EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
by and among
WINWIN WIRELESS, LLC
as the Acquiror
WINWIN GAMING, INC
as Parent of the Acquiror
PIXIEM, INC.
as the acquired Company
and
XXXXXXX XXX,
XXXX X. XXX
and
XXXXXXXX X. XXXXX III
as the Major Shareholders of the Company
TABLE OF CONTENTS
Page
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1. Exchange of Company Shares...............................................1
1.1 Basic Transaction...................................................1
1.2 Share Exchange......................................................1
1.3 The Closing.........................................................2
1.4 Deliveries at the Closing...........................................2
2. Representations and Warranties Concerning the Transaction................2
2.1 Representations and Warranties of the Major Shareholders............2
2.2 Representations and Warranties of WinWin............................3
3. Representations and Warranties of the Company............................5
3.1 Organization and Good Standing; Ownership of Shares.................6
3.2 Capitalization......................................................6
3.3 Noncontravention....................................................6
3.4 Tangible Assets.....................................................7
3.5 Intellectual Property...............................................7
3.6 Financial Statements................................................8
3.7 Events Subsequent to Fiscal Year End 2004...........................8
3.8 Liabilities.........................................................9
3.9 Legal Compliance...................................................10
3.10 Tax Matters........................................................10
3.11 Real Property......................................................12
3.12 Contracts..........................................................12
3.13 Notes and Accounts Receivable......................................13
3.14 Litigation.........................................................13
3.15 Employees..........................................................13
3.16 Employee Benefits..................................................14
3.17 Environmental, Health, and Safety Matters..........................14
3.18 Brokers' Fees......................................................14
3.19 Disclosure.........................................................14
4. Pre-Closing Covenants...................................................14
4.1 General............................................................14
4.2 Notices and Consents...............................................15
4.3 Operation of Business..............................................15
4.4 Preservation of Business...........................................15
4.5 Litigation.........................................................15
4.6 Full Access........................................................15
4.7 Notice of Developments.............................................15
4.8 Exclusivity........................................................16
5. Post-Closing Covenants..................................................16
5.1 General............................................................16
5.2 Litigation Support.................................................16
5.3 Transition.........................................................16
5.4 Confidentiality....................................................16
5.5 WinWin Share Certificates..........................................17
5.6 Financial Information..............................................17
6. Conditions to Obligation to Close.......................................17
6.1 Conditions to Obligation of WinWin.................................17
6.2 Conditions to Obligation of the Major Shareholders.................19
7. Remedies for Breaches of This Agreement.................................20
7.1 Survival of Representations and Warranties.........................18
7.2 Indemnification Provisions for Benefit of WinWin...................19
7.3 Indemnification Provisions for Benefit of the Major Shareholders...19
7.4 Matters Involving Third Parties....................................20
7.5 Other Indemnification Provisions...................................21
8. Termination.............................................................21
8.1 Termination of Agreement...........................................21
8.2 Effect of Termination..............................................21
9. Definitions.............................................................22
10. Miscellaneous...........................................................24
10.1 Nature of Certain Obligations......................................24
10.2 No Third-Party Beneficiaries.......................................25
10.3 Entire Agreement...................................................25
10.4 Succession and Assignment..........................................25
10.5 Counterparts; Facsimile Execution..................................25
10.6 Headings...........................................................25
10.7 Notices............................................................25
10.8 Governing Law......................................................26
10.9 Amendments and Waivers.............................................26
10.10 Severability.......................................................26
10.11 Expenses...........................................................26
10.12 Construction.......................................................26
10.13 Incorporation of Exhibits, Annexes, and Schedules..................27
10.14 Specific Performance...............................................27
10.15 Submission to Jurisdiction.........................................27
SHARE EXCHANGE AGREEMENT
SHARE EXCHANGE AGREEMENT, dated May 11, 2005, by and among WINWIN
WIRELESS, LLC, a Delaware limited liability company (hereinafter referred to as
"WinWin"), WINWIN GAMING, INC., a Delaware Corporation and the indirect parent
of WINWIN (hereinafter referred to as "Parent"), PIXIEM, INC., a Delaware
corporation (hereinafter referred to as the "Company"), and XXXXXXX XXX, XXXX X.
XXX and XXXXXXXX X. XXXXX III, each a Major Shareholder of the Company
(hereinafter referred to as the "Major Shareholders"). WinWin, Parent, the
Company and the Major Shareholders are referred to collectively herein as the
"Parties". Capitalized terms that are used, but not otherwise defined, herein
have the meanings ascribed to them in Section 9.
RECITALS:
WHEREAS, the Major Shareholders, as of the date hereof, own 5,000,000
shares ( 93.81 %) of the issued and outstanding capital stock of the Company.
WHEREAS, the Company is engaged in the business of developing and
publishing mobile games (the "Business");
WHEREAS, prior to the Closing the Company will cause all outstanding
unsecured convertible notes of the Company (the "Notes") held by eight different
individuals (the "Note Holders") with an aggregate principal amount and interest
due of $120,000 to be converted into 330,000 Company Shares prior to the Closing
and will cause the Note Holders to agree to convert those shares into shares of
Common Stock of the Parent;
WHEREAS, WinWin desires to acquire, and the Major Shareholders and the
Note Holders (collectively, the Major Shareholders and the Note Holders, as the
holders of 330,000 Company Shares upon conversion of the Notes, are referred to
herein as the "Shareholders") desire to exchange, all of the issued and
outstanding capital stock of the Company in exchange for shares of the common
stock of Parent; and
WHEREAS, the Parties intend the exchange to qualify as a tax-free
reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties, intending to be legally bound, hereby
agree as follows.
1. Exchange of Company Shares.
1.1 Basic Transaction. On and subject to the terms and conditions
of this Agreement, WinWin shall acquire from each of the Major Shareholders all
of Major Shareholder's Company Shares for the WinWin Shares as specified below
in this Section 1. On and subject to the terms and conditions of separate
agreements with the Note Holders (the "Separate Agreements"), WinWin shall
acquire all of the Company Shares held by the Note Holders. As a result of the
transactions described in the immediately preceding two sentences, WinWin shall
become the owner of all of the issued and outstanding Company Shares.
1.2 Share Exchange. WinWin shall deliver to the Shareholders in
the aggregate at the Closing Three-Million (3,000,000) WinWin Shares. The WinWin
Shares shall be allocated among the Shareholders in proportion to their
respective holdings of Company Shares as set forth in Section 3.2(a) of the
Disclosure Schedule.
1.3 The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx Xxxx &
Priest, at 000 Xxxxxxxxxxxx Xxxxxx XX, Xxxxxxxxxx, XX 00000, commencing at 10:00
a.m. local time on the second business day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as
WinWin and the Major Shareholders may mutually determine (the "Closing Date").
1.4 Deliveries at the Closing. At the Closing, (a) the Major
Shareholders shall deliver to WinWin the various certificates, instruments, and
documents referred to in Section 6.1 below, (b) WinWin shall deliver to the
Major Shareholders the various certificates, instruments, and documents referred
to in Section 6.2 below, (c) each of the Shareholders shall deliver to WinWin
stock certificates representing all of his Company Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (d) WinWin shall deliver
to each of the Shareholders the consideration specified in Section 1.2 above.
