SECURITIES EXCHANGE AGREEMENT
BETWEEN
ESSXSPORT CORP.
AND
CERTAIN SHAREHOLDERS OF
XXXX XXXXXXX HILLS, INC.
DATED MARCH 3, 2004
TABLE OF CONTENTS
SECURITIES EXCHANGE AGREEMENT................................................3
PLAN OF REORGANIZATION.......................................................3
AGREEMENT..................................................................3
Section 1 - Transfer of Shares...........................................3
Section 2 - Issuance of Exchange Stock to MBH Shareholders...............3
Section 3 - Closing......................................................4
Section 4 - Representations and Warranties by MBH and Certain
Shareholders ................................................6
Section 5 - Representations and Warranties by ESSXSPORT..................9
Section 6 - Access and Information......................................12
Section 7 - Additional Covenants of the Parties.........................13
Section 8 - Survival of Representations, Warranties and Covenants.......13
Section 9 - Conditions Precedent to Obligations of Parties..............14
Section 10 - Termination, Amendment, Waiver.............................13
Section 11 -Miscellaneous...............................................13
EXHIBIT LIST................................................................__
SCHEDULE LIST...............................................................__
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SECURITIES EXCHANGE AGREEMENT
This Securities Exchange Agreement ("Agreement") is entered into on
this 3rd day of March 2004 by and between ESSXSPORT CORP., a Nevada
corporation ("ESSXSPORT"), and Forest, Glenneyre and Associates, Inc. and
Working Capital, Inc., who represent those persons and entities listed in
Exhibit A hereto, being shareholders of XXXX XXXXXXX HILLS, INC. a California
corporation ("MBH") who own collectively thirty percent (30%) of the issued
and outstanding stock of MBH as of the date this Agreement is executed (the
"MBH Shareholders").
PLAN OF REORGANIZATION
The transaction contemplated by this Agreement is intended to be an
exchange of stock reorganization. ESSXSPORT will acquire up to 30% of MBH's
issued and outstanding common stock, (no par value) in exchange for up to
60,000,000 shares of ESSXSPORT's common stock, $.001 par value (the "Exchange
Stock"). Upon the consummation of the exchange transaction and the issuance
and transfer of the Exchange Stock as set forth in Section 2 hereinbelow, MBH
Shareholders would hold approximately forty three percent (43%) of the
then-outstanding common stock of ESSXSPORT representing a controlling
interest in ESSXSPORT.
AGREEMENT
SECTION 1
TRANSFER OF SHARES
1.1 All shareholders of MBH (the "Shareholders" or the "MBH Shareholders"),
as of the date of Closing as such term is defined in Section 3 herein
(the "Closing" or the "Closing Date"), shall transfer, assign, convey
and deliver to ESSXSPORT on the Closing Date, certificates representing
4,800,000 shares or thirty percent (30%) of the MBH. The transfer of
the MBH Stock shall be made free and clear of all liens, mortgages,
pledges, encumbrances or charges, whether disclosed or undisclosed,
except as the MBH Shareholders and ESSXSPORT shall have otherwise
agreed in writing.
SECTION 2
ISSUANCE OF EXCHANGE STOCK TO MBH SHAREHOLDERS
2.1 As consideration for the transfer, assignment, conveyance and delivery
of the MBH Stock hereunder, ESSXSPORT shall, at the Closing issue to
the MBH Shareholders, or their nominees and/or assignees, certificates
representing up to 60,000,000 shares of ESSXSPORT Common Stock. The
parties intend that the Exchange Shares being issued will be used to
acquire all 4,800,000 MBH Shares.
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2.2 The issuance of the Exchange Stock shall be made free and clear of all
liens, mortgages, pledges, encumbrances or charges, whether disclosed
or undisclosed, except as the MBH Shareholders and ESSXSPORT shall have
otherwise agreed in writing. As provided herein, and immediately prior
to the Closing, ESSXSPORT shall have issued and outstanding: (i) not
more than 49,000,000 shares of Common Stock; and (ii) shall have no
preferred stock or other securities issued and outstanding.
2.3 None of the Exchange Stock issued to the MBH Shareholders or their
nominees and/or assignees, nor any of the MBH Stock transferred to
ESSXSPORT hereunder shall, at the time of Closing, be registered under
federal securities laws but, rather, shall be issued pursuant to an
exemption therefrom and be considered "restricted stock" within the
meaning of Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Act"). All of such shares shall bear a legend worded
substantially as follows:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 (the
"Act") and are `restricted securities' as that term
is defined in Rule 144 under the Act. The shares may
not be offered for sale, sold or otherwise
transferred except pursuant to an exemption from
registration under the Act, the availability of which
is to be established to the satisfaction of the
Company."
The respective transfer agents of ESSXSPORT and MBH shall annotate
their records to reflect the restrictions on transfer embodied in the
legend set forth above. There shall be no requirement ESSXSPORT
register the Exchange Stock under the Act, nor shall MBH or the
Shareholders be required to register any MBH Shares under the Act.
