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SHARE
EXCHANGE AGREEMENT
This
SHARE EXCHANGE AGREEMENT (“Agreement”) is made and entered into this 31st day of
December, 2008, by and among Sports Supplement Acquisition Group, Inc., a
Nevada
corporation with its principal executive offices at 00 Xxxxxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx XX0 0XX (“Acquiror”), and Sports Supplement
Acquisition Group Inc., a Delaware corporation with its principal executive
offices at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxx-Xxxxx, Xxxxxx, Xxxxxx X0X 0X0
(“Acquiree”), and the shareholders of Acquiree listed on Schedule 2.1 attached
hereto and made a part hereof (collectively referred to herein as the
“Shareholders”). Acquiror, Acquiree and the Shareholders are referred
to severally herein as a “Party” and jointly as the “Parties”.
PREAMBLE
WHEREAS,
Acquiree has 1,400 shares of common stock, no par value per share, issued and
outstanding and owned by the Shareholders (the “Acquiree Common Stock”);
and
WHEREAS,
Acquiror desires to acquire all of the Acquiree Common Stock owned by the
Shareholders, making Acquiree a wholly owned subsidiary of Acquiror, in exchange
for 18,000,000 shares of Acquiror’s common stock, $.0001 par value (the
“Acquiror Common Stock”), and the Shareholders similarly desire to make such
exchange;
WHEREAS,
the Parties further desire to enter into a series of related transactions, on
the terms and conditions as set forth herein.
NOW,
THEREFORE, in consideration of the respective covenants contained herein and
intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE
I — DEFINITIONS
For
convenience, certain terms used in this Agreement and not defined above or
elsewhere, are listed in alphabetical order and defined below (such
terms as well as any other terms defined elsewhere in this Agreement shall be
equally applicable to both the singular and plural forms of the terms
defined).
A. “Acquiror
Indemnified Party” means Acquiror and each of its officers, directors,
shareholders, employees, agents and counsel.
B. “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person. For the purposes of this definition, “control” when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “affiliated,” “controlling” and “controlled” have meanings
correlative to the foregoing.
C. “Agreement”
means this Reorganization Agreement and the Schedules hereto.
D. “Assets”
means, with respect to Acquiror or Acquiree, as shown by the context in which
used, all of the assets, properties, goodwill and rights of every kind and
description, real and personal, tangible and intangible, wherever situated and
whether or not reflected in such Party’s most recent financial statements, that
are owned or possessed by such Party.
E. “Benefit
Plan” means all employee benefit, health, welfare, supplemental unemployment
benefit, bonus, pension, profit sharing, deferred compensation, severance,
incentive, stock compensation, stock purchase, retirement, hospitalization
insurance, medical, dental, legal, disability, fringe benefit and similar plans,
programs, arrangements or practices, including, without limitation, each
“employee benefit plan” as defined in Section 3(3) of ERISA.
F. “Business”
means with respect to any Person the entire business and operations of such
Person.
G. “Business
Day” means any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the state of New York
generally are authorized or required by law or other government actions to
close.
H. “Charter
Documents” means an entity’s certificate or articles of incorporation, and any
amendments thereto.
I. “Closing”
is defined in Section 2.4(a).
J. “Closing
Date” is defined in Section 2.4(a).
K. “Contract”
means any written or oral contract, agreement, letter of intent, agreement in
principle, lease, instrument or other commitment that is binding on any Person
or its property under applicable Law.
L. “Copyrights”
means registered copyrights, copyright applications and unregistered
copyrights.
M. “Court
Order” means any judgment, decree, injunction, order or ruling of any federal,
state, local or foreign court or governmental or regulatory body or authority,
or any arbitrator that is binding on any Person or its property under applicable
Law.
N. “Default”
means (i) a breach, default or violation, (ii) the occurrence of an event that
with or without the passage of time or the giving of notice, or both, would
constitute a breach, default or violation or (iii) with respect to any Contract,
the occurrence of an event that with or without the passage of time or the
giving of notice, or both, would give rise to a right of termination,
renegotiation or acceleration or a right to receive damages or a payment of
penalties.
O. “$”
means United States dollars unless provided for otherwise
herein.
P. “Encumbrances”
means any lien, mortgage, security interest, pledge, restriction on
transferability, defect of title or other claim, charge or encumbrance of any
nature whatsoever on any property or property interest.
Q. “Environmental
Condition” means any condition or circumstance, including the presence of
Hazardous Substances which does or would (i) require assessment, investigation,
abatement, correction, removal or remediation under any Environmental Law, (ii)
give rise to any civil or criminal Liability under any Environmental Law, (iii)
create or constitute a public or private nuisance or (iv) constitute a violation
of or non-compliance with any Environmental Law.
R. “Environmental
Law” means all Laws, Court Orders, principles of common law, and permits,
licenses, registrations, approvals or other authorizations of any Governmental
Authority relating to Hazardous Substances, pollution, protection of the
environment or human health.
S. “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
T. “GAAP”
means United States generally accepted accounting principles including those set
forth: (a) in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (b) in the statements
and pronouncements of the Financial Accounting Standards Board, (c) in such
other statements by such other entity as approved by a significant segment of
the accounting profession, and (d) the rules and regulations of the SEC
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Securities Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting staff of
the SEC.
U. “Governmental
Authority” means any federal, state, local, municipal or foreign or other
government or governmental agency or body.
V. “Hazardous
Substances” means any material, waste or substance (including, without
limitation, any product) that may or could pose a hazard to the environment or
human health or safety including, without limitation, (i) any “hazardous
substances” as defined by the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. §9601 et seq. and its implementing regulations,
(ii) any “extremely hazardous substance,” “hazardous chemical” or “toxic
chemical” as those terms are defined by the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. §11001 et seq. and its implementing regulations,
(iii) any “hazardous waste,” as defined under the Solid Waste Disposal Act, as
amended by the Resource Conservation and Xxxxxxxx Xxx, 00 X.X.X. §0000 et seq.
and its implementing regulations, (iv) any “pollutant,” as defined under the
Water Pollution Xxxxxxx Xxx, 00 X.X.X. §0000 et seq. and its implementing
regulations as any of such Laws in clauses (i) through (iv) may be amended from
time to time, and (v) any material, substance or waste regulated under any Laws
or Court Orders that currently exist or that may be enacted, promulgated or
issued in the future by any Governmental Authority concerning protection of the
environment, pollution, health or safety or the public welfare.
W. “Intellectual
Property” means any Copyrights, Patents, Trademarks, technology, licenses, trade
secrets, computer software and other intellectual property.
X. “Knowledge”
of any Shareholder means that which such Shareholder actually knows or, after
diligent investigation commensurate with such Shareholder’s position with
Acquiree, should have known. “Knowledge” of Acquiror or Acquiree
means that which an executive officer thereof actually knows or, after diligent
investigation, should have known.
Y. “NCL”
means the
Nevada Corporation Law, as amended through the date of this
Agreement.
Z.
“Law” means any statute, law, ordinance, regulation, order, rule, common law
principles or consent agreements of any Governmental Authority, including,
without limitation, those covering environmental, energy, safety, health,
transportation, bribery, record keeping, zoning, anti-discrimination, antitrust,
wage and hour, and price and wage control matters.
AA. “Liability”
means any direct or indirect liability, indebtedness, obligation, expense,
claim, loss, damage, deficiency, guaranty or endorsement of or by any
Person.
BB. “Litigation”
means any lawsuit, action, arbitration, administrative or other proceeding,
criminal prosecution or governmental investigation or inquiry.
CC. “Material
Adverse Effect” means a fact or event which has had or is reasonably likely to
have a material adverse effect on the Assets, Business, financial condition or
results of operations of Acquiror or Acquiree, as the case may be, as indicated
by the context in which used, and when used with respect to representations,
warranties, conditions, covenants or other provisions hereof means the
individual effect of the situation to which it relates and also the aggregate
effect of all similar situations unless the context indicates
otherwise.
DD. “Patents”
means patents, patent applications, reissue patents, patents of addition,
divisions, renewals, continuations, continuations-in-part, substitutions,
additions and extensions of any of the foregoing.
EE. “Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
FF. “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
GG. “Regulation”
means any federal, state, local or foreign rule or regulation.
HH. “Schedule”
means any Schedule attached to and forming part of this Agreement including
Schedules 2.1, 4.4 and 4.5.
II. “SEC”
means the United States Securities and Exchange Commission.
JJ. “Securities
Act” means the Securities Act of 1933, as amended.
KK. “Securities
Exchange Act” means the Securities Exchange Act of 1934, as
amended.
LL. “Subsidiary”
means any corporation or other legal entity of which Acquiror or Acquiree, as
the case may be (either above or through or together with any other Subsidiary)
owns, directly or indirectly, more than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of directors or other governing body of such corporation or other
entity.
MM. “Taxes”
means any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions, levies and liabilities, including,
without limitation, taxes based upon gross receipts, income, profits, sales, use
and occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment, insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts.
NN. “Tax
Return” means any report, return, election, notice, estimate, declaration,
information statement and other forms and documents (including all schedules,
exhibits and other attachments thereto) relating to and filed or required to be
filed with a taxing authority in connection with any Taxes (including, without
limitation, estimated Taxes).
OO. “Trademarks”
means registered trademarks, registered service marks, trademark and service
xxxx applications and unregistered trademarks and service marks.
PP. “Transaction
Documents” means this Agreement and the other agreements described in Article
III.
QQ. “Transactions”
means the purchase and sale of the Acquiree Common Stock, Acquiror Common Stock
and the other transactions contemplated by the Transaction
Documents.
ARTICLE
II — PURCHASES, SALES AND
CANCELLATIONS
OF SHARES, AND
RELATED
TRANSACTIONS
2.1
SALE OF ACQUIREE STOCK. Subject to the terms and conditions set forth
in this Agreement, the Shareholders shall sell to Acquiror and Acquiror shall
purchase from the Shareholders, an aggregate of 1,400 shares of Acquiree Common
Stock. Following the purchase of the Acquiree Common Stock, Acquiree
shall be operated as a wholly owned subsidiary of Acquiror. The
amount of Acquiree Common Stock to be sold by each Shareholder is set forth in
Schedule 2.1 hereto. The Acquiree Common Stock currently represents
and will represent at Closing all of the issued and outstanding capital stock of
Acquiree.
