Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of the 28th day of December, 2004
AMONG:
UNITED NETWORK MARKETING SERVICES, INC., a corporation formed
pursuant to the laws of the State of Delaware and having an
office for business located at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000
("United")
AND:
KNOCKOUT ACQUISITION CORP., a corporation formed pursuant to
the laws of the State of Delaware and a wholly owned
subsidiary of United
("Merger Sub")
AND:
THE KNOCKOUT GROUP, INC., a corporation formed pursuant to the
laws of the State of Delaware and having an office for
business located at 000 X. Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000
("Knockout")
WHEREAS:
A. Knockout is a Delaware corporation engaged in the business of selling
household and automobile cleaning products that are based on a proprietary
encapsulation technology;
B. United is a reporting company whose common stock is quoted on the OTC
"Bulletin Board" under the symbol "UMKG" and which is presently engaged in the
business of Internet sales through a corporation in which it owns a 50%
interest;
C. The respective Boards of Directors of United, Knockout and Merger Sub deem it
advisable and in the best interests of United, Knockout and Merger Sub that
Merger Sub merge with and into Knockout (the "Merger") pursuant to this
Agreement and the Certificate of Merger, and the applicable provisions of the
laws of the State of Delaware; and
D. Prior to the Merger, Knockout completed a four point six for one (4.6 for 1)
forward split of its Common Stock; and it is intended that a financing by
Knockout for two and one half million dollars ($2,500,000) of Series C Preferred
Shares of Knockout be completed prior to the Merger; and
E. Immediately prior to the Merger, all Preferred Shares of Knockout will
automatically convert into voting Common Stock of Knockout; and
F. Pursuant to the terms of the Merger, each Common Share of Knockout will be
exchanged for one fortieth of a Series A Preferred Share of United and,
immediately following the Merger, a financing by United, which will then be
controlled by the Knockout Shareholders, for up to $6 million of Series B
Preferred Shares of United is expected to be completed;
G. Following the Merger, United plans to increase its authorized Common Shares
from twenty million to one hundred million; will effect a reverse split of its
Common Shares on a one for four basis; and each of its Series A and Series B
Preferred Shares will automatically convert to United Common Shares on a forty
for one basis immediately following the effectiveness of the amendment to
United's Certificate of Incorporation increasing the authorized Common Shares
and effecting the reverse stock split; and
H. It is intended that the Merger shall qualify for United States federal income
tax purposes as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In this Agreement the following terms will have the following meanings:
(a) "ACCESSNEWAGE" has the meaning set forth in Section 3.1(b).
(b) "ACQUISITION SHARES" means the seven hundred ninety four
thousand seven hundred thirty four (794,734) United Series A
Preferred Shares to be issued to the Knockout Shareholders at
Closing pursuant to the terms of the Merger;
(c) "AGREEMENT" means this agreement and plan of merger among
United, Merger Sub and Knockout;
(d) "CERTIFICATE OF DESIGNATION" has the meaning set forth in
Section 3.1(h).
(e) "CLOSING" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 9
hereof;
(f) "CLOSING DATE" means the day on which all conditions precedent
to the completion of the transaction as contemplated hereby
have been satisfied or waived;
(g) "EFFECTIVE TIME" means the date of the filing of an
appropriate Certificate of Merger in the form required by the
State of Delaware, which certificate shall provide that the
Merger shall become effective upon such filing;
(h) "KNOCKOUT ACCOUNTS PAYABLE AND LIABILITIES" means all accounts
payable and liabilities of Knockout, due and owing or
otherwise constituting a binding obligation of Knockout (other
than a Knockout Material Contract) as of September 30, 2004 as
set forth in Schedule "B" hereto;
(i) "KNOCKOUT ACCOUNTS RECEIVABLE" means all accounts receivable
and other debts owing to Knockout, as of September 30, 2004,
as set forth in Schedule "C" hereto;
(j) "KNOCKOUT ASSETS" means the undertaking and all the property
and assets of the Knockout Business of every kind and
description wheresoever situated including, without
limitation, Knockout Equipment, Knockout Inventory, Knockout
Cash, Knockout Intangible Assets and Knockout Goodwill, and
all credit cards, charge cards and banking cards issued to
Knockout;
(k) "KNOCKOUT BANK ACCOUNTS" means all of the bank accounts, lock
boxes and safety deposit boxes of Knockout or relating to the
Knockout Business as set forth in Schedule "D" hereto;
(l) "KNOCKOUT BUSINESS" means all aspects of the business
conducted by Knockout and its Subsidiaries;
(m) "KNOCKOUT CASH" means all cash on hand or on deposit to the
credit of Knockout and its Subsidiaries on the Closing Date;
(n) "KNOCKOUT COMMON SHARES" means all of the issued and
outstanding shares of Knockout's Common Stock, $.01 par value;
(o) "KNOCKOUT DEBT TO RELATED PARTIES" means the debts owed by
Knockout and its Subsidiaries to any of the Knockout
shareholders or to any family member thereof, or to any
affiliate, director or officer of Knockout or any of the
Knockout Shareholders as described in Schedule "E";
(p) "KNOCKOUT EQUIPMENT" means all machinery, equipment,
furniture, and furnishings used in the Knockout Business,
including, without limitation, the items more particularly
described in Schedule "F" hereto;
(q) "KNOCKOUT FINANCIAL STATEMENTS" means collectively, the
unaudited consolidated financial statements of Knockout for
the nine-month period from inception through September 30,
2004, true copies of which are attached as Schedule "A"
hereto;
(r) "KNOCKOUT GOODWILL" means the goodwill of the Knockout
Business together with the exclusive right of United to
represent itself as carrying on the Knockout Business in
succession of Knockout subject to the terms hereof, and the
right to use any words indicating that the Knockout Business
is so carried on including the right to use the name
"Knockout" or any variation thereof as part of the name of or
in connection with the Knockout Business or any part thereof
carried on or to be carried on by Knockout, the right to all
corporate, operating and trade names associated with the
Knockout Business, or any variations of such names as part of
or in connection with the Knockout Business, all telephone
listings and telephone advertising contracts, all lists of
customers, books and records and other information relating to
the Knockout Business, all necessary licenses and
authorizations and any other rights used in connection with
the Knockout Business;
(s) "KNOCKOUT INSURANCE POLICIES" means the public liability
insurance and insurance against loss or damage to Knockout
Assets and the Knockout Business as described in Schedule "G"
hereto;
(t) "KNOCKOUT INTANGIBLE ASSETS" means all of the intangible
assets of Knockout, including, without limitation, Knockout
Goodwill, all trademarks, logos, copyrights, designs, and
other intellectual and industrial property of Knockout and its
Subsidiaries;
(u) "KNOCKOUT INVENTORY" means all inventory and supplies of the
Knockout Business as of September 30, 2004 as set forth in
Schedule "H" hereto;
(v) "KNOCKOUT MATERIAL CONTRACTS" means the burden and benefit of
and the right, title and interest of Knockout in, to and under
all trade and non-trade contracts, engagements or commitments,
whether written or oral, to which Knockout is entitled in
connection with the Knockout Business whereunder Knockout is
obligated to pay or entitled to receive the sum of $10,000 or
more including, without limitation, any pension plans, profit
sharing plans, bonus plans, loan agreements, security
agreements, indemnities and guarantees, any agreements with
employees, lessees, licensees, managers, accountants,
suppliers, agents, distributors, officers, directors,
attorneys or others which cannot be terminated without
liability on not more than one month's notice, and those
contracts listed in Schedule "I" hereto;
(w) "KNOCKOUT PREFERRED SHARES" means all of the issued and
outstanding shares of Knockout's Preferred Stock, including
the Series A Preferred $.01 par value ("KNOCKOUT SERIES A
PREFERRED SHARES"), the Series B Preferred, $.01 par value
("KNOCKOUT SERIES B PREFERRED SHARES") and the Series C
Preferred, $.01 par value ("KNOCKOUT SERIES C PREFERRED
SHARES");
(x) "KNOCKOUT SHARES" means all of the issued and outstanding
shares of Knockout's equity stock, consisting of the Knockout
Common Shares and the Knockout Preferred Shares;
(y) "KNOCKOUT SHAREHOLDERS" means the holders of Knockout Shares
as of the date of this Agreement, whose names and respective
share holdings as of the date hereof are listed in Schedule
"J" hereto;
(z) "MERGER" means the merger, at the Effective Time, of Knockout
and Merger Sub pursuant to this Agreement and Plan of Merger;
(aa) "MERGER CONSIDERATION" means the Acquisition Shares;
(bb) "NEW CONVERTIBLE NOTES" has the meaning set forth in Section
4.1(f).
