STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT is entered into as of November 13, 2007 (the
“Agreement”), by and between AFH Holding II, Inc., a Delaware
corporation (the “Company”) and AFH Holding and Advisory, LLC, a Nevada
limited liability company (the “Buyer”). Each party to this Agreement
is referred to herein as a “Party,” and they are all referred to collectively as
“Parties.”
W
I T N E
S S E T H:
WHEREAS,
the Company desires to sell and the Buyer desires to purchase from the Company,
upon the terms and conditions set forth herein, 1,500,000 shares (the “Shares”)
of the Company’s common stock, $0.001 par value per share (the “Common Stock”),
which shall constitute 100% of the total outstanding shares of the Common Stock
of the Company on a fully-diluted basis immediately prior to the Closing (as
defined below).
NOW,
THEREFORE, in consideration of the premises and of the mutual representations,
warranties and agreements set forth herein, the Parties hereto agree as
follows:
ARTICLE
I
SALE
AND
PURCHASE OF SHARES
1.1 Incorporation
of Recitals. The provisions and recitals set forth above are
hereby referred to and incorporated herein and made a part of this Agreement
by
reference.
1.2 Sale
and Purchase of Shares. Subject to the terms and conditions of
this Agreement, at the Closing, the Company hereby agrees to sell to Buyer
and
Buyer agrees to purchase from the Company the Shares for an aggregate purchase
price of $12,500 (the “Purchase Price”). On the Closing Date (as
defined below), the Purchase Price shall be delivered to the
Company.
1.3 Closing. Subject
to the terms and conditions of this Agreement, the closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place on November 13,
2007 (the “Closing Date”). On the Closing Date, the Company shall
deliver to the Buyer: (a) stock certificate evidencing the Shares in
negotiable form, duly endorsed in blank, or with stock transfer powers attached
thereto (the “Share Certificate”). On the Closing Date, the Buyer
shall deliver to the Company the Purchase Price for the purchase of
the Shares.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as
set forth under the corresponding section of the disclosure schedules (the
“Disclosure Schedules”) attached hereto as Exhibit A, which Disclosure
Schedules shall be deemed a part hereof, the Company hereby represents and
warrants to Buyer that now and as of the Closing:
2.1 Due
Organization and Qualification; Subsidiaries; Due
Authorization.
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of formation, with full corporate
power and authority to own, lease and operate its business and properties and
to
carry on its business in the places and in the manner as presently
conducted. The Company is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the properties owned, leased
or operated, or the business conducted, by it requires such qualification except
for any failure to qualify, which when taken together with all other failures
to
qualify, is not likely to have a material adverse effect on the business of
the
Company.
(b) The
Company does not have, and has never had, any subsidiaries and does not own,
directly or indirectly, any capital stock, equity or interest in any
corporation, firm, partnership, joint venture or other entity.
(c) The
Company is the record and beneficial owner of its respective Shares and has
sole
power and authority over the disposition of its respective
Shares. The Shares are free and clear of any liens, claims,
encumbrances, and charges. The Shares have not been sold, conveyed,
encumbered, hypothecated or otherwise transferred by Company except pursuant
to
this Agreement. The Company has the legal right to enter into and to
consummate the transactions contemplated hereby and otherwise to carry out
its
obligations hereunder. This Agreement constitutes the valid and
binding obligation of the Company. The execution, delivery and
performance by the Company of this Agreement does not violate any contractual
restriction contained in any agreement which binds or affects or purports to
bind or affect the Company. The Company is not a party to any
agreement, written or oral, creating rights in respect of any of such Shares
in
any third party or relating to the voting of its Common Stock. The
Company is not a party to any outstanding or authorized options, warrants,
rights, calls, commitments, conversion rights, rights of exchange or other
agreements of any character, contingent or otherwise, providing for the
purchase, issuance or sale of any of the Shares, and there are no restrictions
of any kind on the transfer of any of the Shares other than (a) restrictions
on
transfer imposed by the Securities Act of 1933, as amended (the “Securities
Act”) and (b) restrictions on transfer imposed by applicable state securities or
“blue sky” laws. Those creditors listed in the Disclosure Schedules
are the only individuals or entities with any claims against the
Company. Other than as set forth on the Disclosure Schedules, the
Company does not have any obligations or liabilities of any nature (matured
or
unmatured, fixed or contingent).
