Exhibit 10.1 Asset Purchase Agreement
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement ("Agreement") is made on February 11, 2003,
by and among Sharp Holding Corporation, a Delaware corporation (the "Buyer"),
Xxxx Xxxx Media, Inc., a Delaware corporation (the "Seller"), and individually
by certain officers, directors and shareholders of the Seller, who are: Xxxxxxx
Xxxx and Xxx Xxxxxx (each an officer, director and/or shareholder of the Seller
(a "Stockholder" or collectively, the "Stockholders").
R E C I T A L S:
WHEREAS, the Seller is the owner of all of the tangible and intangible
assets associated or used in connection with HyperCD (tm) and Encrippling (tm)
digital media technology, which is a methodology of digital rights security and
manufacturing, including the intellectual property, source code (hard copies and
digital copies), patents, patents pending, patents applied for, patent rights,
trade secrets, trademarks, service marks, urls (and url content), copyrights,
manuals, instructions, training material, marketing material and archive digital
copies and hard copies of all of the above, related to Encrippling technology
and HyperCD (tm), all of whose descriptions and all of whose Patent and
Trademark Office and Copyright Office descriptions and serial numbers are listed
on Exhibit "A" attached hereto which is incorporated herein by reference (all of
the above, collectively, the "Technology Assets").
WHEREAS, the Seller desires to sell, assign and transfer the Technology
Assets and certain other assets to the Buyer (or the Buyer's assignee) as
described below.
WHEREAS, the Buyer (or the Buyer's assignee) desires to acquire the
Technology Assets and certain other assets of Seller, upon and subject to the
terms and conditions of this Agreement.
WHEREAS, the Buyer desires to receive an indemnification from each of the
Stockholders.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein and in reliance upon the representations and
warranties contained herein, the parties hereto covenant and agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS AND PROPERTY
1.1 Assets of Seller to be Acquired by Buyer (the "Purchased Assets").
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On the Closing Date (as defined in Article IV hereof), and subject to the terms
and conditions set forth in this Agreement, Buyer agrees to purchase, accept and
acquire from Seller, and Seller agrees to sell, transfer, assign, convey and
deliver to Buyer the following Purchased Assets:
1.1.1 The Technology Assets as set forth in Exhibit "A."
1.1.2 Any Inventory, fixtures, furniture and equipment used in
connection with the Technology Assets.
1.1.3 Any and all copies of financial, administrative and
operational records and books in Seller's possession
relating to or compiled in connection with its business and
operation of the Technology Assets (the "Records").
1.1.4 To the extent assignable, all marketing, distribution and
sales contracts and other service contracts (which contracts
and services the Buyer agrees to perform in accordance with
their terms) of the Seller.
1.2 Intent of the Parties. Although the Exhibits to this Agreement are
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intended to be complete, in the event such Exhibits fail to contain the
description of any asset belonging to Seller which is used in connection with
the Technology Assets or are otherwise necessary for the ownership of the
Technology Assets, such assets shall nonetheless be deemed transferred to Buyer
(or its assignee) at the Closing.
1.3 Bulk Sales Taxes. At or prior to the Closing, the Buyer shall pay
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all bulk sales taxes related to this Agreement (which responsibility shall
survive the closing of title).
1.4 Allocation of Purchase Price. The Purchase Price of the Purchased
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Assets, including the Technology Assets shall be allocated in accordance with a
schedule which shall be agreed upon and signed by all of the parties hereto at
or prior to the Closing Date.
ARTICLE II
EXCLUDED LIABILITIES
2.1 Except as otherwise provided for in this Agreement Buyer shall have
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no obligation and shall not assume or agree to pay, perform or discharge, nor
shall Buyer be directly or indirectly responsible or obligated for, any debts,
obligations, contracts, fines, or penalties or liabilities of Seller, wherever
or however incurred, except for liabilities subsequent to the date of Closing
which are expressly assumed, and the assumption of refund liabilities and credit
card charge backs. All personal property taxes on the Purchased Assets will be
paid in full by the Seller for all years prior to the Closing and the taxes for
year of Closing will be pro rated to the Closing Date. The Buyer shall not
assume or be responsible for any of the liabilities or obligations of Seller or
with respect to the business prior to the Closing Date, including any fines or
penalties levied against Seller by any third party, and further including,
without limitation, the following:
(i) Nonenumerated Liabilities. Any liability or obligation of Seller of
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any kind, known or unknown, contingent or otherwise, not resulting
from any covenant, agreement or indemnity of Buyer in this Agreement
or the other agreements and instruments to be executed and delivered
by Buyer in connection with Agreement;
(ii) Taxes. Any liability or obligation of Seller for federal, state, or
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local income, franchise, property, sales or use or recapture taxes,
assessments, and penalties, whether arising out of the transactions
contemplated by this agreement or otherwise;
(iii) Violations of Law. Any liability or obligation resulting from
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violations of any applicable laws or regulations by Seller prior to
the Closing Date or infringement of third party rights or interests
prior to the Closing Date;
(iv) Employee Liabilities. Any employee liabilities relating to present and
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past employees of the business with respect to plans, programs,
policies, commitments, and other benefit entitlements established or
existing on or prior to the Closing (whether or not such liabilities
are accrued or payable at the Closing, and whether or not such
liabilities are contingent in nature);
(v) Litigation. Any litigation pending or threatened against Seller, the
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business or the Purchased Assets; and
(vi) Nontransferable Contracts and Agreements. Any liability or obligation
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associated with any contract, agreement, instrument, license or other
right or obligation of Seller which is an asset of the business but
which requires the consent of some third party to be assigned and/or
transferred and with respect to which such consent of such third party
has not been obtained.
