SHARE EXCHANGE AGREEMENT
SHARE
EXCHANGE AGREEMENT,
dated
as of May 18,
2007
(the
“Agreement”), by and among OFFLINE
CONSULTING, INC.,
a
Delaware corporation (“Purchaser”) and XXXXXXXXXX
CORPORATION,
a
Florida corporation, (the “Company”), and each of the shareholders of the
Company set forth on the signature page hereof (collectively, the
“Sellers”).
WITNESSETH
WHEREAS,
the
Company is in the business of commercial and residential building restoration,
and
WHEREAS,
the
Sellers desire to sell to Purchaser and the Purchaser desires to purchase from
the Sellers, 99.9% of the oustanding securities of the Company in exchange
for
shares of common stock of the Purchaser and upon the terms and conditions
hereinafter set forth; and
WHEREAS,
immediately subsequent to the closing of the Purchaser’s acquisition of the
Company, the Purchaser shall cause the holders of an aggregate of 6,002,500
shares (the “Control Block”) of common stock (the “Majority Stockholders”) to
return the shares of common stock to the Company in consideration of the
transfer of all of the assets of the Purchaser to the Majority Stockholders;
and
WHEREAS,
certain
terms used in this Agreement are defined in Article 1; and
WHEREAS,
it is
intended that the Acquisition shall qualify for United States federal income
tax
purposes as a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended.
NOW
THEREFORE in
consideration of the premises and the mutual covenants, agreements,
representations and warranties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereto hereby agree as follows:
ARTICLE
1.
DEFINITIONS
AND INTERPRETATION
1.1 Definitions.
As used
in this Agreement, the following terms when capitalized in this Agreement shall
have the following meanings:
(a) |
“Affiliates"
shall mean, with respect to any Person, any and all other Persons
that
control, are controlled by, or are under common control with, such
Person.
For purposes of the foregoing, "control" of a Person shall mean direct
or
indirect ownership of 50% or more of the securities or other interests
of
such Person having by their terms ordinary voting power to elect
or
appoint a majority of the board of directors or others performing
similar
functions with respect to such Person.
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(b) |
“Acquisition”
means the Acquisition, at the Closing, of the Company by Purchaser
pursuant to this Agreement;
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1
(c) |
“Acquisition
Shares”
means the 1,374,163 shares of common stock of the Purchaser to be
issued
to the Sellers at Closing pursuant to the terms of the
Acquisition;
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(d) |
"Business
Day"
shall mean any day other than Saturday, Sunday and any day on which
banking institutions in the United States are authorized by law or
other
governmental action to close;
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(e) |
“Closing
Date”
means the day on which all conditions precedent to the completion
of the
transactions contemplated hereby have been satisfied or
waived;
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(f) |
"Claim
Notice"
means written notification pursuant to Section 9.3 of a Third Party
Claim
as to which indemnity under Section 9.1 is sought by an Indemnified
Party.
|
(g) |
"Code"
means the Internal Revenue Code of 1986, as amended, and the rules
and
regulations promulgated thereunder.
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(h) |
"Contract"
shall mean an agreement, written or oral, between the Company and
any
other Person which obligates either the Company or such other Person
to do
or not to do a particular thing.
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(i) |
"Election
Notice"
means a written notice provided by the Sellers or Purchaser, as the
case
may be, in respect of a Tax Claim to the effect that it elects to
contest,
and to control the defense or prosecution of, such Tax Claim as provided
in this Agreement.
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(j) |
"ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as
amended.
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(k) |
"ERISA
Affiliate"
shall mean any entity that would be deemed to be a "single employer"
with
the Company under Section 414(b), (c), (m) or (o) of the Code or
Section
4001 of ERISA.
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(l) |
"Environmental
Liabilities"
means any cost, damages, expense, liability, obligation, or other
responsibility arising from or under (a) any Environmental Law and
consisting of or relating to (i) any environmental matters or conditions
(including on-site or off-site contamination and environmental regulation
of chemical substances or products); (ii) fines, penalties, judgments,
awards, settlements, legal or administrative proceedings, out-of-pocket
damages and necessary and required response, investigative, remedial,
or
inspection costs and expenses arising under Environmental Law; (iii)
financial responsibility under Environmental Law for clean-up costs
or
corrective action, including any necessary and required investigation,
clean-up, removal, containment, or other remediation or response
actions
required by Environmental Law and for any natural resource damages;
or
(iv) any other compliance, corrective, investigative, or remedial
measures
required under Environmental Law; or (b) any common law causes of
action,
including, but not limited to, negligence, trespass or nuisance,
based on
violation by the Company of Environmental Laws, releases by the Company
of
Hazardous Materials or actions or omissions by the Company that expose
others to Hazardous Materials. The terms "removal," "remedial," "response
action", and "release" shall have the meanings provided for such
terms
under, and shall include the types of activities covered by, the
United
States Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA").
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2
(m) |
"Environmental
Laws"
shall mean all federal, state and local Laws relating to public health,
or
to pollution or protection of the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or
subsurface strata) including, without limitation, the Clean Air Act,
as
amended, CERCLA, the Resource Conservation and Recovery Act of 1976,
as
amended ("RCRA"), the Toxic Substances Control Act, the Federal Water
Pollution Control Act, as amended, the Safe Drinking Water Act, as
amended, the Hazardous Materials Transportation Act, as amended,
the Oil
Pollution Act of 1990, any state Laws implementing the foregoing
federal
Laws, and all other Laws relating to or regulating (i) emissions,
discharges, releases, or cleanup of pollutants, contaminants, chemicals,
polychlorinated biphenyls (PCB's), oil and gas exploration and production
wastes, brine, solid wastes, or toxic or Hazardous Materials or wastes
(collectively, the "Polluting Substances"), (ii) the generation,
processing, distribution, use, treatment, handling, storage, disposal,
or
transportation of Polluting Substances, or (iii) environmental
conservation or protection. References in this Agreement to Environmental
Laws existing or in effect as of a particular date shall include
written
administrative interpretations and policies then existing or in effect.
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(n) |
"Environmental
Permit"
means any federal, state, local, provincial, or foreign permits,
licenses,
approvals, consent or authorizations required by any Governmental
or
Regulatory Authority under or in connection with any Environmental
Law and
includes any and all orders, consent orders or binding agreements
issued
or entered into by a Governmental or Regulatory Authority under any
applicable Environmental Law.
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(o) |
"Governmental
or Regulatory Authority"
shall mean any federal, state, regional, municipal or local court,
legislative, executive, Native American or regulatory authority or
agency,
board, commission, department or subdivision thereof.
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(p) |
"Hazardous
Activity"
means the distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, release, storage,
transfer, transportation, treatment, or use (including any withdrawal
or
other use of groundwater) of Hazardous Materials in, on, under, about,
or
from the Company’s facilities or any part thereof into the environment.
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(q) |
"Hazardous
Materials"
means (i) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is, or that is likely to become, friable,
urea
formaldehyde foam insulation and transformers or other equipment
that
contain dielectric fluid containing levels of polychlorinated biphenyls
(PCBs), or (ii) any chemicals, materials, substances or wastes which
are
now or hereafter become defined as or included in the definition
of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants" or words of similar import, under
any
applicable Environmental Law.
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(r) |
"Indemnified
Party"
means any Person entitled to indemnification under any provision
of
Article 9.
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(s) |
"Indemnifying
Party"
means any Person obligated to provide indemnification under any provision
of Article 9.
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(t) |
"Law"
shall mean any federal, state, county, or local laws, statutes,
regulations, rules, codes, ordinances, orders, decrees, judgments
or
injunctions enacted, adopted, issued or promulgated by any Governmental
or
Regulatory Authority, from time to time.
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3
(u) |
"Lien"
shall mean any mortgage, deed of trust, pledge, lien, claim, security
interest, covenant, restriction, easement, preemptive right, or any
other
encumbrance or charge of any kind.
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(v) |
"Material
Contract"
shall have the meaning set forth in Section 4.14.
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(w) |
“Material
Adverse Effect”
shall mean any material adverse effect on the business or financial
condition of the Company;
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(x) |
“Order”
shall mean any writ, judgment, decree, injunction or similar order
of any
Governmental or Regulatory Authority (in each such case whether
preliminary or final).
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(y) |
“Place
of Closing”
means the offices of Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, or such
other
place as Purchaser and the Sellers may mutually agree
upon;
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(z) |
"Permitted
Lien"
shall mean: (a) liens created under any Lease, except any lien arising
as
a result of any failure to timely make any payment or failure to
perform
any other obligation or other default under such Lease; (b) liens
for
Taxes that are not yet due and payable or that are being contested
in good
faith by appropriate proceedings; (c) mechanics, materialmen's,
landlords', carriers', warehousemen's, and other liens imposed by
law
incurred in the ordinary course of business; (d) zoning restrictions,
land
use regulations, declarations, reservations, provisions, covenants,
conditions, waivers, restrictions on the use of property and third
party
easements, rights of way, leases or similar matters that are recorded
in
the county records where the effected property is located and do
not
prohibit the use of the property as currently used; (e) the absence
of
executed rights of way or easements, or a defect in any executed
right of
way or easement, where such rights have been or can be otherwise
obtained
through a proceeding under prescription or other operation of law;
(f)
deposits or pledges to secure obligations under worker's compensation,
social security or similar laws, or under unemployment insurance;
(g)
deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations,
surety
and appeal bonds, performance bonds and other obligations of like
nature
arising in the ordinary course of the Company's business and made,
created
or arising prior to the Closing Date; (h) leases or subleases granted
by
or to others; and (i) precautionary Uniform Commercial Code financing
statements regarding operating leases which leases are either disclosed
pursuant to Article
3
hereof or no longer in effect.
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(aa) |
"Person"
shall mean an individual, partnership, joint venture, trust, corporation,
limited liability company or other legal entity or Governmental or
Regulatory Authority.
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(bb) |
“Post-Closing
Period”
means any taxable period or portion thereof beginning after the Closing
Date. If a taxable period begins on or before the Closing Date and
ends
after the Closing Date, then the portion of the taxable period that
begins
on the day following the Closing Date shall constitute a Post-Closing
Period.
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(cc) |
"Pre-Closing
Period"
means any taxable period or portion thereof that is not a Post-Closing
Period.
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(dd) |
“Purchaser
Material Adverse Effect”
shall mean any material adverse effect on the business or financial
condition of the Purchaser;
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(ee) |
“Remedial
Action” shall
mean any removal,
remediation, response, clean up or other corrective action to respond
to,
remove or otherwise address any Environmental Liability.
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(ff) |
“Shares”
means all of the issued and outstanding shares of common stock of
the
Company as defined in Section 3.3.
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(gg) |
"Taxes"
shall mean any and all taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, gross
receipts, excise, stamp, real or personal property, ad valorem,
withholding, estimated, social security, unemployment, occupation,
use,
sales, service, service use, license, net worth, payroll, franchise,
severance, transfer, recording or other taxes, assessments or charges
imposed by any Governmental or Regulatory Authority, whether computed
on a
separate, consolidated, unitary, combined or other basis, and in
each case
such term shall include any interest, penalties, or additions to
tax
attributable thereto.
