Exhibit 10.1
ACQUISITION AGREEMENT
AMONG
AMERICAN SOIL TECHNOLOGIES, INC.,
SMART WORLD ORGANICS, INC.,
AND
THE STOCKHOLDERS LISTED ON EXHIBIT A HERETO
TABLE OF CONTENTS
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
1.1 Issuance of the Shares................................................. 1
1.2 Consideration.......................................................... 1
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2. Representations and Warranties of the Parties.......................... 2
2.1 Organization, Standing, Power................................... 2
2.2 Authority....................................................... 2
2.3 Capitalization of the Parties................................... 3
2.4 Subsidiaries.................................................... 3
2.5 No Defaults..................................................... 4
2.6 Governmental Consents........................................... 4
2.7 Financial Statements............................................ 4
2.8 Absence of Undisclosed Liabilities.............................. 4
2.9 Absence of Changes.............................................. 4
2.10 Patents and Trademarks........................................... 5
2.11 Certain Agreements............................................... 6
2.12 Compliance with Other Instruments................................ 6
2.13 Employee Benefit Plans........................................... 6
2.14 Other Personal Property.......................................... 6
2.15 Properties and Liens............................................. 6
2.16 Inventory........................................................ 6
2.17 Major Contracts.................................................. 7
2.18 Questionable Payments............................................ 8
2.19 Recent Transactions.............................................. 8
2.20 Leases in Effect................................................. 8
2.21 Taxes............................................................ 8
2.22 Disputes and Litigation.......................................... 9
2.23 Compliance with Laws............................................. 9
2.24 Related Party Transactions....................................... 9
2.25 Minute Books..................................................... 10
2.26 Disclosure....................................................... 10
2.27 Reliance......................................................... 10
ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions to Each Party's Obligations................................. 10
3.2 Conditions to Seller's Obligations..................................... 10
3.3 Conditions to Buyer's Obligations...................................... 11
ARTICLE 4
CLOSING AND DELIVERY OF DOCUMENTS
4.1 Time and Place........................................................ 12
4.2 Deliveries by Seller.................................................. 12
4.3 Deliveries by the Company............................................. 12
4.4 Deliveries by Buyer................................................... 13
ARTICLE 5
INDEMNIFICATION
5.1 Seller and the Company's Indemnity Obligations........................ 13
5.2 Buyer's Indemnity Obligations......................................... 14
ARTICLE 6
DEFAULT, AMENDMENT AND WAIVER
6.1 Default............................................................... 14
6.2 Waiver and Amendment.................................................. 14
ARTICLE 7
MISCELLANEOUS
7.1 Expenses.............................................................. 15
7.2 Notices............................................................... 15
7.3 Entire Agreement...................................................... 16
7.4 Survival of Representations........................................... 16
7.5 Incorporated by Reference............................................. 16
7.6 Remedies Cumulative................................................... 16
7.7 Execution of Additional Documents..................................... 16
7.8 Costs and Fees........................................................ 16
7.9 Choice of Law......................................................... 16
7.10 Jurisdiction.......................................................... 17
7.11 Attorneys' Fees....................................................... 17
7.12 Binding Effect and Assignment......................................... 17
7.13 Counterparts; Facsimile Signatures.................................... 17
7.14 Conflict Waiver....................................................... 17
TABLE OF CONTENTS
TABLE OF SCHEDULES AND EXHIBITS
Exhibit A Shareholders of Smart World Organics, Inc.
Exhibit B American Soil Technologies, Inc. Disclosure Schedule
Exhibit C Smart World Organics, Inc. Disclosure Schedule
Exhibit D Smart World Organics, Inc. Shareholders Disclosure Schedule
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "Agreement"), dated July 7, 2006, is by and
between AMERICAN SOIL TECHNOLOGIES, INC., a Nevada corporation (the "Buyer"),
SMART WORLD ORGANICS, INC., a Florida corporation (the "Company"), and the
persons and/or entities listed on Exhibit A hereto who are the holders in the
aggregate of 100% of the issued and outstanding capital stock of the Company
(referred to collectively as the "Seller") (individually, a "Party";
collectively, the "Parties").
RECITALS
A. The capital stock of the Company consists of 100 authorized shares of
Common Stock, of which 100 are currently issued and outstanding and held by
Seller (the "Shares").
B. Upon the terms and conditions set forth below, Seller desires to sell
all of the Company Shares to Buyer, such that, following such transaction, the
Company will be a 100% owned subsidiary of Buyer.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the Parties hereto
agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
1.1 Issuance of the Shares. Subject to the terms and conditions herein set
forth, and on the basis of the representations, warranties and agreements herein
contained, Seller shall sell and transfer to Buyer that certain number of the
Company Shares that will constitute 100% of the issued and outstanding common
stock of the Company.
1.2 Consideration. The purchase price for the Company Shares shall be
2,300,000 shares of common stock of Buyer (the "Buyer's Stock").
1.3 Xxxxxxx Money Deposit. The Buyer shall deposit with the Seller $100,000
as an xxxxxxx money deposit which shall be refundable if the acquisition fails
to close.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2. Representations and Warranties of the Parties. Except as disclosed in a
document referring specifically to the representations and warranties in this
Agreement that identifies by section number the section and subsection to which
such disclosure relates and is delivered by each Party to the others prior to
the execution of this Agreement (the "Disclosure Schedules"), the Parties
represent and warrant each to the other, as of the date hereof and as of the
Closing, as follows:
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2.1 Organization, Standing, Power.
