the
singular, and the use of any gender shall include any and all genders.
11.12. Acceptance by Fax. This Agreement shall be accepted, effective and
binding, for all purposes, when the parties shall have signed and transmitted to
each other, by telecopier or otherwise, copies of the signature pages hereto.
11.13. Attorneys Fees. In the event of any litigation arising under the
terms of this Agreement, the prevailing party or parties shall be entitled to
recover its or their reasonable attorneys fees and court costs from the other
party or parties.
11.14. Opportunity to Hire counsel; Role of Xxxxxxxxxxx & Xxxxxxxx
Xxxxxxxxx Xxxxxx LLP. The Company Shareholders acknowledge that they have been
advised and have been given an opportunity to hire counsel with respect to this
Agreement and the transactions contemplated hereby. The Company Shareholders
further acknowledge that the law firm of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx
LLP did not provide them any legal advice, including any tax advice with respect
to the transactions contemplated by this Agreement. The Company Shareholders
further acknowledge that the law firm of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx
LLP has solely represented ARC in connection with this Agreement and the
transactions contemplated hereby and no other person.
20
11.15. Time is of the Essence. It is understood and agreed among the
parties hereto that time is of the essence in this Agreement and this applies to
all terms and conditions contained herein.
11.16. NO JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES' ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement to be duly
executed by their duly authorized officers as of the day and year first above
written.
AMERICAN RACING CAPITAL, INC.,
a Nevada corporation
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
----------------------------------
Title: President
----------------------------------
COMPANY SHAREHOLDERS:
Xxx Xxxxxxxxx
By: /s/ Xxx Xxxxxxxxx
----------------------------------
Name: Xxx Xxxxxxxxx
----------------------------------
Acorn, LLC
By: /s/ Xxxx X. Xxxxx, Xx.
----------------------------------
Name: Xxxx X. Xxxxx, Xx.
----------------------------------
Title: Managing Partner
----------------------------------
THE COMPANY:
ARC DEVELOPMENT CORPORATION
a Nevada corporation
By: /s/ Xxx Xxxxxxxxx
----------------------------------
Name: Xxx Xxxxxxxxx
----------------------------------
Title: President
----------------------------------
22
