SHARE EXCHANGE AGREEMENT
THIS
SHARE EXCHANGE AGREEMENT (hereinafter the "Agreement")
is
made and entered into this 20th
day of
November, 2008, by and between Red Oak Concepts, Inc., a corporation organized
and existing under the laws of the State of Nevada ("Acquiror"),
on
the one hand, and The Vinyl Fence Company, Inc., a corporation organized and
existing under the laws of the State of California (the "Company"),
the
members of the Board of Directors of the Company (collectively "Company
Principals"),
and
the holders of all the outstanding shares of common stock of the Company (each
a
"Company
Shareholder"
and
collectively "Company
Shareholders"),
on
the other hand.
RECITALS
WHEREAS,
Acquiror desires to acquire all of the issued and outstanding shares of the
Company’s capital stock, consisting of 22,100,000 shares of common stock, no par
value per share (the "Company
Stock"),
solely in exchange for shares of its authorized but unissued shares of common
stock, par value $0.0001 per share (the "Acquiror
Stock"),
on
the basis of one share of Acquiror Stock issued in exchange for each outstanding
share of Company Stock, so that, upon the consummation of such exchange and
the
other transactions described herein, the Company Principals will own an
aggregate of 96.929% of the outstanding shares of Acquiror Stock (the shares
of
Acquiror Stock issued in exchange for the shares of Company Stock are referred
to herein as the "Exchange
Shares");
WHEREAS,
the Company Shareholders desire to exchange all of their shares of Company
Stock
solely for the Exchange Shares; and
WHEREAS,
prior to the date hereof, the respective boards of directors and the holders
of
all of the outstanding shares of capital stock of each of Acquiror and the
Company have approved and adopted this Agreement and the transactions
contemplated hereby and it is the intent of the parties hereto that the
transactions contemplated hereby be structured so as to qualify as a tax-free
exchange under Subchapter C of the Internal Revenue Code of 1986, as amended
(the "Code"),
and
the provisions of this Agreement will be interpreted in a manner consistent
with
this intent.
References
herein to any “Schedule” are to the schedules included in the Disclosure
Schedule attached hereto and incorporated herein.
NOW,
THEREFORE, in consideration of the premises and mutual representations,
warranties and covenants herein contained, the parties hereby agree as
follows:
ARTICLE
I
ACQUISITION
AND EXCHANGE OF SHARES
1.1.
The
Agreement.
The
parties hereby agree that Acquiror is hereby acquiring all of the issued and
outstanding shares of the Company Stock solely in exchange for an aggregate
of
22,100,000 shares of authorized, but theretofore unissued, shares of Acquiror
Stock, or one share of Acquiror Stock for each share of Company Stock
outstanding on the date hereof. The parties hereto acknowledge that after the
date hereof, the Company will be a wholly-owned subsidiary of Acquiror.
1.2.
Exchange
of Shares and Other Securities.
(a)
Upon
the execution of this Agreement, Acquiror will issue an aggregate of 22,100,000
shares of the authorized but theretofore unissued shares of Acquiror Stock
in
the names of the persons and in the respective denominations set forth in
Schedule 1.2 annexed hereto, solely in exchange for all of the issued and
outstanding shares of the Company Stock registered in their names.
(b)
All
of the Exchange Shares are "restricted securities" as defined in paragraph
(a)
of Rule 144 of the Rules and Regulations promulgated under the Securities Act
of
1933, as amended (the "Securities
Act"),
and
each person receiving such shares is representing herein that such person is
acquiring the Exchange Shares for investment purposes only and without the
intent to make a further distribution thereof. All Exchange Shares being issued
under the terms of this Agreement are being issued pursuant to an exemption
from
the registration requirements of the Securities Act, under Section 4(2) thereof
and Rule 506 of Regulation D of the Rules and Regulations promulgated
thereunder. Certificates representing the Exchange Shares shall bear a
restrictive legend in substantially the following form:
"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS."
(c)
Upon
the execution of this Agreement, Acquiror shall (i) assume and honor all rights
under options granted by the Company to purchase up to 133,800 shares of Company
Stock outstanding immediately prior to the date hereof (collectively, "Company
Options") and shall permit each holder of any such security to exercise, convert
or exchange such securities for shares of Acquiror Stock on terms identical
terms to those granted under the Company Options held by them, including as
to
number of shares acquirable and the price at which they may be acquired, and
(ii) reserve out of its authorized but unissued shares of Acquiror Stock a
number of shares of such class of stock as may be necessary to permit the
exercise of all Company Options into Acquiror Stock.
1.3.
Documents
Delivered Herewith.
The
parties are herewith delivering the following:
(a)
The
Company is delivering to Acquiror:
(i)
stock
certificates representing all of the issued and outstanding shares of the
Company Stock, duly endorsed by the Company Principals and Company Shareholders,
so as to make Acquiror the holder thereof, free and clear of all claims and
encumbrances; and
2
(ii)
an
opinion of counsel in form and substance substantially as set forth in
Exhibit
A
hereto.
(b)
Acquiror is delivering to the Company:
(i)
an
opinion of its counsel in form and substance substantially as set forth in
Exhibit
B
hereto;
(ii)
a
Registration Rights Agreement in the form attached hereto as Exhibit
C
pursuant
to which it agrees to register for public resale under the Securities Act those
shares of Acquiror Stock delineated in Section 1.5(b), below (the “Registration
Rights Agreement”).
(iii)
the
Certificate of Amendment to the Articles of Incorporation to change the
corporate name to "Vinyl Products, Inc.," a copy of which is attached hereto
as
Exhibit
D
(the
"Certificate
of Amendment").
(c)
Issuance of Certificates Evidencing Acquiror Stock. As soon as practicable
after
the date hereof, Acquiror will deliver stock certificates representing the
Exchange Shares as provided Section 1.2(a), above, which certificates shall
bear
a restrictive legend in the form set forth in Section 1.2(b),
above.
1.4. Ratification
of Agreement.
(a)
By
the Company. The Company Principals and Company Shareholders have taken all
necessary and requisite action to approve and adopt this Agreement and all
transactions contemplated hereby, including the exchange of their shares of
Company Stock; and
(b)
By
the Acquiror. The Board of Director and holders of all of the outstanding shares
of Acquiror Stock have taken all necessary and requisite action to:
(i)
approve and adopt this Agreement, the Registration Rights Agreement and all
transactions contemplated hereby and thereby;
(ii)
appoint new directors, as provided in Section 1.5 hereof; and
(ii)
approve the amendment to Acquiror's Articles of Incorporation to change the
corporate name to "Vinyl Products, Inc."
