Contract
Exhibit
10.1
This
Share Exchange Agreement (“Agreement”) is entered into by and between
Benacquista Galleries, Inc., a Nevada corporation (“BAQG”) and Vibe Records,
Inc., a Delaware corporation (“VIBE”) as of April
3, 2008.
W I T N E
S S E T H:
WHEREAS,
upon the terms and subject to the conditions of this Agreement and in accordance
with the General Corporation Law of the State of Delaware (''Delaware Law'') and
the corporate law contained in the Nevada Revised Statutes (“Nevada Law”), and
for the reasons listed below, VIBE shall exchange 100% of its issued and
outstanding shares of stock for shares of BAQG and become a wholly owned
subsidiary of BAQG (the “Exchange”); and
WHEREAS,
the Board of Directors of BAQG has determined that the Exchange is consistent
with and in furtherance of the long-term business strategies of BAQG and is fair
to, and in the best interest of, BAQG and its stockholders (the ''BAQG
Stockholders'') and has approved and adopted this Agreement and has approved the
Exchange and the other transactions contemplated hereby; and
WHEREAS,
the Board of Directors of VIBE has determined that the Exchange is consistent
with and in furtherance of the long-term business strategies of VIBE and is fair
to, and in the best interest of, VIBE and its stockholders (the ''VIBE
Stockholders'') and has approved and adopted this Agreement and has approved the
Exchange and the other transactions contemplated hereby and recommended approval
and adoption of this Agreement and approval of the Exchange by the VIBE
Stockholders; and
WHEREAS,
for federal income tax purposes, it is intended that the Exchange qualify as a
tax-free reorganization under the provisions of Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the ''Code'');
NOW,
THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, the parties
hereto agree as follows:
1. The
Exchange
Section
1.1. The Exchange. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with Nevada Law, at the Effective Time (as
herein defined), 100% of the issued and outstanding shares of capital stock of
VIBE (the “VIBE Shares”) shall be exchanged for 13,390,930 shares of common
stock of BAQG (the “BAQG Shares”).
Section
1.2. Consummation of the Exchange. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Article 8 and subject to the satisfaction or waiver of the
conditions set forth in Article 6, the consummation of the Exchange will take
place as promptly as practicable after the later of (i) the satisfaction or
waiver of the conditions set forth in Article 7 or (ii) April 25, 2008, unless
another date, time and place is agreed to in writing by the parties
hereto.
Section
1.3. Effective Time. As promptly as practicable after the satisfaction or waiver
of the conditions set forth in Article 7, the parties hereto shall cause the
Exchange to be consummated by the issuance of the BAQG Shares in the names and
amounts as listed on Exhibit A attached hereto and totaling 13,390,930 common
shares of BAQG stock. The BAQG Shares shall not be adjusted for any
stock split, share dividend or recapitalization entered into by BAQG subsequent
to this Agreement, provided that such an event does not violate any covenant or
representation contained in this Agreement. At the same time, VIBE
shall cause the 14,113,963 VIBE Shares constituting 100% of the issued and
outstanding capital stock of VIBE to be issued in the name of BAQG and exchanged
for the BAQG Shares.
Section
1.4. Further Actions. At and after the Effective Time, the Surviving
Corporation shall take all action as shall be required in connection with the
Exchange, including, but not limited to, the execution and delivery of any
further deeds, assignments, instruments or documentation as are necessary or
desirable to carry out the provisions of this Agreement.
2.
Conversion and Exchange of Shares
Section
2.1. Exchange Ratio. As of the Effective Time, by virtue of the Exchange and
without any action on the part of any holder of any shares of VIBE Shares,
Holders of VIBE Shares shall receive 13,390,930 shares of BAQG stock for 100% of
the issued and outstanding capital stock of VIBE totaling 14,113,963 shares (the
“Exchange Ratio”).
2.1.1.
Subject to the provisions of Sections 2.4, 2.5 and 7.2.5 hereof, each share of
VIBE capital stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive the Exchange Ratio of fully
paid and nonassessable shares of common stock, par value $0.001 per share of
BAQG. All such VIBE Shares, when so converted, shall no longer be outstanding
and shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the shares of
BAQG and any cash in lieu of fractional shares as provided in Section
2.4 hereof, all to be issued or paid in consideration for such certificate upon
the surrender thereof in accordance with Section 2.2 hereof.
2.1.3. As
neither BAQG nor VIBE shall have any outstanding options, warrants or other
rights to acquire any capital stock outstanding at the Effective Time, no
exchange shall be made of options to acquire any capital stock in VIBE for any
shares of BAQG.
Section
2.2. Exchange Procedures
2.2.1.
Immediately prior to the Effective Time, BAQG shall deposit with an exchange
agent (the ''Exchange Agent'') designated by BAQG, which shall be reasonably
satisfactory to VIBE, in trust for the VIBE Stockholders of record immediately
prior to the Effective Time, certificates representing the aggregate number of
shares of BAQG issuable pursuant to Section 2.1.2 hereof in exchange for the
total outstanding shares of VIBE immediately prior to the Effective Time in the
amounts and in the names as listed in Exhibit A attached hereto.