2. Representations and Warranties Concerning the Transaction2.1
Representations and Warranties of the Major Shareholders. Each of the Major
Shareholders severally and not jointly represents and warrants to WinWin that
the statements contained in this Section 2.1 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 2.1) with respect to himself,
except as set forth in the disclosure schedule attached hereto (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Section 2.
(a) Ownership of Shares. The Major Shareholder is the owner of
record and beneficially of all the Company Shares listed next to his name on
Schedule 3.2(a), free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws), taxes,
Security Interest, options, warrants, purchase rights, contracts, commitments,
equities, claims and demands, and the Major Shareholder has not sold, pledged,
assigned or otherwise transferred any of the Company Shares except pursuant to
this Agreement. The Major Shareholder is not a party to any option, warrant,
purchase right, or other contract or commitment that could require the Major
Shareholder to sell, transfer, or otherwise dispose of any capital stock of the
Company (other than this Agreement). The Major Shareholder is not a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
(b) Authorization of Transaction. The Major Shareholder has
full power and authority to execute and deliver this Agreement and to perform
his respective obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Major Shareholder, enforceable in accordance
with its terms and conditions except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies. The Major Shareholder does not need give any notice to, make
any filing with, or obtain any authorization, consent, or approval of
Governmental Authority in order to consummate the transactions contemplated by
this Agreement.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement nor the consummation of the transactions contemplated hereby,
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will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which the Major Shareholders is subject, or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Major Shareholder is a party or by
which he is bound or to which any of his assets is subject.
(d) Investment. The Major Shareholder (i) understands that the
WinWin Shares have not been, and will not be, registered under the Securities
Act of 1933, as amended, or under any state securities laws, and are being
offered in reliance upon federal and state exemptions for transactions not
involving any public offering, (ii) is acquiring the WinWin Shares solely for
his own account for investment purposes, and not with a view to the distribution
thereof, (iii) is a sophisticated investor with knowledge and experience in
business and financial matters, (iv) has received certain information concerning
WinWin and have had the opportunity to obtain additional information as desired
in order to evaluate the merits and the risks inherent in holding the WinWin
Shares, and (v) is able to bear the economic risk and lack of liquidity inherent
in holding the WinWin Shares.
(e) Brokers' Fees. The Major Shareholder has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which WinWin
could become liable or obligated.
2.2 Representations and Warranties of WinWin. WinWin and Parent
jointly and severally represent and warrant to the Major Shareholders that the
statements contained in this Section 2.2 are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 2.2), except as previously disclosed in
any of Parent's Security and Exchange Commission (the "SEC") reports, forms and
documents ("Parent Reports") filed by Parent under the Securities Act of 1933,
as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act") since January 1, 2005.
(a) Organization of WinWin and Parent. WinWin is a limited
liability company, duly formed and in good standing under the laws of the State
of Delaware. Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and WinWin
has the requisite power and authority to carry on its respective business as now
being conducted and own, lease and operate its assets and properties. Each of
Parent and WinWin is duly qualified to conduct its respective business and is in
good standing under the laws of each jurisdiction where such qualification is
required.
(b) Authorization of Transaction. WinWin and Parent have full
power and authority (including full limited liability company power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of WinWin and Parent, enforceable in accordance with its terms and conditions
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. Neither WinWin nor Parent need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any Governmental
Authority in order to consummate the transactions contemplated by this
Agreement.
(c) Litigation. Except as disclosed in the Parent Reports,
there are no actions, suits, proceedings, hearings, or investigations pending
or, to the Knowledge of Parent or WinWin, threatened against either Parent or
WinWin, relating to or affecting (i) Parent or Merger Sub, that if determined
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adversely to Parent or WinWin is likely to have a Material Adverse Effect on
Parent or WinWin or (ii) the transactions contemplated by this Agreement and, to
the Knowledge of each of Parent and WinWin, there is no basis for any such suit,
action, proceeding, hearing or investigation.
(d) Reports and Financial Statements. Parent has previously
furnished or made available to the Major Shareholders complete and accurate
copies, as amended or supplemented, of all Parent Reports. The Parent Reports
constitute all of the documents required to be filed by Parent under the
Exchange Act or the Securities Act with the SEC since January 1, 2005 The Parent
Reports were duly and timely filed, were in compliance in all material respects
with the requirements of the Exchange Act and Securities Act, as the case may
be, and the rules and regulations thereunder when filed, and were complete and
correct in all material respects as of the dates at which the information
therein was furnished. As of their respective dates, the Parent Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of
Parent included in the Parent Reports (i) complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto when filed, (ii) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated therein or in the notes thereto, and
in the case of quarterly financial statements, as permitted by Form 10-Q under
the Exchange Act), (iii) fairly present the consolidated financial condition,
results of operations and cash flows of Parent as of the respective dates
thereof and for the periods referred to therein, and (iv) are consistent with
the books and records of Parent. As used in this Section 2.2(d), the term file
shall be broadly construed to include any manner in which a document or
information is furnished, supplied or otherwise made available to the SEC. Each
contract or agreement included as an exhibit to the Parent Reports is in full
force and effect and constitutes a legal, valid and binding agreement,
enforceable in accordance with its terms, of Parent, and to the Knowledge of the
Parent, the other parties thereto; and Parent has performed in all material
respects all of its required obligations under, and is not in violation or
breach of or default under, any such contract or agreement. To the Knowledge of
Parent, the other parties to any such contract or agreement are not in violation
or breach of or default under any such contract or agreement.
(e) To the Knowledge of Parent and WinWin, since March 31,
2005 there has not been any adverse event, occurrence, development or state of
related circumstances or facts, not otherwise reflected in the Parent Reports
filed prior to the date of this Agreement, that, individually or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect on Parent or WinWin.
(f) Capitalization. As of the date of this Agreement, the
authorized capital stock of the Parent consisted of (i) 300,000,000 shares of
Common Stock, of which 45,421,607 shares were issued and outstanding; (ii)
10,000,000 shares of Preferred Stock, none of which were issued and outstanding,
and (iii) no shares held by Parent in treasury. Other than outstanding options,
warrants, convertible securities and similar rights described in the Parent
Reports, and except for option grants made to Parent employees, directors or
consultants in the Ordinary Course of Business since the filing of the last
Parent Report, there are no outstanding options, warrants, convertible
securities or other rights to acquire shares of Parent capital stock.
(g) No Undisclosed Liabilities. Except as disclosed in the
Parent Reports, and except for liabilities incurred in the Ordinary Course of
Business since the date of the financial statements included in Parent's most
recent report on Form 10-Q or 10-K which liabilities have not had, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent or WinWin, Parent has no material liabilities (whether
absolute, contingent, accrued or otherwise) (including but not limited to any
4
liability for Taxes) that that would be required to be disclosed on a balance
sheet prepared in accordance with GAAP, nor, to the Knowledge of Parent, is
there any basis for any claim against Parent for any such liabilities relating
to or affecting the Parent or any of its Assets and Properties.