2.2 No
Conflicts or Defaults. The execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
hereby do not and shall not (a) contravene the Certificate of Incorporation
or
By-laws of the Company or (b) with or without the giving of notice or the
passage of time (i) violate, conflict with, or result in a breach of,
or a default or loss of rights under, any material covenant, agreement,
mortgage, indenture, lease, instrument, commitment, arrangement, permit or
license to which the Company is a party or by which the Company is bound (each
a
“Contract”), or any judgment, order or decree, or any federal, state or other
statute, law, ordinance, rule or regulation to which the Company is subject,
(ii) result in the creation of, or give any party the right to create, any
mortgage, security interest, lien, charge, easement, lease, sublease, covenant,
option, claim, restriction or encumbrance or any other right or adverse interest
(“Liens”) upon any of the properties or assets of the Company, (iii) terminate
or give any party the right to terminate, amend, abandon or refuse to perform,
any Contract to which the Company is a party or by which the Company’s assets
are bound, or (iv) accelerate or modify, or give any party the right to
accelerate or modify, the time within which, or the terms under which, the
Company is to perform any duties or obligations or receive any rights or
benefits under any material agreement, arrangement or commitment to which it
is
a party.
2.3 Capitalization. On
the Closing Date, the authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, par value $0.001 per share, of which, as
of
the date hereof, 5,000,000 are issued and none are outstanding (the “Company
Shares”), and 20,000,000 shares of preferred stock, par value $0.001 per share
(the “Preferred Stock”), of which none have been designated or
issued. All of the Company Shares are duly authorized, validly
issued, fully paid and nonassessable, and have not been issued in violation
of
any purchase option, call option, right of first refusal, preemptive right,
subscription right, or any similar right of stockholders. The Company
Shares are not, and the Shares are not and will not be as of the Closing,
subject to any preemptive or subscription right. There is no
outstanding voting trust agreement or other Contract, agreement, arrangement,
option, warrant, call, commitment or other right of any character obligating
or
entitling the Company to issue, sell, redeem or repurchase any of its
securities, and there is no outstanding security of any kind convertible into
or
exchangeable for the Common Stock of the Company, nor has the Company, or any
of
its agents orally agreed to issue any of the foregoing. There are no
declared or accrued unpaid dividends with respect to any shares of the Company’s
Common Stock or Preferred Stock. There are no agreements, written or
oral, between the Company and any of its stockholders or among any stockholders
relating to the acquisition (including without limitation rights of first
refusal or preemptive rights), or disposition, or registration under the
Securities Act or voting of the capital stock of the Company. There are no
outstanding shares of Common Stock and Preferred Stock that are subject to
vesting. The Company has no capital stock other than the Common Stock and
Preferred Stock authorized, issued or outstanding.
2.4 Acknowledgement
Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that Buyer is acting solely in the capacity of an arm’s
length purchaser with respect to this Agreement and the transactions
contemplated hereby and that Buyer is not (i) an officer or director of the
Company, (ii) an affiliate of the Company or (iii) to the knowledge of the
Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as
defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as
amended (“Exchange Act”). The Company further acknowledges that Buyer
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions
contemplated hereby, and any advice given by Buyer or any of its representatives
or agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to Buyer’s purchase of the Shares. The
Company further represents to Buyer that the Company’s decision to enter into
this Agreement has been based solely on the independent evaluation by the
Company and its representatives.
2.5 No
General Solicitation; Placement Agent’s Fees. Neither the
Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of
the
Shares. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other
than for persons engaged by the Buyer or its investment advisor) relating to
or
arising out of the transactions contemplated hereby. The Company
shall pay, and hold Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney’s fees and out-of-pocket expenses)
arising in connection with any such claim. The Company has not
engaged any placement agent or other agents in connection with the sale of
the
Shares.
2.6 Private
Placement; No Integrated Offering. Subject to the accuracy of the
Buyer’s representations and warranties in Article III of this Agreement, the
offer and sale by the Company of the Shares in conformity with the terms of
this
Agreement constitute transactions that are exempt from registration under the
1933 Act. None of the Company, its affiliates and any person acting
on its behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of any of the Shares under the 1933 Act or cause
this
offering of the Shares to be integrated with prior offerings by the Company
for
purposes of the 1933 Act or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company
are
listed or designated. None of the Company, its affiliates and any
person acting on its behalf will take any action or steps referred to in the
preceding sentence that would require registration of any of the Shares under
the 1933 Act or cause the offering of the Shares to be integrated with other
offerings.
2.7 Financial
Statements.
