EX-2.1 2 hdi_ex21.htm SHARE ACQUISITION AGREEMENT SHARE ACQUISITION AGREEMENT
THIS SHARE ACQUISITION AGREEMENT (this "Agreement"), is made and entered into as of September 30, 2012, by and among Sollensys Corp., a Nevada corporation ("SOLS"), Sollensys Corporation, a South Korean corporation (the “Company”), and the shareholders of the Company set forth on the signature pages of this Agreement (the "Shareholders"; and collectively with the Company and SOLS, the "Parties"), with reference to the following facts:
A.
WHEREAS, Company is a privately held corporation engaged in the business of designing and manufacturing of touch screen panels, and SOLS is a Nevada corporation.
B.
C.
D.
ARTICLE I EXCHANGE OF THE SHARES AND CONSIDERATION
1.1
1.2
1
2.1
ARTICLE III
3.1
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth in the written disclosure schedule attached hereto as Exhibit A dated as of the date hereof prepared by the Company, signed by the President and Chief Financial Officer of the Company and delivered to SOLS simultaneously with the execution hereof (the “Company Disclosure Schedule”), the Company represents and warrants to SOLS that all of the statements contained in this Article IV are true and correct as of the date of this Agreement (or, if made as of a specified date, as of such date) and will be true, complete and correct as of the Closing Date (or if made as of a specified date, as of such date). Each exception set forth in the Disclosure Schedule and each other response to this Agreement set forth in the Disclosure Schedule is identified by reference to, or has been grouped under a heading referring to, a specific individual section of this Agreement and relates only to such section except to the extent that one portion of the Disclosure Schedule specifically refers to another portion thereof, identifying such other portion by section reference or similar specific cross-reference.
4.1
Organization and Qualification.
(a)
The Company is a corporation duly organized, validly existing and in good standing under the laws of South Korea and has the requisite corporate power and authority to carry on its business as it is now being conducted. There is no pending or threatened proceeding for the dissolution or liquidation of the Company.
2
(b)
Except as described in Schedule 4.1 of the Company Disclosure Schedule, the Company (i) does not, directly or indirectly, own any interest in any corporation, partnership, joint venture, limited liability company, or other Person and (ii) is not subject to any obligation or requirement to provide funds to or to make any investment (in the form of a loan, capital contribution or otherwise) in or to any Person. For purposes of this Agreement, "Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, government, entity or any group comprised of one or more of the foregoing.
(c)
The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the properties owned or leased by it makes such qualification or licensing necessary, except for any such jurisdiction where the failure to so qualify or be licensed, individually and in the aggregate for all such jurisdictions, would not reasonably be expected to have a Material Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means an action, event or occurrence if it has, or could reasonably be expected to have, a material adverse effect on the capitalization, financial condition or results of operations of the person or entity in question. Any item or event susceptible of measurement in monetary terms which, when considered together with similar items or events, does not exceed the amount of $10,000, shall not be considered a Material Adverse Effect.
(d)
The Company has provided or will, promptly following the date of this Agreement, provide to SOLS complete and accurate copies of the Articles of Incorporation and Bylaws of the Company, as currently in effect, and minutes and other records of the meetings and other proceedings of the Board of Directors and shareholders of the Company. The Company is not violation of any provisions of its Articles of Incorporation or Bylaws.
4.2
(a)
The authorized capital stock of Company consists of ________ shares of Common Stock, $.0.001 par value per share, of which 401,804 shares are issued and outstanding. All issued and outstanding shares of Company Common Stock are validly issued and outstanding, fully paid and nonassessable and free of preemptive rights. Other than the 401,804 shares of Company Common Stock, (i) there are no shares of capital stock or other equity securities of the Company outstanding and, (ii) there are no outstanding options, warrants, subscription rights (including any preemptive rights), calls, or commitments, or convertible notes or instruments of any character whatsoever to which the Company is a party or is bound, requiring or which could require the issuance, sale or transfer by the Company of any shares of capital stock of the Company or any securities convertible into or exchangeable or exercisable for, or rights to purchase or otherwise acquire, any shares of capital stock of the Company. There are no stock appreciation, phantom stock or similar rights relating to the Company.
(b)
All of the shares of Company Common Stock issued and outstanding immediately prior to the Closing have been issued in compliance with applicable national, regional and local securities laws in reliance on exemptions from registration or qualification thereunder.
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4.3
4.4
No Conflict, Required Filings and Consents.
(a)
The execution and delivery of this Agreement and any instrument required hereby to be executed and delivered by the Company at the Closing does not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Articles of Incorporation or Bylaws of the Company; or (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or by which it or any of its properties is bound or affected; or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default), or impair in any material respect the Company's rights or materially alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of any note, bond, mortgage, indenture, deed of trust, lease, permit, concession, franchise, license, agreement or other instrument or obligation to which the Company is a party or to which the properties or assets of the Company are subject, or (iv) result in the creation of any security interest, lien, claim, pledge, agreement, limitation on voting rights, charge or other encumbrance of any material nature (collectively, “Liens”) on any of the properties or assets of the Company pursuant to any Company Agreement (as defined in Section 4.11 below).
(b)
The execution and delivery of this Agreement and any instrument required hereby to be executed and delivered by the Company at the Closing does not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any court, administrative or regulatory agency or commission or other governmental authority or instrumentality (whether domestic or foreign, a “Governmental Entity”).
(c)
The consent of, or the delivery of notice to or filing with, any party to a Company Agreement (as defined in Section 4.11 below) is not required for the execution and delivery by the Company of this Agreement or the consummation of the transactions contemplated by this Agreement.
4.5
(a)
The Company is not in conflict with, or in default or violation of (and has not received any notices of violation. with respect to), any law, rule, regulation, order, judgment or decree applicable to the Company or by which it or any of its properties is bound or affected, and the Company has no knowledge of any such conflict, default or violation thereunder, except in each case for any such conflicts, defaults or violations that is not currently having or would not have a Material Adverse Effect on the Company.
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(b)
The Company holds all permits, licenses, easements, variances, exemptions, consents, certificates, authorizations, registrations, orders and other approvals from Governmental Entities that are material to the operation of the business of the Company as it is now being conducted (collectively, the “Company Permits”). The Company Permits are in full force and effect, have not been violated in any respect that is currently having or would have a Material Adverse Effect on the Company, and no suspension, revocation or cancellation thereof has been threatened and there is no action, proceeding or investigation pending or, to the Company's knowledge, threatened regarding suspension, revocation or cancellation of any Company Permits, except where the suspension, revocation or cancellation of such Company Permits would not have a Material Adverse Effect on the Company.