(a) Buyer. Buyer is a corporation duly organized, validly existing, and in
good standing under the laws of the state of Nevada. It has all requisite
corporate power, franchises, licenses, permits, and authority to own its
properties and assets and to carry on its business as it has been and is being
conducted. Buyer is duly qualified and in good standing to do business in each
jurisdiction in which a failure to so qualify would have a Material Adverse
Effect (as defined below) on Buyer. For purposes of this Agreement, the term
"Material Adverse Effect" means any change or effect that, individually or when
taken together with all other such changes or effects which have occurred prior
to the date of determination of the occurrence of the Material Adverse Effect,
is or is reasonably likely to be materially adverse to the business, assets
(including intangible assets), financial condition, or results of operations of
the entity.
(b) The Company. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Florida. It has
all requisite corporate power, franchises, licenses, permits, and authority to
own its properties and assets and to carry on its business as it has been and is
being conducted. The Company is duly qualified and in good standing to do
business in each jurisdiction in which a failure to so qualify would have a
Material Adverse Effect (as defined above) on the Company.
2.2 Authority. The Parties have all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by the Parties of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the parts of the Parties, including the approval of the Board of
Directors of each Party. This Agreement has been duly executed and delivered by
the Parties to each other and constitutes a valid and binding obligation of each
Party enforceable in accordance with its terms, except that such enforceability
may be subject to: (a) bankruptcy, insolvency, reorganization, or other similar
laws relating to enforcement of creditors' rights generally; and (b) general
equitable principles. Subject to the satisfaction of the conditions set forth in
Article 3 below, the execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict with or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation, or
acceleration of any obligation, or to loss of a material benefit under, or the
creation of a lien, pledge, security interest, charge, or other encumbrance on
any assets of any of the Parties (any such conflict, violation, default, right,
loss, or creation being referred to herein as a "Violation") pursuant to: (i)
any provision of the organization documents of the Parties; or (ii) any loan or
credit agreement, note, bond, mortgage, indenture, contract, lease, or other
agreement, or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule, or regulation applicable to each
of the Parties' respective properties or assets, other than in the case of any
such Violation which individually or in the aggregate would not have a Material
Adverse Effect on any of the Parties.
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2.3 Capitalization of the Parties.
(a) The Company. The capital stock of the Company consists of 100
authorized shares of Common Stock, of which 100 are currently issued and
outstanding and held by Seller.
(c) Upon issuance pursuant to the terms of this Agreement, the Shares will
be duly and validly issued, fully paid and nonassessable, and issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Act"), and any relevant state securities laws or
pursuant to valid exemptions therefrom. The Shares are free of restrictions on
transfer other than restrictions on transfer as set forth in the Disclosure
Schedules and under applicable state and federal securities laws. The Shares
shall be issued in a private transaction and consequently will be deemed to be
"Restricted Securities" as set forth in Rule 144 promulgated under the Act.
(d) Except as set forth on the Disclosure Schedules, there are no options,
warrants, rights, calls, commitments, plans, contracts, or other agreements of
any character granted or issued by any of the Parties which provide for the
purchase, issuance, or transfer of any additional shares of the capital stock of
the Parties nor are there any outstanding securities granted or issued by any of
the Parties that are convertible into any shares of the equity securities of the
Parties, and none is authorized. None of the Parties have outstanding any bonds,
debentures, notes, or other indebtedness the holders of which have the right to
vote (or convertible or exercisable into securities having the right to vote)
with holders of the Parties' capital stock on any matter.
(e) Except as set forth on the Disclosure Schedules, none of the Parties
are a party or subject to any agreement or understanding, and, to the best of
the Parties' knowledge, there is no agreement or understanding between any
persons and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a shareholder or director of
any of the Parties.
(f) Except as set forth on the Disclosure Schedules, none of the Parties
have granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity.
2.4 Subsidiaries. "Subsidiary" or "Subsidiaries" means all corporations,
trusts, partnerships, associations, joint ventures, or other Persons, as defined
below, of which any of the Parties or any Subsidiary of any of the Parties owns
not less than 20% of the voting securities or other equity or of which any of
the Parties or any Subsidiary of any of the Parties possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies, whether through ownership of voting shares, management contracts, or
otherwise. "Person" means any individual, corporation, trust, association,
partnership, proprietorship, joint venture, or other entity. Prior to the
Closing of this Agreement, there are no Subsidiaries of any of the Parties other
than as disclosed herein or disclosed on the Disclosure Schedules.
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2.5 No Defaults. None of the Parties has received notice that they would
be, with the passage of time, in default or violation of any term, condition, or
provision of: (i) their Articles of Incorporation or Bylaws; (ii) any judgment,
decree, or order applicable to any of the Parties; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, contract, agreement, lease, license,
or other instrument to which any of the Parties is now a party or by which they
or any of their properties or assets may be bound, except for defaults and
violations which, individually or in the aggregate, would not have a Material
Adverse Effect on any of the Parties.
2.6 Governmental Consents. Any consents, approvals, orders, or
authorizations of or registrations, qualifications, designations, declarations,
or filings with or exemptions by (collectively "Consents"), any court,
administrative agency, or commission, or other federal, state, or local
governmental authority or instrumentality, whether domestic or foreign (each a
"Governmental Entity"), which may be required by or with respect to any of the
Parties in connection with the execution and delivery of this Agreement or the
consummation by the Parties of the transactions contemplated hereby, except for
such Consents which if not obtained or made would not have a Material Adverse
Effect on any of the Parties for the transactions contemplated by this
Agreement, are the responsibility of the respective Party. Each of the Parties
hereby represents and warrants that such Consents have been obtained by them, if
necessary.
