STOCK PURCHASE AGREEMENT
Exhibit
10.1
This
STOCK PURCHASE AGREEMENT (“Agreement”), dated as of the 14th day of August,
2008, is entered into by and between Castle Bison, Inc., a California
corporation (“Castle”) by and on behalf of itself and those parties named on
Exhibit
A
(Castle
and such other parties being hereinafter collectively referred to as the
“Castle
Purchasers”), Vision Opportunity China LP (“Vision”) (each of Castle, the Castle
Purchasers and Vision being a “Purchaser;”
and
hereinafter collectively referred to as the “Purchasers”),
Xxxxx X.
Xxxxxxxx (“Seller”),
and
First
Transaction Management,
Inc., a
Delaware corporation (the “Issuer”).
WITNESSETH
THAT:
WHEREAS,
Seller
owns
a total
of
262,798 restricted shares of common stock of the Issuer,
par
value $.01 (the “Shares”);
and
WHEREAS,
Seller
is the owner and holder of a certain Secured Promissory Note made by the
Issuer,
as borrower, to Seller, as lender, dated July 12, 2000, in the principal
amount
of $771,791, which note can be converted, in whole (principal and interest)
or
in part into common stock of Issuer at the rate of $1.60 per share (the
“Note”);
and
WHEREAS,
the
Note is secured by a certain Security Agreement, dated July 12, 2000, granting
to Seller a security interest in all of the assets of Issuer set forth on
Schedule I attached thereto (the “Security
Agreement”);
and
WHEREAS,
Purchasers
desire to purchase from Seller
and
Seller desires to sell to
Purchasers
the
Shares
and the
Note
(collectively, the “Securities”),
on
the
terms
and conditions set forth herein,
NOW,
THEREFORE, in
consideration of the foregoing and mutual covenants set forth below, the
parties
hereto agree as follows:
1. PURCHASE
AND SALE OF THE SHARES AND THE NOTE
1.1 Purchase
Price.
The
aggregate purchase price for the Securities, to be paid by Purchasers to
Seller,
is $600,000 (the “Purchase
Price”),
$25,000 of which shall be allocated to the purchase of the Shares, and the
remaining $575,000 of which shall be allocated to the purchase of the Note
and
Seller’s interest under the Security Agreement. The amounts and interests in the
Securities to be purchased by each of the Purchaser’s shall be as set forth on
Exhibit
B.
Seller
acknowledges and agrees that interest under the Note shall not accrue after
July
31, 2008 and that, accordingly, there shall not be any change to the Purchase
Price on account of interest that would have accrued after July 31,
2008.
1.3 Transfer
of Title.
The
sale, assignment, conveyance, transfer, and delivery by Seller of the Securities
shall be made by delivering (x) stock certificate(s) representing the
Shares,
together with one or more medallion guaranteed stock powers duly endorsed
to
Purchasers, and (y) an assignment and endorsement to Purchasers of the Note,
the
form of which is attached hereto as Exhibit C, upon receipt of which the
Purchasers shall give to the Issuer and its transfer agent notice of the
conversion of the Note into common shares of the Issuer. The Warrants (as
defined in Section 2.1(c)(ii)), shall be returned to the Issuer together
with
one or more powers or other appropriate transfer documents duly endorsed
to the
Issuer.
1.4 Closing.
The
closing of the purchase and sale of the Securities, and the payment by
Purchasers of the Purchase Price (the “Closing”)
shall
take place on
or
before August 15, 2008,
at the
offices of Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, 61 Broadway, 32nd
Fl. Xxx
Xxxx, XX 00000, or as counsel for the parties otherwise may agree, subject
to
the satisfaction of the Closing Conditions (hereinafter defined) having been
satisfied or waived by Purchasers.
2. REPRESENTATIONS
AND WARRANTIES BY THE SELLER, PURCHASERS
AND
ISSUER
2.1 The
Seller hereby represents and warrants to Purchasers as follows:
(a) The
Issuer
is a
corporation duly organized, validly existing, and in good standing under
the
laws of the State of Delaware, and is qualified in no other state. The Issuer
holds a business license in the State of Washington but is not qualified
as a
foreign corporation in such state. The failure to be qualified as a foreign
corporation in the State of Washington would not have a Material Adverse
Effect
on the Issuer. As used in this Agreement, “Material
Adverse Effect”
means
a
material adverse effect on, or a material adverse change in, or a group of
such
effects on or changes in, the business, operations, condition, financial
or
otherwise, results of operations, prospects, assets or liabilities of the
Issuer
and its subsidiaries, taken as a whole.
