SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (the "AGREEMENT"), dated as of October 12,
2004, is made and entered into by and among Continuum Group C Inc., a Nevada
corporation ("CONTINUUM"), Premier Alliance Group, Inc., a North Carolina
corporation ("PREMIER"), and the individual shareholders of Premier listed on
SCHEDULE A attached hereto (each a "SHAREHOLDER" and collectively, the
"SHAREHOLDERS").
RECITALS:
A. The Shareholders collectively own all of the issued and outstanding
capital stock of Premier, consisting of 5,000,000 shares of common stock, no par
value per share (the "PREMIER COMMON STOCK") and 597,500 shares of preferred
stock, $.0001 par value per share (the "PREMIER PREFERRED STOCK").
C. The Shareholders are the holders of certain warrants issued by Premier,
each warrant entitling the holder to purchase one share of the Premier Common
Stock at an exercise price of $2.00 (the "PREMIER WARRANTS").
B. The Shareholders desire to transfer and exchange:
(a) all of their shares of Premier Common Stock for newly-issued
shares of common stock, $.001 par value per share, of Continuum (the "CONTINUUM
COMMON STOCK");
(b) all of their shares of Premier Preferred Stock for
newly-issued shares of preferred stock, $.001 par value per share, of Continuum
(the "CONTINUUM PREFERRED STOCK"); and
(c) all of their Premier Warrants for warrants exercisable for
newly-issued shares of Continuum Common Stock (the "CONTINUUM WARRANTS"),
substantially in the form attached hereto as EXHIBIT A.
D. The Shareholders and Continuum desire to consummate such transfer and
exchange pursuant to the terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual premises herein set forth
and certain other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
THE SHARE EXCHANGE AND RELATED TRANSACTIONS
Section 1.1 TAX FREE SHARE EXCHANGE. In accordance with the provisions
of this Agreement, the General Statutes of North Carolina (the "GSNC") and other
applicable law, on the Closing Date (as defined below), the Shareholders shall,
on a tax free basis, deliver to Continuum the Premier Common Stock, the Premier
Preferred Stock and the Premier Warrants and in exchange therefore Continuum
shall issue and deliver to the Shareholders a sufficient number of newly issued
shares of Continuum Common Stock, shares of Continuum Preferred Stock and
Continuum Warrants to cause the number of shares of Continuum Common Stock and
Continuum Preferred Stock so issued to be equal to nine times the number of
shares of Continuum Common Stock outstanding immediately prior to Closing, the
number of shares of Continuum Common Stock, shares of Continuum Preferred Stock,
and Continuum Warrants to be issued to the Shareholders being stated on SCHEDULE
A (the exchange transaction is referred to herein as the "SHARE EXCHANGE"). The
shares of Continuum Common Stock, the shares of Continuum Preferred Stock and
the Continuum Warrants to be issued as part of the Share Exchange are referred
to herein collectively as the "CONTINUUM SHARES," also sometimes referred to
hereinafter as the "EXCHANGE CONSIDERATION." Continuum shall take, or shall
cause one or more of its shareholders to take, as applicable, such actions as
are necessary to permit Continuum to issue the Exchange Consideration without
causing the number of shares of Continuum Common Stock and Continuum Preferred
Stock outstanding immediately after the Closing to exceed the number of such
shares that Continuum is authorized to issue.
Section 1.2 THE CLOSING. The parties to this Agreement shall file
articles of exchange pursuant to the GSNC, cause the Share Exchange to become
effective and consummate the other transactions contemplated by this Agreement
(the "CLOSING") PROVIDED, HOWEVER, in no event shall the Closing occur prior to
the satisfaction of the conditions precedent set forth in Articles VI, VII and
VIII hereof. The date of the Closing is referred to herein as the "CLOSING
DATE." The Closing shall take place at the offices of counsel to Continuum, or
at such other place as may be mutually agreed upon by Continuum and the
Shareholders. At the Closing, (i) the Shareholders shall deliver to Continuum:
(a) the original stock certificates representing the Premier Common Stock,
together with stock powers duly executed in blank; (b) the original stock
certificates representing the Premier Preferred Stock, together with stock
powers duly executed in blank; and (c) the Premier Warrants and (ii) Continuum
shall deliver to the Shareholders (a) stock certificates and warrants
representing the Exchange Consideration and (b) a list of shareholders of record
as of the Closing Date, including the number of shares of Continuum Common Stock
held by each.
Section 1.3 APPROVAL OF SHARE EXCHANGE. By unanimous written consent,
the Premier Board of Directors has recommended to the Shareholders that Premier
enter into this Agreement. The Board of Directors of Continuum has approved this
Agreement and the transactions contemplated hereby and no other corporate
proceedings of Continuum are required with respect thereto.
ARTICLE II
ADDITIONAL AGREEMENTS
Section 2.1 ACCESS AND INSPECTION, ETC. Each of Continuum, on the one
hand, and Premier and the Shareholders, on the other hand, shall allow the other
and its authorized representatives full access during normal business hours from
and after the date hereof and prior to the Closing Date to all of its
properties, books, contracts, commitments and records for the purpose of making
such investigations as the requesting party may reasonably request in connection
with the transactions contemplated hereby, and shall furnish to the requesting
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party such information concerning its affairs as may be reasonably requested.
Each of Continuum, on the one hand, and Premier and the Shareholders, on the
other hand, shall cause its personnel to assist the other in making such
investigation and each party shall use reasonable efforts to cause its counsel,
accountants, and other non-employee representatives to be reasonably available
to the other for such purposes. The Shareholders shall cause Premier to comply
with all obligations of Premier under this Agreement.
Section 2.2 CONFIDENTIAL TREATMENT OF INFORMATION. From and after the
date hereof, Continuum, Premier and the Shareholders shall and shall cause their
representatives to hold in confidence this Agreement (including the Exhibits and
Schedules hereto), all matters relating hereto and all data and information
obtained with respect to the other parties or their business, except such data
or information as is published or is a matter of public record, or as compelled
by legal process. In the event this Agreement is terminated pursuant to Article
X hereof, each party shall promptly return to the other(s) any statements,
documents, schedules, exhibits or other written information obtained from them
in connection with this Agreement, and shall not retain any copies thereof.
Section 2.3 PUBLIC ANNOUNCEMENTS. After the date hereof and prior to
the Closing, neither Premier nor the Shareholders shall make any press release,
statement to employees or other disclosure of this Agreement or the transactions
contemplated hereby without the prior written consent of Continuum, and
Continuum shall not make any press release, statement to employees or other
disclosure of this Agreement or the transactions contemplated hereby without the
prior written consent of Premier, except as may be required by law. No party
hereto shall make any such disclosure unless the other parties receive prior
notice of the contemplated disclosure and have adequate time and opportunity to
comment on such disclosure, which shall be satisfactory in form and content to
each party and its counsel.
Section 2.4 SECURITIES LAW COMPLIANCE. The issuance of the Continuum
Shares to the Shareholders hereunder shall not be registered under the
Securities Act of 1933, as amended, (the "Securities Act") by reason of the
exemption provided by Section 4(2) thereof, and such shares may not be further
transferred unless such transfer is registered under applicable securities laws
or, in the opinion of Continuum's counsel, such transfer complies with an
exemption from such registration. All certificates evidencing the Continuum
Shares to be issued to the Shareholders shall be legended to reflect the
foregoing restriction.
Section 2.5 BEST EFFORTS. Subject to the terms and conditions provided
in this Agreement, each of the parties shall use its best efforts to take or
cause to be taken as promptly as practicable all reasonable actions that are
within its power to cause to be fulfilled those conditions precedent to its
obligations or the obligations of the other parties to consummate the
transactions contemplated by this Agreement that are dependent upon its actions.