2.7 Financial Statements. The Company has furnished Buyer with a true and
complete copy of its financial statements for the years ending December 31, 2004
and 2005 and the period ending May 3, 2006 (the "Financial Statements"), which,
in reliance upon the Company's outside independent auditing firm, comply as to
form in all material respects with all applicable accounting requirements with
respect thereto and have been prepared internally and fairly present the
financial positions of the Company as at the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal, recurring audit adjustments not material in
scope or amount). To the best of the Company's directors' knowledge and belief,
there has been no change in the Company's accounting policies or the methods of
making accounting estimates or changes in estimates that are material to the
Financial Statements, except as described in the notes thereto.
2.8 Absence of Undisclosed Liabilities. To the best of their knowledge and
belief, none of the Parties have any liabilities or obligations (whether
absolute, accrued, or contingent) except: (i) liabilities that are accrued or
reserved against in their respective Balance Sheets; or (ii) additional
liabilities reserved against since May 3, 2006 that (x) have arisen in the
ordinary course of business; (y) are accrued or reserved against on their books
and records; and (z) amount in the aggregate to less than $10,000.
2.9 Absence of Changes. To the best of their knowledge and belief, since
May 3, 2006, the Parties have conducted their businesses in the ordinary course
and there has not been: (i) any Material Adverse Effect on the business,
financial condition, liabilities, or assets of the Parties or any development or
combination of developments of which management of the Parties has knowledge
which is reasonably likely to result in such an effect; (ii) any damage,
destruction, or loss, whether or not covered by insurance, having a Material
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Adverse Effect on the Parties; (iii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock, or property) with
respect to the capital stock of the Parties; (iv) any increase or change in the
compensation or benefits payable or to become payable by the Parties to any of
their employees, except in the ordinary course of business consistent with past
practice; (v) any sale, lease, assignment, disposition, or abandonment of a
material amount of property of the Parties, except in the ordinary course of
business; (vi) any increase or modification in any bonus, pension, insurance, or
other employee benefit plan, payment, or arrangement made to, for, or with any
of their employees; (vii) the granting of stock options, restricted stock
awards, stock bonuses, stock appreciation rights, and similar equity based
awards; (viii) any resignation or termination of employment of any office of the
Parties; and the Parties, to the best of their knowledge, do not know of the
impending resignation or termination of employment of any such office; (ix) any
merger or consolidation with another entity, or acquisition of assets from
another entity except in the ordinary course of business; (x) any loan or
advance by the Parties to any person or entity, or guaranty by the Parties of
any loan or advance; (xi) any amendment or termination of any contract,
agreement, or license to which any of the Parties is a party, except in the
ordinary course of business; (xii) any mortgage, pledge, or other encumbrance of
any asset of any of the Parties; (xiii) any waiver or release of any right or
claim of the Parties, except in the ordinary course of business; (xiv) any write
off as uncollectible any note or account receivable or portion thereof; or (xv)
any agreement by any of the Parties to do any of the things described in this
Section 2.9.
2.10 Patents and Trademarks. The Parties each have sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights, and processes (collectively,
"Intellectual Property") necessary for their businesses as now conducted without
any conflict with or infringement of the rights of others. There are no
outstanding options, licenses, or agreements of any kind relating to the
Intellectual Property, nor are any of the Parties bound by or a party to any
options, licenses, or agreements of any kind with respect to the Intellectual
Property of any other person or entity. None of the Parties has received any
communications alleging that they have violated or, by conducting their
businesses as proposed, would violate any of the Intellectual Property of any
other person or entity. None of the Parties are aware that any of their
employees is obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that would interfere
with the use of his or her best efforts to promote the interests of the Parties
or that would conflict with each of the Parties' respective business as proposed
to be conducted. Neither the execution or delivery of this Agreement, nor the
carrying on of each of the Parties' respective business by their respective
employees, nor the conduct of each of the Parties' respective business as
proposed, will, to the best of the Parties' knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant, or instrument under which any of such employees
is now obligated. None of the Parties believe that it is or will be necessary to
utilize any inventions of any of its employees (or people it currently intends
to hire) made prior to their employment by any of the Parties.
2.11 Certain Agreements. To the best of the Parties' knowledge and belief,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (i) result in any payment (including,
without limitation, severance, unemployment compensation, parachute payment,
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bonus, or otherwise), becoming due to any director, employee, or independent
contractor of any of the Parties, from any other Party under any agreement or
otherwise; (ii) materially increase any benefits otherwise payable under any
agreement; or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
2.12 Compliance with Other Instruments. To the best of the Parties'
knowledge and belief, none of the Parties are in violation or default of any
provision of their respective articles of incorporation or bylaws, or of any
instrument, judgment, order, writ, decree, or contract to which they are a party
or by which they are bound, or, to the best of their knowledge, of any provision
of any federal or state statute, rule, or regulation which may be applicable to
them. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree, or contract, or an event that results
in the creation of any lien, charge, or encumbrance upon any assets of any Party
or the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization, or approval applicable to any Party,
its businesses, or operations, or any of its assets or properties.
2.13 Employee Benefit Plans. The Parties have no employee benefit plans
(including without limitation all plans which authorize the granting of stock
options, restricted stock, stock bonuses, or other equity based awards) covering
active, former, or returned employees, other than as listed in the Disclosure
Schedules.
2.14 Other Personal Property. The books and records of each of the Parties
contain a complete and accurate description, and specify the location, of all
trucks, automobiles, machinery, equipment, furniture, supplies, and other
tangible personal property owned by, in the possession of, or used by the
Parties in connection with their businesses. Except as set forth in the
Disclosure Schedules, no personal property used by the Parties in connection
with their businesses is held under any lease, security agreement, conditional
sales contract, or other title retention or security arrangement.
2.15 Properties and Liens. Except as reflected in the Financial Statements
or as set forth in the Disclosure Schedules, and except for statutory mechanics'
and material men's liens, liens for current taxes not yet delinquent, the
Parties own, free and clear of any liens, claims, charges, options, or other
encumbrances, all of their tangible and intangible property, real and personal,
whether or not reflected in the Financial Statements (except that sold or
disposed of in the ordinary course of business since the date of such
statements) and all such property acquired since the date of such statements.