1.5. Other
Transactions.
(a)
Concurrent with the execution of this Agreement:
(i)
all
of the members of the Board of Directors of Acquiror shall resign from such
position and from any executive office such director may then hold but prior
thereto appoint the following persons to serve as Directors:
Xxxxxx
Xxxxx
Xxxxxxx
Xxxxxxxxxx
3
(ii)
Acquiror will file the Certificate of Amendment with the Secretary of State
of
Nevada;
(iii)
Xxxxx X. Xxxxxxxx and Xxxxxxxxx Xxxxxxx, officers and members of the board
of
directors of Acquiror through the date hereof, shall contribute to the capital
of Acquiror all amounts due under those certain promissory notes dated June
18,
2007 each in the principal amount of $14,950 made by Acquiror in their favor,
as
evidenced by Xx. Xxxxxxxx'x and Xx. Xxxxxx'x letters to the Acquiror, which
are
attached hereto as Exhibit
E;
(iv)
the
holders of the outstanding shares of Acquiror Stock as of the date hereof shall
return to the treasury of Acquiror the shares of Acquiror Stock listed below,
so
that upon the return of said shares they shall own the number of shares set
forth in the right column of the table below:
Stockholder
|
No. Shares
Currently Owned
|
No. Shares
Returned to Treasury
|
No. Shares Owned After Giving
Effect to Return of Shares |
|||||||
Xxxxx
X. Xxxxxxxx
|
475,000
|
142,500
|
332,500
|
|||||||
Xxxxxxxxx
X. Xxxxxxx
|
475,000
|
142,500
|
332,500
|
|||||||
Xxxxxxx
Xxxxxxxxx
|
50,000
|
15,000
|
35,000
|
(b)
Acquiror shall, subject to the execution of the Registration Rights Agreement
by
the holders of the shares Acquiror Stock identified in subsections (i) – (iii),
below, include in the next registration statement it files with the SEC to
register securities for public resale under the Securities Act, as provided
in
and subject to the terms and conditions of the Registration Rights Agreement,
the following shares of Acquiror Stock:
(i)
all
of the shares of Acquiror Stock held by each of Xxxxx X. Xxxxxxxx, Xxxxxxxxx
Xxxxxxx and Xxxxxxx Xxxxxxxxx (collectively, the "Acquiror Insiders"); provided,
however, that the obligation to register such shares shall be subject to each
Acquiror Insider entering into the Lock Up/Leak Out Agreement in the form
attached hereto as Exhibit
F;
(ii)
an
aggregate of 2,300,000 Exchange Shares on behalf of the Company Principals
and
Company Shareholders in the denominations set forth on Schedule 1.5(d)(2);
and
(iii)
all
shares of Acquiror Stock issuable upon exercise of the Company Options.
1.6. Further
Assurances.
After
the execution of this Agreement, the parties shall from time to time, execute
and deliver such other instruments of conveyance and transfer and take such
other actions as such other party may reasonably request, in order to more
effectively consummate the transactions contemplated hereby.
4
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF ACQUIROR
Acquiror
hereby represents and warrant to and agrees with the Company that:
2.1. Organization
and Qualification.
Acquiror is duly organized and validly existing and in good standing under
the
laws of the State of Nevada and has the requisite power and authority to own
the
properties and to carry on its business as now being conducted. Acquiror is
not
qualified to transact business in any other jurisdiction and no such
qualification is required. The copies of the Articles of Incorporation and
Bylaws of Acquiror heretofore delivered to the Company are complete and correct
copies of such instruments as presently in effect.
2.2. Capitalization
of Acquiror.
The
authorized capital stock of Acquiror consists of 100,000,000 shares of common
stock, par value $0.0001 per share, of which, after giving effect to the
transactions described in Section 1.5(d), 700,000 shares will be issued and
outstanding, and 10,000,000 shares of preferred stock, par value $0.0001 per
share, none of which are outstanding and none of which have been designated.
All
shares of Acquiror Stock currently outstanding have been duly authorized,
validly issued and are fully paid and non-assessable. There are no preemptive
rights, or other outstanding rights, options, warrants, conversion rights,
stock
appreciation rights, redemption rights, repurchase rights, calls, agreements
or
commitments of any character obligating Acquiror to issue any shares of its
capital stock or any security representing the right to acquire, purchase or
otherwise receive any such stock. The Exchange Shares, when issued pursuant
to
this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable.
2.3. Authority;
Enforcement and Validity.
Acquiror has the requisite power and authority to enter into and perform its
obligations under this Agreement. The execution and delivery of this Agreement
by Acquiror and the consummation by Acquiror of the transactions contemplated
hereby have been duly authorized by Acquiror's board of directors and the
Acquiror Stockholders, and no further consent, or authorization is required
by
Acquiror. This Agreement has been duly executed and delivered by Acquiror and
constitutes the legal, valid and binding obligations of Acquiror, enforceable
against Acquiror in accordance with its terms, except as such enforceability
may
be limited by general principles of equity, applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
2.4. No
Conflicts.
The
execution, delivery and performance of this Agreement by Acquiror and the
consummation by Acquiror of the transactions contemplated hereby will not (i)
result in a violation of the Articles of Incorporation or Bylaws of Acquiror
or
(ii) conflict with, or constitute a default (or an event which with notice
or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Acquiror is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to
Acquiror or by which any property or asset of Acquiror is bound or
affected.
2.5. Consents.
Acquiror is not required to obtain any consent, authorization or order of,
or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by
this
Agreement.
5
2.6. Shell
Company Status.
Acquiror is not currently engaged in any business operations and is not a party
to or bound by any material contract or commitment, and has, since its
organization, been a "shell company," as such term is defined in Rule 12b-2
promulgated under the Exchange Act. The Company has no liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise), except
for two loans in the aggregate amount of $29,900 due to directors of Acquiror,
evidenced by promissory notes dated June 18, 2007, due on demand, as reported
in
Acquiror's financial statements, which such promissory notes and all amounts
due
thereunder are being contributed to the capital of Acquiror effective as of
the
date hereof in accordance with Section 1.5(a)(iii) of this
Agreement.