2.2 The above notwithstanding, the Buyer agrees to assume the Seller's
liabilities as set forth in Exhibit 2.2 in an amount not to exceed $140,000.00,
which represents all the existing liabilities of Seller. ALL of the Seller's
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liabilities are set forth in Exhibit 2.2.
ARTICLE III
PURCHASE PRICE PAID TO THE SELLER;
PAYMENT TO THE STOCKHOLDERS
Purchase Price Paid to the Seller. As consideration for the Purchased
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Assets, the Buyer shall deliver to Seller 3,000,000 unregistered shares of Sharp
Holding Corporation common stock, par value $.001 (the "Sharp Stock") and a
five-year warrant to purchase one million shares of Sharp Holding Corporation
common stock, par value $.001 for an exercise price of one cent per share
($.001). The warrant shall contain a cashless exercise privilege.
ARTICLE IV
THE CLOSING
4.1 Date and Time. The closing of the transactions contemplated by
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this Agreement (the "Closing") shall take place at the offices of Xxxxxxx, Xxxxx
& Xxxxxxxxx, 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 on or before
February 28, 2003, or at such other time and on such date as the parties hereto
shall mutually agree in writing. For purposes of this Agreement, the date on
which the Closing actually occurs is the "Closing Date". In the event (i) the
transactions contemplated by this Agreement are not consummated on or before
February 28, 2003, 2003 (unless extended in writing) or (ii) the Shareholders
meeting referred to in Section 5.2 and Section 8.2 (d) is not held and the
Agreement adopted and approved by February 11, 2003, then this Agreement shall
terminate and be of no force or effect.
4.2 Related Transactions. In addition to the consummation of the
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acquisition of the Purchased Assets, the following actions shall take place
contemporaneously at the Closing:
(i) The Buyer shall engage, pursuant to separate Employment Agreements,
the following persons: Xxxxxxx Xxxx and Xxx Xxxxxx.
(ii) At or prior to the Closing, the Landlord (the "Landlord") of 000
Xxxxxx Xxxxxx, Xxx Xxxx, XX, shall release the Seller from its
existing lease at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("Release").
Xxxx Xxxxxxxxxxx is an authorized agent of the Landlord to effect the
transactions contemplated by this Section 4.2(ii).
(iii) At or prior to the Closing, the Landlord and the Buyer shall enter
into good faith negotiations to enter into a new lease with the Buyer
for the office space at 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, which
lease shall be mutually acceptable to the Landlord and the Buyer.
4.3 Closing Documents of Seller. At the Closing, Seller (and the
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Stockholders and the Landlord, as the case may be) shall deliver or cause to be
delivered to Buyer the following:
(a) all instruments of assignment and bills of sale necessary to transfer
to Buyer good and marketable title to the Purchased Assets free and
clear of all liens, charges or encumbrances;
(b) all documents necessary to transfer domain names;
(c) officers certificate required by Section 8.2(c);
(d) resolutions of the Board of Directors as required by Section 8.2(d);
(e) consent of two thirds of the Stockholders to the transaction; and
(f) source code (two digital copies and two hard copies) for all
Technology Assets.
4.4 Closing Documents of Buyer. At the Closing, Buyer shall deliver or
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cause to be delivered to Seller, the following:
(a) officers certificate required by Section 8.1(c);
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(b) resolutions of the Board of Directors as required by Section 8.1(d);
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(c) Stock Certificates evidencing the 3,000,000 shares of Sharp's Stock to
the Seller as contemplated by this Agreement, in form and substance
satisfactory to counsel for the Seller; and Warrant agreement
evidencing the right to purchase 1,000,000 shares of Sharp's common
stock at a purchase price of $.001 per share.
(d) Document of the Buyer's assignment of this Agreement, if applicable;
and
(e) All appropriate assumption documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE CONTROL STOCKHOLDERS
The Seller and Xxxxxxx Xxxx and Xxx Xxxxxx (collectively, the "Control or
Controlling Stockholders"), jointly and severally represent and warrant to Buyer
(and its assignee) as follows:
5.1 Organization and Capitalization of Seller. Seller is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and to
perform its obligations under this Agreement, is duly qualified or licensed to
do business and is in good standing as a foreign corporation in all states or
jurisdictions which the conduct of such business requires such qualification and
which the failure to be so qualified or licensed would have a material adverse
effect on the business of the Seller. All of such issued and outstanding
shares of common stock of Seller are duly authorized, validly issued, fully paid
and non-assessable.