2.2 CONSIDERATION
FOR THE ACQUIREE COMMON STOCK. (a) As consideration for the Acquiree
Common Stock, Acquiror shall issue to the Shareholders an aggregate of
18,000,000 restricted shares of Acquiror Common Stock. The Acquiror
Common Stock shall be allocated among the Shareholders in direct proportion to
their ownership of their Acquiree Common Stock, such that each Shareholder shall
receive the same number of shares of Acquiror Common Stock that the Shareholder
currently owns in Acquiree. An aggregate of 18,000,000 shares of
Acquiror Common Stock shall be issued to the Shareholders at the
Closing. Of this stock, an aggregate of 12,000,000 shares of Acquiror
Common Stock shall be subject to the lock up agreement provided in paragraph
2.2(b) (below), with 6,000,000 shares of this stock to be released from the
lock-up agreement on the six-month anniversary of the Closing Date and the
remaining 6,000,000 shares of Acquiror Common Stock shall be released from the
lock-up agreement on the first anniversary of the Closing
Date. Acquiror agrees that it shall, at all times prior to the
issuance of all of the Acquiror Common Stock, reserve from its shares of
authorized but unissued common stock a sufficient number of shares to allow it
to make the issuances of Acquiror Common Stock provided for in this
Section 2.2.
(b) Each
Shareholder hereby covenants and agrees, except as provided herein, not to (1)
offer, sell, contract to sell, grant any option to purchase, hypothecate, pledge
or options to acquire shares, or otherwise dispose of or (2) transfer title to
(a “Prohibited
Sale”) any of the shares (the “Acquired Shares”) of
Acquiror Common Stock acquired by such Shareholder pursuant to or in connection
with this Agreement, or upon the exercise of any options to acquire shares of
Common Stock, during the periods set forth above, without the prior written
consent of the Company. Notwithstanding the foregoing, the undersigned shall be
permitted from time to time during such periods, without the prior written
consent of the Company, as applicable, (i) to engage in transactions in
connection with the undersigned’s participation in the Company’s stock option
plans, (ii) to transfer all or any part of the Acquired Shares to any family
member, for estate planning purposes , or to an affiliate thereof (as such term
is defined in Rule 405 under the Securities Exchange Act of 1934, as amended),
provided that such transferee agrees in writing with the Company to be bound
hereby, (iii) to participate in a registered direct offering by the Company in
which the undersigned participates as a selling stockholder or (iv) to
participate in any transaction in which holders of the Common Stock of the
Company participate or have the opportunity to participate pro rata, including,
without limitation, an underwritten offering of Common Stock, a merger,
consolidation or binding share exchange involving the Company, a disposition of
the Common Stock in connection with the exercise of any rights, warrants or
other securities distributed to the Company’s stockholders, or a tender or
exchange offer for the Common Stock, and no transaction contemplated by the
foregoing clauses (i) , (ii) or (iii) shall be deemed a Prohibited Sale for
purposes of this provision.
2.3 CANCELLATION
OF CERTAIN ACQUIROR SHARES. Subject to the terms and conditions set
forth in this Agreement, at the Closing, Acquiror Management will deliver
8,625,000 of the 14,950,000 shares of Acquiror common stock currently
outstanding for cancellation (the “Share Cancellation”).
2.4 CLOSING.
(a) The
closing of the transactions set forth in Sections 2.1, 2.2 and 2.3 above (the
“Closing”) shall be held at the offices of Corsair Advisors, Inc., 000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 as promptly as practicable after the execution
of this Agreement, (and in any event within five (5) Business Days of the date
of this Agreement) after satisfaction or waiver of the conditions to the
consummation of the transactions set forth in Articles VIII and
IX. The date on which the Closing occurs is referred to herein as the
“Closing Date.”
(b) At
the Closing, each of the Shareholders shall transfer to Acquiror good and
marketable title to the Acquiree Common Stock owned by such Shareholder, free
and clear of any and all liens, claims, encumbrances and adverse interests of
any kind, by delivering to Acquiror the certificates for the Acquiree Common
Stock in negotiable form, duly endorsed in blank, or with stock transfer powers
attached thereto. At the Closing, Acquiror shall provide the
Shareholders with good and marketable title to an aggregate of 18,000,000
restricted shares of Acquiror Common Stock free and clear of any and all liens,
claims, encumbrances and adverse interests of any kind by delivery to the
Shareholders of certificates for such shares. At the Closing, the
Shareholders shall cause to be made available the books and records of Acquiree
to Acquiror. At the Closing, each of Acquiror and Acquiree shall
deliver the other closing documents referenced in Articles IX and
X. At any time and from time to time after the Closing, the Parties
shall duly execute, acknowledge and deliver all such further assignments,
conveyances, instruments and documents, and shall take such other action
consistent with the terms of this Agreement to carry out the transactions
contemplated by this Agreement.
(c) Acquiror’s
board of directors currently consists of Xxx Xxxxxxx. At the Closing, Xxxxx
Xxxxx, the designee of the Shareholders, shall be appointed to and added to the
board of directors of Acquiror. At the Closing, Xxxxxxx Xxxxx, the Acquiror’s
current secretary shall resign and be replaced by Xxxxx Xxxxx who will also
serve as president and chief executive officer, chief financial officer and
treasurer, and Xxx Xxxxxxx shall resign as officer but will continue to serve as
director. Following the Closing, Acquiree shall appoint Xxxx Xxxxxxxx, Xxxxx
Xxxxxxxx and Xxxxxx Xxxxxxx, and Knights Bridge Capital Group and the
Shareholders agree to use their best efforts to mutually locate and designate a
sixth director, for appointment to Acquiror’s board of directors. Acquiror
agrees to appoint such designee to its board as promptly as practicable upon
receiving notice of such designation. The parties acknowledge and agree that no
assurance can be given that the Shareholders and Knights Bridge Capital Group
will successfully find a mutually acceptable director.
ARTICLE
III — REPRESENTATIONS AND WARRANTIES OF
ACQUIROR
Acquiror
hereby represents and warrants to Shareholders as follows:
3.1 CORPORATE. Acquiror
is a corporation duly organized, validly existing and in good standing under the
Laws under which it was incorporated. Acquiror is qualified to do
business as a foreign corporation in all jurisdictions where it is required to
be so qualified, except where the failure to so qualify would not have a
Material Adverse Effect. The Charter Documents and by-laws of
Acquiror have been duly adopted or ratified and are current, correct and
complete. The Charter Documents consist of Acquiror’s Certificate of
Incorporation as filed with the State of
Nevada on February 27, 2007 and amended
on each of August 19, 2008 and December 4, 2008. Acquiror has all
necessary corporate power and authority to own, lease and operate its Assets and
to carry on its Business as it is now being conducted. Acquiror has
no subsidiaries.
3.2 AUTHORIZATION. Acquiror
has the requisite corporate power and authority to execute and deliver the
Transaction Documents to which it is a party and to perform the Transactions to
be performed by it. Such execution, delivery and performance by
Acquiror has been duly authorized by all necessary corporate and shareholder
action. Each Transaction Document executed and delivered by Acquiror
as of the date hereof has been duly executed and delivered by Acquiror and
constitutes a valid and binding obligation of Acquiror enforceable against
Acquiror in accordance with its terms, and any Transaction Document executed and
delivered by Acquiror after the date hereof will be duly executed and delivered
by Acquiror and will constitute a valid and binding obligation of Acquiror,
enforceable against Acquiror in accordance with its terms, except as otherwise
limited by bankruptcy, insolvency, reorganization and other laws affecting
creditors’ rights generally, and except that the remedy of specific performance
or other equitable relief is available only at the discretion of the court
before which enforcement is sought.
3.3 VALIDITY
OF CONTEMPLATED TRANSACTIONS. The securities issuances to be made by
Acquiror pursuant to this Agreement will be made in compliance with the
Securities Act and applicable state securities Laws. The Form 8-K
filing to be made by Acquiror after the Closing with respect to the Transactions
will be made in compliance with the Securities Exchange
Act. All required consents to the Transactions by
Acquiror’s board of directors shall be obtained prior to the
Closing. With the exception of the above, neither the execution
and delivery by Acquiror of the respective Transaction Documents to which it is
or will be a party, nor the performance of the Transactions to be performed by
it, will require any filing, consent or approval under or constitute a Default,
or result in a loss of material benefit under, (a) to Acquiror’s Knowledge, any
Law or Court Order to which Acquiror is subject, (b) the Charter Documents or
bylaws of Acquiror, or (c) any Contracts to which Acquiror is a party or by
which any of the Acquiror Assets may be subject.
3.4 ACQUIROR
SEC REPORTS; FINANCIAL STATEMENTS. Acquiror has filed all required
forms, reports, statements, schedules and other documents with the SEC
(collectively, the “Acquiror SEC Reports”). Each of such Acquiror SEC
Reports, at the time it was filed or was amended, complied in all material
respects with all applicable requirements of the Securities Act and the
Securities Exchange Act, and with the forms and Regulations of the SEC
promulgated thereunder, and did not contain, at the time it was filed or was
amended, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The financial statements, including all related notes and schedules,
contained in the Acquiror SEC Reports (or incorporated by reference therein)
fairly present the financial position of Acquiror as at the respective dates
thereof and the results of operations and cash flows of Acquiror for the periods
indicated in accordance with GAAP applied on a consistent basis throughout the
periods involved (except for changes in accounting principles disclosed in the
notes thereto) and subject in the case of interim financial statements to normal
year-end adjustments and the absence of notes.
