ACQUISITION AGREEMENT AND PLAN OF MERGER
EXHIBIT
2.1
ACQUISITION
AGREEMENT AND PLAN OF MERGER
This
ACQUISITION AND PLAN OF MERGER AGREEMENT ("Agreement") is made on this 26 day
of
October, 2007 by and among BASIC SERVICES, INC. a Nevada corporation (the
"Parent"), Adrenalina, a Nevada Corporation (the "Dissolving Corporation")
and
LQD Adrenalina, LLC and its subsidiaries, a Florida Limited Liability Company
(the "LLC").
RECITALS:
A.
Parent
is a corporation formed under the laws of the State of Nevada pursuant to
Articles of Incorporation filed with the Nevada Secretary of State on March
28,
2007 (the "Articles of Incorporation").
B.
The
Dissolving Corporation is a Nevada Corporation formed under the laws of the
State of Nevada on September 6, 2007, as a subsidiary of Basic Services,
Inc..
C.
The
LLC is a Limited Liability Company formed under the laws of the State of Florida
pursuant to Articles of Organization filed with the Florida Secretary of State
on September 13, 2004.
D.
The
respective Boards of Directors of the Parent and the majority shareholders
of
the Parent have determined that a merger of the LLC with and into the Dissolving
Corporation and the Merger of the Dissolving Corporation with and into the
Parent (the "Merger"), upon the terms and subject to the conditions set forth
in
this Agreement, would be fair and in the best interests of its respective
shareholders, and its Board of Directors has approved such Merger, pursuant
to
which the Units of the LLC ("LLC Units") issued and outstanding immediately
prior to the Effective Date of the Merger (as defined herein) will be exchanged
for shares of the Dissolving Corporation which will be converted into shares
of
the Capital Stock of the Parent ("Parent Capital Stock").
E.
The
respective Boards of Directors of the Dissolving Corporation and the majority
shareholders of the Dissolving Corporation have determined that a merger of
the
LLC with and into the Dissolving Corporation and the Merger of the Dissolving
Corporation with and into the Parent (the "Merger"), upon the terms and subject
to the conditions set forth in this Agreement, would be fair and in the best
interests of its respective shareholders, and its Board of Directors has
approved such Merger, pursuant to which the LLC Units issued and outstanding
immediately prior to the Effective Date of the Merger (as defined herein) will
be exchanged for shares of the Dissolving Corporation which will be converted
into shares of the Parent Capital Stock.
G.
The
Parent, Dissolving Corporation, and the LLC desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
H.
For
federal income tax purposes, the parties intend that the Merger shall qualify
as
a reorganization under the provisions of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
NOW,
THEREFORE, in consideration of the representations, warranties, covenants and
agreements contained in this Agreement, the parties agree as
follows:
I.
DEFINITIONS
When
used
in this Agreement (and any Exhibits and Schedules in which terms are not
otherwise defined), the following terms shall have the following
meanings:
1.01
Capital Stock
"Capital
Stock" shall mean the outstanding shares of common stock, $0.001 par value,
of
Parent or Dissolving Corporation.
1.02
Certificate of Merger
"Certificate
of Merger" shall mean a Certificate of Merger in substantially the form attached
to this Agreement as Exhibit A and to be filed with the States of Nevada and
Florida.
1.03
Closing
"Closing"
shall mean the closing of the transactions contemplated by this
Agreement.
1.04
Effective Date
"Effective
Date" shall mean the later date of which the Certificate of Merger is properly
filed with the Secretaries of State of Florida and Nevada as required under
the
applicable provisions of the law of such jurisdictions, or such later date
as
may be agreed by the parties and set forth in the Certificate of
Merger.
1.05
LLC
Unit
"LLC
Unit" shall mean a unit of membership interest in the LLC.
"Surviving
Corporation" shall mean the Parent from and after the Effective Date, which
shall remain a Parent organized under the laws of the State of Nevada and Nevada
Statutes.
1.07
Material Adverse Change
"Material
Adverse Change" or "Material Adverse Effect" means, when used in connection
with
the LLC or Parent, any change or effect that either individually or in the
aggregate with all other such changes or effects is materially adverse to the
business, assets, properties, condition (financial or otherwise) or results
of
operations of such party and its subsidiaries taken as a whole (after giving
effect in the case of Parent to the consummation of the Merger).
1.08
Person
"Person"
means an individual, corporation, partnership, joint venture, association,
trust, unincorporated organization or other entity.
1.09
Subsidiary
A
"Subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which
is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, fifty percent (50%)
or more of the equity interests of which) is owned directly or indirectly by
such first person.
II.
THE MERGER
2.01
The
Merger. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Nevada Corporations Code (the "Nevada
Statutes") and Florida Revised Statutes (the "Florida Statutes"), the LLC shall
be merged with and into the Dissolving Corporation and the Dissolving
Corporation shall be merged into the Parent at the Effective Date of the Merger.
At the Effective Date of the Merger, the separate existence of the LLC and
the
Dissolving Corporation shall cease, and the Parent shall continue as the
surviving corporation (the "Surviving Corporation") and shall change its name
to
Adrenalina, Inc. by filing an amendment to its Articles of Incorporation with
the Secretary of State of Nevada.
2.02
Closing. Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 9.1 and
subject to the satisfaction or waiver of the conditions set forth in Article
IV,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on
the
business day after satisfaction of the conditions set forth in Article IV (or
as
soon as practicable thereafter following satisfaction or waiver of the
conditions set forth in Article IV) (the "Closing Date"), at the Law Offices
of
Xxxxxx X. Xxxx, 000 X. Xxxxxxx, Xxxxx 000, Xxx Xxxxx, XX, unless another date,
time or place is agreed to in writing by the parties hereto.
At
or
prior to Closing, the following will occur:
(a)
The
LLC Unit Holders shall surrender the certificates evidencing one hundred percent
(100%) of the LLC Units, duly endorsed with Medallion Guaranteed stock powers
attached and all Units of the LLC issued and outstanding immediately prior
to
the Effective Date of the Merger, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such LLC Units shall cease to have any rights
with respect thereto, except the common shares of the Surviving Corporation
to
be issued in consideration therefore upon surrender of such certificate
representing LLC Units.
(b)
The
shareholders of the Dissolving Corporation shall surrender the certificates
evidencing one hundred percent (100%) of the Dissolving Corporation's Capital
Stock, duly endorsed with Medallion Guaranteed stock powers attached and all
Capital Stock of the Dissolving Corporation issued and outstanding immediately
prior to the Effective Date of the Merger, shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and
each
holder of a certificate representing any such Capital Stock of the Dissolving
Corporation shall cease to have any rights with respect thereto, except the
common shares of the Surviving Corporation to be issued in consideration
therefore upon surrender of such certificate representing Capital Stock of
the
Dissolving Corporation.