Section 2.6 FURTHER ASSURANCES. The parties shall deliver any and all
other instruments or documents required to be delivered pursuant to, or
necessary or proper in order to give effect to, the provisions of this
Agreement, including, without limitation, all necessary stock powers and such
other instruments of transfer as may be necessary or desirable to transfer
ownership of Premier Common Stock and to consummate the transactions
contemplated by this Agreement.
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Section 2.7 NONCOMPETITION.
(a) From and after the Closing Date and for a period of two (2)
years thereafter (the "RESTRICTED PERIOD") and except for employment by
Continuum and/or Premier, no Shareholder shall directly or indirectly compete
with Continuum and/or Premier by owning, managing, controlling or participating
in the ownership, management or control of or be employed by or engaged in any
Competitive Business (as defined herein) in the continental United States. As
used herein, a "COMPETITIVE BUSINESS" is any other corporation, partnership,
proprietorship, firm or other business entity which is engaged in the provision
of information technology consulting services.
(b) From and after the date hereof and during the Restricted
Period, no Shareholder shall induce or solicit any employee of Continuum and/or
Premier or any person doing business with Continuum and/or Premier to terminate
his or her employment or business relationship with Continuum and/or Premier or
otherwise interfere with any such relationship.
(c) The Shareholders agree and acknowledge that, by reason of the
nature of the Shareholders' ownership interest in Continuum and/or Premier, each
Shareholder will have or may have access to and become informed of confidential
and secret information which is a competitive asset of Continuum and/or Premier
("CONFIDENTIAL INFORMATION"), including, without limitation, technology, lists
of customers, financial statistics, research data or any other statistics and
plans contained in profit plans, capital plans, critical issue plans, strategic
plans or marketing or operation plans or other trade secrets of Continuum and/or
Premier and any of the foregoing which belong to any person or company but to
which the Shareholders have had access by reason of their relationship with
Continuum and/or Premier. The Shareholders agree faithfully to keep in strict
confidence, and not, either directly or indirectly, to make known, divulge,
reveal, furnish, make available or use any such Confidential Information. The
Shareholders acknowledge that all manuals, instruction books, price lists,
information and records and other information and aids relating to Continuum
and/or Premier's business, and any and all other documents containing
Confidential Information furnished to the Shareholders by Continuum and/or
Premier or otherwise acquired or developed by the Shareholders, shall at all
times be the property of Continuum and/or Premier. Upon the termination of this
Agreement, each Shareholder shall return to Continuum and/or Premier any such
property or documents which are in their possession, custody or control, but the
Shareholders' obligation of confidentiality shall survive such termination and
unless any such Confidential Information shall have become, through no fault of
the Shareholder, generally known to the trade. The obligations of the
Shareholders under this subsection are in addition to, and not in limitation or
preemption of, all other obligations of confidentiality which each Shareholder
may have to Continuum and/or Premier under general legal or equitable
principles. Excluded from Confidential Information, and therefore not subject to
the provisions of this Agreement, shall be any information which (i) at the time
of disclosure, is in the public domain; (ii) after the disclosure, enters the
public domain through no fault of the Shareholder; or (iii) by written
documentation was acquired, after disclosure, from a third party who did not
receive it from Continuum or Premier, and who had the right to disclose the
information without any obligation to hold such information confidential.
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Section 2.8 REMEDIES. It is expressly agreed by the Shareholders and
Continuum that the provisions in Section 2.7 are reasonable for purposes of
preserving for Continuum and/or Premier its business, goodwill and Confidential
Information. It is also agreed that if any provision is found by a court having
jurisdiction to be unreasonable because of scope, area or time, then that
provision shall be amended to correspond in scope, area and time to that
considered reasonable by a court and as amended shall be enforced and the
remaining provisions shall remain effective. In the event any breach of these
provisions by any Shareholder, the parties recognize and acknowledge that a
remedy at law will be inadequate and Continuum and/or Premier may suffer
irreparable injury. The Shareholders consent to injunctive and other appropriate
equitable relief without the posting of a bond upon the institution of
proceedings therefor by Continuum and/or Premier in order to protect Continuum
and/or Premier's rights. Such relief shall be in addition to any other relief to
which Continuum and/or Premier may be entitled at law, in equity, or under any
other agreement between each Shareholder and Continuum and/or Premier. The
provisions of this Section 2.8 shall survive the termination of this Agreement.
Section 2.9 RELEASE OF CLAIMS. Effective as of the Closing Date, and
except for any obligations arising out of this Agreement and except for any
indemnification obligations with respect to actions arising prior to the Closing
Date, each Shareholder and that Shareholder's successors, predecessors, assigns,
agents, advisors, legal representatives, partners and all persons acting by,
through or under that Shareholder, hereby release Premier and each of its
successors, predecessors, assigns, agents, advisors, officers, directors,
employees, legal representatives, partners and all persons acting by, through or
under each of them, from any and all claims, obligations, causes of action,
actions, suits, contracts, controversies, agreements, promises, damages,
demands, costs, attorneys' fees and liabilities of any nature whatsoever from
the beginning of time up to and including the Closing Date, in law or at equity,
whether known now or on the Closing Date, anticipated or unanticipated,
suspected or claimed, fixed or contingent, liquidated or unliquidated, arising
out of, in connection with or relating to any matter, cause or thing whatsoever.
Section 2.10 NO-SHOP. From the date hereof until the termination of
this Agreement, none of Premier, any Shareholder or Continuum shall, directly or
indirectly, make, solicit, initiate or encourage submission of proposals or
offers from any persons (including any of their employees or officers) relating
to an Acquisition Proposal (as defined below). As used herein, "ACQUISITION
PROPOSAL" means any proposal or offer involving a liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of all or
substantially all of the assets of, or equity interest in, Continuum or Premier
or other similar transaction or business combination involving either Continuum
or Premier. Each of Continuum, Premier and each Shareholder shall immediately
cease and cause to be terminated all discussions or negotiations with third
parties with respect to any Acquisition Proposal, if any, exiting on the date
hereof.
Section 2.11 OPTIONS. (a) On condition that at or prior to the Closing
the options issued by Premier to Xxxxx Bayern and Xxx Xxxxxxx jointly are
cancelled, at the Closing Continuum shall issue to Mr. Bayern and Xx. Xxxxxxx
jointly, in accordance with an option agreement in a form reasonably acceptable
to Continuum, Premier, Mr. Bayern, and Xx. Xxxxxxx, the following options:
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(i) An option to purchase a number of shares of Continuum Common
Stock equal to 245,000 multiplied by a fraction, the numerator of which is the
total number of shares of Continuum Common Stock issued to the Shareholders at
the Closing and the denominator of which is the total number of shares of
Premier Common Stock outstanding at the Closing, at an exercise price of
$180,000. This option may be exercised in whole or in part any time prior to
October 31, 2004. If this option is not exercised in whole prior to October 31,
2004, it will then terminate with regard to any unexercised portion.
(ii) An option to purchase a number of shares of Continuum Common
Stock equal to 4.5% of the number of shares of Continuum Common Stock
outstanding on the Option Price Date at an exercise price equal to the average
closing price of a share of Continuum Common Stock during the 10 trading days
immediately preceding the Option Price Date. For purposes of this Section 2.11,
the "OPTION PRICE DATE" means the 90th day following the commencement of trading
of shares of Continuum Common Stock. The option may be exercised in whole or
part at any time during the two years following the Option Price Date. If this
option is not exercised in whole during that period, it will then terminate with
regard to any unexercised portion.
