AGREEMENT
This Agreement is made and entered into this 20th day of December, by and
between Grandma Xxxxxxx a Nevada corporation ("Buyer"), and Los Cabos
Beverage/Xxxxxx Xxxxxxxxx. (THE "SELLER") The parties hereto are collectively
and individually referred to herein as the "Parties."
RECITALS:
WHEREAS, Seller, who is in the business of marketing of nutritional, health and
dietary supplements and products along with water, wishes to sell to Buyer its
Assets and company stock (sometimes referred to hereinafter as "Business");
WHEREAS, Buyer desires to acquire assets of Seller used in the operation of the
business and Seller desires to sell, transfer and assign same to Buyer;
WHEREAS, Xxxxxx Xxxxxxxxx ("Xxxxxxxxx") is the principal owner of Los Cabos
Beverage and owns 100% of the stock;
WHEREAS, Seller has attained legal opinion of fair value.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, the Parties, intending to be legally bound, agree as follows:
1. Assets to be conveyed. On the Closing Date and at the Closing Place,
Seller will sell, assign, convey, transfer and deliver to Buyer, and Buyer will
acquire, purchase and accept all of the following (hereinafter collectively
referred to as the "Assets"), free and clear of all debts, liens, security
interests, mortgages, trusts, claims, liabilities and encumbrances, except as
specifically assumed by Buyer as listed on attached Exhibit A: All accounts
payable are the responsibility of the Seller except for payable on printing
machine listed on exhibit A.
(a) All of the tangible personal property, physical assets and equipment used
or intended to be used in the operation of the business, including but not
limited to those assets set forth in Exhibit A attached hereto, except for those
items of tangible personal property specifically identified as excluded assets
on Exhibit A, together with any replacements thereof or additions thereto made
between the date hereof and the Closing Date, less any retirements made in the
ordinary and usual course of business in connection with the acquisition of
similar property or assets of greater or equal value (hereinafter referred to as
the "Personal Tangible Assets");
(b) All right, title and interest to any and all rights, licenses, permits,
trademark names, websites, authorizations and other intangibles, to the
extent lawfully transferable, which are used, useful or intended to be used
in the operation of Business listed on Exhibit A Assets.
(c) Payables are the burden of Seller and Buyer assumes no payables except
printer listed on Exhibit A.
(d) Seller will forgive the remaining debt in Grandma Xxxxxxx purchase listed
currently on its books at $187,054.64 and $6,777.94 for a total of
$193,832.58.
(e) Seller will receive all rights to the GHF product line along with inventory
on hand at approximately 10,000 units of various flavors.
(f) Seller will have 49% ownership in Los Cabos Beverage and Gateway
Distributors limited will own 51%. Los Cabos Beverage which will be form as
a dba of Grandma Xxxxxxx.
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2. Excluded Assets, Liabilities and Contracts. Seller shall be solely
responsible for, and there shall be no assumption of liability by Buyer of, any
liabilities, obligations or commitments of Seller of any nature whatsoever
except as agreed to by both parties after the due diligence process is
completed.
3. Purchase Price. The purchase price for the Assets to be conveyed
pursuant to this Agreement is as follows:
(a) GHF product line currently doing excess of $140,000 annual in sales in
2004.
(b) Seller will receive 49% ownership in Los Cabos Beverage operating as a
dba under Grandma Xxxxxxx.
4. Allocation. It is agreed between the Parties hereto that the purchase
price is being paid for the Assets in the amounts set forth in 3 above. Seller
and Buyer agree to complete and separately their federal income tax returns for
the tax year in which the Closing Date occurs, that neither Seller nor Buyer
shall take a position on any income, transfer or gain tax return, before any
governmental agency charged with the collection of any such tax or in any
judicial proceeding that is in any manner substantially inconsistent with the
terms of any such allocation without the written consent of the other.
5. Representations, Warranties and Covenants of Seller. Seller represents,
warrants and covenants to Buyer that:
(a) Organization and Standing. December 20, 2004 is the official closing
date and signature of this agreement which consummates the entire agreement.