2.2.2. As
soon as practicable after the Effective Time, BAQG shall cause the Exchange
Agent to mail to each VIBE Stockholder a letter of transmittal and instructions
for use in effecting the surrender of certificates representing shares of VIBE
outstanding immediately prior to the Effective Time (the ''Certificates'') in
appropriate and customary form with such provisions as VIBE (prior to the
Exchange) and BAQG may reasonably specify. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly and properly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of BAQG Common which such holder has a right to receive pursuant to the
provisions of this Article 2. BAQG shall cause all such BAQG Shares issued
pursuant to the Exchange to be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
2.2.3. If
any certificate representing VIBE Shares is to be issued in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such exchange and/or payment, as the case may be that
the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange and/or
payment, as the case may be, shall pay any transfer or other taxes required by
reason of the issuance of certificates for such BAQG Shares, in a name other
than that of, and/or payment to a person other than, as the case may be, the
registered holder of the Certificate so surrendered.
2.2.4. In
the event any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and upon the posting by such person of a bond in
such amount as BAQG may reasonably direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent will
issue in respect of such lost, stolen or destroyed Certificate the Exchange
Consideration with respect to the BAQG Shares represented thereof.
Section
2.3. Dividends and Distributions. No dividends or other distributions declared
or made with respect to BAQG Shares with a record date on or after the date of
the Effective Time will be paid to the holder of a Certificate entitled by
reason of the Exchange to receive certificates representing BAQG Shares until
such holder surrenders such Certificate as provided in Section 2.2 hereof,
provided that there shall be paid forthwith by BAQG to the person in whose name
certificates representing shares of BAQG Shares shall be issued pursuant to the
terms of this Article 2 (i) at the time of the surrender of such Certificate,
the amount of any dividends and other distributions theretofore paid with
respect to that number of whole shares of BAQG represented by such
surrendered Certificate pursuant to the terms of this Article 2, which dividends
or other distributions had a record date on or after the date of Effective Time
and a payment date prior to such surrender and (ii) at the appropriate payment
date, the amount of dividends and other distributions payable with respect to
that number of whole shares of BAQG represented by such surrendered Certificate
pursuant to the terms of Article 2, which dividends or other distributions have
a record date on or after the date of Effective Time and a payment date
subsequent to such surrender.
Section
2.4. No Fractional Shares
2.4.1.
Notwithstanding anything herein to the contrary, no certificates or scrip
evidencing fractional shares of BAQG shall be issued upon the surrender for
exchange of Certificates, but instead any holder of VIBE Shares who would
otherwise be entitled to receive a fractional share shall receive one whole
share of BAQG in lieu of any fractional share they might otherwise be entitled
to by the Exchange Ratio.
Section
2.5. Adjustment of Exchange Ratio. In the event of any
reclassification, stock split (including reverse stock split), stock dividend or
other general distribution of securities, cash or other property with respect to
BAQG Shares (or if a record date with respect to any of the foregoing should
occur) on or after the date of this Agreement and on or prior to the date of the
Effective Time, appropriate and equitable adjustments, if any, shall be made to
the Exchange Ratio, if and only if the absence of such adjustments would cause
any covenant or representation of BAQG in this Agreement to be
violated.
Section
2.6. Transfers Following the Effective Time. The stock transfer books of the
VIBE shall be closed as of the Effective Time, and thereafter there shall be no
further registration of transfers of VIBE Shares that were outstanding prior to
the Effective Time.
3.
Representations and Warranties of VIBE
VIBE
represents and warrants to BAQG that, except as set forth in the schedule
delivered to the BAQG concurrently with the execution of this Agreement, which
schedule shall identify exceptions and other information by specific Section
references and shall be initialed by the BAQG and VIBE for identification
purposes (the ''VIBE Disclosure Schedule''):
Section
3.1. VIBE is a corporation duly organized, validly existing and in good standing
under Delaware Law. The VIBE Disclosure Schedule contains a list of the name and
jurisdiction of organization of each subsidiary of VIBE (each such corporation,
partnership or other entity being referred to herein individually as a ''VIBE
Subsidiary'' and collectively, as the ''VIBE Subsidiaries'') and VIBE ownership
interest with respect thereto. Each VIBE Subsidiary is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of its place of incorporation.
Section
3.2. VIBE and each VIBE Subsidiary (i) has all requisite corporate power and
authority to own, lease and operate its properties and carry on its business as
now being conducted and (ii) is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the nature
or location of its assets require such qualification and where the failure to be
so qualified and in good standing would have a Material Adverse Effect on VIBE.
For purposes of this Agreement, ''Material Adverse Effect'' means, with respect
to VIBE, a materially adverse effect on the business, results of operation,
financial condition, properties or assets of VIBE and the VIBE Subsidiaries,
taken as a whole.
Section
3.3. VIBE has all necessary corporate power and authority to enter into this
Agreement and, subject to approval and adoption of this Agreement by the holders
of a majority of the outstanding shares of VIBE Common, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by VIBE and the performance by VIBE, subject to approval and adoption of this
Agreement by the VIBE Stockholders, of its obligations hereunder have been duly
authorized and approved by all requisite corporate action and no other corporate
proceedings on the part of VIBE are necessary to authorize this Agreement or for
VIBE to consummate the Exchange. This Agreement has been duly executed and
delivered by duly authorized officers of VIBE and constitutes a valid and
binding obligation of VIBE, enforceable against VIBE in accordance with its
terms.