(cc) "NEW OPTIONS" has the meaning set forth in Section 4.1(e).
(dd) "NEW WARRANTS" has the meaning set forth in Section 4.1(e).
(ee) "PLACE OF CLOSING" means the offices of Sichenzia Xxxx
Xxxxxxxx Xxxxxxx LLP, or such other place as United and
Knockout may mutually agree upon;
(ff) "SEC" has the meaning set forth in Section 3.1(d).
(gg) "STATE CORPORATION LAW" means the General Corporation Law of
the State of Delaware;
(hh) "SUBSIDIARY" for purposes of this Agreement includes
AccessNewAge, whenever this Agreement refers to a Subsidiary
of United;
(ii) "SURVIVING COMPANY" means Knockout following the merger with
Merger Sub;
(jj) "UNITED ACCOUNTS PAYABLE AND LIABILITIES" means all accounts
payable and liabilities of United, on a consolidated basis,
due and owing or otherwise constituting a binding obligation
of United as of September 30, 2004 as set forth on Schedule
"M" hereto;
(kk) UNITED ACCOUNTS RECEIVABLE" means all accounts receivable and
other debts owing to United on a consolidated basis, as of
September 30, 2004 as set forth in Schedule "N" hereto;
(ll) "UNITED ASSETS" means the undertaking and all the property and
assets of the United Business of every kind and description
wheresoever situated including, without limitation, United
Equipment, United Inventory, United Material Contracts, United
Accounts Receivable, United Cash, United Intangible Assets and
United Goodwill, and all credit cards, charge cards and
banking cards issued to United;
(mm) "UNITED BANK ACCOUNTS" means all of the bank accounts, lock
boxes and safety deposit boxes of United and its Subsidiaries
or relating to the United Business as set forth in Schedule
"O" hereto;
(nn) "UNITED BUSINESS" means all aspects of any business conducted
by United and its Subsidiaries;
(oo) "UNITED CASH" means all cash on hand or on deposit to the
credit of United and its Subsidiaries on the Closing Date;
(pp) "UNITED COMMON SHARES" means the shares of Common Stock, par
value $.001 per share, in the capital of United;
(qq) "UNITED DEBT TO RELATED PARTIES" means the debts owed by
United and its Subsidiaries to any affiliate, director or
officer of United as described in Schedule "P" hereto;
(rr) "UNITED EQUIPMENT" means all machinery, equipment, furniture,
and furnishings used in the United Business, including,
without limitation, the items more particularly described in
Schedule "Q" hereto;
(ss) "UNITED FINANCIAL STATEMENTS" means, collectively, the audited
financial statements of United for the fiscal year ended
December 31, 2003, together with the auditors' report thereon,
and the unaudited consolidated financial statements of United
for the nine month period ended September 30,2004, true copies
of which are attached as Schedule "L" hereto;
(tt) "UNITED GOODWILL" means the goodwill of the United Business
including the right to all corporate, operating and trade
names associated with the United Business, or any variations
of such names as part of or in connection with the United
Business, all books and records and other information relating
to the United Business, all necessary licenses and
authorizations and any other rights used in connection with
the United Business;
(uu) "UNITED INSURANCE POLICIES" means the public liability
insurance and insurance against loss or damage to the United
Assets and the United Business as described in Schedule "R"
hereto;
(vv) "UNITED INTANGIBLE ASSETS" means all of the intangible assets
of United and its Subsidiaries, including, without limitation,
United Goodwill, all trademarks, logos, copyrights, designs,
and other intellectual and industrial property of United and
its Subsidiaries;
(ww) "UNITED INVENTORY" means all inventory and supplies of the
United Business as of September 30, 2004, as set forth in
Schedule "S" hereto;
(xx) "UNITED MATERIAL CONTRACTS" means the burden and benefit of
and the right, title and interest of United and its
Subsidiaries in, to and under all trade and non-trade
contracts, engagements or commitments, whether written or
oral, to which United or its Subsidiaries are entitled
whereunder United or its Subsidiaries are obligated to pay or
entitled to receive the sum of $10,000 or more including,
without limitation, any pension plans, profit sharing plans,
bonus plans, loan agreements, security agreements, indemnities
and guarantees, any agreements with employees, lessees,
licensees, managers, accountants, suppliers, agents,
distributors, officers, directors, attorneys or others which
cannot be terminated without liability on not more than one
month's notice, and those contracts listed in Schedule "T"
hereto;
(yy) "UNITED PREFERRED SHARES" means the shares of convertible
preferred stock in the capital of United, consisting of Series
A Preferred, par value $.001 per share ("UNITED SERIES A
PREFERRED Shares"), and Series B Preferred, par value $.001
per share ("UNITED SERIES B PREFERRED SHARES");
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
CAPTIONS AND SECTION NUMBERS
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
SECTION REFERENCES AND SCHEDULES
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
Information concerning Knockout
Schedule "A" Knockout Financial Statements
Schedule "B" Knockout Accounts Payable and Liabilities
Schedule "C" Knockout Accounts Receivable
Schedule "D" Knockout Bank Accounts
Schedule "E" Knockout Debts to Related Parties
Schedule "F" Knockout Equipment
Schedule "G" Knockout Insurance Policies
Schedule "H" Knockout Inventory
Schedule "I" Knockout Material Contracts
Schedule "J" Knockout Shareholders
Schedule "K" Knockout Options and Warrants
Information concerning United
Schedule "L" United Financial Statements
Schedule "M" United Accounts Payable and Liabilities
Schedule "N" United Accounts Receivable
Schedule "O" United Bank Accounts
Schedule "P" United Debts to Related Parties
Schedule "Q" United Equipment
Schedule "R" United Insurance Policies
Schedule "S" United Inventory
Schedule "T" United Material Contracts
Schedule "U" United Certificate of Designation of Series A Preferred Shares
Schedule "V" United Certificate of Designation of Series B Preferred Shares
Schedule "W" United Options, Warrants or Preemptive Rights
Schedule "X" United Common Stock to be Registered
Agreement Relating to Payment of Expenses
Schedule "Y" Agreement Relating to Payment of Expenses
SEVERABILITY OF CLAUSES
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE MERGER
THE MERGER
2.1 At Closing, Merger Sub shall be merged with and into Knockout pursuant to
this Agreement and Plan of Merger, and the separate corporate existence of
Merger Sub shall cease, and Knockout, as it exists from and after the Closing,
shall be the Surviving Company.
EFFECT OF THE MERGER
2.2 The Merger shall have the effect provided therefor by the State Corporation
Law. Without limiting the generality of the foregoing, and subject thereto, at
Closing (i) all the rights, privileges, immunities, powers and franchises, of a
public as well as of a private nature, and all property, real, personal and
mixed, and all debts due on whatever account, including without limitation
subscriptions to shares, and all other choses in action, and all and every other
interest of or belonging to or due to Knockout or Merger Sub, as a group,
subject to the terms hereof, shall be taken and deemed to be transferred to, and
vested in, the Surviving Company without further act or deed; and all property,
rights and privileges, immunities, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Company, as they were of Knockout and Merger Sub, as a group, and (ii) all
debts, liabilities, duties and obligations of Knockout and Merger Sub, as a
group, subject to the terms hereof, shall become the debts, liabilities and
duties of the Surviving Company and the Surviving Company shall thenceforth be
responsible and liable for all debts, liabilities, duties and obligations of
Knockout and Merger Sub, as a group, and neither the rights of creditors nor any
liens upon the property of Knockout or Merger Sub, as a group, shall be impaired
by the Merger, and may be enforced against the Surviving Company.
CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
2.3 The Certificate of Incorporation of the Surviving Company from and after the
Closing shall be the Certificate of Incorporation of Knockout until thereafter
amended in accordance with the provisions therein and as provided by the
applicable provisions of the State Corporation Law. The Bylaws of the Surviving
Company from and after the Closing shall be the Bylaws of Knockout as in effect
immediately prior to the Closing, continuing until thereafter amended in
accordance with their terms, the Certificate of Incorporation of the Surviving
Company and as provided by the State Corporation Law. The Directors of Knockout
at the Effective Time shall continue to be the Directors of the Surviving
Company.
EXCHANGE OF SECURITIES
2.4 At the Effective Time, by virtue of the Merger and without any action on the
part of Merger Sub or the Knockout Shareholders, the shares of capital stock of
each of Knockout and Merger Sub shall be exchanged as follows:
(a) Capital Stock of Merger Sub. Each issued and outstanding share
of Merger Sub's capital stock shall continue to be issued and
outstanding and shall be exchanged for one share of validly
issued, fully paid, and non-assessable common stock of the
Surviving Company. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to
evidence ownership of such shares of capital stock of the
Surviving Company.
