Contract
EQUITY EXCHANGE AGREEMENT,
dated as of December 31,
2010 (the “Agreement”), among
VINYL PRODUCTS, INC., a
Nevada corporation (“VPI”), XXXXXXX X’XXXXXX LLC, an
Arizona limited liability company (the “Company”), and THE MEMBERS OF THE COMPANY
IDENTIFIED IN SCHEDULE A HERETO (the “Company
Members”).
WHEREAS the Company Members
are owners of 100% of the issued and outstanding membership interests in the
Company (the “Company
Interests”); and
WHEREAS VPI desires to acquire
the Company Interests in exchange for an aggregate of 20,000,000 authorized, but
unissued, shares of Common Stock, par value $0.0001 per share, of VPI (the
“VPI Shares”),
and the Company Members desire to exchange the Company Interests for the VPI
Shares; and
WHEREAS, prior to the date
hereof, the board of directors of VPI and the Company Members have, approved and
adopted this Agreement; and
WHEREAS, simultaneously with
the execution and delivery hereof, Xxxxxxx Xxxxxxxxxx and
Xxxxxx Xxxxx (collectively, the “VFC Buyers”), and VPI
are executing and delivering the Stock Purchase Agreement, dated as of the date
hereof, pursuant to which VPI will, among other things, sell to the VFC Buyers
of all of the outstanding capital stock of The Vinyl Fence Company, Inc., a
California corporation (“VFC”) and VFC
Franchise Corp., a California corporation (“VFC Franchise” in
exchange for (a) 20,000,000 shares of Common Stock of VPI, and (b)
the assumption by the VFC Buyers of all of the liabilities of VPI relating to
periods prior to the Closing (as defined below), other than liabilities of the
Company.
NOW, THEREFORE, in
consideration of the premises and mutual representations, warranties and
covenants herein contained, the parties hereby agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.01 Definitions.
(a) The
following terms, as used herein, have the following meanings:
“Lien” means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.
“Person” means an
individual, a corporation, a partnership, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
"Taxes" means all
taxes, assessments and governmental charges imposed by any federal, state,
county, local or foreign government, taxing authority, subdivision or agency
thereof, including interest, penalties or additions thereto.
(b) Each
of the following terms is defined in the Section set forth opposite such
term:
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Term
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Section
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Closing
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2.02
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Commission
Documents
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3.06
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Company
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Recitals
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Company
Interests
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Recitals
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Company
Members
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Recitals
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Governmental
Entity
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3.04
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Material
Adverse Effect
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3.01
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Post-Closing
Filings
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6.04(b)
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Securities
Act
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2.02
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VFC
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Recitals
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VFC
Franchise
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Recitals
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VPI
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Recitals
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VPI
Balance Sheet
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3.08
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VPI
Common Stock
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3.02
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VPI
Shares
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Recitals
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ARTICLE
2
ACQUISITION
AND EXCHANGE
Section
2.01 Exchange
of Equity. Upon the terms
and subject to the conditions of this Agreement, VPI will acquire the Company
Interests in exchange for the VPI Shares at the Closing.
Section
2.02 Closing. The closing (the
“Closing”) of
the acquisition of the Company Interests hereunder shall take place at the
offices of the Company in San Juan Capistrano, California as soon as possible,
but in no event later than three business days, after the satisfaction of the
conditions set forth in Article VII, or at such other time or place as VPI and
the Company may agree. At the Closing,
(a) VPI
will deliver to the Company Members or their designees, stock certificates
representing the VPI Shares in accordance with Schedule A
hereto.
(b) The
Company Members will assign and deliver to VPI, the Company Interests, so as to
make VPI the holder thereof, free and clear of all Liens.
All VPI
Shares to be issued hereunder shall be deemed “restricted securities” as
defined in paragraph (a) of Rule 144 under the Securities Act of 1933, as
amended (the “Securities
Act”). All VPI Shares to be issued under the terms of this
Agreement shall be issued pursuant to an exemption from the registration
requirements of the Securities Act, under Section 4(2) of the Securities Act and
the rules and regulations promulgated thereunder. Certificates
representing the VPI Shares to be issued hereunder shall bear a restrictive
legend in substantially the following form:
-2-
The
shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be offered for sale, sold, or
otherwise disposed of, except in compliance with the registration provisions of
such Act or pursuant to an exemption from such registration provisions, the
availability of which is to be established to the satisfaction of the
Company.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF VPI
VPI
hereby represents and warrants to the Company and the Company Members
that:
Section
3.01 Organization. VPI
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. VPI is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not in
the aggregate have a material adverse effect on the business, operations or
financial condition (a “Material Adverse
Effect”) on VPI. VPI has heretofore delivered to the Company
accurate and complete copies of the Articles of Incorporation and Bylaws, as
currently in effect, of VPI.