(a) SEC
Documents. The Company hereby makes reference to the following documents
filed with the United States Securities and Exchange Commission (the
“SEC”),
as posted on the SEC’s website, xxx.xxx.xxx: (collectively, the “SEC
Documents”): (i) General Form for Registration of Securities of Small Business
Issuers on Form 10-SB as filed on June 13, 2007 and (ii) Quarterly Report on
Form 10-QSB for the quarter ended June 30, 2007 as filed on October 10,
2007. The SEC Documents constitute all of the documents and reports
that the Company was required to file with the SEC pursuant to the Securities
Act, and the Exchange Act, and the rules and regulations promulgated thereunder
by the SEC. The financial statements included in the SEC Documents
include copies of the balance sheets of the Company at April 30, 2007, and
the
related statements of operations and stockholders’ cash flows for the period
from inception, April 16, 2007, through April 30, 2007, including the notes
thereto, as audited by Xxxxxxxxx & Co., LLP, certified, independent
accountants, and copies of the unaudited balance sheets of the Company at June
30, 2007, and the related unaudited statements of operations and stockholders’
cash flows for the period from inception, April 16, 2007, through June 30,
2007,
including the notes thereto (all such statements being referred to collectively
as the “Company Existing Financial Statements”). All the Company
Existing Financial Statements, together with the notes thereto, have been
prepared in accordance with U.S. generally accepted accounting principles
applied on a basis consistent throughout all periods presented. These
Company Existing Financial Statements present fairly the financial position
of
the Company as of the dates and for the periods indicated. The books
of account and other financial records of the Company have been maintained
in
accordance with U.S. GAAP.
(b) Since
the date of the latest Company Existing Financial Statements (the “Most Recent
Date”), there has been no material adverse change in the condition,
financial
or otherwise, net worth, prospects or results of operations of the
Company. Without limiting the foregoing, since the Most Recent
Date:
(i) the
Company has not sold, leased, transferred or assigned any of its assets,
tangible or intangible, other than in the ordinary course of
business;
(ii) the
Company has not entered into any agreement, Contract, commitment, lease or
license (or series of related agreements, Contracts, commitments,
leases
and licenses);
(iii) no
party (including the Company) has accelerated, terminated, modified or canceled
any agreement, Contract, lease or license (or series of related
agreements,
Contracts, leases and licenses) to which the Company is a party or by which
the
Company or its assets are bound;
(iv) the
Company has not made any capital expenditure (or series of related capital
expenditures) of whatever nature;
(v) the
Company has not made any capital investments in, any loans to, or any
acquisitions of the securities or assets of any other person (or a series of
related
capital investments, loans and acquisitions);
(vi) declared
or paid any dividends or made any other distribution to its stockholders whether
or not upon or in respect of any shares of its capital stock;
(vii) redeemed
or otherwise acquired any shares of its capital stock (except upon the exercise
of outstanding options) or any option, warrant or right relating
thereto,
except for the 5,000,000 shares of Common Stock redeemed by the Company on
November 13, 2007;
(viii) the
Company has not issued any notes, bonds or other debt securities, or created,
incurred, assumed or guaranteed any liabilities, obligations or
indebtedness
for borrowed money or capitalized lease obligation;
(ix) the
Company has not canceled, compromised, waived or released any right or claim
(or
series of related rights and claims) or material indebtedness;
(x)
the Company has not made any loans to, or entered into any other transactions
with, any of its directors, officers, or employees; and
(xi) the
Company has not committed to do any of the foregoing.
2.8 Further
Financial Matters. The Company does not have any (a) assets of
any kind or (b) liabilities or obligations, whether secured or unsecured,
accrued, determined, absolute or contingent, asserted or unasserted or
otherwise, which are required to be reflected or reserved in a balance sheet
or
the notes thereto under generally accepted accounting principles, and which
are
not reflected in the Company Existing Financial Statements.
