Exhibit 10.8
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT ("Agreement") is entered
into this _ day of April, 2005 by and between XXXXXXX XXXXXXXX
having an address of 000 X. Xxxxxx Xx., Xxxxxx, XX 00000 (the
"Buyer") and XXXX XXXXXXX having an address of 0000 Xxxxxxxxx Xx.,
Xxxxxxx Xxxx, XX 00000 ("Seller") and COMPOUND NATURAL FOODS, INC., a
Nevada corporation (the "Company") for those purposes in connection
with which the Company is specifically included herein (Buyer, Seller and
the Company are referred to herein individually as a "Party" and,
collectively, as the "Parties.")
RECITALS:
WHEREAS, Seller is the holder of record of one million (1,000,000)
shares of the free-trading issued and outstanding $.001 par value common stock
of the Company (the "Free-Trading Securities"); and
WHEREAS, Buyer desires to purchase the Free-Trading Securities
from Seller, and Seller desires to sell the Free-Trading Securities
to Buyer pursuant to the terms and subject to the conditions set forth
in this Agreement.
NOW THEREFORE, in consideration of the premises, and the
respective agreements, covenants, representations and warranties of the
Parties herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article l:
"Best Efforts" the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible, provided, however,
that an obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to take actions that
would result in a materially adverse change in the benefits to
such Person of this Agreement and the Contemplated Transactions.
"Breach" a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument
delivered pursuant to this Agreement will be deemed to have occurred if
there is or has been (a) any inaccuracy in or breach of, or any failure to
perform or comply with, such representation, warranty, covenant,
obligation, or other provision, or (b) any claim (by any Person) or
other occurrence or circumstance that is or was inconsistent with
such representation, warranty, covenant, obligation, or other provision,
and the term "Breach" means any such inaccuracy, breach, failure, claim,
occurrence, or circumstance.
"Proceeding" any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Threatened" a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has been
given (orally or in writing), or if any other event has occurred or
any other circumstances exist, that would lead a prudent Person to
conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise pursued
in the future.
ARTICLE II
PURCHASE AND SALE OF CONTROL SECURITIES
Section 2.1 SALE OF FREE-TRADING SECURITIES: Subject to the terms and
conditions set forth in this Agreement, Seller shall sell, transfer and
convey the Free-Trading Securities to Buyer, free and clear of any
and all liens, claims, and encumbrances, whatsoever, and Buyer
shall purchase the Free-Trading Securities from Seller (the
"Transaction").
Section 2.2 CONSIDERATION. As payment for the sale, conveyance
and transfer of the Free-Trading Securities by Seller to Buyer, Buyer shall
deliver the sum of ONE HUNDRED AND 00/100 DOLLARS ($100.00) ("Purchase
Price") to Escrow Agent (defined below) at the closing of this
Transaction.
Section 2.3 ESCROW. All Free-Trading Securities purchased by
Buyer herein, and sold and delivered by Seller shall be transferred
into the escrow ("Escrow") of Xxxxx X. Xxxxxxx, Esq. ("Xxxxxxx") and
administered in accordance with that certain escrow agreement by and
among Xxxxxxx, on the one hand as escrow agent, and the other parties
thereto, on the other, the form of which is attached hereto as
Exhibit "A" ("Escrow Agreement"). Escrow Agent shall, among other things
in this connection, deliver out of Escrow, the Free-Trading Securities to
Buyer upon the execution, delivery and performance by the parties identified
in the Escrow Agreement of their obligations pursuant to the Transaction
Documents, also identified therein and the Purchase Price to the Seller.