(b) Authorization. Seller has full right, power and authority to enter into
and perform this Agreement and the transactions contemplated hereby. All
necessary corporate action to approve the execution, delivery and performance of
this Agreement and the consummation of the transaction contemplated hereby has
been taken by Seller, and this Agreement constitutes a valid and binding
agreement of Seller enforceable in accordance with its terms;
(c) Personal Property. All of the Personal Tangible Assets are listed and
described in Exhibit A, attached hereto. Seller now has, or on the Closing Date
shall have, good valid and marketable title to the Personal Tangible Assets
listed and described in Exhibit A, free and clear of all mortgages, liens,
charges, claims, pledges, security interests and encumbrances whatsoever, except
as assumed by Buyer;
(d) Condition and Adequacy of Assets. Seller now owns and on the Closing
Date will own and transfer to Buyer the Assets. The Personal Tangible Assets are
now and on the Closing Date will be in good operating condition and repair,
reasonable wear and tear from ordinary use accepted, and is now and on the
Closing Date will be adequate and suitable for the purposes for which they are
presently used and intended to be used.
6. Litigation. No judgment is issued or outstanding against the Business.
To the best of Seller's knowledge, except for matters affecting the Business
generally or as set forth in Exhibit E, attached hereto, presently and as of the
Closing Date there is no litigation, action, claim, special assessment, suit,
fine, judgment, proceeding or investigation pending or outstanding before any
arbitrator, forum, court or governmental
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body, department or agency of any kind, to which Seller or the Business is a
party. To the best of Seller's knowledge, no such litigation, action, claim,
special assessment, suit, fine, proceeding or investigation is now or on the
Closing Date shall be threatened, which might result in any material adverse
change in the business, prospects or financial conditions of the Business.
7. Contracts. With respect to the Business, Seller has no existing
contract, agreement, lease, commitment or understanding, written or oral,
expressed or implied.
8. Absence of Restrictions. The execution, delivery and performance of this
Agreement and the transaction contemplated hereby by Seller do not and on the
Closing Date will not: (i) violate any material provision of law applicable to
Seller or conflict with, result in the termination or breach of any term,
condition of provision of, or constitute a default under, the Articles of
Incorporation or by-laws of Seller, or of any contract, lease, agreement or
other instrument or condition to which Seller is a party or to which the Assets
are subject, or result in the creation of any lien, charge, claim, pledge,
security interest or encumbrance on any of the Assets; or (iii) cause or result
in the advancement or acceleration of maturity of any liability of the Seller or
the alteration or modification to the detriment of Buyer of the terms,
conditions or provisions of any contract, lease agreement or other instrument or
condition by which Seller is bound or to which any of the Assets are subject;
9. Disclosure. Seller has made full disclosure of all material events and
facts pertaining to the operation of the Business, of which it has knowledge,
including but not limited to any material events and facts pertaining to the
operation and business of the Business about which Buyer has requested
information. No covenant, representation or warranty by Seller and no written
statement, certificate or exhibit furnished or to be furnished by Seller
pursuant hereto or in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make the statement contained therein not
misleading and to provide Buyer with complete and accurate information as to the
Business. Moreover, Seller has withheld no material facts of any kind, which
might affect the licenses, leases and agreements or any other assets to be
acquired.
10. Tax Matters.
Business has duly and timely filed all tax information reports, returns and
related documents required to be filed by it with respect to the income-type,
sales/use-type and employment-related taxes of the United States and the states
and other jurisdictions. Business has duly and timely filed all other tax and
information reports, returns and related documents required to by filed by it
with any Authority, including without limitation all returns and reports of
income, franchise, gross receipts, sales, use, occupation, employment,
withholding, excise, transfer, real and personal property and other taxes,
charges and levies (collectively, the "Tax Returns") and has duly paid, or made
adequate provisions for the due and timely payment of all such taxes and other
charges, including without limitation interest, penalties, assessments and
deficiencies, due or claimed to be due from them by any such Authorities; the
reserves for all of such taxes and other charges reflected in the Latest Balance
Sheet are adequate; and there
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are no liens for such taxes or other charges upon any property or assets of
Business. There is no material omission, deficiency, error, misstatement or
misrepresentation, whether innocent, intentional or fraudulent, in any Tax
Return filed by Business for any period. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
Return for any period.