3.5 CAPITALIZATION
AND STOCK OWNERSHIP. The total authorized capital stock of Acquiror
consists of 1,150,000,000 shares of common stock, par value $.00001 per share
and 1,150,000,000 shares of preferred stock, par value $.00001 per
share. Of such authorized capital stock, on the date hereof
14,950,000 shares of Acquiror Common Stock and no Shares of Acquiror Preferred
Stock are issued and outstanding. Following the Share Cancellation
referred to in Section 2.3 hereof, and not taking into account the issuance of
the Acquiror Common Stock at Closing, on the Closing Date, 6,325,000 shares of
Acquiror Common Stock will be issued and outstanding. All of the
currently issued and outstanding shares of Acquiror’s common stock are validly
issued, fully paid and non-assessable and all of the shares of Acquiror Common
Stock and other shares of common stock of Acquiror to be issued pursuant to this
Agreement will, when issued, have been validly issued, fully paid and
non-assessable. Other than restrictions related to its status as
stock not registered under the Securities Act of 1933, as amended, no transfer
or sale restrictions shall be applicable, at the time of issuance, to the
Acquiror Common Stock and other restricted shares of common stock of Acquiror to
be issued pursuant to this Agreement. There are no existing options,
warrants, calls, commitments or other rights of any character (including
conversion or preemptive rights) relating to the acquisition of any issued or
unissued capital stock or other securities of Acquiror. Schedule 4.5
hereof sets forth (i) the capitalization of Acquiror that exists as at the
date hereof; and (ii) the capitalization of Acquiror that will exist on the
Closing Date following the issuance of 18,000,000 shares of Acquiror Common
Stock, and the shares issued as a result of the SSAG convertible
notes.
3.6 ACQUIROR
FINANCIAL STATEMENTS. As at the Closing Date, the Acquiror SEC
Reports contain unaudited quarterly financial statements and audited yearend
financial statements (singularly and collectively, the “Acquiror Financial
Statements”). The Acquiror Financial Statements fairly present the
financial position of Acquiror as at the respective dates thereof and the
results of operations of Acquiror for the periods indicated in accordance with
GAAP applied on a consistent basis throughout the periods
involved. Acquiror has no material contingent Liabilities except as
otherwise set forth in the Acquiror Financial Statements. As of the Closing, the
Acquiror’s total liabilities shall not exceed $ 10,000.
3.7 TAXES. Acquiror
(i) has filed (or, in the case of Tax Returns not yet due, will file) with the
appropriate governmental agencies all Tax Returns required to be filed on or
before the Closing Date and all such Tax Returns filed were true, correct and
complete in all respects, and (ii) has paid (or, in the case of Taxes not yet
due, will pay), all Taxes shown on such Tax Returns. Acquiror has (i)
duly paid or caused to be paid all Taxes and all Taxes shown on Tax Returns that
are or were due, and (ii) provided a sufficient reserve on the Acquiror Balance
Sheet for the payment of all Taxes not yet due and payable. No
deficiency in respect of any Taxes which has been assessed against Acquiror
remains unpaid, and Acquiror has no Knowledge of any unassessed Tax deficiencies
or of any audits or investigations pending or threatened against Acquiror with
respect to any Taxes. Acquiror has not extended or waived the
application of any applicable statute of limitations of any jurisdiction
regarding the assessment or collection of any Tax or any Tax
Return. There are no liens for Taxes upon any assets of Acquiror
except for liens for current Taxes not yet due. Acquiror has to its
Knowledge (i) complied with all provisions of the Code relating to the
withholding and payment of Taxes and (ii) has made all deposits required by
applicable Law to be made with respect to employees’ withholding and other
payroll, employment or other withholding or related Taxes.
3.8 TITLE
TO ASSETS AND RELATED MATTERS. Acquiror has good and marketable title
to the Acquiror Assets, free from any Encumbrances. Acquiror owns all
Acquiror Assets necessary or currently used in the operation of Acquiror’s
Business.
3.9 REAL
PROPERTY. As of the date hereof, Acquiror does not own any real
property.
3.10 LEGAL
PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS.
(a) There
is no Litigation that is pending or, to Acquiror’s Knowledge, threatened against
Acquiror. To Acquiror’s Knowledge, Acquiror is and has been in
compliance with all applicable Laws, including Environmental Laws and applicable
securities Laws, except where the failure to be in compliance would not have a
Material Adverse Effect. There has been no Default under any Laws
applicable to Acquiror, including Environmental Laws. There has been
no Default with respect to any Court Order applicable to
Acquiror. Acquiror has not received any written notice and, to the
Knowledge of Acquiror, no other communication has been received to the effect
that it is not in compliance with any applicable Laws.
(b) There
is no Environmental Condition at any property presently or formerly owned or
leased by Acquiror or any of its Subsidiaries which is reasonably likely to have
a Material Adverse Effect.
(c) Acquiror
has all material consents, permits, franchises, licenses, concessions,
registrations, certificates of occupancy, approvals and other authorizations of
Governmental Authorities (collectively, the “Governmental Permits”) required in
connection with the operation of its Business, all of which are in full force
and effect. Acquiror has complied with all of its Governmental
Permits.
3.11 CONTRACTS
AND COMMITMENTS. Each Contract to which Acquiror is a party (i) is
legal, valid, binding and enforceable by Acquiror except as otherwise limited by
bankruptcy, insolvency, reorganization and other laws affecting creditors’
rights generally, and except that the remedy of specific performance or other
equitable relief is available only at the discretion of the court before which
enforcement is sought, and (ii) Acquiror, and to Acquiror’s Knowledge, any other
party, is not in Default under any such Contract. Acquiror is not
subject to any Contract limiting the freedom of Acquiror to compete in any line
of business, or with any Person, or in any geographic area or
market.
3.12 EMPLOYEE
RELATIONS. Acquiror is not (a) a party to, involved in or, to
Acquiror’s Knowledge, threatened by, any labor dispute or unfair labor practice
charge, or (b) currently negotiating any collective bargaining agreement,
and Acquiror has not experienced any work stoppage.
3.13 BENEFIT
PLANS. Acquiror has not sponsored or maintained any Benefit Plans
since its inception.
3.14 PATENTS,
TRADEMARKS, ETC. Acquiror does not infringe upon or unlawfully or
wrongfully use any Intellectual Property owned or claimed by another
Person. Acquiror does not utilize any Intellectual Property in the
conduct of its Business.
3.15 ABSENCE
OF CERTAIN CHANGES. Since October 31, 2008, the date of the latest
Acquiror balance sheet contained in an Acquiror SEC Report, Acquiror has
conducted its business in the ordinary course, and, as of the date hereof,
except as otherwise provided in this Agreement, there has not been, nor as of
the Closing Date, will there have been:
(a) any
Material Adverse Effect on the Acquiror Business;
(b) any
distribution or payment declared or made in respect of Acquiror’s capital stock
by way of dividends, purchase or redemption of shares or otherwise;
(c) any
increase in the compensation payable or to become payable to any current
director or officer of Acquiror, nor any material change in any existing
employment, severance, consulting arrangements or any Acquiror Benefit
Plan;
(d) any
sale, assignment or transfer of any Acquiror Assets, or any additions to or
transactions involving any Acquiror Assets, other than those made in the
ordinary course of business;
(e) other
than in the ordinary course of business, any waiver or release of any material
claim or right or cancellation of any material debt held by
Acquiror;
(f) any
change in practice with respect to Taxes, or any election, change of any
election, or revocation of any election with respect to Taxes, or any settlement
or compromise of any dispute involving a Tax Liability;
(g) (i)
any creation, or assumption of, any leases, long-term debt or any short-term
debt for borrowed money other than under existing notes payable, lines of credit
or other credit facility or in the ordinary course of business (ii) any
assumption, granting of guarantees, endorsements or otherwise becoming liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person; (iii) any loans, advances or capital contributions to, or
investments in, any other Person; or (iv) any other material increase in
Liabilities or capital expenditures outside the ordinary course of
business.
(h) any
material agreement, commitment or contract, except agreements, commitments or
contracts for the purchase, sale or lease of goods or services in the ordinary
course of business;
(i) any
authorization, recommendation, proposal or announcement of an intention to
authorize, recommend or propose, or enter into any Contract with respect to, any
(i) plan of liquidation or dissolution, (ii) acquisition of a material amount of
assets or securities, (iii) disposition or Encumbrance of a material amount of
assets or securities, (iv) merger or consolidation or (v) material change in its
capitalization;
(j) any
change in accounting procedure or practice; or
(k) any
agreement or promise by Acquiror to (i) do any of the foregoing or (ii) do
anything that would likely result in any of the foregoing.
3.16 CORPORATE
RECORDS. The minute books of Acquiror contain accurate and current
copies of all Charter Documents and of all minutes of meetings, resolutions and
other proceedings of its Board of Directors and stockholders.
3.17 FINDER’S
FEES. No Person is or will be entitled to any commission, finder’s
fee or other payment in connection with the Transactions based on arrangements
made by or on behalf of Acquiror.
3.18 PRE-CLOSING
TRANSACTIONS. Prior to Closing, all amounts due to related parties as
described in the SEC Reports shall be forgiven.
ARTICLE
IV —
REPRESENTATIONS
AND WARRANTIES
OF
ACQUIREE AND THE SHAREHOLDERS
Acquiree
and each Shareholder, severally and not jointly, hereby represents and warrants
to Acquiror as follows:
4.1 CORPORATE. Acquiree
is a corporation duly organized, validly existing and in good standing under the
Laws under which it was incorporated. Acquiree is qualified to do business as a
foreign corporation in any jurisdiction where it is required to be so qualified,
except where the failure to so qualify would not have a Material Adverse
Effect. The Charter Documents and bylaws of Acquiree (all of which
have been delivered or made available to Acquiror) have been duly adopted and
are current, correct and complete. The Charter Documents consist of
Acquiree’s Certificate of Incorporation as filed pursuant to the Delaware
General Corporation Law on November 2, 2007. Acquiree has all
necessary corporate power and authority to own, lease and operate the Acquiree
Assets and to carry on the Acquiree Business as it is now being conducted.
Acquiree has no Subsidiaries.