5.2 Authorization of Agreement. Seller has all requisite corporate
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power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Seller of this Agreement
and the performance by Seller of its obligations hereunder (a) have been duly
and validly authorized by all requisite corporate action by the Board of
Directors of the Seller as of the date hereof and will be duly and validly
authorized, adopted and approved by the affirmative vote of not less than
two-thirds of the Stockholders of the Seller at a duly called Stockholder
meeting of the Seller, all as required by Delaware law prior to the Closing
Date, and (b) will not violate its charter or bylaws or any order, writ,
injunction, decree, statute, rule or regulations applicable to it or any of its
properties or assets, or be in conflict with, result in a breach of or
constitute a default under any note, bond, indenture, mortgage, lease, license,
franchise agreement or other agreement, instrument or obligation, or result in
the creation or imposition of any lien, charge or encumbrance of any kind or
nature whatsoever upon any of the properties or assets of Seller. This
Agreement and each and every agreement, document, exhibit and instrument to be
executed, delivered and performed by the Seller in connection herewith
constitute the valid and legally binding obligations of the Seller enforceable
against it in accordance with their respective terms, except as enforceability
may be limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
5.3 Consents. No consent of, approval by, order or authorization of,
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or registration, declaration or filing by Seller with any court or any
governmental or regulatory agency or authority having jurisdiction over Seller
or any of its property or assets or any other person is required on the part of
Seller in connection with the consummation of the transactions contemplated by
this Agreement, excluding any registration, declaration or filing the failure to
effect which would not have a material adverse effect on the financial condition
of Seller or the operation of its business after the Closing.
5.4 Title to Purchased Assets. The Seller has and will transfer to
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Buyer at Closing good and marketable title to all of the Purchased Assets, which
are being sold to Buyer under this Agreement, free and clear of all liens,
claims, charges, encumbrances, restrictions or security interests. Seller is
not a party to any contract or obligation whereby there has been granted to
anyone an absolute or
contingent right to purchase, obtain or acquire any rights in the Purchased
Assets.
5.5 Material Agreements; Action. Exhibit 5.5, is an accurate and
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complete list of all contracts, agreements, commitments, understandings or
proposed transactions, whether written or oral, to which Seller any of its
subsidiaries is a party or by which it is bound that involve or relate to: (i)
the ownership of the Purchased Assets; or (ii) covenants of Seller or any of its
subsidiaries not to compete in any line of business or with any person in any
geographical area or covenants of any other person not to compete with Seller or
any of its subsidiaries in any line of business or in any geographical area.
There have been made available to Buyer and its representatives true and
complete copies of all such agreements. To Seller's knowledge all such
agreements are in full force and effect and are the legal, valid and binding
obligation of Seller or its subsidiaries, enforceable against them in accordance
with their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity). None of
Seller or any of its subsidiaries is in default under any such agreements nor to
the best of its knowledge, is any other party to any such agreements in default
thereunder in any respect.
5.6 Contracts and Leases. Except for a lease of a Xerox photocopier
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and a Dell server, the Seller (i) has no leases of any personal property
relating to the Purchased Assets, whether as lessor or lessee; (ii) has no
contractual or other obligations relating to the Purchased Assets, whether
written or oral; and (iii) has not given any power of attorney to any person or
organization for any purpose relating to the Purchased Assets. Exhibit 5.6 sets
forth a complete list, including any amendment of each domain name, lease or
contract which are part of the Purchased Assets and Intellectual Property to be
acquired by Buyer. Seller has furnished Buyer a copy of each contract, lease or
other document relating to the Purchased Assets and Intellectual Property to
which they are subject or are a party or a beneficiary, which is to be assumed
or acquired by Buyer. To Seller's knowledge, such contracts, leases or other
documents are valid and in full force and effect according to their terms and
each constitutes a legal, valid and binding obligation of Seller and the other
respective parties thereto and is enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and the Seller has
no knowledge of any default or breach under such contract, lease or other
document or of any pending or threatened claims under any such contract, lease
or other document. Neither the signing or execution of this Agreement, nor the
consummation of all or any of the transactions contemplated under this
Agreement, will constitute a breach or default under any such contract, lease or
other document.
5.7 Litigation. Except as disclosed in Exhibit 5.7, there is no suit,
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claim, arbitration, investigation, action or proceeding entered against, now
pending or, to the Seller's knowledge, threatened against the Seller, the
Purchased Assets or the Intellectual Property, before any court, arbitration,
administrative or regulatory body or any governmental agency which may result in
any judgment, order, award, decree, liability or other determination which will
or could reasonably be expected to have any effect upon the Purchased Assets or
the Intellectual Property, nor is there any basis known to Seller for any such
action. No litigation is pending, or, to Seller's knowledge, threatened,
against Seller, or its assets or properties which seeks to restrain or enjoin
the execution and delivery of this Agreement or any of the documents referred to
herein or the consummation of any of the transactions contemplated hereby or
thereby. The Seller is not subject to any judicial injunction or mandate or any
quasi-judicial or administrative order or restriction directed to or against it
or which would affect the Purchased Assets.
5.8 Taxes. Seller has timely and accurately filed all federal, state,
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foreign and local tax returns and reports required to be filed prior to such
dates and have timely paid all taxes shown on such returns as owed for the
periods of such returns, including all sales taxes and withholding or other
payroll related taxes shown on such returns. No assessments or notices of
deficiency or other communications have been received by Seller with respect to
any tax return which has not been paid, discharged or fully reserved against and
no amendments or applications for refund have been filed or are planned with
respect to any such return. There is no dispute or claim concerning any tax
liability of Seller either claimed or raised by any authority in writing as to
which Seller or its directors or officers has knowledge. There are no
agreements between Seller and any taxing authority, including, without
limitation, the Internal Revenue Service, waiving or extending any statute of
limitations with respect to any tax return.
5.9 Financial Statements and Information. The financial statements and
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information previously given by the Seller to the Buyer are true and correct in
all material respects.