SECTION 3
CLOSING
3.1 CLOSING OF TRANSACTION. Subject to the fulfillment or waiver of the
conditions precedent set forth in Section 11 hereof, the Closing shall take
place on the Closing Date at the offices of, Xxxx Xxxxxxx Hills, 0000
Xxxxxxxx Xxxx., Xxx. 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, at 10:00 A.M.,
local time, or at such other time on the Closing Date as ESSXSPORT and the
MBH Shareholders may mutually agree in writing.
3.2 CLOSING DATE. The Closing Date of the Exchange shall take place on a
date chosen by mutual agreement of MBH Shareholders and ESSXSPORT within ten
(10) days from the date of this Agreement, or such later date upon which the
parties hereto may mutually agree in writing, or as extended pursuant to
subsection 12.1(b) hereinbelow.
3.3 DELIVERIES AT CLOSING.
(a) MBH Shareholders shall deliver or cause to be delivered to
ESSXSPORT at Closing:
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(1) certificates representing all 4,800,000shares of the MBH
Stock as described in Section 1, each endorsed in blank by
the registered owner;
(2) an agreement from each Shareholder, including nominees
and/or assignees, surrendering his or her shares agreeing
to a restriction on the transfer of the Exchange Stock as
described in Section 2 hereof;
(3) such other documents, instruments or certificates as shall
be reasonably requested by ESSXSPORT or its counsel.
(b) ESSXSPORT shall deliver or cause to be delivered to MBH
Shareholders at Closing:
(1) a copy of a consent of ESSXSPORT's board of directors
authorizing ESSXSPORT to take the necessary steps toward
Closing the transaction described by this Agreement in the
form set forth in Exhibit B;
(2) stock certificate(s) or a computer listing from ESSXSPORT's
transfer agent representing the Exchange Stock to be newly
issued by ESSXSPORT under this Agreement, which
certificates shall be in the names of the appropriate MBH
Shareholders, each in the appropriate denomination as
described in Section 2;
(3) a copy of Board of Directors meeting appointing two new
directors of ESSXSPORT approved by MBH Shareholders to take
effect upon the closing; and
(4) such other documents, instruments or certificates as shall
be reasonably requested by MBH Shareholders or its counsel.
3.4 FILINGS; COOPERATION.
(a) Prior to the Closing, the parties shall proceed with due
diligence and in good faith to make such filings and take such
other actions as may be necessary to satisfy the conditions
precedent set forth in Section 9 below.
(b) On and after the Closing Date, ESSXSPORT, and the MBH
Shareholders set forth in Exhibit A shall, on request and without
further consideration, cooperate with one another by furnishing
or using their best efforts to cause others to furnish any
additional information and/or executing and delivering or using
their best efforts to cause others to execute and deliver any
additional documents and/or instruments, and doing or using their
best efforts to cause others to do any and all such other things
as may be reasonably required by the parties or their counsel to
consummate or otherwise implement the transactions contemplated
by this Agreement.
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SECTION 4
REPRESENTATIONS AND WARRANTIES BY THE MBH SHAREHOLDERS
4.1 Subject to the schedule of exceptions, attached hereto and incorporated
herein by this reference, (which schedules shall be acceptable to
ESSXSPORT), MBH Shareholders listed on Exhibit A represent and warrant
to ESSXSPORT as follows to the best of their knowledge:
(a) ORGANIZATION AND GOOD STANDING OF MBH. The Articles of
Incorporation of MBH and all Amendments thereto as presently in
effect, certified by the Secretary of California, and the Bylaws
of MBH as presently in effect, certified by the President and
Secretary of MBH, have been delivered to ESSXSPORT and are
complete and correct and since the date of such delivery, there
has been no amendment, modification or other change thereto.
(b) CAPITALIZATION. MBH's authorized capital stock is 50,000,000
shares no par value Common Stock (defined as "MBH Common Stock"),
of which approximately 16,000,000 shares are issued and
outstanding prior to the Closing Date. All of such outstanding
shares are validly issued, fully paid and non-assessable. To the
best of our knowledge there are no outstanding options and
warrants for MBH Common Stock. All securities issued by MBH as of
the date of this Agreement have been issued in compliance with
all applicable state and federal laws. Except as set forth in
Schedule 4.1(b), no other equity securities or debt obligations
of MBH are authorized, issued or outstanding.
(c) FINANCIAL STATEMENTS. MBH Shareholders shall cause to be
delivered to ESSXSPORT within sixty (60) days of Closing, a copy
of MBH's audited financial statements for the year ended December
31, 2003 which will be true and complete and will have been
prepared in conformity with generally accepted accounting
principles. Other than changes in the usual and ordinary conduct
of the business since December 31, 2003, there have been and, at
the Closing Date, there will be no material adverse changes in
such financial statements.
(d) ABSENCE OF UNDISCLOSED LIABILITIES. MBH has no liabilities which
are not adequately reflected or reserved against in the MBH
Financial Statements or otherwise reflected in this Agreement and
MBH shall not have as of the Closing Date, any liabilities
(secured or unsecured and whether accrued, absolute, direct,
indirect or otherwise) which were incurred after December 31,
2003, and would be individually or in the aggregate, material to
the results of operations or financial condition of MBH as of the
Closing Date.