(h) WinWin Shares. The WinWin Shares to be issued to the Major
Shareholders have been or will have been by the Closing duly authorized for
issuance by all requisite corporate and stockholder action required under the
General Corporation Law of the State of Delaware and no other corporate or
shareholder action by Parent or WinWin is required to authorize the WinWin
Shares for issuance and, when so issued in accordance with the terms of this
Agreement, the WinWin Shares will be validly issued, fully paid and
non-assessable. Assuming the accuracy of the representations and warranties of
the Major Shareholders in Section 2.1, the offer, sale and issuance of the
WinWin Shares to be issued pursuant to this Agreement will be exempt from the
registration requirements of the Securities Act of 1933 and will have been
registered or qualified or be exempt from the registration or qualification
requirements of all applicable state securities laws.
(i) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which WinWin is subject or any provision of its
charter or bylaws, or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
WinWin is a party or by which it is bound or to which any of its assets is
subject.
(j) Brokers' Fees. WinWin has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Major Shareholder
could become liable or obligated.
(k) Disclosure. The representations and warranties contained
in this Section 2.2 as modified by the Parent Reports do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained in this Section 2.2 not
misleading.
3. Representations and Warranties of the Company. The Major Shareholders,
jointly and severally, represent and warrant to WinWin that the statements
contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the disclosure
schedule attached hereto. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
3.
3.1 Organization and Good Standing; Ownership of Shares. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of state of Delaware, with full corporate power and authority to
own, operate and lease its properties and to carry on its business as currently
conducted and in the places where such properties are now owned, operated or
leased and such business is presently conducted. The Company has all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and is duly licensed or qualified and in good standing as a foreign
corporation where the character of the properties owned by it or the nature of
5
the business transacted by it make such licenses or qualifications necessary.
Section 3.1 of the Disclosure Schedule lists the jurisdictions in which the
Company is qualified to do business as a foreign corporation and the officers
and directors of the Company. The Company does not have any subsidiaries. The
Company has delivered to WinWin correct and complete copies of its charter and
bylaws (as amended to date). The minute book (containing the records of meetings
of the stockholders, the board of directors, and any committees of the board of
directors), the stock certificate book, and the stock ledger of the Company are
correct and complete. The Company is not in default under or in violation of any
provision of its charter or bylaws.
3.2 Capitalization. The entire authorized capital stock of the
Company consists of 10,000,000 Company Shares, of which 5,330,000 Company Shares
are issued and outstanding. All of the issued and outstanding Company Shares
have been duly authorized, are validly issued, fully paid, and nonassessable,
and are held of record by the respective Shareholders as set forth in Section
3.2(a) of the Disclosure Schedule. Except as set forth in Section 3.2(b) of the
Disclosure Schedule, there are no outstanding or authorized options, warrants,
preemptive rights, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the Company.
3.3 Noncontravention. Neither the execution and the delivery of
this Agreement and the documents referenced herein, nor the consummation of the
transactions contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Authority to which the Company is subject or any
provision of its charter or bylaws, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, permit or other arrangement to which the Company
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
Except as set forth in Section 3.3 of the Disclosure Schedule, the Company does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority in order for
the parties to consummate the transactions contemplated by this Agreement.
3.4 Tangible Assets. The Company has full title and interest in
all machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, owned or leased by the Company, any related capitalized items or
other tangible property material to the business of the Company (the "Tangible
Assets"). The Company holds all rights, title and interest in all the Tangible
Assets owned by it on the most recent Balance Sheet or acquired by it after the
date of the most recent Balance Sheet, free and clear of all Security Interests,
conditional sales contracts or any other encumbrances except as set forth in the
Disclosure Schedule. All of the Tangible Assets are in good operating condition
and repair and are usable in the Ordinary Course of Business of the Company and
conform to all applicable laws, ordinances and governmental orders, rules and
regulations relating to their construction and operation.
3.5 Intellectual Property.
(a) The Company owns or has the right to use pursuant to
licenses, sublicenses, agreements or permission all Intellectual Property
necessary for the operation of the Business as presently conducted. The Company
possess all right, title and interest in and to each item of owned Intellectual
Property, free and clear of any Security Interest or other restriction or claim.
With respect to each item of Intellectual Property that any third party owns and
6
that the Company uses, the license, sublicense, agreement or permission pursuant
to which the Company has the right to use such item is legal, valid, binding,
enforceable and in full force and effect. Each item of Intellectual Property
owned or used by the Company immediately prior to the Closing hereunder will be
owned or available for use by WinWin on identical terms and conditions
immediately subsequent to the Closing hereunder. The Company has taken all
necessary action to maintain and protect each item of Intellectual Property that
it owns or uses.
(b) Section 3.5(b) of the Disclosure Schedule identifies each
software product developed, licensed or published by the Company. The Disclosure
Schedule identifies each patent or registration which has been issued to the
Company with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which the Company has
made with respect to any of its Intellectual Property, and identifies each
license, agreement, or other permission which the Company has granted to any
third party with respect to any of its Intellectual Property. The Company has
delivered to WinWin correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date) and have made available to WinWin correct and complete copies of all
other written documentation evidencing ownership and prosecution (if applicable)
of each such item. The Disclosure Schedule also identifies each registered or
unregistered trade name, service xxxx or trademark used by the Company in
connection with any part of the Company's business. The Company has delivered to
WinWin correct and complete copies of all licenses, sublicenses, agreements, and
permissions (as amended to date) relating to Intellectual Property.
(c) Section 3.5(c) of the Disclosure Schedule identifies each
employee of the Company or other Person who is or has been involved in the
conception, creation, discovery, design, invention or development of any item of
Intellectual Property for the Company. The Nondisclosure and Developments
Agreement, which shall be entered into and delivered to WinWin at the Closing by
each such employee and other Person, shall be valid and binding and enforceable
so as to cause each such employee or other Person to convey to the Company at
the Closing all items of Intellectual Property that such employee or other
Person at any time during his or her employment or other relation with the
Company has made, conceived, created, discovered, designed, invented or
developed that relates to the Business at the Closing or prospective business or
any of the products or services being developed, manufactured or sold by the
Company.
(d) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and neither the Company nor the Major Shareholders have
ever received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that the Company must license or refrain from using any Intellectual Property
rights of any third party). No third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of the Company.
3.6 Financial Statements. Section 3.6 of the Disclosure
Schedule lists all Liabilities of the Company.