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(hh) |
"Tax
Return"
shall mean any return, report or similar statement required to be
filed
with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax and including any return of
an
affiliated, combined or unitary group.
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Any
other
terms defined within the text of this Agreement will have the meanings so
ascribed to them.
1.2 Captions
and Section Numbers.
The
headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended
to
interpret, define or limit the scope, extent or intent of this Agreement or
any
provision thereof.
1.3 Section
References and Schedules.
Any
reference to a particular “Article”, “Section”, “paragraph”, “clause” or other
subdivision is to the particular Article, section, clause or other subdivision
of this Agreement and any reference to a Schedule by number will mean the
appropriate Schedule attached to this Agreement and by such reference the
appropriate Schedule is incorporated into and made part of this Agreement.
1.4 Severability
of Clauses.
If any
part of this Agreement is declared or held to be invalid for any reason, such
invalidity will not affect the validity of the remainder which will continue
in
full force and effect and be construed as if this Agreement had been executed
without the invalid portion, and it is hereby declared the intention of the
parties that this Agreement would have been executed without reference to any
portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE
2.
THE
ACQUISITION
2.1 The
Acquisition.
Subject
to the terms and conditions set forth in this Agreement and in reliance on
the
representations, warranties, covenants and conditions herein contained, the
Sellers hereby agree to sell, assign and deliver to Purchaser the Shares in
exchange for the Acquisition Shares on the Closing Date and to transfer to
Purchaser on the Closing Date a 100% undivided interest in and to the Shares
free from all liens, mortgages, charges, pledges, encumbrances or other burdens
(other than those that may arise under federal or state securities laws
restricting the right to sell or transfer the Shares) with all rights now or
thereafter attached thereto.
5
2.2 Purchase
Price; Allocation.
The
purchase price for the purchase of the Shares shall be the Acquisition Shares
allocated on the basis of .051 Acquisition Share for each one Share held by
Sellers in accordance with Exhibit
A
attached
hereto.
2.3 Adherence
with Applicable Securities Laws.
Each of
the Sellers agrees that he is acquiring the Acquisition Shares for investment
purposes and will not offer, sell or otherwise transfer, pledge or hypothecate
any of the Acquisition Shares issued to him (other than pursuant to an effective
Registration Statement under the Securities Act of 1933, as amended (the
“Securities Act”) directly or indirectly unless:
(a) |
the
sale is to Purchaser;
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(b) |
the
sale is made pursuant to the exemption from registration under the
Securities Act,
provided by Rule 144 thereunder; or
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(c) |
the
Acquisition Shares are sold in a transaction that does not require
registration under the Securities Act or any applicable United States
state laws and regulations governing the offer and sale of securities,
and
the vendor has furnished to Purchaser an opinion of counsel to that
effect
or such other written opinion as may be reasonably required by
Purchaser.
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The
Sellers acknowledge that the certificates representing the Acquisition Shares
shall bear the following legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED
UNDER
THE
SECURITIES ACT OF 1933. THEY MAY NOT
BE
SOLD,
OFFERED FOR SALE, PLEDGED,
HYPOTHECATED
OR OTHERWISE TRANSFERRED IN
THE
ABSENCE OF A REGISTRATION STATEMENT WITH
RESPECT
TO THE SECURITIES UNDER SUCH ACT AND
THE
OPINION OF COUNSEL REASONABLY
SATISFACTORY
TO THE COMPANY THAT SUCH
REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD
PURSUANT
TO RULE 144 OR RULE 144A OF SUCH ACT.
2.4 Closing.
The parties hereto shall use their best efforts to close the transactions
contemplated by this Agreement (the “Closing”), by May __, 2007.
6
ARTICLE
3.
REPESENTATIONS
AND WARRANTIES OF THE COMPANY AND SELLERS
The
Company and Sellers hereby jointly and severally represent and warrant to
Purchaser, that:
3.1 Organization,
Standing and Power.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida, with full corporate power and corporate
authority to (i) own, lease and operate its properties, (ii) carry on the
business as currently conducted by it. There are no states or jurisdictions
in
which the character and location of any of the properties owned or leased by
the
Company, or the conduct of the Company’s business makes it necessary for the
Company to qualify to do business as a foreign corporation, except for those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect on the business or operations of the Company.
3.2 Authorization
of Agreement.
Each
Seller has all requisite power, authority and legal capacity to execute and
deliver this Agreement, and each other agreement, document, or instrument or
certificate contemplated by this Agreement or to be executed by such Seller
in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the “Seller Documents”), and to
consummate the transactions contemplated hereby and thereby. This Agreement
has
been, and each of the Seller Documents will be at or prior to the Closing,
duly
and validly executed and delivered by each Seller and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the Seller Documents when so executed
and delivered will constitute, legal, valid and binding obligations of each
Seller, enforceable against each Seller in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in
equity).
3.3 Capitalization.
The
authorized capital stock of the Company consists of 100,000,000 shares of common
stock, $.00001 par value, 26,773,800 shares of which are issued and outstanding
(the “Shares”). All of the Shares are duly authorized, validly issued, fully
paid and nonassessable. Except
for 200,000 options held by an executive officer, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company or obligating
the Company to issue or sell any shares of capital stock of or other equity
interests in the Company. There is no personal liability, and there are no
preemptive rights with regard to the capital stock of the Company, and no
right-of-first refusal or similar catch-up rights with regard to such capital
stock. Except for the transactions contemplated by this Agreement, there are
no
outstanding contractual obligations or other commitments or arrangements of
the
Company to (A) repurchase, redeem or otherwise acquire any shares of the shares
of the Company (or any interest therein) or (B) to provide funds to or make
any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity, or (C) issue or distribute to any person any capital stock of
the
Company, or (D) issue or distribute to holders of any of the capital stock
of
the Company any evidences of indebtedness or assets of the Company. All of
the
outstanding securities of the Company have been issued and sold by the Company
in full compliance in all material respects with applicable federal and state
securities laws.
7
3.4 Corporate
Records.
(a) |
The
Sellers and the Company have delivered to the Purchaser true, correct
and
complete copies of the certificate of incorporation (certified by
the
Secretary of State or other appropriate official of the applicable
jurisdiction of organization) and by-laws (certified by the secretary,
assistant secretary or other appropriate officer) or comparable
organizational documents of the
Company.
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(b) |
The
minute books of the Company previously made available to the Purchaser
contain complete and accurate records of all meetings and accurately
reflect all other corporate action of the stockholders and board
of
directors (including committees thereof) of the Company. The stock
certificate books and stock transfer ledgers of the Company previously
made available to the Purchaser are true, correct and complete. All
stock
transfer taxes levied or payable with respect to all transfers of
shares
of the Company prior to the date hereof have been paid and appropriate
transfer tax stamps affixed.
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3.5 Conflicts;
Consents of Third Parties.
(a) |
None
of the execution and delivery by the Company or any Seller of this
Agreement and the Seller Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Company or any
Seller
with any of the provisions hereof or thereof will (i) conflict with,
or
result in the breach of, any provision of the articles of incorporation
or
by-laws or comparable organizational documents of the Company; (ii)
conflict with, violate, result in the breach or termination of, or
constitute a default under any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which the Company
is a
party or by which any of them or any of their respective properties
or
assets is bound; (iii) violate any statute, rule, regulation, order
or
decree of any governmental body or authority by which the Company
is
bound; or (iv) result in the creation of any Lien upon the properties
or
assets of the Company or any subsidiary of the Company except, in
case of
clauses (ii), (iii) and (iv), for such violations, breaches or defaults
as
would not, individually or in the aggregate, have a Material Adverse
Effect.
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(b) |
No
consent, waiver, approval, Order, permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental
or Regulatory Authority is
required on the part of any Seller, the Company in connection with
the
execution and delivery of this Agreement or the Seller Documents,
or the
compliance by each Seller or the Company as the case may be, with
any of
the provisions hereof or thereof.
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3.6 Ownership
and Transfer of Shares. Each
Seller is the record and beneficial owner of the Shares indicated as being
owned
by such Seller on Exhibit A, free and clear of any and all Liens. Each Seller
has the power and authority to sell, transfer, assign and deliver such Shares
as
provided in this Agreement, and such delivery will convey to the Purchaser
good
and marketable title to such Shares, free and clear of any and all
Liens.
3.7 .
No
Undisclosed Liabilities.
Except
as set forth on Schedule 3.7, the Company has no indebtedness, obligations
or
liabilities of any kind (whether accrued, absolute, contingent or otherwise,
and
whether due or to become due).
3.8 Taxes.
The
Company has filed all applicable Tax Returns.
3.9 Investors.
Each of
the Sellers represents and warrants to Purchaser that he or she is an
“accredited investor” as such term is defined under the Securities Act of 1933,
as amended; provided, however, in the event that such Seller is not an
accredited investor, he or she hereby represents that he or she has received
and
read the Confidential Private Placement Memorandum dated May 16, 2007 describing
the terms of the Acquisition and that such Seller either alone or with his
purchaser representative(s) has such knowledge and experience in financial
and
business matters that such Seller is capable of evaluating the merits and risks
of the prospective investment.
3.10 Financial
Advisors.
Except
as set forth on Schedule
3.10,
no
Person has acted, directly or indirectly, as a broker or finder for the Company
and/or the Sellers in connection with the transactions contemplated by this
Agreement and no Person is entitled to any fee or commission or like payment
in
respect thereof. The Company and the Seller shall be responsible for the payment
of such fee.
8
ARTICLE
4.
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
hereby represents and warrants to the Sellers, that:
4.1 Organization
and Good Standing.
The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power and corporate
authority to (i) own, lease and operate its properties, (ii) carry on the
business as currently conducted by it. There are no states or jurisdictions
in
which the character and location of any of the properties owned or leased by
the
Purchaser, or the conduct of the Purchaser’s business makes it necessary for the
Purchaser to qualify to do business as a foreign corporation, except for those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect on the business or operations of the Purchaser.
4.2 Authorization
of Agreement.
The
Purchaser has full corporate power and authority to execute and deliver this
Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by the Purchaser in connection
with the consummation of the transactions contemplated hereby and thereby (the
"Purchaser Documents"), and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by the Purchaser of this
Agreement and each Purchaser Document have been duly authorized by all necessary
corporate action on behalf of the Purchaser. This Agreement has been, and each
Purchaser Document will be at or prior to the Closing, duly executed and
delivered by the Purchaser and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each Purchaser Document when so executed and delivered will constitute,
legal, valid and binding obligations of the Purchaser, enforceable against
the
Purchaser in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability,
to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in
a
proceeding at law or in equity).
4.3 Capitalization.
The
authorized capital stock of the Purchaser consists of: 700,000,000 shares of
common stock, $0.0001 par value per share, 6,339,980 shares of which are issued
and outstanding, and 20,000,000 shares of preferred stock, $0.0001 par value
per
share, none of which are issued and outstanding. All of the shares of the
Purchaser are duly authorized, validly issued, fully paid and nonassessable.