2.7. SEC
Documents.
Acquiror's class of common stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Acquiror
is subject to the periodic reporting requirements of Section 13 of the Exchange
Act. Acquiror has heretofore made available to the Company Principals true,
complete, and correct copies of all documents (“SEC Documents”) filed by
Acquiror with the Securities and Exchange Commission (“SEC”). The financial
statements included in the SEC Documents complied when filed as to form in
all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles in the United States,
applied on a consistent basis during the periods involved (except, in the case
of unaudited financial statements, as permitted by the rules and regulations
of
the Commission) and fairly present, subject, in the case of the unaudited
financial statements, to customary year end audit adjustments, the financial
position of Acquiror as at the dates thereof and the results of its operations
and cash flows.
2.8. No
Undisclosed Liabilities.
Acquiror has no liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) which were not fully reflected or reserved against
in
the SEC Documents, except for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the date
thereof.
2.9. Absence
of Certain Changes.
Since
September 30, 2008, Acquiror:
(a)
has
not (i) issued or sold any promissory note, stock, bond, option or other
corporate security of which it was an issuer or other obligor, (ii) discharged
or satisfied any lien or encumbrance or paid any obligation or liability,
absolute or contingent, direct of indirect, (iii) incurred or suffered to be
incurred any liability or obligation other than in the ordinary and usual course
of business, (iv) caused or permitted any lien, encumbrance or security interest
to be created or arise on or in any of its properties or assets, (v) declared,
set aside or made any dividend, payment or other distribution to any stockholder
or purchased or redeemed or agreed to purchase or redeem any shares of its
capital stock, (vi) reclassified its shares of capital stock, or (vii) entered
into any agreement or transaction except in the ordinary and usual course of
business or in connection with the execution and performance of this
Agreement;
(b)
except for liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, has conducted its business only in the
ordinary and usual course of business, and there has not been (i) any event
or
occurrence which could have a Material Adverse Effect (as such term is defined
in Section 3.1 hereof) on Acquiror's business or assets, (ii) except insofar
as
may have been or required by a change in generally accepted accounting
principles and practices as in effect from time to time in the United States,
any change in accounting methods, principles or practices by Acquiror materially
affecting its assets, liabilities or business or (iii) made any tax election
that individually or in the aggregate could reasonably be expected to have
a
Material Adverse Effect on Acquiror's business or assets, or any of its tax
attributes or any settlement or compromise of any material income tax liability;
and
6
(c)
has
not taken and has not agreed to take any action (other than actions contemplated
by this Agreement) that could reasonably be expected to prevent the transactions
contemplated by this Agreement from constituting a "reorganization" under
section 368(b) of the Code or as an acquisition of in excess of 80% of the
stock
of a corporation in exchange for property under Section 351 of the Code nor
is
it aware of any agreement, plan or other circumstance that could reasonably
be
expected to prevent the transactions contemplated by this Agreement from so
qualifying.
2.10. Tax
Returns and Payments.
Acquiror has filed with the appropriate governmental authority, all tax returns
as required by law to be filed on or before the date of this Agreement, and
Acquiror has paid all taxes to be due on said returns, any assessments made
against Acquiror and all other taxes, fees and similar charges imposed on
Acquiror by any governmental authority. No tax liens have been filed and no
claims are being assessed and no returns are under audit with respect to any
such taxes, fees or other similar charges. Acquiror has provided the Company
with copies of all such tax returns.
2.11. Compliance
with Law and Government Regulations.
Acquiror is in compliance with and is not in violation of applicable federal,
state, local or foreign statutes, laws and regulations affecting its properties
or the operation of its business. Acquiror is not subject to any order, decree,
judgment or other sanction of any court, administrative agency or other
tribunal.
2.12. Litigation.
There
are no actions, suits, proceedings or orders pending or, to the best of
Acquiror’s knowledge, threatened against or affecting Acquiror or any of its
properties or assets, or pending or threatened by Acquiror against any third
party, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality (including, without
limitation, any actions, suit, proceedings or investigations with respect to
the
transactions contemplated by this Agreement); and there is no basis for any
of
the foregoing. There is no action, suit or proceeding which Acquiror intends
to
initiate. Acquiror is not subject to any judgment, order or decree of any court
or other governmental agency. Neither Acquiror nor to the best of Acquiror's
knowledge, any director or officer thereof, is or has been the subject of any
action, suit, proceeding or order involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty.
2.14. Governmental
Consent.
Other
than as may be required in connection with the transactions contemplated by
this
Agreement, no notices, reports or other filings are required to be made nor
are
any consents, registrations, approvals, permits, authorizations or designations
required to be obtained by Acquiror prior to the date hereof from any court,
governmental or regulatory authority, agency, commission, body or other
governmental entity, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect or prevent, materially delay or materially impair the ability of Acquiror
to consummate the transactions contemplated by this Agreement.
7
2.15. Employees
and Employee Compensation.
Acquiror has no full-time employees and does not owe any compensation to any
Person. Acquiror is not a party to, or bound by, any bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance
or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement
plan,
program, agreement or arrangement, other employee benefit plan, program,
agreement or arrangement.
2.16. Validity
of Exchange Shares.
The
Exchange Shares to be issued to the Company Principals and Company Shareholders
upon consummation of the transactions contemplated by this Agreement will,
upon
issuance, have been duly and validly authorized and, when so issued in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non-assessable.
2.17. Accuracy
of Information Furnished.
No
representation, statement, or information contained in this Agreement (including
the schedules) or any document executed in connection herewith or delivered
pursuant hereto, or made available or furnished to the Company or its
representatives by Acquiror or its representatives contains any untrue statement
of a material fact, or omits any material fact necessary to make the information
contained therein not misleading. Acquiror has provided (or caused to be
provided) to the Company correct and complete copies of all documents listed
or
described in the Disclosure Schedule provided by Acquiror hereunder or as
otherwise requested by the Company.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company and the Company Principals hereby jointly and severally represent,
warrant and agree that:
3.1. Organization
and Qualification.