3.7 Events Subsequent to Fiscal Year End 2004. Since the fiscal
year end 2004 there has not been any adverse change in the business, financial
condition, operations, results of operations, or future prospects of any of the
Company. Without limiting the generality of the foregoing, except as set forth
in the Disclosure Schedule, since that date:
(a) the Company has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair consideration
in the Ordinary Course of Business;
7
(b) the Company has not entered into any agreement, contract,
lease, pricing arrangement or license (or series of related agreements,
contracts, leases, arrangements and licenses) either involving more than $10,000
or outside the Ordinary Course of Business;
(c) no party, including the Company, has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) involving
more than $10,000 to which the Company is a party or by which it or any of its
assets is bound;
(d) the Company has not imposed or permitted any lien upon any
of its assets, tangible or intangible;
(e) the Company has not made any capital expenditure (or
series of related capital expenditures) either involving more than $10,000 or
outside the Ordinary Course of Business;
(f) the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any Person (or
series of related capital investments, loans, and acquisitions) either involving
more than $10,000 or outside the Ordinary Course of Business;
(g) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation either involving more than
$10,000 in the aggregate or outside the Ordinary Course of Business;
(h) the Company has not delayed or postponed the payment of
accounts payable and other Liability outside the Ordinary Course of Business;
(i) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims) either
involving more than $10,000 or outside the Ordinary Course of Business;
(j) there has been no change made or authorized in the charter
or bylaws of the Company;
(k) the Company has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, preemptive or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock other than the conversion of the eight unsecured
convertible notes in the aggregate principal amount of $120,000 for 120,000
Company Shares.
(l) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(m) the Company has not experienced any damage, destruction,
or loss (whether or not covered by insurance) individually, in the aggregate,
more than $10,000 to its property;
(n) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, employees or
stockholders outside the Ordinary Course of Business;
8
(o) the Company has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(p) the Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business or made any other change in employment terms for any
of its directors, officers, or employees outside the Ordinary Course of
Business;
(q) the Company has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other employee benefit
plan);
(r) the Company has not made or pledged to make any charitable
or other capital contribution outside the Ordinary Course of Business;
(s) No material customer, supplier, representative,
distributor, lessee, or lessor has terminated or given notice of its intent to
terminate its relationship with the Company;
(t) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving the Company; and
(u) the Company has not committed to any of the foregoing.
3.8 Liabilities. The Company does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation, any liability on account of taxes, any other governmental
charge or lawsuit (all of the foregoing collectively defined to as
"Liabilities") which would be required to be disclosed on a balance sheet
prepared in accordance with GAAP, which were not fully, fairly and adequately
reflected on the Balance Sheet or in Section 3.8 of the Disclosure Schedule. As
of the Closing Date, the Company will not have any Liabilities, other than
Liabilities fully and adequately reflected on the Balance Sheet, except for
Liabilities incurred in the Ordinary Course of Business and any credit extended
to the Company by WinWin prior to the Closing.
3.9 Legal Compliance. The Company has complied in all material
respects with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of all
Governmental Authorities, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply. Section 3.9 of
the Disclosure Schedule lists all non-compliances with laws for which the
Company has been cited during the past three years.
The Company possess, and is in compliance with, the terms and
conditions of, all franchises, consents, approvals, licenses, permits,
certificates and other authorizations ("Permits") from any Governmental
Authority that are necessary for the ownership of their respective assets and
the conduct of the Company's business as presently conducted in the Ordinary
Course of Business. With respect to each such Permit: (a) the Permit is in full
force and effect; (b) the Company is not in breach or default, and, to the Major
Shareholders' Knowledge, no event has occurred which, with notice or lapse of
time, or both, would constitute a breach or default, or permit termination or
modification of the Permit; and (c) the Permit will continue in full force and
effect on identical terms for the benefit of WinWin following the consummation
of the transactions contemplated hereby.
9
None of the Major Shareholders, nor any director, officer,
agent, or employee of the Company, or any other Person associated with or acting
for or on behalf of the Company, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Company or any Affiliate of the Company, or (iv) in violation of
any applicable Laws of any applicable Governmental Authority (including, the
Foreign Corrupt Practices Act of 1977, as amended, to the extent applicable),
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Company. There is not now, and there has never
been, any employment by the Company, or beneficial ownership in the Company by,
any governmental or political official in Korea in connection with the Business.
3.10 Tax Matters.
(a) Company has filed all Tax Returns that it was required to
file under applicable laws and regulations. All such Tax Returns were correct
and complete in all respects and were prepared in substantial compliance with
all applicable laws and regulations. All Taxes due and owing by Company (whether
or not shown on any Tax Return) have been paid. Company is not currently the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where Company does
not file Tax Returns that Company is or may be subject to taxation by that
jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and
payable) upon any of the assets of Company.
(b) Company has withheld and paid all Taxes required to have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
(c) No Major Shareholder or director or officer (or employee
responsible for Tax matters) of Company expects any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. No
foreign, federal, state, or local tax audits or administrative or judicial Tax
proceedings are pending or being conducted with respect to Company. Company has
not received from any foreign, federal, state, or local taxing authority
(including jurisdictions where Company has not filed Tax Returns) any (i) notice
indicating an intent to open an audit or other review, (ii) request for
information related to Tax matters, or (iii) notice of deficiency or proposed
adjustment for any amount of Tax proposed, asserted, or assessed by any taxing
authority against Company. Section 3.10(c) of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with respect to
Company for taxable periods ended on or after December 31, 2001, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Major Shareholders have delivered to Win-Win
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by Company
filed or received since December 31, 2001.
(d) Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) Company is not a party to any agreement, contract,
arrangement or plan that has resulted or could result, separately or in the
aggregate, in the payment of (i) any "excess parachute payment" within the
meaning of Code section 280G (or any corresponding provision of state, local or
foreign Tax law) and (ii) any amount that will not be fully deductible as a
result of Code section 162(m) (or any corresponding provision of state, local or
foreign Tax law). Company has not been a United States real property holding
10
corporation within the meaning of Code section 897(c)(2) during the applicable
period specified in Code section 897(c)(1)(A)(ii). Company has disclosed on its
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Code
section 6662. Company is not a party to or bound by any Tax allocation or
sharing agreement. Company (A) has not been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common
parent of which was Company) and (B) has no Liability for the Taxes of any
Person (other than Company) under Treasury Regulation section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(f) Section 3.10(f) of the Disclosure Schedule sets forth the
following information with respect to Company as of the most recent practicable
date: (A) the basis of Company in its assets; and (B) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution of Company.
(g) The unpaid Taxes of Company (A) did not, as of the Most
Recent Fiscal Month End, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Balance Sheet (rather than in
any notes thereto) and (B) will not exceed that reserve as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of Company in filing its Tax Returns.
(h) Company will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any (A)
change in method of accounting for a taxable period ending on or prior to the
Closing Date; (B) "closing agreement" as described in Code section 7121 (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date; (C) installment sale or open
transaction disposition made on or prior to the Closing Date; or (D) prepaid
amount received on or prior to the Closing Date.
(i) Company has not distributed stock of another Person, or
has had its stock distributed by another Person, in a transaction that was
purported or intended to be governed in whole or in part by Code section 355 or
Code section 361.
(j) Company has not engaged in any "reportable transaction"
as defined in Treasury Regulation section 1.6011-4.
(k) The Company has not entered into any gain recognition
agreements within the meaning of Treasury Regulation section 1.367(a)-8 within
the last ten years.
(l) The Company does not have property that is: (i) required
to be treated as owned by any other person pursuant to the "safe harbor lease"
provisions of former Section 168(f)(8) of the Code; (ii) required to be or is
being depreciated under the alternative depreciation system under Section
168(g)(2) of the Code; or (iii) "tax exempt use property" within the meaning of
Section 168(h) of the Code.