2.9 Taxes. The
Company has filed all United States federal, state, county, local and foreign,
national, provincial and local returns and reports which were required to be
filed on or prior to the Closing Date hereof in respect of all income,
withholding, franchise, payroll, excise, property, sales, use, value-added
or
other taxes or levies, imposts, duties, license and registration fees, charges,
assessments or withholdings of any nature whatsoever (together, “Taxes”), and
has paid all Taxes (and any related penalties, fines and interest) which have
become due pursuant to such returns or reports or pursuant to any assessment
which has become payable, or, to the extent its liability for any Taxes (and
any
related penalties, fines and interest) has not been fully discharged, the same
have been properly reflected as a liability on the books and records of the
Company and adequate reserves therefor have been established. All
such returns and reports filed on or prior to the date hereof have been properly
prepared and are true, correct (and to the extent such returns reflect judgments
made by the Company, as the case may be, such judgments were reasonable under
the circumstances) and complete in all material respects. The amount
shown on the Company’s most recent balance sheet in the Company Existing
Financial Statements as provision for taxes is sufficient in all material
respects to pay all accrued and unpaid federal, state, local and foreign taxes
for the period then ended and all prior periods. No tax return or tax
return liability of the Company has been audited or, is presently under
audit. The Company has not given or been requested to give waivers of
any statute of limitations relating to the payment of any Taxes (or any related
penalties, fines and interest). There are no claims pending or, to
the knowledge of the Company, threatened, against the Company for past due
Taxes. All payments for withholding taxes, unemployment insurance and
other amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of the Company,
including, without limitation, amounts payable pursuant to the Federal Insurance
Contributions Act, have been paid or shall be paid prior to the Closing and
have
been duly provided for on the books and records of the Company and in the
Company Existing Financial Statements. All such amounts and penalties
are set forth in the Company’s most recent balance sheet in the Company Existing
Financial Statements.
2.10 Indebtedness;
Contracts; No Defaults; Liabilities.
(a) The
Company has no instruments, agreements, indentures, mortgages, guarantees,
notes, commitments, accommodations, letters of credit or other arrangements
or
understandings, whether written or oral, to which the Company is a
party.
(b) Neither
the Company, nor, to the Company’s knowledge, any other person or entity, is in
breach of, or in default under any Contract, agreement, arrangement,
commitment
or plan to which the Company is a party, and no event or action has occurred,
is
pending or is threatened, which, after the giving of notice, passage of time
or
otherwise, would constitute or result in such a breach or default by the Company
or, to the knowledge of the Company, any other person or entity. The
Company has not received any notice of default under any Contract, agreement,
arrangement, commitment or plan to which it is a party, which default has not
been cured to the satisfaction of, or duly waived by, the party claiming such
default on or before the date hereof.
(c) Other
than the Company Liabilities set forth on Schedule A, which shall be paid
off immediately upon the closing, the Company has no liabilities.
2.11 Real
Property. The Company does not own or lease any real
property.
2.12 Compliance.
(a) The
Company is not conducting its respective business or affairs in violation
of any
applicable federal, state or local law, ordinance, rule, regulation, court
or
administrative
order, decree or process, or any requirement of insurance
carriers. The Company has not received any notice of violation or
claimed violation of any such law, ordinance, rule, regulation, order, decree,
process or requirement.
(b) The
Company is in compliance with all applicable federal, state, local and foreign
laws, rules and regulations. There are no claims, notices, actions,
suits,
hearings,
investigations, inquiries or proceedings pending or, to the knowledge of
the
Company, threatened against the Company, and there are no past or present
conditions that the Company has reason to believe are likely to give rise
to any
liability or other obligations of the Company under any
circumstances.
2.13 Permits
and Licenses. The Company has all certificates of occupancy,
rights, permits, certificates, licenses, franchises, approvals and other
authorizations as are reasonably necessary to conduct its business and to own,
lease, use, operate and occupy its assets, at the places and in the manner
now
conducted and operated. The Company has not received any written or
oral notice or claim pertaining to the failure to obtain any material permit,
certificate, license, approval or other authorization required by any federal,
state or local agency or other regulatory body, the failure of which to obtain
would materially and adversely affect its business.
2.14 Litigation.
(a) There
is no claim, dispute, action, suit, inquiry, proceeding or investigation pending
or, to the knowledge of the Company, threatened, against or affecting the
business
of the Company, or challenging the validity or propriety of the transactions
contemplated by this Agreement, at law or in equity or admiralty or before
any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality, nor has any such claim, dispute, action, suit,
proceeding or investigation been pending or threatened during the 12 month
period preceding the date hereof;
(b) There
is no outstanding judgment, order, writ, ruling, injunction, stipulation or
decree of any court, arbitrator or federal, state, local, foreign or other
governmental
authority, board, agency, commission or instrumentality, against or affecting
the business of the Company; and
(c) The
Company has not received any written or verbal inquiry from any federal, state,
local, foreign or other governmental authority, board, agency, commission
or
instrumentality concerning the possible violation of any law, rule or regulation
or any matter disclosed in respect of its business.