(b) This
Agreement and any other agreement executed by Seller in connection herewith
have
been duly executed and delivered by it and constitute the valid, binding
and
enforceable obligation of Seller, subject to the applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and rights of
stockholders.
(c)
(i)
The
authorized capital stock of the Issuer
consists
of 125,000,000 shares of common stock, 399,256 of which are validly issued
and
outstanding, fully paid and non-assessable, and 25,000,000 shares of preferred
stock, none of which are issued or outstanding. The Shares have been validly
issued, are fully paid and non-assessable, and are owned beneficially and
of
record solely by Seller free and clear of all liens, pledges, encumbrances,
security agreements, equities, options, claims, charges and restrictions
of any
nature whatsoever, except any restrictions under applicable securities laws,
and
Seller has not previously entered into any agreement or commitment for the
sale
of all or part of the Shares or otherwise conveyed or encumbered Seller’s
interest (voting or otherwise) with respect to the Shares. Seller has the
unqualified right to sell, assign, and deliver the Shares, and, upon
consummation of the transactions contemplated by this Agreement, Purchasers
will
acquire good and valid title to the Shares, free and clear of all liens,
claims,
options, charges, and encumbrances of whatsoever nature. Purchasers acknowledge
that the Shares being acquired from the Seller are restricted securities
as that
term is defined in Rule 144 of the Securities Act of 1933, as amended (the
“Act”).
(ii)
In
addition to the foregoing, the Issuer has outstanding warrants that are held
by
the Seller that entitle the Seller to purchase an aggregate of 5,000 shares
of
common stock of the Issuer at an exercise price of $30.00 per share (the
“Warrants”). The Warrants are owned beneficially and of record solely by Seller
free and clear of all liens, pledges, encumbrances, security agreements,
equities, options, claims, charges and restrictions of any nature whatsoever,
except any restrictions under applicable securities laws, and Seller has
not
previously entered into any agreement or commitment for the sale of all or
part
of the Warrants or otherwise conveyed or encumbered Seller’s interest (voting or
otherwise) with respect to the Warrants. Seller has the unqualified right
to
sell, assign, and deliver the Warrants, and, upon delivery to the Issuer
of the
Warrants for cancellation (as provided for in Section 1.3), neither the Seller,
nor anyone claiming by, through or under Seller, will have any claim or right
under the Warrants or otherwise to exercise the Warrants.
(iii)
The
outstanding principal balance of the Note is $771,791, accrued but unpaid
interest as of July 31, 2008 is $278,872, and the aggregate principal balance
and accrued but unpaid interest under the Note is convertible into 656,665
shares of common stock of the Issuer. The Note was duly executed and delivered
by, and is enforceable against, the Issuer and is owned and held by Seller
free
and clear of all liens, pledges, encumbrances, security agreements, equities,
options, claims, charges and restrictions of any nature whatsoever, except
any
restrictions under applicable securities laws, and Seller has not previously
entered into any agreement or commitment for the sale of all or part of the
Note
or otherwise conveyed or encumbered Seller’s interest in the Note. Seller has
the unqualified right to sell, assign, and deliver the Note, and, upon
consummation of the transactions contemplated by this Agreement, Purchasers
will
acquire good and valid title to the Note, free and clear of all liens, claims,
options, charges, and encumbrances of whatsoever nature, and the right to
convert the entire principal balance and accrued but unpaid interest thereon
into not less than 656,665 shares of common stock of the Issuer.
(d) Neither
Seller nor, to the knowledge of Seller, the Issuer, is a party to or bound
by
any unexpired, undischarged or unsatisfied written or oral contract, agreement,
indenture, mortgage, debenture, note or other instrument under the terms
of
which performance by Seller according to the terms of this Agreement will
be a
default or an event of acceleration, or grounds for termination, or whereby
timely performance by Seller according to the terms of this Agreement may
be
prohibited, prevented or delayed.