(m) Company has not participated in an international boycott
within the meaning of Section 999 of the Code.
3.11 Real Property.
11
(a) The Company does not own any real property.
(b) The Section 3.11 of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to, or otherwise
occupied by, the Company (all such real property, together with all buildings
and other improvements thereon, the "Leased Real Property") and (i) all existing
leases, subleases or other contracts with respect to such Leased Real Property
(the "Leases") are legal, valid, binding, enforceable, and in full force and
effect; (ii) each of the Leases will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; and (iii) no party to any
of the Leases is in breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
3.12 Contracts. Section 3.12 of the Disclosure Schedule lists all
purchase orders, contracts, commitments, obligations, plans, agreements,
instruments, arrangements, understandings, bids, undertakings and proposals
written or oral including all amendments and supplements thereto, or series of
any of the foregoing, to which the Company is a party or by which its assets or
the business of the Company are bound involving consideration in excess of
$10,000 per year or which are otherwise material to the (including, without
limitation, any contract concerning confidentiality or non-competition or
limiting the Company's ability to do business in any line of business or
geographical area) (the "Contracts"). The Company has delivered to WinWin a
correct and complete copy of each written Contract in Section 3.12 of the
Disclosure Schedule (as amended to date) and a written summary setting forth the
terms and conditions of each oral Contract referred to in the Disclosure
Schedule. With respect to each such Contract: (a) the Contract is legal, valid,
binding, enforceable, and in full force and effect; (b) no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the Contract; and (c) the Company has not and, to the
Company's and the Major Shareholders' Knowledge, no other party has repudiated
any provision of any Contract. Except as set forth in the Disclosure Schedule,
(y) no purchase Contracts of the Company is in excess of the normal and ordinary
requirements of the Company's business, and (z) the Company is not (and from and
after the Closing WinWin will not be) contractually restricted from carrying out
the Business in any geographic area. There are no outstanding powers of attorney
executed on behalf of the Company. The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
3.13 Notes and Accounts Receivable. All notes and accounts
receivable of the Company are reflected properly on their books and records, are
valid receivables subject to no set off or counterclaim, are subject to adequate
reserves, and were incurred in the Ordinary Course of Business of the Company
for bona fide services rendered.
3.14 Litigation. Section 3.14 of the Disclosure Schedule sets forth
each instance in which the Company (a) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, or (b) is a party or, to the
Knowledge of any of the Major Shareholders, is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator. None of the actions, suits,
proceedings, hearings, and investigations set forth in the Disclosure Schedule
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of any of the
Company. None of the Major Shareholders has any reason to believe that any such
action, suit, proceeding, hearing, or investigation may be brought or threatened
against the Company.
3.15 Employees. To the Knowledge of any of the Major Shareholders,
no executive, key employee, or group of employees has any plans to terminate
employment with the Company. The Company is not a party to or bound by any
12
collective bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes. The
Company has not committed any unfair labor practice. None of the Major
Shareholders has any Knowledge of any organizational effort presently being made
or threatened by or on behalf of any labor union with respect to employees of
any of the Company. All salaried employees of the Company are listed in the
Disclosure Schedule, which includes the salary level of each such employee. The
qualifications of each employee of the Company for employment under applicable
immigration laws have been reviewed, a properly completed Form I-9 is on file
with respect to each such employee, as applicable, and the Company has complied
with the Immigration and Nationality Act, as amended from time to time, and the
rules and regulations promulgated thereunder, and the Major Shareholder have no
Knowledge of any basis for any claim that the Company is not in compliance with
the terms thereof.
3.16 Employee Benefits. There are no plans of the Company in effect
for pension, profit sharing, deferred compensation, severance pay, bonuses,
stock options, stock purchases, or any other form of retirement or deferred
benefit, or for any health, accident or other welfare plan, as to which WinWin
will become liable as a result of the transactions contemplated hereby or that
the Company will remain liable for after the Closing.
3.17 Environmental, Health, and Safety Matters.
(a) There have been no private or governmental claims,
citations, complaints, notices of violation or letters made, issued to or
threatened against the Company by any governmental entity or private or other
party for the impairment or diminution of, or damage, injury or other adverse
effects to, the environment or public health resulting, in whole or in part,
from the ownership, use or operation of any of the Company's facilities (whether
owned or leased) (the "Property").
(b) The Company has duly complied with, and, to the best of
Major Shareholders' knowledge, the Property is in compliance with, the
provisions of all federal, state and local environmental, health and safety
laws, codes and ordinances and all rules and regulations promulgated thereunder.
(c) The Company has provided WinWin with true, accurate and
complete copies of any written information in the possession of the Company
which pertains to the environmental history of the Property. The Company shall
also promptly furnish to WinWin true, accurate and complete copies of any
sampling and test results which may be obtained by the Company prior to the
Closing from all environmental and/or health samples and tests taken at and
around the Property.
3.18 Brokers' Fees. The Company does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement.
3.19 Disclosure. The representations and warranties contained in
this Section 3 as modified by the Disclosure Schedule do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained in this Section 3 not
misleading.
4. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
13
4.1 General. Each of the Parties will use his or its best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 5 below).
4.2 Notices and Consents. The Major Shareholders will cause the
Company to give any notices to third parties, and will cause the Company to use
its best efforts to obtain any third party consents, that WinWin may request in
connection with the matters referred to in Section 2.1 (c). Each of the Parties
will (and the Major Shareholders will cause the Company to) give any notices to,
make any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of Governmental Authorities in connection with the
matters referred to in Section 2.1 (c), Section 2.2(c), and Section 3.3.
4.3 Operation of Business. The Major Shareholders will not cause
or permit the Company to engage in any practice, take any action, or enter into
any transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Major Shareholders will not cause or permit the
Company to (a) declare, set aside, or pay any dividend or make any distribution
with respect to its capital stock or redeem, purchase, or otherwise acquire any
of its capital stock, or (b) otherwise engage in any practice, take any action,
or enter into any transaction of the sort described in Section 3.7.
4.4 Preservation of Business. The Major Shareholders will cause
the Company to keep its business and properties substantially intact, including
its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
4.5 Litigation. The Company shall promptly notify WinWin of any
lawsuits, claims, proceedings or investigations which after the date hereof are
threatened or commenced against the Company or against any officer, director,
employee, consultant, agent, Major Shareholder or other representative with
respect to the affairs of the Company.
4.6 Full Access. Each of the Major Shareholders will permit, and
the Major Shareholders will cause the Company to permit, representatives of
WinWin to have full access at all reasonable times, to all premises, properties,
personnel, accountants, customers, suppliers, third party lenders and other
third parties whose consent is required in order to consummate the transactions
contemplated hereby, books, records (including Tax records), contracts, and
documents of or pertaining to the Company.