4.2 AUTHORIZATION. Acquiree
has the requisite corporate power and authority to execute and deliver the
Transaction Documents to which it is a party and to perform the Transactions to
be performed by it. Such execution, delivery and performance by Acquiree has
been duly authorized by all necessary corporate and Shareholder
action. Each Shareholder has the capacity to execute and deliver the
Transaction Documents to which he is a party and to perform the Transactions to
be performed by him. Each Transaction Document executed and delivered
by Acquiree and any Shareholder as of the date hereof has been duly executed and
delivered by Acquiree and each such Shareholder and constitutes a valid and
binding obligation of Acquiree and each such Shareholder, enforceable against
Acquiree and each such Shareholder in accordance with its terms, and any
Transaction Documents executed and delivered by Acquiree and any Shareholder
after the date hereof will be duly executed and delivered by Acquiree and each
such Shareholder and will constitute a valid and binding obligation of Acquiree
and each such Shareholder enforceable against Acquiree and each such Shareholder
in accordance with its terms, except as otherwise limited by bankruptcy,
insolvency, reorganization and other laws affecting creditors’ rights generally,
and except that the remedy of specified performance or other equitable relief is
available only at the discretion of the court before which enforcement is
sought.
4.3 VALIDITY
OF CONTEMPLATED TRANSACTIONS. Neither the execution and delivery by
Acquiree or any Shareholder of the respective Transaction Documents to which he
is or will be a party, nor the performance of the Transactions to be performed
by him, will require any filing, consent or approval which has not already been
obtained or constitute a Default, or result in a loss of material benefit under,
(a) to any Shareholder’s Knowledge, any Law or Court Order to which Acquiree or
any Shareholder is subject, (b) the Charter Documents or bylaws of Acquiree, (c)
any other Contracts to which Acquiree or any Shareholder is a party or by which
any of the Acquiree Assets may be subject.
4.4 CAPITALIZATION
AND STOCK OWNERSHIP. The total authorized capital stock of Acquiree
consists of 1,500 common shares. Of such authorized capital stock,
the only issued and outstanding shares on the date hereof are 1,400 shares of
Acquiree common stock. Except as set forth on Schedule 4.4, there are
no existing options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) relating to the
acquisition of any issued or unissued capital stock or other securities of
Acquiree. All of the issued and outstanding shares of Acquiree common
stock are validly issued, fully paid and non-assessable.
4.5 ACQUIREE
FINANCIAL STATEMENTS. The financial statements of Acquiree as at September 30,
2008 (the “Acquiree Financial Statements”), delivered to Acquiror fairly present
the financial position of Acquiree as at the respective dates thereof and the
results of operations of Acquiree for the periods indicated in accordance with
GAAP applied on a consistent basis throughout the periods
involved. For purposes of this Agreement, the Balance Sheet of
Acquiree as of September 30, 2008 is referred to as the “Acquiree Balance Sheet”
and the date thereof is referred to as the “Acquiree Balance Sheet
Date.” Acquiree has no material contingent Liabilities except as
otherwise set forth in the Acquiree Financial Statements.
4.6 TAXES. Acquiree
(i) has filed (or, in the case of Tax Returns not yet due, will file) with the
appropriate governmental agencies all Tax Returns required to be filed on or
before the Closing Date and all such Tax Returns filed were true, correct and
complete in all respects, and (ii) has paid (or, in the case of Taxes not
yet due, will pay), all Taxes shown on such Tax Returns. Acquiree has
(i) duly paid or caused to be paid all Taxes and all Taxes shown on Tax
Returns that are or were due, and (ii) provided a sufficient reserve on the
Acquiree Balance Sheet for the payment of all Taxes not yet due and
payable. No deficiency in respect of any Taxes which has been
assessed against Acquiree remains unpaid, and Acquiree has no Knowledge of any
unassessed Tax deficiencies or of any audits or investigations pending or
threatened against Acquiree with respect to any Taxes. Acquiree has
not extended or waived the application of any applicable statute of limitations
of any jurisdiction regarding the assessment or collection of any Tax or any Tax
Return. There are no liens for Taxes upon any assets of Acquiree
except for liens for current Taxes not yet due.
4.7 TITLE
TO ASSETS AND RELATED MATTERS. Acquiree has good and marketable title
to the Acquiree Assets, free from any Encumbrances. Acquiree owns all
Acquiree Assets necessary or currently used in the operation of Acquiree’s
Business.
4.8 REAL
PROPERTY. As of the date hereof, Acquiree does not own any real
property.
4.9 LEGAL
PROCEEDINGS; COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS.
(a) There
is no Litigation that is pending or, to Acquiree’s or any Shareholder’s
Knowledge, threatened against Acquiree. To Acquiree’s or any
Shareholder’s Knowledge, Acquiree is and has been in compliance with all
applicable Laws, including applicable securities Laws, except where the failure
to be in compliance would not have a Material Adverse Effect. There
has been no Default under any Laws applicable to Acquiree. There has
been no Default with respect to any Court Order applicable to
Acquiree. Acquiree has not received any written notice and, to the
Knowledge of Acquiree or any Shareholder, no other communication has been
received to the effect that it is not in compliance with any applicable
Laws. No Shareholder has reason to believe that any presently
existing circumstances are likely to result in violations of any applicable
Laws.
(b) There
is no Environmental Condition at any property presently or formerly owned or
leased by Acquiree which is reasonably likely to have a Material Adverse
Effect.
(c) Acquiree
has all material consents, permits, franchises, licenses, concessions,
registrations, certificates of occupancy, approvals and other authorizations of
Governmental Authorities (collectively, the “Governmental Permits”) required in
connection with the operation of its Business, all of which are in full force
and effect. Acquiree has complied with all of its Governmental
Permits.
4.10 CONTRACTS
AND COMMITMENTS. Each Contract to which Acquiree is a party
(i) is legal, valid, binding and enforceable by Acquiree except as
otherwise limited by bankruptcy, insolvency, reorganization and other laws
affecting creditors’ rights generally, and except that the remedy of specific
performance or other equitable relief is available only at the discretion of the
court before which enforcement is sought, and (ii) Acquiree, and to
Acquiree’s and any Shareholder’s Knowledge, any other party, is not
in Default under any such Contract. Acquiree is not subject to any
Contract limiting the freedom of Acquiree to compete in any line of business, or
with any Person, or in any geographic area or market.
4.11 EMPLOYEE
RELATIONS. Acquiree is not (a) a party to, involved in or, to
Acquiree’s and any Shareholder’s Knowledge, threatened by, any labor dispute or
unfair labor practice charge, or (b) currently negotiating any collective
bargaining agreement, and Acquiree has not experienced any work
stoppage.
4.12 BENEFIT
PLANS. With the exception of a group insurance plan, Acquiree has not
sponsored or maintained any Benefit Plans since its inception.
4.13 PATENTS,
TRADEMARKS, ETC Acquiree does not infringe upon or unlawfully or
wrongfully use any Intellectual Property owned or claimed by another Person and
no Person infringes on or wrongfully uses any Intellectual Property owned or
claimed by Acquiree. Acquiree owns or has valid rights to use all
Intellectual Property used in the conduct of Acquiree Business, free and clear
of all Encumbrances.
4.14 ABSENCE
OF CERTAIN CHANGES. Since the Acquiree Balance Sheet Date, Acquiree
has conducted the Acquiree Business in the ordinary course, and, as of the date
hereof, there has not been, nor as of the Closing Date, will there have
been:
(a) any
Material Adverse Effect on the Acquiree Business;
(b) any
distribution or payment declared or made in respect of Acquiree’s capital stock
by way of dividends, purchase or redemption of shares or otherwise;
(c) any
increase in the compensation payable or to become payable to any current
director or officer of Acquiree, nor any material change in any existing
employment, severance, consulting arrangements or any Acquiree Benefit
Plan;
(d) any
sale, assignment or transfer of any Acquiree Assets, or any additions to or
transactions involving any Acquiree Assets, other than those made in the
ordinary course of business;
(e) other
than in the ordinary course of business, any waiver or release of any material
claim or right or cancellation of any material debt held by
Acquiree;
(f) any
change in practice with respect to Taxes, or any election, change of any
election, or revocation of any election with respect to Taxes, or any settlement
or compromise of any dispute involving a Tax Liability;
(g) (i)
any creation, or assumption of, any leases, long-term debt or any short-term
debt for borrowed money other than under existing notes payable, lines of credit
or other credit facility or in the ordinary course of business (ii) any
assumption, granting of guarantees, endorsements or otherwise becoming liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person or (iii) any loans, advances or capital contributions to, or
investments in, any other Person; or (iv) any other material increase in
Liabilities or capital expenditures outside the ordinary course of
business.
(h) any
material agreement, commitment or contract, except agreements, commitments or
contracts for the purchase, sale or lease of goods or services in the ordinary
course of business;
(i) any
authorization, recommendation, proposal or announcement of an intention to
authorize, recommend or propose, or enter into any Contract with respect to, any
(i) plan of liquidation or dissolution, (ii) acquisition of a material amount of
assets or securities, (iii) disposition or Encumbrance of a material amount of
assets or securities, (iv) merger or consolidation or (v) material change in its
capitalization;
(j) any
change in accounting procedure or practice; or
(k) any
agreement or promise by Acquiree to (i) do any of the foregoing or
(ii) do anything that would likely result in any of the
foregoing.
4.15 CORPORATE
RECORDS. In all material respects, the minute books of Acquiree
contain accurate, complete and current copies of all Charter Documents and of
all minutes of meetings, resolutions and other proceedings of its Board of
Directors and stockholders.
4.16 FINDER’S
FEES. No Person is or will be entitled to any commission, finder’s
fee or other payment in connection with the Transactions based on arrangements
made by or on behalf of Acquiree.
4.17 OWNERSHIP
OF SHARES. Each Shareholder is the record and beneficial owner of the
Shares as set forth next to such Shareholder’s name on Schedule 2.1, and has
sole management power over the disposition of such Shares. The Shares
owned by each Shareholder as set forth on Schedule 2.1 are free and clear of any
liens, claims, encumbrances, and charges. The Shares have not been
sold, conveyed, encumbered, hypothecated or otherwise transferred by any
Shareholder except pursuant to this Agreement. Each Shareholder has
the legal right to enter into and to consummate the Transactions contemplated
hereby and otherwise to carry out his or her obligations hereunder.