Schedule
4.3
sets
forth a true and complete list of the holders of all outstanding shares of
the
Purchaser as of the date of this Agreement. Except as contemplated by this
Agreement and except as set forth on Schedule
4.3,
there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of
the Purchaser or obligating the Purchaser to issue or sell any shares of capital
stock of or other equity interests in the Purchaser. There is no personal
liability, and there are no preemptive rights with regard to the capital stock
of the Purchaser, and no right-of-first refusal or similar catch-up rights
with
regard to such capital stock. Except as set forth on Schedule
4.3,
there
are no outstanding contractual obligations or other commitments or arrangements
of the Purchaser to (A) repurchase, redeem or otherwise acquire any shares
of
the Shares (or any interest therein) or (B) to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other entity, or (C) issue or distribute to any person any capital stock of
the
Purchaser, or (D) issue or distribute to holders of any of the capital stock
of
the Purchaser any evidences of indebtedness or assets of the Purchaser. All
of
the outstanding securities of the Purchaser have been issued and sold by the
Purchaser in full compliance in all material respects with applicable federal
and state securities laws.
9
4.4 Subsidiaries.
Except
as set forth on Schedule
4.4,
Purchaser has no subsidiaries.
4.5 Corporate
Records.
(a) |
The
Purchaser has delivered to the Company true, correct and complete
copies
of the articles of incorporation (each certified by the Secretary
of State
or other appropriate official of the applicable jurisdiction of
organization) and by-laws (each certified by the secretary, assistant
secretary or other appropriate officer) or comparable organizational
documents of the Purchaser.
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(b) |
The
minute books of the Purchaser previously made available to the Sellers
contain complete and accurate records of all meetings and accurately
reflect all other corporate action of the stockholders and board
of
directors (including committees thereof) of the Purchaser to the
best of
the Purchaser’s knowledge. The stock certificate books and stock transfer
ledgers of the Purchaser previously made available to the Sellers
are
true, correct and complete. All stock transfer taxes levied or payable
with respect to all transfers of shares of the Purchaser prior to
the date
hereof have been paid and appropriate transfer tax stamps affixed
to the
best of the Purchaser’s knowledge.
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4.6 Conflicts;
Consents of Third Parties.
(a) |
None
of the execution and delivery by Purchaser of this Agreement and
the
Purchaser Documents, the consummation of the transactions contemplated
hereby or thereby, or compliance by Purchaser with any of the provisions
hereof or thereof will (i) conflict with, or result in the breach
of, any
provision of the articles of incorporation or by-laws or comparable
organizational documents of the Purchaser; (ii) conflict with, violate,
result in the breach or termination of, or constitute a default under
any
note, bond, mortgage, indenture, license, agreement or other instrument
or
obligation to which the Purchaser is a party or by which any of them
or
any of their respective properties or assets is bound; (iii) violate
any
statute, rule, regulation, order or decree of any governmental body
or
authority by which the Purchaser is bound; or (iv) result in the
creation
of any Lien upon the properties or assets of the Purchaser except,
in case
of clauses (ii), (iii) and (iv), for such violations, breaches or
defaults
as would not, individually or in the aggregate, have a Material Adverse
Effect.
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(b) |
No
consent, waiver, approval, Order, permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental
or Regulatory Authority is
required on the part of Purchaser in connection with the execution
and
delivery of this Agreement or the Purchaser Documents, or the compliance
by Purchaser with any of the provisions hereof or thereof, other
than the
filing of a Current Report on Form 8-K, a Schedule 14f-1 and any
applicable Schedule 13D amendments and Forms
4..
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10
4.7 Financial
Statements.
(a) |
The
Sellers have reviewed copies of the audited balance sheets of the
Purchaser as at December 31, 2006 and 2005 and the related audited
statements of income and of cash flows of the Purchaser for the years
then
ended and the copies of the unaudited balance sheets of the Purchaser
as
at March 31, 2007 and the related unaudited statements of income
and of
cash flows of the Purchaser for the years then ended (the “Financial
Statements”). Each of the Financial Statements is complete and correct in
all material respects, has been prepared in accordance with GAAP
(subject
to normal year-end adjustments in the case of the unaudited statements)
and in conformity with the practices consistently applied by the
Purchaser
without modification of the accounting principles used in the preparation
thereof and presents fairly the financial position, results of operations
and cash flows of the Purchaser as at the dates and for the periods
indicated.
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(b) |
For
the purposes hereof, the audited balance sheet of the Purchaser as
at
December 31, 2006 is referred to as the "Balance Sheet" and December
31,
2006 is referred to as the “Balance Sheet
Date”.
|
4.8 No
Undisclosed Liabilities.
Purchaser has no indebtedness, obligations or liabilities of any kind (whether
accrued, absolute, contingent or otherwise, and whether due or to become due)
that would have been required to be reflected in, reserved against or otherwise
described on the Balance Sheet or in the notes thereto in accordance with GAAP
which was not fully reflected in, reserved against or otherwise described in
the
Balance Sheet or the notes thereto or was not incurred in the ordinary course
of
business consistent with past practice since the Balance Sheet
Date.
4.9 Absence
of Certain Developments.
Except
as expressly contemplated by this Agreement, since the Balance Sheet
Date:
(i) |
there
has not been any material adverse change nor has there occurred any
event
which is reasonably likely to result in a material adverse
change;
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(ii) |
there
has not been any damage, destruction or loss, whether or not covered
by
insurance, with respect to the property and assets of the Purchaser
having
a replacement cost of more than $25,000 for any single loss or $100,000
for all such losses;
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(iii) |
there
has not been any declaration, setting aside or payment of any dividend
or
other distribution in respect of any shares of capital stock of the
Purchaser or any repurchase, redemption or other acquisition by the
Purchaser of any outstanding shares of capital stock or other securities
of, or other ownership interest in, the
Purchaser;
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(iv) |
the
Purchaser has not awarded or paid any bonuses to employees of the
Purchaser with respect to the fiscal year ended December 31, 2004, except
to the extent accrued on the Balance Sheet or entered into any employment,
deferred compensation, severance or similar agreement (nor amended
any
such agreement) or agreed to increase the compensation payable or
to
become payable by it to any of the Purchaser's directors, officers,
employees, agents or representatives or agreed to increase the coverage
or
benefits available under any severance pay, termination pay, vacation
pay,
company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension
or
other employee benefit plan, payment or arrangement made to, for
or with
such directors, officers, employees, agents or representatives (other
than
normal increases in the ordinary course of business consistent with
past
practice and that in the aggregate have not resulted in a material
increase in the benefits or compensation expense of the
Purchaser);
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11
(v) |
there
has not been any change by the Purchaser in accounting or Tax reporting
principles, methods or policies;
|
(vi) |
the
Purchaser has not entered into any transaction or Contract or conducted
its business other than in the ordinary course consistent with past
practice;
|
(vii) |
the
Purchaser has not made any loans, advances or capital contributions
to, or
investments in, any Person or paid any fees or expenses to any Seller
or
any Affiliate of any Seller;
|
(viii) |
the
Purchaser has not mortgaged, pledged or subjected to any Lien, any
of its
assets, or acquired any assets or sold, assigned, transferred, conveyed,
leased or otherwise disposed of any assets of the Purchaser, except
for
assets acquired or sold, assigned, transferred, conveyed, leased
or
otherwise disposed of in the ordinary course of business consistent
with
past practice;
|
(ix) |
the
Purchaser has not discharged or satisfied any Lien, or paid any obligation
or liability (fixed or contingent), except in the ordinary course
of
business consistent with past practice and which, in the aggregate,
would
not be material to the Purchaser;
|
(x) |
the
Purchaser has not canceled or compromised any debt or claim or amended,
canceled, terminated, relinquished, waived or released any Contract
or
right except in the ordinary course of business consistent with past
practice and which, in the aggregate, would not be material to the
Purchaser;
|
(xi) |
the
Purchaser has not made or committed to make any capital expenditures
or
capital additions or betterments in excess of $25,000 individually
or
$100,000 in the aggregate;
|
(xii) |
the
Purchaser has not instituted or settled any material legal proceeding;
and
|
(xiii) |
the
Purchaser has not agreed to do anything set forth in this Section
4.9.
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12
4.10 Taxes.
(a) |
(A)
all Tax Returns required to be filed by or on behalf of the Purchaser
have
been filed with the appropriate taxing authorities in all jurisdictions
in
which such Tax Returns are required to be filed (after giving effect
to
any valid extensions of time in which to make such filings), and
all such
Tax Returns were true, complete and correct in all material respects;
(B)
all Taxes payable by or on behalf of the Purchaser or in respect
of its
income, assets or operations have been fully and timely paid, and
(C) the
Purchaser has not executed or filed with the IRS or any other taxing
authority any agreement, waiver or other document or arrangement
extending
or having the effect of extending the period for assessment or collection
of Taxes (including, but not limited to, any applicable statute of
limitation), and no power of attorney with respect to any Tax matter
is
currently in force.
|
(b) |
The
Purchaser has complied in all material respects with all applicable
laws,
rules and regulations relating to the payment and withholding of
Taxes and
has duly and timely withheld from employee salaries, wages and other
compensation and has paid over to the appropriate taxing authorities
all
amounts required to be so withheld and paid over for all periods
under all
applicable laws.
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(c) |
The
Sellers have received complete copies of (A) all federal, state,
local and
foreign income or franchise Tax Returns of the Purchaser relating
to the
taxable periods since 2001 and (B) any audit report issued within
the last
three years relating to Taxes due from or with respect to the Purchaser
its income, assets or operations.
|
(d) |
All
material types of Taxes paid and material types of Tax Returns filed
by or
on behalf of the Purchaser have been paid and filed. To
the best of the Purchaser’s knowledge,
no claim has been made by a taxing authority in a jurisdiction where
the
Purchaser does not file Tax Returns such that it is or may be subject
to
taxation by that jurisdiction.
|
(e) |
All
deficiencies asserted or assessments made as a result of any examinations
by the IRS or any other taxing authority of the Tax Returns of or
covering
or including the Purchaser have been fully paid, and there are no
other
audits or investigations by any taxing authority in progress, nor
have the
Sellers or the Purchaser received any notice from any taxing authority
that it intends to conduct such an audit or investigation. No issue
has
been raised by a federal, state, local or foreign taxing authority
in any
current or prior examination which, by application of the same or
similar
principles, could reasonably be expected to result in a proposed
deficiency for any subsequent taxable
period.
|
(f) |
Neither
the Purchaser nor any other Person (including any of the Sellers)
on
behalf of the Purchaser has (A) filed a consent pursuant to Section
341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply
to any
disposition of a subsection (f) asset (as such term is defined in
Section
341(f)(4) of the Code) owned by the Purchaser, (B) agreed to or is
required to make any adjustments pursuant to Section 481(a) of the
Code or
any similar provision of state, local or foreign law by reason of
a change
in accounting method initiated by the Purchaser or has any knowledge
that
the Internal Revenue Service has proposed any such adjustment or
change in
accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods
that
relate to the business or operations of the Purchaser, (C) executed
or
entered into a closing agreement pursuant to Section 7121 of the
Code or
any predecessor provision thereof or any similar provision of state,
local
or foreign law with respect to the Purchaser, or (D) requested any
extension of time within which to file any Tax Return, which Tax
Return
has since not been filed.