Section
3.4. No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality (each of the foregoing being a
''Governmental Entity''), is required by or with respect to VIBE or any VIBE
Subsidiary in connection with the execution and delivery of this Agreement by
VIBE or the consummation by VIBE of the transactions contemplated
hereby.
Section
3.5. Neither the execution and delivery of this Agreement by VIBE, nor the
consummation by VIBE of the transactions contemplated hereby, will (i) conflict
with or result in a breach of any of the terms or provisions of VIBE Certificate
of Incorporation or By-Laws, (ii) violate any statute or administrative
regulation, or any order, writ, injunction, judgment or decree of any court or
governmental authority or any arbitration award to which VIBE is a party or by
which VIBE is bound, or (iii) violate, conflict with, breach, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute or default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien or other
encumbrance upon any of the properties or assets of VIBE or any VIBE Subsidiary
under, any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which VIBE or any VIBE Subsidiary
is a party or to which they or any of their respective properties or assets are
subject.
Section
3.6. As of the date hereof, the authorized capital stock of VIBE consists of
VIBE Common Stock, par value $0.0001 per share and preferred stock, par value
$0.001 per share (the ''VIBE Preferred''). As of the date hereof, 50,000,000
shares of VIBE Common were authorized, 14,113,963 shares of VIBE Common were
issued and outstanding or will be issued and outstanding prior to the Effective
Time. As of the date hereof 5,000,000 shares of VIBE Preferred were authorized,
none of which will be issued and outstanding prior to the Effective Time. There
are no other shares of capital stock of VIBE authorized, issued or outstanding.
All of the issued and outstanding shares of VIBE Common have been duly
authorized, validly issued and are fully paid and nonassessable. Except as set
forth on the VIBE Disclosure Schedule, there are no subscriptions, options,
warrants, rights (including preemptive rights), calls, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of VIBE obligating VIBE to issue any
securities of any kind.
Section
3.7. The financial statements of VIBE included in Exhibit B to be attached
hereto have been prepared in accordance with generally accepted accounting
principles ("GAAP'') consistently applied (except as may be indicated in the
notes thereto or) and fairly present in all material respects the consolidated
financial position of VIBE as at the dates thereof and the consolidated results
of its operations, cash flows and changes in financial position for the periods
indicated therein.
Section
3.8. Except as otherwise disclosed in the VIBE Disclosure Schedule, VIBE and the
VIBE Subsidiaries do not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) other than liabilities or
obligations which would not, individually or in the aggregate exceed
$10,000.
Section
3.9. VIBE has not suffered or, to VIBE' knowledge, been threatened with any
change (other than changes generally affecting the industries in which VIBE or
any VIBE Subsidiary operates or changes relating to the transactions
contemplated by this Agreement) which could have a Material Adverse Effect on
VIBE; and (ii) VIBE and the VIBE Subsidiaries have operated only in the ordinary
course of business consistent with past practice.
Section
3.10
3.10.1.
As used in this Agreement, the term (i) ''Taxes'' means all federal, state,
local, foreign and other income, sales, use, ad valorem, transfer, franchise,
withholding, payroll, employment, gross receipts, property, severance, duties,
net worth, excise or other taxes, charges, levies or like assessments of any
kind, together with any interest, penalties and additions with respect thereto,
and the term ''Tax'' means any one of the foregoing Taxes, and (ii) ''Returns''
means all returns, declarations, reports, statements and other documents
required to be filed in respect of Taxes, and the term ''Return'' means any one
of the foregoing Returns.
3.10.2.
There have been properly completed and filed on a timely basis all Returns
required to be filed by VIBE or any VIBE Subsidiary. As of the time of filing,
the foregoing Returns correctly reflected the facts regarding the income,
business, assets, operations, activities, status or other matters of VIBE or, as
applicable, a VIBE Subsidiary or any other information required to be shown
thereon.
3.10.3.
With respect to all amounts in respect of Taxes imposed upon VIBE or any VIBE
Subsidiary, or for which VIBE or any VIBE Subsidiary is liable to taxing
authorities, with respect to all taxable periods or portions of periods ending
on or before the date hereof, all applicable Tax laws have been complied
with and all amounts that are required to have been
paid.
3.10.4.
No issues have been raised or are currently pending by any tax authority in
connection with any of the Returns. There are no material outstanding waivers of
the applicable statutes of limitation with respect to Tax liabilities of VIBE or
any VIBE Subsidiary.
3.10.5.
VIBE has not agreed to make, nor is required to make, any adjustment under
Section 481 (a) of the Code by reason of a change in accounting method or
otherwise.
Section
3.11
3.11.1.
VIBE and the VIBE subsidiaries have never had more than 10 employees in any
given 12 month period.
Section
3.12. Except as set forth on the VIBE Disclosure Schedule, there is no
litigation or proceeding, in law or in equity, and there are no proceedings or
governmental investigations before any commission, authority, agency or other
administrative authority, pending or, to VIBE' knowledge, threatened against
VIBE or any VIBE Subsidiary with respect to or affecting VIBE' or any VIBE
Subsidiary's operations, business or financial condition.