(e) Seller
has full power and authority to sell and transfer the Shares and the Note
to
Purchasers, and deliver the Warrants to the Issuer, without obtaining the
waiver, consent, order or approval of (i) any state or federal governmental
authority, (ii) the Issuer, or (iii) any third party or other person including,
but not limited to, other stockholders of the Issuer.
(f) The
Issuer
has the
corporate power,
authority
and
capacity to
carry
on its business as presently conducted.
(g) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or default under
any term or provision of the Certificate of Incorporation or By-Laws of the
Issuer,
or of
any contract, commitment, indenture, other agreement or restriction of any
kind
or character to which the Issuer
or the
Seller is a party to or by which the Issuer
or the
Seller is bound.
(h) The
Issuer has no outstanding liabilities or obligations to any party except
as
reflected on the Issuer’s Form 10-Q for the three months ended June 30, 2008,
other than charges since such date similar to those incurred in past periods
and
consistent with past practice, all of which will be discharged prior to or
at
the Closing so that, at the Closing, the Issuer will have no direct, contingent
or other obligations of any kind or any commitment or contractual obligations
of
any kind whatsoever, except for (x) liabilities to Issuer’s transfer agent
arising out of shareholders exchanging certificates on account of the reverse
split effected on August 1, 2008 (the “Reverse Split Liabilities”), (y) the
piggy-back registration obligations relating to 17,500 shares of Issuer’s common
stock held by each of PAN Consultants Ltd. and Xxxxxx Xxxxx and 1,250 shares
by
Xxxxx Xxxxxxxx (the “Registrations Rights Obligations”), and (z) liabilities
under the Other Warrants, the Note and this Agreement..
(i) All
actions taken by the Issuer within the past two years, have been duly approved
by the Issuer’s Board of Directors, as reflected in the minutes of the Board of
Directors.
2.2 The
Issuer hereby represents and warrants to Purchasers as follows:
(a) The
Issuer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Issuer has the corporate power
to
own its properties and to carry on its business as now being conducted and
is
duly qualified to do business and is in good standing in each jurisdiction
in
which the failure to be so qualified and in good standing would have a material
adverse effect on the Issuer. The Issuer is not in violation of any of the
provisions of its certificate of incorporation or by-laws. No consent, approval
or agreement of any individual or entity is required to be obtained by the
Issuer in connection with the execution and performance by the Issuer of
this
Agreement or the execution and performance by the Issuer of any agreements,
instruments or other obligations entered into in connection with this Agreement.
The Issuer has no subsidiary, and it does not have any equity investment
or
other interest, direct or indirect, in, or any outstanding loans, advances
or
guarantees to or on behalf of, any domestic or foreign individual or
entity.
(b)
(i)
The
authorized capital stock of the Issuer consists of 125,000,000 shares of
common
stock, 399,256 of which are validly issued and outstanding, fully paid and
non-assessable, and 25,000,000 shares of preferred stock none of which are
issued or outstanding; (ii) Seller is the record owner of the Shares and
the
Warrants; (iii) the Note and the Security Agreement are legal, valid and
binding
obligations of the Issuer, enforceable against the Issuer in accordance with
their terms; (iv) the outstanding principal balance of, and accrued but unpaid
interest on, of the Note as of July 31, 2008 totals $1,050,663 (comprised
of
principal in the amount of $771,791 and accrued interest in the amount of
$278,872); (v) the Note (principal and interest) is convertible into common
stock of the Issuer at the rate of $1.60 per share; (vi) other
than
the Warrants, there are only 13,750 other warrants (the “Other
Warrants”)
issued
by the Issuer and outstanding entitling the holders thereof to purchase 13,750
shares of common stock of the issuer, in the aggregate, in each case at an
exercise price of $30.00 per share; (vii) except as disclosed in this paragraph,
there are no shares of common stock of the Issuer owned beneficially by
Affiliates of the Issuer as of the date hereof; (viii) the Issuer has not
issued
any capital stock since its most recently filed periodic report under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”);
(ix)
no person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by this Agreement; (x) except for the Other Warrants, and as
a
result of the purchase and sale of the Shares and the Note (and the return
of
the Warrants), there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any person or entity any right to subscribe for
or
acquire, any shares of common stock, or contracts, commitments, understandings
or arrangements by which the Issuer is or may become bound to issue additional
shares of common stock or common stock equivalents or securities of the Issuer;
(xi) except pursuant to the Warrants, the Other Warrants and the Note, the
Issuer is not obligated to issue shares of common stock or other securities
to
any person or entity; and (xii) no approval or authorization of any stockholder
of the Issuer or the Issuer’s Board of Directors or any other is required for
Seller to sell and transfer to Purchasers the Shares and the Note or return
the
Warrants to the Issuer.