Section
3.02 Capitalization.
(a) The
authorized capital stock of VPI consists of (i) 100,000,000 shares of common
stock, par value $.0001 per share (“VPI Common Stock”),
of which, as of the date hereof, 20,064,000 were issued and outstanding and (ii)
10,000,000 shares of preferred stock, par value $.0001 per share, of which, as
of the date hereof, none were issued and outstanding. All the issued
and outstanding shares of VPI Common Stock are validly issued, fully paid and
nonassessable and free of preemptive rights. Except as set forth
above, there are not now, and at the Closing Date there will not be, any shares
of capital stock (or securities substantially equivalent to capital stock) of
VPI issued or outstanding or any subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or commitments of any
character obligating VPI to issue, transfer or sell any of its
securities.
(b) Other
than VFC and VFC Franchise, VPI does not own, directly or indirectly, any
capital stock or other equity securities of any corporation or have any direct
or indirect equity or ownership interest in any business.
Section
3.03 Corporate
Authorization. The execution, delivery and performance by VPI
of this Agreement and the consummation by VPI of the transactions contemplated
hereby are within VPI’s corporate powers and have been duly authorized by all
necessary corporate action of VPI. This Agreement has been duly and
validly executed and delivered by VPI and constitutes a valid and binding
agreement of VPI, enforceable against VPI in accordance with its
terms.
-3-
Section
3.04 Governmental
Authorization; Consents.
(a) The
execution, delivery and performance by VPI of this Agreement require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority (a “Governmental
Entity”).
(b) No
consent, approval, waiver or other action by an Person (other than any
Governmental Entity referred to in (a) above) under any contract, agreement,
indenture, lease, instrument, or other document to which VPI is a party or by
which either of them is bound is required or necessary for the execution,
delivery and performance of this Agreement by VPI or the consummation of the
transactions contemplated hereby.
Section
3.05 Non-Contravention. The
execution, delivery and performance by VPI of this Agreement do not and will not
(i) contravene or conflict with the articles of incorporation or bylaws of VPI,
(ii) contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to VPI; (iii) constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of VPI or
to a loss of any benefit to which VPI is entitled under any provision of any
agreement, contract, or other instrument binding upon VPI or any license,
franchise, permit or other similar authorization held by VPI or (iv) result in
the creation or imposition of any Lien on any asset of VPI.
Section 3.06 Commission
Documents, Financial Statements. The Common Stock
of VPI is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and
VPI has timely filedall reports, schedules, forms, statements and other
documents required to be filed by it with the Commission since November 20, 2008
(the date on which VPI, formerly Red Oak Concepts, Inc., acquired all of the
outstanding shares of common stock of VFC through a reverse merger) pursuant to
the reporting requirements of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein as the “Commission
Documents”). At the times of their respective filings, based
on the knowledge of the president and the chief financial officer of VPI, the
Form 10-Q for the fiscal quarter ended September 30, 2010 (the “Form 10-Q”) and the
Form 10-K for the fiscal year ended December 31, 2009, as amended (the “Form 10-K”) complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and the Form 10-Q and
Form 10-K did not contain any untrue statement of a material fact or omit to
state 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. As of their respective dates, the financial
statements of VPI included in the Commission Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial position of VPI and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
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Section 3.07 Absence
of Certain Changes. Since September 30, 2010, except as
disclosed in the Commission Documents or on Section 3.07 of the
VPI Disclosure Schedule, VPI has conducted its business in the ordinary course
consistent with past practices and there has not been any material adverse
change in the business, operations, properties, prospects or financial condition
of VPI and its subsidiaries, taken as a whole.
Section
3.08 No
Undisclosed Liabilities. There are no material liabilities of
VPI of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability, other than:
(a) Liabilities
disclosed or provided for in the unaudited balance sheet of VPI as of September
30, 2010 (the “VPI
Balance Sheet”) previously delivered to the Company;
(b) Liabilities
incurred in the ordinary course of business consistent with past practice since
the VPI Balance Sheet Date, which in the aggregate are not material to VPI;
and
(c) Liabilities
not required under generally accepted accounting principles to be shown on the
VPI Balance Sheet for reasons other than the contingent nature thereof or the
difficulty of determining the amount thereof.
Section
3.09 Properties. Except for the capital
stock of VFC and VFC Franchise and the property and assets set forth in Section 3.09 of the
VPI Disclosure Schedule, VPI does not own, lease or otherwise hold
any property and assets (whether real or personal, tangible or
intangible).