The
Company is duly organized and validly existing and in good standing under the
laws of the State of California and has the requisite power and authorization
to
own the properties and to carry on its business as now being conducted. The
Company is duly qualified as a foreign entity to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it makes such qualification necessary, except
to
the extent that the failure to be so qualified or be in good standing would
not
reasonably be expected to have a Material Adverse Effect. The copies of the
Articles of Incorporation and Bylaws of the Company heretofore delivered to
Acquiror are complete and correct copies of such instruments as presently in
effect. As used in this Agreement, "Material
Adverse Effect"
means
any material adverse effect on the business, properties, assets, operations,
results of operations, condition (financial or otherwise) or prospects of
Acquiror taken as a whole. Acquiror does not own any stock or other interest
in
any other corporation nor is there any other corporation over which Acquiror
may
be deemed to be in control because of factors or relationships.
3.2. Capitalization
of the Company.
The
authorized capital stock of the Company consists of 100,000,000 shares of common
stock, no par value per share, 22,100,000 of which are issued and outstanding.
All shares of the Company Stock currently issued and outstanding have been
duly
authorized, validly issued and are fully paid and non-assessable. Except as
described in Schedule
3.2,
there
are no preemptive rights, or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, calls, agreements or commitments of any character obligating the Company
to issue any shares of its capital stock or any security representing the right
to acquire, purchase or otherwise receive any such stock. The stock ledgers
and
stock transfer books of the Company relating to all issuances and transfers
of
securities by the Company previously delivered to Acquiror are exact copies
of
the original stock ledgers and stock transfer books.
8
3.3. Subsidiaries
and Affiliates.
The
Company does not have any subsidiaries and does not own, directly or indirectly,
any capital stock or other equity securities of any corporation or have any
direct or indirect equity or ownership interest in any business.
3.4. Authority;
Enforcement and Validity.
The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Company's board of
directors and stockholders, and no further consent, or authorization is required
by the Company. This Agreement has been duly executed and delivered by the
Company, and constitutes the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with its terms, except
as
such enforceability may be limited by general principles of equity, applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.
3.5 No
Conflicts.
The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not
(i)
result in a violation of the Articles of Incorporation or Bylaws of the Company,
(ii) conflict with, or constitute a default (or an event which with notice
or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to
the
Company or by which any property or asset of the Company is bound or
affected.
3.6. Consents.
The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other Person in order for it to
execute, deliver or perform any of its obligations under or contemplated by
this
Agreement.
3.7. Financial
Statements.
(a)
Attached hereto as Exhibit
G
are: (i)
a balance sheet of the Company as of December 31 in each of the years 2006
and
2007; and statements of income, shareholders' equity and cash flows for each
of
the years then ended, all certified by Xxxxx X. Xxxxxxxx, CPA, independent
certified public accountant, whose reports thereon are included therein; and
(ii) an unaudited balance sheet of the Company as at September 30, 2008 (the
"Balance
Sheet"),
and
unaudited statements of income, shareholders' equity and cash flows for the
nine
month period then ended. Such balance sheets and the notes thereto are true,
complete and accurate and fairly present the assets, liabilities and financial
condition of the Company as at the respective dates thereof, and such statements
of income, changes in shareholders' equity and cash flows and the notes thereto
are true, complete and accurate and fairly present the results of operations
for
the periods therein referred to; all in accordance with generally accepted
accounting principles and practices as in effect from time to time in the United
States consistently applied throughout the periods involved except, in the
case
of unaudited statements, for normally recurring year-end adjustments, which
adjustments will not be material either individually or in the
aggregate.
9
3.8. No
Undisclosed Events, Liabilities, Developments or Circumstances.
Except
as set forth in Schedule
3.8,
the
Company does not have any material obligations or liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) arising out of transactions
entered into at or prior to the date hereof, or any action or inaction at or
prior to the date hereof, or any statement of facts existing at or prior to
the
date hereof other than: (i) liabilities set forth on the Balance Sheet
(including any notes thereto), and (ii) liabilities and obligations which have
arisen after the date of the Balance Sheet in the ordinary course of business,
consistent in nature and amount with past practices. Except as set forth in
the
Schedule
3.8,
since
September 30, 2008, the Company has paid all liabilities, debts and lease
obligations in accordance with the applicable contractual agreements with such
third party creditors. Except as disclosed in Schedule
3.8,
the
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.9. Off
Balance Sheet Arrangements.
There
is no transaction, arrangement, or other relationship between the Company and
an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company.
3.10. Accounts
Receivable.
All
accounts receivable of the Company, whether reflected in the Balance Sheet
or
otherwise, represent sales actually made in the ordinary course of business,
and
are current and collectible net of any reserves shown on the Balance Sheet
(which reserves are adequate and were calculated consistent with past
practice).
3.11. Absence
of Certain Changes.
Except
as disclosed in Schedule
3.11,
since
the date of the Balance Sheet, the Company:
(a)
has
not (i) issued or sold any promissory note, stock, bond, option or other
corporate security of which it was an issuer or other obligor, (ii) discharged
or satisfied any lien or encumbrance or paid any obligation or liability,
absolute or contingent, direct of indirect, (iii) incurred or suffered to be
incurred any liability or obligation other than in the ordinary and usual course
of business, (iv) caused or permitted any lien, encumbrance or security interest
to be created or arise on or in any of its properties or assets, (v) declared,
set aside or made any dividend, payment or other distribution to any stockholder
or purchased or redeemed or agreed to purchase or redeem any shares of its
capital stock, (vi) reclassified its shares of capital stock, or (vii) entered
into any agreement or transaction except in the ordinary and usual course of
business or in connection with the execution and performance of this
Agreement;
(b)
except for liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, has conducted its business only in the
ordinary and usual course of business, and there has not been (i) any event
or
occurrence which could have a Material Adverse Effect on the Company's business,
assets or prospects, (ii) except insofar as may have been or required by a
change in generally accepted accounting principles and practices as in effect
from time to time in the United States, any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or business or (iii) made any tax election that individually or
in
the aggregate could reasonably be expected to have a Material Adverse Effect
on
the Company's business or assets, or any of its tax attributes or any settlement
or compromise of any material income tax liability; or
10
(c)
has
not taken and has not agreed to take any action (other than actions contemplated
by this Agreement) that could reasonably be expected to prevent the transactions
contemplated by this Agreement from constituting a “reorganization” under
section 368(b) of the Code or as an acquisition of in excess of 80% of the
stock
of a corporation in exchange for property under Section 351 of the Code nor
is
it aware of any agreement, plan or other circumstance that could reasonably
be
expected to prevent the transactions contemplated by this Agreement from so
qualifying.