(c)
The
Dissolving Corporation will issue and deliver eighteen million (18,000,000)
shares of its Capital Stock to the Parent representing Shares issued in exchange
for one hundred percent (100%) of the LLC Units. The parent will then issue
and
deliver eighteen million (18,000,000) of the Parent's Capital Stock, as set
forth hereof in accordance with this agreement in exchange for the Dissolving
Corporation's shares.
(d)
Directors. The directors of the Parent shall resign and Xxxx Xxxxxx, Xxxxxxx
Xxxxxx, Xxxxx Xxxxxxx and Xxxxxx Xxxxxxxxx shall be the directors of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
(e)
Officers. At Closing, the officers of the Parent shall resign and the officers
nominated by the LLC shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be. The board will appoint
Xxxx
Xxxxxx as Chairman and CEO; Xxxxxxx Xxxxxx as President, CFO, and COO; Xxxxxxx
Xxxxxxx as Chief Technology Officer; and Xxxxxxxx Xxxxxxxx as Senior VP of
Media
Operations.
(f)
At
Closing, the Surviving Company will issue 353,000 unregistered shares to Gilford
Securities, New York, NY to be paid as referral fee compensation for the
introduction to LQD Adrenalina, LLC. The two largest shareholders of Basic
Services, Inc. have agreed to pay Gilford Securities the sum of Thirty Thousand
($30,000) Dollars for the introduction, and the Parent has agreed to transfer
the assets, any intellectual property and liabilities to the two largest
shareholders of Basic Services, Inc.
2.04
Effective Date of Merger. As soon as practicable following the satisfaction
or
waiver of the conditions set forth in Article IV, the parties shall file
Articles of Merger with the respective Secretaries of State of Florida and
Nevada (the "Articles of Merger") executed in accordance with the relevant
provisions of the Nevada and Florida Statutes shall make all other filings
or
recordings required under such Statutes. The Merger shall become effective
at
the later of such date as the Articles of Merger are duly filed with the
Secretaries of State of Nevada and Florida, or at such other time as is
permissible in accordance with the Nevada and Florida Statutes and as the Parent
and the LLC shall agree (the time the Merger becomes effective being the
"Effective Date of the Merger"). Parent shall use reasonable efforts to have
the
Closing Date and the Effective Date of the Merger to be the same
day.
2.05
Effects of the Merger. The Merger shall have the effects set forth in the
applicable provisions of Nevada and Florida Statutes.
2.06
Articles of Incorporation; Bylaws; Purposes.
(a)
The
Certificate of Incorporation of the Parent in effect immediately prior to the
Effective Date of the Merger shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein
or
by applicable law.
(b)
The
Bylaws of the Parent in effect at the Effective Date of the Merger shall be
the
Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(c)
The
purposes of the Surviving Corporation and the total number of its authorized
capital stock shall be as set forth in the Certificate of Incorporation of
the
Parent in effect immediately prior to the Effective Date of the Merger until
such time as such purposes and such number may be amended as provided in the
Certificate of Incorporation of the Surviving Corporation and by applicable
law.
3.01
Effect on Capital Stock. As of the Effective Date of the Merger, by virtue
of
the Merger and without any action on the part of the holders of the LLC
Units:
(a)
Exchange. At closing, each LLC Unit issued and outstanding immediately prior
to
the Effective Date of the Merger shall be converted so than one and eight tenths
(1.8) shares of Dissolving Corporation's Capital Stock is issued for each one
(1) LLC Unit held and which shall be exchanged into the Parent's Capital Stock
at a ratio of one (1) share of the Dissolving Corporation's stock for one (1)
share of Parent's Capital Stock ("the Merger Consideration"). Upon Closing
the
newly issued Capital Stock of the Parent shall be the issued and outstanding
capital stock of the Surviving Corporation. After the issuance of the Merger
Consideration the Surviving Corporation shall have 18,353,000 shares of its
Capital Stock outstanding.
(b)
No
fractional Stock shall be issued in the Merger. If the product of the number
of
shares a LLC shareholder holds immediately prior to the Closing multiplied
by
the exchange ratio would result in the issuance of a fractional share of
Dissolving Corporation's Capital Stock, that product will be rounded down to
the
nearest whole number of shares of Dissolving Corporation's Capital Stock and
be
exchanged for Parent Capital Stock if it is equal to or less than the fraction
of one-half (.5) of one Parent Capital Stock or round up to the nearest whole
number of shares of Parent Capital Stock if the said product is greater than
the
fraction of one-half (.5) of one Parent Capital Stock.
(c)
If at
any time after the Effective Date, the Surviving Corporation considers or is
advised that any other actions or things are necessary or desirable (a) to
vest,
perfect, or confirm of record or otherwise in the LLC its right, title, or
interest in, to, or under any of the rights, properties, or assets of the LLC
or
(b) to otherwise carry out the provisions of this Agreement, the Surviving
Corporation is authorized, in the name and on behalf of the LLC, to execute
and
deliver all proper deeds, assignments, confirmations, and assurances in law,
and
do all such actions as may be necessary or desirable to vest, perfect, or
confirm in the Surviving Corporation all rights, title, and interests in, to,
and under such rights, properties, or assets or to otherwise carry out this
Agreement.
(d)
The
present Officers and Directors of Parent will cooperate and sign an undertaking
to assist the Surviving Corporation in all respects disclosing the transactions
set forth herein and other information required by the Securities Act of
1933.
(e)
After
the Effective Date of the Merger, there shall be no further transfer on the
records of the LLC of certificates representing the LLC Units and there shall
be
no further transfer on the records of the Dissolving Corporation of certificates
representing the Securities of the Dissolving Corporation. If any certificate
for such Parent Capital Stock is to be issued in a name other than that in
which
the certificate for Dissolving Corporation's or the LLC Securities surrendered
for exchange is registered, it shall be a condition of such exchange that the
certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and that the person
requesting such exchange shall pay to Parent or its transfer agent any transfer
or other taxes or other costs required by reason of the issuance of certificates
for such Parent Capital Stock in a name other than that of the registered holder
of the certificate surrendered, or establish to the satisfaction of Parent
or
its transfer agent that all taxes have been paid.
(f)
No
Further Ownership Rights in Dissolving Corporation's Capital Stock. All shares
of Parent Capital Stock issued upon the surrender of the Dissolving
Corporation's Capital Stock in accordance with the terms of this Article III
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the Dissolving Corporation's Capital Stock theretofore
represented by such certificates.