Section
3.13. Neither VIBE nor any VIBE Subsidiary is a party to, or bound by, any
judgment, writ, injunction, decree, order, or arbitration award (or agreement
entered into in any administrative, judicial or arbitration proceeding with any
Governmental Entity) with respect to or affecting the properties, assets,
personnel or business activities of VIBE or any VIBE Subsidiary.
Section
3.16. Each of VIBE and the VIBE Subsidiaries owns, licenses or otherwise has the
right to use all patents, copyrights, trademarks, trade names and rights in
respect of the foregoing, adequate for the conduct of its business substantially
as now conducted without any known conflict with any rights of
others.
Section
3.17. VIBE has disclosed on the VIBE Disclosure Schedule a list of and made
available to BAQG, true and complete copies of all written contracts,
agreements, commitments, arrangements, leases (including with respect to
personal property), and other instruments to which it or any VIBE Subsidiary is
a party Except as set forth on the VIBE Disclosure Schedule, neither VIBE nor
any VIBE Subsidiary is, or has received any notice or has any knowledge that any
other party is, in default in any material respect under any such contract and
to VIBE' knowledge there has not occurred any event that with the lapse of time
or the giving of notice or both would constitute such a default.
Section
3.18. To the knowledge of VIBE, neither VIBE nor any VIBE Subsidiary has taken
any action which would violate any requirement, including the
continuity-of-business-enterprise requirement of 26 C.F.R. 1.368-1(a), for
tax-free reorganization status under Section 368(a) of the Code with respect to
the Exchange.
Section
3.19. No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transaction
contemplated hereby based upon any arrangements made by or on behalf of
VIBE.
4.
Representations and Warranties of BAQG
BAQG
represents and warrants to VIBE that, except as set forth in the schedule
delivered to the VIBE concurrently with the execution of this Agreement, which
schedule shall identify exceptions and other information by specific Section
references and shall be initialed by the VIBE and BAQG for identification
purposes (the ''BAQG Disclosure Schedule''):
Section
4.1. BAQG is a corporation duly organized, validly existing and in good standing
under Nevada Law. The BAQG Disclosure Schedule contains a list of the name and
jurisdiction of organization of each subsidiary of BAQG (each such corporation,
partnership or other entity being referred to herein individually as a ''BAQG
Subsidiary'' and collectively, as the ''BAQG Subsidiaries'') and BAQG ownership
interest with respect thereto. Each BAQG Subsidiary is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of its place of incorporation.
Section
4.2. BAQG and each BAQG Subsidiary (i) has all requisite corporate power and
authority to own, lease and operate its properties and carry on its business as
now being conducted and (ii) is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the nature
or location of its assets require such qualification and where the failure to be
so qualified and in good standing would have a Material Adverse Effect on BAQG.
For purposes of this Agreement, ''Material Adverse Effect'' means, with respect
to BAQG, a materially adverse effect on the business, results of operation,
financial condition, properties or assets of BAQG and the BAQG Subsidiaries,
taken as a whole.
Section
4.3. BAQG has all necessary corporate power and authority to enter into this
Agreement and, subject to approval and adoption of this Agreement by the holders
of a majority of the outstanding shares of BAQG Common, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by BAQG and the performance by BAQG of its obligations hereunder have been duly
authorized and approved by all requisite corporate action and no other corporate
proceedings on the part of BAQG are necessary to authorize this Agreement or for
BAQG to consummate the Exchange. This Agreement has been duly executed and
delivered by duly authorized officers of BAQG and constitutes a valid and
binding obligation of BAQG, enforceable against BAQG in accordance with its
terms.
Section
4.4. No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality (each of the foregoing being a
''Governmental Entity''), is required by or with respect to BAQG or any BAQG
Subsidiary in connection with the execution and delivery of this Agreement by
BAQG or the consummation by BAQG of the transactions contemplated
hereby.
Section
4.5. Neither the execution and delivery of this Agreement by BAQG, nor the
consummation by BAQG of the transactions contemplated hereby, will (i) conflict
with or result in a breach of any of the terms or provisions of BAQG Certificate
of Incorporation or By-Laws, (ii) violate any statute or administrative
regulation, or any order, writ, injunction, judgment or decree of any court or
governmental authority or any arbitration award to which BAQG is a party or by
which BAQG is bound, or (iii) violate, conflict with, breach, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute or default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien or other
encumbrance upon any of the properties or assets of BAQG or any BAQG Subsidiary
under, any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which BAQG or any BAQG Subsidiary
is a party or to which they or any of their respective properties or assets are
subject.
Section
4.6. As of the date hereof, the authorized capital stock of BAQG consists of
BAQG Common Stock, par value $0.001 per share and no preferred stock. As of the
date hereof, 10,000,000 shares of BAQG Common were authorized, 1,072,666 shares
of BAQG Common were issued and outstanding and no more than 1,609,070 will be
issued and outstanding prior to the Effective Time. As of the date hereof no
shares of BAQG Preferred were authorized and none are issued and
outstanding. There are no other shares of capital stock of BAQG
authorized, issued or outstanding. All of the issued and outstanding shares of
BAQG Common have been duly authorized, validly issued and are fully paid and
nonassessable. Except as set forth on the BAQG Disclosure Schedule, there are no
subscriptions, options, warrants, rights (including preemptive rights), calls,
convertible securities or other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of BAQG
obligating BAQG to issue any securities of any kind.