4.6
4.7
4.8
(a)
The Company is in compliance in all material respects with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and laws, and is not engaged in any unfair labor practices;
(b)
There are no controversies pending or, to the knowledge of the Company, threatened, between the Company and any of its respective employees, consultants or independent contractors, which controversies have had or could reasonably be expected to have a Material Adverse Effect on the Company;
(c)
The Company is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company, nor does the Company know of any activities or proceedings of any labor union to organize any such employees; and
(d)
The Company has no knowledge of any labor disputes, strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to any employees of, or consultants or independent contractors to, the Company.
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4.9
4.10
4.11
(a)
Except for the contracts, commitments, leases, licenses and agreements listed on Section 4.11 of the Company Disclosure Schedule (the "Company Agreements"), the Company is not party to or subject to:
(i)
any agreement (or group of related agreements) which requires future expenditures by the Company in excess of $10,000 or is otherwise material to the Company's business;
(ii)
any material contract or agreement for the purchase or sale of any commodity, product, material, supplies, equipment or other personal property, other than purchase or sale orders entered into in the ordinary course of business consistent with past practices;
(iii)
any employment, consulting or independent contractor agreements;
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(iv)
any distributor, sales representative, sales agent, commission or similar agreement, whether or not in writing;
(v)
any material license agreement (whether as licensor or licensee) or royalty agreement;
(vi)
any agreement with any current or former stockholder, officer or director of the Company, or any “affiliate” or “associate” of such persons (as such terms are defined in the rules and regulations promulgated under the Securities Act), including without limitation any agreement or other arrangement providing for the furnishing of services by, rental of real or personal property from, or otherwise requiring payments to, any such person;
(vii)
any agreement or other commitment with any person or entity containing covenants limiting the freedom of the Company or any of the Company’s affiliates, employees, directors, officers, consultants or agents to compete in any line of business or with any person or entity or in any geographical location or to use or disclose any information in their possession;
(viii)
any loan agreement, indenture, note, bond, debenture, guarantee or any other document or agreement evidencing a capitalized lease obligation or indebtedness to any person or any agreement of guaranty, indemnification or other similar commitment with respect to the obligations or liabilities of any other Person;
(ix)
any agreement for the disposition of Company assets other than in the ordinary course of business consistent with past practices;
(x)
any agreement for the acquisition of the business or shares of another party (except repurchase rights in favor of the Company for shares of Company common stock owned by any employee, officer, director, consultant, or advisor to the Company);
(xi)
any contract or agreement concerning a partnership or joint venture with one or more Person;
(xii)
any lease of real property;
(xiii)
any agreement which contains a fixed penalty or liquidated damages clause for late performance or other default by the Company to the extent that such late performance or default would have a Material Adverse Effect on the Company; or
(xiv)
any other agreement or contract (or group of related agreements or contracts) to the extent not otherwise disclosed in the Company Disclosure Schedule, the performance of which involves consideration paid by the Company in excess of $10,000 in any one year period.
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(b)
Correct and complete copies of all Company Agreements, including all amendments thereto, have been delivered to SOLS. The Company has not breached, is not in default under, and has not received written notice of any breach of or default under, any agreement required to be disclosed in Section 4.11 of the Company Disclosure Schedule (each, a “Material Contract”). To the Company’s knowledge, no other party to any Material Contract has breached or is in default of any of its obligations thereunder to the extent that such breach or default would have a Material Adverse Effect on the Company. Each Material Contract is in full force and effect, except in any such case for breaches, defaults or failures to be in full force and effect that do not currently have or would not have a Material Adverse Effect on the Company. Each Material Contract is a legal, valid and binding obligation of the Company and each of the other parties thereto, enforceable in accordance with its terms, except that the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity.
(c)
The consent of, or the delivery of notice to or filing with, any party to a Material Contract is not required for the execution and delivery by the Company of this Agreement or the consummation of the transactions contemplated under the Agreement.
4.12
(a)
any event, damage, destruction or loss, whether covered by insurance or not, which has had or reasonably is expected to have a Material Adverse Effect on the Company or its assets;
(b)
any entry by the Company into a commitment or transaction material to the Company, which is not in the ordinary course of business consistent with past practice;
(c)
any change by the Company in accounting principles, methods or practices, except insofar as may have been required by a change in GAAP;
(d)
any declaration, payment or setting aside for payment of any dividends or distributions in respect to shares of Company Common Stock, or any redemption, purchase or other acquisition of any shares of Company Common Stock;
(e)
any cancellation of any debts or waiver or release of any right or claim of the Company individually or in the aggregate material to the Company, whether or not in the ordinary course of business;
(f)
any revaluations by the Company of any of its assets or liabilities, including without limitation, writing-off notes or accounts receivable;
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(g)
any material increase in the rate or terms of compensation payable or to become payable by the Company to any of its personnel or consultants; any bonus, incentive compensation, service award or other benefit granted, made or accrued, contingently or otherwise, for or to the credit of any Company personnel; employee welfare, pension, retirement, profit-sharing or similar payment or arrangement made or agreed to by the Company for any Company personnel except for contributions in accordance with prior practice made to, and payments made to employees under, plans and arrangements existing on the date of the Audited Company Balance Sheet;
(h)
any adoption of a plan of liquidation or resolutions providing for the liquidation, dissolution, merger, consolidation or other reorganization of the Company, other than in connection with the transactions contemplated hereby;
(i)
any purchase, acquisition or sale by the Company of any assets, other than in the ordinary course of business;
(j)
any amendment, cancellation or termination of any Material Contract, including, without limitation, license or sublicense, or other instrument to which the Company is a party or to which the Company or any of the assets of the Company is bound;
(k)
any failure to pay when due any material obligation of the Company;
(l)
any failure to operate the business of the Company in the ordinary course with an effort to preserve the business intact, to keep available to the Company the services of its personnel, and to preserve for the Company the goodwill of its customers and others having business relations with the Company except for such failures that would not have a Material Adverse Effect on the Company;
(m)
any commitment to borrow money entered into by the Company, or any loans made or agreed to be made by the Company, involving more than $10,000 individually or $25,000 in the aggregate (other than credit provided by suppliers or manufacturers in the ordinary course of the Company's business consistent with past practices);
(n)
any liabilities incurred by the Company involving $10,000 or more individually and $25,000 or more in the aggregate, other than liabilities incurred in the ordinary course of business consistent with past practices;
(o)
any payment, discharge or satisfaction of any material liabilities of the Company or any material capital expenditure of the Company, other than (i) the payment, discharge or satisfaction in the ordinary course of business consistent with prior practice of liabilities reflected or reserved against in the Audited Financial Statements or incurred in the ordinary course of business consistent with prior practice since the date of the Audited Company Balance Sheet, and (ii) any capital expenditures involving $10,000 or less individually and $25,000 or less in the aggregate;
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(p)
any amendment of the Company's Articles of Incorporation or Company Bylaws; or
(q)
any agreement by the Company to do any of the things described in the preceding clauses (a) through (p) of this Section 4.12, other than as expressly contemplated or provided for in this Agreement.