(g)
No
Further Ownership Rights in LLC Units. All shares of Dissolving Corporation's
Capital Stock issued upon the surrender of the LLC Units in accordance with
the
terms of this Article III shall be deemed to have been issued (and paid) in
full
satisfaction of all rights pertaining to the LLC Units theretofore represented
by such certificates.
(h)
Closing. One hundred percent (100%) of the Certificates representing the LLC
Units shall be delivered to Dissolving Corporation for cancellation and one
hundred percent (100%) of the Certificates representing the Dissolving
Corporation's shares shall be delivered to Parent for cancellation.
IV.
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE LLC TO CLOSE
The
obligation of the LLC to complete the Closing is subject, at the option of
the
LLC, to the fulfillment on or prior to the Closing Date of the following
Conditions, any one or more of which may be waived by the LLC and Shareholders
in writing:
4.01
Representations and Covenants. The representations and warranties of the Parent
and Dissolving Corporation contained in this Agreement shall be true in all
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. The Parent and Dissolving Corporation shall
have performed and complied with all covenants and agreements required by this
Agreement to be performed or complied with by the Parent and Dissolving
Corporation on or prior to the Closing Date.
4.03
Satisfactory Business Review. The LLC and their representatives shall have
completed the review of the business of Parent and Dissolving Corporation
contemplated by this Agreement, that none of the information revealed thereby
or
in the Financial Statements has resulted in, or in the opinion of them may
result in, an adverse change in the assets, properties, business, operations
or
condition (financial or otherwise) of Parent or Dissolving
Corporation.
4.04
No
Material Adverse Change. Between the date of this Agreement and the Closing
Date: (a) there shall have been no material adverse change to Parent or
Dissolving Corporation or their respective business, financial position, or
results of operation excluding events which affect companies business generally;
(b) there shall have been no adverse federal, state, or local legislative or
regulatory change affecting in any material respect the services, products
or
business of Parent or Dissolving Corporation; and (c) none of the properties
or
assets of Parent or Dissolving Corporation or its subsidiaries shall be damaged
by fire, flood, casualty, act of God or the public enemy or other cause
(regardless of insurance coverage for such damage) which damage may, in the
opinion of LLC have a material adverse affect on Parent.
4.05
Litigation. No action, suit, or proceeding shall have been instituted before
any
court or governmental or regulatory body or instituted or threatened by any
governmental or regulatory body, to restrain, modify or prevent the carrying
out
of the transactions contemplated hereby, or to seek damages or a discovery
order
in connection with such transactions, or which has or may have, in the opinion
of the Dissolving Corporation, Parent and their Shareholders, a material adverse
affect on the assets, properties, business, operations, or condition (financial
or otherwise) of Parent or Dissolving Corporation.
4.06
Parent will obtain Majority Shareholder approval for the Merger prior to
Closing.
4.07
Review of Financial Statements. The LLC designated representatives shall
complete a satisfactory review of Financial Statements of Parent and Dissolving
Corporation immediately prior to Closing in accordance with the provisions
herein.
4.09
Xxxx
XxXxxxxxx, an individual shareholder of the Parent shall deliver certificates
of
the Parent representing an aggregate of 9,773,750 shares of the Capital Stock
of
the Parent with medallion guaranteed stock powers attached along with
irrevocable instructions to the transfer agent to cancel such certificates
and
upon such cancellation immediately prior to Closing Parent will have 1,100,000
shares of its Capital Stock outstanding.
4.10
Dissolving Corporation shall have conducted no operations, had no activity
and
have not issued or undertaken any obligation to issue any securities of any
nature other than in connection with the Merger as set forth
herein.
4.11
Other Documents. Parent and Dissolving Corporation shall have delivered such
other documents, instruments, and certificates, if any, as are required to
be
delivered pursuant to the provisions of this Agreement or which may reasonably
be requested in furtherance of the provisions of this Agreement.
4.12
Agreement. The officers of Parent and Dissolving Corporation shall have
delivered to LLC duly executed copies of this Agreement and the Certificate
of
Merger as required by applicable law.
4.13
Shareholder Approval. This Agreement and the transactions contemplated by this
Agreement shall have been approved by one hundred percent (100%) of the Unit
Holders of the LLC, one hundred percent (100%) of the Shareholders of the
Dissolving Corporation, and by the majority of the Shareholders of the
Parent.
4.14
No
Outstanding Opinions. Immediately before the Closing, there shall be no options,
warrants, or other securities or agreements outstanding for the purchase of
any
Capital Stock or other interest in Parent.
4.15
Other Legal Requirements. All statutory and other legal requirements for the
valid consummation of the Merger shall have been fulfilled. No law or regulation
shall have passed or been enacted that would prevent the consummation of the
transactions contemplated by this Agreement.
4.16
Financial Condition. Dissolving Corporation shall have no assets and no
liabilities at the time of Closing.
V.
DOCUMENTS TO BE FURNISHED TO LLC BY PARENT AND DISSOLVING
CORPORATION
(a)
Certified copies of resolutions of the Parent and Dissolving Corporation
approving and authorizing the execution, delivery and performance of this
Agreement and authorizing all of the necessary and proper action to enable
Parent and Dissolving Corporation to comply with the terms of this
Agreement.
(b)
The
Corporate Book of Parent and Dissolving Corporation.
(c)
A
list of the states where Parent and Dissolving Corporation are qualified to
do
business.
(e)
A
list of the officers and directors of Parent and Dissolving
Corporation.
(f)
Copies of the Articles of Incorporation and bylaws currently in effect of Parent
and Dissolving Corporation.
(g)
Copies of all contracts, agreements or commitments in which Parent or Dissolving
Corporation is a party.
(h)
A
list of all fringe benefit plans and programs applying to employees of Parent
and Dissolving Corporation including but not limited to, pension, profit
sharing, life insurance, medical, bonus, incentive and similar plans and the
approximate annual cost of each.
(i)
A
list of all employees of Parent and Dissolving Corporation.
(j)
A
list of all letters, patents, patent applications, inventions upon which patent
application have not yet been filed, trade names, trademarks, trademark
registrations and applications, copyrights, copyright registrations, both
domestic and foreign presently owned by Parent and Dissolving Corporation
together with the corporate owner.
(k)
Copies of all financing or loan agreements, mortgages or similar agreements
to
which Parent and Dissolving Corporation are a party.
(l)
A
list of all Parent's and Dissolving Corporation's bank accounts, brokerage
accounts, safety deposit boxes, with the authorized signers
indicated.
(m)
Copies of all powers of attorney granted by Parent or Dissolving
Corporation.
(n)
A
list of each insurance policy owned by Parent, with the name of the insurance
carrier, the policy number, a brief description of the coverage, the annual
premium, the corporate owner and any claims pending.