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(e) LITIGATION. Except as disclosed in Schedule 4.1(f), there are no
outstanding orders, judgments, injunctions, awards or decrees of
any court, governmental or regulatory body or arbitration
tribunal against MBH or its properties. Except as disclosed in
Schedule 4.1(f), there are no actions, suits or proceedings
pending, or, to the knowledge of MBH Shareholders, threatened
against or affecting MBH or its affiliated companies, any of its
officers or directors relating to their positions as such, or any
of its properties, at law or in equity, or before or by any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, in connection with the business, operations or affairs
of MBH which might result in any material adverse change in the
operations or financial condition of MBH, or which might prevent
or materially impede the consummation of the transactions under
this Agreement.
(f) COMPLIANCE WITH LAWS. To the best of the MBH Shareholder's
knowledge, the operations and affairs of MBH do not violate any
law, ordinance, rule or regulation currently in effect, or any
order, writ, injunction or decree of any court or governmental
agency, the violation of which would substantially and adversely
affect the business, financial conditions or operations of MBH.
(g) ABSENCE OF CERTAIN CHANGES. Except as set forth in
Schedule 4.1(g), or otherwise disclosed in writing to ESSXSPORT,
since December 31, 2003,
(i) MBH has not entered into any material transaction;
(ii) there has been no change in the condition (financial or
otherwise), business, property, prospects, assets or
liabilities of MBH as shown on the MBH Financial Statement,
other than changes that both individually and in the
aggregate do not have a consequence that is materially
adverse to such condition, business, property, prospects,
assets or liabilities;
(iii) there has been no damage to, destruction of or loss of any
of the properties or assets of MBH (whether or not covered
by insurance) materially and adversely affecting the
condition (financial or otherwise), business, property,
prospects, assets or liabilities of MBH;
(iv) MBH has not declared, or paid any dividend or made any
distribution on its capital stock, redeemed, purchased or
otherwise acquired any of its capital stock, granted any
options to purchase shares of its stock, or issued any
shares of its capital stock except in conjunction with the
private placement described in Schedule 4.1(g);
(v) there has been no material change, except in the ordinary
course of business, in the contingent obligations of MBH by
way of guaranty, endorsement, indemnity, warranty or
otherwise;
(vi) there have been no loans made by MBH to its employees,
officers or directors that have not been disclosed;
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(vii) there has been no waiver or compromise by MBH of a valuable
right or of a material debt owed to it;
(viii)there has been no extraordinary increase in the compensation
of any of MBH's employees;
(ix) there has been no agreement or commitment by MBH to do or
perform any of the acts described in this Section 4.1(g);
and
(x) there has been no other event or condition of any
character, which might reasonably be expected either to
result in a material and adverse change in the condition
(financial or otherwise), business, property, prospects,
assets or liabilities of MBH or to impair materially the
ability of MBH to conduct the business now being conducted.
(h) ASSETS. All of the assets reflected on the December 31, 2003, MBH
Financial Statements or acquired and held as of the Closing Date,
will be owned by MBH on the Closing Date. Except as set forth in
Schedule 4.1(h), MBH owns outright and has good and marketable
title, or holds valid and enforceable leases, to all of such
assets.
(i) TAX MATTERS. All federal, foreign, state and local tax returns,
reports and information statements required to be filed by or
with respect to the activities of MBH have been timely filed.
Since December 31, 2003, MBH has not incurred any liability with
respect to any federal, foreign, state or local taxes except in
the ordinary and regular course of business. On the date of this
Agreement, MBH is not delinquent in the payment of any such tax
or assessment, and no deficiencies for any amount of such tax
have been proposed or assessed.
(j) OPERATING AUTHORITIES. To the best knowledge of MBH Shareholders,
MBH has all material operating authorities, governmental
certificates and licenses, permits, authorizations and approvals
("Permits") required to conduct its business as presently
conducted.
(k) CONTINUATION OF KEY MANAGEMENT. To the best knowledge of MBH
Shareholders, all key management personnel of MBH intend to
continue their employment with MBH after the Closing. For
purposes of this subsection 4.1(k), "key management personnel"
shall include Xx. Xxxxxx, Xxxxxxx Star, and Xxxx XxXxxxxx.
(l) FINDER'S FEES. The MBH Shareholders are not, and on the Closing
Date will not be liable or obligated to pay any finder's, agent's
or broker's fee arising out of or in connection with this
Agreement or the transactions contemplated by this Agreement.