(b) Exchange of Knockout Shares. At the Effective Time, each
Knockout Common Share that is then issued and outstanding
shall automatically be cancelled and extinguished and
exchanged, without any action on the part of the holder
thereof, for the right to receive at the time and in the
amounts described in this Agreement an amount of Acquisition
Shares equal to the number of Knockout Common Shares divided
by forty (40), so that forty (40) Common Shares of Knockout
shall become one United Series A Preferred Share. Fractional
Acquisition Shares shall be issued to the nearest one
thousandth of a share so that each full Knockout Common Share
will equal twenty-five one thousandths (.025) of an
Acquisition Share. All such Knockout Shares, when so
exchanged, 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 Acquisition Shares paid in
consideration therefor upon the surrender of such certificate
in accordance with this Agreement.
ADHERENCE WITH APPLICABLE SECURITIES LAWS
2.5 Knockout agrees on behalf of its shareholders that each Acquisition Share
shall bear a legend stating that the holder thereof agrees as a condition of
acquiring such shares that he is acquiring the Acquisition Shares for investment
purposes and will not offer, sell or otherwise transfer, pledge or hypothecate
any of the Acquisition Shares issued to them (other than pursuant to an
effective Registration Statement under the Securities Act of 1933, as amended)
directly or indirectly unless:
(a) the sale is to United;
(b) the sale is made pursuant to the exemption from registration
under the Securities Act of 1933, as amended, provided by Rule
144 thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act of 1933, as
amended, or any applicable United States state laws and
regulations governing the offer and sale of securities, and
the vendor has furnished to United an opinion of counsel to
that effect or such other written opinion as may be reasonably
required by United.
United acknowledges that the certificates representing the Acquisition
Shares shall bear the following legend:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED
BY THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION
STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED, IN RESPECT OF SUCH SHARES IS THEN IN EFFECT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT IS
THEN IN FACT APPLICABLE TO SAID SHARES.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF UNITED
REPRESENTATIONS AND WARRANTIES
3.1 United represents and warrants in all material respects to Knockout, with
the intent that Knockout will rely thereon in entering into this Agreement and
in approving and completing the transactions contemplated hereby, that:
UNITED - CORPORATE STATUS AND CAPACITY
(a) Incorporation. United is a corporation duly incorporated and
validly subsisting under the laws of the State of Delaware,
and is in good standing with the office of the Secretary of
State for the State of Delaware;
(b) Carrying on Business. United does not currently conduct
business, except for (i) the actual operations of the
corporation and (ii) its ownership of a fifty percent interest
in AccessNewAge Corporation ("ACCESSNEWAGE") which owns and
operates an Internet website. United does not carry on any
other material business activity in any jurisdictions other
than as described in the immediately preceding sentence. The
nature of the United Business does not require United to
register or otherwise be qualified to carry on business in any
jurisdictions other than Delaware;
(c) Corporate Capacity. United has the corporate power, capacity
and authority to own the United Assets and to enter into and
complete this Agreement;
(d) Reporting Status; Listing. United is required to file current
reports with the Securities and Exchange Commission ("SEC")
pursuant to section 12(g) of the Securities Exchange Act of
1934, the United Common Shares are quoted on the OTC "Bulletin
Board", and all reports required to be filed by United with
the SEC or the OTC Bulletin Board have been timely filed.
United has no outstanding comment letters from the SEC or the
OTC Bulletin Board;
MERGER SUB - CORPORATE STATUS AND CAPACITY
(e) Incorporation. Merger Sub is a corporation duly incorporated
and validly subsisting under the laws of the State of
Delaware, and is in good standing with the office of the
Secretary of State for the State of Delaware;
(f) Carrying on Business. Other than corporate formation and
organization, Merger Sub has not carried on business
activities to date.
(g) Corporate Capacity. Merger Sub has the corporate power,
capacity and authority to enter into and complete this
Agreement;
UNITED - CAPITALIZATION
(h) Authorized Capital. The authorized capital of United consists
of twenty million (20,000,000) United Common Shares and one
million (1,000,000) United Preferred Shares, of which eight
million one hundred sixty-five thousand seven hundred forty
seven (8,165,747) United Common Shares are presently issued
and outstanding, and zero shares of Preferred Stock are
presently issued and outstanding. The authorized Preferred
Stock consists of eight hundred sixty-five thousand (865,000)
Series A Preferred Shares and one hundred thirty five thousand
(135,000) Series B Preferred Shares. The Certificates of the
Powers, Designations, Preferences and Rights ("CERTIFICATE OF
DESIGNATION") of the Series A and Series B Preferred Shares
are set forth as Schedules U and V hereto and have been duly
filed with the Secretary of State of the State of Delaware. -
(i) United Shares Issued and Outstanding after Closing. The issued
and outstanding share capital of United will after Closing
consist of eight million nine hundred eighty-two thousand
three hundred twenty-two (8,982,322) Common Shares, seven
hundred ninety four thousand seven hundred thirty-four
(794,734) Series A Preferred Shares and one hundred twenty
seven thousand nine hundred fifty (127,950) Series B Preferred
Shares, which shares on Closing shall be validly issued and
outstanding as fully paid and non-assessable shares. The
Series A and Series B Preferred Shares will on Closing be free
and clear of any and all liens, charges, pledges,
encumbrances, restrictions on transfer and adverse claims
whatsoever;
(j) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement or option
for the acquisition of United Common Shares or for the
purchase, subscription or issuance of any of the unissued
shares in the capital of United.
(k) Capacity. United has the full right, power and authority to
enter into this Agreement on the terms and conditions
contained herein;
MERGER SUB CAPITALIZATION
(l) Authorized Capital. The authorized capital of Merger Sub
consists of 200 shares of common stock, $0.01 par value, of
which one share of common stock is presently issued and
outstanding;
(m) No Option. No person, firm or corporation has any agreement or
option or any right capable of becoming an agreement Merger
Sub or for the purchase, subscription or issuance of any of
the unissued shares in the capital of Merger Sub;
(n) Capacity. Merger Sub has the full right, power and authority
to enter into this Agreement on the terms and conditions
contained herein;
UNITED - RECORDS AND FINANCIAL STATEMENTS
(o) Charter Documents. The charter documents of United and Merger
Sub have not been altered since the incorporation of each,
respectively, except as filed in the record books of United or
Merger Sub, as the case may be;
(p) Corporate Minute Books. The corporate minute books of United
and its Subsidiaries are complete and each of the minutes
contained therein accurately reflect the actions that were
taken at a duly called and held meeting or by consent without
a meeting. All actions by United and its Subsidiaries which
required director or shareholder approval are reflected on the
corporate minute books of United and its Subsidiaries. United
and its Subsidiaries are not in violation or breach of, or in
default with respect to, any term of their respective
Certificates of Incorporation (or other charter documents) or
by-laws.
(q) United Financial Statements. The United Financial Statements
present fairly, in all material respects, the assets and
liabilities (whether accrued, absolute, contingent or
otherwise) of United, as of the respective dates thereof, and
the sales and earnings of the United Business during the
periods covered thereby, in all material respects and have
been prepared in substantial accordance with generally
accepted accounting principles consistently applied;
(r) United Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of United or its
Subsidiaries which are not disclosed in Schedule "M" hereto or
reflected in the United Financial Statements except those
incurred in the ordinary course of business since the date of
the said schedule and the United Financial Statements, and
neither United nor its Subsidiaries have guaranteed or agreed
to guarantee any debt, liability or other obligation of any
person, firm or corporation. Without limiting the generality
of the foregoing, all accounts payable and liabilities of
United and its Subsidiaries as of the date hereof are
described in Schedule "M" hereto;
(s) United Accounts Receivable. All the United Accounts Receivable
result from bona fide business transactions and services
actually rendered without, to the knowledge and belief of
United, any claim by the obligor for set-off or counterclaim;
(t) United Bank Accounts. All of the United Bank Accounts, their
location, numbers and the authorized signatories thereto are
as set forth in Schedule "O" hereto;
(u) No Debt to Related Parties. Except as disclosed in Schedule
"P" hereto, neither United nor its Subsidiaries are, and on
Closing will not be, materially indebted to any affiliate,
director or officer of United except accounts payable on
account of bona fide business transactions of United incurred
in normal course of the United Business, including employment
agreements, none of which are more than 30 days in arrears;
(v) No Related Party Debt to United. No director or officer or
affiliate of United is now indebted to or under any financial
obligation to United or its Subsidiaries on any account
whatsoever, except for advances on account of travel and other
expenses not exceeding $5,000 in total;
(w) No Dividends. No dividends or other distributions on any
shares in the capital of United have been made, declared or
authorized since the date of United Financial Statements;
(x) No Payments. No payments of any kind have been made or
authorized since the date of the United Financial Statements
to or on behalf of officers, directors, shareholders or
employees of United or its Subsidiaries or under any
management agreements with United or its Subsidiaries, except
payments made in the ordinary course of business and at the
regular rates of salary or other remuneration payable to them;
(y) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation
plans affecting United or its Subsidiaries;
(z) No Adverse Events. Since the date of the United Financial
Statements
(i) there has not been any material adverse change in the
financial position or condition of United, its
Subsidiaries, its liabilities or the United Assets or
any damage, loss or other change in circumstances
materially affecting United, the United Business or
the United Assets or United' right to carry on the
United Business, other than changes in the ordinary
course of business,
(ii) there has not been any damage, destruction, loss or
other event (whether or not covered by insurance)
materially and adversely affecting United, its
Subsidiaries, the United Business or the United
Assets,
(iii) there has not been any material increase in the
compensation payable or to become payable by United
to any of United's officers, employees or agents or
any bonus, payment or arrangement made to or with any
of them,
(iv) the United Business has been and continues to be
carried on in the ordinary course,
(v) United has not waived or surrendered any right of
material value,
(vi) Neither United nor its Subsidiaries have discharged
or satisfied or paid any lien or encumbrance or
obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000
individually or $30,000 in total have been authorized
or made.