(o)
A
certificate from the Chief Executive Officer of Parent and Dissolving
Corporation, to the effect that all representations and warranties of Parent
and
Dissolving Corporation made under this Agreement are true and correct as of
the
Closing, the same as though originally given to LLC on said date.
(p)
Such
other instruments and documents as are required to be delivered pursuant to
the
provisions of this Agreement.
(q)
Corporate minutes and/or resolutions reflecting the Resignations and Appoints
set forth in Section 2.03 (c) and (d).
(t)
The
irrevocable transfer agent instruction set forth in Section 4.09 hereof,
requesting the cancellation of 9,773,750 Capital Stock of Parent.
VI.
REPRESENTATIONS AND WARRANTIES
6.01
Representations and Warranties of the LLC. Except as set forth in the LLC
Disclosure Schedule the LLC represents and warrants to Parent as
follows:
(a)
Organization, Standing and Corporate Power. The LLC is a Florida Limited
Liability Company duly organized, validly existing and in good standing under
the laws of the State of Florida and has the requisite organizational power
and
authority to carry on its business as now being conducted. The LLC is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing
of
its properties makes such qualification or licensing necessary, other than
in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect
(as
defined in Section 1.7) with respect to the LLC.
(b)
Subsidiaries. The LLC has the subsidiaries listed on the LLC Disclosure
Schedule.
(c)
Capital Structure. The members equity of the LLC consists of ten million
(10,000,000) Units of the LLC'S Membership Interests which are issued and
outstanding and held by twenty-seven (27) equity members. Except as set forth
herein the LLC has no other securities of any nature issued, reserved for
issuance or outstanding. All outstanding LLC Units are duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive rights.
There are no outstanding bonds, debentures, notes or other indebtedness or
other
securities of the LLC having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
members of the LLC may vote. There are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the LLC is a party or by which it is bound obligating
the
LLC to issue, deliver or sell, or cause to be issued, delivered or sold,
additional LLC Units or other equity or voting securities of the LLC or
obligating the LLC to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations, commitments, understandings
or
arrangements of the LLC to repurchase, redeem or otherwise acquire or make
any
payment in respect of any LLC Units or securities of the LLC. There are no
agreements or arrangements pursuant to which the LLC is or could be required
to
register the LLC Units or other securities under the Securities Act of 1933,
as
amended (the "Securities Act") or other agreements or arrangements with or
among
any holders of the LLC Units or with respect to any securities of the
LLC.
(e)
Absence of Certain Changes or Events. Since September 13, 2004 (inception)
the
LLC has conducted its business only in the ordinary course consistent with
past
practice, and there is not and has not been: (i) any material adverse change
with respect to the LLC; (ii) any condition, event or occurrence which
individually or in the aggregate could reasonably be expected to have a material
adverse effect or give rise to a material adverse change with respect to the
LLC; (iii) any event which, if it had taken place following the execution of
this Agreement, would not have been permitted under the terms of this Agreement
without prior consent of Parent; or (iv) any condition, event or occurrence
which could reasonably be expected to prevent, hinder or materially delay the
ability of the LLC to consummate the transactions contemplated by this
Agreement.
(f)
Litigation; Labor Matters; Compliance with Laws.
(g)
There
is no suit, action or proceeding or investigation pending or, to the knowledge
of the LLC, threatened against or affecting the LLC or any basis for any such
suit, action, proceeding or investigation that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect with
respect to the LLC or prevent, hinder or materially delay the ability of the
LLC
to consummate the transactions contemplated by this Agreement, nor is there
any
judgment, decree,
injunction,
rule or order of any Governmental Entity or arbitrator outstanding against
the
LLC having, or which, insofar as reasonably could be foreseen by the LLC, in
the
future could have, any such effect.
(ii)
The
conduct of the business of the LLC complies with all statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees or arbitration awards
applicable thereto.
(h)
Environmental Matters. The LLC is in compliance with all applicable
Environmental Laws. "Environmental Laws" means all applicable federal, state
and
local statutes, rules, regulations, ordinances, orders, decrees and common
law
relating in any manner to contamination, pollution or protection of human health
or the environment, and similar state laws.
(j)
Properties. The LLC has good, clear and marketable titles to all the tangible
properties and tangible assets reflected in the latest balance sheet as being
owned by the LLC or acquired after the date thereof which are, individually
or
in the aggregate, material to the LLC's business (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all material liens.
(k)
Trademarks and Related Contracts. To the knowledge of the LLC:
(l)
As
used in this Agreement, the term "Trademarks" means trademarks, service marks,
trade names, Internet domain names, designs, slogans, and general intangibles
of
like nature; the term "Trade Secrets" means technology, trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models, and methodologies; the term "Intellectual Property" means patents,
copyrights, Trademarks, applications for any of the foregoing, and Trade
Secrets; the term "Company License Agreements" means any license agreements
granting any right to use or practice any rights under any Intellectual Property
(except for such agreements for shrink-wrap or click wrap software or other
off-the-shelf products that are generally available for less than $25,000),
and
any written settlements relating to any Intellectual Property, to which the
LLC
is a party or otherwise bound; and the term "Software" means any and all
computer programs, including any and all software implementations of algorithms,
models and methodologies, whether in source code or object code.
(ii)
To
the knowledge of the LLC, none of the LLC's Intellectual Property, Software
or
Company License Agreements infringe upon the rights of any third party that
may
give rise to a cause of action or claim against the LLC or its
successors.
(n)
Manager. The Managing Member of the LLC has determined that the terms of the
Merger are fair to and in the best interests of the Unit Holders of the LLC
and
recommended that the holders of the LLC Units approve the Merger.
(o)
Required LLC. The Holders of one hundred percent (100%) of the LLC Units will
approve the Merger (the "LLC Unit Holder Approval").
6.02
Representations and Warranties of Parent and Dissolving Corporation. Except
as
set forth in the disclosure schedule delivered by Parent to the LLC at the
time
of execution of this Agreement (the "Parent Disclosure Schedule"), Parent and
Dissolving Corporation represents and warrants to the LLC as
follows:
(a)
Organization, Standing and Corporate Power. Parent and Dissolving Corporation
are (or at Closing will be) duly organized, validly existing and in good
standing under the laws of the State of Nevada, as is applicable, and has the
requisite corporate power and authority to carry on its business as now being
conducted. Parent and Dissolving Corporation are duly qualified or licensed
to
do business and is in good standing in each jurisdiction in which the nature
of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the
failure to be so qualified or licensed (individually or in the aggregate) would
not have a material adverse effect with respect to Parent.
(b)
Subsidiaries. The only direct or indirect subsidiaries of Parent and Dissolving
Corporation are listed in the Parent Disclosure Schedule (the "Parent
Subsidiaries"). All the outstanding shares of capital stock of each such Parent
Subsidiary which is a corporation have been validly issued and are fully paid
and non-assessable and, except as set forth in the Parent Disclosure Schedule,
are owned (of record and beneficially) by Parent, free and clear of all Liens.