All real property and tangible personal property of the Parties is in good
operating condition and repair, ordinary wear and tear excepted.
2.16 Inventory. In reliance upon their respective auditing firms, the
inventories of the Parties shown on the Financial Statements and inventories
acquired by them subsequent to the date of the Financial Statements consist
solely of items of a quality and quantity usable and salable in the normal
course of business, with the exception of obsolete materials and materials below
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standard quality, all of which have been written down in the books of the
Parties to net realizable market value or have been provided for by adequate
reserves. Except for sales made in the ordinary course of business, all
inventory is the property of the Parties. No items are subject to security
interests, except as set forth in the Disclosure Schedules. The value of the
inventories has been determined on a first-in, first-out basis consistent with
prior years.
2.17 Major Contracts. Except as otherwise disclosed in the Disclosure
Schedules, none of the Parties is a party or subject to:
(a) Any union contract, or any employment contract or arrangement providing
for future compensation, written or oral, with any officer, consultant,
director, or employee which is not terminable by the Party on 30 days' notice or
less without penalty or obligations to make payments related to such
termination;
(b) Any joint venture contract, partnership agreement or arrangement or any
other agreement which has involved or is expected to involve a sharing of
revenues with other persons or a joint development of products with other
persons;
(c) Any manufacture, production, distribution, sales, franchise, marketing,
or license agreement, or arrangement by which products or services of the Party
are developed, sold, or distributed;
(d) Any material agreement, license, franchise, permit, indenture, or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, accelerated, terminated, impaired, or
adversely affected by reason of the execution of this Agreement, or the
consummation of the transactions contemplated hereby or thereby;
(e) Any material agreement, contract, or commitment that requires the
consent of another person for the Party to enter into or consummate the
transactions contemplated by this Agreement;
(f) Except for object code license agreements for any of the Party's
executed in the ordinary course of business, any indemnification by the Party
with respect to infringements of proprietary rights; or
(g) Any contract containing covenants purporting to materially limit the
Party's freedom to compete in any line of business in any geographic area.
All contracts, plans, arrangements, agreements, licenses, franchises,
permits, indentures, authorizations, instruments, and other commitments of the
Parties are valid and in full force and effect and to the best of their
knowledge, neither the Parties themselves nor any other party thereto, breached
any material provisions of, or is in default in any material respect under the
terms thereof.
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2.18 Questionable Payments. None of the Parties, nor to their knowledge any
director, officer, employee, or agent of any of the Parties, has: (i) made any
payment or provided services or other favors in the United States or any foreign
country in order to obtain preferential treatment or consideration by any
Governmental Entity with respect to any aspect of the business of the Parties;
or (ii) made any political contributions that would not be lawful under the laws
of the United States, any foreign country or any jurisdiction within the United
States or any foreign country. None of the Parties, nor to their knowledge any
director, officer, employee, or agent of any of the Parties, has been or is the
subject of any investigation by any Governmental Entity in connection with any
such payment, provision of services, or contribution.
2.19 Recent Transactions. None of the Parties, nor to their knowledge any
director, officer, employee, or agent of any of the Parties, is participating in
any discussions and do not intend to engage in any discussion: (i) with any
representative of any corporation or corporations regarding the consolidation or
merger of any of the Parties with or into any such corporation or corporations;
(ii) with any corporation, partnership, association, or other business entity or
any individual regarding the sale, conveyance, or disposition of all or
substantially all of the assets of the Parties or a transaction or series of
related transactions in which more than 50% of the voting power of any of the
Parties is disposed of; or (iii) regarding any other form of acquisition,
liquidation, dissolution, or winding up of the Parties.
2.20 Leases in Effect. All real property leases and subleases as to which
any of the Parties is a party and any amendments or modifications thereof (each
a "Lease" and, collectively, the "Leases")are valid, in full force and effect
and enforceable, and there are no existing defaults on the part of any Party and
no Party has received nor given notice of default or claimed default with
respect to any Lease, nor is there any event that with notice or lapse of time,
or both, would constitute a default thereunder. Except as set forth on the
Disclosure Schedules, no consent is required from any Party under any Lease in
connection with the completion of the transactions contemplated by this
Agreement, and none of the Parties have received notice that any party to any
Lease intends to cancel, terminate, or refuse to renew the same or to exercise
any option or other right thereunder, except where the failure to receive such
consent, or where such cancellation, termination, or refusal would not have a
Material Adverse Effect on the Parties.
2.21 Taxes. Except as set forth elsewhere in this Agreement or in the
Disclosure Schedules:
(a) All taxes, assessments, fees, penalties, interest, and other
governmental charges with respect to the Parties which have become due and
payable by April 15, 2006 have been paid in full or adequately reserved against
by the Parties, and all taxes, assessments, fees, penalties, interest, and other
governmental charges which have become due and payable subsequent to April 15,
2006 have been paid in full or adequately reserved against on their books of
account and such books are sufficient for the payment of all unpaid federal,
state, local, foreign, and other taxes, fees, and assessments (including without
limitation, income, property, sales, use, franchise, capital stock, excise,
added value, employees' income withholding, social security, and unemployment
taxes), and all interest and penalties thereon with respect to the periods then
ended and for all periods prior thereto;
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(b) There are no agreements, waivers, or other arrangements providing for
an extension of time with respect to the assessment of any tax or deficiency
against the Parties, nor are there any actions, suits, proceedings,
investigations, or claims now pending against the Parties in respect of any tax
or assessment, or any matters under discussion with any federal, state, local,
or foreign authority relating to any taxes or assessments, or any claims for
additional taxes or assessments asserted by any such authority; and
(c) There are no liens for taxes upon the assets of the Parties except for
taxes that are not yet payable. The Parties have withheld all taxes required to
be withheld in respect of wages, salaries, and other payments to all employees,
officers, and directors and timely paid all such amounts withheld to the proper
taxing authority.