Section 3.10 Contracts
and Commitments. Except for agreements, contracts,
plans, leases, arrangements or commitments set forth in Section 3.10 of the
VPI Disclosure Schedule, VPI is not a party to or subject to any agreement, contract, plan,
lease, arrangement or commitment that provides for monetary obligations to VPI
in excess of $25,000 per year.
Section 3.11 Litigation. Except
as disclosed in Section 3.11 of the
VPI Disclosure Schedule, there is no action, suit, investigation, proceeding,
review pending against, or to the knowledge of VPI threatened against or
affecting, VPI or any of its properties before any court or arbitrator or any
Governmental Entity which, in the aggregate, are reasonably likely to have a
Material Adverse Effect of VPI or materially delay the transactions contemplated
hereby.
Section 3.12 Compliance
with Laws. Not applicable, as VPI is not an operatinig
company] The business of VPI is not being conducted in violation of any
applicable law, ordinance, rule, regulation, decree or order of any Governmental
Entity, except for violations which in the aggregate do not and would not
reasonably be expected to have a Material Adverse Effect of VPI.
-5-
Section 3.13 Taxes. Except
as set forth in Section 3.13 of the
VPI Disclosure Schedule, VPI has duly filed all material federal, state, local
and foreign tax returns required to be filed by it with respect to fiscal years
2008 and 2009, and VPI has duly paid, caused to be paid or made adequate
provision for the payment of all Taxes required to be paid in respect of the
periods covered by such returns and has made adequate provision for payment of
all Taxes anticipated to be payable in respect of all calendar periods since the
periods covered by such returns. All deficiencies and assessments
asserted as a result of IRS examinations or other audits by federal, state,
local or foreign taxing authorities have been paid, fully settled or adequately
provided for in the financial statements of VPI, and no issue or claim has been
asserted for Taxes by any taxing authority for any prior period, the adverse
determination of which would result in a deficiency which would have a Material
Adverse Effect of VPI, other than those heretofore paid or provided
for. Except as set forth in Section 3.13 of the
VPI Disclosure Schedule, there are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any federal or
foreign income tax return of VPI or its subsidiaries.
Section 3.14 Finders’
Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of VPI
who might be entitled to any fee or commission from the Company, VPI or any of
their respective affiliates upon consummation of the transactions contemplated
by this Agreement.
Section 3.15 Employees. Except as set
forth in Section 3.15 of the VPI Disclosure Schedule, VPI does not (a) have any
employees, or (b) have, or contribute to, any pension, profit-sharing, option,
other incentive plan, or any other type of Employee Benefit Plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended), or (c) have any obligation to or customary arrangement with former
employees for bonuses, incentive compensation, vacations, severance pay, sick
pay, sick leave, insurance, service award, relocation, disability, tuition
refund, or other benefits, whether oral or written.
Section 3.16 Questionable
Payments. Neither VPI, nor any director, officer, agent,
employee, or other person associated with, or acting on behalf of, VPI, nor any
stockholder of VPI has, directly or indirectly: used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment.
Section 3.17 Validity
of VPI Shares to be Issued. The shares of VPI Shares to
be issued at the Closing are validly authorized and, when the such VPI Shares
have been duly delivered pursuant to the terms of this Agreement, such VPI
Shares will be validly issued, fully paid, and nonassessable and will not have
been issued, owned or held in violation of any preemptive or similar right of
stockholder.
Section 3.18 Completeness
of Disclosure. No representation or warranty by VPI in this
Agreement contains or, and at the Closing Date will contain, an untrue statement
of material fact or omits or, at the Closing Date, will omit to state a material
fact required to be stated therein or necessary to make the statements made not
misleading.
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ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to VPI that:
Section
4.01 Organization. The
Company is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Company is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not in the aggregate have a Material Adverse Effect on the
Company. The Company has heretofore delivered to VPI accurate and
complete copies of the organizational documents, as currently in effect, of the
Company.
Section
4.02 Capitalization.
(a) Except
for the Company Interests, there are not now, and at the Closing Date there will
not be, any equity interests of the Company issued or outstanding or any
subscriptions, options, warrants, calls, rights, convertible securities or other
agreements or commitments of any character obligating the Company to issue,
transfer or sell any of its equity interests.
(b) The
Company does not own, directly or indirectly, any capital stock or other equity
securities of any corporation or have any direct or indirect equity or ownership
interest in any business.
Section
4.03 Authorization. The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby are within
the Company’s organizational powers and have been duly authorized by all
necessary action of the Company. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
Section
4.04 Governmental
Authorization; Consents.