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(g) |
No
property owned by the Purchaser is (i) property required to be treated
as
being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect
immediately prior to the enactment of the Tax Reform Act of 1986,
(ii)
constitutes "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code or (iii) is "tax-exempt bond financed property"
within the meaning of Section 168(g) of the
Code.
|
(h) |
The
Purchaser is not a foreign person within the meaning of Section 1445
of
the Code.
|
(i) |
The
Purchaser is not a party to any tax sharing or similar agreement
or
arrangement (whether or not written) pursuant to which it will have
any
obligation to make any payments after the
Closing.
|
(j) |
There
is no contract, agreement, plan or arrangement covering any person
that,
individually or collectively, could give rise to the payment of any
amount
that would not be deductible by the Company, its Affiliates or their
respective affiliates by reason of Section 280G of the Code, or would
constitute compensation in excess of the limitation set forth in
Section
162(m) of the Code.
|
(k) |
The
Purchaser is not subject to any private letter ruling of the IRS
or
comparable rulings of other taxing
authorities.
|
(l) |
Except
as set forth on Schedule 4.10, there are no liens as a result of
any
unpaid Taxes upon any of the assets of the
Purchaser.
|
(m) |
The
Purchaser has no elections in effect for federal income tax purposes
under
Sections 108, 168, 338, 441, 463, 472, 1017, 1033 or 4977 of the
code.
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13
4.11 Real
Property.
(a) |
Schedule
4.11(a)
sets forth a complete list of (i) all real property and interests
in real
property owned in fee by the Purchaser (individually, an "Owned Property"
and collectively, the "Owned Properties"), and (ii) all real property
and
interests in real property leased by the Purchaser (individually,
a "Real
Property Lease" and the real properties specified in such leases,
together
with the Owned Properties, being referred to herein individually
as a
"Purchaser Property" and collectively as the "Purchaser Properties")
as
lessee or lessor. The Purchaser has good and marketable fee title
to all
Owned Property, free and clear of all Liens of any nature whatsoever
except (A) Liens set forth on Schedule
4.11(a)
and (B) Permitted Liens. The Purchaser Property constitutes all interests
in real property currently used or currently held for use in connection
with the business of the Purchaser and which are necessary for the
continued operation of the business of the Purchaser as the business
is
currently conducted. The Purchaser has a valid and enforceable leasehold
interest under each of the Real Property Leases, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as
to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and the
Purchaser has not received any written notice of any default or event
that
with notice or lapse of time, or both, would constitute a default
by the
Purchaser under any of the Real Property Leases. All of the Purchaser
Property, buildings, fixtures and improvements thereon owned or leased
by
the Purchaser are in good operating condition and repair (subject
to
normal wear and tear). The Purchaser has delivered or otherwise made
available to the Sellers, correct and complete copies of (i) all
deeds,
title reports and surveys for the Owned Properties and (ii) the Real
Property Leases, together with all amendments, modifications or
supplements, if any, thereto.
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(b) |
The
Purchaser has all material certificates of occupancy and permits
of any
Governmental or Regulatory Authority necessary or useful for the
current
use and operation of each Purchaser Property, and the Purchaser has
fully
complied with all material conditions of the permits applicable to
them.
No default or violation, or event that with the lapse of time or
giving of
notice or both would become a default or violation, has occurred
in the
due observance of any permit.
|
(c) |
There
does not exist any actual or, to the best knowledge of the Purchaser,
threatened or contemplated condemnation or eminent domain proceedings
that
affect any Purchaser Property or any part thereof, and Purchaser
has not
received any notice, oral or written, of the intention of any Governmental
or Regulatory Authority or other Person to take or use all or any
part
thereof.
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(d) |
The
Purchaser has not received any written notice from any insurance
company
that has issued a policy with respect to any Purchaser Property requiring
performance of any structural or other repairs or alterations to
such
Purchaser Property.
|
(e) |
The
Purchaser does not own or hold, and is not obligated under or a party
to,
any option, right of first refusal or other Contractual right to
purchase,
acquire, sell, assign or dispose of any real estate or any portion
thereof
or interest therein.
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14
4.12 Tangible
Personal Property.
(a) |
Schedule
4.12(a) sets
forth all leases of personal property ("Personal Property Leases")
involving annual payments in excess of $25,000 relating to personal
property used in the business of the Purchaser or to which the Purchaser
is a party or by which the properties or assets of the Purchaser
is bound.
The Purchaser has delivered or otherwise made available to the Sellers
true, correct and complete copies of the Personal Property Leases,
together with all amendments, modifications or supplements
thereto.
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(b) |
The
Purchaser has a valid leasehold interest under each of the Personal
Property Leases under which it is a lessee, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as
to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there
is
no default under any Personal Property Lease by the Purchaser or,
to the
best knowledge of the Purchaser, by any other party thereto, and
no event
has occurred that with the lapse of time or the giving of notice
or both
would constitute a default
thereunder.
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(c) |
The
Purchaser has good and marketable title to all of the items of tangible
personal property reflected in the Balance Sheet (except as sold
or
disposed of subsequent to the date thereof in the ordinary course
of
business consistent with past practice), free and clear of any and
all
Liens other than the Permitted Liens. All such items of tangible
personal
property which, individually or in the aggregate, are material to
the
operation of the business of the Purchaser are in good condition
and in a
state of good maintenance and repair (ordinary wear and tear excepted)
and
are suitable for the purposes used.
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(d) |
All
of the items of tangible personal property used by the Purchaser
under the
Personal Property Leases are in good condition and repair (ordinary
wear
and tear excepted) and are suitable for the purposes
used.
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4.13 Intangible
Property.
Schedule
4.13
contains
a complete and correct list of each patent, trademark, trade name, service
xxxx
and copyright owned or used by Purchaser as well as all registrations thereof
and pending applications therefor, and each license or other agreement relating
thereto. Except as set forth on Schedule
4.13,
each of
the foregoing is owned by the party shown on such Schedule as owning the same,
free and clear of all mortgages, claims, liens, security interests, charges
and
encumbrances and is in good standing and not the subject of any challenge.
There
have been no claims made and the Purchaser has not received any notice or
otherwise knows or has reason to believe that any of the foregoing is invalid
or
conflicts with the asserted rights of others. The Purchaser possesses all
patents, patent licenses, trade names, trademarks, service marks, brand marks,
brand names, copyrights, know-how, formulate and other proprietary and trade
rights necessary for the conduct of its business as now conducted, not subject
to any restrictions and without any known conflict with the rights of others
and
the Purchaser has not forfeited or otherwise relinquished any such patent,
patent license, trade name, trademark, service xxxx, brand xxxx, brand name,
copyright, know-how, formulate or other proprietary right necessary for the
conduct of its business as conducted on the date hereof. The Purchaser is not
under any obligation to pay any royalties or similar payments in connection
with
any license to any Seller or any affiliate thereof.
15
4.14 Material
Contracts.
Schedule
4.14
sets
forth all of the following Contracts to which the Purchaser is a party or by
which it is bound (collectively, the "Material Contracts"): (i) Contracts with
any the Seller or any current officer or director of the Purchaser; (ii)
Contracts with any labor union or association representing any employee of
the
Purchaser; (iii) Contracts pursuant to which any party is required to purchase
or sell a stated portion of its requirements or output from or to another party;
(iv) Contracts for the sale of any of the assets of the Purchaser other than
in
the ordinary course of business or for the grant to any person of any
preferential rights to purchase any of its assets; (v) joint venture agreements;
(vi) Material Contracts containing covenants of the Purchaser not to compete
in
any line of business or with any person in any geographical area or covenants
of
any other person not to compete with the Purchaser in any line of business
or in
any geographical area; (vii) Contracts relating to the acquisition by the
Purchaser of any operating business or the capital stock of any other person;
(viii) Contracts relating to the borrowing of money; or (ix) any other
Contracts, other than Real Property Leases, which involve the expenditure of
more than $100,000 in the aggregate or $25,000 annually or require performance
by any party more than one year from the date hereof. There have been made
available to the Sellers and their representatives true and complete copies
of
all of the Material Contracts. Except as set forth on Schedule
4.14,
all of
the Material Contracts and other agreements are in full force and effect and
are
the legal, valid and binding obligation of the Purchaser, enforceable against
them in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity). Except as set forth on Schedule
4.14,
the
Purchaser is not in default in any material respect under any Material
Contracts, nor, to the knowledge of Purchaser, is any other party to any
Material Contract in default thereunder in any material respect.
4.15 Employee
Benefits.
(a) |
Schedule
4.15(a)
sets forth a complete and correct list of (i) all "employee benefit
plans", as defined in Section 3(3) ERISA, and any other pension plans
or
employee benefit arrangements, programs or payroll practices (including,
without limitation, severance pay, vacation pay, company awards,
salary
continuation for disability, sick leave, retirement, deferred
compensation, bonus or other incentive compensation, stock purchase
arrangements or policies, hospitalization, medical insurance, life
insurance and scholarship programs) maintained by the Purchaser or
to
which the Purchaser contributes or is obligated to contribute thereunder
with respect to employees of the Purchaser ("Employee Benefit Plans")
and
(ii) all "employee pension plans", as defined in Section 3(2) of
ERISA,
maintained by the Purchaser or any trade or business (whether or
not
incorporated) which are under control, or which are treated as a
single
employer, with Purchaser as an ERISA Affiliate or to which the Purchaser
or any ERISA Affiliate contributed or is obligated to contribute
thereunder ("Pension Plans"). Schedule
4.15(a)
clearly identifies, in separate categories, Employee Benefit Plans
or
Pension Plans that are (i) subject to Section 4063 and 4064 of ERISA
("Multiple Employer Plans"), (ii) multiemployer plans (as defined
in
Section 4001(a)(3) of ERISA) ("Multiemployer Plans") or (iii) "benefit
plans", within the meaning of Section 5000(b)(1) of the Code providing
continuing benefits after the termination of employment (other than
as
required by Section 4980B of the Code or Part 6 of Title I of ERISA
and at
the former employee's or his beneficiary's sole
expense).
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(b) |
Each
of the Employee Benefit Plans and Pension Plans intended to qualify
under
Section 401 of the Code ("Qualified Plans") so qualify and the trusts
maintained thereto are exempt from federal income taxation under
Section
501 of the Code, and, except as disclosed on Schedule
4.15(b),
nothing has occurred with respect to the operation of any such plan
which
could cause the loss of such qualification or exemption or the imposition
of any liability, penalty or tax under ERISA or the
Code.
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(c) |
All
contributions and premiums required by law or by the terms of any
Employee
Benefit Plan or Pension Plan which are defined benefit plans or money
purchase plans or any agreement relating thereto have been timely
made
(without regard to any waivers granted with respect thereto) to any
funds
or trusts established thereunder or in connection therewith, and
no
accumulated funding deficiencies exist in any of such plans subject
to
Section 412 of the Code.
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(d) |
The
benefit liabilities, as defined in Section 4001(a)(16) of ERISA,
of each
of the Employee Benefit Plans and Pension Plans subject to Title
IV of
ERISA using the actuarial assumptions that would be used by the Pension
Benefit Guaranty Corporation (the "PBGC") in the event it terminated
each
such plan do not exceed the fair market value of the assets of each
such
plan. The liabilities of each Employee Benefit Plan that has been
terminated or otherwise wound up, have been fully discharged in full
compliance with applicable Law.