Section
4.7. The financial statements of BAQG included in Exhibit B to be attached
hereto have been prepared in accordance with generally accepted accounting
principles ("GAAP'') consistently applied (except as may be indicated in the
notes thereto or) and fairly present in all material respects the consolidated
financial position of BAQG as at the dates thereof and the consolidated results
of its operations, cash flows and changes in financial position for the periods
indicated therein. All BAQG disclosure as filed with the Securities
and Exchange Commission (“SEC”) is true and accurate in all material respects
and there is no outstanding unresolved comment, order, letter or inquiry pending
by the SEC with respect to BAQG.
Section
4.8. Except as otherwise disclosed in the BAQG Disclosure Schedule, BAQG and the
BAQG Subsidiaries do not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) other than liabilities or
obligations which would not, individually or in the aggregate exceed
$10,000.
Section
4.9. BAQG has not suffered or, to BAQG' knowledge, been threatened with any
change (other than changes generally affecting the industries in which BAQG or
any BAQG Subsidiary operates or changes relating to the transactions
contemplated by this Agreement); and (ii) BAQG and the BAQG Subsidiaries have
operated only in the ordinary course of business consistent with past
practice.
Section
4.10
4.10.1.
As used in this Agreement, the term (i) ''Taxes'' means all federal, state,
local, foreign and other income, sales, use, ad valorem, transfer, franchise,
withholding, payroll, employment, gross receipts, property, severance, duties,
net worth, excise or other taxes, charges, levies or like assessments of any
kind, together with any interest, penalties and additions with respect thereto,
and the term ''Tax'' means any one of the foregoing Taxes, and (ii) ''Returns''
means all returns, declarations, reports, statements and other documents
required to be filed in respect of Taxes, and the term ''Return'' means any one
of the foregoing Returns.
4.10.2.
There have been properly completed and filed on a timely basis all Returns
required to be filed by BAQG or any BAQG Subsidiary. As of the time of filing,
the foregoing Returns correctly reflected the facts regarding the income,
business, assets, operations, activities, status or other matters of BAQG or, as
applicable, a BAQG Subsidiary or any other information required to be shown
thereon.
4.10.3.
With respect to all amounts in respect of Taxes imposed upon BAQG or any BAQG
Subsidiary, or for which BAQG or any BAQG Subsidiary is liable to taxing
authorities, with respect to all taxable periods or portions of periods ending
on or before the date hereof, all applicable Tax laws have been complied
with and all amounts that are required to have been
paid.
4.10.4.
No issues have been raised or are currently pending by any tax authority in
connection with any of the Returns. There are no material outstanding waivers of
the applicable statutes of limitation with respect to Tax liabilities of BAQG or
any BAQG Subsidiary.
4.10.5.
BAQG has not agreed to make, nor is required to make, any adjustment under
Section 481 (a) of the Code by reason of a change in accounting method or
otherwise.
Section
4.11
4.11.1.
BAQG and the BAQG subsidiaries have never had more than 10 employees in any
given 12 month period.
Section
4.12. Except as set forth on the BAQG Disclosure Schedule, there is no
litigation or proceeding, in law or in equity, and there are no proceedings or
governmental investigations before any commission, authority, agency or other
administrative authority, pending or, to BAQG' knowledge, threatened against
BAQG or any BAQG Subsidiary with respect to or affecting BAQG' or any BAQG
Subsidiary's operations, business or financial condition.
Section
4.13. Neither BAQG nor any BAQG Subsidiary is a party to, or bound by, any
judgment, writ, injunction, decree, order, or arbitration award (or agreement
entered into in any administrative, judicial or arbitration proceeding with any
Governmental Entity) with respect to or affecting the properties, assets,
personnel or business activities of BAQG or any BAQG Subsidiary.
Section
4.16. Each of BAQG and the BAQG Subsidiaries owns, licenses or otherwise has the
right to use all patents, copyrights, trademarks, trade names and rights in
respect of the foregoing, adequate for the conduct of its business substantially
as now conducted without any known conflict with any rights of
others.
Section
4.17. BAQG has disclosed on the BAQG Disclosure Schedule a list of and made
available to XXXX, xxxx and complete copies of all written contracts,
agreements, commitments, arrangements, leases (including with respect to
personal property), and other instruments to which it or any BAQG Subsidiary is
a party Except as set forth on the BAQG Disclosure Schedule, neither BAQG nor
any BAQG Subsidiary is, or has received any notice or has any knowledge that any
other party is, in default in any material respect under any such contract and
to BAQG' knowledge there has not occurred any event that with the lapse of time
or the giving of notice or both would constitute such a default.
Section
4.18. To the knowledge of BAQG, neither BAQG nor any BAQG Subsidiary has taken
any action which would violate any requirement, including the
continuity-of-business-enterprise requirement of 26 C.F.R. 1.368-1(a), for
tax-free reorganization status under Section 368(a) of the Code with respect to
the Exchange.
Section
4.19. No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transaction
contemplated hereby based upon any arrangements made by or on behalf of
BAQG.
5.