Section 2.4 OTHER TRANSACTIONS. The parties acknowledge that in
addition to the Transaction the subject matter of this Agreement, it is the
intent of Buyer that Seller and Xxxxxxx Xxxxxxx ("Duxbury") be
repaid certain amounts of money previously loaned by Seller and
Duxbury to Pure Nature, LLC, a Colorado limited liability company
("Pure Nature"), as said transaction is documented in that certain Note
Purchase and Use of Proceeds Agreement among Buyer, in his capacity
also as "Buyer" in said instrument, Joey Canyon ("Canyon"), the
Company and Pure Nature (the "Note Purchase Agreement"). The Parties
acknowledge that the concurrent execution, delivery and performance
of the Note Purchase Agreement, including the repayment provision in
favor of Seller in connection therewith by Pure Nature, is a material
inducement for Seller to sell the Free-Trading Securities to Buyer
pursuant hereto, and, at the same time, that the execution, delivery and
performance of this Agreement is a material inducement for Buyer to
enter into and perform under said Note Purchase Agreement.
ARTICLE III
CONDITIONS OF CLOSING/DUE DILIGENCE
Section 3.1 CONDITIONS TO CONSUMMATION OF THE TRANSACTION. The
respective obligations of the Parties pursuant to the Transaction the
subject of this Agreement are subject to: (i) the successful consummation
of those certain other transactions of even date hereof that are
integrally-related to this Transaction, including (a) as referred to in
Section 2.4 above, the transactions referred to the Note Purchase
Agreement, (b) the successful consummation of the stock purchase
transaction referred to in that certain Stock Purchase and Sale Agreement
among Canyon, Xxxxxx X Xxxxxx ("Xxxxxx"), Duxbury and the Company,
wherein Xxxxxx and Duxbury shall have sold sixty (60) million restricted
shares of the $.001 par value common stock of the Company to Canyon
("Control Security Transaction"), and (c) the entry into the Escrow
Agreement by Xxxxxxx and the Parties thereto; and (ii) the satisfaction
of conditions customary to transactions of this type, including without
limitation, (u) execution of this Agreement by all Parties; (v) the
absence of any pledges, liens, security interests in or to, or any other
encumbrance of any nature whatsoever arising in connection with the Free-
Trading Securities (w) the absence of a material adverse change in the
condition (financial or otherwise), business, properties, assets or
prospects of the Company prior to closing, (x) the absence of pending or
Threatened litigation, investigations or other matters affecting the
Company, the Buyer or the Transaction, (y) satisfactory completion by the
Buyer and the Seller of a due diligence investigation of the other Party;
and (z) confirmation that the representations and warranties of each
Party are true and accurate in all respects.
Section 3.2 DUE DILIGENCE OBLIGATIONS OF SELLERS TO BUYER. Seller
shall use his Best Efforts to provide, or cause to be provided, such
necessary information to Buyer in respect of the Company enabling him to
complete due diligence. Immediately upon execution of this Agreement,
Seller shall deliver or cause to be delivered to Buyer a form of
transfer documents for the transfer of the Free-Trading Securities from
Sellers to Buyer.
Section 3.3 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CID SE;
Buyer's obligation to purchase the Free-Trading Securities and to take the
other actions required to be taken by Buyer at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyers, in whole or in part):
(a) All representations and warranties of Seller contained
herein being true at the time of Closing;
(b) From the date of this Agreement, there must not have been
commenced or Threatened against the Company, or against any person
affiliated with the Company, including Seller, any Proceeding (i)
involving any challenge to, or seeking damages or other relief in
connection with the contemplated Transaction, (ii) involving the ability of
the Company to continue trading its securities, including the Free-
Trading Securities in compliance with the federal securities laws of the
United States, or (iii) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with the contemplated
transactions.
Section 3.5 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE-
Seller's obligations to sell the Free-Trading Securities and to take the
other actions required to be taken by Seller at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Sellers, in whole or in part):
(a) All representations and warranties of Buyer contained
herein being true at the time of Closing;
(b) Buyer shall have tendered the consideration as
specified in Section 2.2 of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Seller and where applicable, the Company, represents and warrants to
buyer that at the time of the execution of this Agreement and at the
Closing thereof
(a) MARKETABLE TITLE. The Seller shall convey to Buyer good and
marketable title in and to the Free-Trading Securities, free and clear
of any and all liens, claims, encumbrances, including, but not limited
to, any and all pledges and security interests, and all other defects of
title of any type whatsoever;
(b) AUTHORITY. The Seller has the right, power, legal capacity
and authority to enter into and perform his obligations under this
Agreement and no approvals or consents of any persons or entities are
necessary in connection with it;
(c) OUTSTANDING CLAIMS, SUITS OR ACTIONS. Seller is not aware of
any outstanding claims, suits or actions or potential claims, suits or
actions in connection with him, the Transaction, and/or the Company.