(b) The option agreement relating to each of the above options
will provide that (1) the holder of each option has the right to request on one
occasion that Continuum promptly file a registration statement permitting resale
by the holder of the shares underlying the option and (2) if Continuum files a
registration statement it will notify the holder and the holder will, on one
occasion, be entitled to have the shares underlying the option included in the
registration statement.
Section 2.12 CONTINUUM SHARES AVAILABLE FOR FUTURE ISSUANCES. Promptly
after the Closing, the Shareholders, in their capacity as shareholders of
Continuum, shall by written consent in lieu of a meeting cause Continuum to take
appropriate action to ensure that Continuum has available sufficient shares of
Continuum Common Stock to issue upon conversion of all outstanding shares of
Continuum Preferred Stock and exercise of all issued Continuum Warrants, that
appropriate action consisting of either a reverse stock split of Continuum
Common Stock and Continuum Preferred Stock or an amendment of Continuum's
articles of incorporation to increase the authorized stock. Those Shareholders
that own shares of Premier Preferred Stock and Premier Warrants acknowledge that
until that action is taken, Continuum may not have available sufficient shares
of Continuum Common Stock to issue upon conversion of shares of Continuum
Preferred Stock and exercise of Continuum Warrants.
Section 2.13 PAYMENT OF LIABILITIES. At the closing, Continuum will
have less than $75,000 of liabilities and Premier will pay all such liabilities
in full at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND PREMIER
To induce Continuum to enter into this Agreement and to consummate the
transactions contemplated hereby, Premier and the Shareholders jointly and
severally represent and warrant to and covenant with Continuum as follows:
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Section 3.1 ORGANIZATION; COMPLIANCE. Premier is a corporation duly
organized, validly existing and in good standing under the laws of North
Carolina. Premier is (a) entitled to own or lease its properties and to carry on
its business as and in the places where such business is now conducted, and (b)
duly licensed and qualified in all jurisdictions where the character of the
property owned by it or the nature of the business transacted by it makes such
license or qualification necessary, except where the failure to do so would not
reasonably be expected to result in a material adverse effect on Premier.
SCHEDULE 3.1 lists all locations where Premier has an office or place of
business and the nature of the ownership interest in such property (fee, lease,
or other).
Section 3.2 CAPITALIZATION AND RELATED MATTERS.
(a) Premier has an authorized capital consisting of 20,000,000
shares of Premier Common Stock and 1,000,000 shares of Premier Preferred Stock,
of which 5,000,000 shares of Premier Common Stock and 597,500 shares of Premier
Preferred Stock are issued and outstanding as of the date hereof. All
outstanding shares of Premier Common Stock and Premier Preferred Stock are duly
and validly issued, and are fully paid and nonassessable. No shares of Premier
capital stock (i) were issued in violation of the preemptive rights of any
shareholder, (ii) were issued in violation of any federal or state securities
laws. or (iii) are held as treasury stock.
(b) Except for Premier Warrants and as set forth on SCHEDULE 3.2,
there are no outstanding securities convertible into capital stock of Premier
nor any rights to subscribe for or to purchase, or any options for the purchase
of, or any agreements providing for the issuance (contingent or otherwise) of,
or any calls, commitments or claims of any character relating to, such capital
stock or securities convertible into such capital stock. Premier is neither (i)
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any of its capital stock, nor (ii) liable for dividends or
other distributions declared or accrued, but unpaid, with respect to any capital
stock.
(c) The Shareholders are, and will immediately prior to the
Closing be, the record and beneficial owners of all shares of Premier Common
Stock and Premier Preferred Stock, free and clear of all claims, liens, options,
agreements, restrictions, and encumbrances whatsoever and no Shareholder is a
party to any agreement, understanding or arrangement, direct or indirect,
relating to the Premier Common Stock or Premier Preferred Stock, including,
without limitation, agreements, understandings or arrangements regarding voting
or sale of such stock.
Section 3.3 SUBSIDIARIES. Except as disclosed in SCHEDULE 3.3, Premier
owns (a) no shares of capital stock of any other corporation, including any
joint stock company, and (b) no other proprietary interest in any company,
partnership, trust or other entity, including any limited liability company.
Section 3.4 EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
(a) This Agreement has been duly and validly executed and
delivered and is a valid and binding agreement of Premier and the Shareholders,
enforceable in accordance with its terms. Premier and the Shareholders have the
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absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement and the documents to be delivered by them in connection
with the Closing and to perform their obligations under this Agreement.
(b) The execution and delivery of this Agreement by Premier and
the Shareholders does not, and the consummation of the transactions contemplated
hereby will not, constitute a breach or violation of the charter or bylaws of
Premier, or a default under any of the terms, conditions or provisions of (or an
act or omission that would give rise to any right of termination, cancellation
or acceleration under) any note, bond, mortgage, lease, indenture, agreement or
obligation to which Premier or any Shareholder is a party, pursuant to which
Premier or any Shareholder otherwise receives benefits, or to which any of the
properties of Premier or any Shareholder is subject, or violate any judgment,
order, decree, statute or regulation applicable to Premier or any Shareholder or
by which any of them may be subject.
Section 3.5 CORPORATE RECORDS. The statutory records, including the
stock register and minute books of Premier, fully reflect all issuances,
transfers and redemptions of its capital stock, currently show and will
correctly show the total number of shares of its capital stock issued and
outstanding on the date hereof and on the Closing Date. The books of account,
minute books, stock record, books, and other records of Premier, all of which
have been made available to Continuum, are complete and correct in all material
respects. The minute books of Premier contain accurate and complete records of
all meetings held of, and corporate action taken by, the Shareholders, the Board
of Directors, and committees of the Boards of Directors of Premier, and no
meeting of any shareholders, Board of Directors, or committee has been held for
which minutes have not been prepared and are not contained in such minute books.
At the Closing, all of those books and records will be in the possession of
Premier.
Section 3.6 FINANCIAL STATEMENTS.
(a) Premier and the Shareholders have delivered to Continuum the
audited balance sheet of Premier as of December 31, 2003 (the balance sheet as
of December 31, 2003 is hereinafter referred to as the "BALANCE SHEET"), and the
related statements of income, shareholders' equity and cash flows of Premier for
the fiscal year ended December 31, 2003 and the independent auditors' report
thereon. In addition, Premier and the Shareholders have delivered to Continuum
the balance sheet of Premier as of June 30, 2004, and the related statements of
income, shareholders' equity and cash flows of Premier for the three and six
months ended June 30, 2004. Premier represents that the June 30, 2004 financial
statements have been reviewed by Premier's independent certified public
accountants. All the foregoing financial statements, and any additional
financial statements delivered pursuant to this Section 3.6, are referred to
herein collectively as the "PREMIER FINANCIAL STATEMENTS."
(b) The Premier Financial Statements have been and will be
prepared in accordance with generally accepted accounting principals
consistently applied ("GAAP") throughout the periods involved, subject, in the
case of interim financial statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the Balance Sheet), applied on a consistent
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basis, and fairly reflect and will reflect in all material respects the
financial condition of Premier as at the dates thereof and the results of the
operations of Premier for the periods then ended, and are true and complete and
are consistent with the books and records of Premier.
Section 3.7 LIABILITIES. Except as described in Schedule 3.7, as of the
date of this Agreement and as of the Closing Date, Premier has no, and will not
have any debt, liability or obligation of any kind, whether accrued, absolute,
contingent or otherwise, except (a) those reflected on the Balance Sheet,
including the notes thereto, and (b) liabilities incurred in the ordinary course
of business (consistent with past practice) since June 30, 2004, none of which
has had or would reasonably be expected to have (singularly or in the aggregate)
a material adverse effect on the financial condition of Premier.