2.15 Insurance. The
Company does not currently maintain any form of insurance.
2.16 Articles
of Incorporation and By-laws; Minute Books. Copies of the
Company’s Certificate of Incorporation and its By-laws have been provided
to the Buyer. Such copies of the Certificate of Incorporation and
By-laws (or similar governing documents) of the Company, and all amendments
to
each as provided are true, correct and complete. The minute books of
the Company as forwarded to the Buyer contain true, correct and complete records
of all meetings and consents in lieu of meetings of its Board of Directors
(and
any committees thereof), or similar governing bodies, since the time of its
organization. The stock books of the Company as forwarded to the
Buyer are true, correct and complete.
2.17 Employee
Benefit Plans. The Company does not maintain, nor has the Company
maintained in the past, any employee benefit plans (“as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)),
or any plans, programs, policies, practices, arrangements or contracts (whether
group or individual) providing for payments, benefits or reimbursements to
employees, officers or consultants of the Company, former employees, officers
or
consultants of the Company, their beneficiaries and dependents under which
such
employees, officers or consultants, former employees, officers or consultants,
their beneficiaries and dependents are covered through an employment
relationship with the Company, any entity required to be aggregated in a
controlled group or affiliated service group with the Company for purposes
of
ERISA or the Internal Revenue Code of 1986 (the “Code”) (including,
without limitation, under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA, at any relevant time (“Benefit Plans”).
2.18 Patents;
Trademarks and Intellectual Property Rights. The Company does not
own or possess any patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, Internet web site(s) or proprietary rights
of any nature. The business conducted by the Company has not and will
not cause the Company to infringe or violate any of the patents, trademarks,
service marks, trade names, copyrights, mask-works, licenses, trade secrets,
processes, data, know-how or other intellectual property rights of any other
person.
2.19 Brokers. The
Company has not agreed to or incurred any obligation or other liability that
could be claimed against the Company or Buyer or any other person for any
finder’s fee, brokerage commission or similar payment.
2.20 Affiliate
Transactions. No officer, director, employee or other affiliate
of the Company (or any of the relatives or affiliates of any of the
aforementioned persons) is a party to any agreement, Contract, commitment or
transaction with the Company or affecting the business of the Company, or has
any interest in any property, whether real, personal or mixed, or tangible
or
intangible, used in or necessary to the Company which will subject the Company
to any liability or obligation from and after the Closing Date.
2.21 Compliance. The
Company has complied with the requirements of the Exchange Act and the
Securities Act, and is current in its filings under the Exchange Act and the
Securities Act.
2.22 Filings. None
of the filings made by the Company under the Exchange Act or the Securities
Act
contain any untrue statement of a material fact or omit to state a material
fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
2.23 Consents. Other
than any applicable Current Report on Form 8-K under the Exchange Act, and
any
Section 13(a), 15(d), or Section 16 filings under the Exchange Act, no consent,
waiver, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other federal,
state, county, local or other foreign governmental authority, instrumentality,
agency or commission (“Governmental Entity”) is required by or with respect to
the Company in connection with the execution and delivery of this Agreement
and
any related agreements to which the Company is a party or the consummation
of
the transactions contemplated hereby and thereby, except for such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable securities laws.
2.24 Schedules. All
lists or other statements, information or documents set forth in, or attached
to
any Schedule provided pursuant to this Agreement or delivered hereunder shall
be
deemed to be representations and warranties by the Company with the same force
and effect as if such lists, statements, information and documents were set
forth herein. Any list, statement, document or any information set
forth in, or attached to any Schedule provided pursuant to this Agreement or
delivered hereunder shall not be deemed to constitute disclosure for the
purposes of any other Schedule provided pursuant to this Agreement unless
specific cross reference is made and shall survive after closing.
2.25 Environmental
Matters. The Company has never: (i) operated any underground
storage tanks at any property that the Company has at any time owned, operated,
occupied or leased; or (ii) illegally released any material amount of any
substance that has been designated by any Governmental Entity or by applicable
foreign, federal, state, or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, and urea-formaldehyde and all substances listed
as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws),
but excluding office and janitorial supplies properly and safely
maintained.