Except for the capital stock of its subsidiaries, which are corporations, Parent
does not own, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, business association, joint venture
or
other entity.
The
Parent is also authorized to issue 5,000,000 shares of preferred stock, $0.001
par value, none of which is issued and outstanding. Except as set forth herein,
no shares of capital stock or other equity securities of Parent are issued,
reserved for issuance or outstanding. All outstanding shares of capital stock
of
Parent are, and all shares which may be issued pursuant to this Agreement will
be, when issued, duly authorized, validly issued, fully paid and non-assessable
and, not subject to preemptive rights, and issued in compliance with all
applicable state and federal laws concerning the issuance of securities. There
are no outstanding bonds, debentures, notes or other indebtedness or other
securities of Parent having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) of the Parent. There
are
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Parent is a party
or by which any of them is bound obligating Parent to issue, deliver or sell,
or
cause to be issued, delivered or sold, additional shares of capital stock or
other securities of Parent or any of its subsidiaries or obligating Parent
or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity securities
of Parent or any of its subsidiaries or obligating Parent or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding contractual obligations, commitments, understandings or
arrangements of Parent or any of its subsidiaries to repurchase, redeem or
otherwise acquire or make any payment in respect of any shares of capital stock
or other Securities of Parent or any of its subsidiaries.
(d)
Authority; Non-contravention. Parent and Dissolving Corporation have all
requisite corporate authority to enter into this Agreement and to consummate
the
transactions contemplated by this Agreement. The execution and delivery of
this
Agreement by Parent and the consummation by Parent of the transactions
contemplated by this Agreement has been (or at Closing will have been) duly
authorized by all necessary corporate action on the part of Parent. This
Agreement has been duly executed and delivered by and constitutes a valid and
binding obligation of Parent, enforceable in accordance with its terms. The
execution and delivery of this Agreement does not, and the consummation of
the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any breach or violation
of, or default (with or without notice or lapse of time, or both) under, or
give
rise to a right of termination, cancellation or acceleration of or "put" right
with respect to any obligation or to loss of a material benefit under, or result
in the creation of any lien upon any of the properties or assets of Parent
or
any of its subsidiaries under, (i) the Articles of Incorporation or bylaws
of
Parent or the comparable charter or organizational documents of any other
subsidiary of Parent, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit,
concession,
franchise
or license applicable to Parent, or any subsidiary of Parent or their respective
properties or assets, or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule, regulation or arbitration award applicable to
Parent or any subsidiary of Parent or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts, breaches,
violations, defaults, rights, losses or liens that individually or in the
aggregate could not have a material adverse effect with respect to Parent or
could not prevent, hinder or materially delay the ability of Parent to
consummate the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any Governmental Entity is required by or with respect
to
Parent or any subsidiary of Parent in connection with the execution and delivery
of this Agreement by Parent or the consummation by Parent, as the case may
be,
of any of the transactions contemplated by this Agreement, except for the filing
of the Articles of Merger with the Secretaries of State of Nevada and Florida,
as required, and such other consents, approvals, orders, authorizations,
registrations, declarations, filings or notices as may be required under the
"blue sky" laws of various states.
(e)
S.E.C. Documents; Undisclosed Liabilities. Parent has filed all reports,
schedules, forms, statements and other documents as required by the Securities
and Exchange Commission (the "S.E.C.") and Parent has delivered or made
available to the LLC all reports, schedules, forms, statements and other
documents filed with the S.E.C. (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "Parent S.E.C. Documents"). The Parent S.E.C. Documents complied in all
material respects with the requirements of the Securities Act or the Securities
Exchange Act of 1934, as the case may be, and the rules and regulations of
the
S.E.C. promulgated thereunder applicable to such Parent S.E.C. documents, and
none of the Parent S.E.C. Documents (including any and all consolidated
financial statements included therein) as of such date contained any untrue
statement of a material fact or omitted 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 were made, not misleading. Except to the
extent revised or superseded by a subsequent filing with the S.E.C. (a copy
of
which has been provided to the LLC prior to the date of this Agreement), none
of
the Parent S.E.C. Documents contains any untrue statement of a material fact
or
omits to state any material fact or omitted 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 were made, not misleading. The
consolidated financial statements of Parent included in such Parent S.E.C.
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the S.E.C. with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly statements,
as permitted by Form 10-QSB of the S.E.C.) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of operations and changes in cash flows for the periods then ended (subject,
in
the case of unaudited quarterly statements, to normal year-end audit adjustments
as determined by Parent's independent accountants). Except as set forth in
the
Parent S.E.C. Documents, at the date of the most recent audited financial
statements of Parent included in the Parent S.E.C. Documents, neither Parent
nor
any of its subsidiaries had, and since such date neither Parent nor any of
such
subsidiaries has incurred, any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, could reasonably be expected to have a material adverse effect with
respect to Parent.
(f)
Absence of Certain Changes or Events. Except as disclosed in the Parent S.E.C.
Documents, since the date of the most recent financial statements included
in
the Parent S.E.C. Documents, Parent and Dissolving Corporation have conducted
their business only in the ordinary course consistent with past practice in
light of its current business circumstances, and there is not and has not been:
(i) any material adverse change with respect to Parent; (ii) any condition,
event or occurrence which, individually or in the aggregate, could reasonably
be
expected to have a material adverse effect or give rise to a material adverse
change with respect to Parent; (iii) any event which, if it had taken place
following the execution of this Agreement, would not have been permitted by
Section 7.01 without the prior consent of the LLC; or (iv) any condition, event
or occurrence which could reasonably be expected to prevent, hinder or
materially delay the ability of Parent to consummate the transactions
contemplated by this Agreement.
(g)
Litigation; Labor Matters; Compliance with Laws.
(i)
There
is no suit, action or proceeding or investigation pending or, to the knowledge
of Parent and Dissolving Corporation, threatened against or affecting Parent
or
any basis for any such suit, action, proceeding or investigation that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect with respect to Parent or prevent, hinder or materially
delay the ability of Parent to consummate the transactions contemplated by
this
Agreement, nor is there any
judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent having, or which, insofar as reasonably could be
foreseen by Parent, in the future could have, any such effect.
(ii)
Parent and Dissolving Corporation are not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is it the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages or conditions
of
employment nor is there any strike, work stoppage or other labor dispute
involving it pending or, to its knowledge, threatened, any of which could have
a
material adverse effect with respect to Parent.
(iii)
The
conduct of the business of Parent and Dissolving Corporation complies with
all
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees
or
arbitration awards applicable thereto.