11. Cooperation on Tax Matters. The Seller and Buyer shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns and any audit, litigation or other proceeding with
respect to taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation on any material provided hereunder.
12. Buyer's Representations and Warranties. Buyer represents and warrants
to Seller that:
(a) Authorization. All necessary action to approve the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby has been taken by Buyer, and this Agreement constitutes a
valid and binding agreement of Buyer enforceable in accordance with its terms;
(b) Absence of Restrictions. No unwaived contract, agreement or other
instrument or condition exists or on the Closing Date will exist which
restricts, limits or in any manner materially adversely affects any aspect of
this Agreement or the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the transactions contemplated hereby by
Buyer do not, and will not at Closing Date, conflict with or result in the
termination or breach of any terms, condition or provisions of, or constitute a
default under the certificate of incorporation, or any contract, lease agreement
or other instrument or condition by which Buyer is bound; and
(c) Litigation. There is no litigation, proceeding or governmental
investigation pending and no other judicial or administrative proceedings which
would materially adversely affect Buyer's power, authority or ability to enter
into this Agreement and to carry out the transactions contemplated hereby, nor
any circumstances which might give rise to such proceedings.
12. Condition Precedent to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated hereby is, at Buyer's option, subject
to the fulfillment prior to and at the Closing Date of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
Seller contained in this Agreement or in any statement, exhibit or other
document delivered pursuant to this Agreement or in connection with the
transaction contemplated hereby shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made at and as of such time;
(b) Performance. Seller shall have in all material respects performed and
complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it prior to and on the Closing
Date;
(c) No Adverse Change. Between the date hereof and the Closing Date, there
shall not have been any material adverse change in the Assets or the operations
or financial position of the Business (excluding loss of personnel and
advertising sales for air time on the Business), which would include the fact
that there has not been any action in
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contemplation of, or which would constitute the basis for, the institution of an
insolvency proceeding of any character;
(d) Actions. No action, suit or proceeding before any court or any
governmental body or authority pertaining to the transactions contemplated by
this Agreement or its consummation shall have been instituted or threatened on
or before the Closing Date; and
13. Indemnification by Seller.
(a) It is understood and agreed that Buyer does not assume, and shall not
be obligated to pay, any liability of Seller under the terms of this Agreement
or otherwise, and shall not be obligated to perform any obligations of Seller of
any kind or manner, except by reason of contracts expressly assumed by Buyer
hereunder, and with respect to such contracts, only such obligations which arise
subsequent to the Closing Date, or as herein provided. For a period of one (1)
year following the Closing, Seller hereby agrees to indemnify, defend and hold
harmless Buyer and its successors and assigns, from and against, and shall
reimburse them for:
(i) Any and all claims, demands, liabilities, obligations, actions, suits,
proceedings, losses, damages, costs, expenses, assessments, judgments,
recoveries and deficiencies, including interest, penalties and reasonable
attorneys' fees and expenses, of any kind and description, contingent or
otherwise (the foregoing hereinafter collectively referred to as "Damages"),
occasioned by, arising out of or resulting from the operation of the Business
prior to the Closing under any contract, agreement or lease assumed by Buyer
hereunder or otherwise, and any claim relating to the issuance of the Shares to
Buyer pursuant to this Agreement.
(ii) Any and all Damages occasioned by, arising out of or resulting from
any misrepresentation, breach of warranty or nonfulfillment of any covenant, or
default or nonfulfillment of any agreement on the part of Seller under this
Agreement, or from any certificate, agreement, appendix, schedule or other
instrument furnished to Buyer pursuant to this Agreement or in connection with
any of the transactions contemplated hereby.
(b) Anything in this section to the contrary notwithstanding, (i) if there
is a reasonable probability that a claim may materially and adversely affect
Buyer, Buyer will have the right, at its own cost and expense, to defend,
compromise or settle such claim; and (ii) Seller will not, without Buyer's
written consent, settle or compromise any claim or consent to any entry of
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to Buyer of a release from all liability in
respect to such claim; and
(c) This indemnity is intended by Seller to cover all acts, suits,
proceedings, claims, demands, assessments, adjustments, interest, penalties,
costs, and expenses (including, without limitation, reasonable fees and
disbursements of counsel), arising within said one (1) year following the
Closing whether suit is instituted or not and, if instituted, whether at the
trial or appellate level, with respect to any and all of the specific matters
set forth in this indemnity.