Seller has not been put on notice of default of any obligation. Seller
is not aware of any individual suffering an injury on the premises owned
and operated by Company.
(d) CREDITORS AND LIABILITIES. To Seller's knowledge, there are no
liens on assets, the Free-Trading Securities, or obligations of Company,
and that the Company has no liabilities of any sort whatsoever which
have not been disclosed or provided to Canyon in written due diligence
documents presented by Xxxxxx and Duxbury to Canyon pursuant to the
Control Security Transaction, that all federal, state, and local, taxes
(including, but not limited to, sales and payroll taxes), assessments,
fines, penalties, if any, have been prepared, filed, and paid with the
appropriate governmental authorities up to and through the date of
Closing, or if such returns have not been filed, the Company has no
taxable obligations.
(e) CONTRACTS. To Seller's knowledge, neither the Company nor Seller
is a party to any agreement, contract, or understanding, oral or
written, express or implied, which would prevent them from lawfully
entering into this Agreement or which would create an obligation upon
them as a result of this Transaction. All employees, vendors,
contractors and the like are "at will." Seller has no contract with a
business broker and is not obligated to pay a business broker a commission as
a result of this Transaction.
(f) FINANCIAL INFORMATION. Xxxxxx has, or will have prior to
Closing, delivered all financial information requested by Canyon
regarding the Company pursuant to the Control Share Transaction,
including annual income tax returns, bank
statements, and financial statements, and such financial information when
taken together as a whole is true, complete, correct, and accurate, and
there has been no material change in the financial condition of the
Company since the most recent financial information provided.
Notwithstanding anything in the forgoing sentence to the contrary, to
the extent the financial statements have erroneously included in their
disclosure asset and income items attributable to Pure Nature under the
assumption that Pure Nature had heretofore been combined into the
Company, representations as to the correctness and accuracy thereof are
hereby retracted.
(g) BOOKS AND RECORDS. To Seller's knowledge, the books of
account, minute books, stock record books, and other records of the
Company, shall be delivered to Canyon at Closing of the Control Share
Transaction. Seller makes no representations as to the completeness of such
records. Buyer agrees that he is buying the Free-Trading Securities "as
is".
(h) TAXES Except as disclosed in due diligence, to Seller's knowledge,
the Company has, filed, or caused to be filed (on a timely basis since ),
all tax returns that are or were required to be filed pursuant to
applicable legal requirements. To Seller's knowledge, the Company has
paid, or made provision for the payment of, all taxes that have or
may have become due pursuant to those tax returns or otherwise, or
pursuant to any assessment received by Seller or the Company. To
Seller's knowledge, all tax returns filed by the Company are true,
correct, accurate, and complete. To Seller's knowledge, there is no tax
sharing agreement that will require any payment by the Company after the
date of this Agreement.
(i) NO MATERIAL ADVERSE CHANGE. To Seller's knowledge, since the
date of the initiation of negotiations regarding this Transaction, there has
not been any material adverse change in the business, operations,
properties, prospects, assets, or condition of the Company (financial or
otherwise), and no event has occurred or circumstance exists that may
result in such a material adverse change.
(j) DISCLOSURE:, The representations and warranties of Seller in
this Agreement, taken together as a whole, do not omit to state a
material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
There is no fact known to Seller that has specific application to the
Seller or the Company (other than general economic or industry
conditions) and that materially adversely affects the assets, business,
prospects, financial condition, or results of operations of the Company
that has not been set forth in this Agreement.