4.18 INVESTMENT
REPRESENTATIONS. (a) Each Shareholder understands
and acknowledges that (A) none of the Shares have been registered under the
Securities Act of 1933, as amended (the “Securities Act”) or the securities laws
of any state, based upon exemptions from such registration requirements; (B) the
Shares are and will be “restricted securities” as said term is defined in Rule
144 of the Rules and Regulations promulgated under the Securities Act; (C) the
Shares may not be sold or otherwise transferred unless they have been first
registered under the Securities Act and all applicable state securities laws, or
unless exemptions from such registration provisions are available with respect
to said resale or transfer; and (D) Acquiror is under no contractual obligation
to the undersigned to register the Shares under the Securities Act or any state
securities laws.
(b) Each
Shareholder will not sell or otherwise transfer any of the Shares, or any
interest therein, unless and until (A) said Shares shall have first been
registered under the Securities Act and all applicable state securities laws; or
(B) the undersigned shall obtain a written opinion from Acquiror’s counsel to
the effect that the proposed sale or transfer is exempt from the registration
provisions of the Securities Act and all applicable state securities
laws.
(c) Each
Shareholder is acquiring the Shares for its own account for investment purposes
only and not with a view to or for distributing or reselling such Shares or any
part thereof or interest therein, without prejudice, however, to the
undersigned's right to sell or otherwise dispose of all or any part of such
Shares pursuant to an effective registration statement under the Securities Act
and in compliance with applicable federal and state securities laws or under an
exemption from such registration.
(d) Each
Shareholder has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Shares, and has so evaluated the merits and risks
of such investment.
(e) Each
Shareholder understands that the certificates representing the Shares will bear
a legend in substantially the following form:
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THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (I) AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER SAID ACT OR (II) AN
OPINION OF COMPANY COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
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ARTICLE
V — JOINT COVENANTS OF THE PARTIES
5.1 NOTIFICATION
OF CERTAIN MATTERS. Each of Acquiror, on the one hand, and Acquiree
and the Shareholders, on the other hand, shall give prompt notice to each other
of the following:
(a) the
occurrence or nonoccurrence of any event whose occurrence or nonoccurrence would
be likely to cause either (i) any representation or warranty contained in this
Agreement to be untrue or inaccurate at any time from the date hereof to the
Closing Date, or (ii) directly or indirectly, any Material Adverse Effect;
and
(b) any
material failure of such Party, or any officer, director, employee or agent of
any thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder.
5.2 ACCESS
TO INFORMATION. From the date hereof to the Closing Date, Acquiror
and Acquiree shall, and shall cause its officers, directors, employees,
auditors, counsel and agents to afford the officers, employees, auditors,
counsel, financial advisors and agents of the other Party complete access at all
reasonable times to such Party’s officers, employees, auditors, counsel, agents,
properties, offices and other facilities and to all of their respective books
and records, and shall furnish the other with all financial, operating and other
data and information as such other Party may reasonably request.
5.3 PUBLIC
ANNOUNCEMENTS. Acquiror and Acquiree (a) shall use all reasonable
efforts to develop a joint communications plan and each Party shall use all
reasonable efforts to ensure that all press releases and other public statements
with respect to the Transactions shall be consistent with such joint
communications plan or, to the extent inconsistent therewith, shall have
received the prior written approval of the other and (b) before issuing any
press release or otherwise making any public statements with respect to the
Transactions, will consult with each other as to its form and substance and
shall not issue any such press release or make any such public statement prior
to such consultation, except for each of (a) and (b) above as may be required by
Law (it being agreed that the Parties hereto are entitled to disclose all
requisite information concerning the Transactions in any filings required with
the SEC).
5.4 COOPERATION. Upon
the terms and subject to the conditions hereof, each of the Parties shall use
its commercially reasonable efforts to take or cause to be taken all actions and
to do or cause to be done all things necessary, proper or advisable to
consummate as promptly as practicable the Transactions and shall use its
commercially reasonable efforts to obtain all required consents, and to effect
all necessary filings under the Securities Act and the Exchange Act. Without
limiting the generality of the foregoing, each Party shall use all commercially
reasonable efforts to take, or cause to be taken, all other actions and to do,
or cause to be done, all other things necessary, proper or advisable to fulfill
the conditions herein to the extent that the fulfillment thereof is within a
Party’s control.
5.5 EXPENSES. Acquiror
shall pay all of the legal, accounting and other expenses incurred by Acquiror
in connection with the Transactions. Acquiree shall pay all of the
legal, accounting and other expenses incurred by Acquiree and the Shareholders
in connection with the Transactions.
ARTICLE
VI — COVENANTS OF ACQUIREE AND SHAREHOLDERS
6.1 OPERATION
OF THE BUSINESS. Except as contemplated by this Agreement or as
expressly agreed to in writing by Acquiror, during the period from the date of
this Agreement to the Closing Date, Acquiree will conduct its operations only in
the ordinary course of business consistent with sound financial, operational and
regulatory practice, and will take no action which would have a Material Adverse
Effect on its ability to consummate the Transactions. Without
limiting the generality of the foregoing, except as otherwise expressly provided
in this Agreement or related Schedules, prior to the Closing Date, Acquiree will
not, and Shareholders shall not cause or permit Acquiree to, without the prior
written consent of Acquiror:
(a) amend
its Charter Documents or bylaws (or similar organizational
documents);
(b) authorize
for issuance, issue, sell, deliver, grant any options for, or otherwise agree or
commit to issue, sell or deliver any shares of its capital stock or any other
securities;
(c) recapitalize,
split, combine or reclassify any shares of its capital stock; declare, set aside
or pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock; or purchase, redeem or
otherwise acquire any of its securities or modify any of the terms of any such
securities;
(d) (i)
create, incur, assume or permit to exist any long-term debt or any short-term
debt for borrowed money other than under existing notes payable, lines of credit
or other credit facilities or in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other or (iii) make any
loans, advances or capital contributions to, or investments in, any other
Person;
(e) (i)
increase in any manner the rate of compensation of any of its directors,
officers or other employees everywhere, (ii) pay or agree to pay any bonus,
pension, retirement allowance, severance or other employee benefit except as
required under currently existing Acquiree Benefit Plans, except for holiday
bonuses in an aggregate amount not to exceed holiday bonuses for the prior year,
or (iii) amend, terminate or enter into any employment, consulting, severance,
change in control or similar agreements or arrangements with any of its
directors, officers or other employees;
(f) enter
into any material agreement, commitment or contract, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services in
the ordinary course of business;
(g) other
than in the ordinary course of business, authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into any
Contract with respect to, any (i) plan of liquidation or dissolution, (ii)
acquisition of a material amount of assets or securities, (iii) disposition or
Encumbrance of a material amount of assets or securities, (iv) merger or
consolidation or (v) material change in its capitalization;
(h) change
any material accounting or Tax procedure or practice;
(i) take
any action the taking of which, or knowingly omit to take any action the
omission of which, would cause any of the representations and warranties herein
to fail to be true and correct in all material respects as of the date of such
action or omission as though made at and as of the date of such action or
omission;
(j) compromise,
settle or otherwise modify any material claim or litigation;
(k) permit
any existing insurance policy insuring Acquiree Assets to terminate;
or
(l) commit,
promise or agree to do any of the foregoing.
6.2 MAINTENANCE
OF THE ASSETS. Acquiree shall use its reasonable best efforts to
continue to maintain and service the Acquiree Assets consistent with past
practice. Acquiree shall not directly or indirectly, sell or encumber all or any
part of the Acquiree Assets, other than sales in the ordinary course of business
or initiate or participate in any discussions or negotiations or enter into any
agreement to do any of the foregoing.
6.3 EMPLOYEES
AND BUSINESS RELATIONS. Acquiree shall use commercially reasonable
efforts to keep available the services of its current employees and agents and
to maintain its relations and goodwill with its suppliers, customers,
distributors and any others having business relations with it.
ARTICLE
VII — COVENANTS OF ACQUIROR
7.1 OPERATION
OF THE BUSINESS. Except as contemplated by this Agreement or as
expressly agreed to in writing by Acquiree and the Shareholders, during the
period from the date of this Agreement to the Closing Date, Acquiror will
conduct its operations only in the ordinary course of business consistent with
sound financial, operational and regulatory practice, and will take no action
which would have a Material Adverse Effect on its ability to consummate the
transactions required by this Agreement. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement or related Schedules, prior to the Closing Date, Acquiror will not
without the prior written consent of Acquiree and the Shareholders:
(a) amend
its Charter Documents or bylaws (or similar organizational
documents);
(b) authorize
for issuance, issue, sell, deliver, grant any options for, or otherwise agree or
commit to issue, sell or deliver any shares of its capital stock or any other
securities;
(c) recapitalize,
split, combine or reclassify any shares of its capital stock; declare, set aside
or pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock; or purchase, redeem or
otherwise acquire any of its securities or modify any of the terms of any such
securities;
(d) (i)
create, incur, assume or permit to exist any long-term debt or any short-term
debt for borrowed money other than under existing notes payable, lines of credit
or other credit facilities or in the ordinary course of business; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other or (iii) make any
loans, advances or capital contributions to, or investments in, any other
Person;
(e) (i)
increase in any manner the rate of compensation of any of its directors,
officers or other employees everywhere, (ii) pay or agree to pay any bonus,
pension, retirement allowance, severance or other employee benefit except as
required under currently existing Acquiree Benefit Plans, except for holiday
bonuses in an aggregate amount not to exceed holiday bonuses for the prior year,
or (iii) amend, terminate or enter into any employment, consulting, severance,
change in control or similar agreements or arrangements with any of its
directors, officers or other employees;
(f) enter
into any material agreement, commitment or contract, except agreements,
commitments or contracts for the purchase, sale or lease of goods or services in
the ordinary course of business;
(g) other
than in the ordinary course of business, authorize, recommend, propose or
announce an intention to authorize, recommend or propose, or enter into any
Contract with respect to, any (i) plan of liquidation or dissolution, (ii)
acquisition of a material amount of assets or securities, (iii) disposition or
Encumbrance of a material amount of assets or securities, (iv) merger or
consolidation or (v) material change in its capitalization;
(h) change
any material accounting or Tax procedure or practice;
(i) take
any action the taking of which, or knowingly omit to take any action the
omission of which, would cause any of the representations and warranties herein
to fail to be true and correct in all material respects as of the date of such
action or omission as though made at and as of the date of such action or
omission;
(j) compromise,
settle or otherwise modify any material claim or litigation;
(k) permit
any existing insurance policy insuring Acquiror Assets to terminate;
or
(l) commit,
promise or agree to do any of the foregoing.