UNITED - INCOME TAX MATTERS
(aa) Tax Returns. All tax returns and reports of United and its
Subsidiaries required by law to be filed have been filed and
are true, complete and correct, and any taxes payable in
accordance with any return filed by United and its
Subsidiaries or in accordance with any notice of assessment or
reassessment issued by any taxing authority have been so paid;
(bb) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by United or its
Subsidiaries. United is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in
filing earlier tax returns;
UNITED - APPLICABLE LAWS AND LEGAL MATTERS
(cc) Licenses. United and its Subsidiaries hold all licenses and
permits as may be requisite for carrying on the United
Business in the manner in which it has heretofore been carried
on, which licenses and permits have been maintained and
continue to be in good standing except where the failure to
obtain or maintain such licenses or permits would not have a
material adverse effect on the United Business;
(dd) Applicable Laws. Neither United nor its Subsidiaries have been
charged with or received notice of breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees
to which they are subject or which apply to them the violation
of which would have a material adverse effect on the United
Business, and to United' knowledge, neither United nor its
Subsidiaries are in breach of any laws, ordinances, statutes,
regulations, bylaws, orders or decrees the contravention of
which would result in a material adverse impact on the United
Business;
(ee) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to United, its
Subsidiaries, the United Business, or any of the United Assets
nor does United have any knowledge of any deliberate act or
omission of United or its Subsidiaries that would form any
material basis for any such action or proceeding;
(ff) No Bankruptcy. Neither United nor its Subsidiaries have made
any voluntary assignment or proposal under applicable laws
relating to insolvency and bankruptcy and no bankruptcy
petition has been filed or presented against United or its
Subsidiaries and no order has been made or a resolution passed
for the winding-up, dissolution or liquidation of United or
its Subsidiaries;
(gg) Labor Matters. Neither United nor its Subsidiaries are party
to any collective agreement relating to the United Business
with any labor union or other association of employees and no
part of the United Business has been certified as a unit
appropriate for collective bargaining or, to the knowledge of
United, has made any attempt in that regard;
(hh) Finder's Fees. Neither United nor its Subsidiaries are party
to any agreement which provides for the payment of finder's
fees, brokerage fees, commissions or other fees or amounts
which are or may become payable to any third party in
connection with the execution and delivery of this Agreement
and the transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(ii) Authorization and Enforceability. The execution and delivery
of this Agreement, and the completion of the transactions
contemplated hereby, have been duly and validly authorized by
all necessary corporate action on the part of United and
Merger Sub.
(jj) No Violation or Breach. The execution and performance of this
Agreement will not:
(i) violate the charter documents of United or Merger Sub
or result in any breach of, or default under, any
loan agreement, mortgage, deed of trust, or any other
agreement to which United or its Subsidiaries are
party,
(ii) give any person any right to terminate or cancel any
agreement including, without limitation, the United
Material Contracts, or any right or rights enjoyed by
United or its Subsidiaries,
(iii) result in any alteration of United' or its
Subsidiaries' obligations under any agreement to
which United or its Subsidiaries are party including,
without limitation, the United Material Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the United
Assets,
(v) result in the imposition of any tax liability to
United or its Subsidiaries relating to the United
Assets, or
(vi) violate any court order or decree to which either
United or its Subsidiaries are subject;
THE UNITED ASSETS - OWNERSHIP AND CONDITION
(kk) Business Assets. The United Assets comprise all of the
property and assets of the United Business, and no other
person, firm or corporation owns any assets used by United or
its Subsidiaries in operating the United Business, whether
under a lease, rental agreement or other arrangement, other
than as disclosed in Schedules "Q" or "T" hereto;
(ll) Title. United or its Subsidiaries are the legal and beneficial
owner of the United Assets, free and clear of all mortgages,
liens, charges, pledges, security interests, encumbrances or
other claims whatsoever, save and except as disclosed in
Schedules "Q" or "T" hereto;
(mm) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the United Assets;
(nn) United Insurance Policies. United and its Subsidiaries
maintain the public liability insurance and insurance against
loss or damage to the United Assets and the United Business as
described in Schedule "R" hereto;
(oo) United Material Contracts. The United Material Contracts
listed in Schedule "T" constitute all of the material
contracts of United and its Subsidiaries;
(pp) No Default. There has not been any default in any material
obligation of United or any other party to be performed under
any of the United Material Contracts, each of which is in good
standing and in full force and effect and unamended (except as
disclosed in Schedule "T" hereto), and United is not aware of
any default in the obligations of any other party to any of
the United Material Contracts;
(qq) No Compensation on Termination. There are no agreements,
commitments or understandings relating to severance pay or
separation allowances on termination of employment of any
employee of United or its Subsidiaries. Neither United nor its
Subsidiaries are obliged to pay benefits or share profits with
any employee after termination of employment except as
required by law;
UNITED ASSETS - UNITED EQUIPMENT
(rr) United Equipment. The United Equipment has been maintained in
a manner consistent with that of a reasonably prudent owner
and such equipment is in good working condition;
UNITED ASSETS - UNITED GOODWILL AND OTHER ASSETS
(ss) United Goodwill. United and its Subsidiaries does not carry on
the United Business under any other business or trade names.
United does not have any knowledge of any infringement by
United or its Subsidiaries of any patent, trademarks,
copyright or trade secret;
THE UNITED BUSINESS
(tt) Maintenance of Business. Since the date of the United
Financial Statements, United and its Subsidiaries have not
entered into any material agreement or commitment except in
the ordinary course and except as disclosed herein;
(uu) Ownership of Subsidiaries. Except for Merger Sub and a fifty
percent interest in AccessNewAge, United does not own any
Subsidiaries and does not otherwise own, directly or
indirectly, any shares or interest in any other corporation,
partnership, joint venture or firm. AccessNewAge is the only
Subsidiary of United, and all representations and warranties
made by United with respect to AccessNewAge in this Agreement
are deemed to be qualified by material adverse effect on the
United Business, so that if a representation and warranty as
to AccessNewAge is untrue, United shall not be deemed to have
breached its obligations under this Agreement if the breach of
such representation and warranty does not have a material
adverse effect on the United Business;
UNITED - ACQUISITION SHARES
(vv) Acquisition Shares. The Acquisition Shares when delivered to
the holders of Knockout Shares pursuant to the Merger shall be
validly issued and outstanding as fully paid and
non-assessable shares and the Acquisition Shares shall be
transferable upon the books of United, in all cases subject to
the provisions and restrictions of all applicable securities
laws.
NON-MERGER AND SURVIVAL
3.2 The representations and warranties of United contained herein will be true
at and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by Knockout, the representations and
warranties of United shall not survive the Closing.