(k) NO PREFERRED SHARES ISSUED OR OUTSTANDING. To Seller's knowledge,
the Company has not issued any preferred shares of stock and no such
preferred shares are outstanding.
ARTICLE V
REPRESENTATION AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to Seller that:
(a) Buyer is a sophisticated investor. The Buyer has the
financial ability to pay the consideration required at Closing and to
bear the economic risk of this investment in the Free-Trading
Securities, has adequate means for providing for the current needs
and contingencies of the Buyer and has no need for immediate
liquidity with respect to the investment in the Free-Trading
Securities.
b. He has
(i) evaluated the risks of a purchase of the Free-Trading
Securities
and has relied solely upon his own investigation of the
Company
and the information and representations made by the Seller
and
the Company contained herein this Agreement and any written
information and documents provided to Buyer by the Seller
and/or the
Company;
(ii) been given the opportunity to ask questions of, and
receive
answers from, the Company and Seller concerning the terms
and
conditions of the Free-Trading Securities and other matters
pertaining to this investment, and has been given the
opportunity
to obtain such additional information necessary to verify the
accuracy of the information contained in any documents
provided in
order for the Buyer to evaluate the merits and risks of the
purchase of the Free-Trading Securities to the extent the
Company
or Seller possess such information or could acquire it without
unreasonable efforts or expense, and has not been furnished
with any
other offering literature upon which the Buyer has relied;
(iii) not been furnished by Seller with any oral or written
representation or oral or written information upon which the
Buyer
has relied in connection with the offering of the Free-
Trading
Securities that is not contained, or referred to, in this
Agreement;
(iv) investigated the acquisition of the Free-Trading
Securities to
the extent the Buyer has deemed necessary or desirable, and
the
Company or Seller have provided the Buyer with any assistance
the
Buyer has requested in connection herewith;
(v) determined that the Free-Trading Securities are a
suitable
investment for the Buyer and that at this time the Buyer
could
bear a complete loss of an investment in the Free-Trading
Securities purchased hereby; and
(vi) is experienced in transactions involving obtaining
control
of companies such as the Company.
(c) The Buyer is not relying on the Seller, or the Company, or any
of its affiliates, or this Agreement, with respect to the Buyer's tax
consequences with respect to the Buyer's purchase of the Free-Trading
Securities.
(d) No federal or state agency has passed upon the Free-Trading
Securities or made any finding or determination as to the fairness of this
investment.
(e) The Buyer is an individual over the age of 18 years and is
empowered, authorized and qualified to purchase the Free-Trading
Securities, in the manner contemplated in this Agreement.
(f) The Buyer has the right, power, legal capacity and authority
to enter into and perform his obligations under this Agreement and no
approvals or consents of any persons or entities are necessary in
connection with such actions.
ARTICLE VI
INDEMNIFICATION
Section 6.1 INDEMNIFICATION BY SELLER: Seller shall indemnify,
save, defend and hold harmless Buyer from and against any and all damages,
costs, liabilities, and expenses, of any kind whatsoever (including
reasonable attorneys' fees) arising out of; or in connection with,
(a) any and all operations, activities, and events, of and/or
impacting the Company (which term "Company" includes its
subsidiaries and affiliates (other than Pure Nature, LLC)) occurring
prior to the Closing; (b) any and all Breaches of this Agreement by
Seller; and (c) any and all claims by a third party relating to
Seller's actions (or inactions, as the case may be) or gross negligence; (d)
any untrue statement or material fact represented and warranted by Seller
hereunder or any omission of material information necessary to make any
representation made herein not misleading or (e) any claim by any person
or entity for any and all brokerage or finder's fees, or commissions, or
similar payments, based upon any agreement or understanding (whether
actual, or alleged to have been made by any such person or entity with
either Seller or the Company (car any person acting on their behalf) in
connection with the contemplated Transaction or this Agreement.