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(e) |
There
has been no "reportable event" as that term is defined in Section
4043 of
ERISA and the regulations thereunder with respect to any of the Employee
Benefit Plans or Pension Plans subject to Title IV of ERISA which
would
require the giving of notice, or any event requiring notice to be
provided
under Section 4041(c)(3)(C) or 4063(a) of
ERISA.
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(f) |
There
has been no violation of ERISA with respect to the filing of applicable
returns, reports, documents and notices regarding any of the Employee
Benefit Plans or Pension Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of such notices or documents
to the participants or beneficiaries of the Employee Benefit Plans
or
Pension Plans.
|
16
(g) |
True,
correct and complete copies of the following documents, with respect
to
each of the Employee Benefit Plans and Pension Plans (as applicable),
have
been delivered to the Sellers (A) any plans and related trust documents,
and all amendments thereto, (B) the most recent Forms 5500 for the
past
three years and schedules thereto, (C) the most recent financial
statements and actuarial valuations for the past three years, (D)
the most
recent Internal Revenue Service determination letter, (E) the most
recent
summary plan descriptions (including letters or other documents updating
such descriptions) and (F) written descriptions of all non-written
agreements relating to the Employee Benefit Plans and Pension
Plans.
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(h) |
There
are no pending legal proceedings which have been asserted or instituted
against any of the Employee Benefit Plans or Pension Plans, the assets
of
any such plans or the Purchaser, or the plan administrator or any
fiduciary of the Employee Benefit Plans or Pension Plans with respect to
the operation of such plans (other than routine, uncontested benefit
claims), and there are no facts or circumstances which could form
the
basis for any such legal
proceeding.
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(i) |
Each
of the Employee Benefit Plans and Pension Plans has been maintained,
in
all material respects, in accordance with its terms and all provisions
of
applicable Law. All amendments and actions required to bring each
of the
Employee Benefit Plans and Pension Plans into conformity in all material
respects with all of the applicable provisions of ERISA and other
applicable Laws have been made or taken except to the extent that
such
amendments or actions are not required by law to be made or taken
until a
date after the Closing Date and are disclosed on Schedule
4.15(i).
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(j) |
The
Purchaser and any ERISA Affiliate which maintains a "benefits plan"
within
the meaning of Section 5000(b)(1) of ERISA, have complied with the
notice
and continuation requirements of Section 4980B of the Code or Part
6 of
Title I of ERISA and the applicable regulations
thereunder.
|
(k) |
None
of the Purchaser, any ERISA Affiliate or any organization to which
any is
a successor or parent corporation, has divested any business or entity
maintaining or sponsoring a defined benefit pension plan having unfunded
benefit liabilities (within the meaning of Section 4001(a)(18) of
ERISA)
or transferred any such plan to any person other than the Purchaser
or any
ERISA Affiliate during the five-year period ending on the Closing
Date.
|
(l) |
The
Purchaser is not a "party in interest" or "disqualified person" with
respect to the Employee Benefit Plans or Pension Plans has engaged
in a
"prohibited transaction" within the meaning of Section 4975 of the
Code or
Section 406 of ERISA.
|
(m) |
None
of the Purchaser or any ERISA Affiliate has terminated any Employee
Benefit Plan or Pension Plan subject to Title IV of ERISA, or incurred
any
outstanding liability under Section 4062 of ERISA to the Pension
Benefit
Guaranty Corporation or to a trustee appointed under Section 4042
of
ERISA.
|
(n) |
Neither
the execution and delivery of this Agreement nor the consummation
of the
transactions contemplated hereby will (i) result in any payment becoming
due to any employee of Purchaser; (ii) increase any benefits otherwise
payable under any Employee Benefit Plan or Pension Plan; or (iii)
result
in the acceleration of the time of payment or vesting of any such
benefits.
|
(o) |
No
stock or other security issued by Purchaser forms or has formed a
material
part of the assets of any Employee Benefit Plan or Pension
Plan.
|
17
4.16 Labor.
(a) |
The
Purchaser is not a party to any labor or collective bargaining agreement
and there are no labor or collective bargaining agreements which
pertain
to employees of the Purchaser.
|
(b) |
No
employees of the Purchaser are represented by any labor organization.
No
labor organization or group of employees of the Purchaser has made
a
pending demand for recognition, and there are no representation
proceedings or petitions seeking a representation proceeding presently
pending or, to the best knowledge of the Purchaser, threatened to
be
brought or filed, with the National Labor Relations Board or other
labor
relations tribunal. There is no organizing activity involving the
Purchaser pending or, to the best knowledge of the Purchaser, threatened
by any labor organization or group of employees of the
Purchaser.
|
(c) |
There
are no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations
or
(ii) material grievances or other labor disputes pending or, to the
best
knowledge of any Purchaser, threatened against or involving the Purchaser.
There are no unfair labor practice charges, grievances or complaints
pending or, to the best knowledge of Purchaser, threatened by or
on behalf
of any employee or group of employees of the
Purchaser.
|
4.17 Litigation.
There
is
no suit, action, proceeding, investigation, claim or order pending or, to the
knowledge of the Purchaser, overtly threatened against the Purchaser (or to
the
knowledge of the Purchaser, pending or threatened, against any of the officers,
directors or key employees of the Purchaser with respect to their business
activities on behalf of the Purchaser), or to which the Purchaser is otherwise
a
party, which, if adversely determined, would have a Material Adverse Effect,
before any court, or before any governmental department, commission, board,
agency, or instrumentality; nor to the knowledge of the Purchaser is there
any
reasonable basis for any such action, proceeding, or investigation. The
Purchaser is not subject to any judgment, order or decree of any court or
governmental agency except to the extent the same are not reasonably likely
to
have a Material Adverse Effect and the Purchaser is not engaged in any legal
action to recover monies due it or for damages sustained by it.
4.18 Compliance
with Laws; Permits.
The
Purchaser is in compliance with all Laws applicable to the Purchaser or to
the
conduct of the business or operations of the Purchaser or the use of its
properties (including any leased properties) and assets, except for such
non-compliances as would not, individually or in the aggregate, have a Material
Adverse Effect. The Purchaser has all governmental permits and approvals from
state, federal or local authorities which are required for the Purchaser to
operate its business, except for those the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect.
4.19 Environmental
Matters.
Except
as set forth on Schedule
4.19
hereto:
(a) |
the
operations of the Purchaser are in compliance with all applicable
Environmental Laws and all Environmental
Permits;
|
(b) |
the
Purchaser has obtained all permits required under all applicable
Environmental Laws necessary to operate its
business;
|
(c) |
the
Purchaser is not the subject of any outstanding written order or
Contract
with any Governmental or Regulatory Authority or Person respecting
(i)
Environmental Laws, (ii) Remedial Action, (iii) any release or threatened
release of a Hazardous Material or (iv) any Hazardous
Activity;
|
(d) |
the
Purchaser has not received any written communication alleging that
the
Purchaser may be in violation of any Environmental Law, or any
Environmental Permit, or may have any liability under any Environmental
Law;
|
(e) |
the
Purchaser has no current contingent liability in connection with
any
Hazardous Activity or release of any Hazardous Materials into the
indoor
or outdoor environment (whether on-site or
off-site);
|
(f) |
to
the Purchaser’s knowledge, there are no investigations of the business,
operations, or currently or previously owned, operated or leased
property
of the Purchaser pending or threatened which could lead to the imposition
of any liability pursuant to Environmental
Law;
|
(g) |
there
is not located at any of the properties of the Purchaser any (i)
underground storage tanks, (ii) asbestos-containing material or (iii)
equipment containing polychlorinated biphenyls;
and,
|
(h) |
the
Purchaser has provided to the Sellers all environmentally related
audits,
studies, reports, analyses, and results of investigations that have
been
performed with respect to the currently or previously owned, leased
or
operated properties of the
Purchaser.
|
18
4.20 Insurance.
Schedule
4.20
sets
forth a complete and accurate list of all policies of insurance of any kind
or
nature covering the Purchaser or any of its employees, properties or assets,
including, without limitation, policies of life, disability, fire, theft,
workers compensation, employee fidelity and other casualty and liability
insurance. All such policies are in full force and effect, and, to the
Purchaser’s knowledge, the Purchaser is not in default of any provision thereof,
except for such defaults as would not, individually or in the aggregate, have
a
Material Adverse Effect.
4.21 Inventories;
Receivables; Payables.
(a) |
The
inventories of the Purchaser are in good and marketable condition,
and are
saleable in the ordinary course of business. Adequate reserves have
been
reflected in the Balance Sheet for obsolete or otherwise unusable
inventory, which reserves were calculated in a manner consistent
with past
practice and in accordance with GAAP consistently
applied.
|
(b) |
All
accounts receivable of the Purchaser have arisen from bona fide
transactions in the ordinary course of business consistent with past
practice. All accounts receivable of the Purchaser reflected on the
Balance Sheet are good and collectible at the aggregate recorded
amounts
thereof, net of any applicable reserve for returns or doubtful accounts
reflected thereon, which reserves are adequate and were calculated
in a
manner consistent with past practice and in accordance with GAAP
consistently applied. All accounts receivable arising after the Balance
Sheet Date are good and collectible at the aggregate recorded amounts
thereof, net of any applicable reserve for returns or doubtful accounts,
which reserves are adequate and were calculated in a manner consistent
with past practice and in accordance with GAAP consistently
applied.
|
(c) |
All
accounts payable of the Purchaser reflected in the Balance Sheet
or
arising after the date thereof are the result of bona fide transactions
in
the ordinary course of business and have been paid or are not yet
due and
payable.
|
4.22 Related
Party Transactions.
Except
as set forth on Schedule
4.22,
neither
the Purchaser nor any Affiliates of Purchaser has borrowed any moneys from
or
has outstanding any indebtedness or other similar obligations to the Purchaser.
Except as set forth in Schedule
4.22,
neither
the Purchaser, any Affiliate of the Purchaser nor any officer or employee of
any
of them (i) owns any direct or indirect interest of any kind in, or controls
or
is a director, officer, employee or partner of, or consultant to, or lender
to
or borrower from or has the right to participate in the profits of, any Person
which is (A) a competitor, supplier, customer, landlord, tenant, creditor or
debtor of the Purchaser, (B) engaged in a business related to the business
of
the Purchaser, or (C) a participant in any transaction to which the Purchaser
is
a party or (ii) is a party to any Contract with the Purchaser.
4.23 No
Misrepresentation.
No
representation or warranty of Purchaser contained in this Agreement or in any
schedule hereto or in any certificate or other instrument furnished by the
Purchaser to Sellers pursuant to the terms hereof, contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.
4.24 Financial
Advisors.
Except
as set forth on Schedule
4.24,
no
Person has acted, directly or indirectly, as a broker or finder for the
Purchaser in connection with the transactions contemplated by this Agreement
and
no Person is entitled to any fee or commission or like payment in respect
thereof.