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4.2 DISCLOSURE. At the date of this Agreement, the MBH Shareholders listed
in Exhibit A have, and at the Closing Date they will have, disclosed
all events, conditions and facts materially affecting the business and
prospects of MBH. The MBH Shareholders have not now and will not have
at the Closing Date, withheld knowledge of any such events, conditions
or facts which they know, or have reasonable grounds to know, may
materially affect MBH's business and prospects. Neither this Agreement
nor any certificate, exhibit, schedule or other written document or
statement, furnished to ESSXSPORT by such MBH Shareholders in
connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to be stated in
order to make the statements contained herein or therein not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES BY ESSXSPORT
5.1 Subject to the schedule of exceptions, attached hereto and incorporated
herein by this reference, (which schedules shall be acceptable to MBH
Shareholders), ESSXSPORT represents and warrants to the MBH
Shareholders listed in Exhibit A as follows:
(a) ORGANIZATION AND GOOD STANDING. ESSXSPORT is currently a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has full corporate
power and authority to own or lease its properties and to carry
on its business as now being conducted and as proposed to be
conducted. ESSXSPORT is qualified to conduct business as a
foreign corporation in no other jurisdiction, and the failure to
so qualify in any other jurisdiction does not materially,
adversely affect the ability of ESSXSPORT to carry on its
business as most recently conducted. The Articles of
Incorporation of ESSXSPORT and all amendments thereto as
presently in effect, certified by the Secretary of State of
Nevada, and the Bylaws of ESSXSPORT as presently in effect,
certified by the President and Secretary of ESSXSPORT, have been
made available to MBH Shareholders and are complete and correct
and since the date of such delivery, there has been no amendment,
modification or other change thereto.
(b) CAPITALIZATION. ESSXSPORT's authorized capital stock consists of
300,000,000 shares of $.001 par value Common stock (defined above
as "ESSXSPORT Common Stock"), of which not more than 49,000,000
will be issued and outstanding, prior to Closing Date. and held
of record by approximately 210 shareholders. Except as set forth
in Schedule 5.1(b), no other equity securities or debt
obligations of ESSXSPORT are authorized, issued or outstanding
and as of the Closing, there will be no other outstanding
options, warrants, agreements, contracts, calls, commitments or
demands of any character, preemptive or otherwise, other than
this Agreement, relating to any of the ESSXSPORT Common Stock,
and there will be no outstanding security of any kind convertible
into ESSXSPORT Common Stock. The shares of ESSXSPORT Common Stock
are free and clear of all liens, charges, claims, pledges,
restrictions and encumbrances whatsoever of any kind or nature
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that would inhibit, prevent or otherwise interfere with the
transactions contemplated hereby. All the outstanding ESSXSPORT
Common Stock are validly issued, fully paid and nonassessable and
there are no voting trust agreements or other contracts,
agreements or arrangements restricting or affecting voting or
dividend rights or transferability with respect to the
outstanding shares of ESSXSPORT Common Stock.
(c) ISSUANCE OF EXCHANGE STOCK. All of the ESSXSPORT Common Stock to
be issued to or transferred to MBH Shareholders pursuant to this
Agreement, when issued, transferred and delivered as provided
herein, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free and clear of all liens, charges,
claims, pledges, restrictions and encumbrances whatsoever of any
kind or nature, except those restrictions imposed by State or
Federal corporate and securities regulations.
(d) NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby nor compliance by ESSXSPORT with any of the provisions
hereof will:
(1) violate or conflict with, or result in a breach of any
provisions of, or constitute a default ( or an event which,
with notice or lapse of time or both, would constitute a
default) under, any of the terms, conditions or provisions
of the Articles of Incorporation or Bylaws of ESSXSPORT or
any note, bond, mortgage, indenture, deed of trust,
license, agreement or other instrument to which ESSXSPORT
is a party, or by which it or its properties or assets may
be bound or affected; or
(2) violate any order, writ, injunction or decree, or any
statute, rule, permit, or regulation applicable to
Essxsport or any of its properties or assets.
(e) FINANCIAL STATEMENTS. ESSXSPORT will deliver to MBH Shareholders
prior to Closing, copies of all of ESSXSPORT's audited and
unaudited financial statements through October 31, 2003, all of
which are true and complete and have been prepared in accordance
with generally accepted accounting principles.
(f) SEC FILINGS. ESSXSPORT will deliver to MBH Shareholders prior to
Closing, copies of all of ESSXSPORT's recent filings made with
the Securities and Exchange Commission ("SEC" including Forms
10-KSB and 10-QSB and any proxy material).
(g) ABSENCE OF CERTAIN CHANGES. Since October 31, 2003 there has been
no material change in ESSXSPORT's financial conditions, assets or
liabilities, except as set forth in Schedule 5.1(g).
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(h) ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
ESSXSPORT's Financial Statements, ESSXSPORT did not have, as of
the Closing Date, any liabilities (secured or unsecured and
whether accrued, absolute, direct, indirect or otherwise) which
were incurred after October 31, 2003, and would be individually
or in the aggregate, material to the results of operation or
financial condition of ESSXSPORT.
(i) LITIGATION. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against ESSXSPORT or its
properties. There are no actions, suits or proceedings pending,
or, to the knowledge of ESSXSPORT, threatened against or relating
to ESSXSPORT. ESSXSPORT is not, and on the Closing Date will not
be, in default under or with respect to any judgment, order,
writ, injunction or decree of any court or of any federal, state,
municipal or other governmental authority, department,
commission, board, agency or other instrumentality; and ESSXSPORT
has, and on the Closing Date will have, complied in all material
respects with all laws, rules, regulations and orders applicable
to it, if any.