3.12. Tax
Matters.
The
Company has accurately prepared and timely filed all income and other tax
returns, if any, that are required to be filed by or on behalf of the Company,
its business or assets, and has paid, or made provision for the payment of,
all
taxes that have become due and owing, including any assessment that has been
or
may be received from any taxing authority for the period through the date of
this Agreement. There are no outstanding agreements by the Company for the
extension of time for the assessment of any tax. None of the Company’s tax
returns has been or, to the Company’s knowledge, is now under audit or
investigation by any tax authority. No deficiency assessment or proposed
adjustment of the Company’s taxes (if any) is pending, and the Company has no
knowledge of any proposed liability for any tax to be imposed upon the Company’s
properties or assets for which there is not an adequate reserve reflected on
the
Balance Sheet.
3.13. Contracts
and Commitments.
(a)
Schedule
3.13
lists
all contracts and agreements to which the Company is a party that involve
amounts in excess of $5,000. Except as expressly contemplated by this Agreement
or as set forth on Schedule
3.13,
the
Company is not a party to or bound by any written or oral contract or
agreement.
(b)
All
of the contracts, agreements and instruments set forth on Schedule
3.13
are
valid, binding and enforceable in accordance with their respective terms. The
Company has performed all material obligations required to be performed by
it
and is not in default under or in breach of nor in receipt of any claim of
default or breach under any contract, agreement or instrument identified on
Schedule
3.13.
No
event has occurred which with the passage of time or the giving of notice or
both would result in a default, breach or event of noncompliance by the Company
under any material contract; the Company does not have any present expectation
or intention of not fully performing all such obligations; the Company does
not
have knowledge of any breach or anticipated breach by the other parties to
any
contract; and the Company is not a party to any materially adverse contract
or
commitment.
(c)
The
Company is not a party to or bound by any material contract or commitment (in
excess of $5,000), including any guaranty whether written or oral, except as
may
otherwise be disclosed in Schedule
3.13.
(d)
Acquiror has been supplied with a true and correct copy of each of the written
instruments, plans, contracts and agreements and an accurate description of
each
of the oral arrangements, contracts and agreements which are referred to on
Schedule
3.13
together
with all amendments, waivers or other changes thereto.
3.14. Leases.
Schedule
3.14
contains
an accurate and complete description of the terms of all leases pursuant to
which the Company leases real or personal property. Except as set forth in
Schedule
3.14,
all
such leases are valid, binding and enforceable in accordance with their terms,
and are in full force and effect; there are no existing defaults by the Company
thereunder; no event of default has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default thereunder; and all lessors under such leases have
consented (where such consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification
in
the rights or obligations of the lessee under such leases.
11
3.15. Title
to Properties; Encumbrances.
The
Company has good, valid and marketable title to all the properties and assets
which it purports to own (real, personal and mixed, tangible and intangible),
including, without limitation, all the properties and assets reflected in the
Balance Sheet (except for personal property having an aggregate book value
not
in excess of $1,000 sold since the date of the Balance Sheet in the ordinary
course of business and consistent with past practice), and all the properties
and assets purchased by the Company since the date of the Balance Sheet, which
subsequently acquired properties and assets (other than inventory) are listed
in
Schedule
3.15.
All
properties and assets reflected in the Balance Sheet have a fair market or
realizable value at least equal to the value thereof as reflected therein,
and,
except as disclosed in Schedule 3.15, all such properties and assets are free
and clear of all title defects or objections, liens, claims, charges, security
interests or other encumbrances of any nature whatsoever including, without
limitation leases, chattel mortgages, conditional sales contracts, collateral
security arrangements and other title or interest retention arrangements, and
are not, in the case of real property, subject to any rights of way, building
use restrictions, exceptions, variances, reservations or limitations of any
nature whatsoever except, with respect to all such properties and assets, (a)
liens shown on the Balance Sheet as securing specified liabilities or
obligations and liens incurred in connection with the purchase of property
and/or assets, if such purchase was effected after the date of the Balance
Sheet, with respect to which no default exists; (b) minor imperfections of
title, if any, none of which are substantial in amount, materially detract
from
the value or impair the use of the property subject thereto, or impair the
operations of the Company and which have arisen only in the ordinary course
of
business and consistent with past practice since the date of the Balance Sheet;
and (c) liens for current taxes not yet due.
3.16. Plant
and Equipment.
The
plants, structures and equipment of the Company are structurally sound with
no
known defects and are in good operating condition and repair and are adequate
for the uses to which they are being put; and none of such plants, structures
or
equipment are in need of maintenance or repairs except for ordinary, routine
maintenance and repairs which are not material in nature or cost. Except as
set
forth in Schedule
3.16,
the
Company has not received notification that it is in violation of any applicable
building, zoning, anti-pollution, health or other law, ordinance or regulation
in respect of its plants or structures or their operations and no such violation
exists.
3.17. Patents,
Trademarks, Trade Names, Etc.
The
Company does not own, nor is it licensed to use, any patents, trademarks, trade
names, copyrights, technology or know-how and does not require any proprietary
information, know-how or processes in the conduct of its business as heretofore
conducted.
3.18. Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as management of the Company believes
to be prudent and customary in the business in which the Company is engaged.
The
Company has not been refused any insurance coverage applied for that is material
to the business of the Company, and the Company has no reason to believe that
it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be
necessary to continue its business at a cost that would not have a Material
Adverse Effect.
12
3.19. Suppliers
and Customers.
The
Company maintains good relationships with each of its suppliers and customers
and has not taken any action that would jeopardize its relationships with its
suppliers and customers nor does it have any reason to believe that its
relationship with its suppliers and customers will change in any material way
in
the foreseeable future.
3.20. Inventory.
All
inventory of the Company, whether reflected in the Balance Sheet or otherwise,
consists of a quality and quantity usable and salable in the ordinary course
of
business, except for items of obsolete materials and materials of below-standard
quality, all of which have been written down in the Balance Sheet to realizable
market value or for which adequate reserves have been provided therein. The
quantities of all inventory of the Company are reasonable and warranted in
the
present circumstances of its business.
3.21. Employee
Relations.