7.2 MAINTENANCE
OF THE ASSETS. Acquiror shall use its reasonable best efforts to
continue to maintain and service the Acquiror Assets consistent with past
practice. Acquiror shall not directly or indirectly, sell or encumber all or any
part of the Acquiror Assets, other than sales in the ordinary course of business
or initiate or participate in any discussions or negotiations or enter into any
agreement to do any of the foregoing.
7.3 EMPLOYEES
AND BUSINESS RELATIONS. Acquiror shall use commercially reasonable
efforts to keep available the services of its current employees and agents and
to maintain its relations and goodwill with its suppliers, customers,
distributors and any others having business relations with it.
7.4 CHANGE
OF NAME. Following the Closing, the Acquiror shall change its name to
“Sports Supplement Group, Inc.”
ARTICLE
VIII — CONDITIONS
PRECEDENT
TO OBLIGATIONS OF ACQUIREE
AND
THE SHAREHOLDERS
The
obligations of Shareholders to consummate the Transactions shall be subject to
the satisfaction or waiver, on or before the Closing Date, of each of the
following conditions:
8.1 REPRESENTATIONS
AND WARRANTIES. The representations and warranties of Acquiror
contained in this Agreement shall be true and correct on the date hereof and
(except to the extent such representations and warranties speak as of an earlier
date) shall also be true and correct on and as of the Closing Date, except for
changes contemplated by this Agreement, with the same force and effect as if
made on and as of the Closing Date.
8.2 AGREEMENTS,
CONDITIONS AND COVENANTS. (a) Acquiror shall have performed or
complied in all material respects with all agreements, conditions and covenants
required by this Agreement to be performed or complied with by it on or before
the Closing Date.
(b) Prior
to the Closing, the Acquiror shall have entered into a warrant agreement with
Knights Bridge Capital Group, Inc. in form and substance reasonably acceptable
to Acquiree, providing for the issuance of 1.8 million shares of Acquiror Common
Stock in exchange for cash proceeds of $1 million; and subscription agreements
in form and substance reasonably acceptable to Acquiror, providing for the
issuance of 1.5 million shares of Acquiror Common Stock in exchange for cash
proceeds of $500,000.
(c) Without
the written consent of Xxx Xxxxxxx, so long as he is a director of the Company,
for a period of six months from the date of this agreement, the Company shall
not effect a reverse stock split.
8.3 MATERIAL
ADVERSE EFFECT. There shall have been no Material Adverse Effect on
Acquiror.
8.4 CERTIFICATES. Acquiree
shall have received a certificate of an executive officer of Acquiror to the
effect set forth in Sections 8.1, 8.2 and 8.3, respectively.
8.5 REQUIRED
CONSENTS. Acquiror shall have obtained all consents from third
parties necessary for consummation of the Transactions or the absence of which
would result in a Material Adverse Effect on Acquiror.
8.6 ANCILLARY
DOCUMENTS. Acquiror shall have tendered executed copies of the
respective Transaction Documents to which it is intended to be a
party.
8.7 LEGALITY. All
required governmental approvals shall have been obtained and any applicable
waiting periods, shall have expired. No Law or Court Order shall have been
enacted, entered, promulgated or enforced by any court or governmental entity
that is in effect and that has the effect of making the Transactions illegal or
otherwise prohibiting the consummation of the Transactions and no legal action
shall be pending or threatened which is reasonably likely to have a Material
Adverse Effect on any Party.
ARTICLE
IX — CONDITIONS PRECEDENT TO OBLIGATIONS OF
ACQUIROR
The
obligations of Acquiror to consummate the Transactions shall be subject to the
satisfaction or waiver, on or before the Closing Date, of each of the following
conditions:
9.1 REPRESENTATIONS
AND WARRANTIES. The representations and warranties of Acquiree and
Shareholders contained in this Agreement shall be true and correct on the date
hereof and (except to the extent such representations and warranties speak as of
an earlier date) shall also be true and correct on and as of the Closing Date,
except for changes contemplated by this Agreement, with the same force and
effect as if made on and as of the Closing Date.
9.2 AGREEMENTS,
CONDITIONS AND COVENANTS. Acquiree and Shareholders shall have
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by
each of them on or before the Closing Date.
9.3 MATERIAL
ADVERSE EFFECT. There shall have been no Material Adverse Effect on
Acquiree.
9.4 CERTIFICATES. Acquiror
shall have received a certificate of an executive officer of Acquiree and each
Shareholder to the effect set forth in Sections 9.1, 9.2 and 9.3,
respectively.
9.5 REQUIRED
CONSENTS. Acquiree and Shareholders shall have obtained all consents
from third parties necessary for the consummation of the Transactions or the
absence of which would result in a Material Adverse Effect on
Acquiree.
9.6 ANCILLARY
DOCUMENTS. Acquiree and each Shareholder shall have tendered executed
copies of the Transaction Documents to which each of them is intended to be a
party.
9.7 LEGALITY. All
required governmental approvals shall have been obtained and any applicable
waiting periods, shall have expired. No Law or Court Order shall have been
enacted, entered, promulgated or enforced by any court or governmental entity
that is in effect and that has the effect of making the Transactions illegal or
otherwise prohibiting the consummation of the Merger and no legal action shall
be pending or threatened which is reasonably likely to have a Material Adverse
Effect on any Party.
ARTICLE
X — INDEMNIFICATION
10.1 SURVIVAL
OF REPRESENTATIONS AND WARRANTIES. All the provisions of this
Agreement will survive the Closing notwithstanding any investigation at any time
made by or on behalf of any Party hereto. The representations and
warranties set forth in Articles IV and V and in any certificate delivered in
connection herewith with respect to any of those representations and warranties
will terminate and expire on the date two (2) years after the Closing Date
except in the event of fraud or intentional misrepresentation, in which case the
survival period shall not be limited. The expiration period with
respect to tax matters, shall be the period ending ninety (90) days after the
date upon which the right of any taxation authority to assess or reassess with
respect to a claim for such taxes expires. Additionally, the
expiration period with respect to all matters set forth in Sections 3.1,
3.2, 3.3, 3.4, 3.5, 4.1, 4.2, 4.3 and 4.4 shall be an unlimited
period. After a representation and warranty has terminated and
expired, no indemnification will or may be sought pursuant to this Article X on
the basis of that representation and warranty by any Person who would have been
entitled pursuant to this Article X to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that, in the case of each representation and warranty that will terminate and
expire as provided in this Section 10.1, no claim presented in writing for
indemnification pursuant to this Article X on the basis of that representation
and warranty prior to its termination and expiration will be affected in any way
by that termination and expiration. The Parties agree that no
indemnification will be sought by any Party hereto under this Article XI where
the amount of indemnification sought would be less than $10,000.
10.2 INDEMNIFICATION
OF SHAREHOLDERS. Acquiror covenants and agrees that it will indemnify
each Shareholder against, and hold each Shareholder harmless from and in respect
of, all losses, costs, expenses and damage claims that arise from, are based on,
arise out of, or are attributable to (i) any breach of the representations
and warranties of Acquiror or in certificates delivered by Acquiror in
connection herewith; (ii) the nonfulfillment of any covenant or agreement
on the part of Acquiror under this Agreement to be performed prior to or
immediately after the Closing or (iii) any liability under the Securities
Act, the Exchange Act or other applicable Law which arises out of or is based on
(A) any untrue statement or alleged untrue statement of a material fact
relating to Acquiror which is provided to Shareholders in writing by the
Acquiror or (B) any omission or alleged omission to state therein a
material fact relating to Acquiror required to be stated therein or necessary to
make the statements therein not misleading, and not provided to Shareholders by
Acquiror after a written request therefor (each damage claim described in
Section 11.2 being a “Shareholder Indemnified Loss”).
10.3 INDEMNIFICATION
OF ACQUIROR INDEMNIFIED PARTIES. Each Shareholder, severally (in an
amount that is in direct proportion to his, her or its ownership in Acquiree)
covenants and agrees that he, she or it will indemnify each Acquiror Indemnified
Party against, and hold each Acquiror Indemnified Party harmless from and in
respect of, all losses, costs, expenses and damage claims that arise from, are
based on, arise out of, or are attributable to (i) any breach of the
representations and warranties of Acquiree or any Shareholder or in certificates
delivered by Acquiree or any Shareholder in connection herewith; (ii) the
nonfulfillment of any covenant or agreement on the part of Acquiree or any
Shareholder under this Agreement to be performed prior to the Closing or (iii)
any liability under the Securities Act, the Exchange Act or other applicable Law
which arises out of or is based on (A) any untrue statement or alleged
untrue statement of a material fact relating to Acquiree or any Shareholder, or
any of them, which is provided to Acquiror or its counsel in writing by the
Acquiree or any Shareholder or (B) any omission or alleged omission to
state therein a material fact relating to Acquiree or any Shareholder, or any of
them, required to be stated therein or necessary to make the statements therein
not misleading, and not provided to Acquiror or its counsel by Acquiree or any
Shareholder after a written request therefor (each damage claim described in
Section 10.3 being an “Acquiror Indemnified Loss”).
10.4 CONDITIONS
OF THIRD PARTY INDEMNIFICATION.
(a) All
claims for indemnification under this Agreement arising from third-party claims
shall be asserted and resolved as follows in this
Section 10.4.