(j) TAX MATTERS. Except as set forth in Schedule 5.1(j), all federal,
foreign, state and local tax returns, reports and information
statements required to be filed by or with respect to the
activities of ESSXSPORT have been filed for all the years and
periods for which such returns and statements were due, including
extensions thereof. Since October 31, 2003, ESSXSPORT has not
incurred any liability with respect to any federal, foreign,
state or local taxes except in the ordinary and regular course of
business. Such returns, reports and information statements are
true and correct in all material respects insofar as they relate
to the activities of ESSXSPORT. On the date of this Agreement,
ESSXSPORT is not delinquent in the payment of any such tax or
assessment, and no deficiencies for any amount of such tax have
been proposed or assessed.
(k) AUTHORITY TO EXECUTE AGREEMENT. The Board of Directors of
ESSXSPORT, pursuant to the power and authority legally vested in
it, has duly authorized the execution and delivery by ESSXSPORT
of this Agreement and the Exchange Stock, and has duly authorized
each of the transactions hereby contemplated. ESSXSPORT has the
power and authority to execute and deliver this Agreement, to
consummate the transactions hereby contemplated and to take all
other actions required to be taken by it pursuant to the
provisions hereof. ESSXSPORT has taken all the actions required
by law, its Certificate of Incorporation, as amended, its Bylaws,
as amended, applicable state law or otherwise to authorize the
execution and delivery of the Exchange Stock pursuant to the
provisions hereof. This Agreement is valid and binding upon
ESSXSPORT in accordance with its terms.
(l) FINDER'S FEES. ESSXSPORT is not, and on the Closing Date, will
not be liable or obligated to pay any finder's, agent's or
broker's fee arising out of or in connection with this Agreement
or the transactions contemplated by this Agreement.
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5.2 DISCLOSURE. ESSXSPORT has and at the Closing Date it will have,
disclosed all events, conditions and facts materially affecting the
business and prospects of ESSXSPORT. ESSXSPORT has not now and will not
have at the Closing Date, withheld knowledge of any such events,
conditions and facts which it knows, or has reasonable grounds to know,
may materially affect ESSXSPORT's business and prospects. Neither this
Agreement, nor any certificate, exhibit, schedule or other written
document or statement, furnished to MBH or the MBH Shareholders by
ESSXSPORT in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to be
stated in order to make the statements contained herein or therein not
misleading.
SECTION 6
ACCESS AND INFORMATION
6.1 Subject to the protections provided by subsection 7.4 herein, ESSXSPORT
shall give to MBH, the MBH Shareholders, their nominees and/or
assignees, and their counsel, accountants and other representatives,
full access, during normal business hours throughout the period prior
to the Closing, to all of ESSXSPORT's properties, books, contracts,
commitments, and records, if any, and shall furnish the MBH
Shareholders during such period with all such information concerning
ESSXSPORT's affairs as the MBH Shareholders reasonably may request.
SECTION 7
ADDITIONAL COVENANTS OF THE PARTIES
7.1 COOPERATION. Both the MBH Shareholders and ESSXSPORT will cooperate
with each other and their respective counsel, accountants and agents in
carrying out the transaction contemplated by this Agreement, and in
delivering all documents and instruments deemed reasonably necessary or
useful by the other party.
7.2 EXPENSES. Each of the parties hereto shall pay all of its respective
costs and expenses (including attorneys' and accountants' fees, costs
and expenses) incurred in connection with this Agreement and the
consummation of the transactions contemplated herein.
7.3 PUBLICITY. Prior to the Closing, any written news releases or public
disclosure by either party pertaining to this Agreement shall be
submitted to the other party for its review and approval prior to such
release or disclosure, provided, however, that (a) such approval shall
not be unreasonably withheld, and (b) such review and approval shall
not be required of disclosures required to comply, in the judgment of
counsel, with federal or state securities or corporate laws or policies.
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7.4 CONFIDENTIALITY. While ESSXSPORT is obligated to provide access to and
furnish information in accordance with Section 6 herein, it is
understood and agreed that such disclosure and information subsequently
obtained as a result of such disclosures are proprietary and
confidential in nature. The MBH Shareholders agree to hold such
information in confidence and not to reveal any such information to any
person who is not a party to this Agreement, or an officer, director or
key employee thereof, and not to use the information obtained for any
purpose other than assisting in its due diligence inquiry in
conjunction with the transaction contemplated by this Agreement. Upon
request of any party, a confidentiality agreement, acceptable to the
disclosing party, will be executed by any person selected to receive
such proprietary information, prior to receipt of such information.