(a) The
execution, delivery and performance by the Company of this Agreement require no
action by or in respect of, or filing with, any Governmental
Entity.
(b) No
consent, approval, waiver or other action by an Person (other than any
Governmental Entity referred to in (a) above) under any contract, agreement,
indenture, lease, instrument, or other document to which the Company is a party
or by which either of them is bound is required or necessary for the execution,
delivery and performance of this Agreement by the Company or the consummation of
the transactions contemplated hereby.
-7-
Section
4.05 Non-Contravention. The
execution, delivery and performance by the Company of this Agreement do not and
will not (i) contravene or conflict with the organizational documents of the
Company, (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Company; (iii) constitute a default under or give rise
to any right of termination, cancellation or acceleration of any right or
obligation of the Company or to a loss of any benefit to which the Company is
entitled under any provision of any agreement, contract, or other instrument
binding upon the company or any license, franchise, permit or other similar
authorization held by the Company or (iv) result in the creation or imposition
of any Lien on any asset of the Company.
Section
4.06 No
Undisclosed Liabilities. To the knowledge of the Company,
there are no material liabilities of the Company of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than:
(a) Liabilities
incurred in the ordinary course of business, which in the aggregate are not
material to the Company; and
(b) Liabilities
not required under generally accepted accounting principles to be shown on a
balance sheet for reasons other than the contingent nature thereof or the
difficulty of determining the amount thereof.
Section
4.07 Properties. Except for the property
and assets set forth in Section 4.07 of the
Company Disclosure Schedule, the Company does not own, lease or
otherwise hold any property and assets (whether real or personal, tangible or
intangible).
Section 4.08 Contracts
and Commitments.
The Company is not a party to or subject to any agreement, contract, plan,
lease, arrangement and commitment.
Section 4.09 Litigation. There is no action, suit,
investigation, proceeding, review pending against, or to the knowledge of the
Company threatened against or affecting, the Company or any of its properties
before any court or arbitrator or any Governmental Entity which, in the
aggregate, are reasonably likely to have a Material Adverse Effect of the
company or materially delay the transactions contemplated hereby.
Section 4.10 Compliance
with Laws; No Defaults. The business of the Company is not
being conducted in violation of any applicable law, ordinance, rule, regulation,
decree or order of any Governmental Entity, except for violations which in the
aggregate do not and would not reasonably be expected to have a Material Adverse
Effect of the Company.
Section 4.11 Taxes. The Company has
duly filed all material federal, state, local and foreign tax returns required
to be filed by it with respect to fiscal year 2009 and 2008, and the Company has
duly paid, caused to be paid or made adequate provision for the payment of all
Taxes required to be paid in respect of the periods covered by such returns and
has made adequate provision for payment of all Taxes anticipated to be payable
in respect of all calendar periods since the periods covered by such
returns. All deficiencies and assessments asserted as a result of
such examinations or other audits by federal, state, local or foreign taxing
authorities have been paid, fully settled or adequately provided for in the
financial statements of the Company, and no issue or claim has been asserted for
Taxes by any taxing authority for any prior period, the adverse determination of
which would result in a deficiency which would have a Material Adverse Effect of
the Company, other than those heretofore paid or provided forThere are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal or foreign income tax return of the
Company.
-8-
Section 4.12 Finders’
Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of the
Company who might be entitled to any fee or commission from the Company, VPI or
any of their respective affiliates upon consummation of the transactions
contemplated by this Agreement.
Section 4.13 Employees.
The Company does not (a) have any employees, or (b) have, or contribute to, any
pension, profit-sharing, option, other incentive plan, or any other type of
Employee Benefit Plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended), or (c) have any obligation to or
customary arrangement with former employees for bonuses, incentive compensation,
vacations, severance pay, sick pay, sick leave, insurance, service award,
relocation, disability, tuition refund, or other benefits, whether oral or
written.
Section 4.14 Questionable
Payments. Neither the Company, nor any director, officer,
agent, employee, or other person associated with, or acting on behalf of, the
Company, nor any Company Member has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful
payment.
Section 4.15 Completeness
of Disclosure. No representation or warranty by the Company in
this Agreement contains or, and at the Closing Date will contain, an untrue
statement of material fact or omits or, at the Closing Date, will omit to state
a material fact required to be stated therein or necessary to make the
statements made not misleading.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF COMPANY MEMBERS
The
Company Members hereby represent and warrant to VPI that:
Section
5.01 Authority. The
Company Members have approved this Agreement and duly authorized the execution
and delivery hereof. The Company Members have full power and
authority to execute, deliver, and perform this Agreement and the transactions
contemplated hereby and in connection herewith.