(d) Any and all claims, demands, liabilities, obligations, actions, suits,
proceedings, losses, damages, costs, expenses, assessments, judgments,
recoveries and deficiencies, including interest, penalties, and reasonable
attorneys' fees, of any kind
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and description, contingent or otherwise (the foregoing hereinafter collectively
referred to as "Damages"), occasioned by, arising out of or resulting from the
operation of the Business subsequent to the Closing under any lease, contract,
or agreement assumed by Buyer hereunder or otherwise. (This paragraph shall not
apply to any acts of Seller or Seller's representatives; i.e., Buyer shall not
indemnify Seller from such acts.)
(e) Any and all Damages occasioned by, arising out of or resulting from any
misrepresentation, breach of warranty, or nonfulfillment of any covenant, or
default or nonfulfillment of any agreement on the part of Seller under this
Agreement, or from any certificate, agreement, appendix, schedule or other
instrument furnished to Buyer pursuant to this Agreement or in connection with
any of the transactions contemplated hereby.
14. Seller's Performance at Closing. On the Closing Date at the Closing
Place, Seller shall execute and deliver or cause to be delivered to Buyer, in
form and substance reasonably satisfactory to Buyer.
15. Buyer's Performance at Closing. On the Closing Date at the Closing
Place, Buyer shall execute and deliver or cause to be delivered to Seller, in
form and substance reasonably satisfactory to Seller and its counsel:
(a) The purchase price as set forth in this agreement
(b) Seller too as reasonably may request such other documents
consummate this Agreement and the transactions contemplated hereby.
16. Survival of Covenants, Representations and Warranties. All
representations and warranties of the Seller contained in this Agreement shall
survive the Closing Date. The representations and warranties of Buyer shall not
survive the Closing Date. In no event will Buyer have any liability for
compensation payments, benefits, accrued vacation obligations or any other
obligations of Seller to its employees with respect to any period ending on or
prior to the Closing Date, whether or not any of such employees shall be
retained by Buyer.
17. Restrictive Covenants.
(a) Post-Closing Confidentiality. The Seller acknowledges intent to fully
and effectively convey to the Buyer all proprietary rights, including the
Intellectual Property Rights of Business, to be transferred to the Buyer
pursuant hereto. Accordingly, the Seller shall at all times keep confidential
and shall not disclose to others any proprietary rights, including the
Intellectual Property Rights, and shall not use or permit to be used any
proprietary rights or any Intellectual Property Rights for any purpose other
than the performance of obligations to the Buyer.
(b) Non-Diversion. Seller shall not take advantage of, or attempt to take
advantage of, any actual or potential business or opportunities of Seller of
which Seller becomes aware as the result of its affiliation with the Business or
its relationship with the Buyer and which relate specifically to the business or
any part thereof.
(c) Severability and Modification of Any Unenforceable Covenant. Each of
the Restrictive Covenants will be read and interpreted with every reasonable
inference
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given to its enforceability. However, if any term, provision or condition of the
Restrictive Covenants is held by a court or arbitrator to be invalid, void or
unenforceable, the remainder of the provisions thereof shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. If a
court or arbitrator should determine any of the Restrictive Covenants are
unenforceable because of over breadth, then the court or arbitrator shall modify
such covenant so as to make it enforceable to the fullest extent the court or
arbitrator deems reasonable and enforceable under the prevailing circumstances.
18. Notices. Any notice or other communication hereunder must be given in
writing and either (a) delivered in person, (b) transmitted by telex,
Telefax or telecopy mechanism, provided that any notice so given is
also mailed as provided in clause (c), or (c) mailed, postage prepaid,
receipt requested, to the addresses set forth below or to such other
address or to such other persons as either party shall have last
designated by such notice to the other party. Each such notice or
other communication shall be effective (i) if given by
telecommunication, when transmitted to the applicable number and an
appropriate answer back is received, (ii) if given by mail, three days
after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any
other means, when actually received at such address.