4.13
Properties, Assets, Encumbrances; No Undisclosed Liabilities.
(a)
The Company has good, valid and marketable title to, a valid leasehold interest in, or valid license rights to, all the properties and assets which it purports to own, lease or license (real, personal and mixed, tangible and intangible), including, without, limitation, all the properties and assets reflected in the Company Balance Sheet (except for personal property sold since the date of the Company Balance Sheet in the ordinary course of business consistent with past practice), except as would not have a Material Adverse Effect on the Company, and such properties and assets are all of the assets (whether tangible or intangible) that are used or required for use in the operation of its business as currently or proposed to be conducted. All properties and assets reflected in the Company Balance Sheet are free and clear of all Liens, except for Liens reflected on the Company Balance Sheet and Liens for current taxes not yet due and other Liens that do not, individually or in the aggregate, materially detract from the value or impair the use of the property or assets subject thereto. Section 4.13 of the Company Disclosure Schedule contains a complete and accurate list of all leases pursuant to which the Company leases from others material amounts of real or personal property. Each such lease is in good standing, valid and effective in accordance with its terms, and there is not under any such lease, any existing material default or event of default (or event which with the giving of notice or lapse of time, or both, would constitute a material default).
(b)
There are no liabilities of the Company, other than (i) liabilities disclosed or provided for in the Company Balance Sheet, or (ii) liabilities incurred in the ordinary course of business since the date of the Company Balance Sheet and which, if existing, would not have a Material Adverse Effect on the Company. There is no probable or reasonably possible loss contingency (within the meaning of Statement of Financial Accounting Standards No. 5) known to the Company which is not reflected in the Financial Statements (including the notes thereto).
4.14
(a)
The Company is in compliance in all material respects with all applicable Environmental Laws (as defined below). The Company has not received any communication from a Governmental Entity, citizens group, employee or other person that alleges that the Company is not in full compliance with all applicable Environmental Laws.
(b)
There is no Environmental Claim (as defined below) pending against the Company or, to the Company's knowledge, threatened against any person whose liability for any Environmental Claim the Company has or may have retained or assumed either contractually or by operation of law.
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(c)
“Environmental Claim” means any claim, action, cause of action, investigation or notice by any person alleging potential liability arising out of, based on or resulting from (i) the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned by the Company, or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.
(d)
“Environmental Laws” means all federal, state, local and foreign laws and regulations relating to pollution or protection or preservation of human health or the environment including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata and natural resources, and including, without limitation, all laws and regulations relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, containment (whether above ground or underground), disposal, transport or handling of Materials of Environmental Concern, or the preservation of the environment or mitigation of adverse effects thereon and all laws and regulations with regard to recordkeeping, notification, disclosure and reporting requirements respecting Materials of Environmental Concern.
(e)
“Materials of Environmental Concern” means all pollutants, containments, toxic or hazardous substances, materials and wastes, petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, radon or lead-based paints and materials.
4.15
(a)
“Intellectual Property” is defined as all intellectual property in which Company has any right, title, or interest (including a licensed right other than rights to licensed software that is generally commercially available) or which has been, is being, or is expected to be used, exploited, or commercialized by Company in the conduct of its business, including but not limited to all “Patents” (hereinafter defined), all “Marks” (hereinafter defined), all “Copyrights” (hereinafter defined), and all “Confidential Information” (hereinafter defined).
(1)
“Patents” is defined to include all concepts, ideas, designs, formulas, inventions (whether patentable or not), techniques, all U.S. and foreign patent applications, and all U.S. and foreign patents.
(2)
“Marks” is defined to include all words, names, logos, symbols, trade names, source indicating indicia, trade dress, trademarks, marks, U.S. and foreign applications to register marks, and U.S. and foreign registrations.
(3)
“Copyrights” is defined to include all copyrights, U.S. and foreign, whether registered or not, all copyright applications, all copyright registrations, including but not limited to the copyrights in Company's business documents and files, customer documents and files, software, product designs and packaging, advertising, promotional material, and software products (whether developed or in development).
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(4)
“Confidential Information” is defined to include, but not limited to, confidential information, financial information, business trade secrets, marketing information, financial and technical trade secrets, techniques, processes, and know-how.
(b)
Section 4.15(b) of the Company Disclosure Schedule contains a complete and accurate list and description of (i) Intellectual Property which is material to the business of the Company; (ii) all patent applications, issued patents, trademark applications, trademark registrations, copyright applications, and copyright registrations, (iii) all licenses of Intellectual Property to the Company (other than licensed software that is generally commercially available) which are material to the business of Company; and (iv) all licenses and other agreements, written or not, from the Company to any third party granting any rights or interests in the Intellectual Property.
(c)
Except as set forth in Section 4.15(c) of the Company Disclosure Schedule:
(1)
Company is the sole owner, free and clear of any Lien or encumbrance, and without the payment of any monies or royalty except with respect to off-the-shelf software, of the Intellectual Property;
(2)
Company has taken, and will continue to take, all actions which are necessary or advisable to acquire and protect the Intellectual Property, consistent with prudent commercial practices;
(3)
Company's rights in the Intellectual Property are valid and enforceable;
(4)
Company has received no demand, claim, notice or inquiry from any person in respect of the Intellectual Property which challenges, threatens to challenge or inquires as to whether there is any basis to challenge, the validity of, the rights of the Company in, or the right of the Company to use, any such Intellectual Property, and the Company knows of no basis for any such challenge;
(5)
Company is not in violation or infringement of, and has not violated or infringed, any proprietary rights of any other person;
(6)
no person has or is infringing, misappropriating, or making unauthorized use of any Intellectual Property;
(7)
except on an arm's-length basis for value and other commercially reasonable terms, the Company has not licensed, consented or acquiesced to the taking or use of any Intellectual Property by any person;
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(8)
all Marks and Copyrights which are material to the business of the Company were either (a) authored by regular employees of Company within the scope of their employment and Company was thus the original author pursuant to the work made for hire doctrine, or (b) authored by independent contractors subject to enforceable non-disclosure and assignment agreements;
(9)
the execution and consummation of this Agreement will not adversely impair or impact the value of or SOLS's future enjoyment and exploitation of the Intellectual Property;
(10)
all current or former Company personnel, including partners, directors, officers, employees, agents, consultants and contractors, who have contributed to or participated in the conception, creation, or development of any Intellectual Property have executed effective and proper agreements containing non-disclosure and assignment provisions for the benefit of Company. True and complete copies of these agreements have been delivered to SOLS. After giving effect to the transactions contemplated herein, no current or former personnel of Company will possess any right, title or interest in the Intellectual Property; and
(11)
Company is not in breach or violation of any agreement relating to any Intellectual Property which would materially impair Company's rights, title, or interest in the Intellectual Property or agreement.