SECTION 8
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 The representations, warranties and covenants of those MBH Shareholders
listed in Exhibit A contained herein shall survive the execution and delivery
of this Agreement, the Closing and the consummation of the transactions
called for by this Agreement. The representations, warranties and covenants
of ESSXSPORT contained herein shall survive the execution and delivery of
this Agreement, the Closing and the consummation of the transactions called
for by this Agreement.
SECTION 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES
9.1 CONDITIONS TO OBLIGATIONS OF THE PARTIES. The obligations of ESSXSPORT
and those MBH Shareholders listed in Exhibit A under this Agreement
shall be subject to the fulfillment, on or prior to the Closing, of all
conditions elsewhere herein set forth, including, but not limited to,
receipt by the appropriate party of all deliveries required by Sections
4 and 5 herein, and fulfillment, prior to Closing, of each of the
following conditions:
(a) All representations and warranties made by MBH Shareholders
listed in Exhibit A and ESSXSPORT in this Agreement shall be true
and correct in all material respects on and as of the Closing
Date with the same effect as if such representations and
warranties had been made on and as of the Closing Date.
(b) MBH Shareholders listed in Exhibit A and ESSXSPORT shall have
performed or complied with all covenants, agreements and
conditions contained in this Agreement on their part required to
be performed or complied with at or prior to the Closing.
(c) All material authorizations, consents or approvals of any and all
governmental regulatory authorities necessary in connection with
the consummation of the transactions contemplated by this
Agreement shall have been obtained and be in full force and
effect.
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(d) The Closing shall not violate any permit or order, decree or
judgment of any court or governmental body having competent
jurisdiction and there shall not have been instituted any legal
or administrative action or proceeding to enjoin the transaction
contemplated hereby or seeking damages from any party with
respect thereto.
9.2 CONDITIONS TO OBLIGATIONS OF ESSXSPORT. The obligations of
ESSXSPORT to consummate the transactions contemplated herein are
subject to satisfaction (or waiver by it) of the following
conditions:
(a) Each MBH Shareholder, or their nominees and/or assignees,
acquiring Exchange Stock will be required, at Closing, to submit
an agreement confirming that all the Exchange Stock received will
be acquired for investment and not with a view to, or for sale in
connection with, any distribution thereof, and agreeing not to
transfer any of the Exchange Stock for a period of two years from
the date of the Closing, except for those transfers falling
within the exemption from registration under the Securities Act
of 1933 and any applicable state securities laws, which transfers
do not constitute a public distribution of securities, and in
which the transferees execute an investment letter in form and
substance satisfactory to counsel for ESSXSPORT. The foregoing
provision shall not prohibit the registration of those shares at
any time following the Closing. Each MBH Shareholder acquiring
Exchange Stock will be required to transfer to ESSXSPORT at the
Closing his/her respective MBH Shares, free and clear of all
liens, mortgages, pledges, encumbrances or changes, whether
disclosed or undisclosed.
(b) All schedules, prepared by MBH Shareholders shall be current or
updated as necessary as of the Closing Date.
(c) Each party shall have satisfied itself that since the date of
this Agreement the business of the other party has been conducted
in the ordinary course. In addition, each party shall have
satisfied itself that no withdrawals of cash or other assets have
been made and no indebtedness has been incurred since the date of
this Agreement, except in the ordinary course of business or with
respect to services rendered or expenses incurred in connection
with the Closing of this Agreement, unless said withdrawals or
indebtedness were either authorized by the terms of this
Agreement or subsequently consented to in writing by the parties.
(d) Each party covenants that, to the best of its knowledge, it has
complied in all material respects with all applicable laws,
orders and regulations of federal, state, municipal and/or other
governments and/or any instrumentality thereof, domestic or
foreign, applicable to their assets, to the business conducted by
them and to the transactions contemplated by this Agreement.
14
9.3 CONDITIONS TO OBLIGATION OF THE MBH SHAREHOLDERS. The obligations
of the MBH Shareholders listed in Exhibit A to consummate the
transactions contemplated herein are subject to satisfaction (or
waiver by them) of the following conditions:
(a) ESSXSPORT shall have provided to MBH Shareholders through October
31, 2003, all unaudited financial statements prepared in
accordance with generally accepted accounting principles by
independent accountants of ESSXSPORT. ESSXSPORT shall also
provide, as of a date within thirty days of Closing, an update on
any material change in the aforementioned financial statements.
(b) Each party shall have granted to the other party (acting through
its management personnel, counsel, accountants or other
representatives designated by it) full opportunity to examine its
books and records, properties, plants and equipment, proprietary
rights and other instruments, rights and papers of all kinds in
accordance with Sections 4 and 5 hereof, and each party shall be
satisfied to proceed with the transactions contemplated by this
Agreement upon completion of such examination and investigation.
(c) ESSXSPORT and MBH Shareholders shall agree to indemnify each
other party against any liability to any broker or finder to
which that party may become obligated.
(d) ESSXSPORT and the MBH Shareholders and their respective legal
counsel shall have received copies of all such certificates,
opinions and other documents and instruments as each party or its
legal counsel may reasonably request pursuant to this Agreement
or otherwise in connection with the consummation of the
transactions contemplated hereby, and all such certificates,
opinions and other documents and instruments received by each
party shall be reasonably satisfactory, in form and substance, to
each party and its legal counsel.