Section 3.8 ABSENCE OF CHANGES. Except as described in SCHEDULE 3.8,
from June 30, 2004 to the date of this Agreement:
(a) there has not been any adverse change in the business, assets,
liabilities, results of operations or financial condition of Premier or in its
relationships with suppliers, customers, employees, lessors or others, other
than changes in the ordinary course of business, none of which, singularly or in
the aggregate, have had or would reasonably be expected to have a material
adverse effect on the business, properties or financial condition of Premier;
(b) there has not been any: (i) change in Premier's authorized or
issued capital stock, retirement, or other acquisition by Premier of any shares
of any such capital stock; (ii) a declaration or payment of any dividend or
other distribution or payment in respect of shares of capital stock; (iii)
amendment to the Articles of Incorporation or Bylaws of Premier; (iv) increase
by Premier of any bonuses, salaries, or other compensation to any shareholder,
director, officer, or (except in the ordinary course of business) employee or
entry into any employment, severance, or similar agreement with any director,
officer, or employee; (v) adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of Premier; (vi) sale, lease, or other disposition of any asset or
property of Premier or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of Premier, in each case other
than in the ordinary course of business; (vii) cancellation or waiver of any
claims or rights with a value to Premier in excess of $10,000; (viii) material
change in the accounting methods used by Premier; or (ix) agreement, whether
oral or written, by Premier to do any of the foregoing.
Section 3.9 TITLE TO PROPERTIES. Premier has good and marketable title
to all of its properties and assets, real and personal, including, but not
limited to, those reflected in the Balance Sheet (except as since sold or
otherwise disposed of in the ordinary course of business, or as expressly
provided for in this Agreement), free and clear of all encumbrances, liens or
charges of any kind or character except: (a) those securing liabilities of
Premier incurred in the ordinary course (with respect to which no default
exists) and (b) imperfections of title and encumbrances, if any, which, in the
aggregate (i) are not substantial in amount; (ii) do not detract from the value
of the property subject thereto or impair the operations of Premier; and (iii)
would not reasonably be expected to have a material adverse effect on the
business, properties or assets of Premier.
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Section 3.10 COMPLIANCE WITH LAW. Since the inception of Premier and
except for any applicable statute of limitations that have expired, the business
and activities of Premier have at all times been conducted in accordance with
its Articles of Incorporation and Bylaws and any applicable law, regulation,
ordinance, order, License (as defined below), permit, rule, injunction or other
restriction or ruling of any court or administrative or governmental agency,
ministry, or body, except where the failure to do so would not reasonably be
expected to result in a material adverse effect on Premier.
Section 3.11 TAXES. Premier has duly filed with the appropriate taxing
authorities all federal, provincial, and material local and foreign tax returns
and reports, and all returns and reports of all other governmental units having
jurisdiction with respect to taxes imposed on it or on its income, properties,
sales, franchises, operations or employee benefit plans or trusts, all such
returns were complete and accurate in all material respects when filed and all
taxes and assessments payable by Premier have been paid to the extent that such
taxes have become due. All taxes accrued or payable by Premier for all periods
through December 31, 2003 have been accrued or paid in full, whether or not due
and payable and whether or not disputed. Premier has withheld proper and
accurate amounts from its employees for all periods in full compliance with the
tax withholding provisions of applicable foreign, federal, state and local tax
laws. There are no waivers or agreements by Premier for the extension of time
for the assessment of any taxes. There are no examinations of the income tax
returns of Premier pending, or any proposed deficiencies or assessments against
Premier of additional taxes of any kind.
Section 3.12 REAL PROPERTIES. Premier does not have an interest in any
real property, except for the Leases (as defined below).
Section 3.13 LEASES OF REAL PROPERTY. All leases pursuant to which
Premier is a lessee of any real property as of the date of this Agreement (the
"LEASES") are listed in SCHEDULE 3.13 and are valid and enforceable in
accordance with their terms. There is not under any of such Leases any material
default or any claimed material default by Premier or any event of default or
event which with notice or lapse of time, or both, would constitute a material
default by Premier and in respect to which Premier has not taken adequate steps
to prevent a default on its part from occurring. The copies of the Leases
heretofore furnished to Continuum are true, correct and complete, and such
Leases have not been modified in any respect since the date they were so
furnished, and are in full force and effect in accordance with their terms.
Premier is lawfully in possession of all real properties of which they are a
lessee.
Section 3.14 CONTINGENCIES. There are no actions, suits, claims or
proceedings pending, or to the knowledge of the Shareholders threatened against,
by or affecting, Premier in any court or before any arbitrator or governmental
agency that would reasonably be expected to have a material adverse effect on
Premier or which could materially and adversely affect the right or ability of
any Shareholder to consummate the transactions contemplated hereby. To Premier's
and the Shareholders' knowledge, there is no valid basis upon which any such
action, suit, claim, or proceeding may be commenced or asserted against Premier.
There are no unsatisfied judgments against Premier and no consent decrees or
similar agreements to which Premier is subject and which would reasonably be
expected to have a material adverse effect on Premier.
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Section 3.15 MATERIAL CONTRACTS. SCHEDULE 3.15 contains a complete list
of all contracts of Premier as of the date of this Agreement that involve
consideration in excess of the equivalent of $100,000 or have a term of one (1)
year or more (the "MATERIAL CONTRACTS"). Premier has delivered to Continuum a
true, correct and complete copy of each of the written contracts, and a summary
of each oral contract, listed on SCHEDULE 3.15. Except as disclosed in SCHEDULE
3.15; (a) Premier has performed all material obligations to be performed by it
through the date of this Agreement under all such contracts, and is not in
material default thereof, (b) no condition exists or has occurred which with the
giving of notice or the lapse of time, or both, would constitute a material
default by Premier or accelerate the maturity of, or otherwise modify, any such
contract, and (c) all such contracts are in full force and effect. To Premier's
or the Shareholders' knowledge, no other party to any of such contracts is in
material default under that contract.
Section 3.16 POSSESSION OF FRANCHISES, LICENSES, ETC. Premier: (a)
possess all franchises, certificates, licenses, permits and other authorizations
(collectively, the "LICENSES") from governmental authorities, political
subdivisions or regulatory authorities that are necessary for the ownership,
maintenance and operation of its business in the manner presently conducted,
except for any License, the lack of which could not reasonably be expected to
have a material adverse effect on Premier; (b) is not in violation of any
material provisions thereof; and (c) has maintained and amended, as necessary,
all Licenses and duly completed all filings and notifications in connection
therewith.
Section 3.17 AGREEMENTS AND TRANSACTIONS WITH RELATED PARTIES. Except
as disclosed on SCHEDULE 3.17, and except as disclosed in the Premier Financial
Statements, Premier is not a party to any contract, agreement, lease or
transaction with, or any other commitment to, (a) any Shareholder, (b) any
person related by blood, adoption or marriage to any Shareholder, (c) any
director or officer of Premier, (d) any corporation or other entity in which any
of the foregoing parties has, directly or indirectly, at least five percent
(5.0%) beneficial interest in the capital stock or other type of equity interest
in such corporation or other entity, or (e) any partnership in which any such
party is a general partner or a limited partner having a five percent (5%) or
more interest therein (any or all of the foregoing being herein referred to as a
"RELATED PARTY" and, collectively, as the "RELATED PARTIES"). Without limiting
the generality of the foregoing, except as set forth in SCHEDULE 3.17, and
except as disclosed in the Premier Financial Statements, no Related Party,
directly or indirectly, owns or controls any assets or properties which are used
in the business of Premier.
Section 3.18 CONDITION AND SUFFICIENCY OF ASSETS. The buildings and
equipment leased or owned by Premier are generally in good operating condition
and repair, and are adequate for the uses to which they are being put. The
buildings and equipment of Premier are sufficient for the continued conduct of
Premier's business after the Closing in substantially the same manner as
conducted prior to the Closing.