4.16
4.17
13
4.18
4.19
4.20
4.21
4.22
14
ARTICLE V SEVERAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Except as set forth in the disclosure schedule attached hereto as Exhibit B (the “Shareholder Disclosure Schedule”), each Shareholder, by virtue of signing this Agreement, severally but not jointly, represents and warrants to SOLS that the statements contained in this Article V are true, correct and complete as of the date of this Agreement (or, if made as of a specified date, as of such date) and will be true, correct and complete as of the Closing Date (or, if made as of a specified date, as of such date).
5.1
5.2
5.3
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5.4
(a)
(b)
Accredited Investor. Shareholder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Shareholder is experienced in evaluating and investing in securities of companies in a similar stage of development to SOLS and has sufficient knowledge and experience in financial and business matters to assess the relative merits and risks of an investment in SOLS, and can bear the economic risk of this investment.
(c)
(d)
5.5
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5.6
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE DISTRIBUTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT AND LAWS.”
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SOLS
Except as set forth in the written disclosure schedule attached hereto as Exhibit C (the “SOLS Disclosure Schedule”), SOLS represents and warrants to the Company and the Shareholders that the statements contained in this Article VI are true, correct and complete as of the date of this Agreement (or if made as of a specified date, as of such date) and will be true, correct and complete as of the Closing Date (or, if made as of a specified date, as of such date).
6.1
Organization and Qualification.
(a)
SOLS is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada and has the requisite corporate power and authority to carry on its business as it is now being conducted.
(b)
SOLS (i) does not, directly or indirectly, own any interest in any corporation, partnership, joint venture, limited liability company, or other Person and (ii) is not subject to any obligation or requirement to provide funds to or to make any investment (in the form of a loan, capital contribution or otherwise) in or to any Person.
(c)
SOLS is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the properties owned or leased by it makes such qualification or licensing necessary, except for any such jurisdiction where the failure to so qualify or be licensed, individually and in the aggregate for all such jurisdictions, would not reasonably be expected to have a Material Adverse Effect.
(d)
SOLS has provided or will, promptly following the date of this Agreement, provide to Company complete and accurate copies of the Articles of Incorporation and Bylaws of SOLS, as currently in effect, and minutes and other records of the meetings and other proceedings of the Board of Directors and shareholders of SOLS. SOLS is not in violation of any provisions of its Articles of Incorporation or Bylaws.
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6.2
6.3
(a)
SOLS has the requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by SOLS and the consummation by SOLS of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of SOLS. This Agreement has been duly executed and delivered by SOLS and constitutes a legal, valid and binding obligation of SOLS, enforceable against it in accordance with its terms.
(b)
The execution and delivery by SOLS of this Agreement does not, and the consummation of the transactions contemplated thereby will not, (i) conflict with, or result in a violation of, any provision of the Articles of Incorporation or Bylaws of SOLS, (ii) constitute or result in a breach of or default (or an event which with notice or lapse of time, or both, would constitute a default) under, or result in the termination or suspension of, or accelerate the performance required by, or result in a right of termination, cancellation or acceleration of any obligation or a loss of a benefit under, any note, bond, mortgage, indenture, deed of trust, lease, permit, concession, franchise, license, agreement or other instrument or obligation to which SOLS is a party or to which the properties or assets of SOLS are subject, (iii) create any Lien upon any of the properties or assets of SOLS, or (iv) constitute, or result in, a violation of any law applicable to SOLS or any of the properties or assets of SOLS.
(c)
No consent, approval, order or authorization of, notice to, registration or filing with any governmental authority or other person is necessary in connection with the execution and delivery of this Agreement by SOLS or the consummation by SOLS of the transactions contemplated by this Agreement, except for (i) the filing of a Form D in connection with the issuance of the SOLS Shares to the Company Shareholders hereunder, and (ii) the filing of a current report on form 8-K with the Securities and Exchange Commission (the "SEC") announcing completion of the transactions contemplated by this Agreement.
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6.4
SEC Filings; Financial Statements.
(a)
SOLS has filed and made available to the Company all forms, reports, schedules, statements and other documents required to be filed by SOLS under the Exchange Act with the SEC since June 30, 2012 (collectively, the "SOLS SEC Reports"). The SOLS SEC Reports (i) at the time filed, complied in all material respects with the applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, and (ii) with respect to any SOLS SEC Reports filed on or after June 30, 2012, did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated in such SOLS SEC Reports or necessary in order to make the statements in such SOLS SEC Reports, in light of the circumstances under which they were made, not misleading.
(b)
Each of the financial statements (including, in each case, any related notes), contained in the SOLS SEC Reports, including any SOLS SEC Reports filed after the date of this Agreement until the Closing, complied, as of its respective date, in all material respects with all applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and fairly presented the financial position of SOLS as at the respective dates and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not or are not expected to be material in amount.
(c)
Between June 30, 2012 and the date hereof, except as disclosed in the SOLS SEC Reports and other than as contemplated by this Agreement, there has not been any change in the business or operations of SOLS that has had or reasonably would be expected to have a Material Adverse Effect on SOLS.
6.5
6.6
6.7
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6.8
(a)
Except for this Agreement, and the agreements and transactions specifically contemplated by this Agreement, SOLS is not a party to or subject to:
(i)
any agreement or other commitments requiring any payments or performance of services by SOLS;
(ii)
any agreement or other commitments containing covenants limiting the freedom of SOLS to compete in any line of business or with any Person or in any geographic location or to use or disclose any information in its possession;
(iii)
any license agreement (as licensor or licensee) or royalty agreement;
(iv)
any agreement of indemnification, other than indemnification rights granted in the Bylaws or Articles of Incorporation of SOLS;
(v)
any agreement or undertaking pursuant to which SOLS is: (A) borrowing or is entitled to borrow any money; (B) lending or has committed itself to lend any money; or (C) a guarantor or surety with respect to the obligations of any Person; and
(vi)
any leases of real property.
(b)
SOLS is not in violation or breach of any material contract to which it is a party. There does not exist any event or condition that, after notice or lapse of time or both, would constitute an event of default or breach under any material contract on the part of SOLS or, to the knowledge of SOLS, any other party thereto or would permit the modification, cancellation or termination of any material contract or result in the creation of any lien upon, or any person acquiring any right to acquire, any assets of SOLS. SOLS has not received in writing any claim or threat that SOLS has breached any of the terms and conditions of any material contract.
(c)
The consent of, or the delivery of notice to or filing with, any party to a material contract to which SOLS is a party is not required for the execution and delivery by SOLS of this Agreement or the consummation of the transactions contemplated under the Agreement.