Conduct of Business Pending the Merger
Section
5.1. Conduct of Business by BAQG Pending the Exchange. Prior to the Effective
Time, unless VIBE shall otherwise agree in writing:
5.1.1.
BAQG shall use their reasonable best efforts to carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as hereto conducted. BAQG shall: (i) maintain insurance
coverage and its books, accounts and records in the usual manner consistent with
prior practices; (ii) comply in all material respects with all laws, ordinances
and regulations of Governmental Entities applicable to BAQG; and (iv)
perform in all material respects its obligations under all contracts and
commitments to which it is a party or by which it is bound.
5.1.2.
Except as required or permitted by this Agreement, BAQG shall not and shall not
propose to (i) sell or pledge or agree to sell or pledge any of its capital
stock, (ii) amend its Articles of Incorporation or By-Laws, (iii) split, combine
or reclassify its outstanding capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of BAQG, or declare, set aside or pay any dividend
or other distribution payable in cash, stock or property or (iv) directly or
indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or
otherwise acquire any shares of BAQG capital stock, except that BAQG shall
perform a 1.5 for 1 forward stock split or share prior to the Effective
Time.
5.1.3.
BAQG shall not (i) except as permitted or required by this Agreement, issue,
deliver or sell or agree to issue, deliver or sell any additional shares of, or
rights of any kind to acquire any shares of, its capital stock of any class or
incur any liability, payable, contract or obligation in respect of any contract
which individually or in the aggregate exceeds $5,000.
5.1.4.
Except as disclosed in BAQG Disclosure Schedule, BAQG shall not (i) adopt, enter
into, terminate or amend any bonus, profit sharing, compensation, severance,
termination, stock option, pension, retirement, deferred compensation,
employment agreement, trust, fund or other arrangement for the benefit or
welfare of any director, officer or current or former employee, (ii) increase in
any manner the compensation or fringe benefit of any director or officer or of
any employee (iii) pay any benefit not provided under any existing plan or
arrangement, (iv) grant any awards under any bonus, incentive, performance, or
other compensation plan or arrangement (including, without limitation, the grant
of stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of existing
restrictions in any benefit plans or agreements or awards made thereunder), (v)
take any action to fund or in any other way secure the payment of compensation
or benefits under any employee plan, agreement, contract or arrangement other
than in the ordinary course of business consistent with past practice or (vi)
adopt, enter into, amend or terminate any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section
5.2. Conduct of Business by VIBE Pending the Exchange. Prior to the Effective
Time, unless BAQG shall otherwise agree in writing:
5.2.1.
VIBE shall use their reasonable best efforts to carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as hereto conducted. VIBE shall: (i) maintain insurance
coverage and its books, accounts and records in the usual manner consistent with
prior practices; (ii) comply in all material respects with all laws, ordinances
and regulations of Governmental Entities applicable to VIBE; and (iv) perform in
all material respects its obligations under all contracts and commitments to
which it is a party or by which it is bound.
5.2.2.
Except as required or permitted by this Agreement, VIBE shall not and shall not
propose to (i) sell or pledge or agree to sell or pledge any of its capital
stock, (ii) amend its Articles of Incorporation or By-Laws, (iii) split, combine
or reclassify its outstanding capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of VIBE, or declare, set aside or pay any dividend
or other distribution payable in cash, stock or property or (iv) directly or
indirectly redeem, purchase or otherwise acquire or agree to redeem, purchase or
otherwise acquire any shares of VIBE capital stock, except that VIBE shall cause
all of its preferred stock to be converted into common stock and may convert any
indebtedness into common stock provided, however, that the total issued and
outstanding common shares of VIBE do not exceed 14,113,963 at the Effective
Time.
5.2.3.
VIBE shall not (i) except as permitted or required by this Agreement, issue,
deliver or sell or agree to issue, deliver or sell any additional shares of, or
rights of any kind to acquire any shares of, its capital stock of any class or
incur any liability, payable, contract or obligation in respect of any contract
which individually or in the aggregate exceeds $100,000.
5.2.4.
Except as disclosed in VIBE Disclosure Schedule, VIBE shall not (i) adopt, enter
into, terminate or amend any bonus, profit sharing, compensation, severance,
termination, stock option, pension, retirement, deferred compensation,
employment agreement, trust, fund or other arrangement for the benefit or
welfare of any director, officer or current or former employee, (ii) increase in
any manner the compensation or fringe benefit of any director or officer or of
any employee (iii) pay any benefit not provided under any existing plan or
arrangement, (iv) grant any awards under any bonus, incentive, performance, or
other compensation plan or arrangement (including, without limitation, the grant
of stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of existing
restrictions in any benefit plans or agreements or awards made thereunder), (v)
take any action to fund or in any other way secure the payment of compensation
or benefits under any employee plan, agreement, contract or arrangement other
than in the ordinary course of business consistent with past practice or (vi)
adopt, enter into, amend or terminate any contract, agreement, commitment or
arrangement to do any of the foregoing.
6.