(e) Both MBH and ESSXSPORT shall have the right to waive any or all
of the conditions precedent to its obligations hereunder not
otherwise legally required; provided, however, that no waiver by
a party of any condition precedent to its obligations hereunder
shall constitute a waiver by such party of any other condition.
SECTION 10
TERMINATION, AMENDMENT, WAIVER
10.1 This Agreement may be terminated at any time prior to the Closing, and
the contemplated transactions abandoned, without liability to either
party, except with respect to the obligations of ESSXSPORT and those
MBH Shareholders listed in Exhibit A under Section 7.4 hereof:
15
(a) By mutual agreement of ESSXSPORT and the MBH Shareholders;
(b) If the Closing (as defined in Section 3) has not have taken place
on or prior to March 5, 2004, this Agreement can be terminated
upon written notice given by ESSXSPORT or the MBH Shareholders
which is not in material default;
(c) By ESSXSPORT, if in its reasonable believe there has been a
material misrepresentation or breach of warranty on the part of
any MBH Shareholder listed in Exhibit A in the representations
and warranties set forth in the Agreement.
(d) By a majority of those MBH Shareholders listed in Exhibit A (as
measured by their equity interest) if, in the reasonable belief
of any such MBH Shareholders, there has been a material
misrepresentation or breach of warranty on the part of ESSXSPORT
in the representations and warranties set forth in the Agreement;
(e) By ESSXSPORT or those MBH Shareholders listed in Exhibit A if, in
their opinion or that of their counsel, the Exchange does not
qualify for exemption from registration under applicable federal
and state securities laws, or qualification, if obtainable,
cannot be accomplished in ESSXSPORT's opinion or that of its
counsel, without unreasonable expense or effort;
(f) By ESSXSPORT or by a majority of those MBH Shareholders listed in
Exhibit A (as measured by their equity interest) if either party
shall determine in its sole discretion that the Exchange has
become inadvisable or impracticable by reason of the institution
or threat by state, local or federal governmental authorities or
by any other person of material litigation or proceedings against
any party [it being understood and agreed that a written request
by a governmental authority for information with respect to the
Exchange, which information could be used in connection with such
litigation or proceedings, may be deemed to be a threat of
material litigation or proceedings regardless of whether such
request is received before or after the signing of this
Agreement];
(g) By ESSXSPORT if the business or assets or financial condition of
MBH, taken as a whole, have been materially and adversely
affected, whether by the institution of litigation or by reason
of changes or developments or in operations in the ordinary
course of business or otherwise; or, by a majority of those MBH
Shareholders listed in Exhibit A (as measured by their equity
interest) if the business or assets or financial condition of
ESSXSPORT, taken as a whole, have been materially and adversely
affected, whether by the institution of litigation or by reason
of changes or developments or in operations in the ordinary
course of business or otherwise;
16
(h) By a majority of those MBH Shareholders if ESSXSPORT fails to
perform material conditions set forth in Sub-Section 9.1 and 9.3
herein;
(i) By ESSXSPORT if the MBH Shareholders fail to perform material
conditions set forth in Sub-Section 9.1 and 9.2 herein; and
10.2 No modification or amendment of any provision of this Agreement shall
be effective unless specifically made in writing and duly signed by the
party to be bound.
SECTION 11
MISCELLANEOUS
11.1 ENTIRE AGREEMENT. This Agreement (including the Exhibits and Schedules
hereto) contains the entire agreement between the parties with respect
to the transactions contemplated hereby, and supersedes all
negotiations, representations, warranties, commitments, offers,
contracts, and writings prior to the date hereof. No waiver and no
modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the
party to be bound thereby.
11.2 BINDING AGREEMENT.
(a) This Agreement shall become binding upon the parties when, but
only when, it shall have been signed on behalf of all parties.
(b) Subject to the condition stated in subsection (a), above, this
Agreement shall be binding upon, and inure to the benefit of, the
respective parties and their legal representatives, successors
and assigns. This Agreement, in all of its particulars, shall be
enforceable by the means set forth in subsection 11.9 for the
recovery of damages or by way of specific performance and the
terms and conditions of this Agreement shall remain in full force
and effect subsequent to Closing and shall not be deemed to be
merged into any documents conveyed and delivered at the time of
Closing. In the event that subsection 11.9 is found to be
unenforceable as to any party for any reason or is not invoked by
any party, and any person is required to initiate any action at
law or in equity for the enforcement of this Agreement, the
prevailing party in such litigation shall be entitled to recover
from the party determined to be in default, all of its reasonable
costs incurred in said litigation, including attorneys' fees.
11.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which may be deemed an original, but all of which
together, shall constitute one and the same instrument.
17
11.4 SEVERABILITY. If any provisions hereof are to be held invalid or
unenforceable by any court of competent jurisdiction or as a result of
future legislative action, such holding or action shall be strictly
construed and shall not affect the validity or effect or any other
provision hereof.