6.9
20
6.10
ARTICLE VII pRE-CLOSING COVENANTS
7.1
(a)
Except as specifically provided in this Agreement, between the date of this Agreement and the Closing Date, SOLS shall:
(i)
maintain its books of account and records in the usual and ordinary manner, and in conformity with its past practices;
(ii)
pay accounts payable and other obligations when they become due and payable in the ordinary course of business consistent with past practices except to the extent disputed in good faith;
(iii)
conduct its business in the ordinary course consistent with past practices, or as required by this Agreement;
(iv)
pay all taxes when due and file all SOLS Tax Returns on or before the due date therefor except to the extent disputed in good faith;
(v)
make appropriate provisions in its books of account and records for taxes relating to its operations during such period (regardless of whether such taxes are required to be reflected in a tax return having a due date on or prior to the Closing Date);
(vi)
withhold all taxes required to be withheld and remitted by or on behalf of SOLS in connection with amounts paid or owing to any SOLS personnel or other person, and pay such taxes to the proper governmental authority or set aside such taxes in accounts for such purpose;
(vii)
make all required filings on a timely basis with the SEC or any other state, federal or local regulatory body, including, without limitation, making all filings under the Exchange Act, on a timely basis so as to maintain SOLS's status as a reporting company in good standing under the Exchange Act; and
(viii)
comply with the listing requirements of, and take all steps reasonably necessary to maintain SOLS's listing on, the OTC Markets.
21
(b)
Without the prior written consent of the Company and except as contemplated by this Agreement, between the date of this Agreement and the Closing Date (or termination of this Agreement), SOLS shall not:
(i)
grant any increase in the compensation payable, or to become payable, to any SOLS personnel or enter into any bonus, insurance, pension, severance, change-in-control or other benefit plan, payment, agreement or arrangement for or with any SOLS personnel, except as consistent with past practices in the ordinary course of business;
(ii)
borrow or agree to borrow any funds, incur any indebtedness or directly or indirectly guarantee or agree to guarantee the obligations of others, or draw or borrow on any lines of credit that may be available to SOLS;
(iii)
except as specifically contemplated by this Agreement, enter into any material agreement, contract, lease or other commitment;
(iv)
place or allow to be placed a lien on any of the assets of SOLS;
(v)
except as specifically contemplated by this Agreement, cancel, discount or otherwise compromise any material indebtedness owing to SOLS or any claims which SOLS may possess or waive any rights of material value;
(vi)
sell or otherwise dispose of any assets of SOLS, except in the ordinary course of business consistent with past practices;
(vii)
commit any act or omit to do any act which will cause a breach of this Agreement or any other material agreement, contract, lease or commitment;
(viii)
violate any law or governmental approval, including, without limitation any federal or state securities laws;
(ix)
make any loan, advance, distribution or payment of any type or to any Person other than as specifically contemplated by this Agreement;
(x)
amend its Articles of Incorporation or Bylaws;
(xi)
merge or consolidate with, or agree to merge or consolidate with, or purchase substantially all of the assets of, or otherwise acquire any business or any Person or division thereof;
(xii)
make any tax election or settle or compromise any tax liability other than in the ordinary course of business consistent with past practices; or
(xiii)
take any action or series of actions that results in or is likely to result in (i) the delisting of the SOLS Common Stock from trading on the OTC Markets.
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7.2
(a)
Except as specifically provided in this Agreement, between the date of this Agreement and the Closing Date, the Company shall:
(i)
maintain its books of account and records in the usual and ordinary manner, and in conformity with its past practices;
(ii)
pay accounts payable and other obligations when they become due and payable in the ordinary course of business consistent with past practices except to the extent disputed in good faith;
(iii)
conduct its business, if any, in the ordinary course consistent with past practices, or as required by this Agreement;
(iv)
pay all taxes when due and file all Company Tax Returns on or before the due date therefor except to the extent disputed in good faith;
(v)
make appropriate provisions in its books of account and records for taxes relating to its operations during such period (regardless of whether such taxes are required to be reflected in a tax return having a due date on or prior to the Closing Date); and
(vi)
withhold all taxes required to be withheld and remitted by or on behalf of the Company in connection with amounts paid or owing to any Company personnel or other person, and pay such taxes to the proper governmental authority or set aside such taxes in accounts for such purpose.
(b)
Without the prior written consent of SOLS, between the date of this Agreement and the Closing Date (or termination of this Agreement), the Company shall not:
(i)
except contemplated by this Agreement, issue or promise to issue any capital stock or any options, warrants or other rights to subscribe for or purchase any capital stock or any securities convertible into or exchangeable or exercisable for, or rights to purchase or otherwise acquire, any shares of the capital stock of the Company;
(ii)
declare or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any of its capital stock, or split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock;
23
(iii)
enter into any material contract or commitment, or amend or otherwise modify or waive any of the terms of any of its material contracts, other than in the ordinary course of business consistent with past practice, or violate or terminate any such material contracts;
(iv)
transfer, assign or license to any person or entity any rights to its intellectual property other than in the ordinary course of business consistent with past practice;
(v)
enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or other exclusive rights of any type or scope with respect to any of its products or intellectual property;
(vi)
adopt or amend any employee benefit or stock purchase or option plan;
(vii)
except as may be required or reasonably necessary in order to complete the transactions contemplated by this Agreement, agree to borrow any funds, incur any indebtedness or directly or indirectly guarantee or agree to guarantee the obligations of others, or draw or borrow on any lines of credit that may be available to Company;
(viii)
place or allow to be placed a lien or encumbrance on any of the assets of the Company;
(ix)
pay, discharge or satisfy in an amount in excess of $5,000 in any one case or $15,000 in the aggregate, any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) arising other than in the ordinary course of business, other than the payment, discharge or satisfaction of liabilities reflected or reserved against in the Company's financial statements;
(x)
make any capital expenditures, capital additions or capital improvements except in the ordinary course of business and consistent with past practice;
(xi)
materially reduce the amount of any material insurance coverage provided by existing insurance policies;
(xii)
terminate or waive any right of substantial value;
(xiii)
commence a lawsuit other than (1) for the routine collection of bills, (2) in such cases where it in good faith determines that failure to commence suit would result in the material impairment of a valuable aspect of its business, provided that it consults with SOLS prior to the filing of such a suit, or (3) for a breach of this Agreement;
24
(xiv)
sell, lease, license or otherwise dispose of or encumber any of its properties or assets which are material, individually or in the aggregate, to its business, except in the ordinary course of business consistent with past practice;
(xv)
commit any act or omit to do any act which will cause a breach of this Agreement or any other material agreement, contract, lease or commitment to which the Company is party;
(xvi)
violate any law or governmental approval, including, without limitation any federal or state securities laws;
(xvii)
make any loan, advance, distribution or payment of any type or to any Person other than as contemplated by this Agreement;
(xviii)
amend its Articles of Incorporation or Bylaws;
(xix)
except as contemplated by this Agreement, consolidate with, or agree to merge or consolidate with, or purchase substantially all of the assets of, or otherwise acquire any business or any Person or division thereof;
(xx)
make any tax election or settle or compromise any tax liability other than in the ordinary course of business consistent with past practices;
(xxi)
lease or purchase or agree to lease or purchase any assets or properties; or
(xxii)
take, or agree in writing or otherwise to take, any action which would make any of its representations or warranties contained in this Agreement untrue or incorrect in any material respect or prevent it from performing or cause it not to perform its covenants hereunder in any material respect.