(b) A
party claiming indemnification under this Agreement (an “Indemnified Party”)
shall promptly (i) notify the party from whom indemnification is sought (the
“Indemnifying Party”) of any third-party claim or claims asserted against the
Indemnified Party (“Third Party Claim”) that could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying Party
a written notice (“Claim Notice”) describing in reasonable detail the nature of
the Third Party Claim, a copy of all papers served with respect to that claim
(if any), an estimate of the amount of damages attributable to the Third Party
Claim to the extent feasible (which estimate shall not be conclusive of the
final amount of such claim) and the basis for the Indemnified Party’s request
for indemnification under this Agreement. Except as set forth in Section 10.1,
the failure to promptly deliver a Claim Notice shall not relieve the
Indemnifying Party of its obligations to the Indemnified Party with respect to
the related Third Party Claim except to the extent that the resulting delay is
materially prejudicial to the defense of that claim. Within 15 days after
receipt of any Claim Notice (the “Election Period”), the Indemnifying Party
shall notify the Indemnified Party (i) whether the Indemnifying Party disputes
its potential liability to the Indemnified Party under this Article XII with
respect to that Third Party Claim and (ii) if the Indemnifying Party does not
dispute its potential liability to the Indemnified Party with respect to that
Third Party Claim, whether the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party against that
Third Party Claim.
(c) If
the Indemnifying Party does not dispute its potential liability to the
Indemnified Party and notifies the Indemnified Party within the Election Period
that the Indemnifying Party elects to assume the defense of the Third Party
Claim, then the Indemnifying Party shall have the right to defend, at its sole
cost and expense, that Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party in accordance
with this Section 11.4(c) and the Indemnified Party will furnish the
Indemnifying Party with all information in its possession, subject to a
confidentiality agreement, with respect to that Third Party Claim and otherwise
cooperate with the Indemnifying Party in the defense of that Third Party Claim;
provided, however, that the Indemnifying Party shall not enter into any
settlement with respect to any Third Party Claim that (i) purports to limit the
activities of, or otherwise restrict in any way, any Indemnified Party or any
Affiliate of any Indemnified Party, (ii) involves a guilty plea to any crime or
(iii) involves a fine or penalty, whether or not paid by the Indemnifying Party,
without the prior consent of that Indemnified Party (which consent may be
withheld in the sole discretion of that Indemnified Party). The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer or other
pleadings that the Indemnified Party shall deem necessary or appropriate to
protect its interests or those of the Indemnifying Party. The Indemnified Party
may participate in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to this Section
11.4(c) and will bear its own costs and expenses with respect to that
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party
(provided that such expenses are reasonable), and, on its written notification
of that employment, the Indemnifying Party shall not have the right to assume or
continue the defense of such action on behalf of the Indemnified
Party.
(d) If
the Indemnifying Party (i) within the Election Period (A) disputes its potential
liability to the Indemnified Party under this Article X, (B) elects not to
defend the Indemnified Party pursuant to Section 11.4(c) or (C) fails to notify
the Indemnified Party that the Indemnifying Party elects to defend the
Indemnified Party pursuant to Section 10.4(c) or (ii) elects to defend the
Indemnified Party pursuant to Section 11.4(c) but fails diligently and promptly
to prosecute or settle the Third Party Claim, then the Indemnified Party shall
have the right to defend, at the sole cost and expense of the Indemnifying Party
(provided that such expenses are reasonable) (if the Indemnified Party is
entitled to indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings. Notwithstanding the
foregoing, if the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article X and if such
dispute is resolved in favor of the Indemnifying Party, the Indemnifying Party
shall not be required to bear the costs and expenses of the Indemnified Party’s
defense pursuant to this Section 10.4 or of the Indemnifying Party’s
participation therein at the Indemnified Party’s request, and the Indemnified
Party shall reimburse the Indemnifying Party in full for all reasonable costs
and expenses of such litigation. The Indemnifying Party may participate in, but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 10.4(d), and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation.
(e) In
the event any Indemnified Party should have a claim against any Indemnifying
Party hereunder that does not involve a Third Party Claim, the Indemnified Party
shall transmit to the Indemnifying Party a written notice (the “Indemnity
Notice”) describing in reasonable detail the nature of the claim, an estimate of
the amount of Losses attributable to that claim to the extent feasible (which
estimate shall not be conclusive of the final amount of such claim) and the
basis of the Indemnified Party’s request for indemnification under this
Agreement. If the Indemnifying Party does not notify the Indemnified Party
within 15 days from its receipt of the Indemnity Notice that the Indemnifying
Party disputes such claim, the claim specified by the Indemnified Party in the
Indemnity Notice shall be deemed a liability of the Indemnifying Party
hereunder. If the Indemnifying Party has timely disputed such claim, as provided
above, such dispute shall be resolved by proceedings in an appropriate court of
competent jurisdiction if the parties do not reach a settlement of such dispute
within 30 days after notice of a dispute is given.
(f) Payments
of all amounts owing by an Indemnifying Party pursuant to this Article XI
relating to a Third Party Claim shall be made within 30 days after the latest of
(i) the settlement of that Third Party Claim, (ii) the expiration of the period
for appeal of a final adjudication of that Third Party Claim or (iii) the
expiration of the period for appeal of a final adjudication of the Indemnifying
Party’s liability to the Indemnified Party under this Agreement. Payments of all
amounts owing by an Indemnifying Party pursuant to Section 10.4(e) shall be made
within 30 days after the later of (i) the expiration of the 30-day Indemnity
Notice period or (ii) the expiration of the period for appeal of a final
adjudication of the Indemnifying Party’s liability to the Indemnified Party
under this Agreement.
10.5 REMEDIES
NOT EXCLUSIVE. The remedies provided in this Agreement shall not be
exclusive of any other rights or remedies available to one party against the
other, either at law or in equity.
ARTICLE
XI — TERMINATION
11.1 GROUNDS
FOR TERMINATION. This Agreement may be terminated at any time before
the Closing Date:
(a) By
mutual written consent of Acquiror and Shareholders owning at least 51% of the
Shares.
(b) By
Acquiror or Shareholders owning at least 51% of the Shares, if the Closing shall
not have been consummated within five (5) business days of the date
of this Agreement (the “Termination Date”); provided, however, that the right to
terminate this Agreement under this Section 11.1(b) shall not be available to
any Party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing Date to occur on or
before the Termination Date;
(c) By
Acquiror or Shareholders owning at least 51% of the Shares if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a Court Order (which Court Order the Parties shall
use commercially reasonable efforts to lift) that permanently restrains, enjoins
or otherwise prohibits the Transactions, and such Court Order shall have become
final and nonappealable;
(d) By
Shareholders owning at least 51% of the Shares if Acquiror shall have breached,
or failed to comply with, in any material respect, any of its obligations under
this Agreement or any representation or warranty made by Acquiror shall have
been incorrect in any material respect when made, and such breach, failure or
misrepresentation is not cured within 3 days after notice thereof, and in either
case, any such breaches, failures or misrepresentations, individually or in the
aggregate, results or would reasonably be expected to result in a failure to
satisfy a condition to Acquiror’s obligations to consummate the transactions
contemplated hereby;
(e) By
Acquiror if Acquiree or any Shareholder shall have breached, or failed to comply
with, in any material respect, any of its obligations under this Agreement or
any representation or warranty made by it shall have been incorrect in any
material respect when made, and such breach, failure or misrepresentation is not
cured within 3 days after notice thereof, and in either case, any such breaches,
failures or misrepresentations, individually or in the aggregate, results or
would reasonably be expected to result in a failure to satisfy a condition to
Acquiree’s or any Shareholder’s obligations to consummate the transactions
contemplated hereby;
11.2
EFFECT OF TERMINATION.
(a) Except
as otherwise provided in Section 11.2(b) hereof, if this Agreement is
terminated pursuant to Section 11.1(a), (b) or (c), this Agreement shall be
terminated and there shall be no liability on the part of any of the
Parties. Notwithstanding the foregoing, nothing herein shall relieve
any Party from liability for any willful breach hereof; provided that the
provisions of Section 5.5, and this Section 11.2 shall survive the
termination hereof.
ARTICLE
XII — GENERAL MATTERS
12.1 CONTENTS
OF AGREEMENT. This Agreement, together with the other Transaction
Documents, set forth the entire understanding of the Parties hereto with respect
to the Transactions and supersedes all prior agreements or understandings among
the Parties regarding those matters.
12.2 PARTIES
IN INTEREST, ASSIGNMENT, ETC This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective heirs, legal
representatives, successors and permitted assigns of the Parties hereto. No
Party hereto shall assign this Agreement or any right, benefit or obligation
hereunder. Any term or provision of this Agreement may be waived at any time by
the Party entitled to the benefit thereof by a written instrument duly executed
by such Party. The Parties hereto shall execute and deliver any and all
documents and take any and all other actions that may be deemed reasonably
necessary by their respective counsel to complete the Transactions. Nothing in
this Agreement is intended or will be construed to confer on any Person other
than the Parties hereto any rights or benefits hereunder.
12.3 INTERPRETATION. Unless
the context of this Agreement clearly requires otherwise, (a) references to the
plural include the singular, the singular the plural, the part the whole, (b)
references to any gender include all genders, (c) “or” has the inclusive meaning
frequently identified with the phrase “and/or,” (d) “including,” “includes” or
similar words has the inclusive meaning frequently identified with the phrase
“but not limited to” and (e) references to “hereunder” or “herein” relate to
this Agreement. The section and other headings contained in this Agreement are
for reference purposes only and shall not control or affect the construction of
this Agreement or the interpretation thereof in any respect. Section,
subsection, and Schedule references are to this Agreement unless otherwise
specified. The Schedules referred to in this Agreement will be deemed to be a
part of this Agreement. Each accounting term used herein that is not
specifically defined herein shall have the meaning given to it under
GAAP.
12.4 NOTICES. All
notices that are required or permitted hereunder shall be in writing and shall
be sufficient if personally delivered or sent by a nationally recognized
overnight courier upon proof of delivery. Any notices shall be deemed given upon
receipt at the address set forth below, unless such address is changed by notice
to the other Party hereto:
If to
Acquiror:
Sports
Supplement Acquisition Group, Inc.
at the
address in the recital hereto
If to
Acquiree to:
Sports
Supplement Acquisition Group Inc.