5.10 Conduct of Business.
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(a) Ordinary Course of Business. Since January 1, 2002, the
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Seller has operated its business in the ordinary course consistent with past
practices.
(b) No Material Adverse Change. Since January 1, 2002, there has
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been no material adverse change in the business or the assets of the Seller
(c) Absence of Particular Events. Since January 1, 2002, the
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Seller has not: (i) suffered any damage or destruction adversely affecting the
business or involving the assets in an amount in excess of Five Thousand Dollars
($5,000.00); (ii) increased the compensation payable or to become payable to
employees of Seller; (iii) incurred any liability or obligation other than in
the ordinary course consistent with past practice; (iv) made any change in any
method, practice, or principle of accounting involving the business or assets;
(v) paid, loaned, or advanced any material monetary amount or other asset to, or
sold, transferred, or leased any asset to, any employee involved in the business
except for normal compensation involving salary and benefits; or (vi) agreed to
take any action described in this Section 5.10(c).
(d) Absence of Joint Ventures, etc. Seller is not a party to any
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joint venture or other similar agreement or arrangement that involves any
sharing of profits of its business.
5.11 Compliance with Laws. Seller is and at all times prior to the
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date hereof has been, in compliance with all statutes, orders, rules, and
regulations applicable to it or to the ownership of its assets or the operation
of its business, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of Seller, and Seller has no basis to expect to receive,
and have not received, any order or notice of any such violation or claim of
violation of any such statute, order, rule, ordinance or regulation.
5.12 Intellectual Property. Seller owns, has good and marketable title
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to, and has full right to use and transfer to Buyer, all of the Purchased Assets
free and clear of any liens, mortgages, judgments, or other encumbrances of any
kind, and no rights or licenses of any kind respecting the Purchased Assets have
been granted to any third party. There are no outstanding or threatened claims
of infringement against Seller respecting the use of any of the Purchased Assets
in connection with the operations or business of the Seller and the Seller has
no knowledge of any trademark, service xxxx, trade name, assumed name,
copyright, patent, trade secret, contractual or other rights of any third party
which may be violated or infringed by the use of any of the Purchased Assets.
5.13 No Default. Seller is not in default under any term or condition
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of any instrument evidencing, creating or securing any material indebtedness of
Seller, and there has been no default in any material obligation to be performed
by Seller under any other agreement to which it is a party or by which it or its
assets or properties are bound.
5.14 Indebtedness. Seller has delivered to Buyer true and complete
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copies of all documents related to any indebtedness of the Seller and has made
available to Buyer all correspondence concerning the status of the indebtedness.
5.15 Pending Claims. There is no claim, suit, action or proceeding,
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whether judicial, administrative or otherwise, pending or, to the knowledge of
the Seller, threatened that would preclude or restrict the performance of this
Agreement by Seller.
5.16 Absence of Change. The Seller has no knowledge of any present or
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future condition or state of facts or circumstances that would materially and
adversely affect the business of the Seller.
5.17 Disclosure. No representation or warranty of Seller or the
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Control Stockholders contained in this Agreement (including the exhibits hereto)
contains any untrue statement or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
5.18 No Brokerage Commission. No broker or finder has acted for the
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Seller in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Seller.
5.19 Acquisition of Stock for Investment. The Seller and the Control
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Stockholders understand that the issuance of common stock of the Buyer hereunder
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has not been registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities acts, and Seller represents and warrants to the
Buyer that the Seller's and the Control Stockholder's present intention is to
receive and hold the common stock of the Buyer for investment only and not with
a view to the distribution or resale thereof. The Seller and the Control
Stockholders further acknowledge that each of them has had access to information
regarding the Buyer and its operations, and that the Seller and the Control
Stockholders have such knowledge and experience in financial and business
matters so as to be capable of evaluating the relative merits and risks of an
investment in the Buyer. The Seller and the Control Stockholders have had an
opportunity to review the following documents of the Buyer: Form 10-KSB for the
year ended December 31, 2001, and all subsequent Forms 10-QSB and Forms 8-K up
to the date first written above.
Additionally, the Seller and the Control Stockholders understand that any
sale by the Seller or the Control Stockholders of any of the common stock of the
Buyer received under this Agreement, will, under current law, require either (a)
the registration of the common stock of the Buyer under the Act and applicable
state securities acts; (b) compliance with Rule 144 of the Act; or (c) the
availability of an exemption from the registration requirements of the Act and
applicable state securities acts. Assuming full compliance with the applicable
federal and state securities laws, the Buyer, at the request of the Seller or
any person who owns shares of the Seller as of the date of this Agreement (a
"Galt Stockholder") , hereby agrees to request the Buyer's legal counsel, at no
cost or expense to Seller or any such Galt Stockholder, to render an opinion of
counsel that is reasonably acceptable to the Seller or Galt Stockholder, prior
to any subsequent transfer of the common stock of the Buyer from the Seller or
any such Galt Stockholder, that such transfer will not violate the registration
requirements of the federal or state securities acts. The Seller and the
Control Stockholders further agree to execute, deliver, furnish or otherwise
provide to the Buyer any documents or instruments as may be reasonably necessary
or desirable in order to evidence and record the common stock of the Buyer
acquired hereby.