ARTICLE VIII ADDITIONAL AGREEMENTS
8.1
(a)
From the date hereof to the Closing Date, Company shall afford, and shall cause its officers, directors, employees, representatives and agents to afford, to SOLS and to the officers, employees and agents of SOLS reasonable access during normal business hours to Company's officers, employees, agents, representatives, properties, books, records and contracts, and shall furnish to SOLS all financial, operating and other data and information as SOLS, through its agents, officers, employees or other representatives, may reasonably request.
25
(b)
From the date hereof to the Closing Date, SOLS shall afford, and shall cause its officers, directors, employees, representatives and agents to afford, to Company and to the officers, employees and agents of Company reasonable access during normal business hours to SOLS's officers, employees, agents, representatives, properties, books, records and contracts, and shall furnish to Company all financial, operating and other data and information as Company, through its agents, officers, employees or other representatives, may reasonably request.
(c)
No investigation pursuant to Section 8.1(a) shall affect any representations or warranties of the Parties herein or the conditions to the obligations of the Parties.
8.2
8.3
8.4
8.5
Notification of Certain Matters.
(a)
Company shall give prompt notice to SOLS of any material inaccuracy in any representation or warranty made by it herein, or any material failure of Company to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by Company under this Agreement; provided, however, that no such notification shall affect the representations or warranties or covenants or agreements of Company or the conditions to the obligations of SOLS hereunder.
26
(b)
SOLS shall give prompt notice to Company of any material inaccuracy in any representation or warranty made by it herein, or any material failure of SOLS to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations or warranties or covenants or agreements of SOLS or the conditions to the obligations of Company hereunder.
(c)
Company and SOLS shall each promptly advise the other in writing of any change or event having, or which, insofar as can reasonably be foreseen, in the future would have, a Material Adverse Effect or any adverse effect on the right or ability of any Party to enter into and complete the transactions contemplated hereby.
8.6
(a)
Each Party shall hold, and shall cause its officers, employees, agents and representatives, including, without limitation, attorneys, accountants, consultants and financial advisors who obtain such information to hold, in confidence, and not use for any purpose other than evaluating the transactions contemplated by this Agreement, any confidential information of another Party obtained through the investigations permitted hereunder, which for the purposes hereof shall not include any information which (i) is or becomes generally available to the public other than as a result of disclosure by a Party or one of its affiliates in violation of its obligations under this subsection, (ii) becomes available to a Party on a nonconfidential basis from a source, other than the Party which alleges the information is confidential or its affiliates, which has represented that such source is entitled to disclose it, or (iii) was known to a Party on a nonconfidential basis prior to its disclosure to such Party hereunder. If this Agreement is terminated, at the request of a Party, the other Party shall deliver, and cause its officers, employees, agents, and representatives, including, without limitation, attorneys, accountants, consultants and financial advisors who obtain confidential information of the requesting Party pursuant to investigations permitted hereunder, to deliver to the requesting Party all such confidential information that is written (including copies or extracts thereof).
(b)
If a Party or a Person to whom a Party transmits confidential information of another Party is requested or becomes legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, criminal or civil investigative demand or similar process) to disclose any of such confidential information, such Party or other Person will provide the other Party with prompt written notice so that such Party may seek a protective order or other appropriate remedy or waive compliance with Section 8.6(a). If such protective order or other remedy is not obtained, or if the applicable Party waives compliance with Section 8.6(a), the Party or Person subject to the request will furnish only that portion of such confidential information which is legally required and will exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such confidential information.
27
8.7
8.8
8.9
(a)
Prior to termination of this Agreement pursuant to Article X hereof, neither the Company, its subsidiaries, if any, or any Shareholder shall, nor shall the Company or any Shareholder authorize or permit any officers, directors or employees of, or any investment bankers, attorneys or other agents or representatives retained by or acting on behalf of, the Company, any of its subsidiaries or Shareholders, or authorize any third party to: (i) initiate, solicit or encourage, directly or indirectly, any inquiries or the making of any proposal that constitutes an Acquisition Proposal (as hereinafter defined), (ii) engage or participate in negotiations or discussions with, or furnish any information or data to, or take any other action to, facilitate any inquiries or making any proposal by, any third party relating to an Acquisition Proposal, (iii) enter into any agreement with respect to any Acquisition Proposal or approve an Acquisition Proposal, (iv) negotiate or enter discussions with, or furnish any information to, any third party (a “Potential Acquiror”) with respect to any unsolicited Acquisition Proposal, or (v) make or authorize any statement, recommendation or solicitation in support of any possible Acquisition Proposal. In the event that the Company shall receive any Acquisition Proposal, it shall promptly (and in no event later than 48 hours after receipt thereof) furnish to SOLS the identity of the recipient of the Acquisition Proposal and of the Potential Acquiror, the terms of such Acquisition Proposal, and copies of such Acquisition Proposal and all information provided by the Potential Acquiror. The Company and the Shareholders understand and agree that any violation of the restrictions set forth in this Section 8.9 by the Company or any of its subsidiaries or Shareholders, or by any director or officer of the Company or any of its subsidiaries or any financial advisor, attorney or other advisor or representative of the Company or any of its subsidiaries, whether or not such person is purporting to act on behalf of the Company, any of its subsidiaries, the Shareholders or otherwise, or any violation of these restrictions by any third party authorized by the Company or the Shareholders to do so, shall be deemed to be a breach of this Section 8.9 sufficient to enable SOLS to terminate this Agreement pursuant to Article X hereof and seek injunctive and monetary relief to the fullest extent permitted by applicable law.
28
(b)
For the purposes of this Agreement, “Acquisition Proposal” shall mean (i) any proposal, whether in writing or otherwise, made by any person other than SOLS, to acquire “beneficial ownership” (as defined under Rule 13(d) of the Securities Exchange Act of 1934, as amended) of any material part of the assets (other than in the ordinary course of the Company’s business) or outstanding capital stock (or securities convertible into shares of capital stock) of any of the Company or its subsidiaries pursuant to a merger, consolidation, exchange of shares or other business combination, sale of shares of capital stock (or securities convertible into capital stock), sales of assets, tender offer or exchange offer or similar transaction involving the Company or its subsidiaries, including, without limitation, any sale or transfer or license of the Company's intellectual property, or (ii) any other transaction or proposed transaction, the consummation of which would reasonably be expected to impede, interfere with, prevent or materially delay the transactions contemplated by this Agreement, or which would reasonably be expected to dilute the benefits of such transactions to SOLS.