ARTICLE 4
COVENANTS OF UNITED
COVENANTS
4.1 United covenants and agrees with Knockout that it will:
(a) Conduct of Business. Until the Closing, conduct its business
diligently and in the ordinary course consistent with the
manner in which it generally has been operated up to the date
of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best
efforts to preserve the United Business and the United Assets
and, without limitation, preserve for Knockout United's and
its Subsidiaries' relationships with any third party having
business relations with them;
(c) Access. Until the Closing, give Knockout and its
representatives full access to all of the properties, books,
contracts, commitments and records of United, and furnish to
Knockout and its representatives all such information as they
may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Merger and to preserve and
maintain the United Assets notwithstanding the change in
control of Knockout arising from the Merger; and
(e) Options and Warrants. Effective as of the Closing, assume all
outstanding options and warrants to purchase Knockout Shares
which have not then been exercised so that all then
outstanding options and warrants which give the holder thereof
a right to purchase Knockout Common Shares will be exchanged
for options to purchase United Series A Preferred Shares in
the case of options ("NEW OPTIONS") and warrants to purchase
United Series A Preferred Shares in the case of warrants ("NEW
WARRANTS"), based on the conversion ratio applicable to the
Merger, so that each option or warrant to purchase one share
of Knockout Common Stock will become an option or warrant to
purchase one fortieth of a United Series A Preferred Share;
and the option or warrant price for each United Series A
Preferred Share will become 40 times the strike price of such
Knockout option or warrant; and the options and warrants shall
otherwise be subject to all of the same terms and conditions
as the outstanding options and warrants were subject to with
respect to Knockout. For example, a holder of an unexercised
option or warrant to purchase one hundred shares of Knockout
at $1 per share will have the right as of the Closing to
purchase two and one half United Series A Preferred Shares at
$40 per share. Each such New Option or New Warrant shall
automatically become an option or warrant to purchase United
Common Shares upon the close of the 75-day period referred to
in Section 10(e) hereof so that, upon the close of such
period, an option or warrant to purchase one United Series A
Preferred Share shall become an option or warrant to purchase
forty United Common Shares and the strike price for each New
Option or Warrant to purchase one United Common Share shall
equal one fortieth of the strike price for each such New
Option or New Warrant immediately prior to the close of such
75-day period.
(f) Convertible Notes. Effective as of the Closing, assume the
conversion obligation, but not the debt obligation, under all
convertible notes of Knockout which give the holder the right
to convert such debt to Knockout Common Shares and which have
not then been converted, so that all then outstanding
convertible notes of Knockout will be exchanged for new
convertible notes of Knockout ("NEW CONVERTIBLE NOTES") which
give the holder thereof the right to convert such notes to
United Series A Preferred Shares based on the conversion ratio
applicable to the Merger, so that each such convertible note
giving the holder the right to convert to one share of
Knockout Common Stock shall become a right to convert to one
fortieth of a United Series A Preferred Share; and the
conversion price for each United Series A Preferred Share
under such New Convertible Notes will become 40 times the
strike price of such convertible note; and the convertible
notes shall otherwise be subject to all of the same terms and
conditions as the outstanding convertible notes were subject
to prior to the Merger. For example, a holder of an
unexercised note convertible to one hundred shares of Knockout
at $1 per share will have the right as of the Closing to
convert such note to two and one half United Series A
Preferred Shares at $40 per share. Each such New Convertible
Note shall automatically become a convertible note to purchase
United Common Stock upon the close of the 75-day period
referred to in Section 10(e) hereof so that upon the close of
such period a New Convertible Note giving the holder the right
to convert to one United Series A Preferred Share shall become
a convertible note giving the holder the right to convert to
forty United Common Shares and the strike price for each New
Convertible Note to convert to one United Common Share shall
equal one fortieth of the strike price for each such New
Convertible Note immediately prior to the close of such 75-day
period.
(g) Filings and Applications. Cooperate fully with Knockout in
furnishing any necessary information required in connection
with the preparation, distribution and filing of any filings,
applications and notices which may be required by federal,
state and local governmental or regulatory agencies
AUTHORIZATION
4.2 United hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting United and its Subsidiaries to release any and
all information in their possession respecting United and its Subsidiaries to
Knockout. United shall promptly execute and deliver to Knockout any and all
consents to the release of information and specific authorizations which
Knockout reasonably requires to gain access to any and all such information.
SURVIVAL
4.3 The covenants set forth in this Article shall survive the Closing for the
benefit of Knockout.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
KNOCKOUT
REPRESENTATIONS AND WARRANTIES
5.1 Knockout represents and warrants in all material respects to United, with
the intent that it will rely thereon in entering into this Agreement and in
approving and completing the transactions contemplated hereby, that:
KNOCKOUT - CORPORATE STATUS AND CAPACITY
(a) Incorporation. Knockout is a corporation duly incorporated and
validly subsisting under the laws of the State of Delaware,
and is in good standing with the office of the Secretary of
State for the State of Delaware;
(b) Carrying on Business. Knockout carries on business primarily
in the State of Illinois and does not carry on any material
business activity in any other jurisdiction. Knockout has an
office in Northlake, IL and in no other locations. Knockout is
duly authorized to carry on such business in Illinois and is
in good standing with the office of the Secretary of State for
the State of Illinois. The nature of the Knockout Business
does not require Knockout to register or otherwise be
qualified to carry on business in any other jurisdiction;
(c) Corporate Capacity. Knockout has the corporate power, capacity
and authority to own Knockout Assets, to carry on the Business
of Knockout and to enter into and complete this Agreement;
KNOCKOUT - CAPITALIZATION
(d) Authorized Capital. The authorized capital of Knockout
consists of two hundred fifty million (250,000,000) Common
Shares consisting of: (v) two hundred forty eight million five
hundred thousand (248,500,000) voting Common Shares, $.01 par
value per share, (w) one million five hundred thousand
(1,500,000) non-voting Common Shares, $.01 par value per
share, (x) one million four hundred thirty thousand
(1,430,000) Series A Preferred Shares, (y) two hundred thirty
thousand (230,000) Series B Preferred Shares and (z)
twenty-five (25,000) Series C Preferred Shares;
(e) No Option. Except as set forth on Schedule "K," no person,
firm or corporation has any agreement, option, warrant,
convertible note, preemptive right or any other right capable
of becoming an agreement or option for the acquisition of
Knockout Shares held by the Knockout shareholder or for the
purchase, subscription or issuance of any of the unissued
shares in the capital of Knockout;
(f) No Restrictions. There are no restrictions on the transfer,
sale or other disposition of Knockout Shares contained in the
charter documents of Knockout or under any agreement;
KNOCKOUT - RECORDS AND FINANCIAL STATEMENTS
(g) Charter Documents. The charter documents of Knockout have not
been altered since its incorporation date, except as filed in
the record books of Knockout;
(h) Corporate Minute Books. The corporate minute books of Knockout
are complete and each of the minutes contained therein
accurately reflect the actions that were taken at a duly
called and held meeting or by consent without a meeting. All
actions by Knockout which required director or shareholder
approval are reflected on the corporate minute books of
Knockout. Knockout is not in violation or breach of, or in
default with respect to, any term of its Certificates of
Incorporation (or other charter documents) or by-laws.