(h)
Benefit Plans. Parent and Dissolving Corporation are not parties to any Benefit
Plan under which Parent or Dissolving Corporation currently has an obligation
to
provide benefits to any current or former employee, officer or director of
Parent or Dissolving Corporation.
(i)
Certain Employee Payments. Parent and Dissolving Corporation are not parties
to
any employment agreement which could result in the payment to any current,
former or future director or employee of Parent or Dissolving Corporation of
any
money or other property or rights or accelerate or provide any other rights
or
benefits to any such employee or director as a result of the transactions
contemplated by this Agreement, whether or not (i) such payment, acceleration
or
provision would constitute a "parachute payment" (within the meaning of Section
280G of the Code), or (ii) some other subsequent action or event would be
required to cause such payment, acceleration or provision to be
triggered.
(j)
Tax
Returns and Tax Payments. Parent and Dissolving Corporation have timely filed
all tax returns required to be filed by them, have paid all taxes shown thereon
to be due and have provided adequate reserves in their financial statements
for
any taxes that have not been paid, whether or not shown as being due on any
returns. No material claim for unpaid taxes have been made or become a lien
against the property of Parent or Dissolving Corporation or is being asserted
against Parent or Dissolving Corporation, no audit of any tax return of Parent
or Dissolving Corporation is being conducted by a tax authority, and no
extension of the statute of limitations on the assessment of any taxes has
been
granted by Parent or Dissolving Corporation and is currently in
effect.
(k)
Environmental Matters. Parent is in compliance with all applicable Environmental
Laws.
(l)
Material Contract Defaults. Parent and Dissolving Corporation are not, or have
not, received any notice or has any knowledge that any other party is, in
default in any respect under any Material Contract; and there has not occurred
any event that with the lapse of time or the giving of notice or both would
constitute such a material default. For purposes of this Agreement, a Material
Contract means any contract, agreement or commitment that is effective as of
the
Closing Date to which Parent is a party (i) with expected receipts or
expenditures in excess of $10,000, (ii) requiring Parent to indemnify any
person, (iii) granting exclusive rights to any party, (iv) evidencing
indebtedness for borrowed or loaned money in excess of $10,000 or more,
including guarantees of such indebtedness, or (v) which, if breached by Parent
in such a manner would (A) permit any other party to cancel or terminate the
same (with or without notice of passage of time) or (B) provide a basis for
any
other party to claim money damages (either individually or in the aggregate
with
all other such claims under that contract) from Parent or (C) give rise to
a
right of acceleration of any material obligation or loss of any material benefit
under any such contract, agreement or commitment.
(m)
Properties. Parent and Dissolving Corporation have good, clear and marketable
title to all the tangible properties and tangible assets reflected in the latest
balance sheet as being owned by Parent or Dissolving Corporation or acquired
after the date thereof which are, individually or in the aggregate, material
to
Parent's or Dissolving Corporation's businesses (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all material liens.
(n)
Trademarks and Related Contracts.
(i)
Dissolving Corporation has no Intellectual Property.
(ii)
As
used in this Agreement, the term "Parent License Agreements" means any license
agreements granting any right to use or practice any rights under any
Intellectual Property (except for such agreements for shrink-wrap or click
wrap
software or
other
off-the-shelf products that are generally available for less than $25,000),
and
any written settlements relating to any Intellectual Property, to which Parent
is a party or otherwise bound.
(iii)
To
the knowledge of Parent, none of Parent's Intellectual Property, Software or
Parent License Agreements infringe upon the rights of any third party that
may
give rise to a cause of action or claim against Parent or its
successors.
(o)
Board
Recommendation. The Board of Directors of Parent has unanimously determined
that
the terms of the Merger are fair to and in the best interests of the
shareholders of Parent.
(p)
Majority Shareholder Recommendation. The majority of shareholders of the Parent
representing eighty-seven percent (87%) of the issued and outstanding shares
determined that the terms of the Merger are fair to and in the best interests
of
the shareholders of Parent.
VII.
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
7.01
Conduct of Parent and Dissolving Corporation. From the date of this Agreement
and until the Effective Date, or until the prior termination of this Agreement,
the Parent and Dissolving Corporation shall not, unless mutually agreed to
in
writing:
(a)
engage in any transaction, except in the normal and ordinary course of business,
or create or suffer to exist any lien or other encumbrance upon any of their
respective assets or which will not be discharged in full prior to the Effective
Date;
(b)
sell,
assign or otherwise transfer any of their assets, or cancel or compromise any
debts or claims relating to their assets, other than for fair value, in the
ordinary course of business, and consistent with past practice;
(c)
fail
to use reasonable efforts to preserve intact their present business
organizations, keep available the services of their employees and preserve
its
material relationships with customers, suppliers, licensors, licensees,
distributors and others, to the end that its good will and on-going business
not
be impaired prior to the Effective Date;
(d)
except for matters related to complaints by former employees related to wages,
suffer or permit any material adverse change to occur with respect to Company
and Parent or their business or assets; or
(e)
make
any material change with respect to their business in accounting or bookkeeping
methods, principles or practices, except as required by GAAP.
VIII.
ADDITIONAL AGREEMENTS
8.01
Meetings of LLC Unit Holders. The LLC will, as promptly as practicable following
the execution of this Agreement, call, give notice of, convene and hold a
meeting of its Unit Holders (the "Shareholders Meeting") for the purpose of
approving this Agreement and the transactions contemplated by this Agreement
or
obtain the unanimous written consent of its Unit Holders for the same
aforementioned purpose.
8.02
Access to Information; Confidentiality.
(a)
The
LLC shall, and shall cause its officers, employees, counsel, financial advisors
and other representatives to, afford to Parent and its representatives
reasonable access during normal business hours during the period prior to the
Effective Date of the Merger to its properties, books, contracts, commitments,
personnel and records and, during such period, the LLC shall, and shall cause
its officers, employees and representatives to, furnish promptly to Parent
all
information concerning its business, properties, financial condition, operations
and personnel as such other party may from time to time reasonably request.
For
the purposes of determining the accuracy of the representations and warranties
of the LLC set forth herein and compliance by the LLC of its obligations
hereunder, during the period prior to the Effective Date of the Merger, Parent
shall provide the LLC and its representatives with reasonable access during
normal business hours to its properties, books, contracts, commitments,
personnel and records as may be necessary to enable the LLC to confirm the
accuracy of the representations and warranties of Parent set forth herein and
compliance by Parent of their obligations hereunder, and, during such period,
Parent shall, and shall cause its subsidiaries, officers, employees and
representatives to, furnish promptly to the LLC upon its request (i) a copy
of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and (ii) all other information concerning its business, properties,
financial condition, operations and personnel as such other party may from
time
to time reasonably request.