Closing Conditions
Section
6.1 BAQG Closing Conditions. Prior to the Effective Time, BAQG shall
have effected a 1.5 for 1 forward split or share dividend and appointed one
representatives designated by VIBE to the BAQG board of directors, which shall
consist of three members at the Effective Time. BAQG shall not have
violated any term or condition of this Agreement and there shall be no adverse
event or change in BAQG or its business. BAQG shall have provided a
certificate from its President and CEO certifying that it is in compliance with
all representations, warranties and covenants of this Agreement and an opinion
of counsel to BAQG that the BAQG Shares, when issued, will be validly issued,
fully paid and non-assessable. BAQG does not currently have authorized enough
shares to issue all of the BAQG Shares. If all other conditions have
been met under this Section 6.1, VIBE may, at its sole discretion, allow the
Exchange to take place and have such shares as are issuable to VIBE in excess of
the authorized shares of BAQG be issued at a later time when sufficient common
stock is authorized. In this event, VIBE will designate in writing
which BAQG Shares are to remain unissued until such an increase in the
authorized shares takes place. However, the full number of VIBE Shares must
still be cancelled and issued to BAQG, holders of VIBE Shares not receiving BAQG
Shares at the Effective Time simply having a right to receive such shares when
the authorized shares of BAQG shall increase sufficiently to permit such an
issuance.
Section
6.2 VIBE Closing Conditions. Prior to the Effective Time, VIBE shall
have caused all of its issued and outstanding preferred shares to be converted
into common shares. VIBE shall not have violated any term or
condition of this Agreement and there shall be no adverse event or change in
VIBE or its business. VIBE shall have provided a certificate from its
President and CEO certifying that it is in compliance with all representations,
warranties and covenants of this Agreement and an opinion of counsel to VIBE
that the VIBE Shares, when issued, will be validly issued, fully paid and
non-assessable. VIBE shall also have secured an affirmative vote of
the VIBE’S Shareholders in accordance with Delaware Law approving the
Exchange.
7.
[Intentionally omitted]
8.
Termination; Effect of Termination
Section
8.1. Right to Terminate. ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, THIS
AGREEMENT AND THE TRANSACTION CONTEMPLATED HEREBY MAY BE TERMINATED AT ANY TIME
PRIOR TO THE EFFECTIVE TIME BY PROMPT NOTICE GIVEN IN ACCORDANCE WITH SECTION
9.2:
8.1.1. by
the mutual written consent of VIBE and BAQG (with the approval of their Board of
Directors);
8.1.2. by
VIBE (with the approval of its Board of Directors) or BAQG (with the approval of
its Board of Directors) if the Effective Time shall not have occurred at or
before 11:59 pm New York time on December 15, 2007; provided, however, that the
right to terminate this Agreement under this section 8.1.2 shall not be
available to any party whose failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the occurrence of the event
above;
8.1.3. by
VIBE (with the approval of its Board of Directors), by giving written notice of
such termination to the Company, if (i) there has been a material breach of any
material agreement of the Company herein, such that in the reasonable opinion of
VIBE, the condition to closing in Section 6 could not be expected to be
satisfied by the termination date contemplated by Section 8.1.2 hereof, (ii)
there has been a material breach of any material representation or warranty of
BAQG herein such that, in the reasonable opinion of VIBE, the condition to
closing in Section 6 could not be expected to be satisfied by the termination
date contemplated by Section 8.1.2 hereof; or (iii) the VIBE stockholders do not
approve and adopt this Agreement; or
8.1.4. by
BAQG (with the approval of its Board of Directors), by giving written notice of
such termination to VIBE, if (i) there has been a material breach of any
material agreement of VIBE herein, such that in the reasonable opinion of BAQG
the condition to closing in Section 6 could not be expected to be satisfied by
the termination date contemplated by Section 8.1.2 hereof, (ii) there has been a
material breach of any material representation or warranty of VIBE herein such
that in the reasonable opinion of the Company, the condition to closing in
Section 6 could not be expected to be satisfied by the termination date
contemplated by Section 8.1.2 hereof; (iii) the Board of Directors of the
Company fails to make, withdraws, or modifies or changes the recommendation
referred to in Section 6.2 based on its good faith determination, after
consultation with counsel, that making such recommendation, or the failure to
withdraw, modify or change such recommendation, could reasonably be deemed a
breach of its fiduciary duties under applicable law; (iv) Xxxxxxx Xxxxxx shall
be the holder of less than 500,000 common shares of BAQG immediately prior to
the Effective Time and prior to the Exchange.
Section
8.2. Certain Effects of Termination. In the event of the termination of this
agreement as provided in Section 8.1 hereof:
8.2.1.
Except as provided in Sections 8.2.2, 8.3 and 9.6 hereof, this Agreement shall
forthwith become void, there shall be no liability on the part of VIBE or the
BAQG or any of their respective affiliates, officers or directors and all rights
and obligations of any party hereto shall cease;;
8.2.2.
Each party, if so requested by the other party, will return promptly every
document furnished to it by or on behalf of the other party in connection with
the transaction contemplated hereby, whether so obtained before or after the
execution of this Agreement, and any copies thereof (except for copies of
documents publicly available) which may have been made, and will use reasonable
efforts to cause its representatives and any representatives of financial
institutions and investors and others to whom such documents were furnished
promptly to return such documents and any copies thereof any of them may have
made;
Section
8.3 ADDITIONAL TERMINATION AND RELEASE PROVISIONS. This Agreement
shall be void and of no effect, except with respect to this Section 8.3 which
shall survive such a termination, in the event that Xxxxxxx Xxxxxx or VIBE fail
to consummate the transactions with prompt and full payment as contemplated by
that certain Agreement of Sale dated January 11, 2008 and any amendments or
extensions signed by all of the parties thereto. Xxxxx Xxxxx shall
have no personal liability under this Agreement of any kind, including but not
limited to liability as an officer, director or shareholder of BAQG under any
circumstance. Any remedies against Mr. Price are limited to those
contained in the Agreement of Sale and related amendments and extensions thereto
signed by both parties.