11.5 ASSIGNABILITY. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto; provided,
that neither this Agreement nor any right hereunder shall be assignable
by the MBH Shareholders or ESSXSPORT without prior written consent of
the other party.
11.6 CAPTIONS. The captions of the various Sections of this Agreement have
been inserted only for convenience of reference and shall not be deemed
to modify, explain, enlarge or restrict any of the provisions of this
Agreement.
11.7 GOVERNING LAW. The validity, interpretation, and effect of this
Agreement shall be governed exclusively by the laws of the State of
California.
11.8 JURISDICTION AND VENUE. Each party hereto irrevocably consents to the
jurisdiction and venue of the state or federal courts located in Los
Angeles County, State of California, in connection with any action,
suit, proceeding or claim to enforce the provisions of this Agreement,
to recover damages for breach of or default under this Agreement, or
otherwise arising under or by reason of this Agreement. The prevailing
party may recover costs and reasonable attorney's fees.
11.9 ARBITRATION. Any dispute between the parties relating in any way to
this Agreement or any of its terms and provisions shall be submitted to
binding arbitration before a single arbitrator in Los Angeles County,
Calif., before JAMS and the prevailing party in such arbitration shall
have the right to have any award made by arbitrators confirmed by a
court of competent jurisdiction. The provisions of section 1283.05 of
the CA Code of Civil Procedure, authorizing and taking of depositions
and obtaining discovery are incorporated herein by this reference and
shall be applicable to any such arbitration. Any such arbitration
shall be conducted in an expeditious manner. Any such arbitration
shall be governed by the JAMS complex arbitration rules and the JAMS
optional arbitration appeal procedure.
18
11.10 NOTICES. All notices, requests, demands and other communications under
this Agreement shall be in writing and delivered in person or sent by
certified mail, postage prepaid and properly addressed as follows:
TO MBH SHAREHOLDERS:
Forest, Glenneyre and Associates, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
Fax (000) 000-0000
TO ESSXSPORT:
Xxxxx Xxxxxxxx, President
Essxsport Corp.
0000-00 Xxxxxxxx Xxxx.
Xxx Xxxxxx, Xxxxxxxxxx 00000
Fax (000) 000-0000
Any party may from time to time change its address for the purpose of
notices to that party by a similar notice specifying a new address, but
no such change shall be deemed to have been given until it is actually
received by the respective party hereto.
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section 11.9 if
delivered personally, shall be effective upon delivery; and, if
delivered by mail, shall be effective three days following deposit in
the United States mail, postage prepaid.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ESSXSPORT CORP.
By: ________________________________
Xxxxx Xxxxxxxx, President
MBH SHAREHOLDERS
By: ________________________________
Xxxxx Xxxxxx, President
Forest, Glenneyre and Associates, Inc.
By: ________________________________
Xxxxxx Xxxxxx, Secretary
Working Capital, Inc.
19
EXHIBIT A
SHAREHOLDERS OF XXXX XXXXXXX HILLS, INC.
MBH ESSX
SHAREHOLDER NUMBER NUMBER
----------- OF SHARES OF SHARES
--------- ---------
Working Capital, Inc. 3,000,000 37,500,000
Forest, Glenneyre & Associates, Inc. 1,800,000 22,500,000
-------------------------
TOTAL 4,800,000 60,000,000
20
SCHEDULE LIST
Schedule 4.1(b): Xxxx Xxxxxxx Hills, Inc., Common Stock, Options and Warrants
Outstanding
Schedule 4.1(c): Xxxx Xxxxxxx Hills, Inc. Subsidiaries
Schedule 4.1(f): Litigation Involving Xxxx Xxxxxxx Hills, Inc.
Schedule 4.1(g): Absence of Certain Changes - Xxxx Xxxxxxx Hills, Inc.
Schedule 4.1(h): Asset Ownership Exceptions
Schedule 5.1(b): Essxsport Corp., Common Stock, Options and Warrants
Outstanding
Schedule 5.1(j): Essxsport Corp., Tax Matters
21
SCHEDULE 4.1(B)
XXXX XXXXXXX HILLS, INC., COMMON STOCK,
OPTIONS AND WARRANTS OUTSTANDING
NONE.
22
SCHEDULE 4.1(C)
XXXX XXXXXXX HILLS, INC. SUBSIDIARIES
NONE.
23
SCHEDULE 4.1(F)
LITIGATION INVOLVING XXXX XXXXXXX HILLS, INC.
NONE.
24
SCHEDULE 4.1(G)
ABSENCE OF CERTAIN CHANGES - XXXX XXXXXXX HILLS, INC.
NONE.
25
SCHEDULE 4.1(H)
ASSET OWNERSHIP EXCEPTIONS
NONE.
26
SCHEDULE 5.1(B)
ESSXSPORT CORP., COMMON STOCK, OPTIONS AND WARRANTS OUTSTANDING
NONE.
27
SCHEDULE 5.1(J)
ESSXSPORT CORP., TAX MATTERS
NONE.
28