4.7 Notice of Developments. The Major Shareholders will give
prompt written notice to WinWin of any material adverse development causing a
breach of any of the representations and warranties in Section 3. Each Party
will give prompt written notice to the others of any material adverse
development causing a breach of any of his own representations and warranties in
Section 2. No disclosure by any Party pursuant to this Section 4.7, however,
shall be deemed to amend the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
4.8 Exclusivity. None of the Major Shareholders will (and the
Major Shareholders will not cause or permit the Company to) (a) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting securities, or
any assets (including any acquisition structured as a merger, consolidation, or
share exchange), or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. None of the Major Shareholders will vote their Company
Shares in favor of any such acquisition structured as a merger, consolidation,
or share exchange. The Major Shareholders will notify WinWin immediately if any
14
Person makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
5. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
5.1 General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 7 below).
The Major Shareholders acknowledge and agree that from and after the Closing,
WinWin will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort relating to
the Company and its Subsidiaries.
5.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(a) any transaction contemplated under this Agreement, or (b) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any of the Company and its Subsidiaries, each of
the other Parties will cooperate with him or it and his or its counsel in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 7 below).
5.3 Transition. None of the Major Shareholders will take any
action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of the Company
from maintaining the same business relationships with the Company after the
Closing as it maintained with the Company prior to the Closing. Each of the
Major Shareholders will refer all customer inquiries relating to the businesses
of the Company to WinWin from and after the Closing.
5.4 Confidentiality. Each of the Major Shareholders will treat and
hold as confidential all of the Confidential Information, refrain from using any
of the Confidential Information except in connection with this Agreement, and
deliver promptly to WinWin or destroy, at the request and option of WinWin, all
tangible embodiments (and all copies) of the Confidential Information which are
in his or its possession. In the event that any of the Major Shareholders is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that the Major
Shareholders will notify WinWin promptly of the request or requirement so that
WinWin may seek an appropriate protective order or waive compliance with the
provisions of this Section 5.4. If, in the absence of a protective order or the
receipt of a waiver hereunder, any of the Major Shareholders is, on the advice
of counsel, compelled to disclose any Confidential Information to any tribunal
or else stand liable for contempt, that the Major Shareholders may disclose the
Confidential Information to the tribunal; provided, however, that the disclosing
Major Shareholder shall use his or its best efforts to obtain, at the request of
WinWin, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as
WinWin shall designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public immediately
prior to the time of disclosure.
15
5.5 WinWin Share Certificates. Each WinWin Share Certificate to
be delivered to the Major Shareholders will be imprinted with a legend
substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE SECURITIES LAW.
THESE SECURITIES MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY TO THE CORPORATION
OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH
TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW.
5.6 Financial Information. The Major Shareholders shall cooperate
with the WinWin and the WinWin's independent certified public accounting firm in
order to enable WinWin to create audited financial statements prepared in
accordance with the GAAP for the full fiscal years from inception through the
fiscal year ended December 31, 2004, by making available the Major Shareholders'
records as they are maintained in the ordinary course of business and answering
reasonable questions, the cost for which will be borne by WinWin.
6. Conditions to Obligation to Close.
6.1 Conditions to Obligation of WinWin. The obligation of WinWin
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section
2.1 above shall be true and correct in all material respects at and as of the
Closing Date.
(b) the representations and warranties set forth in Section 3
above shall be true and correct in all respects (without taking into
consideration materiality, Material Adverse Effect or similar qualifiers) at and
as of the Closing Date except where the failure of the representations and
warranties to be true and correct, in the aggregate, does not and would not be
reasonably be expected to have a Material Adverse Effect on the Company;
(c) the Major Shareholders shall have performed and complied
with all of their covenants hereunder in all material respects through the
Closing;
(d) the Company shall have procured all of the third party
consents specified in Section 4.2 above;
(e) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (iii) affect adversely the right of WinWin to
own the Company Shares and to control the Company, or (iv) affect adversely the
right of the Company to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge shall be in effect);
(f) the Major Shareholders shall have delivered to WinWin a
certificate to the effect that each of the conditions specified above in Section
6.1(a)-(e) is satisfied in all respects;
16
(g) each of the Major Shareholders and Xxx Xxxxxxxx shall have
executed non-competition agreements with WinWin;
(h) WinWin shall have received the resignations, effective as
of the Closing, of each director and officer of the Company other than those
whom WinWin shall have specified in writing at least five business days prior to
the Closing;
(i) there shall not have been any occurrence, event, incident,
action, failure to act, or transaction since the Most Recent Financial Statement
which has had or is reasonably likely to cause a material adverse effect on the
business, assets, properties, financial condition, results of operations or
prospects of any of the Company or the Business taken as a whole;
(j) WinWin shall have completed its business, accounting and
legal due diligence review of the Company and the Business, its assets and
liabilities and the results thereof shall be reasonably satisfactory to WinWin;
(k) each of the Major Shareholders shall have executed and
delivered to WinWin a FIRPTA affidavit;
(l) the Major Shareholders shall have obtained releases for
all liens, charges or encumbrances against any asset of the Company;
(m) WinWin shall have received UCC, judgment lien and tax lien
searches with respect to the Major Shareholders and the Company, the results of
which indicate no liens on the assets of the Company other than those as to
which the Major Shareholders or the Company have delivered releases and
terminations of lien satisfactory to WinWin;
(n) the Company shall have delivered evidence reasonably
satisfactory to WinWin of the Company's corporate organization and proceedings
and its existence in each jurisdiction in which it is incorporated or qualified
to transact business, including evidence of such existence as of the Closing;
(o) the Notes shall have been converted to Company Shares and
each Note Holder shall have agreed to exchange their Company Shares for WinWin
Shares on the basis provided for in this Agreement;
(p) the Major Shareholders shall have delivered the
certificates representing the Company Shares, duly endorsed (or with executed
stock powers) so as to make WinWin the sole owner thereof;
(q) WinWin shall have received a release from each Shareholder
in form and substance reasonably satisfactory to WinWin;
(r) WinWin shall have received a nondisclosure and
developments agreement from each employee and other Person listed in Disclosure
Schedule 3.5(c) in form and substance reasonably satisfactory to WinWin; and
(s) all actions to be taken by the Major Shareholders in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
WinWin.
17
WinWin may waive any condition specified in this Section 6.1 if it executes a
written instrument so stating at or prior to the Closing.
6.2 Conditions to Obligation of the Major Shareholders. The
obligation of the Major Shareholders to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(a) the representations and warranties set forth in Section
2.2 above shall be true and correct (without taking into consideration
materiality, Material Adverse Effect or similar qualifiers) at and as of the
Closing Date except where the failure of such representations and warranties to
be true and correct, in the aggregate, does not and would not be reasonably be
expected to have a Material Adverse Effect on Parent and WinWin taken together;
(b) WinWin shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(d) WinWin shall have delivered to the Major Shareholders a
certificate to the effect that each of the conditions specified above in Section
6.2(a)-(c) is satisfied in all respects;
(e) the Company shall have received all authorizations,
consents, and approvals of the Governmental Authorities referred to in [Section
2.1(b), Section 2.2(b), and Section 3.3] above; and
(f) all actions to be taken by WinWin in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Major
Shareholders.