Section
5.02 Ownership
of Company Interests. The Company Members own beneficially all
of the Company Interests. The Company Members have full power and
authority to transfer the Company Interests to VPI under, pursuant to, and in
accordance with, this Agreement, and such shares are free and clear of any Liens
and such shares are not subject to any claims as to the ownership thereof, or
any rights, powers or interest therein, by any third party and are not subject
to any preemptive or similar rights of stockholders.
-9-
Section
5.04 Investment Representations
and Covenants.
(i) The
Company Members represent that they are acquiring the VPI Shares for their own
accounts and for investment only and not with a view to distribution or resale
thereof within the meaning of such phrase as defined under the Securities
Act. The Company Members shall not dispose of any part or all of such
VPI Shares in violation of the provisions of the Securities Act and the rules
and regulations promulgated under the Securities Act by the Securities and
Exchange Commission and all applicable provisions of state securities laws and
regulations.
(ii) The
certificate or certificates representing the shares of VPI Shares shall bear a
legend in substantially the form set forth in Section 2.02 hereof.
(iii) The
Company Members acknowledge being informed that the VPI Shares shall be
unregistered, shall be “restricted securities” as
defined in paragraph (a) of Rule 144 under the Securities Act, and must be held
indefinitely unless (a) they are subsequently registered under the
Securities Act, or (b) an exemption from such registration is
available. The Company Members further acknowledge that VPI does not
have an obligation to currently register such securities for the account of
Company Members.
(iv) The
Company Members acknowledge that they have been afforded access to all material
information which they have requested relevant to their decision to acquire the
VPI Shares and to ask questions of VPI’s management and that, except as set
forth herein, neither VPI nor anyone acting on behalf of VPI has made any
representations or warranties to the Company Members which have induced,
persuaded, or stimulated the Company Members to acquire such VPI
Shares.
(v)
Either alone, or together with their investment advisor(s), the Company
Members have the knowledge and experience in financial and business matters to
be capable of evaluating the merits and risks of the prospective investment in
the VPI Shares, and the Company Members are and will be able to bear the
economic risk of the investment in such VPI Shares.
ARTICLE
VI
COVENANTS
Section
6.01 Covenants
of VPI. VPI agrees that:
(a) Conduct
of VPI. During the period from the date of this Agreement and
continuing until the Closing Date, VPI shall conduct its business in the
ordinary course consistent with past practices and use its best efforts to
preserve intact its business organizations and relationships with third parties
and to keep available the services of its present officers and
employees. Without limiting the generality of the foregoing, from the
date hereof until the Closing Date, VPI will not:
(i) Adopt
or propose any change in its certificate of incorporation or bylaws, except for
those bylaw amendments contemplated by this Agreement and the related
transactions;
-10-
(ii) Merge
or consolidate with any other Person or acquire a material amount of assets of
any other Person;
(iii) Pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than (i) the payment,
discharge or satisfaction in the ordinary course of business consistent with
past practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the VPI Balance Sheet (or the notes
thereto) or incurred in the ordinary course of business consistent with past
practice, or (ii) payments made in accordance with Settlement Agreements, if
any, that have been listed on the VPI Disclosure Schedule;
(iv)
Except as expressly permitted by this Agreement, sell, lease, license or
otherwise dispose of any material assets or properties except (A) pursuant to
existing contracts or commitments and (B) in the ordinary course of business
consistent with past practice; or
(v) Agree
or commit to do any of the foregoing.
VPI will
not (i) take or agree or commit to take any action that would make any
representation and warranty of VPI inaccurate in any respect at, or as of any
time prior to, the Closing Date, (ii) omit or agree or commit to omit to take
any action necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time, or (iii) make any agreement or reach
any understanding not approved in writing by VPI as a condition for obtaining
any consent, authorization, approval, order, license, certificate, or permit
required for the consummation of the transactions contemplated by this
Agreement.
(b) Board of
Directors of VPI. Effective at the Closing, the Board of
Directors of VPI shall take all required corporate action to cause the Board of
Directors of VPI to consist of four members and to appoint Xxxx Xxxxxxx and
Xxxxx Xxxxx as additional members of the Board of Directors.
(c) Access to
Information. Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released), VPI
shall afford to the officers, employees, accountants, counsel and other
representatives of the Company, access, during normal business hours during the
period prior to the Closing, to all of VPI’s properties, books, contracts,
commitments and records and, during such period, VPI shall furnish promptly to
the other all information concerning the Company’s business, properties and
personnel as the Company may reasonably request.