(i) Knockout Financial Statements. The Knockout Financial
Statements present fairly, in all material respects, the
assets and liabilities (whether accrued, absolute, contingent
or otherwise) of Knockout, on consolidated basis, as of the
respective dates thereof, and the sales and earnings of the
Knockout Business during the periods covered thereby, in all
material respects, and have been prepared in substantial
accordance with generally accepted accounting principles
consistently applied;
(j) Knockout Accounts Payable and Liabilities. There are no
material liabilities, contingent or otherwise, of Knockout
which are not disclosed in Schedule "B" hereto or reflected in
the Knockout Financial Statements except those incurred in the
ordinary course of business since the date of the said
schedule and the Knockout Financial Statements, and Knockout
has not guaranteed or agreed to guarantee any debt, liability
or other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts
payable and liabilities of Knockout as of September 30, 2004
are described in Schedule "B" hereto;
(k) Knockout Accounts Receivable. All Knockout Accounts Receivable
result from bona fide business transactions and services
actually rendered without, to the knowledge and belief of
Knockout, any claim by the obligor for set-off or
counterclaim;
(l) Knockout Bank Accounts. All of the Knockout Bank Accounts,
their location, numbers and the authorized signatories thereto
are as set forth in Schedule "D" hereto;
(m) No Debt to Related Parties. Except as disclosed in Schedule
"E" hereto, Knockout is not, and on Closing will not be,
materially indebted to any Knockout Shareholder nor to any
family member thereof, nor to any affiliate, director or
officer of Knockout except accounts payable on account of bona
fide business transactions of Knockout incurred in normal
course of Knockout Business, none of which are more than 30
days in arrears;
(n) No Related Party Debt to Knockout. No director, officer or
affiliate of Knockout are now indebted to or under any
financial obligation to Knockout on any account whatsoever,
except for advances on account of travel and other expenses
not exceeding $5,000 in total;
(o) No Dividends. No dividends or other distributions on any
shares in the capital of Knockout have been made, declared or
authorized since the date of the Knockout Financial
Statements;
(p) No Payments. Except as disclosed in Schedule "E," no payments
of any kind are contemplated at the Closing of the Merger
other than the Merger consideration as described in Exhibit A
and no payments of any kind have been made or authorized since
the date of the Knockout Financial Statements to or on behalf
of officers, directors, shareholders or employees of Knockout
or under any management agreements with Knockout, except
payments made in the ordinary course of business and at the
regular rates of salary or other remuneration payable to them;
(q) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation
plans affecting Knockout;
(r) No Adverse Events. Since the date of the Knockout Financial
Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of Knockout, its
liabilities or the Knockout Assets or any damage, loss or
other change in circumstances materially affecting Knockout,
the Knockout Business or the Knockout Assets or Knockout's
right to carry on the Knockout Business, other than changes in
the ordinary course of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting Knockout, the Knockout Business or the
Knockout Assets,
(iii) except as disclosed in Schedule "E," there has not been any
material increase in the compensation payable or to become
payable by Knockout to any of Knockout's officers, employees
or agents or any bonus, payment or arrangement made to or with
any of them,
(iv) the Knockout Business has been and continues to be carried on
in the ordinary course,
(v) Knockout has not waived or surrendered any right of material
value,
(vi) Knockout has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $100,000 individually or
$300,000 in total have been authorized or made;
KNOCKOUT - INCOME TAX MATTERS
(s) Tax Returns. All tax returns and reports of Knockout required
by law to be filed have been filed and are true, complete and
correct in all material respects, and any taxes payable in
accordance with any return filed by Knockout or in accordance
with any notice of assessment or reassessment issued by any
taxing authority have been so paid; notwithstanding the
foregoing, Knockout has not filed, and has not been required
to file, any income tax returns with respect to its own
income;
(t) Current Taxes. Adequate provisions have been made for taxes
payable for the current period for which tax returns are not
yet required to be filed and there are no agreements, waivers,
or other arrangements providing for an extension of time with
respect to the filing of any tax return by, or payment of, any
tax, governmental charge or deficiency by Knockout. Knockout
is not aware of any contingent tax liabilities or any grounds
which would prompt a reassessment including aggressive
treatment of income and expenses in filing earlier tax
returns;
KNOCKOUT - APPLICABLE LAWS AND LEGAL MATTERS
(u) Licenses. Knockout holds all licenses and permits as may be
requisite for carrying on the Knockout Business in the manner
in which it has heretofore been carried on, which licenses and
permits have been maintained and continue to be in good
standing except where the failure to obtain or maintain such
licenses or permits would not have a material adverse effect
on the Knockout Business;
(v) Applicable Laws. Knockout has not been charged with or
received notice of breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which it is subject
or which applies to it the violation of which would have a
material adverse effect on the Knockout Business, and, to
Knockout's knowledge, Knockout is not in breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees
the contravention of which would result in a material adverse
impact on the Knockout Business;
(w) Pending or Threatened Litigation. There is no material
litigation or administrative or governmental proceeding
pending or threatened against or relating to Knockout, the
Knockout Business, or any of the Knockout Assets, nor does
Knockout have any knowledge of any deliberate act or omission
of Knockout that would form any material basis for any such
action or proceeding;
(x) No Bankruptcy. Knockout has not made any voluntary assignment
or proposal under applicable laws relating to insolvency and
bankruptcy and no bankruptcy petition has been filed or
presented against Knockout and no order has been made or a
resolution passed for the winding-up, dissolution or
liquidation of Knockout;
(y) Labor Matters. Knockout is not a party to any collective
agreement relating to the Knockout Business with any labor
union or other association of employees and no part of the
Knockout Business has been certified as a unit appropriate for
collective bargaining or, to the knowledge of Knockout, has
made any attempt in that regard and Knockout has no reason to
believe that any current employees will leave Knockout's
employ as a result of this Merger.
(z) Finder's Fees. Knockout is not a party to any agreement which
provides for the payment of finder's fees, brokerage fees,
commissions or other fees or amounts which are or may become
payable to any third party in connection with the execution
and delivery of this Agreement and the transactions
contemplated herein, except for an agreement providing for
fees payable to Xxxxxx Capital;
EXECUTION AND PERFORMANCE OF AGREEMENT
(aa) Authorization and Enforceability. The execution and delivery
of this Agreement, and the completion of the transactions
contemplated hereby, have been duly and validly authorized by
all necessary corporate action on the part of Knockout;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of Knockout or result
in any breach of, or default under, any loan
agreement, mortgage, deed of trust, or any other
agreement to which Knockout is a party,
(ii) give any person any right to terminate or cancel any
agreement including, without limitation, Knockout
Material Contracts, or any right or rights enjoyed by
Knockout,
(iii) result in any alteration of Knockout's obligations
under any agreement to which Knockout is a party
including, without limitation, the Knockout Material
Contracts,
(iv) result in the creation or imposition of any lien,
encumbrance or restriction of any nature whatsoever
in favor of a third party upon or against the
Knockout Assets,
(v) result in the imposition of any tax liability to
Knockout relating to Knockout Assets or the Knockout
Shares, or
(vi) violate any court order or decree to which either
Knockout is subject;
KNOCKOUT ASSETS - OWNERSHIP AND CONDITION
(cc) Business Assets. The Knockout Assets comprise all of the
property and assets of the Knockout Business, and no other
person, firm or corporation owns any assets used by Knockout
in operating the Knockout Business, whether under a lease,
rental agreement or other arrangement, other than as disclosed
in Schedules "F" or "I" hereto;
(dd) Title. Knockout is the legal and beneficial owner of the
Knockout Assets, free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances or other
claims whatsoever, save and except as disclosed in Schedules
"F" or "I" hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the
purchase of any of the Knockout Assets;
(ff) Knockout Insurance Policies. Knockout maintains the public
liability insurance and insurance against loss or damage to
the Knockout Assets and the Knockout Business as described in
Schedule "G" hereto;
(gg) Knockout Material Contracts. The Knockout Material Contracts
listed in Schedule "I" constitute all of the material
contracts of Knockout;
(hh) No Default. There has not been any default in any material
obligation of Knockout or any other party to be performed
under any of Knockout Material Contracts, each of which is in
good standing and in full force and effect and unamended
(except as disclosed in Schedule "I"), and Knockout is not
aware of any default in the obligations of any other party to
any of the Knockout Material Contracts;
(ii) No Compensation on Termination. Except as disclosed in
Schedule "E," there are no agreements, commitments or
understandings relating to severance pay or separation
allowances on termination of employment of any employee of
Knockout. Knockout is not obliged to pay benefits or share
profits with any employee after termination of employment
except as required by law;
KNOCKOUT ASSETS - KNOCKOUT EQUIPMENT
(jj) Knockout Equipment. The Knockout Equipment has been maintained
in a manner consistent with that of a reasonably prudent owner
and such equipment is in good working condition;
KNOCKOUT ASSETS - KNOCKOUT GOODWILL AND OTHER ASSETS
(kk) Knockout Goodwill. Knockout carries on the Knockout Business
only under the name "Knockout Holdings, Inc." and variations
thereof and under no other business or trade names. Knockout
does not have any knowledge of any infringement by Knockout of
any patent, trademark, copyright or trade secret;
THE BUSINESS OF KNOCKOUT
(ll) Maintenance of Business. Since the date of the Knockout
Financial Statements, the Knockout Business has been carried
on in the ordinary course and Knockout has not entered into
any material agreement or commitment except in the ordinary
course; and
(mm) Subsidiaries. Knockout does not own any Subsidiaries and does
not otherwise own, directly or indirectly, any shares or
interest in any other corporation, partnership, joint venture
or firm.
NON-MERGER AND SURVIVAL
5.2 The representations and warranties of Knockout contained herein will be true
at and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by United, the representations and
warranties of Knockout shall not survive the Closing.