2.26 Representations
and Warranties. The representations and warranties of the Company
included in this Agreement and any list, statement, document or information
set
forth in, attached to any Schedule provided pursuant to this Agreement or
delivered hereunder, are true and complete in all material respects and do
not
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading, under the circumstance under which
they were made and shall survive after Closing as set forth herein.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
The
Buyer
hereby represents and warrants to the Company that now and as of the
Closing:
3.1
Authority Relative to this Agreement. Such Buyer has the
requisite power and/or authority to enter into this Agreement and carry out
its
obligations hereunder. This Agreement has been duly and validly
executed and delivered by the Buyer and constitutes a valid and binding
obligation of the Buyer, enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency or other similar
laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
3.2
Buyer Representation Regarding the Securities. Such Buyer
understands that the Shares are “restricted securities” and have not been
registered under the Securities Act or any applicable state securities law
and
such Buyer is acquiring the Shares as principal for its own account and not
with
a view to or for distributing or reselling such Shares or any part thereof,
has
no present intention of distributing any of such Shares and has no arrangement
or understanding with any other persons regarding the distribution of such
Shares (this representation and warranty not limiting such Buyer’s right to sell
the Shares pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws). The Buyer is
acquiring the Shares hereunder in the ordinary course of its
business. The Buyer does not have any agreement or understanding,
directly or indirectly, with any person to distribute any of the
Shares.
3.3
Buyer Status. At the time the Buyer receives any of the
Shares, the Buyer will be an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.
3.4
Experience of the Buyer. Such Buyer, either alone or together
with its representatives, have such knowledge, sophistication and experience
in
business and financial matters so as to be capable of evaluating the merits
and
risks of the prospective investment in the Shares, and has so evaluated the
merits and risks of such investment. The Buyer is able to bear the
economic risk of an investment in the Shares and, at the present time, is able
to afford a complete loss of such investment.
3.5 General
Solicitation. The Buyer is not receiving the Shares as a result
of any advertisement, article, notice or other communication regarding the
Shares published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
ARTICLE
IV
Reserved.
ARTICLE
V
DELIVERIES
& CONDITIONS
5.1 Items
to be delivered to the Buyer at the Closing by the
Company. The Buyer’s obligation to purchase the Shares
hereunder is conditioned on the following closing conditions and
deliveries:
(a) Delivery
by the Company of the following:
(i) All
applicable schedules hereto;
(ii) A
duly executed copy of this Agreement;
(iii) The
Share Certificate; and
(iv) Any
other document reasonably requested by the Buyer that the Buyer deems necessary
for the consummation of this transaction.
(b) The
Buyer is satisfied with its due diligence investigation of the Company, in
its
sole discretion; and
(c) The
representations and warranties set forth in Article II of this Agreement shall
be true and correct in all material respects.
5.2 Items
to be delivered at Closing by Buyer. The Company’s obligations to
sell the Shares hereunder are conditioned on the following closing conditions
and deliveries by the Buyer:
(a) All
applicable exhibits and schedules hereto;
(b) A
duly executed copy of this Agreement;
(c) Any
other document reasonably requested by the Company that it deems necessary
for
the consummation of this transaction; and
(d) The
Purchase Price.
5.3 Conditions
Subsequent to the Closing. Not less than ten (10) days subsequent
to the Company’s filing of a Schedule 14f-1 Information Statement:
(a) The
Company’s sole director, Ms. Xxxxxx Xxxxx, shall submit her resignation as a
director of the Company; and
(b) The
Company shall appoint Xxxx X. Xxxxxxxxxxx to the board of directors of the
Company.
ARTICLE
VI
TERMINATION
6.1 Termination. This
Agreement may be terminated:
(a) at
any time before, or at, Closing by written notice of the Buyer; and
(b) prior
to the Closing by any Party at any time if any provision (including, but not
limited to, the representations and warranties) of this Agreement that is
applicable
to or required to be performed by the other Party shall be materially untrue
or
shall become incapable of being accomplished or if any conditions set forth
in
Article V hereof have not been fully satisfied as of the Closing
Date.
Upon
termination of this Agreement for any reason, in accordance with the terms
and
conditions set forth in this paragraph, each Party shall bear its own costs
and
expenses.
ARTICLE
VII
INDEMNIFICATION
7.1 Indemnification.
(a) Obligation
of Company to Indemnify. Company agrees to indemnify, defend and
hold harmless Buyer (and its directors, officers, employees, affiliates,
stockholders,
debenture holders, agents, attorneys, successors and assigns) from and against
all losses, liabilities, damages, deficiencies, costs or expenses (including
interest, penalties and reasonable attorneys’ and consultants’ fees and
disbursements) (collectively, “Losses”) based upon, arising out of or otherwise
in respect of any (i) inaccuracy in any representation or warranty of the
Company contained in this Agreement, or (ii) breach by the Company of any
covenant or agreement contained in this Agreement.