-11-
(d) Confidentiality. Prior
to the Closing Date and after any termination of this Agreement, VPI and its
affiliates will hold, an will use best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning the Company furnished to VPI or its
affiliates in connection with the transaction contemplated by this Agreement,
except to the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by VPI, (ii) in the public domain
through no fault of VPI or (iii) later lawfully acquired by VPI from sources
other than the Company or the Company Members; provided that VPI may
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as such Persons are informed by VPI of
the confidential nature of such information and are directed by VPI to treat
such information confidentially. The obligation of VPI and its
affiliates to hold such information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. If
this Agreement is terminated, VPI and its affiliates will, and will use best
efforts to cause their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or deliver to the Company,
upon request, all documents and other materials, and all copies thereof,
obtained by VPI and its affiliates or on their behalf from the Company or the
Company Members in connection with this Agreement that are subject to such
confidence.
Section 6.02 Covenants
of the Company. The Company agrees that:
(a) Conduct
of the Company. During the period from the date of this
Agreement and continuing until the Closing Date, the Company shall conduct its
business in the ordinary course consistent with past practices and to use its
best efforts to preserve intact its business organizations and relationships
with third parties and to keep available the services of its present officers
and employees. Without limiting the generality of the foregoing, from
the date hereof until the Closing Date, the Company will not:
(i) Adopt
or propose any change in its articles of organization;
(ii) Merge
or consolidate with any other Person or acquire a material amount of assets of
any other Person;
(iii) Pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business consistent with
past practice or in accordance with their terms, of incurred in the ordinary
course of business consistent with past practice;
(iv)
Except as expressly permitted by this Agreement, sell, lease, license or
otherwise dispose of any material assets or properties except (A) pursuant to
existing contracts or commitments and (B) in the ordinary course of business
consistent with past practice; or
(v) Agree
or commit to do any of the foregoing.
The
Company will not (i) take or agree or commit to take any action that would make
any representation and warranty of the Company inaccurate in any respect at, or
as of any time prior to, the Closing Date, (ii) omit or agree or commit to omit
to take any action necessary to prevent any such representation or warranty from
being inaccurate in any respect at any such time or (iii) make any agreement or
reach any understanding not approved in writing by VPI as a condition for
obtaining any consent, authorization, approval, order, license, certificate, or
permit required for the consummation of the transactions contemplated by this
Agreement.
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(b) Access to
Information. Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released), the
company shall afford to the officers, employees, accountants, counsel and other
representatives of VPI, access, during normal business hours during the period
prior to the Closing, to all of the Company’s properties, books, contracts,
commitments and records and, during such period, the Company shall furnish
promptly to the other all information concerning the Company’s business,
properties and personnel as VPI may reasonably request, in each case, to the
extent necessary to permit VPI to determine any matter relating to its rights
and obligations hereunder or to any period ending on or before the Closing
Date.
(c) Confidentiality. Prior
to the Closing Date and after any termination of this Agreement, the Company and
its affiliates will hold, an will use best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning VPI furnished to the Company or its
affiliates in connection with the transaction contemplated by this Agreement,
except to the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by the Company, (ii) in the public
domain through no fault of the Company or (iii) later lawfully acquired by the
Company from sources other than VPI; provided that
the Company may disclose such information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement and to its lenders in
connection with obtaining the financing for the transactions contemplated by
this Agreement so long as such Persons are informed by the Company of the
confidential nature of such information and are directed by the Company to treat
such information confidentially. The obligation of the Company and
its affiliates to hold such information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. If
this Agreement is terminated, the Company and its affiliates will, and will use
best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
VPI, upon request, all documents and other materials, and all copies thereof,
obtained by the company and its affiliates or on their behalf from VPI in
connection with this Agreement that are subject to such confidence.
Section
6.04 Covenants
of Both Parties. Each party hereto agrees that:
(a) Best
Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees (i) to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
and (ii) to execute and deliver such other documents, certificates, agreements
and other writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.
(b) Certain
Filings. Each of the parties will cooperate with one another
(i) in determining whether any action by or in respect of, or filing with, any
Governmental Entity is required or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts, in
connection with the transactions contemplated by this Agreement, and
(ii) in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers.
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Notwithstanding
any other provision in this Agreement, including the immediately preceding
paragraph, all filings with the Securities and Exchange Commission after
December 31, 2010 (“Post-Closing Filings”) and any audits of financial
statements that may be required in connection therewith shall be the financial
responsibility of VPI, and neither VFC nor its owners after the Closing shall
have financial or other obligations with respect to such filings or audits,
except for cooperating with regard to the provision of information needed for
disclosure purposes. Post-Closing Filings shall include (i) ongoing periodic
reports, proxy statements and current reports in the regular course, and (ii)
all filings that may be required in connection with this Agreement and the
related transactions, including any current report on Form 8-K and any report
pursuant to Rule 14f-1.