(a)
The
Company is not a party to any collective bargaining agreement nor does it employ
a member of a union. No executive officer of the Company has notified the
Company that such officer intends to leave the Company or otherwise terminate
such officer's employment with the Company. No executive officer of the Company
is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or
any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company to any liability with respect to any of
the
foregoing matters.
(b) The
Company is in compliance with all federal, state and local laws and regulations
respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
3.22. Compliance
with Law.
The
operations of the Company have been conducted in accordance with all applicable
laws, regulations and other requirements of all national governmental
authorities, and of all states, municipalities and other political subdivisions
and agencies thereof, having jurisdiction over the Company, including, without
limitation, all such laws, regulations and requirements relating to antitrust,
consumer protection, currency exchange, equal opportunity, health, occupational
safety, pension, securities and trading-with-the-enemy matters. The Company
has
not received any notification of any asserted present or past failure by the
Company to comply with such laws, rules or regulations. The Company possesses
all permits, licenses, registrations and consents to transact its business
in
the manner in which it is conducting its business as of the date
hereof.
3.23. Governmental
Consent.
Except
as described in Schedule
3.23,
no
notices, reports or other filings are required to be made nor are any consents,
registrations, approvals, permits, authorizations or designations required
to be
obtained by the Company from any court, governmental or regulatory authority,
agency, commission, body or other governmental entity, in connection with the
execution and delivery of this Agreement by the Company or the carrying out
and
consummation of any transactions contemplated hereby, except those that the
failure to make or obtain are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement. Any notice, report or other filing required
to
be made, and any consent, registration, approval, permit, authorization or
designation required to be obtained, by the Company as described in Schedule
3.23,
has
been made, duly recorded or obtained as of the date hereof.
13
3.24. Environmental
Laws.
The
Company (a) is in compliance with any and all Environmental Laws (as hereinafter
defined), (b) has received all permits, licenses or other approvals required
of
it under applicable Environmental Laws to conduct its business and (c) is in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (a), (b) and (c), the failure to so
comply would be reasonably expected to have, individually or in the aggregate,
a
Material Adverse Effect. There are no actions, proceedings or investigations
pending or, to the Company's best knowledge after making appropriate
investigation, threatened before any governmental environmental regulatory
body,
or before any court, alleging noncompliance by the Company with any
Environmental Laws. To the Company's best knowledge: (i) there is no reasonable
basis for the institution of any action, proceeding or investigation against
the
Company under any Environmental Law; (ii) the Company is not responsible under
any Environmental Law for any release by any person at or in the vicinity of
any
real property it owns or leases of any hazardous substance caused by the
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of any such hazardous substance into
the environment; (iii) the Company is not responsible for any costs of any
remedial action required by virtue of any release of any toxic or hazardous
substance, chemical, pollutant or contaminant into the environment; (iv) no
real
property owned or leased by the Company contains any toxic or hazardous
substance including, without limitation, any asbestos, PCBs or petroleum
products or byproducts in any form, the presence, location or condition of
which
violates any Environmental Law. The term "Environmental
Laws"
means
all federal, state or local laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, "Hazardous
Materials") into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands
or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
3.25. Litigation,
etc.
Except
as described in Schedule
3.25,
there
are no actions, suits, proceedings or orders pending or, to the best of the
Company’s knowledge, threatened against or affecting the Company or any of its
properties or assets, or pending or threatened by the Company against any third
party, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality (including, without
limitation, any actions, suit, proceedings or investigations with respect to
the
transactions contemplated by this Agreement); and there is no basis for any
of
the foregoing. There is no action, suit or proceeding which the Company intends
to initiate. The Company is not subject to any judgment, order or decree of
any
court or other governmental agency. Neither the Company nor to the best of
the
Company’s knowledge, any director or officer thereof, is or has been the subject
of any action, suit, proceeding or order involving a claim of violation of
or
liability under federal or state securities laws or a claim of breach of
fiduciary duty.
14
3.26. Absence
of Questionable Payments.
Neither
the Company nor any director, officer, agent, employee or other person acting
on
behalf of the Company, has used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others.
Neither the Company nor any current director, officer, agent, employee or other
person acting on behalf of the Company, has accepted or received any unlawful
contributions, payments, gifts, or expenditures.
3.27. Personnel.
Schedule
3.27
sets
forth a true and complete list of:
(a)
the
names and current salaries of all directors and elected and appointed officers
of each of the Company, the number of shares of the Company Stock owned
beneficially or of record, or both, by each such person and the family
relationships, if any, among such persons;
(b)
the
wage rates for non-salaried and non-executive salaried employees of each of
the
Company by classification, and all labor union contracts; and
(c)
all
group insurance programs in effect for employees of the Company.
3.28. Employee
Benefit Plans.
Except
as described in Schedule
3.28,
the
Company is not a party to, or bound by, any bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, or any other employee benefit plan, program, agreement
or arrangement (other than arrangements involving the payment of wages),
sponsored, maintained or contributed to or required to be contributed to by
the
Company for the benefit of any current or former employee, director or officer
of the Company whether formal or informal and whether legally binding or not,
with respect to which the Company has or may in the future have any liability
or
obligation to contribute or make payments or any kind.
3.29. Accuracy
of Information Furnished.
No
representation, statement or information contained in this Agreement (including
the schedules) or any contract or document executed in connection herewith
or
delivered pursuant hereto or made available or furnished to Acquiror or its
representatives by the Company or its representatives contains any untrue
statement of a material fact, or omits any material fact necessary to make
the
information contained therein not misleading. The Company has provided (or
caused to be provided) to Acquiror correct and complete copies of all documents
listed or described in this Agreement or in the Disclosure Schedule.
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15
ARTICLE
IV
REPRESENTATIONS,
WARRANTIES AND
COVENANTS
OF THE COMPANY SHAREHOLDERS
Each
Company Shareholder hereby severally represents and warrants to, and agrees
with, Acquiror as follows:
4.1. Authority
of Company Shareholders.
Each
Company Shareholder has approved this Agreement and has duly authorized the
execution and delivery hereof. The Company Shareholder has full power and
authority to execute, deliver, and perform this Agreement and the transactions
contemplated hereby.
4.2. Ownership
of Shares.
The
Company Shareholder owns beneficially all of the shares of Company Stock
registered in its name as set forth on Schedule 1.2. The Company Shareholder
has
full power and authority to transfer such shares of Company Stock to Acquiror
under, pursuant to, and in accordance with, this Agreement, and such shares
are
free and clear of any liens, charges, mortgages, pledges or encumbrances of
any
kind and are not subject to any claims as to the ownership thereof, or any
rights or interest therein.