To assist in implementing the above provisions, the Seller and the Control
Stockholders hereby consents to the placement of the legend, or a substantially
similar legend, set forth below, on all certificates representing ownership of
the common stock of the Buyer acquired hereby until the common stock of the
Buyer has been sold, transferred, or otherwise disposed of, pursuant to the
requirements hereof. The legend shall read substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE SECURITIES
HAVE BEENACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO TRANSFERABILITY, AND
MAY NOT BE SOLD, HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE
WITH THE REGISTRATION AND QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
In addition, the Seller and the Control Stockholders consent to the Buyer
placing a "stop transfer notation" in its corporate records concerning the
transfer of the common stock of the Buyer acquired by the Seller.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
XXXXXXX XXXX AND XXX XXXXXX
Xxxxxxx Xxxx ("Park") and Xxx Xxxxxx ("Xxxxxx"), each a stockholder of the
Seller, each severally represent and warrant to Buyer (and its assignee) as
follows:
6.1 Authorization. Park and Xxxxxx are persons of full age of
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majority, with full power, capacity, and authority to enter into this Agreement
and perform the obligations contemplated hereby by and for themselves . All
action on the part of Park and Xxxxxx necessary for the authorization,
execution, delivery and performance of this Agreement by them has been taken and
will be taken prior to Closing. This Agreement, when duly executed and
delivered in accordance with its terms, will constitute legal, valid, and
binding obligations of Park and Xxxxxx enforceable against Park and Xxxxxx in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
and other similar laws affecting creditors' rights generally or by general
equitable principles.
6.2 Disclosure. No representation or warranty of the Control
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Stockholders contained in this Agreement (including the exhibits hereto)
contains any untrue statement or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer hereby represents and warrants to the Seller and the Control
Stockholders as follows:
7.1 Organization of Buyer. Buyer is a corporation duly organized,
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validly existing and in good standing in the laws of the State of Delaware, with
full power and authority to carry on the businesses in which it is engaged, to
own the properties that it owns currently and will own at the Closing, and to
perform its obligations under this Agreement , is duly qualified or licensed to
do business and is in good standing as a foreign corporation in all states or
jurisdictions which the conduct of such business requires such qualification and
which the failure to be so qualified or licensed would have a material adverse
effect on the business of Buyer. The authorized capital stock of Buyer consists
of 80,000,000 shares of common stock, $.001 par value, of which 13,264,448
shares were validly issued and outstanding as of the date first written above
All of such issued and outstanding shares of common stock of Buyer are duly
authorized, validly issued, fully paid and non-assessable. The authorized
capital stock of Buyer also consists of 20,000,000 shares of preferred stock,
$.001 par value, none of which is issued and outstanding.
7.2 Authorization of Agreement. Buyer has all requisite corporate
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power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Buyer of this Agreement and
the performance by Buyer of its obligations hereunder (a) have been duly and
validly authorized by all requisite corporate action and (b) will not violate
its charter or bylaws or any order, writ, injunction, decree, statute, rule or
regulations applicable to it or any of its properties or assets, or be in
conflict with, result in a breach of or constitute a default under any note,
bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition of
any lien, charge or encumbrance of any kind or nature whatsoever upon any of the
properties or assets of Buyer. The Sharp Stock to be issued under this Agreement
will, when issued, be duly authorized. This Agreement and each and every
agreement, document, exhibit and instrument to be executed, delivered and
performed by Buyer in connection herewith constitute the valid and legally
binding obligations of Buyer enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws from time to time in effect affecting the enforcement of
creditors' rights generally.
7.3 Consents. No consent of, approval by, order or authorization of,
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or registration, declaration or filing by Buyer with any court or any
governmental or regulatory agency or authority having jurisdiction over Buyer or
any of its property or assets or any other person is required on the part of
Buyer in connection with the consummation of the transactions contemplated by
this Agreement, excluding any registration, declaration or filing the failure to
effect which would not have a material adverse effect on the financial condition
of Buyer or the operation of its business after the Closing and except for any
filing under the federal or state securities laws.
7.4 Disclosure. No representation or warranty of Buyer contained in
----------
this Agreement (including the exhibits hereto) contains any untrue statement or
omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
7.5 Litigation. Except as set forth in the Buyer's public filings with
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the Securities and Exchange Commission, no litigation is pending, or, to Buyer's
knowledge, threatened, against Buyer, or its assets or properties which seeks to
restrain or enjoin the execution and delivery of this Agreement or any of the
documents referred to herein or the consummation of any of the transactions
contemplated hereby or thereby. There are no judgments or outstanding orders,
injunctions, decrees, stipulations or awards against Buyer or any of its assets
or properties.
7.6 Brokerage Commission. No broker or finder has acted for Buyer in
--------------------
connection with this Agreement or the transactions contemplated hereby, and no
person is entitled to any brokerage or finder's fee or compensation in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of Buyer.
7.7 No Default. Except as set forth in Exhibit 7.7, Buyer is not in
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material default under any term or condition of any instrument evidencing,
creating or securing any material indebtedness of Buyer, and there has been no
default in any material obligation to be performed by Buyer under any other
agreement to which it is a party or by which it or its assets or properties are
bound.
7.8 Pending Claims. There is no claim, suit, action or proceeding,
--------------
whether judicial, administrative or otherwise, pending or, to the best of
Buyer's knowledge, threatened that would preclude or restrict the performance of
this Agreement by Buyer.
7.9 SEC Filing Requirements. The Buyer will use its best efforts to
-----------------------
comply with its reporting requirements under the Securities Exchange Act of 1934
as amended.