2.22 Disputes and Litigation Except as disclosed in the Disclosure
Schedules, there is no suit, claim, action, litigation, or proceeding pending
or, to the knowledge of the Parties, threatened against or affecting any of the
Parties, respectively, or any of their properties, assets, or business or to
which any of the Parties is a party, in any court or before any arbitrator of
any kind or before or by any Governmental Entity, which would, if adversely
determined, individually or in the aggregate, have a Material Adverse Effect on
the Parties, nor is there any judgment, decree, injunction, rule, or order of
any Governmental Entity or arbitrator outstanding against any of the Parties,
respectively, and having, or which, insofar as reasonably can be foreseen, in
the future could have, any such effect. To the knowledge of the Parties, there
is no investigation pending or threatened against any of the respective Parties
before any foreign, federal, state, municipal, or other governmental department,
commission, board, bureau, agency, instrumentality, or other Governmental
Entity.
2.23 Compliance with Laws. Except as set forth in the Disclosure Schedules,
to the best of their knowledge and belief, none of the Parties' businesses is
being conducted in violation of, or in a manner which could cause liability
under any applicable law, rule, or regulation, judgment, decree, or order of any
Governmental Entity, except for any violations or practices, which, individually
or in the aggregate, have not had and will not have a Material Adverse Effect on
the Parties. The Parties each have all franchises, permits, licenses, and any
similar authority necessary for the conduct of their business as now being
conducted by them, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Parties and
believes they can obtain, without undue burden or expense, any similar authority
for the conduct of their business as it is planned to be conducted. To the best
of their respective knowledge and belief, none of the Parties are in default in
any material respect under any of such franchises, permits, licenses, or other
similar authority.
2.24 Related Party Transactions. To the best of each of the Parties'
knowledge and belief, no employee, officer, or director of any Party nor member
of his or her immediate family is indebted to that Party or any other Party, nor
is any Party indebted (or committed to make loans or extend or guarantee credit)
to any of them. To the best of each of the Parties' knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which any of the Parties is affiliated or with which any of the Parties has
a business relationship, or any firm or corporation that competes with the
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Parties, except that employees, officers, or directors of the Parties and
members of their immediate families may own stock in publicly traded companies
that may compete with the Parties. To the best knowledge of each of the Parties,
respectively, no member of the immediate family of any officer or director of
any of the Parties is directly or indirectly interested in any material contract
with any of the Parties.
2.25 Minute Books. The minute books of the Company provided to Buyer
contain a complete summary of all meetings of directors and shareholders since
the time of incorporation and reflect all transactions referred to in such
minutes accurately in all material respects.
2.26 Disclosure. No representation or warranty made by any of the Parties
in this Agreement, nor any document, written information, statement, financial
statement, certificate, or exhibit prepared and furnished or to be prepared and
furnished by the Parties or their representatives pursuant hereto or in
connection with the transactions contemplated hereby, when taken together,
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading in light of the circumstances under which they were furnished, to the
best of each of the Parties' knowledge and belief.
2.27 Reliance. The foregoing representations and warranties are made by
each Party with the knowledge and expectation that the other Parties are placing
reliance thereon.
ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions to Each Party's Obligations. The respective obligations of
each Party hereunder shall be subject to the satisfaction prior to or at the
Closing of the following conditions:
(a) No Restraints. No statute, rule, regulation, order, decree, or
injunction shall have been enacted, entered, promulgated, or enforced by any
court or Governmental Entity of competent jurisdiction which enjoins or
prohibits the consummation of this Agreement and shall be in effect.
(b) Legal Action. There shall not be pending or threatened in writing any
action, proceeding, or other application before any court or Governmental Entity
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any material
damages.
3.2 Conditions to Seller's Obligations. The obligations of Seller shall be
subject to the satisfaction prior to or at the Closing of the following
conditions unless waived by Seller:
(a) Representations and Warranties of Buyer. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing as though made on and as of the
10
Closing, except: (i) as otherwise contemplated by this Agreement; or (ii) in
respects that do not have a Material Adverse Effect on the Parties or on the
benefits of the transactions provided for in this Agreement. Seller shall have
received a certificate signed on behalf of Buyer by the President or Chief
Executive Officer of Buyer to such effect on the Closing.
(b) Performance of Obligations of Buyer. Buyer shall have performed all
agreements and covenants required to be performed by it under this Agreement
prior to the Closing, except for breaches that do not have a Material Adverse
Effect on the Parties or on the benefits of the transactions provided for in
this Agreement. Seller shall have received a certificate signed on behalf of
Buyer by the President or Chief Executive Officer of Buyer to such effect on the
Closing.
3.3 Conditions to Buyer's Obligations. The obligations of Buyer shall be
subject to the satisfaction prior to or at the Closing of the following
conditions unless waived by Buyer:
(a) Representations and Warranties of Seller and the Company. The
representations and warranties of Seller and the Company set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing as though made on and as of the Closing, except: (i) as otherwise
contemplated by this Agreement; or (ii) in respects that do not have a Material
Adverse Effect on the Parties or on the benefits of the transactions provided
for in this Agreement. Buyer shall have received certificates signed on behalf
of Seller and the Company by the President or Chief Executive Officer of each
Seller and the Company to such effect on the Closing.