4.3. Waiver
of Dissenters' Rights.
The
Company Shareholder hereby acknowledges and confirms as follows:
(a)
it is
aware that the exchange transaction pursuant to this Agreement may give rise
to
dissenters' rights under the California Corporations Code (the “CCC”) which
would entitle it to require the Company to purchase for cash at the fair market
value the shares of Company Stock owned by it in lieu of exchanging such shares
for and receiving the Exchange Shares in the event that it did not approve
and
consent to this Agreement and the share exchange described herein;
(b)
it
has received prior to its execution of this Agreement, a copy of Sections 1300
through 1304 of the CCC relating to Dissenters' Rights;
(c)
by
its signature hereto and to the Unanimous Written Consent to Action by the
Board
of Directors and Holders of all of the Outstanding Shares of Common Stock of
The
Vinyl Fence Company, Inc., a copy of which is attached hereto as Exhibit
H
(the
"Unanimous Written Consent"), he has expressly consented to enter into this
Agreement and consummate the Share Exchange and other transactions contemplated
hereby in accordance with the terms hereof, as if it had so voted at a meeting
of stockholders called for that purpose, and waived its right to assert and
agreed not to seek any dissenters' rights that may be available to it under
the
CCC; and
(d)
has
duly executed and delivered this Agreement, and this Agreement is legal, valid
and binding upon him, enforceable against it in accordance with its
terms.
4.5. Status
of Company Shareholder.
The
Company Shareholder (personally or through its management) either (i) is an
officer, director or employee of the Company, or (ii) has a preexisting personal
or business relationship with the Company or one or more of its officers,
directors or controlling persons, or (iii) by reason of its business or
financial experience or the business or financial experience of its principals
and/or professional advisers who are unaffiliated with the Company, could be
reasonably assumed to have the capacity to protect its own interests in
connection with the transaction, or (iv) is an "accredited investor," as such
term is defined under the Securities Act.
16
4.6. Investment
Representations and Covenants.
(a)
The
Company Shareholder represents that it is acquiring the Exchange Shares for
its
own account and for investment only and not with a view to distribution or
resale thereof within the meaning of such phrase as defined under the Securities
Act. The Company Shareholder shall not dispose of any part or all of such shares
of Acquiror Stock in violation of the provisions of the Securities Act and
the
rules and regulations promulgated under the Securities Act by the SEC and all
applicable provisions of state securities laws and regulations.
(b)
The
Company Shareholder acknowledges being informed that the Exchange Shares have
not been registered under federal securities laws, and are “restricted
securities” as defined in paragraph (a) of Rule 144 under the Securities Act,
and must be held indefinitely unless (a) they are subsequently registered under
the Securities Act, or (b) an exemption from such registration is available.
The
Company Shareholder further acknowledges that Acquiror does not have an
obligation to currently register such securities for the account of Company
Shareholder other than as provided in the Registration Rights
Agreement.
(c)
The
Company Shareholder acknowledges that the certificate or certificates
representing the Exchange Shares shall bear a restrictive legend substantially
in the form set forth in Section 1.02(b) hereof.
(d)
The
Company Shareholder acknowledges and confirms that prior to the execution
hereof, it has been afforded access to all material information that he has
requested relevant to its decision to acquire the shares of Acquiror Stock
and
to ask questions of Acquiror’s management and that, except as set forth herein,
neither Acquiror nor anyone acting on behalf of Acquiror has made any
representations or warranties to the Company Shareholder which have induced,
persuaded or stimulated the Company Shareholder to acquire such shares of
Acquiror Stock.
4.7. Sale
and Transfer of Company Stock.
The
Company Shareholder, in consideration of the issuance to it of the Acquiror
Stock, does hereby sell, assign and transfer the shares of Company Stock
registered in its name in the stock books of the Company to
Acquiror.
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17
ARTICLE
V
ADDITIONAL
AGREEMENTS
Each
of
the Company, the Company Principals, the Company Shareholders and Acquiror
hereby covenant and agree with each other as follows:
5.1. Brokers
and Finders.
Each of
the parties hereto represents, as to itself, that no agent, broker, investment
banker or firm or person is or will be entitled to any broker's or finder's
fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement, except as may be otherwise set
forth herein or by separate document.
5.2. Necessary
Actions.
Subject
to the terms and conditions herein provided, each of the parties hereto agrees
to use all reasonable efforts to take, or cause to be taken, all action and
to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. In the event at any time after
the
date hereof, any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper executive officers and/or directors
of
the Company and/or the Company Principals, as the case may be, will take all
such necessary action.
5.3. Section
368 Reorganization.
For
U.S. federal income tax purposes, the transactions contemplated by this
Agreement are intended to constitute a “reorganization” within the meaning of
Sections 351 and 368(a)(1)(B) of the Code or such other tax free reorganization
exemptions that may be available under the Code. The parties to this Agreement
hereby adopt this Agreement as a "plan of reorganization" within the meaning
of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
Notwithstanding the foregoing or anything else to the contrary contained in
this
Agreement, the parties acknowledge and agree that no party is making any
representation or warranty as to the qualification of the transactions
contemplated by this Agreement as a reorganization under Section 368 of the
Internal Revenue Code or as to the effect, if any, that any transaction
consummated prior to the execution of this Agreement has or may have on any
such
reorganization status. The parties acknowledge and agree that each (i) has
had
the opportunity to obtain independent legal and tax advice with respect to
the
transactions contemplated by this Agreement, and (ii) is responsible for paying
its own taxes, including without limitation, any adverse tax consequences that
may result if the transaction contemplated by this Agreement is determined
by
the Internal Revenue Service not to qualify as a reorganization under Section
368 of the Code.
5.4. Confidentiality.
All
parties hereto agree not to disclose the existence of this Agreement or the
transactions consummated hereunder until the Company has filed all such
documents describing the transaction with the SEC, including a Current Report
on
Form 8-K.