7.10 Registration Rights. If the Buyer files any Registration
-------------------
Statement ("Registration Statement") pursuant to the Securities Act of 1933, as
amended (the "Securities Act") with the Securities and Exchange Commission (the
"Commission") on a form under which the Sharp Stock is permitted to be
registered and other than on a Form S-4 or S-8 Registration Statement, and
subject to the Holder (as defined below) holding shares of Sharp Stock at the
time of any such filing (the "Registration Shares"), Buyer shall include in the
Registration Statement all of the Registration Shares unless otherwise directed
in writing by the Holder. All expenses incident to the Buyer's performance of
its obligations under this Section, including without limitation, all
registration and filing fees, fees and expenses of compliance with securities
and Blue Sky laws, printing expenses, fees and disbursements of the Buyer's
counsel, independent certified public accountants, and other persons retained by
the Buyer (all such expenses being herein called "Registration Expenses") will
be borne by the Buyer. The Seller or the Galt Stockholders shall be responsible
for all discounts and commissions relating to the Registration Shares and for
the fees and expenses of counsel and other persons engaged by the Seller or the
Galt Stockholders.
As used in the Section "Holder" shall mean and include Seller and each
individual Galt Stockholder.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of Seller. The obligations of Seller
---------------------------------------
and the Stockholders to consummate the transactions contemplated hereby shall be
subject to the satisfaction, on or before the Closing Date, of each and every
one of the following conditions, unless waived, in whole or in part, by Seller
for purposes of consummating such transaction.
(a) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects on the Closing
Date.
(b) The Buyer shall have performed and complied with all agreements,
obligations, covenants and conditions required by this Agreement to be
performed or complied with on or prior to the Closing Date.
(c) The Seller shall have received a certificate, dated the Closing
Date and signed by the President of Buyer to the effect set forth in
Section 8.1(a) and 8.1(b) for the purpose of verifying the accuracy of such
representations and warranties and the performance and satisfaction of such
covenants and conditions.
(d) The Seller and the Stockholders shall have received corporate
resolutions of the Board of Directors of Buyer, certified by an officer of
Buyer, which authorize the execution, delivery and performance of this
Agreement and the documents referred to herein to which it is or is to be a
party dated as of or prior to the Closing Date.
(e) The related transactions as set forth in Section 4.2(i) and
4.2(ii) shall be consummated concurrently with the Closing.
(f) Seller shall be satisfied that Buyer has paid all of the bulk
sales taxes related to this Agreement.
(g) Buyer shall reasonably satisfy Seller that it will comply with its
covenant as set forth in Article IX of this Agreement.
(h) Seller shall have received the 3,000,000 shares of Sharp Stock
issued in the name of the Seller and the Warrant Agreement as set forth in
Article 4.4(c).
(i) To the best of Seller's knowledge, no action, suit or proceeding
by or before any court or any governmental or regulatory authority shall
have been commenced and no investigation by any governmental or regulatory
authority shall have been commenced seeking to restrain, prevent or
challenge the transactions contemplated hereby or seeking judgments against
the Buyer.
8.2 Conditions to the Obligations of the Buyer. The obligations of
------------------------------------------
Buyer to effect the transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, unless waived, in whole or in part, by the Buyer for
purposes of consummating such transaction.
(a) The representations and warranties of Seller and the Controlling
Stockholders set forth herein shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had
been made on the Closing Date.
(b) The Seller and the Controlling Stockholders shall have performed
and complied with all agreements, obligations, covenants and conditions
required by this Agreement to be performed or complied with by the Seller
or the controlling Stockholders on or prior to the Closing;
(c) Buyer shall have received a certificate, dated the Closing Date
and signed by the President of the Seller to the effect set forth in
Section 8.2(a) and 8.2(b) for the purpose of verifying the accuracy of such
representations and warranties and the performance and satisfaction of such
covenants and conditions;
(d) Buyer shall have received corporate resolutions of the Board of
Directors of Seller, certified by an officer of Seller, which authorize the
execution, delivery and performance of this Agreement and the documents
referred to herein to which it is or is to be a party dated as of the
Closing Date and Buyer shall have received a certificate, dated the Closing
Date and signed by the President of the Seller certifying that this
Agreement shall have been adopted and approved by the affirmative vote of
not less than two-thirds (2/3) of the stockholders of the Seller at a duly
called stockholders meeting of the Seller, all as required by Delaware law
not later than February 11, 2003;
(e) The Buyer shall have received a certificate, dated the Closing
Date and signed by each Controlling Stockholder to the effect set forth in
Section 8.2(a) and 8.2(b) for the purpose of verifying the accuracy of such
representations and warranties and the performance and satisfaction of such
covenants and conditions;
(f) The related transactions set forth in Section 4.2(i) and 4.2(ii)
shall be consummated concurrently with the Closing; and
(g) The Seller shall have delivered to Buyer all instruments of
assignment and bills of sale necessary to transfer to Buyer good and
marketable title to the Purchased Assets;
(h) To the best of Buyer's knowledge, no action, suit or proceeding by
or before any court or any governmental or regulatory authority shall have
been commenced and no investigation by any governmental or regulatory
authority shall have been commenced seeking to restrain, prevent or
challenge the transactions contemplated hereby or seeking judgments against
Seller or the Controlling Stockholders.