ARTICLE 6
COVENANTS OF KNOCKOUT
COVENANTS
6.1 Knockout covenants and agrees with United that it will:
(a) Conduct of Business. Until the Closing, conduct the Knockout
Business diligently and in the ordinary course consistent with
the manner in which the Knockout Business generally has been
operated up to the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best
efforts to preserve the Knockout Business and the Knockout
Assets and, without limitation, preserve for United Knockout's
relationships with their suppliers, customers and others
having business relations with them;
(c) Access. Until the Closing, give United and its representatives
full access to all of the properties, books, contracts,
commitments and records of Knockout relating to Knockout, the
Knockout Business and the Knockout Assets, and furnish to
United and its representatives all such information as they
may reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Merger and to preserve and
maintain the Knockout Assets, including the Knockout Material
Contracts, notwithstanding the change in control of Knockout
arising from the Merger;
(e) Conversion of Knockout Preferred Shares to Knockout Common
Shares. Immediately prior to the Merger, cause each Knockout
Preferred Share to be automatically converted into Knockout
Common Shares as follows: each Knockout Series A Preferred
Share shall be converted into one Knockout Common Shares; each
Knockout Series B Preferred Share shall be converted into one
Knockout Common Shares and each Knockout Series C Preferred
Share shall be converted into one hundred Knockout Common
Shares.
(f) Options, Warrants and Convertible Notes. Immediately prior to
the Merger, cause all outstanding options and warrants to
purchase Knockout Shares which are not then currently
exercisable to become currently exercisable in full up to the
time immediately prior to the Closing, at which time such
options and warrants, to the extent not exercised, will become
options and warrants to purchase United Shares pursuant to the
provisions of Section 4.1(e) hereof. Immediately prior to the
Merger, cause all outstanding convertible notes convertible
into Knockout Shares which are not then currently convertible
to become currently convertible in full up to the time
immediately prior to the Closing, at which time such
convertible notes, to the extent not converted, will become
convertible to United Shares pursuant to the provisions of
Section 4.1(f) hereof. Prior to the Closing, Knockout will not
issue any Shares or any options, rights, warrants or other
derivative securities for the purchase of the Knockout Common
Shares or Preferred Shares, other than the Series C Preferred
Shares placement as contemplated by this Agreement.
(g) Audited Financial Statements. Immediately upon execution of
this Agreement, cause to be prepared audited financial
statements of Knockout in compliance with the requirements of
Regulation SB as promulgated by the SEC, such audited
financial statements to be provided no later than 75 days
after the Closing Date; and
(h) Name Change. Forthwith after the Closing, take such steps as
are required to change the name of United to "Knockout
Holdings, Inc." or such similar name as may be acceptable to
the board of directors of United.
(i) Filings and Applications. Cooperate fully with United in
furnishing any necessary information required in connection
with the preparation, distribution and filing of any filings,
applications and notices which may be required by federal,
state and local governmental or regulatory agencies.
AUTHORIZATION
6.2 Knockout hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Knockout to release any and all information in
their possession respecting Knockout to United. Knockout shall promptly execute
and deliver to United any and all consents to the release of information and
specific authorizations which United reasonably require to gain access to any
and all such information.
SURVIVAL
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of United.
ARTICLE 7
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT IN FAVOR OF UNITED
7.1 United's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to United hereunder will have been so executed
and delivered;
(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by Knockout at or prior to
the Closing will have been complied with or performed;
(c) United shall have completed its review and inspection of the
books and records of Knockout and shall be satisfied with same
in all material respects;
(d) title to the Knockout Assets will be free and clear of all
mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever, save and except as
disclosed herein;
(e) the Certificate of Merger shall be executed by Knockout in
form acceptable for filing with the Delaware Secretary of
State;
(f) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position
or condition of Knockout, its liabilities or the
Knockout Assets or any damage, loss or other change
in circumstances materially and adversely affecting
the Knockout Business or the Knockout Assets or
Knockout's right to carry on the Knockout Business,
other than changes in the ordinary course of
business, none of which has been materially adverse,
or
(ii) any damage, destruction, loss or other event,
including changes to any laws or statutes applicable
to Knockout or the Knockout Business (whether or not
covered by insurance) materially and adversely
affecting Knockout, the Knockout Business or the
Knockout Assets;
(g) immediately prior to the Merger, each Knockout Preferred Share
shall be automatically converted into Knockout Common Shares
pursuant to the respective Certificates of Designation
governing such Preferred Shares;
(h) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any;
(i) the closing of a private placement by Knockout of not less
than twenty-five thousand (25,000) Series C Preferred Shares
at a price of one hundred dollars ($100) per share;
(j) all information provided by Knockout to United shall be true,
complete and correct in all material respects and without
omission of any material fact;
(k) all consents and other approvals required or reasonably deemed
advisable by United's legal counsel for the transaction will
have been obtained; and
(l) Knockout shall provide United with reasonable assurances that
immediately following the Closing of the Merger, Knockout
management will be able to close a private placement by United
of up to one hundred twenty-seven thousand nine hundred fifty
(127,950) Series B Preferred Shares at a price of forty six
dollars and eighty-nine point three three cents ($46.8933)_
per share.
WAIVER BY UNITED
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of United and any such condition may be waived in whole or
in part by United at or prior to Closing by delivering to Knockout a written
waiver to that effect signed by United. In the event that the conditions
precedent set out in the preceding section are not satisfied on or before the
Closing, United shall be released from all obligations under this Agreement.
CONDITIONS PRECEDENT IN FAVOR OF KNOCKOUT
7.3 The obligation of Knockout to carry out the transactions contemplated hereby
is subject to the fulfillment of each of the following conditions precedent on
or before the Closing:
(a) all documents or copies of documents required to be executed
and delivered to Knockout hereunder will have been so executed
and delivered;
(b) all of the terms, covenants and conditions of this Agreement
to be complied with or performed by United at or prior to the
Closing will have been complied with or performed;
(c) Knockout shall have completed its review and inspection of the
books and records of United and its Subsidiaries and shall be
satisfied with same in all material respects;
(d) United will have delivered the Acquisition Shares to be issued
pursuant to the terms of the Merger to Knockout at the Closing
and the Acquisition Shares will be registered on the books of
United in the names of the respective holders of Knockout
Shares at the Effective Time;
(e) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever;
(f) the Certificate of Merger shall be executed by Merger Sub in
form acceptable for filing with the Delaware Secretary of
State;
(g) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position
or condition of United, its Subsidiaries, their
liabilities or the United Assets or any damage, loss
or other change in circumstances materially and
adversely affecting United, the United Business or
the United Assets or United' right to carry on the
United Business, other than changes in the ordinary
course of business, none of which has been materially
adverse, or
(ii) any damage, destruction, loss or other event,
including changes to any laws or statutes applicable
to United or the United Business (whether or not
covered by insurance) materially and adversely
affecting United, its Subsidiaries, the United
Business or the United Assets;
(h) the transactions contemplated hereby shall have been approved
by all other regulatory authorities having jurisdiction over
the subject matter hereof, if any;
(i) the option to purchase 250,000 United Common Shares at $.05
per share shall have been exercised;
(j) the closing of a private placement by Knockout of not less
than twenty-five thousand (25,000) Series C Preferred Shares
at a price of one hundred dollars ($100) per share;
(k) Knockout shall be reasonably satisfied that immediately
following the Closing of the Merger, Knockout management will
be able to close a private placement by United of not less
than one hundred twenty-seven thousand nine hundred fifty
(127,950) Series B Preferred Shares at a price of forty six
dollars and eighty-nine point three three cents ($46.8933)_
per share.
(l) all information provided by United to Knockout shall be true,
complete and correct in all material respects and without
omission of any material fact;
(m) all consents and other approvals required or reasonably deemed
advisable by legal counsel of Knockout for the transaction
will have been obtained; and
(n) the undated resignations of all officers and directors of
United shall have been tendered; and
(o) the satisfaction of all liabilities of United on or prior to
the Closing Date.
WAIVER BY KNOCKOUT
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Knockout and the Knockout Shareholder and any such
condition may be waived in whole or in part by Knockout or the Knockout
Shareholder at or prior to the Closing by delivering to United a written waiver
to that effect signed by Knockout and the Knockout Shareholder. In the event
that the conditions precedent set out in the preceding section are not satisfied
on or before the Closing Knockout and the Knockout Shareholder shall be released
from all obligations under this Agreement.
NATURE OF CONDITIONS PRECEDENT
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
TERMINATION
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before January 22, 2005, this Agreement will be at an end and
will have no further force or effect, unless otherwise agreed upon by the
parties in writing.
CONFIDENTIALITY
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from Knockout and United
and the contents thereof confidential and not utilize nor reveal or release
same; provided, however, that United will be required to issue news releases
regarding the execution and consummation of this Agreement and file a Current
Report on Form 8-K with the Securities and Exchange Commission respecting the
proposed Merger contemplated hereby together with such other documents as are
required to maintain the currency of United' filings with the Securities and
Exchange Commission. Subject to applicable law, any public announcement relating
to the transactions contemplated by this Agreement will be mutually agreed upon
and jointly made by Knockout and United. United agrees that it shall not issue a
press release, public statement or any other communication about the Merger,
this Agreement or anything using the name of Xxxxxx Xxxxxxx without the approval
of Knockout.