Except
as
required by law, Parent will hold, and will cause its respective directors,
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in
confidence.
(b)
No
investigation pursuant to this Section 8.02 shall affect any representations
or
warranties of the parties herein or the conditions to the obligations of the
parties hereto.
8.03
Best
Efforts. Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement. Parent, and the LLC will use their best efforts and cooperate with
one another (i) in promptly determining whether any filings are required to
be
made or consents, approvals, waivers, permits or authorizations are required
to
be obtained (or, which if not obtained, would result in an event of default,
termination or acceleration of any agreement or any put right under any
agreement) under any applicable law or regulation or from any governmental
authorities or third parties, including parties to loan agreements or other
debt
instruments and including such consents, approvals, waivers, permits or
authorizations as may be required to transfer the assets and related liabilities
of the LLC to the Surviving Corporation in the Merger, in connection with the
transactions contemplated by this Agreement, and (ii) in promptly making any
such filings, in furnishing information required in connection therewith and
in
timely seeking to obtain any such consents, approvals, permits or
authorizations. Parent and the LLC shall mutually cooperate in order to
facilitate the achievement of the benefits reasonably anticipated from the
Merger.
8.04
Public Announcements. Parent, on the one hand, and the LLC, on the other hand,
will consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement
and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law or court
process. The parties agree that the initial press release or releases to be
issued with respect to the transactions contemplated by this Agreement shall
be
mutually agreed upon prior to the issuance thereof. Notwithstanding the
foregoing, Company may disclose the contemplated Merger in letters to the LLC's
optionees for purposes of fulfilling the LLC's obligations under the LLC Option
Plan to the said optionees.
8.05
Expenses. All costs and expenses incurred in connection with this Agreement
and
the transactions contemplated hereby shall be paid by the party incurring such
expenses.
8.06
No
Solicitation. Except as previously agreed to in writing by the other party,
neither Company or Parent shall authorize or permit any of its officers,
directors, agents, representatives, or advisors to (a) solicit, initiate or
encourage or take any action to facilitate the submission of inquiries,
proposals or offers from any person relating to any matter concerning any
merger, consolidation, business combination, recapitalization or similar
transaction involving Company or Parent, respectively, other than the
transaction contemplated by this Agreement or any other transaction the
consummation of which would or could reasonably be expected to impede, interfere
with, prevent or delay the Merger or which would or could be expected to dilute
the benefits to the LLC of the transactions contemplated hereby. Company or
Parent will immediately cease and cause to be terminated any existing
activities, discussions and negotiations with any parties conducted heretofore
with respect to any of the foregoing.
IX.
TERMINATION, AMENDMENT AND WAIVER
9.01
Termination. This Agreement may be terminated and abandoned at any time prior
to
the Effective Date of the Merger:
(a)
by
mutual written consent of Parent and the LLC;
(b)
by
either Parent or the LLC if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining
or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and non-appealable;
(c)
by
either Parent or the LLC if the Merger shall not have been consummated on or
before November 30, 2007 (other than as a result of the failure of the party
seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to the Effective Date of the
Merger);
(d)
by
Parent, if a material adverse change shall have occurred relative to the
LLC;
(e)
by
Parent, if the LLC willfully fails to perform in any material respect any of
its
material obligations under this Agreement; or
(f)
by
the LLC, if Parent willfully fails to perform in any material respect any of
their respective obligations under this Agreement; and
(g)
by
the LLC if the due diligence investigation by the LLC if the parent is not
satisfactory to the LLC.
9.02
Effect of Termination. In the event of termination of this Agreement by either
the LLC or Parent as provided in Section
9.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent or the LLC, other than the
provisions of Section 8.02 (a) and this Section 9.02. Nothing contained in
this
Section shall relieve any party for any breach of the representations,
warranties, covenants or agreements set forth in this Agreement.
9.03
Amendment. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties.
9.04
Extension; Waiver. Subject to Section 8.01 (c) at any time prior to the
Effective Date of the Merger, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement, or (c) waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a party to any such extension or waiver shall
be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such
rights.
9.05
Procedure for Termination, Amendment, Extension or Waiver. A termination of
this
Agreement pursuant to Section 9.01, an amendment of this Agreement pursuant
to
Section 9.03 or an extension or waiver of this Agreement pursuant to Section
9.04 shall, in order to be effective, require in the case of Parent, or the
LLC,
action by the Corporation's Board of Directors or in the event of the LLC action
by its managing member.
9.06
Return of Documents. In the event of termination of this Agreement for any
reason, Parent and Company will return to the other party all of the other
party's documents, work papers, and other materials (including copies) relating
to the transactions contemplated in this Agreement, whether obtained before
or
after execution of this Agreement. Parent and Company will not use any
information so obtained from the other party for any purpose and will take
all
reasonable steps to have such other party's information kept
confidential.
X.
INDEMNIFICATION AND RELATED MATTERS
10.01
Survival of Representations and Warranties. The representations and warranties
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Date of the Merger until the Settlement
Date.
10.02
Indemnification.
(a)
Irrespective of any due diligence investigation conducted by Company with regard
the transactions contemplated hereby, the Parent shall indemnify and hold the
LLC and each of Managers and Unit Holders (the "LLC Representatives") harmless
from and against any and all liabilities, obligations, damages, losses,
deficiencies, costs, penalties, interest and expenses (collectively, "Losses")
arising out of, based upon, attributable to or resulting from any and all Losses
incurred or suffered by the LLC or any of the LLC representatives resulting
from
or arising out of any breach of a representation, warranty or covenant made
by
Parent as set forth herein.
(b)
The
LLC shall indemnify and hold the Parent and each of its officers and directors
(the "Parent Representatives") harmless from and against any and all
liabilities, obligations, damages, losses, deficiencies, costs, penalties,
interest and expenses (collectively, "Losses") arising out of, based upon,
attributable to or resulting from any and all Losses incurred or suffered by
the
Parent or any of the Parent Representatives resulting from or arising out of
any
breach of a representation, warranty or covenant made by Company as set forth
herein.
10.03
Notice of Indemnification. In the event any proceeding shall be threatened
or
instituted or any claim or demand shall be asserted in respect of which payment
may be sought by the Parent or any Parent Representative or by the LLC or any
Company Representative, against the other, as the case may be (each an
"Indemnitee"), under the provisions of this Article XI (an "Indemnity Claim"),
the Indemnitee shall promptly cause written notice of the assertion of any
such
Claim of which it has knowledge which is covered by this indemnity to be
forwarded to the Parent Representative, who shall be Xxxx XxXxxxxxx, or the
LLC
Representative, who shall be Xxxx Xxxxxx, as the case may be, and the Escrow
Agent. Any notice of an Indemnity Claim by reason of any of the representations,
warranties or covenants contained in this Agreement shall state specifically
the
representation, warranty or covenant with respect to which the Indemnity Claim
is made, the facts giving rise to an alleged basis for the Claim, and the amount
of the liability asserted against the Indemnitor by reason of the Indemnity
Claim. Within ten (10) days of the receipt of such written notice, the Parent
Representative or the LLC, as the case may be, shall notify the Indemnitee
in
writing of its intent to contest the indemnification obligation (a "Contest")
or
to accept liability hereunder.