(c) Public
Announcements. Before any party releases any information concerning this
Agreement or any of the other transactions contemplated hereby or in connection
herewith which is intended for or may result in public dissemination thereof, it
shall cooperate with the other parties, shall furnish drafts of all documents or
proposed oral statements to the other parties for comment, and shall not release
any such information without the written consent of the Company (in the case of
release by VPI) or VPI (in the case of releases by the Company or the Company
Members). Nothing contained herein shall prevent a party from releasing any
information if required to do so by applicable law or regulation.
(d) Notices. Each
of the parties shall give prompt notice to the other parties of: (a) any
notice of, or other communication relating to, a default or event which, with
notice or the lapse of time or both, would become a default, received by it or
any of its subsidiaries subsequent to the date of this Agreement and prior to
the Closing, under any agreement, indenture or instrument material to the
financial condition, properties, businesses or results of operations of it and
its subsidiaries, taken as a whole, to which it or any of its subsidiaries is a
party or is subject; (b) any notice or other communication from any third
party alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement, which consent,
if required, would breach the representations contained in Articles III, IV or
V; and (c) any other material fact or occurrence or any
pending or threatened material occurrence of which it obtains knowledge and
which (if existing and known at the date of the execution of this Agreement)
would have been required to be set forth or disclosed in or pursuant to this
Agreement, which (if existing and known at any time prior to or at the Closing)
would make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more difficult than in
the absence of such fact or occurrence, or which (if existing and known at the
time of the Closing) would cause a condition to any party’s obligations under
this Agreement not to be fully satisfied.
ARTICLE
VII
CONDITIONS
Section
7.01 Conditions
to Each Party's Obligation. The obligation of each party to
consummate the Closing is subject to the satisfaction of the following
conditions:
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(a) All
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations or terminations of waiting periods imposed by, any
Governmental Entity, and all required third party consents, shall have been
filed, occurred or been obtained.
(b) No
statute, rule, regulation, executive order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any court or governmental authority
which prohibits the consummation of the Closing and shall be in
effect.
Section
7.02 Conditions
to Obligation of VPI. The obligation of VPI to consummate the
Closing is subject to the satisfaction of the following further
conditions:
(a) The
representations and warranties of the Company and the Company Members set forth
in this Agreement shall be true and correct as of the date of this Agreement,
and shall also be true in all material respects (except for such changes as are
contemplated by the terms of this Agreement and such changes as would be
required to be made in the exhibits to this Agreement if such schedules were to
speak as of the Closing Date) on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date, except if and to the
extent any failures to be true and correct would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect of the
Company.
(b) The
Company and the Company Members shall have performed in all material respects
all obligations required to be performed by them under this Agreement at or
prior to the Closing Date.
(c) VPI
shall have a received a certificate signed by a member of the Company confirming
Section 7.02(a) and
(b).
(d) VPI
shall have received resolutions duly adopted by the Company Members approving
the execution and delivery of this Agreement and all other necessary or proper
organizational action to enable the Company to comply with the terms of this
Agreement.
Section
7.03 Conditions
to Obligations of the Company and Company Members. The
obligations of the Company and the Company Members to consummate the Closing are
subject to the following further conditions:
(a) The
representations and warranties of VPI set forth in this Agreement shall be true
and correct as of the date of this Agreement, and shall also be true in all
material respects (except for such changes as are contemplated by the terms of
this Agreement and such changes as would be required to be made in the exhibits
to this Agreement if such schedules were to speak as of the Closing Date) on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date.
(b) VPI
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date.
(c) The
Company shall have a received a certificate signed by the President of VPI
confirming Section
7.03(a) and (b).
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(d) The
Company shall have received (i) resolutions duly adopted by the Board of
Directors of VPI approving the execution and delivery of this Agreement and all
other necessary or proper corporate action to enable VPI to comply with the
terms of this Agreement..
(e) VPI
shall have made all filings, and taken all actions, necessary to comply with all
reporting requirements under federal and state securities laws (including
without limitation, applicable “blue-sky” laws with regard to the issuance of
VPI Shares as contemplated by this Agreement) other than the filing of Form D up
to 15 days following the Closing.
(f) VPI
shall have received the resignations: (a) of all of its officers,
effective as of the Closing and (b) of Xxxxxxx Xxxxxxxxxx and Xxxxxx Xxxxx as
members of its Board of Directors, effective 11 days after VPI mails the
stockholders of VPI an Information Statement pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder reflecting the changes in the composition
of VPI’s Board of directors contemplated by this Agreement.