ARTICLE 8
RISK
MATERIAL CHANGE IN THE BUSINESS OF KNOCKOUT
8.1 If any material loss or damage to the Knockout Business occurs prior to
Closing and such loss or damage, in United's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, United shall, within
two (2) days following any such loss or damage, by notice in writing to
Knockout, at its option, either:
(a) terminate this Agreement, in which case no party will be under
any further obligation to any other party; or
(b) elect to complete the Merger and the other transactions
contemplated hereby, in which case the proceeds and the rights
to receive the proceeds of all insurance covering such loss or
damage will, as a condition precedent to United's obligations
to carry out the transactions contemplated hereby, be vested
in Knockout or otherwise adequately secured to the
satisfaction of United on or before the Closing Date.
MATERIAL CHANGE IN THE UNITED BUSINESS
8.2 If any material loss or damage to the United Business occurs prior to
Closing and such loss or damage, in Knockout's reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, Knockout shall,
within two (2) days following any such loss or damage, by notice in writing to
United, at its option, either:
(a) terminate this Agreement, in which case no party will be under
any further obligation to any other party; or
(b) elect to complete the Merger and the other transactions
contemplated hereby, in which case the proceeds and the rights
to receive the proceeds of all insurance covering such loss or
damage will, as a condition precedent to Knockout's
obligations to carry out the transactions contemplated hereby,
be vested in United or otherwise adequately secured to the
satisfaction of Knockout on or before the Closing Date.
ARTICLE 9
CLOSING
CLOSING
9.1 The Merger and the other transactions contemplated by this Agreement will be
closed at the Place of Closing in accordance with the closing procedure set out
in this Article.
DOCUMENTS TO BE DELIVERED BY KNOCKOUT
9.2 On or before the Closing, Knockout will deliver or cause to be delivered to
United:
(a) the original or certified copies of the charter documents of
Knockout;
(b) all reasonable consents or approvals required to be obtained
by Knockout for the purposes of completing the Merger and
preserving and maintaining the interests of Knockout under any
and all Knockout Material Contracts and in relation to
Knockout Assets;
(c) certified copies of such resolutions of the board of directors
and shareholders of Knockout as are required to be passed to
authorize the execution, delivery and implementation of this
Agreement;
(d) an acknowledgement from Knockout of the satisfaction of the
conditions precedent set forth in section 7.1 hereof;
(e) Certificate of Designation for Series C Preferred Stock of
Knockout filed with the Secretary of State of Delaware;
(f) documentation evidencing the closing of a private placement by
Knockout of not less than twenty-five thousand (25,000) Series
C Preferred Shares at a price of one hundred dollars ($100)
per share;
(g) amendment to Knockout Certificate of Incorporation evidencing
4.6 for 1 split of Common Stock of Knockout filed with the
Secretary of State of Delaware;
(h) consents of holders of Series A and B Preferred to conversion
of such shares to Common Shares of Knockout;
(i) the Certificate of Merger, duly executed by Knockout; and
(j) such other documents as United may reasonably require to give
effect to the terms and intention of this Agreement.
DOCUMENTS TO BE DELIVERED BY UNITED
9.3 On or before the Closing, United shall deliver or cause to be delivered to
Knockout:
(a) share certificates representing the Acquisition Shares duly
registered in the names of the holders of shares of Knockout
Common Stock;
(b) certified copies of such resolutions of the directors of
United as are required to be passed to authorize the
execution, delivery and implementation of this Agreement;
(c) certified copies of such resolutions of the board of directors
and shareholders of Merger Sub as are required to be passed to
authorize the execution, delivery and implementation of this
Agreement
(d) an undated resolution of the directors of United appointing
the nominees of Knockout as officers of United;
(e) undated resignations of all officers of United;
(f) an undated resolution of the directors of United appointing
the nominees of the Knockout shareholders listed below in
Article 10 to the board of directors of United;
(g) undated resignations of all directors of United;
(h) an acknowledgement from United of the satisfaction of the
conditions precedent set forth in section 7.3 hereof;
(i) the Certificate of Merger, duly executed by the Merger Sub;
(j) Certificates of Designation of Series A and Series B Preferred
Stock of United filed with the Secretary of State of Delaware;
and
(k) such other documents as Knockout may reasonably require to
give effect to the terms and intention of this Agreement.
ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, United and the Knockout agree to use all
their best efforts to:
(a) file the Certificate of Merger with Secretary of State of the
State of Delaware;
(b) issue a news release reporting the Closing;
(c) file a preliminary Schedule 14C Information Statement with
SEC; mail definitive copies of such Information Statement to
United shareholders; file definitive copies of such
Information Statement with the SEC and have a majority of
United shareholders approve (i) an increase in the authorized
Common Shares of United sufficient to convert all United
Preferred Shares into United Common Shares pursuant to the
applicable Certificates of Designation for such Preferred
Shares and (ii) a one for four reverse stock split of United
Common Shares so that each four United Common Share
outstanding after the conversion of all United Preferred
Shares to Common Shares will become one United Common Share,
all within the time frames prescribed by applicable SEC rules.
(d) date the resolutions having all but one director of United
resign and the resolutions appointing one Knockout nominee to
United's Board of Directors; file Form 14F 1 with SEC
disclosing the proposed change of majority of the Board and
mail Form 14F 1 to United's shareholders and, 10 days after
such filing, date the resolutions appointing to the board of
directors of United the nominees of Knockout, and forthwith
date and accept the resignation of the remaining nominees of
United as directors of United;
(e) file a Form 8-K with the Securities and Exchange Commission
disclosing the terms of this Agreement and, not more than 75
days following the Closing Date, to file an amended Form 8-K
which includes audited financial statements of Knockout as
well as pro forma financial information of Knockout and United
as required by Regulation SB as promulgated by the SEC;
(f) file reports on Forms 13D and 3 with the SEC disclosing the
acquisition of the Acquisition Shares as may be required;
(g) take such steps are required to change the name of United to
"Knockout Holdings, Inc." or such similar name as may be
acceptable to the board of directors of United; and
(h) file Form D with SEC and the requisite blue sky notices for
Acquisition Shares.
ARTICLE 11
GENERAL PROVISIONS
ARBITRATION
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York, New York.
NOTICE
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
ADDRESSES FOR SERVICE
11.3 The address for service of notice of each of the parties hereto is as
follows:
(a) United or Merger Sub:
United Network Marketing Services, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
(b) Knockout:
The Knockout Group, Inc.
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Xxxxxxx Xxxxxxxxx, Esq.
Sichenzia Xxxx Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
CHANGE OF ADDRESS
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
FURTHER ASSURANCES
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
TIME OF THE ESSENCE
11.6 Time is expressly declared to be the essence of this Agreement.
ENTIRE AGREEMENT
11.7 The provisions contained herein constitute the entire agreement among
Knockout, Merger Sub and United respecting the subject matter hereof and
supersede all previous communications, representations and agreements, whether
verbal or written, among Knockout, Merger Sub and United with respect to the
subject matter hereof.
ENUREMENT
11.8 This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
ASSIGNMENT
11.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
COUNTERPARTS
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
APPLICABLE LAW
11.11 This Agreement is subject to the laws of the State of New York.
EXPENSES
11.12 Knockout will bear its own expenses and costs of the transactions
contemplated by this Agreement, including, but not limited to, the fees of
attorneys and financial advisors, and the first $20,000 of United's expenses,
and the shareholders of United will pay the expenses and costs of United over
$20,000 pursuant to the Agreement contained in Schedule "Y" hereto. Knockout
will pay such United expenses within five business days of receipt of invoice
for payment.
BREAK-UP FEE
11.13 During a period from the date hereof until January 22, 2005, each party
hereto shall not solicit any other merger and/or acquisition offer and/or change
of control arrangement without the prior written consent of the other party. In
the event that either party terminates this Agreement through accepting another
unsolicited proposal for a merger and/or acquisition offer and/or change of
control, it shall pay the other party a five hundred thousand dollar ($500,000)
break-up fee upon closing of the other such transaction.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
day and year first above written.
UNITED NETWORK MARKETING SERVICES, INC.
By: /s/ Xxxxxxx Xxxx
-------------------------------------
Xxxxxxx Xxxx
President
KNOCKOUT ACQUISITION CORP.
By: Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx
President
THE KNOCKOUT GROUP, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx
Chief Financial Officer and Treasurer