Section 3.19 DIVIDENDS AND OTHER DISTRIBUTIONS. Except as stated in
SCHEDULE 3.19, no dividends and other distributions have been declared, paid or
payable by Premier to the Shareholders since January 1, 2004.
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Section 3.20 LITIGATION. As of the date of this Agreement, there is no
suit, action or proceeding pending, and no person has overtly-threatened in a
writing delivered to Premier or the Shareholders to commence any suit, action or
proceeding, against or affecting Premier that would, individually or in the
aggregate, reasonably be expected to have a material adverse effect on Premier,
nor is there any judgment, decree, injunction, or order of any governmental
entity or arbitrator outstanding against, or, to the knowledge of Premier,
pending investigation by any governmental entity involving, Premier or any
Shareholders that individually or in the aggregate would reasonably be expected
to have a material adverse effect on Premier.
Section 3.21 FULL DISCLOSURE. No representation or warranty of the
Shareholders contained in this Agreement, and none of the statements or
information concerning Premier contained in this Agreement and the Schedules,
contains or will contain as of the date hereof and as of the Closing Date any
untrue statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 3.22 ACCREDITED INVESTOR. Each Shareholder represents that the
Shareholder is an "accredited investor" as that term is defined in rule 501(a)
of Regulation D under the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONTINUUM
To induce the Shareholders to enter into this Agreement and to consummate
the transactions contemplated hereby, Continuum represents and warrants to and
covenants with the Shareholders as follows:
Section 4.1 ORGANIZATION. Continuum is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Continuum is entitled to own or lease its properties and to carry on its
business as and in the places where such business is now conducted, and
Continuum is duly licensed and qualified in all jurisdictions where the
character of the property owned by it or the nature of the business transacted
by it makes such license or qualification necessary, except where such failure
would not reasonably be expected to result in a material adverse effect on
Continuum or its subsidiaries.
Section 4.2 CAPITALIZATION AND RELATED MATTERS.
(a) Continuum has authorized capital stock consisting of
45,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. All
outstanding shares of Continuum Common Stock are duly and validly issued, fully
paid and nonassessable. The Continuum Shares will be, when issued, duly and
validly authorized and fully paid and non-assessable, and will be issued to the
Shareholder free of all encumbrances, claims and liens whatsoever. Continuum is
neither (i) subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its capital stock, nor (ii) liable for
dividends or other distributions declared or accrued, but unpaid, with respect
to any capital stock.
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(b) Continuum does not have outstanding any securities convertible
into capital stock, nor any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock or securities convertible into its
capital stock.
(c) Continuum has provided to Premier a list of the shareholders
of record of Continuum as of the date of this Agreement, including the number of
shares of Continuum Common Stock held by each.
Section 4.3 EXECUTION; NO INCONSISTENT AGREEMENTS; ETC.
(a) This Agreement is a valid and binding agreement of Continuum,
enforceable in accordance with its terms. Continuum has the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and the documents to be delivered by it in connection with the Closing
and to perform its obligations under this Agreement. By written consent in lieu
of a meeting, the Board of Directors of Continuum has approved execution of this
Agreement by Continuum and consummation of the Share Exchange, and no other
corporate proceedings of Continuum are required with respect thereto.
(b) The execution and delivery of this Agreement by Continuum does
not, and the consummation of the transactions contemplated hereby will not,
constitute a breach or violation of the Articles of Incorporation or Bylaws of
Continuum or a default under any of the terms, conditions or provisions of (or
an act or omission that would give rise to any right of termination,
cancellation or acceleration under) any material note, bond, mortgage, lease,
indenture, agreement or obligation to which Continuum or any of its subsidiaries
is a party, pursuant to which any of them otherwise receive benefits, or to
which any of the properties of Continuum is subject, or violate any judgment,
order, decree, statute or regulation applicable to Continuum or by which
Continuum may be subject.
Section 4.4 CORPORATE RECORDS. The statutory records, including the
stock register and minute books of Continuum, fully reflect all issuances,
transfers and redemptions of its capital stock, currently show and will
correctly show the total number of shares of its capital stock issued and
outstanding on the date hereof and on the Closing Date. The books of account,
minute books, stock record books, and other records of Continuum, all of which
have been made available to Premier, are complete and correct in all material
respects. The minute books of Continuum contain accurate and complete records of
all meetings held of, and corporate action taken by, the shareholders, the Board
of Directors, and committees of the Boards of Directors of Continuum, and no
meeting of any shareholders, the Board of Directors, or committee has been held
for which minutes have not been prepared and are not contained in such minute
books.
Section 4.5 FINANCIAL STATEMENTS.
(a) Continuum has delivered to Premier the audited balance sheets
of Continuum as of December 31, 2003, the unaudited balance sheet as of June 30,
2004, the audited statement of income for the two fiscal years ended December
31, 2003, and the unaudited statement of income for the six (6) months ended
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June 30, 2004 (collectively, the "CONTINUUM FINANCIAL STATEMENTS"). The
Continuum Financial Statements have been prepared in accordance with GAAP,
applied on a consistent basis (except that the unaudited statements do not
contain all the disclosures required by GAAP), and fairly reflect in all
material respects the consolidated financial condition of Continuum and its
subsidiaries as at the dates thereof and the consolidated results of Continuum's
operations for the periods then ended.
(b) From June 30, 2004, except as disclosed in the SEC Documents
(as defined below) there has not been any adverse change in the business,
assets, liabilities, results of operations or financial condition of Continuum
or in its relationships with suppliers, customers, employees, lessors or others,
other than changes in the ordinary course of business, none of which, singularly
or in the aggregate, have had or could reasonably be expected to have a material
adverse effect on the business, properties or financial condition of Continuum.
Section 4.6 LIABILITIES. As of the date of this Agreement, except as
disclosed in the SEC Documents, Continuum has no material debt, commitment,
liability or obligation of any kind, whether accrued, absolute, contingent or
otherwise, except (a) those reflected on the Continuum Financial Statements,
including the notes thereto, and (b) liabilities incurred in the ordinary course
of business since June 30, 2004, none of which has had or could reasonably be
expected to have a material adverse affect on the financial condition of
Continuum.
Section 4.7 COMPLIANCE WITH LAW. Since the inception of Continuum and
except for any applicable statute of limitations that have expired, the business
and activities of Continuum have at all times been conducted in accordance with
its Articles of Incorporation and Bylaws and any applicable law, regulation,
ordinance, order, License (as defined in Section 3.16), permit, rule, injunction
or other restriction or ruling of any court or administrative or governmental
agency, ministry, or body, except where the failure to do so would not
reasonably be expected to result in a material adverse effect on Continuum.
Section 4.8 TAXES. Continuum has duly filed all federal, provincial,
and material local and foreign tax returns and reports, and all returns and
reports of all other governmental units having jurisdiction with respect to
taxes imposed on it or on its income, properties, sales, franchises, operations
or employee benefit plans or trusts, all such returns were complete and accurate
when filed, except for any inaccuracies that would not reasonably be expected to
have a material adverse effect on Continuum, and all taxes and assessments
payable by Continuum have been paid to the extent that such taxes have become
due. All taxes accrued or payable by Continuum for all periods through December
31, 2003 have been accrued or paid in full, whether or not due and payable and
whether or not disputed. Continuum has withheld proper and accurate amounts from
its employees for all periods in full compliance with the tax withholding
provisions of applicable foreign, federal, state and local tax laws. There are
no waivers or agreements by Continuum for the extension of time for the
assessment of any taxes. There are no examinations of the income tax returns of
Continuum pending, or any proposed deficiencies or assessments against Continuum
of additional taxes of any kind.