The Major Shareholders may waive any condition specified in this Section 6.2 if
they execute a written instrument so stating at or prior to the Closing.
7. Remedies for Breaches of This Agreement.
7.1 Survival of Representations and Warranties. All of the
representations and warranties of the Major Shareholders contained in Section 3
(except for those representation and warranties made in Section 3.2) herein
shall survive the Closing hereunder (even if WinWin knew or had reason to know
of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of one year thereafter. All of
the representations and warranties of the Major Shareholders contained in
Section 2.1 and Section 3.2 herein shall survive the Closing hereunder (even if
WinWin knew or had reason to know of any misrepresentation or breach of warranty
at the time of Closing) and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations). All of the representations
and warranties of Parent and WinWin contained in Section 2.2 herein shall
survive the Closing hereunder (even if the Company or a Major Shareholder knew
18
or had reason to know of any misrepresentation or breach of warranty at the time
of Closing) and continue in full force and effect for a period of one year
thereafter.
7.2 Indemnification Provisions for Benefit of WinWin.
(a) In the event any of the Major Shareholders breaches (or in
the event any third party alleges facts that, if true, would mean any of the
Major Shareholders has breached) any of their representations, warranties, and
covenants contained herein, and, if there is an applicable survival period
pursuant to Section 7.1 above, provided that WinWin makes a written claim for
indemnification against any of the Major Shareholders pursuant to Section 10.7
below within such survival period, then each of the Major Shareholders shall
indemnify WinWin from and against the entirety of any Adverse Consequences
WinWin may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences WinWin may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach.); provided that no
Major Shareholder shall be liable for any other Major Shareholders breach of the
representations and warranties contained in Section 2.1.
(b) Notwithstanding anything to the contrary herein, the
liability each Major Shareholder pursuant to Section 7.2 (a) shall be limited to
an amount equal to 30% of the value of the WinWin Shares received by such Major
Shareholder pursuant to this Agreement valued as of the date of this Agreement;
provided that (i) there shall be no limit on a Major Shareholder's liability
with respect to breaches of Section 2.1 and (ii) a Major Shareholder liability
to the extent that there are indemnifiable breaches of Section 3.5 and Section
3.2 shall be for up to 100% of the value of the WinWin Shares. At the option of
the Major Shareholder, any liability pursuant to Section 7.2(a) above may be
satisfied by surrendering to WinWin that number of WinWin shares with a value
equal to the amount the liability. Such surrendered WinWin Shares shall be
valued based on the value of the shares as of the date of the Closing.
(c) In the absence of actual fraud, intentional
misrepresentation or willful misconduct, and with the exception of any equitable
remedies available to Parent or WinWin or a breach of the representations and
warranties contained Section 2.1 and Section 3.5, this Section 7.2 sets forth
the sole and exclusive remedy of Parent and WinWin after the Closing for any
breach by any of the Major Shareholders of any representations, warranties or
covenants contained herein or in any document delivered in connection herewith.
7.3 Indemnification Provisions for Benefit of the Major
Shareholders. In the event WinWin breaches (or in the event any third party
alleges facts that, if true, would mean WinWin has breached) any of its
representations, warranties, and covenants contained herein, and, if there is an
applicable survival period pursuant to Section 7.1 above, provided that any of
the Major Shareholders makes a written claim for indemnification against WinWin
pursuant to Section 10.7 below within such survival period, then WinWin shall
indemnify each of the Major Shareholders from and against the entirety of any
Adverse Consequences the Major Shareholder may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences the Major
Shareholders may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach).
19
7.4 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 7, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within 10 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7.4(b) above, (i)
the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
In the event any of the conditions in Section 7.4(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including attorneys' fees and
expenses), and (iii) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 7.
7.5 Other Indemnification Provisions. Each of the Major
Shareholders hereby agrees that he will not make any claim for indemnification
against the Company by reason of the fact that he was a director, officer,
employee, or agent of any such entity or was serving at the request of any such
entity as a partner, trustee, director, officer, employee, or agent of another
entity (whether such claim is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses, or otherwise and whether such
claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim, or
demand brought by WinWin against such Shareholder (whether such action, suit,
20
proceeding, complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
8. Termination.
8.1 Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(a) WinWin and the Major Shareholders may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) WinWin may terminate this Agreement by giving written
notice to the Major Shareholders on or before the 45th day following the date of
this Agreement if WinWin is not satisfied with the results of its continuing
business, legal, environmental, and accounting due diligence regarding the
Company;
(c) WinWin may terminate this Agreement by giving written
notice to the Major Shareholders at any time prior to the Closing (1) in the
event any of the Major Shareholders has breached any material representation,
warranty, or covenant contained in this Agreement and such breach would cause
the condition set forth in Section 6.2(a) not to be satisfied and WinWin has
notified the Major Shareholders of the breach, and the breach has continued
without cure for a period of 15 days after the notice of breach, or (ii) if the
Closing shall not have occurred on or before May 31, 2005 by reason of the
failure of any condition precedent under Section 6.1 hereof (unless the failure
results primarily from WinWin itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(d) the Major Shareholders may terminate this Agreement by
giving written notice to WinWin at any time prior to the Closing (i) in the
event WinWin has breached any material representation, warranty, or covenant
contained in this Agreement and such breach would cause the condition set forth
in Section 6.3(b) not to be satisfied, any of the Major Shareholders has
notified WinWin of the breach, and the breach has continued without cure for a
period of 15 days after the notice of breach, or (ii) if the Closing shall not
have occurred on or before May 31, 2005, by reason of the failure of any
condition precedent under Section 6.2 hereof (unless the failure results
primarily from any of the Major Shareholders themselves breaching any
representation, warranty, or covenant contained in this Agreement).
8.2 Effect of Termination.
(a) If any Party terminates this Agreement pursuant to Section
8.1 above, all rights and obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party (except for any Liability
of any Party then in breach).
(b) If WinWin terminates this Agreement either (i) as the
result of any Major Shareholder's or the Company's failure to comply with
Section 4.8 hereof the Company shall reimburse WinWin's fees and expenses
incurred in connection with the negotiation of this Agreement and all related
agreements and documents and the transactions contemplated by this Agreement and
such related documents, including attorneys fees, and any due diligence work
performed by WinWin whether incurred prior to or after the date of this
Agreement. The total amount to be reimbursed by the Major Shareholders for such
fees and expenses shall not exceed $45,000.
21
9. Definitions. As used herein, the following terms have the respective
meanings set forth below:
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, lost value,
expenses, and fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Balance Sheet" has the meaning set forth in Section 3.6 above.
"Business" has the meaning set forth in the recitals above.
"Closing" has the meaning set forth in Section 1.3 above.
"Closing Date" has the meaning set forth in Section 1.3 above.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the recitals above.
"Company Share" means any share of the Common Stock, par value $0.01 per
share, of the Company.
"Confidential Information" means any information concerning the businesses
and affairs of the Company and WinWin that is not already generally available to
the public and shall include any and all information relating to the price and
terms of this Agreement.
"Contracts" has the meaning set forth in Section 3.12 above.
"Disclosure Schedule" has the meaning set forth in Section 2.1 above.