19
4.25 Guarantees.
There
are no
written
guarantees currently in effect heretofore issued by the Purchaser to any bank
or
other lender in connection with any credit facilities extended by such creditors
to the Purchaser in connection with any other contracts or agreements
(collectively, the "Guarantees"), including the name of such creditor and the
amount of the indebtedness, together with any interest and fees currently owing
and expected to be outstanding as of the Closing.
4.26 Patriot
Act.
The
Purchaser certifies that it has not been designated, and is not owned or
controlled, by a “suspected terrorist” as defined in Executive Order 13224. The
Purchaser hereby acknowledges that the Sellers seek to comply with all
applicable Laws concerning money laundering and related activities. In
furtherance of those efforts, the Purchaser hereby represents, warrants and
agrees that: (i) none of the cash or property owned by the Purchaser has been
or
shall be derived from, or related to, any activity that is deemed criminal
under
United States law; and (ii) no contribution or payment by the Purchaser has,
and
this Agreement will not, cause the Purchaser to be in violation of the United
States Bank Secrecy Act, the United States International Money Laundering
Control Act of 1986 or the United States International Money Laundering
Abatement and Anti-Terrorist Financing Act of 2001.
4.27 Trading
Status.
Purchaser’s common stock is traded on the OTC Bulletin Board, under the trading
symbol “OFLC.” Purchaser has at one market makers. As of the Closing,
Purchaser’s Common Stock will be listed for trading on the OTCBB with at least
one market maker.
4.28 Reporting
Status.
Purchaser is a reporting issuer under Section 15(d) of the Securities Exchange
Act of 1934 (the “’34 Act”). Purchaser is now, and as of the Closing will be,
current in its filings and will have filed all of the filings required to have
been made in the previous twelve months.
4.29 Investment
Intention.
Purchaser is acquiring the Shares for its own account, for investment purposes
only and not with a view to the distribution (as such term is used in Section
2(11) of the Securities Act of 1933, as amended (the "Securities Act") thereof.
Purchaser understands that the Shares have not been registered under the
Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
4.30 Acquisition
Shares.
The
Acquisition Shares issuable pursuant to the purchase price, when issued, will
be
duly authorized and validly issued, fully paid and non-assessable, will be
delivered hereunder free and clear of any Liens, except that such Acquisition
Shares will be "restricted securities", as such term is defined in the rules
and
regulations of the SEC promulgated under the Securities Act, and will be subject
to restrictions on transfers pursuant to such rules and regulations.
20
ARTICLE
5.
COVENANTS
5.1 Access
to Information.
The
Sellers agree that, prior to the Closing Date, the Purchaser shall be entitled,
through its officers, employees and representatives (including, without
limitation, its legal advisors and accountants), to make such investigation
of
the properties, businesses and operations of the Company and its subsidiaries
and such examination of the books, records and financial condition of the
Company and its Subsidiaries as it reasonably requests and to make extracts
and
copies of such books and records. Any such investigation and examination shall
be conducted during regular business hours and under reasonable circumstances,
and the Sellers shall cooperate, and shall cause the Company and its
Subsidiaries to cooperate, fully therein. No investigation by the Purchaser
prior to or after the date of this Agreement shall diminish or obviate any
of
the representations, warranties, covenants or agreements of the Sellers or
the
Company contained in this Agreement or the Seller Documents. In order that
the
Purchaser may have full opportunity to make such physical, business, accounting
and legal review, examination or investigation as it may reasonably request
of
the affairs of the Company and its Subsidiaries, the Sellers shall cause the
officers, employees, consultants, agents, accountants, attorneys and other
representatives of the Company and its Subsidiaries to cooperate fully with
such
representatives in connection with such review and examination.
5.2 Conduct
of the Business Pending the Closing.
(a) |
Except
as otherwise expressly contemplated by this Agreement or with the
prior
written consent of the Purchaser, the Sellers shall, and shall cause
the
Company to:
|
(i) |
conduct
the businesses of the Company only in the ordinary course consistent
with
past practice;
|
(ii) |
use
its best efforts to (A) preserve its present business operations,
organization (including, without limitation, management and the sales
force) and goodwill of the Company and (B) preserve its present
relationship with Persons having business dealings with the
Company;
|
(iii) |
maintain
(A) all of the assets and properties of the Company in their current
condition, ordinary wear and tear excepted and (B) insurance upon
all of
the properties and assets of the Company in such amounts and of such
kinds
comparable to that in effect on the date of this
Agreement;
|
(iv) |
(A)
maintain the books, accounts and records of the Company in the ordinary
course of business consistent with past practices, (B) continue to
collect
accounts receivable and pay accounts payable utilizing normal procedures
and without discounting or accelerating payment of such accounts,
and (C)
comply with all contractual and other obligations applicable to the
operation of the Company; and
|
(v) |
comply
in all material respects with applicable laws, including, without
limitation, Environmental Laws.
|
(b) |
Except
as otherwise expressly contemplated by this Agreement or with the
prior
written consent of the Purchaser, the Sellers shall not, and shall
cause
the Company not to:
|
21
(i) |
declare,
set aside, make or pay any dividend or other distribution in respect
of
the capital stock of the Company or repurchase, redeem or otherwise
acquire any outstanding shares of the capital stock or other securities
of, or other ownership interests in, the
Company;
|
(ii) |
transfer,
issue, sell or dispose of any shares of capital stock or other securities
of the Company or grant options, warrants, calls or other rights
to
purchase or otherwise acquire shares of the capital stock or other
securities of the Company;
|
(iii) |
effect
any recapitalization, reclassification, stock split or like change
in the
capitalization of the Company;
|
(iv) |
amend
the certificate of incorporation or by-laws of the
Company;
|
(v) |
(A)
materially increase the annual level of compensation of any employee
of
the Company, (B) increase the annual level of compensation payable
or to
become payable by the Company to any of its executive officers, (C)
grant
any unusual or extraordinary bonus, benefit or other direct or indirect
compensation to any employee, director or consultant, (D) increase
the
coverage or benefits available under any (or create any new) severance
pay, termination pay, vacation pay, company awards, salary continuation
for disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee benefit
plan
or arrangement made to, for, or with any of the directors, officers,
employees, agents or representatives of the Company or otherwise
modify or
amend or terminate any such plan or arrangement or (E) enter into
any
employment, deferred compensation, severance, consulting, non-competition
or similar agreement (or amend any such agreement) to which the Company
is
a party or involving a director, officer or employee of the Company
in his
or her capacity as a director, officer or employee of the
Company;
|
(vi) |
subject
to any Lien (except for leases that do not materially impair the
use of
the property subject thereto in their respective businesses as presently
conducted), any of the properties or assets (whether tangible or
intangible) of the Company;
|
(vii) |
acquire
any material properties or assets or sell, assign, transfer, convey,
lease
or otherwise dispose of any of the material properties or assets
(except
for fair consideration in the ordinary course of business consistent
with
past practice) of the Company except, with respect to the items listed
on
Schedule
5.2(b)(vii)
hereto, as previously consented to by the
Purchaser;
|
(viii) |
cancel
or compromise any debt or claim or waive or release any material
right of
the Company except in the ordinary course of
business;
|
(ix) |
enter
into any commitment for capital expenditures of the Company in excess
of
$25,000 for any individual commitment and $100,000 for all commitments
in
the aggregate;
|
(x) |
enter
into, modify or terminate any labor or collective bargaining agreement
of
the Company or, through negotiation or otherwise, make any commitment
or
incur any liability to any labor organization with respect to the
Company;
|
22
(xi) |
permit
the Company to enter into any transaction or to make or enter into
any
Contract which by reason of its size or otherwise is not in the ordinary
course of business consistent with past
practice;
|
(xii) |
permit
the Company to enter into or agree to enter into any merger or
consolidation with, any corporation or other entity, and not engage
in any
new business or invest in, make a loan, advance or capital contribution
to, or otherwise acquire the securities of any other
Person;
|
(xiii) |
except
for transfers of cash pursuant to normal cash management practices,
permit
the Company to make any investments in or loans to, or pay any fees
or
expenses to, or enter into or modify any Contract with, any Seller
or any
Affiliate of any Seller; or
|
(xiv) |
agree
to do anything prohibited by this Section 6.2 or anything which would
make
any of the representations and warranties of the Sellers in this
Agreement
or the Seller Documents untrue or incorrect in any material respect
as of
any time through and including the Effective
Time.
|
5.3 Consents. The
Sellers shall use their best efforts, and the Purchaser shall cooperate with
the
Sellers, to obtain at the earliest practicable date all consents and approvals
required to consummate the transactions contemplated by this Agreement,
including, without limitation, the consents and approvals referred to in Section
3.5(b)
hereof;
provided, however, that neither the Sellers nor the Purchaser shall be obligated
to pay any consideration therefor to any third party from whom consent or
approval is requested but it states no consents are necessary.
5.4 Other
Actions. Each
of
the Sellers and the Purchaser shall use its best efforts to (i) take all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement and (ii) cause the fulfillment at the earliest practicable date of
all
of the conditions to their respective obligations to consummate the transactions
contemplated by this Agreement.
5.5 No
Solicitation. The
Sellers will not, and will not cause or permit the Company or any of the
Company's directors, officers, employees, representatives or agents
(collectively, the "Representatives") to, directly or indirectly, (i) discuss,
negotiate, undertake, authorize, recommend, propose or enter into, either as
the
proposed surviving, merged, acquiring or acquired corporation, any transaction
involving a merger, consolidation, business combination, purchase or disposition
of any amount of the assets or capital stock or other equity interest in the
Company or any of its Subsidiaries other than the transactions contemplated
by
this Agreement (an "Acquisition Transaction"), (ii) facilitate, encourage,
solicit or initiate discussions, negotiations or submissions of proposals or
offers in respect of an Acquisition Transaction, (iii) furnish or cause to
be
furnished, to any Person, any information concerning the business, operations,
properties or assets of the Company or any of its Subsidiaries in connection
with an Acquisition Transaction, or (iv) otherwise cooperate in any way with,
or
assist or participate in, facilitate or encourage, any effort or attempt by
any
other Person to do or seek any of the foregoing. The Sellers will inform the
Purchaser in writing immediately following the receipt by any Seller, the
Company or any Representative of any proposal or inquiry in respect of any
Acquisition Transaction.
5.6 Publicity. None
of
the Sellers nor the Purchaser shall issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written approval of the other party hereto, which
approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser, disclosure is otherwise required by applicable Law
or
by the applicable rules of any stock exchange on which the Purchaser lists
securities, provided that, to the extent required by applicable law, the party
intending to make such release shall use its best efforts consistent with such
applicable law to consult with the other party with respect to the text
thereof.
23
ARTICLE
6.
CONDITIONS
TO CLOSING
6.1 Conditions
Precedent to Obligations of Purchaser.