Section 4.9 CONTINGENCIES. There are no actions, suits, claims or
proceedings pending or, to the knowledge of Continuum's management, threatened
against, by or affecting Continuum in any court or before any arbitrator or
governmental agency which could have a material adverse effect on Continuum or
14
which could materially and adversely affect the right or ability of Continuum to
consummate the transactions contemplated hereby. To the knowledge of Continuum,
there is no valid basis upon which any such action, suit, claim or proceeding
may be commenced or asserted against Continuum or its subsidiaries. There are no
unsatisfied judgments against Continuum and no consent decrees or similar
agreements to which Continuum or its subsidiaries is subject and which could
have a material adverse effect on Continuum or its subsidiaries or which could
materially and adversely affect the right or ability of Continuum to consummate
the transactions contemplated hereby.
Section 4.10 CONTRACTS. Continuum is not party to any contracts,
whether oral or written.
Section 4.11 LITIGATION. As of the date of this Agreement, there is no
suit, action or proceeding pending, and no person has overtly-threatened in a
writing delivered to Continuum to commence any suit, action or proceeding,
against or affecting Continuum that would, individually or in the aggregate,
reasonably be expected to have a material adverse effect on Continuum, nor is
there any judgment, decree, injunction, or order of any governmental entity or
arbitrator outstanding against, or, to the knowledge of Continuum, pending
investigation by any governmental entity involving, Continuum that individually
or in the aggregate would reasonably be expected to have a material adverse
effect on Continuum.
Section 4.12 10(B)-5. Except for the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2004, the Company has filed all required
reports, schedules, forms, statements and other documents with the Securities
and Exchange Commission (the "SEC DOCUMENTS"). The SEC Documents, as amended to
date, do not include any untrue statement of material fact, nor do they omit to
state any material fact required to be stated therein necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.
Section 4.13 FULL DISCLOSURE. No representation or warranty of
Continuum contained in this Agreement, and none of the statements or information
concerning Continuum contained in this Agreement and the Schedules, contains or
will contain as of the date hereof and as of the Closing Date any untrue
statement of a material fact nor will such representations, warranties,
covenants or statements taken as a whole omit a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 4.14 LEASES. Continuum does not lease nor rent any properties.
ARTICLE V
CONDUCT OF BUSINESS OF PREMIER PENDING CLOSING
Section 5.1 BUSINESS IN THE ORDINARY COURSE. Premier and the
Shareholders covenant and agree that between the date hereof and the Closing
Date, the business of Premier shall be conducted only in the ordinary course,
and consistent with past practice. Without limiting the generality of the
foregoing, and except as otherwise approved in writing by Continuum:
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(a) Premier shall not enter into any contract, agreement or other
arrangement that would constitute a Material Contract, except for contracts to
sell or supply goods or services to customers in the ordinary course of business
at prices and on terms substantially consistent with the prior operating
practices of Premier;
(b) except for sales of personal property in the ordinary course
of its business, Premier shall not sell, assign, transfer, mortgage, convey,
encumber or otherwise dispose of, or cause the sale, assignment, transfer,
mortgage, conveyance, encumbrance or other disposition of any of the assets or
properties of Premier or any interest therein;
(c) Premier shall not acquire any material assets, except
expenditures made in the ordinary course of business as reasonably necessary to
enable Premier to conduct its normal business operations and to maintain its
normal inventory of goods and materials, at prices and on terms substantially
consistent with current market conditions and prior operating practices;
(d) Premier shall maintain in full force and effect all existing
insurance policies or other insurance equivalent thereto;
(e) the books, records and accounts of Premier shall be maintained
in the usual, regular and ordinary course of business on a basis consistent with
prior practices and in accordance with GAAP;
(f) Premier shall use its reasonable efforts to preserve its
business organization, to preserve the good will of its suppliers, customers and
others having business relations with Premier, and to retain the services of key
employees and agents of Premier after the Closing Date on terms acceptable to
Continuum;
(g) except as they may terminate in accordance with the terms of
this Agreement, Premier shall keep in full force and effect, and not cause a
default of any of its obligations under, each of its contracts and commitments;
(h) Premier shall duly comply in all material respects with all
laws applicable to it and to the conduct of its business;
(i) Premier shall not create, incur or assume any liability or
indebtedness, except in the ordinary course of business consistent with past
practices;
(j) Premier shall not make or commit to make any capital
expenditures in excess of ten thousand dollars ($10,000) in the aggregate;
(k) other than as contemplated in this Agreement, Premier shall
not apply any of its assets to the direct or indirect payment, discharge,
satisfaction or reduction of any amount payable directly or indirectly to or for
the benefit of the Shareholder or any Related Party; and
16
(l) neither Premier nor the Shareholders shall take or omit to
take any action which would render any of the Shareholders' representations or
warranties untrue or misleading, or which would be a breach of any of the
Shareholders' covenants.
Section 5.2 NO MATERIAL CHANGES. Prior to the Closing Premier shall
not, without the prior written consent of Continuum, which consent shall not be
unreasonably withheld, materially alter its organization, capitalization, or
financial structure, practices or operations. Without limiting the generality of
the foregoing:
(a) no change shall be made in the Articles of Incorporation or
Bylaws of Premier;
(b) no change shall be made in the authorized or issued capital
stock of Premier;
(c) Premier shall not issue or grant any right or option to
purchase or otherwise acquire any of its capital stock or other securities;
(d) no dividend or other distribution or payment shall be declared
or made with respect to any of the capital stock of Premier; and
(e) no change shall be made affecting the banking arrangements of
Premier.
Section 5.3 COMPENSATION. No increase shall be made in the compensation
or employee benefits payable or to become payable to any director, officer,
employee or agent of Premier, and no bonus or profit-sharing payment or other
arrangement (whether current or deferred) shall be made to or with any such
director, officer, employee or agent, except in the ordinary course of business
and consistent with prior practices.
Section 5.4 NOTIFICATION. Each party to this Agreement shall promptly
notify the other parties in writing of the occurrence, or threatened occurrence,
of any event that would constitute a breach or violation of this Agreement by
any party or that would cause any representation or warranty made by the
notifying party in this Agreement to be false or misleading in any respect. The
Shareholders will promptly notify Continuum of any event of which the
Shareholders obtain knowledge which could have a material adverse effect on the
business, assets, financial condition or prospects of Premier. The Shareholders
shall have the right to update the Schedules to this Agreement immediately prior
to Closing; provided, if such update discloses any breach of a representation,
warranty, covenant or obligation of the Shareholders and/or Premier, Continuum
shall have the right to then exercise its available rights and remedies
hereunder.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligation of Premier, the Shareholders and Continuum to consummate the
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transactions contemplated by this Agreement are subject to the satisfaction, on
or before the Closing, of each of the following conditions; any or all of which
may be waived in whole or in part by the joint agreement of Continuum, Premier
and the Shareholders:
Section 6.1 ABSENCE OF ACTIONS. No action or proceeding shall have been
brought or threatened before any court or administrative agency to prevent the
consummation or to seek damages in a material amount by reason of the
transactions contemplated hereby, and no governmental authority shall have
asserted that the within transactions (or any other pending transaction
involving Continuum, any of its subsidiaries, the Shareholders or Premier when
considered in light of the effect of the within transactions) shall constitute a
violation of law or give rise to material liability on the part of the
Shareholders, Premier or Continuum.