(b) Obligation
of Buyer to Indemnify. Buyer agrees to indemnify, defend and hold
harmless Company from and against all Losses based upon, arising out of or
otherwise
in respect of any (i) inaccuracy in any representation or warranty of the Buyer
contained in this Agreement, or (ii) breach by the Buyer of any covenant or
agreement contained in this Agreement.
(c) Notice
and Opportunity to Defend. Promptly after receipt by any person
entitled to indemnity under this Agreement (an “Indemnitee”) of notice of any
demand,
claim
or
circumstances which, with the lapse of time, would or might give rise to a
claim
or the commencement (or threatened commencement) of any action, proceeding
or
investigation (an “Asserted Liability”) that may result in a Loss, the
Indemnitee shall give notice thereof (the “Claims Notice”) to any other party
(or parties) who is or may be obligated to provide indemnification pursuant
to
Section 7.1(a) (the “Indemnifying Party”). The Claims Notice shall
describe the Asserted Liability in reasonable detail and shall indicate the
amount (estimated, if necessary and to the extent feasible) of the Loss that
has
been or may be suffered by the Indemnitee.
(d) The
Indemnifying Party may elect to compromise or defend, at its own expense and
by
its own counsel, any Asserted Liability. If the Indemnifying Party
elects
to
compromise or defend such Asserted Liability, it shall within 30 days after
the
date the Claims Notice is given (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate, at the expense of the Indemnifying Party, in the
compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability and all reasonable expenses
incurred by the Indemnitee in defending or compromising such Asserted Liability,
all amounts required to be paid in connection with any such Asserted Liability
pursuant to the determination of any court, governmental or regulatory body
or
arbitrator, and amounts required to be paid in connection with any compromise
or
settlement consented to by the Indemnitee, shall be borne by the Indemnifying
Party. Except as otherwise provided in the immediately preceding
sentence, the Indemnitee may not settle or compromise any claim over the
objection of the Indemnifying Party. In any event, the Indemnitee and
the Indemnifying Party may participate, at their own expense, in (but the
Indemnitee may not control) the defense of such Asserted
Liability. If the Indemnifying Party chooses to defend any claim, the
Indemnitee shall make available to the Indemnifying Party any books, records
or
other documents within its control that are necessary or appropriate for such
defense.
ARTICLE
VIII
MISCELLANEOUS
8.1 Survival
of Representations, Warranties and Agreements. All
representations, warranties and statements made by a Party in this Agreement
or
in any document or certificate delivered pursuant hereto shall survive the
Closing Date. Each of the Parties hereto is executing and carrying
out the provisions of this Agreement in reliance upon the representations,
warranties and covenants and agreements contained in this Agreement or at the
Closing of the transactions herein provided for and not upon any investigation
which it might have made or any representation, warranty, agreement, promise
or
information, written or oral, made by the other Party or any other person other
than as specifically set forth herein.
8.2 Access
to Books and Records. During the course of this transaction
through Closing, the Company agrees to make available for inspection all Company
corporate books, records and assets, and otherwise afford the Buyer and its
representatives, reasonable access to all documentation and other information
concerning the business, financial and legal conditions of the Company for
the
purpose of conducting a due diligence investigation thereof. Such due
diligence investigation shall be for the purpose of satisfying each Party as
to
the business, financial and legal condition of the Company for the purpose
of
determining the desirability of consummating the proposed
transaction. The Parties further agree to keep confidential and not
use for their own benefit, except in accordance with this Agreement any
information or documentation obtained in connection with any such
investigation.
8.3 Further
Assurances. If, at any time after the Closing, the Parties hereby
mutually agree that any further deeds, assignments or assurances in
law or any other things are necessary, desirable or proper to complete the
transactions contemplated hereby in accordance with the terms of this Agreement
or to vest, perfect or confirm, of record or otherwise, the title to any
property or rights of the Parties hereto, the Parties agree that their
proper officers and directors shall execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary, desirable or
proper to vest, perfect or confirm title to such property or rights and
otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors the Parties are fully authorized to take any and all
such
action.