The
obligation of the Purchaser to consummate the transactions contemplated by
this
Agreement is subject to the fulfillment, on or prior to the Closing Date, of
each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable
law):
(a) |
all
representations and warranties of the Sellers contained herein shall
be
true and correct as of the date hereof and as of the Closing
Date;
|
(b) |
all
representations and warranties of the Sellers contained herein qualified
as to materiality shall be true and correct, and the representations
and
warranties of the Sellers contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of
the
Closing Date with the same effect as though those representations
and
warranties had been made again at and as of that
time;
|
(c) |
the
Sellers shall have performed and complied in all material respects
with
all obligations and covenants required by this Agreement to be performed
or complied with by them on or prior to the Closing
Date;
|
(d) |
the
Purchaser shall have been furnished with certificates (dated the
Closing
Date and in form and substance reasonably satisfactory to the Purchaser)
executed by the Chief Executive Officer and Chief Financial Officer
of the
Company and each of the Sellers certifying as to the fulfillment
of the
conditions specified in Sections 6.1(a), 6.2(b)
and 6.2(c)
hereof;
|
(e) |
there
shall not have been or occurred any material adverse change in the
business or operations of the
Company;
|
(f) |
the
Sellers shall have obtained all consents and waivers referred to
in
Section 3.5(b)
there are none hereof, in a form reasonably satisfactory to the Purchaser,
with respect to the transactions contemplated by this Agreement and
the
Seller Documents;
and
|
(g) |
no
legal proceedings shall have been instituted or threatened or claim
or
demand made against the Sellers, the Company or any of its Subsidiaries,
or the Purchaser seeking to restrain or prohibit or to obtain substantial
damages with respect to the consummation of the transactions contemplated
hereby, and there shall not be in effect any Order by a Governmental
or
Regulatory Authority of competent jurisdiction restraining, enjoining
or
otherwise prohibiting the consummation of the transactions contemplated
hereby.
|
24
6.2 Conditions
Precedent to Obligations of the Sellers.
The
obligations of the Sellers to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date,
of
each of the following conditions (any or all of which may be waived by the
Sellers in whole or in part to the extent permitted by applicable
law):
(a) |
all
representations and warranties of the Purchaser contained herein
shall be
true and correct as of the date hereof and as of the Closing
Date;
|
(b) |
all
representations and warranties of the Purchaser contained herein
qualified
as to materiality shall be true and correct, and all representations
and
warranties of the Purchaser contained herein not qualified as to
materiality shall be true and correct in all material respects, at
and as
of the Closing Date with the same effect as though those representations
and warranties had been made again at and as of that
date;
|
(c) |
the
Purchaser shall have performed and complied in all material respects
with
all obligations and covenants required by this Agreement to be performed
or complied with by Purchaser on or prior to the Closing
Date;
|
(d) |
the
Sellers shall have been furnished with certificates (dated the Closing
Date and in form and substance reasonably satisfactory to the Sellers)
executed by the Chief Executive Officer and Chief Financial Officer
of the
Purchaser certifying as to the fulfillment of the conditions specified
in
Sections 6.2(a),
6.2(b)
and 6.2(c)
hereof;
|
(e) |
there
shall not be in effect any Order by a Governmental or Regulatory
Authority
of competent jurisdiction restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated
hereby;
|
(f) |
the
Sellers shall have obtained all consents and waivers referred to
in
Section 4.6(b) hereof, in a form reasonably satisfactory to the Purchaser,
with respect to the transactions contemplated by this Agreement and
the
Seller Documents;
|
(g) |
all
officers and members of the Board of Directors of the Purchaser shall
have
provided an undated resignation and shall have appointed the designees
of
the Sellers as members of the Board of Directors;
and
|
(h) |
the
Majority Stockholders shall have executed the agreement to return
the
Control Block to the Company.
|
25
ARTICLE
7.
TERMINATION
7.1 Material
Change in the Business of Company.
Simultaneous execution and closing, if any material loss or damage to the
Company Business occurs prior to Closing and such loss or damage, in Purchaser'
reasonable opinion, cannot be substantially repaired or replaced within sixty
(60) days, Purchaser shall, within two (2) days following any such loss or
damage, by notice in writing to Company, at its option, either:
(a) |
terminate
this Agreement, in which case no party will be under any further
obligation to any other party; or
|
(b) |
elect
to complete the Acquisition and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds
of all insurance covering such loss or damage will, as a condition
precedent to Purchaser' obligations to carry out the transactions
contemplated hereby, be vested in Company or otherwise adequately
secured
to the satisfaction of Purchaser on or before the Closing
Date.
|
7.2 Material
Change in the Purchaser Business.
If any
material loss or damage to the Purchaser Business occurs prior to Closing and
such loss or damage, in Company's reasonable opinion, cannot be substantially
repaired or replaced within sixty (60) days, Company shall, within two (2)
days
following any such loss or damage, by notice in writing to Purchaser, at its
option, either:
(a) |
terminate
this Agreement, in which case no party will be under any further
obligation to any other party; or
|
(b) |
elect
to complete the Acquisition and the other transactions contemplated
hereby, in which case the proceeds and the rights to receive the
proceeds
of all insurance covering such loss or damage will, as a condition
precedent to Company's obligations to carry out the transactions
contemplated hereby, be vested in Purchaser or otherwise adequately
secured to the satisfaction of Company on or before the Closing
Date.
|
26
ARTICLE
8.
DOCUMENTS
TO BE DELIVERED
8.1 Documents
to be Delivered by the Sellers.
At
the
Closing, the Sellers shall deliver, or cause to be delivered, to the Purchaser
the following:
(a) |
copies
of all consents and waivers referred to in Section 6.1(f)
hereof;
|
(b) |
certificates
of good standing with respect to the Company issued by the Secretary
of
the State of the Florida; and
|
(c) |
such
other documents as the Purchaser shall reasonably
request.
|
8.2 Documents
to be Delivered by the Purchaser.
At
the
Closing, the Purchaser shall deliver to the Sellers the following:
(a) |
the
Acquisition Shares;
|
(b)
the
certificates referred to in Section 6.2(d)
hereof;
(c)
copies of all consents and waivers referred to in Section 6.1(f)
hereof;
(d)
certificates of good standing with respect to the Purchaser issued by the
Secretary of the State of the Delaware;
(e) |
resignation
of the sole officer of the Company effective as of the Closing Date
and
his resignation as the sole member of the Board of Directors of Purchaser,
to be effective 10 days after the mailing of the Schedule 14f-1 to
the
shareholders of Purchaser;
|
(f) |
an
executed agreement between the Majority Stockholders and the Purchaser
pursuant to which the Majority Stockholders agree to return the Control
Block in consideration of the transfer of all assets of the Purchaser
immediately following the Closing;
|
(g) |
certificates
representing the Control Block with an irrevocable stock power signed
in
blank by the Majority Stockholders;
|
(h) |
resolution
of the Board of Directors appointing Xxxxxxx Xxxxx as a director
of the
Purchaser and Xxxxxxx Xxxxx, Xxxxx Xxxxxx and Xxxxx Xxxxxx as officers
of
the Corporation; and
|
(i)
such
other documents as the Sellers shall reasonably request.
27
ARTICLE
9.
INDEMNIFICATION
9.1 Indemnification.
(a) |
Subject
to Section 9.2
hereof, the Sellers hereby agree to jointly and severally indemnify
and
hold the Purchaser, the Company, and their respective directors,
officers,
employees, Affiliates, agents, representatives, heirs, successors
and
assigns (collectively, the "Purchaser Indemnified Parties") harmless
from
and against:
|
(i) |
any
and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the failure of any
representation or warranty of the Sellers set forth in Article
3
hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of the Sellers pursuant to this Agreement,
to be
true and correct in all respects as of the date made;
|
(ii) |
any
and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the breach of any covenant
or other agreement on the part of the Sellers under this Agreement
or any
Seller Document;
|
(iii) |
any
and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from any act or omission
of the
Company or any Seller; and
|
(iv) |
any
and all expenses incident to the
foregoing.
|
(b) |
Subject
to Section 9.2,
Purchaser and the Majority Stockholders hereby agrees to indemnify
and
hold the Sellers and their respective Affiliates, agents, successors
and
assigns (collectively, the "Seller Indemnified Parties") harmless
from and
against:
|
(i) |
any
and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the failure of any
representation or warranty of the Purchaser set forth in Section
4 hereof,
or any representation or warranty contained in any certificate delivered
by or on behalf of the Purchaser pursuant to this Agreement, to be
true
and correct as of the date made;
|
(ii) |
any
and all losses, liabilities, obligations, damages, costs and expenses
based upon, attributable to or resulting from the breach of any covenant
or other agreement on the part of the Purchaser under this Agreement;
and
|
(iii) |
any
and all Expenses incident to the
foregoing.
|
9.2 Intentionally
omitted
28
9.3 Indemnification
Procedures.
(a) |
In
the event that any legal proceedings shall be instituted or that
any claim
or demand ("Claim") shall be asserted by any Person in respect of
which
payment may be sought under Section 9.1 hereof, the Indemnified Party
shall reasonably and promptly cause written notice of the assertion
of any
Claim of which it has knowledge which is covered by this indemnity
to be
forwarded to the Indemnifying Party. The Indemnifying Party shall
have the
right, at its sole option and expense, to be represented by counsel
of its
choice, which must be reasonably satisfactory to the Indemnified
Party,
and to defend against, negotiate, settle or otherwise deal with any
Claim
which relates to any Losses indemnified against hereunder. If the
Indemnifying Party elects to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any losses indemnified
against hereunder, it shall within five (5) days (or sooner, if the
nature
of the Claim so requires) notify the Indemnified Party of its intent
to do
so. If the Indemnifying Party elects not to defend against, negotiate,
settle or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder, fails to notify the Indemnified Party
of
its election as herein provided or contests its obligation to indemnify
the Indemnified Party for such Losses under this Agreement, the
Indemnified Party may defend against, negotiate, settle or otherwise
deal
with such Claim. If the Indemnified Party defends any Claim, then
the
Indemnifying Party shall reimburse the Indemnified Party for the
Expenses
of defending such Claim upon submission of periodic bills. If the
Indemnifying Party shall assume the defense of any Claim, the Indemnified
Party may participate, at his or its own expense, in the defense
of such
Claim; provided, however, that such Indemnified Party shall be entitled
to
participate in any such defense with separate counsel at the expense
of
the Indemnifying Party if, (i) so requested by the Indemnifying Party
to
participate or (ii) in the reasonable opinion of counsel to the
Indemnified Party, a conflict or potential conflict exists between
the
Indemnified Party and the Indemnifying Party that would make such
separate
representation advisable; and provided, further, that the Indemnifying
Party shall not be required to pay for more than one such counsel
for all
indemnified parties in connection with any Claim. The parties hereto
agree
to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such
Claim.
|
(b) |
After
any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction
and
the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the Indemnified Party and the Indemnifying
Party shall have arrived at a mutually binding agreement with respect
to a
Claim hereunder, the Indemnified Party shall forward to the Indemnifying
Party notice of any sums due and owing by the Indemnifying Party
pursuant
to this Agreement with respect to such matter and the Indemnifying
Party
shall be required to pay all of the sums so due and owing to the
Indemnified Party by wire transfer of immediately available funds
within
10 business days after the date of such
notice.
|
(c) |
The
failure of the Indemnified Party to give reasonably prompt notice
of any
Claim shall not release, waive or otherwise affect the Indemnifying
Party's obligations with respect thereto except to the extent that
the
Indemnifying Party can demonstrate actual loss and prejudice as a
result
of such failure.
|
ARTICLE
10.