Section 6.2 CONSENTS. The parties shall have received from any
suppliers, lessors, lenders, lien holders or governmental authorities, bodies or
agencies having jurisdiction over the transactions contemplated by this
Agreement, or any part hereof, such consents, authorizations and approvals as
are necessary for the consummation hereof.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF CONTINUUM
All obligations of Continuum to consummate the transactions contemplated by
this Agreement are subject to the fulfillment and satisfaction of each and every
of the following conditions on or prior to the Closing, any or all of which may
be waived in whole or in part by Continuum:
Section 7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article III of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
the Shareholders in connection with the transactions contemplated by this
Agreement shall be true, correct and complete in all material respects (except
for representations and warranties which are by their terms qualified by
materiality, which shall be true, correct and complete in all respects) as of
the date when made and shall be deemed to be made again at and as of the Closing
Date and shall be true, correct and complete at and as of such time in all
material respects (except for representations and warranties which are by their
terms qualified by materiality, which shall be true, correct and complete in all
respects).
Section 7.2 REGISTRATION RIGHTS AGREEMENT. Continuum shall have
executed a Registration Rights Agreement in substantially the form attached
hereto as EXHIBIT B.
Section 7.3 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. The Shareholders
and Premier shall have performed and complied with all material obligations
required by this Agreement to be performed or complied with by them and/or by
Premier prior to or on the Closing Date.
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ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND PREMIER
All of the obligations of the Shareholders and Premier to consummate the
transactions contemplated by this Agreement are subject to the fulfillment and
satisfaction of each and every of the following conditions on or prior to the
Closing, any or all of which may be waived in whole or in part by the
Shareholders:
Section 8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article IV of this Agreement and in any certificate,
instrument, schedule, agreement or other writing delivered by or on behalf of
Continuum in connection with the transactions contemplated by this Agreement
shall be true and correct in all material respects (except for representations
and warranties which are by their terms qualified by materiality, which shall be
true, correct and complete in all respects) when made and shall be deemed to be
made again at and as of the Closing Date and shall be true at and as of such
time in all material respects (except for representations and warranties which
are by their terms qualified by materiality, which shall be true, correct and
complete in all respects).
Section 8.2 CONTINUUM ARTICLES OF INCORPORATION. At the Closing Date,
Continuum's Articles of Incorporation shall be in the form in effect on the date
of this agreement, except that prior to the Closing Date Continuum shall have
filed a certificate of designations in the form attached as EXHIBIT C.
Section 8.3 DIRECTORS AND OFFICERS.
(a) Prior to the Closing, the Board of Directors of Continuum
shall have appointed as directors of Continuum those persons named by Premier in
a notice to Continuum, with the Board of Directors of Continuum increasing the
number of its members if warranted by the number of persons named by Premier
(taking into account resignation of the members of the Board of Directors of
Continuum effective at the Closing).
(b) Prior to the Closing, the Board of Directors of Continuum
shall have appointed as officers of Continuum, effective at the Closing, those
persons named by Premier in a notice to Continuum.
(c) Each director and officer of Continuum as of immediately prior
to the Closing shall have submitted his resignation, effective at the Closing.
Section 8.4 SEC DOCUMENTS. Prior to Closing, Continuum shall have filed
its Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.
Section 8.5 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Continuum shall
have performed and complied with all material obligations required by this
Agreement to be performed or complied with by Continuum prior to or on the
Closing Date.
Section 8.6 LIABILITIES LESS THAN $75,000. At Closing, the total
liabilities of Continuum shall be less than Seventy Five Thousand Dollars
($75,000).
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ARTICLE IX
INDEMNITY
Section 9.1 INDEMNIFICATION BY SHAREHOLDERS. Subject to Section 9.5,
prior to the Closing the Shareholders (hereinafter collectively called the
"SHAREHOLDER INDEMNITORS") shall jointly and severally defend, indemnify and
hold harmless Continuum and its direct and indirect subsidiaries (including
Premier after Closing) and affiliates, their officers, directors, employees and
agents (hereinafter, collectively, called "CONTINUUM INDEMNITEES") against and
in respect of any and all loss, damage, liability, fine, penalty, cost and
expense, including reasonable attorneys' fees and amounts paid in settlement
(collectively, "CONTINUUM LOSSES"), suffered or incurred by any Continuum
Indemnitee by reason of, or arising out of any misrepresentation, breach of
warranty or breach or non-fulfillment of any agreement of the Shareholders
contained in this Agreement or in any certificate, schedule, instrument or
document delivered to Continuum by or on behalf of the Shareholders or Premier
pursuant to the provisions of this Agreement (without regard to materiality
thresholds contained therein).
Section 9.2 INDEMNIFICATION BY CONTINUUM. Subject to Section 9.5, prior
to the Closing Continuum shall, indemnify and hold harmless the Shareholders
(hereinafter called "SHAREHOLDER INDEMNITEES") against and in respect of any and
all loss, damage, liability, cost and expense, including reasonable attorneys'
fees and amounts paid in settlement (collectively, "SHAREHOLDER LOSSES" and
together with the Continuum Losses, the "Indemnifiable Losses"), suffered or
incurred by Shareholder Indemnitees by reason of or arising out of any
misrepresentation, breach of warranty or breach or non-fulfillment of any
agreement of Continuum contained in this Agreement or in any certificate,
schedule, instrument or document delivered to the Shareholders by or on behalf
of Continuum pursuant to the provisions of this Agreement (without regard to
materiality thresholds contained therein).
Section 9.3 DEFENSE OF CLAIMS.
(a) Each party seeking indemnification hereunder (an
"INDEMNITEE"): (i) shall provide the other party or parties (the "INDEMNITOR")
written notice of any claim or action by a third party arising after the Closing
Date for which an Indemnitor may be liable under the terms of this Agreement,
within ten (10) days after such claim or action arises and is known to
Indemnitee, and (ii) shall give the Indemnitor a reasonable opportunity to
participate in any proceedings and to settle or defend any such claim or action.
The expenses of all proceedings, contests or lawsuits with respect to such
claims or actions shall be borne by the Indemnitor. If the Indemnitor wishes to
assume the defense of such claim or action, the Indemnitor shall give written
notice to the Indemnitee within ten (10) days after notice from the Indemnitee
of such claim or action, and the Indemnitor shall thereafter assume the defense
of any such claim or liability, through counsel reasonably satisfactory to the
Indemnitee, provided that Indemnitee may participate in such defense at their
own expense, and the Indemnitor shall, in any event, have the right to control
the defense of the claim or action.
(b) If the Indemnitor shall not assume the defense of, or if after
so assuming it shall fail to defend, any such claim or action, the Indemnitee
may defend against any such claim or action in such manner as such Indemnitees
20
may deem appropriate and the Indemnitees may settle such claim or litigation on
such terms as they may deem appropriate but subject to the Indemnitor's
approval, such approval not to be unreasonably withheld; provided, however, that
any such settlement shall be deemed approved by the Indemnitor if the Indemnitor
fails to object thereto, by written notice to the Indemnitee, within fifteen
(15) days after the Indemnitor's receipt of a written summary of such
settlement. The Indemnitor shall promptly reimburse the Indemnitee for the
amount of all expenses, legal and otherwise, incurred by the Indemnitee in
connection with the defense and settlement of such claim or action.
(c) If a non-appealable judgment is rendered against any
Indemnitee in any action covered by the indemnification hereunder, or any lien
attaches to any of the assets of any of the Indemnitee, the Indemnitor shall
immediately upon such entry or attachment pay such judgment in full or discharge
such lien unless, at the expense and direction of the Indemnitor, an appeal is
taken under which the execution of the judgment or satisfaction of the lien is
stayed. If and when a final judgment is rendered in any such action, the
Indemnitor shall forthwith pay such judgment or discharge such lien before any
Indemnitee is compelled to do so.
Section 9.4 WAIVER. The failure of any Indemnitee to give any notice or
to take any action hereunder shall not be deemed a waiver of any of the rights
of such Indemnitee hereunder, except to the extent that Indemnitor is actually
prejudiced by such failure.