ARTICLE IX
COVENANT OF SELLER
To induce the Buyer to proceed with this Agreement, Seller and the
Shareholders agree that until the Closing Date or the termination of this
Agreement they will not, either individually or collectively, offer to sell or
solicit any offer to purchase or engage in any discussions or activities of any
nature whatsoever, directly or indirectly, involving in any manner the actual or
potential sale, transfer, encumbrance, pledge, collateralization or
hypothecation of any assets of the Seller. The Seller and the Shareholders
hereby agree to advise the Buyer of any contact from any third party regarding
the acquisition or other investment in the Seller or of any contact which would
relate to the transactions contemplated by the Agreement.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification from the Seller and the Controlling Stockholders.
----------------------------------------------------------------
The Seller and the Controlling Stockholders jointly and severally agree to and
shall indemnify, defend (with legal counsel reasonably acceptable to Buyer), and
hold Buyer and its officers, directors, shareholders, employees, agents,
affiliates, attorneys and assigns harmless at all times after the date of
this Agreement, from and against and in respect of, any liability, claim,
deficiency, loss, damage, penalty or injury, and all reasonable costs and
expenses (including reasonable attorneys' fees and costs of any suit related
thereto) suffered or incurred by Buyer arising from (a) any misrepresentation
by, or breach of any covenant or warranty of Seller or the Stockholders
contained in this Agreement, or any Exhibit, certificate, or other instrument
furnished or to be furnished by Seller or the Stockholders hereunder, or any
claim by a third party (regardless of whether the claimant is ultimately
successful) which if true would be such a misrepresentation or breach; (b) any
nonfulfillment of any agreement on the part of Seller or the Stockholders under
this Agreement, or from any material misrepresentation in or material omission
from, any certificate or other instrument furnished or to be furnished to the
Buyer hereunder; and (c) any suit, action, proceeding, claim or investigation,
pending or threatened against or affecting the Buyer which arises from, which
arose from, or which is based upon or pertaining to the Seller's conduct or
operation of the business of the Seller or Seller's ownership, possession or use
of the Purchased Assets and employment of employees, and any other matter or
state of facts relating to the transactions and the Related Transactions
contemplated herein existing prior to Closing. The obligations of each
Indemnitor under this Section 10.1 shall be limited in an amount equal to the
value of the shares of Sharp Stock received by each Indemnitor solely as a
result of this transaction and the Buyer shall look solely to those shares, if
still owned by the Indemnitors at the time of any claim, and to the proceeds
received by the such Indemnitor from the prior sale of any of the Sharp Stock
by such Indemnitors (which sales amount shall not be less than the fair market
value of the shares as determined by the market price (the average of the bid
and ask prices for Sharp common stock in the 5 trading days immediately
preceding the dates of any such actual sale) on the date of any such sale), for
repayment of any damage suffered by the Buyer as a result of any breach of this
provision.
10.2 Indemnification from Buyer. Buyer agrees to and shall indemnify,
--------------------------
defend (with legal counsel reasonably acceptable to the Seller and the
Controlling Stockholders) and hold the Controlling Stockholders and the Seller,
its officers, directors, shareholders, employees, agents, affiliates and
assigns harmless at all times after the date of Closing from and against, and
in respect of any liability, claim, deficiency, loss, damage, or injury, and all
reasonable costs and expenses (including reasonably attorneys' fees and costs of
any suit related thereto) suffered or incurred by Seller or the Stockholders
from (a) any misrepresentation by, or breach of any covenant or warranty of,
Buyer contained in this Agreement or any Exhibit, certificate, or other
agreement or instrument furnished or to be furnished by Buyer hereunder, or any
claim by a third party (regardless of whether the claimant is ultimately
successful), which if true, would be such a misrepresentation or breach; (b) any
nonfulfillment of any agreement on the part of Buyer under this Agreement, or
from any misrepresentation in or omission from, any certificate or other
agreement or instrument furnished or to be furnished to Seller or the
Stockholders hereunder; and (c) any suit, action, proceeding, claim or
investigation pending or threatened against or affecting the Seller or the
Stockholders which arises from or which is based upon or pertaining to Buyer's
conduct or operation of the business of Buyer or Buyer's ownership, possession
or use of the Purchased Assets and employment of employees, and any other matter
or state of facts relating to the transactions contemplated herein subsequent to
Closing. The obligations of the Indemnitors under this Section 10.2 shall be
limited in an amount equal to the value of the Sharp Stock as of the date of
execution of this Agreement, but not to exceed $300,000. Market value shall mean
the average of the bid and ask prices for Sharp common stock in the 5 trading
days immediately preceding the dates of closing.