POST-CLOSING
MATTERS
10.1 Withine
one business day of the Closing, Purchaser, Company and the Sellers agree to
use
all their best efforts to:
(a) |
issue
a news release reporting the Closing;
|
(b) |
file
a Form 8-K with the Securities and Exchange Commission disclosing
the
terms of this Agreement with audited financial statements of Company
as
well as any required pro forma financial information or other information
of Company and Purchaser as required by the rules and regulations
of the
Securities and Exchange Commission;
and
|
(c) |
file
with the Securities and Exchange Commission a report on Form 14f1
disclosing the change in control of Purchaser and, 10 days after
such
filing, date the resolutions appointing to the board of directors
of
Purchaser Xxxxxxxx X. Xxxxxx, Xxxxxx Xxxx, Xxxx Xxxx and Xxxxxx Xxx
Xxxxxxxx, Xx., and forthwith date and accept the resignation of Xxxxxxxx
Xxxxxxxxx as a director of
Purchaser.
|
29
ARTICLE
11.
GENERAL
PROVISIONS
11.1 Notices. All
notices and other communications under this Agreement shall be in writing and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this
provision):
If
to
Purchaser to:
OFFLINE
CONSULTING, INC.
0000
Xxxx
00xx
Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
Facsimile:
with
a
copies to:
Xxxxx
Xxxxx & Associates, PLLC
00
Xxxx
Xxxxxxxxx Xxxxxx
Xxxxxx
Xxxxxx, Xxx Xxxx 00000
If
to
Company or Sellers to:
Xxxxxxx
Xxxxx, CEO
Xxxxxxxxxx
Corporation
0000-00xx
Xxxxxx
X.
Xxxxxxxxx,
Xxxxxxx 00000
Facsimile:
with
a
copy to:
Xxxxxxx
X. Xxxxxxx, Esq.
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
All
such
notices, requests and other communications will (i) if delivered personally
to
the address as provided in this Section, be deemed given upon delivery, (ii)
if
delivered by mail in the manner described above to the address as provided
in
this Section, be deemed given upon receipt, and (iii) if delivered by courier
to
the address as provided for in this Section, be deemed given on the earlier
of
the second Business Day following the date sent by such courier or upon receipt.
Any party from time to time may change its address or other information for
the
purpose of notices to that party by giving notice specifying such change to
the
other party hereto.
11.2 Payment
of Sales, Use or Similar Taxes. All
sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne by the
Sellers.
11.3 Expenses. Except
as
otherwise provided in this Agreement, the Sellers and the Purchaser shall each
bear its own expenses incurred in connection with the negotiation and execution
of this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby
and thereby, it being understood that in no event shall the Company bear any
of
such costs and expenses.
30
11.4 Specific
Performance. The
Sellers acknowledge and agree that the breach of this Agreement would cause
irreparable damage to the Purchaser and that the Purchaser will not have an
adequate remedy at law. Therefore, the obligations of the Sellers under this
Agreement, including, without limitation, the Sellers' obligation to sell the
Shares to the Purchaser, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement
or
otherwise.
11.5 Further
Assurances. The
Sellers, the Company and the Purchaser each agrees to execute and deliver such
other documents or agreements and to take such other action as may be reasonably
necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.
11.6 Submission
to Jurisdiction; Consent to Service of Process.
(a) |
The
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
of any federal or state court located within the State of New York
over
any dispute arising out of or relating to this Agreement or any of
the
transactions contemplated hereby and each party hereby irrevocably
agrees
that all claims in respect of such dispute or any suit, action proceeding
related thereto may be heard and determined in such courts. The parties
hereby irrevocably waive, to the fullest extent permitted by applicable
law, any objection which they may now or hereafter have to the laying
of
venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the
parties hereto agrees that a judgment in any such dispute may be
enforced
in other jurisdictions by suit on the judgment or in any other manner
provided by law.
|
(b) |
Each
of the parties hereto hereby consents to process being served by
any party
to this Agreement in any suit, action or proceeding by the mailing
of a
copy thereof in accordance with the provisions of Section 11.1.
|
11.7 Entire
Agreement; Amendments and Waivers.
This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of
any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation
by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant
or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further
or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise
of
any other right, power or remedy. All remedies hereunder are cumulative and
are
not exclusive of any other remedies provided by law.
31
11.8 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware.
11.9 Headings. Section
headings of this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
11.10 Severability. If
any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
11.11 Binding
Effect; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
person or entity not a party to this Agreement except as provided below. No
assignment of this Agreement or of any rights or obligations hereunder may
be
made by either the Sellers or the Purchaser (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any
attempted assignment
without the required consents shall be void; provided, however, that the
Purchaser may assign this Agreement and any or all rights or obligations
hereunder (including, without limitation, the Purchaser's rights to purchase
the
Shares and the Purchaser's rights to seek indemnification hereunder) to any
Affiliate of the Purchaser. Upon any such permitted assignment, the references
in this Agreement to the Purchaser shall also apply to any such assignee unless
the context otherwise requires.
11.12 Counterparts.
This
Agreement may be executed in counterparts and by facsimile, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery
of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
[Remainder
of page intentionally left blank.]
3
32
IN
WITNESS WHEREOF
the
parties have executed this Agreement effective as of the day and year first
above written.
OFFLINE
CONSULTING, INC.
By:/s/
Xxxxxxxx
Xxxxxxxxx
Name:
Xxxxxxxx Xxxxxxxxx
Title:
CEO
XXXXXXXXXX
CORPORATION
By:
/s/Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
CEO
MAJORITY
STOCKHOLDERS:
/s/
Xxxxxxxx
Xxxxxxxxx
Xxxxxxxx
Xxxxxxxxx
Xxxxxx
Capital, LLC
By:_
Xxxxxxxx Xxxxxxxxx
Name:
Xxxxxxxx Xxxxxxxxx
Title:
President
SHAREHOLDER
SIGNATURE PAGE FOLLOWS:
33
EXHIBIT
A
Name
|
#
of Shares
|
Acquisition
Shares
|
|||||
Xxxxx
Xxxxxx
|
90,000
|
4,619
|
|||||
Xxxxxx
X. Xxxxxxxxxx and Xxxx X. Xxxxxxxxxx
|
250,000
|
12,831
|
|||||
Xxxxxxx
Xxxxxx
|
160,000
|
8,212
|
|||||
Xxxx
Xxxxxxxx
|
80,000
|
4,106
|
|||||
Xxxxx
Xxxxxxxx
|
10,000
|
513
|
|||||
Xxxxxxx
X. Xxxx and Xxxxxxxx X. Xxxx
|
250,000
|
12,831
|
|||||
Xxxxx
X. Xxxx and Xxxxxx X. Xxxx
|
280,000
|
14,371
|
|||||
Brother
Xxxxxxxx
|
420,000
|
21,556
|
|||||
Xxxxxxx
Xxxxxxxxx
|
10,000
|
513
|
|||||
Xxxxxx
Xxxxxx
|
1,500,000
|
76,987
|
|||||
Xxxxxxx
Xxx
|
20,000
|
1,026
|
|||||
Xxxxxxxx
Xxxxxx
|
1,150,500
|
59,049
|
|||||
Xxxxx
Xxxxx
|
140,000
|
7,185
|
|||||
Xxxxxx
Xxxxxx
|
2,185,500
|
112,171
|
|||||
Xxx
Xxxxx
|
500,000
|
25,662
|
|||||
Xxxx
Xxxxx
|
500,000
|
25,662
|
|||||
Xxxxxxx
Xxxxxxx
|
10,000
|
513
|
|||||
Xxxx
X. Xxxx and Xxxxxxxx X. Xxxx
|
5,720,500
|
293,604
|
|||||
Xxxx
Xxxxxx
|
57,577
|
2,955
|
|||||
Xxxx
X Xxxxxx
|
7,143
|
367
|
|||||
H
Xxxxx Xxxxxxxxx
|
20,000
|
1,026
|
|||||
Xxxxx
X. Xxxx
|
25,000
|
1,283
|
|||||
Xxxx
X. XxXxxxxxxxxx
|
30,000
|
1,540
|
|||||
Xxxxxxxx
X. Xxxx and Xxxxxx X. Xxxxxxxxxxxxx
|
200,000
|
10,265
|
|||||
Xxx
Toomie
|
30,000
|
1,540
|
|||||
Xxxx
X. Xxxx
|
25,000
|
1,283
|
|||||
Xxx
Xxxxxxx
|
10,000
|
513
|
|||||
Xxxxxx
Xxxxx
|
500,000
|
25,662
|
|||||
Xxxxx
X. Xxxxx
|
1,429
|
73
|
|||||
Xxxxxxx
Xxxxx
|
1,200,500
|
61,616
|
|||||
Xxxxxxx
X. Xxxxxxx
|
40,000
|
2,053
|
|||||
Xxxxxx
Xxxxxxx
|
10,000
|
513
|
|||||
Xxxxxxxx
X. Xxxxxx
|
40,000
|
2,053
|
|||||
Xxxx
X. and Xxxxxx X. Xxxx
|
2,965,000
|
152,178
|
|||||
Xxxx
Xxxxxx
|
10,000
|
513
|
|||||
Xxxxxx
X. Xxxxxxxx
|
40,000
|
2,053
|
|||||
Xxxx
Xxxxxx
|
25,000
|
1,283
|
|||||
Xxxxxxx
Xxxxxxxxxx
|
10,000
|
513
|
|||||
Xxxxxxxx
X. and Xxxx X. Xxxxxxx
|
200,000
|
10,265
|
|||||
Xxxx
Xxxxxxx
|
2,857
|
147
|
|||||
Xxxxxx
X'Xxxxxxxx Trust
|
2,255,500
|
115,763
|
|||||
Xxxxxxx
and or Xxxxxxxx Xxxx
|
25,000
|
1,283
|
|||||
Xxxxxx
X. Xxxxxxx
|
140
|
7
|
|||||
Xxxxxx
X. Xxxxxxx
|
140
|
7
|
|||||
Xxx
Xxxxxx
|
30,000
|
1,540
|
|||||
Rose
Xxxxx Xxxxx
|
500,000
|
25,662
|
|||||
Xxxxxxxx
X. Xxxxxx
|
10,000
|
513
|
|||||
Xxxx
X. Xxxxxx
|
5,714
|
293
|
|||||
Spyglass
Ventures, Inc.
|
414,800
|
21,290
|
|||||
TEA
Squared, LLC
|
45,000
|
2,310
|
|||||
Tectonics,
Inc
|
710,000
|
36,441
|
|||||
Xxxxx
X. Xxxxxxxx Xx.
|
1,557,000
|
79,913
|
|||||
Xxxxxxxx
Xxxxx
|
2,255,500
|
115,763
|
|||||
Xxxxxx
X. Xxxxx
|
22,857
|
1,173
|
|||||
Xxxx
Xxxx
|
10,000
|
513
|
|||||
Xxxx
Xxxxx
|
42,143
|
2,163
|
|||||
Xxxxxxx
Xxx Xxxxxxx
|
164,000
|
8,417
|
|||||
1,374,156
|
34