(b) Performance of Obligations of Seller and the Company. Seller and the
Company shall have performed all agreements and covenants required to be
performed by them under this Agreement prior to the Closing, except for breaches
that do not have a Material Adverse Effect on the Parties or on the benefits of
the transactions provided for in this Agreement. Buyer shall have received
certificates signed on behalf of Seller and the Company by the President or
Chief Executive Officer of each Seller and the Company to such effect on the
Closing.
(c) Governmental Approvals. All Consents of Governmental Entities legally
required by Seller and the Company for the transactions contemplated by this
Agreement shall have been filed, occurred, or been obtained, other than such
Consents, the failure of which to obtain would not have a Material Adverse
Effect on the consummation of the transactions contemplated by this Agreement.
(d) Consents of Other Third Parties. Seller and the Company shall have
received and delivered to Buyer all requisite consents and approvals of all
lenders, lessors, and other third parties whose consent or approval is required
in order for Seller and the Company to consummate the transactions contemplated
by this Agreement, or in order to permit the continuation after the Closing of
the business activities of the Company in the manner such business is presently
carried on by it. Buyer shall have received copies of any necessary written
consent(s) to this Agreement and the transactions contemplated herein.
11
(e) Material Adverse Change. Since the date hereof and through Closing,
there shall not have occurred any change, occurrence, or circumstance in Seller
or the Company having or reasonably likely to have, individually or in the
aggregate, in the reasonable judgment of Buyer, a Material Adverse Effect on the
Parties or on the transactions contemplated by this Agreement.
ARTICLE 4
CLOSING AND DELIVERY OF DOCUMENTS
4.1 Time and Place. The closing of the transactions contemplated by this
Agreement shall take place at the offices of Buyer, located at 00000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, within sixty days (60) of the full execution
of this Agreement, granting the parties adequate time to satisfy all conditions,
and the delivery of all required documents. The closing may occur at such other
time and place as the Parties mutually agree upon (which time and place are
hereinafter referred to as the "Closing").
4.2 Deliveries by Seller. At Closing, Seller shall make the following
deliveries to Buyer:
(a) A cancelled stock certificate representing the Shares previously owned
by Seller as set forth in Section 1.1 above;
(b) A certificate of good standing for each Seller if Seller is an entity;
(c) A certificate executed by Seller certifying that: (i) all Seller's
representations and warranties under this Agreement are true as of the Closing,
as though each of those representations and warranties had been made on that
date; and (ii) Seller has performed all agreements and covenants required to be
performed by it under this Agreement prior to the Closing, except for breaches
that do not have a Material Adverse Effect on the Parties or on the benefits of
the transactions provided for in this Agreement; and
(d) Certified resolutions of the Board of Directors of Seller, in form
satisfactory to counsel for Buyer, authorizing the execution and performance of
this Agreement.
4.3 Deliveries by the Company. At Closing, the Company shall make the
following deliveries to Buyer:
(a) A certificate representing the Shares that Buyer is acquiring as set
forth in Section 1.1 above;
(b) A certificate of good standing for the Company;
(c) A certificate executed by the Company certifying that: (i) all the
Company's representations and warranties under this Agreement are true as of the
Closing, as though each of those representations and warranties had been made on
that date; and (ii) the Company has performed all agreements and covenants
required to be performed by it under this Agreement prior to the Closing, except
12
for breaches that do not have a Material Adverse Effect on the Parties or on the
benefits of the transactions provided for in this Agreement; and
(d) Certified resolutions of the Board of Directors of the Company, in form
satisfactory to counsel for Buyer, authorizing the execution and performance of
this Agreement;
(e) The minute book and corporate records of the Company; and
(f) The financial statements of the Company as required in Section 2.7.
4.4 Deliveries by Buyer. At Closing, Buyer shall make the following
deliveries to Seller:
(a) A certificate executed by Buyer certifying that: (i) Buyer's
representations and warranties under this Agreement are true as of the Closing,
as though each of those representations and warranties had been made on that
date; and (ii) Buyer has performed all agreements and covenants required to be
performed by it under this Agreement prior to the Closing, except for breaches
that do not have a Material Adverse Effect on the Parties or on the benefits of
the transactions provided for in this Agreement;
(b) A certificate of good standing for Buyer; and
(c) Certified resolutions of the Board of Directors of Buyer in form
satisfactory to counsel for Seller, authorizing the execution and performance of
this Agreement.
ARTICLE 5
INDEMNIFICATION
5.1 Seller and the Company's Indemnity Obligations.
(a) Upon receipt of notice thereof, Seller and the Company shall, jointly
and severally, indemnify, defend, and hold harmless Buyer from any and all
claims, demands, liabilities, damages, deficiencies, losses, obligations, costs
and expenses, including attorney fees and any costs of investigation that Buyer
shall incur or suffer, that arise, result from or relate to: (i) any breach of,
or failure by Seller or the Company to perform, any of their representations,
warranties, covenants, or agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by Seller
and/or the Company under this Agreement; and (ii) the employment of any of the
Company's employees which is in violation of any law, regulation, or ordinance
of any Governmental Entity.
(b) Buyer shall notify promptly Seller and the Company of the existence of
any claim, demand, or other matter to which Seller and the Company's
indemnification obligations would apply, and shall give them a reasonable
opportunity to defend the same at their own expense and with counsel of their
own selection, provided that Seller shall at all times also have the right to
fully participate in the defense. If Seller and the Company, within a reasonable
time after this notice, fails to defend, Buyer shall have the right, but not the
13
obligation, to undertake the defense of, and, with the written consent of Seller
and the Company, to compromise or settle the claim or other matter on behalf,
for the account, and at the risk, of Seller and the Company.