Attention:
Xxxxx Xxxxx, President
0000
Xxxxxxx Xxxx, Xxxxx 000
Xxxxx-Xxxxx,
XX X0X 0X0 Xxxxxx
|
|
If
to any Stockholder, to such Stockholder
as follows:
|
|
|
c/o
Sports Supplement Acquisition Group
Inc.
|
|
|
0000
Xxxxxxx Xxxx, Xxxxx 000
|
|
|
Xxxxx-Xxxxx,
XX X0X 0X0 Xxxxxx
|
12.5 GOVERNING
LAW. This Agreement shall be construed and interpreted in accordance
with the Laws of the State of
Nevada without regard to its provisions concerning
conflict of laws.
12.6 COUNTERPARTS. This
Agreement may be executed in two or more counterparts, each of which shall be
binding as of the date first written above, and all of which shall constitute
one and the same instrument. Each such copy shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
12.7 WAIVERS. Compliance
with the provisions of this Agreement may be waived only by a written instrument
specifically referring to this Agreement and signed by the Party waiving
compliance. No course of dealing, nor any failure or delay in exercising any
right, will be construed as a waiver, and no single or partial exercise of a
right will preclude any other or further exercise of that or any other
right.
12.8 MODIFICATION. No
supplement, modification or amendment of this Agreement will be binding unless
made in a written instrument that is signed by each of the Parties to this
Agreement.
12.9 ENFORCEMENT
OF AGREEMENT. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction, this being in addition
to any other remedy to which they are entitled at law or equity.
12.10 SEVERABILITY. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable Law in an
acceptable manner to the end that the Transactions are fulfilled to the extent
possible.
12.11 FURTHER
ASSURANCES. The Parties hereto agree to execute and deliver such
further instruments and documents as may reasonably be requested by another
Party in order to carry out fully the intent and accomplish the purposes of this
Reorganization Agreement and the Transactions referred to herein.
[Signatures
on following pages]
IN
WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of
the day and year first written above.
|
Sports
Supplement Acquisition Group Inc.
|
Sports
Supplement Acquisition Group Inc.
|
|
|
|
|
|
|
|
By:
/s/ Xxx
Xxxxxxx
|
By:
/s/ Xxxxx
Xxxxx
|
|
Name:
Xxx Xxxxxxx
|
Name:
Xxxxx Xxxxx
|
|
Title:
President
|
Title:
President
|
Shareholders:
|
The
Xxxxx Xxxxx Family Trust
/s/ Xxxxx
Xxxxx
|
Proviant
Technologies Inc.
/s/ Xxxxxxxxx
Xxxxxxx
|
| | |
| | |
|
3311180
Canada Inc.
/s/ Xxxxxx X Xxxxx as Attorney in
Fact
|
Xxxxxx
Xxxxxxxxxx
/s/ Xxxxxx X Xxxxx as Attorney in
Fact
|
| | |
| | |
|
Xxxxxxx
Xxxxxxx
/s/ Xxxxxx X Xxxxx as Attorney in
Fact
|
Xxxxxx
Xxxxx
/s/ Xxxxxx X
Xxxxx
|
| | |
| | |
|
Dr.
Xxxxx Xxxxxxxxx
/s/ Xxxxxx X Xxxxx as Attorney in
Fact
|
4122852
Canada Inc
/s/ Xxxxx
Xxxxxxxx
|
| | |
| | |
|
Xxxxxx
Xxxxxxx
/s/ Xxxxxx X Xxxxx as Attorney in
Fact
|
Xxxxx
Xxxxxxxx
/s/ Xxxxx
Xxxxxxxx
|
|
Xx.
Xxxx Xxxxxxxx
/s/ Xx. Xxxx
Xxxxxxxx
|
Xxxxx
Xxxxxxxx
/s/ Xxxxx
Xxxxxxxx
|
| | |
| | |
|
RCL
Amro Holdings Inc.
/s/ Xxxxxx
Amro
|
Xxxxxxx
Xxxxxxx
/s/ Xxxxxx X Xxxxx as Attorney in
Fact
|
| | |
| | |
|
Xxxxxxx
Xxxxx
/s/ Xxxxxxx
Xxxxx
|
|
SCHEDULE
2.1
|
SHAREHOLDER
| |
NUMBER
OF
ACQUIREE
SHARES
TO
BE SOLD
| |
ADDRESS
|
|
The
Xxxxx Xxxxx Family Trust
| | | 721.55 | |
0000
Xxxxxxx Xxxxxx
Xxxxxxxx,
XX X0X 0X0
|
| | | | | | |
|
Proviant
Technologies Inc
| | | 400.00 | |
000
Xxxx Xxxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
|
| | | | | | |
|
3311180
Canada Inc
| | | 77.80 | |
00
Xxxxx Xxxx
Xxxxxxxxx,
XX X0X 0X0
|
| | | | | | |
|
Xxxxxx
Xxxxxxxxxx
| | | 58.33 | |
0000
Xxxxx Xxxxxxx
Xxxxxxxx,
XX X0X 0X0
|
| | | | | | |
|
Xxxxxxx
Xxxxxxx
| | | 31.11 | |
0000
Xxxxxx Xxxx
Xxxx-Xx-Xxx,
XX X0X 0X0
|
| | | | | | |
|
Xxxxxx
Xxxxx
| | | 23.33 | |
000
Xxxxxxxx Xxxxxx
Xxxxxxx,
Xxx Xxxx 00000
|
| | | | | | |
|
Xxxxx
Xxxxxxxxx
| | | 19.44 | |
000
Xxxxxxxx Xxxxxx
Xxxxxxx,
XX X0X 0X0
|
| | | | | | |
|
4122852
Canada Inc
| | | 15.56 | |
000
Xxxxxxxx Xxxx
Xxxxxxxx,
XX X0X 0X0
|
| | | | | | |
|
Xxxxxx
Xxxxxxx
| | | 11.67 | |
0000
Xxxxxx Xxxx
Xxxx-Xx-Xxx,
XX X0X 0X0
|
| | | | | | |
|
Xxxxx
Xxxxxxxx
| | | 9.72 | |
000
Xxxxxxx Xxxxx Xxxxx
Xxxxxxxx,
XX 00000
|
| | | | | | |
|
Xxxx
Xxxxxxxx
| | | 9.72 | |
00
Xxxxx Xxxxxxxx Xx.
Xxxxxxxx,
XX 00000
|
| | | | | | |
|
Xxxxx
Xxxxxxxx
| | | 9.72 | |
000
Xxxxxxxxx Xxx Xxxxx
Xxxxxxxx,
XX 00000
|
| | | | | | |
|
RCL
Amro Holdings
| | | 5.83 | |
00
Xxxxxxxxx
Xxxxxxxxx,
XX X0X 0X0
|
| | | | | | |
|
Xxxxxxx
Xxxxxxx
| | | 3.89 | |
0000
Xxxxxx Xxxx
Xxxx-Xx-Xxx,
XX X0X 0X0
|
| | | | | | |
|
Xxxxxxx
Xxxxx
| | | 2.33 | |
00
Xxxxxx Xxxxxx
Xxxxxx
XX X0X 0X0
|
| | | | | | |
|
TOTAL
| | | 1,400 | |
|
SCHEDULE
4.4
ACQUIREE
DEBT AND WARRANTS OUTSTANDING AT TIME OF CLOSING
At time
of Closing, the Acquiree has $ 525,000 of convertible debt, and 4,335,000
warrants outstanding, as follows:
4122852
Canada Inc. — $ 200,000 in debt, convertible into 600,000 post-Closing shares,
with 600,000 5-year $ 0.75 post-Closing warrants
RCL AMRO
Holdings Inc. — $ 125,000 in debt, convertible into 375,000 post-Closing shares,
with 375,000 5-year $ 0.75 post-Closing warrants
6894283
Canada Inc. — $ 75,000 in debt, convertible into 225,000 post-Closing shares,
with 225,000 5-year $ 0.75 post-Closing warrants
Xxxxx
Xxxxxxxxx — $ 15,000 in debt, convertible into 45,000 post-Closing shares, with
45,000 5-year $ 0.75 post-Closing warrants
Xxx
Xxxxxxxx — $ 10,000 in debt, convertible into 30,000 post-Closing shares, with
30,000 5-year $ 0.75 post-Closing warrants
Xxxxx
Xxxxxxxx — 600,000 5-year $ 0.75 post-Closing warrants
Proviant
Technologies Inc. — 2,000,000 5-year $ 0.75 post-Closing warrants, vesting
ratably on December 10, 2009, December 10, 2010 and December 10,
2011.
3311180
Canada Inc. — 1,750,000 5-year $ 0.04 post-Closing warrants, vesting ratably on
the 6 month, 12 month, 18 month and 24 month anniversaries of 3311180 Canada
Inc. providing or securing working capital financing on terms acceptable to the
Company.
Knights
Bridge Capital Group — $ 100,000 in debt, convertible into 300,000 post-Closing
shares.
Xxxx Xxxx
and Xxxx Xxxxxxxxx — 80,000 post-Closing shares each pursuant to consulting
agreements with Acquiree.
SCHEDULE
4.5
ACQUIROR
CAPITALIZATION AT TIME
OF
EXECUTION OF THIS AGREEMENT
|
Shares
of Common Stock Outstanding:
| | | 14,950,000 | |
|
Shares
of Preferred Stock Outstanding:
| | | 0 | |
ACQUIROR
CAPITALIZATION
IMMEDIATELY
FOLLOWING CLOSING
|
Shares
of Common Stock Outstanding:
| | | 24,325,000 | (1) |
|
Shares
of Preferred Stock Outstanding:
| | | 0 | |
(1) An
additional 10,645,000 common shares are being reserved for issuance with respect
to (i) 1,575,000 common shares underlying the SSAG Convertible Debt (ii)
1,275,000 warrants underlying the SSAG Convertible Debt, (iii) the 4,335,000
warrants referred to in Section 4.4; and (iv) an aggregate of 3,460,000
common shares to be issued as a result of the subscriptions and warrants
referred to in Section 8.2, and pursuant to the consulting agreements with the
Acquiree.