Section 6.2 INDE1VINJFICATION BY BUYER: Buyer shall indemnify, save,
defend and hold harmless Seller from and against any and all damages,
costs, liabilities, and expenses, of any kind whatsoever (including
reasonable attorneys' fees) arising directly out of (a) any and all
activities and/or operations of the Company and the Company's
subsidiaries conducted after the Closing; (b) any and all Breaches of
this Agreement by Buyer; (c) any untrue statement or material fact
represented and warranted by Buyer hereunder or any omission of material
information necessary to make any representation made herein not
misleading or (d) any and all claims by a third party relating to
Buyer's and/or the Company's actions or gross negligence, not also
involving the actions or_ gross negligence of Seller, occurring after the
Closing.
ARTICLE VII THE CLOSING
Section 7.1 SELLER OBLIGATIONS: At the time of the consummation of
this transaction (the "Closing"), Sellers shall deliver or cause to be
delivered to Buyer:
(a) One or more irrevocable stock powers duly executed by
the Seller and medallion guaranteed to the Buyer in the name of Buyer;
(b) All other instruments or documents as may be reasonably
required to consummate the Transaction contemplated by this Agreement; and
(d) Instruction by him or the Company to the transfer agent
of the Free-Trading Securities to re-issue the Free-Trading Securities
strictly in accordance with this Agreement and/or at the direction and
request of the Buyer, to provide for the Transactions contemplated
herein.
Section 8.2 BUYER'S OBLIGATIONS: At the Closing, Buyer shall deliver
to Seller the Purchase Price as set forth in Section 2.2. of this Agreement.
Section 8.3 THE CLOSING. The Closing shall occur on or before close
of business on April 8, 2005 or as soon thereafter as possible using
reasonable diligence and efforts. Closing may occur in counterparts as
necessary.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 ASSIGNMENT. Seller may not assign or transfer their
respective interests and/or rights under this Agreement without the prior
written consent of the Buyer. The Buyer may not assign this Agreement
without the consent of the Seller.
Section 9.2 BINDING EFFECT. This Agreement shall be binding upon the
Parties hereto and their personal representatives, executors, heirs,
beneficiaries, distributees, successors, and permitted assigns, if any.
Section 9.3 NOTICES. Unless otherwise changed by written notice, any
notice or other communications required or permitted hereunder shall be
deemed given if sent facsimile, hand delivery or courier addressed to
the respective party at the address set forth in the initial paragraph
of this Agreement or by other means upon reasonable evidence that receipt
of such notice has been acknowledged.
Section 9.4: GOVERNING LAW. This Agreement shall be governed and
interpreted solely in accordance with the laws of the State of
[Nevada][Colorado], and applicable U.S. federal law, if any, and in each
case without regard to their choice of laws principles.
Section 9.5: SURVIVAL OF REPRESENTATIONS. All agreements,
representations, covenants, and warranties, on the part of the Parties
contained herein, shall survive the Closing of this Agreement, and any
investigation made at any time with respect thereto, shall not merge into
any of the documents and instruments executed and delivered pursuant
hereto, and shall remain enforceable to the fullest extent permitted by
law and/or equity.
Section 9.6: ENTIRE AGREEMENT: This Agreement embodies the entire
agreement between the Parties hereto with respect to the subject matter
hereof, and supersedes all prior, and contemporaneous, negotiations,
agreements, and understandings, whether written or oral. This Agreement,
nor any provision herein, may not be changed, waived, discharged, or
terminated, except by an express written instrument signed by the party
against whom enforcement of the change, waiver, discharge or
termination is sought.
Section 9.7. FURTHER ASSURANCES. The Parties hereto will execute and
deliver such further instruments and do such further acts and things as
may be reasonably required to carry out the intent and purposes of this
Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed as of the date first written above.
BUYER
/s/ Xxxxxxx Xxxxxxxx
SELLER:
/s/ Xxxx Xxxxxxx
COMPANY:
COMPOUND NATURAL FOODS,
INC. a Nevada corporation
By: /s/ Xxxxxx X. Xxxxxx, President
Exhibit "A"
Escrow Agreement
0