"Employee Plan" has the meaning set forth in Section 3.16 above .
"Financial Statements" has the meaning set forth in Section 3.6 above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Governmental Authority" means any foreign, federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court of the United States of America or any political
subdivision thereof, or of any other country.
"Indebtedness" of any Person means, in each case whether or not accrued on
the books of such Person, (a) all indebtedness of such Person for borrowed money
or for the deferred purchase price of property or services, (b) all obligations
of such Person upon which interest charges are customarily paid or which are
evidenced by notes, bonds, debentures, credit agreements or similar agreements
or investments, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets purchased by
such Person, (d) all obligations of such Person under capitalized leases, (e)
all obligations of such Person in respect of acceptances, letters of credit or
22
letters of guaranty issued or created for the account of such Person, and (f)
all liabilities secured by any Security Interest on any property owned by such
Person, whether or not such Person has assumed or otherwise become liable for
the payment thereof.
"Indemnified Party" has the meaning set forth in Section 7.4(a) above.
"Indemnifying Party" has the meaning set forth in Section 7.4(a) above.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, diagrams,
specifications, customer and supplier lists, catalogs, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation and source and object code)
(whether purchased or internally developed), (g) all information systems and
management procedures, (h) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Leased Real Property" has the meaning set forth in Section 3.11(b) above.
"Leases" has the meaning set forth in Section 3.11(b) above.
"Liability" has the meaning set forth in Section 3.8
"Material Adverse Effect" shall mean a with respect to an entity a
material adverse effect on the entity's business, operations or financial
condition.
"Most Recent Financial Statements" has the meaning set forth in Section
3.6 above.
"Most Recent Fiscal Month End" has the meaning set forth in Section 3.6
above.
"Noncompetition Period" has the meaning set forth in Section 5.5 above.
"Note Holders" has the meaning set forth in the recitals above.
"Notes" has the meaning set forth in the recitals.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" has the meaning set forth in the preface above.
"Permits" has the meaning set forth in Section 3.9 above.
23
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Security Interest" means any adverse claim, mortgage, pledge, lien,
encumbrance, option, restriction on transfer, easement, right of way, matter of
survey, charge, or other security interest.
"Major Shareholders" has the meaning set forth in the preface above.
"Tangible Asset" has the meaning set forth in Section 3.4 above.
"Tax(es)" means: (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions, deficiencies
and liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income (whether net or gross), profits, sales, use and
occupation, and value added, ad valorem, gains, privilege, wage, unemployment,
workers' compensation, social security, health care, capital, license,
occupancy, severance, stamp, premium, windfall profits, environmental (including
taxes under Code section 59A), capital stock, disability, real property,
personal property, rent, registration, customs, duties, alternative or add-on
minimum, estimated, accumulated earnings, personal holding company, net worth,
capital, goods and services, conveyance, mortgage, documentary, recording,
production, special assessment, utility, intangibles, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes or other
tax of any kind whatsoever (whether disputed or not), together with all
interest, penalties, related charges, fees and additions imposed with respect to
such amounts; (ii) any liability for payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group; and (iii) any liability for amounts of
the type described in clauses (i) and (ii) as a result of any express or implied
obligation to indemnify another person or as a result of any obligations under
any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
"Tax Return(s)" means all federal, state, local and foreign returns and
attachments thereto, estimates, information statements and reports, including
any consolidated, combined and unitary tax returns relating to Taxes required to
be filed by or on behalf of Company with any Tax authority.
"Third Party Claim" has the meaning set forth in Section 7.4(a).
"WinWin" has the meaning set forth in the preface above.
"WinWin Shares" means those shares of the Parent's Common Stock, par value
$0.01 per share, which will be issued by Parent to the Major Shareholders.
10. Miscellaneous.
10.1 Nature of Certain Obligations.
(a) The covenants of each of the Major Shareholders in Section
1.1 above concerning the exchange of his, her or its Company Shares to WinWin
and the representations and warranties of each of the Major Shareholders in
Section 2.1 above concerning the transaction are several obligations. This means
that the particular Major Shareholder making the representation, warranty, or
covenant will be solely responsible to the extent provided in Section 7 above
for any Adverse Consequences WinWin may suffer as a result of any breach
thereof.
24
(b) The remainder of the representations, warranties, and
covenants in this Agreement are joint and several obligations. This means that
each Major Shareholder will be responsible to the extent provided in Section 7
above for the entirety of any Adverse Consequences WinWin may suffer as a result
of any breach thereof.
10.2 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
10.3 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
10.4 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of WinWin and the Major Shareholders.
10.5 Counterparts; Facsimile Execution. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument. Facsimile
execution of this Agreement shall be valid and binding for all purposes.
10.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Major Shareholders:
-----------------------------
PIXIEM, Inc.
Xxxx X. Xxx
000 Xxxxxx Xxx.
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Copy to:
--------
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
0 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxxxx
If to WinWin:
-------------
WinWin Wireless, LLC
25
c/oWinWin Gaming, Inc.
0000 X Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Fax: 000.000.0000
Attention: Chief Financial Officer
Copy to:
--------
Xxxxxx Xxxx & Priest LLP
000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Fax: 000.000.0000
Attention: Xxxxx X. Xxxxxxxxxx, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
10.9 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
WinWin and the Major Shareholders. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
10.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.11 Expenses. Except as provided in Section 8.2(b), each of the
Parties and the Company, will bear his or its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. The Major Shareholders agree that the Company
has not borne or will bear any of the Major Shareholders' costs and expenses
(including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
10.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state or local
26
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant. Nothing
in the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein, however, unless the Disclosure
Schedule identifies the exception with particularity and describes the relevant
facts in detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself).
10.13 Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
10.14 Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 10.15 below), in addition to any other remedy to which they may
be entitled, at law or in equity.
10.15 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in New York, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party with respect
thereto. Any Party may make service on any other Party by sending or delivering
a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 10.7 above. Nothing in this
Section 10.15, however, shall affect the right of any Party to bring any action
or proceeding arising out of or relating to this Agreement in any other court or
to serve legal process in any other manner permitted by law or at equity. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
[signature page follows]
27
[WinWin Signature Page]
IN WITNESS WHEREOF, WinWin has executed this Share Exchange Agreement on
the date first above written.
WINWIN WIRELESS, LLC
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Financial Officer / Vice President, Finance
28
[Company Signature Page]
IN WITNESS WHEREOF, the Company has executed his Share Exchange Agreement
on the date first above written.
PIXIEM, INC.
By: /s/ Xxxxxxx Xxx
--------------------------------
Name: Xxxxxxx Xxx
Title: President
[Major Shareholder Signature Page]
IN WITNESS WHEREOF, the undersigned Major Shareholder of the Company has
executed this Share Exchange Agreement on the date first above written
/s/ Xxxxxxx Xxx
-------------------------------
Xxxxxxx Xxx
/s/ Xxxx X. Xxx
-------------------------------
Xxxx X. Xxx
/s/ Xxxxxxxx X. Xxxxx III
-------------------------------
Xxxxxxxx X. Xxxxx III