ARTICLE IX CLOSING DELIVERIES AND CONDITIONS TO CLOSING
9.1
(a)
A certificate of the Secretary and President of SOLS dated the Closing Date as to (i) the corporate actions taken by SOLS and its board of directors to authorize the transactions contemplated hereby, and (ii) the incumbency and signatures of the officers of SOLS executing this Agreement and the other agreements, instruments and other documents executed by or on behalf of SOLS pursuant to this Agreement or otherwise in connection with the transactions contemplated hereby;
(b)
A certificate, executed by an officer of SOLS, certifying that all representations, warranties and covenants herein are true and correct as of the Closing Date. The delivery of such certificate shall constitute a representation and warranty of SOLS as to the statements set forth therein;
(c)
A copy of the resolutions adopted by the Board of Directors of SOLS (i) authorizing the execution and delivery of this Agreement and the performance by SOLS of its obligations hereunder, (ii) electing the persons designated by the Company as a director of SOLS effective as of the Closing Date, and (iii) electing the persons designated by the Company as officers of SOLS effective as of the Closing Date, certified by its Secretary;
(d)
Resignation of the SOLS’s director effective as of the Closing Date and resignations of SOLS’s officer effective as of the Closing Date.
(e)
A certificate of good standing of SOLS from the Secretary of State of Nevada dated as of the most recent practicable date; and
29
(f)
A completed Form 8K for the acquisition of the Company and the required financial statements.
(g)
Such other customary certificates or documents as may be reasonably required by Company.
9.2
(a)
A certificate of the Secretary and President of the Company, dated the Closing Date, in form and substance reasonably satisfactory to SOLS as to (i) the corporate actions taken by Company and its board of directors to authorize the transactions contemplated hereby, and (ii) the incumbency and signatures of the officers of Company executing this Agreement and the other agreements, instruments and other documents executed by or on behalf of Company pursuant to this Agreement or otherwise in connection with the transactions contemplated hereby;
(b)
A certificate, executed by the President and Chief Financial Officer of the Company, in such detail as SOLS shall reasonably request, certifying that all representations, warranties and covenants herein are true and correct as of the Closing Date. The delivery of such certificate shall constitute a representation and warranty of Company as to the statements set forth therein;
(c)
A copy of the resolutions adopted by the Board of Directors of Company authorizing the execution and delivery of this Agreement and the performance by the Company of its obligations hereunder, certified by the Secretary and President of the Company; and
(d)
A certificate of good standing of the Company from the Secretary of State of Korea dated as of the most recent practicable date.
(e)
The audited financial statements for the years ending 2010 and 2011 and the unaudited six (6) month period as of June 30, 2012 as prepared by EFP Xxxxxxxxx for inclusion in the Company’s 8K that will be filed at the Closing.
(f)
A certificate, executed by the President and Chief Financial Officer of the Company, that the disclosure in the 8K to filed at the Closing does not contain any untrue statement of a material fact and does not omit to state any material facts necessary in order to make the 8K not misleading, as to those facts and statement that pertain to the Company.
9.3
30
9.4
(a)
No temporary restraining order, preliminary or permanent injunction or other order issued by any governmental authority or other material legal restraint or prohibition issued or promulgated by a governmental authority preventing the consummation of the transactions contemplated by this Agreement shall be in effect or shall be threatened, and there shall not be any law or regulation enacted or deemed applicable to the transactions contemplated by this Agreement that makes consummation of such transactions illegal.
9.5
(a)
Each of the representations and warranties of the Company and the Shareholders set forth in this Agreement (i) that are not qualified by materiality must have been true and correct in all material respects as of the Closing Date, and (ii) that are qualified by materiality must have been true and correct as of the Closing Date; except, in each case, for inaccuracies that would not individually or in the aggregate have a Material Adverse Effect on the Company.
(b)
All of the obligations, covenants and agreements with which the Company or Shareholders are required to comply or that the Company or the Shareholders are required to perform under this Agreement at or prior to the Closing shall have been complied with and performed in all material respects.
(c)
The documents required to be delivered by the Company and the Shareholders pursuant to Section 9.2 and Section 9.3, respectively, above shall have been delivered simultaneously with the Closing.
9.6
(a)
Each of the representations and warranties of SOLS set forth in this Agreement (i) that are not qualified by materiality must have been true and correct in all material respects as of the Closing Date, and (ii) that are qualified by materiality must have been true and correct as of the Closing Date; except, in each case, for inaccuracies that would not individually or in the aggregate have a Material Adverse Effect on SOLS.
(b)
All of the obligations, covenants and agreements with which SOLS is required to comply or that SOLS is required to perform under this Agreement at or prior to the Closing shall have been complied with and performed in all material respects.
31
(c)
The documents required to be delivered by SOLS pursuant to Section 9.1 above shall have been delivered simultaneously with the Closing.
10.1
Termination. This Agreement may be terminated at any time prior to the Closing Date:
(a)
by mutual written consent of the Company and SOLS at any time prior to the Closing;
(b)
by SOLS in the event of a material breach by Company or Shareholders of any provision of this Agreement for which written notice has been given to the Company and which breach has not been cured prior to the earlier of (i) the Termination Date or (ii) thirty (30) days following notice of such breach; provided, however that the right to terminate this Agreement under this Section 10.1(b) shall not be available to SOLS if SOLS has materially breached any provision of this Agreement and such breach remains uncured;
(c)
by the Company in the event of a material breach by SOLS of any provision of this Agreement which breach has not been cured prior to the Termination Date; provided, however, that the right to terminate this Agreement under this Section 10.1(c) shall not be available to the Company if the Company has materially breached any provision of this Agreement and such breach remains uncured;
(d)
by the Company if the Closing shall not have occurred by December 1, 2012 (the "Termination Date"); provided, however, the right to terminate this Agreement under this Section 10.1(d) shall not be available to any Party whose failure to fulfill any obligation hereunder has been the cause of, or results in, the failure of the Closing to have occurred on or before the Termination Date;
10.2
32
11.1
11.2
(a)
SOLS agrees to indemnify, defend and hold harmless the Company and the Shareholders from and against any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including interest, penalties and reasonable attorneys’ fees and expenses (collectively “Damages”) asserted against, resulting to, imposed upon or incurred by the Company or the Shareholders, directly or indirectly, by reason of or resulting from (i) any breach by SOLS of this Agreement, or (ii) any inaccuracy in or breach of any of the representations, warranties, covenants or agreements made by SOLS in this Agreement.