INITIALED
BY XXX XXXXXX ON BEHALF OF HIMSELF AND VIBE: ________
Section
8.2 AND Section 8.3 shall survive any termination of this
Agreement.
9.
Miscellaneous
Section
9.1. Effectiveness of Representations, Warranties and Agreements
9.1.1.
Except as set forth in Section 9.1.2 the representations, warranties and
agreements of each party hereto shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any other party
hereto, any person controlling any such party or any of their officers or
directors, whether prior to or after the execution of this
Agreement.
9.1.2.
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Article 8 hereof; except that the Articles 1,2 and 9 and Section 6.3 hereof
shall survive the Effective Time and those set forth in Section 8.2 and Article
9 hereof shall survive termination.
Section
9.2. Entire Agreement. This Agreement constitutes the entire Agreement of the
parties with respect to the subject matter hereof. The representations,
warranties, covenants and agreements set forth in this Agreement and in any
financial statements, schedules or exhibits delivered pursuant hereto constitute
all the representations, warranties, covenants and agreements of the parties
hereto and upon which the parties have relied and except as may be specifically
provided herein, no change, modification, amendment, addition or termination of
this Agreement or any part thereof shall be valid unless in writing and signed
by or on behalf of the party to be charged therewith.
Section
9.3. Notices. Any and all notices or other communications or deliveries required
or permitted to be given or made pursuant to any of the provisions of this
Agreement shall be deemed to have been duly given or made for all purposes if
sent by certified or registered mail, return receipt requested and postage
prepaid, hand delivered, overnight delivery service, or sent by telephone
facsimile as follows:
If to
VIBE, at:
Vibe
Records, Inc.
Attention:
Xxxxxxx X. Xxxxxx
000 Xxx
Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000
With a
copy to:
Xxxxxx
Xxxxxxx, Esq.
_________________
__________________
If to
BAQG, at:
Benacquista
Galleries, Inc.
00000
Xxxx Xxxxx Xxxxx
Xxxxx
000
Xxx
Xxxxx, XX 00000
Attention:
Xxxxx Xxxxx, Chief Executive Officer
With a
copy to:
Xxxxxxxx
Xxxxxxxxxx
Attorney
at Law
Zoma Law
Group, LLC
0000
Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxx,
XX 00000
Tel
000-000-0000
Fax
000-000-0000
or at
such other address as any party may specify by notice given to other party in
accordance with this Section. The date of giving of any such notice shall be
three days following the posting of the mail, the date of hand delivery, the
business day following delivery to an overnight delivery service or the date
sent by telephone facsimile.
Section
9.4. No Waiver. No waiver of the provisions hereof shall be effective unless in
writing and signed by the party to be charged with such waiver. No waiver shall
be deemed a continuing waiver in respect of any subsequent breach or default
either of similar or different nature, unless expressly so stated in
writing.
Section
9.5. Governing Law. Except to the extent that Delaware Law is mandatorily
applicable to the Exchange and the rights of the VIBE Stockholders, this
Agreement shall be governed, interpreted and construed in accordance with the
laws of the State of Nevada applicable to contracts to be performed entirely
within that State. Should any clause, section or part of this Agreement be held
or declared to be void or illegal for any reason, all other clauses, sections or
parts of this Agreement which can be effected without such legal clause, section
or part shall nevertheless continue in full force and effect.
Section
9.6. Expenses, Transfer Taxes; Certain Payments. Each party
hereto shall bear all fees and expenses incurred by such party in connection
with, relating to or arising out of the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, financial
advisors', attorneys', accountants' and other professional fees and expenses,
unless otherwise agreed in writing by the parties.
Section
9.7. Assignment. This Agreement shall not be assigned by operation of law or
otherwise.
Section
9.8. Binding Agreement. This Agreement shall be binding upon and insure solely
to the benefit of the parties hereto, and nothing in this Agreement, express or
implied is intended to or shall confer upon any person any right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.
Section
9.9. Headings. The headings or captions under sections of this Agreement are for
convenience and reference only and do not in any way modify, interpret or
construe the intent of the parties or effect any of the provisions of this
Agreement.
Section
9.10. Counterparts. This Agreement may be executed in one or more counterparts
each of which when taken together shall constitute one agreement.
IN
WITNESS WHEREOF, the parties hereto have caused this agreement to be signed on
the date and year first above written.
BENACQUISTA
GALLERIES, INC.
A NEVADA
CORPORATION
X
/s/ Xxxxx
Xxxxxx Xxxxx
Xxxxx
Xxxxxx Xxxxx
President
and CEO
VIBE
RECORDS INC.
A
DELAWARE CORPORATION
X
/s/ Xxxxxxx
X. Xxxxxx
Xxxxxxx
X. Xxxxxx
President
and CEO