8.4 Notice. All
communications, notices, requests, consents or demands given or required under
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered to, or received by prepaid registered or certified mail or
recognized overnight courier addressed to, or upon receipt of a facsimile sent
to, the Party for whom intended, as follows, or to such other address or
facsimile number as may be furnished by that Party by notice in the manner
provided herein:
If
to the
Company:
0000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx X. Xxxxxxxxxxx, President
Tel: (000)
000-0000
Fax: (000)
000-0000
If
to the
Buyer:
AFH
Holding and Advisory, LLC
0000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attn:
Xxxx X. Xxxxxxxxxxx, Managing Member
Tel: (000)
000-0000
Fax: (000)
000-0000
8.5 Entire
Agreement. This Agreement, the Exhibits and Schedules hereto and
any instruments and agreements to be executed pursuant to this Agreement, set
forth the entire understanding of the Parties hereto with respect to its subject
matter, merges and supersedes all prior and contemporaneous understandings
with
respect to its subject matter and may not be waived or modified, in whole or
in
part, except by a writing signed by each of the Parties hereto. No
waiver of any provision of this Agreement in any instance shall be deemed to
be
a waiver of the same or any other provision in any other
instance. Failure of any Party to enforce any provision of this
Agreement shall not be construed as a waiver of its rights under such
provision.
8.6 Successors
and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the Parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person. This Agreement may not be
assigned by the Company except with the prior written consent of the
Buyer. This Agreement and all of the obligations of the Company may
be assigned by the Buyer without the prior notice to the Company or written
consent of the Company and upon assignment, all of the rights and obligations
of
Buyer shall be the rights and obligations of the Buyer’s designated
assignee.
8.7 Governing
Law. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of California, USA that
are
applicable to agreements made and fully to be performed in such state, without
giving effect to conflicts of law principles.
8.8 Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same
instrument.
8.9 Construction. Headings
contained in this Agreement are for convenience only and shall not be used
in
the interpretation of this Agreement. References herein to Articles,
Sections and Exhibits are to the articles, sections and exhibits, respectively,
of this Agreement. The Schedules hereto are hereby incorporated
herein by reference and made a part of this Agreement. As used
herein, the singular includes the plural, and the masculine, feminine and neuter
gender each includes the others where the context so indicates.
8.10 Severability. If
any provision of this Agreement is held to be invalid or unenforceable by a
court of competent jurisdiction, this Agreement shall be interpreted and
enforceable as if such provision were severed or limited, but only to the extent
necessary to render such provision and this Agreement enforceable.
8.11 Confidentiality;
Public Disclosure. Each of the parties hereto hereby agrees that
the information obtained pursuant to the negotiation and execution of this
Agreement shall be treated as confidential and not be disclosed to third parties
who are not agents of one of the Parties to this Agreement.
8.12 Notification
of Certain Matters. Each Party shall give prompt notice to the
other of (i) the occurrence or non-occurrence of any event, the occurrence
or
non-occurrence of which is likely to cause any representation or warranty of
such party contained in this Agreement to be untrue or inaccurate and (ii)
any
failure of such Party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect any remedies available to the
Party receiving such notice. Further, disclosure pursuant to this
Section shall not be deemed to amend or supplement the Schedules
hereto or prevent or cure any misrepresentations, breach of warranty or
breach of covenant.
8.13 Currency. The
parties hereto agree that all monetary amounts set forth herein are referenced
in United States dollars, unless otherwise stated.
8.14 Rules
of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of
construction providing that ambiguities in an agreement or other document will
be construed against the Party drafting such agreement or document.
8.15 Counterparts. This
Agreement may be
executed in counterparts and by facsimile signatures. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the Party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof. All such counterparts shall
together constitute one and the same instrument.
IN
WITNESS WHEREOF, each of the Parties
hereto has executed this Agreement as of the date first set forth
above.
COMPANY:
AFH
HOLDING II, INC,
a
Delaware corporation
By:
/s/ Xxxx X. Xxxxxxxxxxx
Xxxx
X. Xxxxxxxxxxx, President
BUYER:
AFH
HOLDING AND ADVISORY, LLC,
a
Nevada
limited liability company
By:/s/ Xxxx
X. Xxxxxxxxxxx
Xxxx
X. Xxxxxxxxxxx, Managing Member
Schedule
A
Schedule
of Liabilities
None.
Exhibit
A
Disclosure
Schedules
The
Company’s Form 10-QSB for the quarterly period ended June 30, 2007 was filed
with the Securities and Exchange Commission on October 10, 2007.