5.2 Buyer's Indemnity Obligations.
(a) Upon receipt of notice thereof, Buyer shall indemnify, defend, and hold
harmless Seller and/or the Company from any and all claims, demands,
liabilities, damages, deficiencies, losses, obligations, costs, and expenses,
including attorney fees and any costs of investigation that Seller and/or the
Company shall incur or suffer, that arise, result from or relate to any breach
of, or failure by Buyer to perform any of its representations, warranties,
covenants, or agreements in this Agreement or in any schedule, certificate,
exhibit, or other instrument furnished or to be furnished by Buyer under this
Agreement.
(b) Seller and/or the Company shall notify promptly Buyer of the existence
of any claim, demand or other matter to which Buyer's indemnification
obligations would apply, and shall give it a reasonable opportunity to defend
the same at its own expense and with counsel of its own selection, provided that
Seller and the Company shall at all times also have the right to fully
participate in the defense. If Buyer, within a reasonable time after this
notice, fails to defend, Seller and the Company shall have the right, but not
the obligation, to undertake the defense of, and, with the written consent of
Buyer, to compromise or settle the claim or other matter on behalf, for the
account, and at the risk, of Buyer.
ARTICLE 6
DEFAULT, AMENDMENT AND WAIVER
6.1 Default. Upon a breach or default under this Agreement by any of the
Parties (following the cure period provided herein), the non-defaulting party
shall have all rights and remedies given hereunder or now or hereafter existing
at law or in equity or by statute or otherwise. Notwithstanding the foregoing,
in the event of a breach or default by any Party hereto in the observance or in
the timely performance of any of its obligations hereunder which is not waived
by the non-defaulting Party, such defaulting Party shall have the right to cure
such default within 15 days after receipt of notice in writing of such breach or
default.
6.2 Waiver and Amendment. Any term, provision, covenant, representation,
warranty, or condition of this Agreement may be waived, but only by a written
instrument signed by the party entitled to the benefits thereof. The failure or
delay of any party at any time or times to require performance of any provision
hereof or to exercise its rights with respect to any provision hereof shall in
no manner operate as a waiver of or affect such party's right at a later time to
enforce the same. No waiver by any party of any condition, or of the breach of
any term, provision, covenant, representation, or warranty contained in this
Agreement, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or waiver of any
other condition or of the breach of any other term, provision, covenant,
representation, or warranty. No modification or amendment of this Agreement
shall be valid and binding unless it be in writing and signed by all Parties
hereto.
14
ARTICLE 7
MISCELLANEOUS
7.1 Expenses. Whether or not the transactions contemplated hereby are
consummated, each of the Parties hereto shall bear all taxes of any nature
(including, without limitation, income, franchise, transfer, and sales taxes)
and all fees and expenses relating to or arising from its compliance with the
various provisions of this Agreement and such party's covenants to be performed
hereunder, and except as otherwise specifically provided for herein, each of the
Parties hereto agrees to pay all of its own expenses (including, without
limitation, attorneys and accountants' fees, and printing expenses) incurred in
connection with this Agreement, the transactions contemplated hereby, the
negotiations leading to the same and the preparations made for carrying the same
into effect, and all such taxes, fees, and expenses of the Parties hereto shall
be paid prior to Closing.
7.2 Notices. Any notice, request, instruction, or other document required
by the terms of this Agreement, or deemed by any of the Parties hereto to be
desirable, to be given to any other party hereto shall be in writing and shall
be given by personal delivery, overnight delivery, mailed by registered or
certified mail, postage prepaid, with return receipt requested, or sent by
facsimile transmission to the addresses of the Parties as follows:
To Buyer: American Soil Technologies, Inc.
Attn: Xxxx Xxxxx, President
00000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
To the Company: Smart World Organics, Inc.
Attn: Xxx Xxxxxxx, President, CEO
00000 Xxxxx Xxxx
Xxxxxx, XX 00000
To Seller: SEE EXHIBIT A
With a copy to: Xxxxxx & Xxx
Attn: Xxxxx Xxxxxx, Esq.
00000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by personal delivery or overnight
delivery in accordance with the provisions of this Section, such notice shall be
conclusively deemed given at the time of such delivery provided a receipt is
obtained from the recipient. If notice is given by mail in accordance with the
provisions of this Section, such notice shall be conclusively deemed given upon
receipt and delivery or refusal. If notice is given by facsimile transmission in
accordance with the provisions of this Section, such notice shall be
conclusively deemed given at the time of delivery if during business hours and
15
if not during business hours, at the next business day after delivery, provided
a confirmation is obtained by the sender.
7.3 Entire Agreement. This Agreement, together with the Schedule and
Exhibits hereto, sets forth the entire agreement and understanding of the
Parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant, or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any party
hereto which is not embodied in this Agreement, or in the schedules or exhibits
hereto or the written statements, certificates, or other documents delivered
pursuant hereto or in connection with the transactions contemplated hereby, and
no party hereto shall be bound by or liable for any alleged understanding,
promise, inducement, statement, representation, warranty, covenant, or condition
not so set forth.
7.4 Survival of Representations. All statements of fact (including
financial statements) contained in the Schedules, the exhibits, the
certificates, or any other instrument delivered by or on behalf of the Parties
hereto, or in connection with the transactions contemplated hereby, shall be
deemed representations and warranties by the respective party hereunder. All
representations, warranties, agreements, and covenants hereunder shall survive
the Closing and remain effective regardless of any investigation or audit at any
time made by or on behalf of the Parties or of any information a party may have
in respect hereto. Consummation of the transactions contemplated hereby shall
not be deemed or construed to be a waiver of any right or remedy possessed by
any party hereto, notwithstanding that such party knew or should have known at
the time of Closing that such right or remedy existed.
7.5 Incorporated by Reference. The recitals, schedules, exhibits, and all
documents (including, without limitation, all financial statements) delivered as
part hereof or incident hereto are incorporated as a part of this Agreement by
reference.