If
the
Parent Representative or the LLC, as the case may be, accepts liability, the
Parent Representative, or the LLC, as the case may be, will deliver a Notice
to
Escrow Agent that there is a determination of liability under Section 10.03
and
the Escrow Agent shall be instructed to adjust the Parent Escrow Deposit or
the
Merger Consideration Escrow Deposit, as the case may be, further to the Escrow
Agreement. If the Parent Representative or the LLC, as the case may be, does
not
respond within ten (10) days of the request of such written notice to such
written notice, the Parent Representative or the LLC, as the case may be, will
be deemed to accept liability as it relates to the Parent Escrow Deposit or
the
Merger Consideration Escrow Deposit, as the case may be. In such event, the
Indemnitee will deliver a Notice to the Escrow Agent that there is a
determination of liability to this Section 10.03 and the Escrow Agent shall
be
instructed to adjust the Parent Escrow Deposit or the Merger Consideration
Escrow Deposit, as the case may be, further to the Escrow Agreement. In the
event of a Contest, within ten (10) days of the receipt of the written notice
thereof, the parties will select arbitrators and submit the dispute to binding
arbitration in Nevada. The arbitrators shall be selected by the mutual agreement
of the parties. If the parties cannot agree on the arbitrator, each may select
one arbitrator and the two designated arbitrators shall select the third
arbitrator. If the third arbitrator cannot be agreed upon, the Federal District
Court for Nevada shall select the third arbitrator. A decision by the individual
arbitrator or a majority decision by the three arbitrators shall be final and
binding upon the parties. Such arbitration shall follow the rules of the
American Arbitration Association and must be resolved by the arbitrators within
thirty (30) days after the matter is submitted to arbitration. If the
arbitration is ruled favorably for Parent so that there is a determination
of a
Loss, the Indemnitee will deliver a Notice to Escrow Agent that there is a
determination of liability pursuant to this Section 10.03 and the Escrow Agent
shall be instructed to adjust the Parent Escrow Deposit or the Merger
Consideration Escrow Deposit, as the case may be, further to the Escrow
Agreement.
XI.
GENERAL PROVISIONS
11.01
Notices. All notices, requests, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by facsimile, electronic mail, or overnight courier
(providing proof of delivery) to the parties at the following addresses (or
at
such other address for a party as shall be specified by like
notice):
(a)
if to
Parent or Dissolving Corporation, to:
Basic
Services, Inc.
0000
Xxxxx Xxxx Xxxxx
Xxx
Xxxxx, Xxxxxx 00000
Attn:
Xxxx XxXxxxxxx, President
with
a
copy to:
Law
Offices of Xxxxxx X. Xxxx
000
Xxxxx
Xxxxxxx Xxxxxxxxx
Xxxxx
000
Xxx
Xxxxx, XX 00000
Fax:
(000) 000-0000
(b)
if to
the LLC, to:
LQD
Adrenalina, LLC
00000
XX
00 Xxx. Xxxxx #X-00
Xxxxx,
Xxxxxxx 00000
Attn:
Xxxx Xxxxxx, CEO
Fax:
000-000-0000
with
a
copy to:
Xxxxxxxx,
Xxxxxx & Xxxxxx, P.A.
000
Xxxxx
Xxxx Xxxxx, Xxxxx 000
Xxxx
Xxxxx, XX 00000
Attn:
Xxxxxx Xxx Xxxxxxxx, Esq.
11.02
Interpretation. When a reference is made in this Agreement to a Section, Exhibit
or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be
followed by the words "without limitation".
11.03
Entire Agreement; No Third-Party Beneficiaries. This Agreement and the other
agreements referred to herein constitute the entire agreement, and supersede
all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement. This Agreement is not
intended to confer upon any person other than the parties any rights or
remedies.
11.04
Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts executed and
performed in such State, without giving effect to conflicts of laws principles.
All controversies, claims and matters of difference arising between the parties
under this Agreement shall be submitted to binding arbitration in Xxxxx County,
Nevada under the Commercial Arbitration Rules of the American Arbitration
Association ("the AAA") from time to time in force (to the extent not in
conflict with the provisions set forth herein). This agreement to arbitrate
shall be specifically enforceable under applicable law in any court of competent
jurisdiction. Notice of the demand for arbitration shall be filed in writing
with the other parties to this Agreement and with the AAA. Once the arbitral
tribunal has been constituted in full, a hearing shall be held and an aware
rendered as soon as practicable. The demand for arbitration shall be made within
a reasonable time after the claim, dispute or other matter in question has
arisen, and the parties are not making progress toward a resolution. In no
event
shall it be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter would be barred by
the
applicable contractual or other statutes of limitations. The parties shall
have
reasonable discovery rights as determined by the arbitration. The award rendered
by the arbitrators shall be final and judgment may be entered in accordance
with
applicable law and in any court having jurisdiction thereof. The decision of
the
arbitrators shall be rendered in writing and shall state the manner in which
the
fees and expenses of the arbitrators shall be borne.
11.05
Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
11.06
Severability. Whenever possible, each provision or portion of any provision
of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality
or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained
herein.
11.07
Counterparts. This Agreement may be executed in one or more identical
counterparts, all of which shall be considered one and the same instrument
and
shall become effective when one or more such counterparts shall have been
executed by each of the parties and delivered to the other parties.
IN
WITNESS WHEREOF, the undersigned have caused their duly authorized officers
to
execute this Agreement as of the date first above written.
| BASIC SERVICES, INC. | |
|
/s/
Xxxxxxx Xxxxxx
|
06/02/2008
|
|
Name:
Xxxxxxx Xxxxxx
|
Date
|
|
Title:
President/CFO
|
| Adrenalina (Subsidiary of Basic Services) | |
|
/s/
Xxxxxxx Xxxxxx
|
06/02/2008
|
|
Name:
Xxxxxxx Xxxxxx
|
Date
|
|
Title:
President/CFO
|
| LQD Adrenalina, LLC | |
|
/s/
Xxxxxxx Xxxxxx
|
06/02/2008
|
|
Name:
Xxxxxxx Xxxxxx
|
Date
|
|
Title:
President/CFO
|