ARTICLE
VIII
TERMINATION
AND AMENDMENT
Section
8.01 Termination. This
Agreement may be terminated at any time prior to the Closing Date:
(a) by
mutual consent of the Company and VPI;
(b) by
either the Company or VPI if the Closing shall not have been consummated before
December 31, 2010 (unless the failure to consummate the Closing by such date
shall be due to the action or failure to act of the party seeking to terminate
this Agreement); or
(c) by
either the Company or VPI if (i) the conditions to such party's obligations
shall have become impossible to satisfy or (ii) any permanent injunction or
other order of a court or other competent authority preventing the consummation
of the Closing shall have become final and non-appealable.
Section
8.02 Effect of
Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 8.01
hereof, this Agreement shall forthwith become void and have no effect, without
any liability on the part of any party hereto or its affiliates, directors,
officers or stockholders, other than the provisions of Sections 6.01(d) and
6.02(c). Nothing contained in this Section 8.02
shall relieve any party from liability for any breach of this
Agreement.
Section
8.03 Amendment. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section
8.04 Extension;
Waiver. At any time prior to the Closing Date, the parties
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such
party.
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ARTICLE
IX
MISCELLANEOUS
Section
9.01 Entire
Agreement; Assignment. This Agreement
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (other than any confidentiality agreement between the
parties; any provisions of such agreements which are inconsistent with the
transactions contemplated by this Agreement being waived hereby) and (b) shall
not be assigned by operation of law or otherwise.
Section
9.02 Non-Survival
of Representations and Warranties. The covenants,
agreements, representations and warranties of the parties hereto contained in
this Agreement or in any certificate or other writing delivered pursuant hereto
or in connection herewith shall not survive the
Closing. This Section 9.02 shall
not limit any claim for fraud or any covenant or agreement of the parties which
by its terms contemplates performance after the Closing Date.
Section
9.03 Expenses. Whether or not
the transactions contemplated in this Agreement are consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, will be paid by the party incurring such expense or as
otherwise agreed to herein; provided, however, that the Company agrees to
reimburse VPI for reasonable legal attorneys’ fees incurred in connection with
the Agreement up to a maximum of $10,000.
Section
9.04 Notices. Any notice or
other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested or by
the most nearly comparable method if mailed from or to a location outside of the
United States or by Federal Express, Express Mail, or similar overnight delivery
or courier service or delivered (in person or by facsimile, email, or similar
telecommunications equipment) against receipt to the party to which it is to be
given at the address of such party set forth in the signature pages to this
Agreement (or to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section
9.04. Any notice or other communication given by certified
mail (or by such comparable method) shall be deemed given at the time of
certification thereof (or comparable act), except for a notice changing a
party's address which will be deemed given at the time of receipt
thereof. Any notice given by other means permitted by this Section 9.04 shall be
deemed given at the time of receipt thereof.
Section
9.05 Parties
in Interest. This Agreement
will inure to the benefit of and be binding upon the parties hereto and the
respective successors and assigns. Nothing in this Agreement is
intended to confer, expressly or by implication, upon any other person any
rights or remedies under or by reason of this Agreement.
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Section
9.06 Counterparts. This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original and all together will constitute one document. The
delivery by facsimile of an executed counterpart of this Agreement will be
deemed to be an original and will have the full force and effect of an original
executed copy.
Section
9.07 Severability. Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section
9.08 Headings. The Article and
Section headings are provided herein for convenience of reference only and do
not constitute a part of this Agreement and will not be deemed to limit or
otherwise affect any of the provisions hereof.
Section
9.09 Governing
Law. This Agreement
will be deemed to be made in and in all respects will be interpreted, construed
and governed by and in accordance with the law of the State of Nevada without
regard to any applicable principles of conflicts of law.
[REMAINDER
OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the
parties hereto have executed and delivered this Agreement in a manner legally
binding upon them as of the date first above written.
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By
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Name:
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Title:
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Address:
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XXXXXXX
X’XXXXXX LLC
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By
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Name:
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Title:
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Address:
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COMPANY
MEMBERS:
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Name: Xxxx
Xxxxxxx
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Address:
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Name: Xxx X.
Xxxxxxx
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Address:
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SCHEDULE
A
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Company Member
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Company Interest Owned
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VPI Share to be Issued
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||||||
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Xxxx
Xxxxxxx
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50 | % | 10,000,000 | |||||
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Xxx
X. Xxxxxxx
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50 | % | 10,000,000 | |||||
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Schedule
4.08 to Company Disclosure Schedule
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1)
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2009
Ford truck, Econoline wagon vin#
0XXXX00X00XX00000
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2)
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Sunrise
bank acct#108011687
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