Section 9.5 CAPS ON LOSSES. The aggregate liability of the Shareholders
after the Closing for Continuum Losses shall not exceed an amount equal to the
value of the Exchange Consideration paid to the Shareholders. The aggregate
liability of Continuum after the Closing for Shareholder Losses shall not exceed
an amount equal to the value of the Exchange Consideration paid to the
Shareholders.
Section 9.6 BASKET. No party shall have any liability hereunder for
Indemnifiable Losses after the Closing, with respect to a breach of the
representations and warranties contained herein, until the aggregate of all
Indemnifiable Losses for which the Shareholder or Continuum as applicable, are
responsible under this Agreement exceeds One Hundred Thousand ($100,000) Dollars
(the "BASKET"); provided that once such Basket is exceeded for the Shareholders
or Continuum as applicable, the responsible party or parties shall be
responsible for all Indemnifiable Losses, from the first dollar as if such
Basket never existed.
Section 9.7 NO POST-CLOSING REMEDIES. After the Closing, except in the
event of fraud, no party to this Agreement will have any remedy against any
other party for breach of any obligation under this Agreement or inaccuracy of
any representation made in this Agreement.
ARTICLE X
TERMINATION
Section 10.1 TERMINATION. This agreement may be terminated at any time
on or prior to the Closing:
(a) by mutual consent of Continuum and the Shareholders;
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(b) at the election of Continuum if: (i) any representation of the
Shareholders stated in this Agreement was inaccurate when made or becomes
inaccurate such that the condition stated in Section 7.1 would not be satisfied,
(ii) the Shareholders or Premier fail to perform or comply with any of the
obligations that the Shareholders or Premier are required to perform or to
comply with under this Agreement such that the condition set forth in Section
7.3 would not be satisfied, or (iii) the Closing has not been consummated by
October 31, 2004; or
(c) at the election of the Shareholders if: (i) any representation
of Continuum stated in this Agreement was inaccurate when made or becomes
inaccurate such that the condition stated in Section 8.1 would not be satisfied,
(ii) Continuum fails to perform or comply with any of the obligations that it is
required to perform or to comply with under this Agreement such that the
condition set forth in Section 8.2 would not be satisfied, or (iii) the Closing
has not been consummated by October 31, 2004.
Section 10.2 MANNER AND EFFECT OF TERMINATION. Written notice of any
termination ("TERMINATION NOTICE") pursuant to this Article X shall be given by
the party electing termination of this Agreement ("TERMINATING PARTY") to the
other party or parties (collectively, the "Terminated Party"), and such notice
shall state the reason for termination. The party or parties receiving
Termination Notice shall have a period of ten (10) days after receipt of
Termination Notice to cure the matters giving rise to such termination to the
reasonable satisfaction of the Terminating Party. If the matters giving rise to
termination are not cured as required hereby, this Agreement shall be terminated
effective as of the close of business on the tenth (10th) day following the
Terminated Party's receipt of Termination Notice. Upon termination of this
Agreement prior to the consummation of the Closing and in accordance with the
terms hereof, this Agreement shall become void and of no effect, and none of the
parties shall have any liability to the others, except that nothing contained
herein shall relieve any party from: (a) its obligations under Sections 2.2 and
2.3; or (b) liability for its intentional breach of any representation, warranty
or covenant contained herein, or its intentional failure to comply with the
terms and conditions of this Agreement or to perform its obligations hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.1 NOTICES.
(a) All notices, requests, demands, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given upon receipt if delivered in person, or upon the expiration of
two (2) business days after the date sent if sent by federal express (or similar
overnight courier service) to the parties at the following addresses:
(i) If to Continuum, to
Continuum Group C Inc.
c/x Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
00
Xxxx Xxxxxx Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
(ii) If to Premier, to:
Premier Alliance Group, Inc.
0000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxx Xxxxxxx
with a copy to;
Xxxxxx & Xxxxx LLP
00 Xxxxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx, Esq.
(iii) If to a Shareholder, to the name and address as listed on
SCHEDULE A attached hereto.
(b) Notices may also be given in any other manner permitted by
law, effective upon actual receipt. Any party may change the address to which
notices, requests, demands or other communications to such party shall be
delivered or mailed by giving notice thereof to the other parties hereto in the
manner provided herein.
Section 11.2 SURVIVAL. The representations, warranties, agreements and
indemnifications of the parties contained in this Agreement or in any writing
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the parties and the consummation
of the transactions contemplated herein.
Section 11.3 TIME IS OF THE ESSENCE. It is understood and agreed among
the parties hereto that time is of the essence in this Agreement and this
applies to all terms and conditions contained herein.
Section 11.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements relating thereto.
Section 11.5 AMENDMENT. This Agreement may be amended by, but only by,
a writing executed by all parties hereto.
Section 11.6 GOVERNING LAW. This Agreement shall be governed by the
corporate laws of the State of Nevada, except that no doctrine of choice of law
shall be used to apply any law other than that of New York, and as to matters of
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law other than corporate law, shall be governed by the laws of the State of New
York as they apply to contracts entered into and wholly to be performed in such
state by residents thereof.
Section 11.7 JURISDICTION. Any legal suit, action or proceeding arising
out of or relating to this Agreement shall be instituted exclusively in New York
State Supreme Court, County of New York or in the United States District Court
for the Southern District of New York, and each party waives any objection to
the venue of any such suit, action or proceeding and the right to assert that
such forum is not a convenient forum, and irrevocably consents to the
jurisdiction of the New York State Supreme Court, County of New York, and the
United States District Court for the Southern District of New York in any such
suit, action or proceeding.
Section 11.8 COUNTERPARTS. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 11.9 WAIVER. No waiver of the provisions hereof shall be
effective unless in writing and signed by the party to be charged with such
waiver. No waiver shall be deemed a continuing waiver or waiver in respect of
any subsequent breach or default, either of similar or different nature unless
expressly so stated in writing.
Section 11.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns; provided that this Agreement may not be assigned by any party without
the consent of the other parties.
Section 11.11 SEVERABILITY. Should any clause, section or part of this
Agreement be held or declared to be void or illegal for any reason, all other
causes, sections or parts of this Agreement which can be effected without such
illegal clause, section or part shall nevertheless continue in full force and
effect.
Section 11.12 INTERPRETATION. As used in this Agreement, references to
the singular will include the plural and vice versa and references to the
masculine gender will include the feminine and neuter genders and vice versa, as
appropriate.
Section 11.13 HEADINGS. The headings or captions under Sections of this
Agreement are for convenience and reference only, and do not form a part hereof,
and do not in any way modify, interpret or construe the intent of the parties or
affect any of the provisions of this Agreement.
Section 11.14 EFFECTIVENESS. This Agreement will only become effective
once it is signed by all Shareholders. By signing this Agreement, those
Shareholders owning shares of Premier Preferred Stock hereby waive, effective as
of the Closing, all rights with respect to those shares except those rights
contained in this Agreement.
[Signature Pages Follow]
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[SIGNATURE PAGE TO SHARE EXCHANGE AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day, month and year first written above.
CONTINUUM GROUP C INC.
By: /S/ XXXXXX X. XXXXX
---------------------------
Name: Xxxxxx X. Xxxxx
Title: President
PREMIER ALLIANCE GROUP, INC.
By: /S/ XXXX XXXXXX
-----------------------------
Name: Xxxx Xxxxxxx
Title: Secretary
[SIGNATURE PAGE TO SHARE EXCHANGE AGREEMENT]
SHAREHOLDERS
[Signed by all Shareholders]
------------------------------------
Signature
------------------------------------
Print Name
Owner of shares of (check one):
/ / Premier Common Stock
/ / Premier Preferred Stock