7.6 Remedies Cumulative. No remedy herein conferred upon the Parties is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
7.7 Execution of Additional Documents. Each Party hereto shall make,
execute, acknowledge, and deliver such other instruments and documents, and take
all such other actions as may be reasonably required in order to effectuate the
purposes of this Agreement and to consummate the transactions contemplated
hereby.
7.8 Costs and Fees. Each of the Parties hereto is responsible for their own
costs and fees incurred with respect to this Agreement or to any of the
transactions contemplated hereby.
7.9 Choice of Law. This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
16
California including all matters of construction, validity, performance, and
enforcement and without giving effect to the principles of conflict of laws.
7.10 Jurisdiction. The parties submit to the jurisdiction of the Courts of
the County of Orange, State of California or a Federal Court empaneled in the
State of California for the resolution of all legal disputes arising under the
terms of this Agreement.
7.11 Attorneys' Fees. In the event any Party hereto shall commence legal
proceedings against the other to enforce the terms hereof, or to declare rights
hereunder, as the result of a breach of any covenant or condition of this
Agreement, the prevailing party in any such proceeding shall be entitled to
recover from the losing party its costs of suit, including reasonable attorneys'
fees, as may be fixed by the court.
7.12 Binding Effect and Assignment. This Agreement shall inure to the
benefit of and be binding upon the Parties hereto and their respective heirs,
executors, administrators, legal representatives, and assigns.
7.12 Counterparts; Facsimile Signatures. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The Parties agree that facsimile signatures of this Agreement shall
be deemed a valid and binding execution of this Agreement.
7.14 Conflict Waiver. Seller hereby acknowledges that Xxxxxx & Xxx ("the
Firm") represents the Buyer with various legal matters and does not represent
the Seller in connection with this Agreement or the contemplated transaction nor
in any other respect. Seller further acknowledges that the Firm has drafted this
Agreement. Seller has been given the opportunity to consult with counsel of
their choice regarding their rights under this Agreement. Seller hereby waives
any action it may have against the Firm regarding such conflict of interest.
(SIGNATURE PAGE IMMEDIATELY FOLLOWS)
17
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of
the date first written hereinabove.
BUYER: THE COMPANY:
AMERICAN SOIL TECHNOLOGIES, INC., SMART WORLD ORGANICS, INC.,
a Nevada corporation a Florida corporation
/s/ Xxxx X. Xxxxx /s/ Xxx Xxxxxxx
--------------------------------- ---------------------------------
By: Xxxx Xxxxx By: Xxx Xxxxxxx
Its: President Its: President/CEO
SELLER:
/s/ Xxx Xxxxxxx /s/ Xxxxxx Xxxxxxx
--------------------------------- ---------------------------------
BY: Xxx Xxxxxxx BY: Xxxxxx Xxxxxxx
--------------------------------- ---------------------------------
BY: Xxx Xxxxx BY: Ixa Xxxx
--------------------------------- ---------------------------------
BY: Xxx Xxxxxxxxxx By: Xxxx Xxxxxxx
---------------------------------
BY: Xxxxx Xxxxxx
18
EXHIBIT A
SHAREHOLDERS OF SMART WORLD ORGANICS, INC.
Name and Address Number of Shares Held
---------------- ---------------------
Ray and Xxxxxx Xxxxxxx
0000 Xxxxxxxxxx Xxx, Xxx 000 00.0
Xxxxx Xxxxx, XX 00000
Xxx Xxxxx
0000 Xxxxx Xxxxx Xxxxx 0.0
Xxx Xxxx Xxxxxx, XX 00000
Ixa Xxxx
0000 Xxxxxxxx Xxxxxx Xxxx X., Xxxxx 000 00
Xx. Xxxxxxxxxx, XX 00000
Xxxx Xxxxxxx
0000 Xxxxx Xxxx Xxxx. 0.0
Xxxxxxxx Xxxxx, XX 00000
Xxx Xxxxxxxxxx
00000 Xxxxxx Xxxxxx 0.0
Xxxxxx Xxxx, XX 00000
Xxxxx Xxxxxx
00000 Xxxxxxxxx Xxxxxx 0
Xxxxxx Xxxx, XX 00000
---------------------
TOTAL 100
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EXHIBIT B
AMERICAN SOIL TECHNOLOGIES, INC. DISCLOSURE SCHEDULE
The items set forth below are exceptions to the representations and warranties
of American Soil Technologies, Inc. (the "Buyer") set forth in Section 2 of the
Agreement. Any matter set forth herein as an exception to a section of the
Agreement shall be deemed to constitute an exception to all other applicable
sections of the Agreement. Capitalized terms not otherwise defined herein shall
have the meaning ascribed to them in the Agreement.
Section Exception
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EXHIBIT C
SMART WORLD ORGANICS, INC. DISCLOSURE SCHEDULE
The items set forth below are exceptions to the representations and warranties
of Smart World Organics, Inc. (the "Company") set forth in Section 2 of the
Agreement. Any matter set forth herein as an exception to a section of the
Agreement shall be deemed to constitute an exception to all other applicable
sections of the Agreement. Capitalized terms not otherwise defined herein shall
have the meaning ascribed to them in the Agreement.
Section Exception
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EXHIBIT D
SMART WORLD ORGANICS, INC. SHAREHOLDERS DISCLOSURE SCHEDULE
The items set forth below are exceptions to the representations and
warranties of the shareholders of Smart World Organics, Inc. (the "Seller") set
forth in Section 2 of the Agreement. Any matter set forth herein as an exception
to a section of the Agreement shall be deemed to constitute an exception to all
other applicable sections of the Agreement. Capitalized terms not otherwise
defined herein shall have the meaning ascribed to them in the Agreement.
Section Exception
22