(b)
Company and the Shareholders agree to indemnify, defend and hold harmless SOLS from and against any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including interest, penalties and reasonable attorneys’ fees and expenses (collectively “Damages”) asserted against, resulting to, imposed upon or incurred by SOLS, directly or indirectly, by reason of or resulting from (i) any breach by Company and the Shareholders of this Agreement, or (ii) any inaccuracy in or breach of any of the representations, warranties, covenants or agreements made by Company and the Shareholders in this Agreement.
11.3
33
If the Indemnifying Party shall not, within thirty (30) days after the giving of such notice by the Indemnified Party, notify the Indemnified Party in accordance herewith that the Indemnifying Party disputes the right of the Indemnified Party to indemnity in respect of such Claim, then any such Claim shall be paid or satisfied as follows: (i) if said Claim is liquidated, then payment of such Claim to the Indemnified Party shall be made by the Indemnifying Party at the end of such period; or (ii) if the amount of such Claim is unliquidated at the time notice is originally given to the Indemnifying Party, the Indemnified Party shall give a second notice to the Indemnifying Party when the liquidated amount of such Claim is known and, unless the Indemnifying Party shall object in writing to such amount (as opposed to the Claim itself, as to which the right to dispute had expired) within twenty (20) days after the giving of said second notice, payment of such Claim to the Indemnified Party shall be made by the Indemnifying Party.
If the Indemnifying Party shall not have made payment to the Indemnified Party of any Claim when said payment is due, then the Indemnified Party shall have the right to take any and all actions required to collect from the Indemnifying Party the amount of such Claim.
Any portion of the amount of Damages asserted by the Indemnified Party in connection with a Claim shall, if not objected to by the Indemnifying Party in accordance with the procedures established herein, be considered to be subject to satisfaction without further objection, as may be appropriate.
If the Indemnifying Party shall notify the Indemnified Party that he disputes any Claim or the amount thereof (which notice shall only be given if the Indemnifying Party has a good faith belief that the Indemnified Party is not entitled to indemnity or the full amount of indemnity as claimed) then the parties hereto shall endeavor to settle and compromise such Claim, or may agree to submit the same to arbitration, and, if unable to agree on any settlement or compromise or on submission to arbitration, such claim shall be settled by appropriate litigation, and any liability and the amount of the Damages established by reason of such settlement, compromise, arbitration or litigation, or incurred as a result thereof, shall be paid and satisfied as provided herein.
11.4
34
If the proceeding involves matters as to which the Indemnifying Party is not “wholly at risk,” then the defense, compromise or settlement of the Claim shall be the responsibility of the Indemnified Party, but such defense, compromise and settlement by the Indemnified Party shall be for the expense and account of the Indemnifying Party. Counsel for the Indemnifying Party shall consult and cooperate at all times with counsel for the Indemnified Party in defending against any such third party claim.
The Indemnifying Party shall not under any circumstances, without the written consent of the Indemnified Party, settle or compromise any claim or consent to the entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a release from all liability in respect of such claim.
11.5
Limitations. Notwithstanding any of the provisions of the Article XI:
(a)
None of the Parties to this Agreement nor any of their affiliates shall be entitled to indemnification under this Article XI until the aggregate amount of all Claims exceeds $10,000 at which time all Claims shall be subject to indemnification;
(b)
In no event will any indemnifying party be liable for consequential damages under this Article XI.
ARTICLE XII GENERAL PROVISIONS
12.1
12.2
12.3
35
12.4
Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of State of Nevada, without regard to the conflict of law provisions thereof.
12.5
12.6
12.7
12.8
Arbitration. Any dispute arising out of this Agreement, or its performance or breach, shall be resolved by binding arbitration in Las Vegas, Nevada under the Commercial Arbitration Rules (the "AAA Rules") of the American Arbitration Association (the "AAA"). This arbitration provision is expressly made pursuant to and shall be governed by the Federal Arbitration Act, 9 U. S. C. Sections 1-14 as well as the AAA Rules. The Parties agree that pursuant to Section 9 of the Federal Arbitration Act, a judgment of a United States District Court of competent jurisdiction shall be entered upon the award made pursuant to the arbitration. A single arbitrator, who shall have the authority to allocate the costs of any arbitration initiated under this paragraph, shall be selected according to the AAA Rules within ten (10) days of the submission to the AAA of the response to the statement of claim or the date on which any such response is due, whichever is earlier. The arbitrator shall be required to furnish to the parties to the arbitration a preliminary statement of the arbitrator's decision that includes the legal rationale for the arbitrator's conclusion and the calculations pertinent to any damage award being made by the arbitrator. The arbitrator shall then furnish each of the parties to the arbitration the opportunity to comment upon and/or contest the arbitrator's preliminary statement of decision either, in the discretion of the arbitrator, through briefs or at a hearing. The arbitrator shall render a final decision following any such briefing or hearing. The arbitrator shall conduct the arbitration in accordance with the Federal Rules of Evidence and the AAA Rules. The arbitrator shall decide the amount and extent of the pre-hearing discovery which is appropriate. The arbitrator shall have the power to enter any award of monetary and/or injunctive relief (including the power to issue permanent injunctive relief and also the power to reconsider any prior request for immediate injunctive relief by any Party and any order as to immediate injunctive relief previously granted or denied by a court in response to a request therefor by any Party), including the power to render an award as provided in Rule 43 of the AAA Rules.
36
The arbitrator shall have the power to award the prevailing party its costs and reasonable attorney's fees; provided, however, that the arbitrator shall not award attorneys' fees to a prevailing party if the prevailing party received a settlement offer unless the arbitrator's award to the prevailing party is greater than such settlement offer without taking into account attorneys' fees in the case of the settlement offer or the arbitrator's award. In addition to the above courts, the arbitration award may be enforced in any court having jurisdiction over the Parties and the subject matter of the arbitration.
12.9
12.10
12.11
If to SOLS: |
|
If to the Shareholders or the Shareholder Representative |
To their addresses as set forth in the records of the Company |
If to Company: |
|
With a Copy to Rowland W. Day II: (which shall not constitute service) | 0 Xxxxxxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000 |
Any Party may change such Party's address for the purpose of receiving notices, demands and other communications as herein provided, by a written notice given in the aforesaid manner to the other Parties.
37
12.12
12.13
[SIGNATURES CONTINUED ON NEXT PAGE]
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__________________, a Nevada corporation
By: President |
|
_______________________, a ___________
corporation
By:_______________________________
President
__________________________________
, individually
and a Shareholder Representative
SHAREHOLDERS
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
EXHIBIT A
Company Disclosure Schedule
EXHIBIT B
Shareholder Disclosure Schedule
EXHIBIT C
SOLS Disclosure Schedule