If to Seller:
Xxxxxx Xxxxxxxxx
X.X. Xxx 000
Xxx Xxxxx, Xxxxxx 00000
If to Buyer:
Gateway Distributors LTD
0000 Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
or any such other addresses as the Parties may from time to time designate in
writing.
19. Confidentiality. The Parties agree to use their best efforts to keep
confidential any and all information furnished to either of them by a party in
the course of the negotiations and the business, technical and legal reviews,
except such information as may be available to the public or to the other party
from another source not under an obligation of confidentiality. In this regard,
the Parties agree to execute and be bound by such written confidentiality
agreements as shall be reasonably requested by either party.
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20. Other Documents. The Parties shall execute and deliver on a timely
basis all such further and additional documents as shall be convenient,
necessary or desirable to the implementation and consummations of this
Agreement.
21. Waiver. No waiver by a party of any provision of this Agreement shall
be considered a waiver of any other provision or any subsequent breach of the
same or any other provision, including the time for performance of any such
provision. The exercise by a party of any remedy provided in this Agreement or
at law shall not prevent the exercise by that party of any other remedy provided
in this Agreement or at law.
22. Exhibits. Exhibit A attached to this Agreement shall be deemed part of
this Agreement and incorporated herein, where applicable, as if fully set forth
therein.
23. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Nevada
24. Entire Agreement. This Agreement, including the attached exhibit and
agreements, shall constitute the full and entire understanding of the Parties
with respect to the subject matter hereof, and any prior agreement or
understanding concerning the same is hereby terminated and canceled in its
entirety and is of no further force and effect.
25. Attorneys' Fees for Actions under This Agreement. If any suit, action
or proceeding is commenced by either party to this Agreement against the other
to obtain any relief by reason of any alleged breach of the representations,
warranties, indemnities or covenants contained in this Agreement, or to enforce
any of the provisions of this Agreement, or to determine either or both of the
Parties' rights, duties or obligations hereunder, the prevailing party shall be
entitled to recover reasonable attorneys' fees and all costs and expenses
relating to such suits, actions or proceedings.
26. Closing Date and Location. The Closing Date shall occur on December 20,
2004. The location of the Closing (the "Closing Place") shall be at Buyer
office, unless mutually agreed otherwise. In the event terms are not agreed to
by both parties on this date the agreement will be null and void.
6. Binding Effect. This Agreement is binding upon and shall inure to the
benefit of the Parties hereto, their respective insurers, agents,
administrators, employees, representatives, partners, officers, directors,
shareholders, affiliates, joint ventures, attorneys, assigns, heirs and
successors in interest.
28. Warranty of Signatories. Each of the persons signing this Agreement on
behalf of an entity warrants and represents that he has the right, power, legal
capacity and authority to execute this Agreement on behalf of such entity,
without the concurrence or approval of any other person, any entity or any
Court, and to thereby bind such entity to this Agreement.
29. Assignability. This Agreement cannot be assigned without approval from
the non-requesting party, and which consent shall not be unreasonably withheld
or delayed.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on December
20, 2004. This agreement is final and binding and supercedes all previous
agreements.
"SELLER"
Los Cabos Beverage
Date:
---------------------------------- ----------------
By: Xxxxxx Xxxxxxxxx
"BUYER"
Gateway Distributors LTD
By: Date
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XXXXXXX XXXXXX, President
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EXHIBIT A
Los Cabos Beverage as of December 20, 2004
ASSETS
------
Item Identification Value
2 CB 416 Color Thermal Printer $ 34,769.00
1 Xxxxx 5600 automatic labeler 9,300.00
1 Collection Table 3,200.00
Trailer single axle US Cargo 1,600.00
Water Inventory Nevada Water 7,500.00
Graphics, artwork, molds 6,500.00
Flyers & Marketing materials 7,390.00
Trademark, Goodwill etc. 100,000.00
-----------
Total $170,259.00
ACCOUNTS PAYABLE
----------------
Thermal Printer $ 19,769.00
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