10.3 Defense of Claims. If any lawsuit or enforcement action is filed
-----------------
against any party entitled to the benefit of indemnity hereunder, written notice
thereof shall be given to the indemnifying party as promptly as practicable (and
in any event not less than fifteen (15) days prior to any hearing date or other
date by which action must be taken); provided that the failure of any
indemnified party to give timely notice shall not affect rights to
indemnification hereunder except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to such indemnified party that
this Agreement applies with respect to such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; and such indemnified party shall cooperate in
all reasonable respects, at its cost, risk and expense, with the indemnifying
party and such attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however, that the
indemnified party may, at its own cost, participate in such investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom. The
indemnifying party shall not, without the prior written consent of the
indemnified party, effect any settlement of any proceeding in respect of which
any indemnified party is a party and indemnity has been sought hereunder unless
such settlement of a claim, investigation, suit, or other proceeding only
involves a remedy for the payment of money by the indemnifying party and
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
10.4 Default of Indemnification Obligation. If an entity or individual
-------------------------------------
having an indemnification, defense and hold harmless obligation, as above
provided, shall fail to assume such obligation, then the party or entities or
both, as the case may be, to whom such indemnification, defense and hold
harmless obligation is due shall have the right, but not the obligation, to
assume and maintain such defense (including reasonable counsel fees and costs of
any suit related thereto) and to make any settlement or pay any judgment or
verdict as the individual or entities deem necessary or appropriate in such
individual's or entities' absolute sole discretion and to charge the cost of any
such settlement, payment, expense and costs, including reasonable attorneys'
fees, to the entity or individual that had the obligation to provide such
indemnification, defense and hold harmless obligation and same shall constitute
an additional obligation of the entity or of the individual or both, as the case
may be.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices and other communications provided for herein
-------
shall be in writing and shall be duly given if delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or
overnight air courier guaranteeing next day delivery:
(a) If to Buyer:
Sharp Holding Corporation
Mr. Xxxxxx Xxxxx, President
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
fax (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
(b) If to Seller:
Xxxx Xxxx Media, Inc.
Xxxxxxx Xxxx, President
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX
fax: (000) 000-0000
With copies to:
Xxxxx Xxxxxxxxx
Long, Tuminello, Besso, Seligman, Xxxxxxx & Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, sent certified mail, return
receipt requested, if mailed; and the next day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery. If a
notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it.
11.2 Assignment. Neither the Seller nor the Controlling Stockholders
----------
shall assign any of the rights, interests or obligations hereunder without the
prior written consent of the other parties. Sharp Holding Corporation may
assign this Agreement to any entity in which it owns 100% of the equity;
provided that Sharp Holding Corporation simultaneously issues a guarantee of all
of the assignee's obligation under this Agreement. This Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective heirs, personal representatives, successors and assigns.
11.3 Counterparts. This Agreement may be executed in any number of
------------
counterparts, which taken together shall constitute one and the same instrument
and each of which shall be considered an original for all purposes.
11.4 Section Headings. The section headings contained in this
-----------------
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
11.5 Entire Agreement; Amendment. Except for the Letter Agreement
-----------------------------
dated November 15, 2002, between the Seller and the Buyer and the Letter
Agreement dated October 31, 2002, between the Seller and the Buyer which Letter
Agreements shall remain in full force and effect, this Agreement, the documents
to be executed hereunder and the exhibits attached hereto constitute the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties pertaining to the subject matter hereof,
and there are no warranties, representations or other agreements among the
parties in connection with the subject matter hereof except as specifically set
forth herein or in documents delivered pursuant hereto. No supplement,
amendment, alteration, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto. All of the
exhibits referred to in this Agreement are hereby incorporated into this
Agreement by reference and constitute a part of this Agreement.
11.6 Survival. All warranties and representations herein shall survive
--------
the Closing and shall be true and correct as of the date hereof. The respective
representations, warranties, covenants and agreements set forth in this
Agreement shall survive the Closing for the maximum period allowed by law.
11.7 Public Announcements. The parties hereto agree that prior to
---------------------
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and use
their best efforts to (i) agree upon the text of a joint public announcement or
statement to be made by all of such parties or (ii) obtain approval of the other
parties hereto to the text of a public announcement or statement to be made
solely by the party desiring to make such public announcement; provided,
however, that if any party hereto is required by law to make such public
announcement or statement, then such announcement or statement may be made
without the approval of the other parties.
11.8 Validity. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
11.9 Waiver. No waiver by any party of any default or non-performance
------
shall be deemed a waiver of any subsequent default or non-performance, and no
waiver of any kind shall be effective unless set forth in writing and signed by
the party against whom such waiver is to be charged.
11.10 Further Assurances. Each party covenants that at any time, and
-------------------
from time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement.
11.11 Exhibits Not Attached. Any exhibits not attached hereto on the
-----------------------
date of execution of this Agreement shall be deemed to be and shall become a
part of this Agreement as if executed on the date hereof upon each of the
parties initialing and dating each such exhibit, upon their respective
acceptance of its terms, conditions and/or form.
11.12 Expenses. All expenses incurred by the parties hereto in
--------
connection with or related to the authorization, preparation and execution of
this Agreement and the Closing of the transactions contemplated hereby, shall be
borne solely and entirely by the party which has incurred the same.
11.13 Attorneys' Review. In connection with the negotiation and
------------------
drafting of this Agreement, the parties represent and warrant to each other that
they have had the opportunity to be advised by attorneys of their own choice.
11.14 Gender. All personal pronouns used in this Agreement shall
------
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
11.15 Jurisdiction and Process. This Agreement shall be governed by,
--------------------------
and its provisions construed to be in compliance with, the laws of the State of
Texas. The parties agree that venue for purposes of construing or enforcing this
Agreement shall be proper in Xxxxxx County, Texas.
[[[SIGNATURES ON FOLLOWING PAGE]]]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the day and year first above written.
BUYER:
SHARP HOLDING CORPORATION
By: ______________________________________
/s/Xxxxxx Xxxxx, President
SELLER:
XXXX XXXX MEDIA, INC.
/s/ Xxxxxxx Xxxx, President
THE STOCKHOLDERS:
_______________________________
/s/ Xxxxxxx Xxxx
_______________________________
/s/ Xxx Xxxxxx