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18
ARTICLE
VI
MISCELLANEOUS
6.1. Notices.
All
notices, instructions or other communications required or permitted to be given
pursuant to this Agreement shall be given in writing and delivered by facsimile,
certified mail, return receipt requested or overnight courier by a nationally
recognized courier service:
If
to the Company:
|
The
Vinyl Fence Company, Inc.
|
0000
Xxxxx Xxxxxx Xxxxxx
|
|
Xxxxx
Xxx Xxxxxxxxxx 00000
|
|
Attn.:
Xx. Xxxxxx Xxxxx
|
|
Facsimile
No.: 000-000-0000
|
|
If
to Acquiror:
|
|
0000
Xxx Xxx Xxxxx
|
|
Xxxxxxxxxxx,
XX 00000
|
|
Xx.
Xxxxx X. Xxxxxxxx
|
|
Facsimile
No.: 000-000-0000
|
Additional
notices are to be given as to each party, at such other address as should be
designated in writing complying as to delivery with the terms of this Section
6.1. All notices shall be deemed to be given on the same day if delivered by
facsimile, on the following business day if sent by overnight delivery or on
the
third business day following the date of mailing.
6.2. Entire
Agreement.
This
Agreement, including the Exhibits hereto, the Disclosure Schedule and the other
documents and certificates delivered pursuant to the terms hereof, set forth
the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein, and supersede all prior agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any party
hereto.
6.3. Parties
in Interest.
This
Agreement will inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns. Nothing in this Agreement is intended
to confer, expressly or by implication, upon any other person any rights or
remedies under or by reason of this Agreement.
6.4. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original and all together will constitute one document. The delivery
by facsimile of an executed counterpart of this Agreement will be deemed to
be
an original and will have the full force and effect of an original executed
copy.
6.5. Severability.
The
provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision hereof will not affect the validity or
enforceability of any of the other provisions hereof.
6.6. Headings.
The
Article and Section headings are provided herein for convenience of reference
only and do not constitute a part of this Agreement and will not be deemed
to
limit or otherwise affect any of the provisions hereof.
19
6.7. Number
and Gender.
All
references to any party will be read with such changes in number and gender
as
the context or reference requires.
6.8. Governing
Law.
This
Agreement will be deemed to be made in and in all respects will be interpreted,
construed and governed by and in accordance with the law of the State of
California without regard to the conflict of law principles
thereof.
6.9. Survival
of Representations and Warranties.
All
terms, conditions, representations and warranties set forth in this Agreement
or
in any instrument, certificate, opinion, or other writing providing for in
it,
will survive the Closing and the delivery of the Exchange Shares for a period
of
one year after Closing, regardless of any investigation made by or on behalf
of
any of the parties hereto.
6.10. Construction.
This
Agreement is the result of negotiations between and has been reviewed by each
of
the parties hereto; accordingly, this Agreement shall be deemed to be the
product of all of the parties hereto, and no ambiguity shall be construed in
favor of or against any one of the parties hereto.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOLLOWS
20
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
in a manner legally binding upon them as of the date first above
written.
By:
/s/
Xxxxx X.
Xxxxxxxx
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|
Xxxxx X. Xxxxxxxx, President
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|
THE
VINYL FENCE COMPANY, INC.
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|
By: /s/
Xxxxxx
Xxxxx
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|
Xxxxxx Xxxxx, President
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As
to the provisions of Section 1.5(c):
|
|
Xxxxx
X. Xxxxxxxx, Personally
|
Xxxxxxxxx
Xxxxxxx, Personally
|
/s/
Xxxxx X.
Xxxxxxxx
|
/s/
Xxxxxxxxx
Xxxxxxx
|
COMPANY
SHAREHOLDERS
|
||
Xxxxxx
Xxxxx
|
Xxxxxxx
Xxxxxxxxxx
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|
/s/
Xxxxxx
Xxxxx
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/s/ Garbed Khatchoyan | |
Xxxxx
LLC
|
Themis
LLC
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By:
/s/ Xxxxx
Xxxxxxx
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By:
/s/
Xxxx
Xxxxxxx
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Tailor
Made Financial LLC
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The
Xxxxx Family Trust
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|
By: /s/
Xxxx
Xxxxx
|
By:
/s/
Xxxxxxx
Xxxxx
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21
DISCLOSURE
SCHEDULE
The
Company:
Schedule
1.2.
|
List
of Company Shareholders.
|
Schedule
3.2.
|
Rights
to Acquire Securities.
|
Schedule
3.8.
|
Undisclosed
Events, Liabilities, Developments or Circumstances.
|
Schedule
3.11.
|
Certain
Changes Since the Date of the Balance Sheet.
|
Schedule
3.13.
|
Contracts
and Commitments.
|
Schedule
3.14.
|
Leases.
|
Schedule
3.15.
|
Subsequently
Acquired Properties and Assets.
|
Schedule
3.16.
|
Notifications
of Certain Violations.
|
Schedule
3.23.
|
Governmental
Consent.
|
Schedule
3.25.
|
Litigation,
etc.
|
Schedule
3.27.
|
Personnel.
|
Schedule
3.28.
|
Employee
Benefit Plans.
|
22
LIST
OF EXHIBITS
Exhibit A: |
Opinion
of Counsel of the Company.
|
Exhibit B: |
Opinion
of Counsel of Acquiror
|
Exhibit C: |
Form
of Registration Rights Agreement.
|
Exhibit D: |
Certificate
of Amendment to the Articles of Incorporation of Red Oak Concepts,
Inc.
|
Exhibit E: |
Letters
from Xxxxx X. Xxxxxxxx and Xxxxxxxxx Xxxxxxx to Acquiror contributing
to
capital all amounts due under the promissory notes in the principal
amount
of $14,950 made by Acquiror dated June 18, 2007 and resigning as
directors
of Acquiror.
|
Exhibit F: |
Lock
Up/Leak Out Agreement.
|
Exhibit G: |
Financial
Statements of the Company:
|
Audited
Financial Statements: (a) balance sheet as of December 31 in each
of the
years 2006 and 2007; (b) statements of income, changes in shareholders'
equity and cash flows for each of the years then
ended.
|
Unaudited
Financial Statements: (a) an unaudited balance sheet as of September
30,
2008 and (b) unaudited statements of income, changes in stockholders'
equity and changes in financial position for the nine month period
then
ended.
|
Exhibit H: |
Unanimous
Written Consent to Action by the Board of Directors and Holders of
all of
the Outstanding Shares of Common Stock of The Vinyl Fence Company,
Inc.
|
23