(c) Annexed
hereto as (i) Exhibit D is a true and complete copy of a Shareholders List
of
the Issuer as of July 31, 2008, certified by the Issuer’s transfer agent; (ii)
Exhibit E is a true and complete copy of the Certificate of Incorporation
of the
Issuer; and (ii) Exhibit F is a true and complete copy of the By-laws of
the
Issuer, in each case certified as in effect as of such date, by the Secretary
of
the Company in the case of the By-laws and by the Secretary of State of Delaware
in the case of the Certificate of Incorporation.
(d) Other
than disclosed in its periodic reports filed pursuant to the Exchange Act,
the
Issuer has not (i) purchased, sold or transferred any assets other than in
the
ordinary and usual course of the operations of the Issuer; (ii) granted any
security interest or other lien or encumbrance affecting any of its assets
or
properties other than in the ordinary and usual course of business and in
amounts not material; or (iii) amended any agreement or contract to which
the
Issuer is a party or by which its assets and properties are bound.
Notwithstanding the foregoing, the parties acknowledge that, at the Closing,
Seller will issue a check of the Issuer, payable to Seller, for the balance
in
the Issuer’s checking account, on account of Seller’s current
salary.
(e) Except
for the following, the Issuer does not maintain any bank account, safe deposit
box, credit or charge cards: Bank of America, checking account number 00000000
and savings account number 00000000. Further, the Issuer agrees, with the
assistance of Seller if necessary, to close all of such accounts immediately
after the Closing and the payment by the bank of all outstanding checks for
the
balance of the funds in the accounts.
(f) (i) The
Issuer’s Form 10-KSB for the fiscal year ended December 31, 2007, as amended, is
correct and complete in all material respects and fairly presents the financial
condition of the Issuer as of December 31, 2007, and (ii) since December
31,
2007, to the Issuer’s knowledge, no event has occurred that could materially and
adversely affect the financial condition of the Issuer, except as disclosed
in
its periodic reports filed with the SEC since December 31, 2007.
(g)
The
Issuer is not a party to any agreement or understanding pursuant to which
any
securities of any class of capital stock of the Issuer are to be issued or
created or transferred, except for the Note, the Warrants and the Other
Warrants. The Issuer has not acquired any shares of its common stock, and
except
for as provided herein with respect to the return of the Warrants has no
formal
or informal agreements or understandings pursuant to which it can or will
acquire any shares of the Issuer’s common stock. Except for the Warrants, the
Other Warrants and the Note (as reflected in the minutes of the Board of
Directors of the Issuer) neither the Issuer nor, to the knowledge of the
Issuer,
any officer, director or 5% stockholder of the Issuer has any agreements,
plans,
understandings or proposals, whether formal or informal or whether oral or
in
writing, pursuant to which it granted or may have issued or granted any
individual or entity any convertible security or any interest in the Issuer
or
the Issuer’s earnings or profits, however defined. As used in this Agreement,
the term “convertible security” shall mean any options, rights, warrants,
convertible debt, equity securities or other instrument or agreement upon
the
exercise or conversion of which or upon the exchange of which or pursuant
to the
terms of which additional shares of any class of capital stock of the Issuer
may
be issued.
(h)
There
is
no private or governmental action, suit, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal, foreign or domestic,
or, to the Issuer’s best knowledge, threatened against the Issuer or any of its
properties or any of its officers or directors (in their capacities as such).
There is no judgment, decree or order against the Issuer that could prevent,
enjoin, alter or delay any of the transactions contemplated by this Agreement.
The term “knowledge of
the
Issuer” shall mean and include (i) actual knowledge and (ii) that knowledge
which a prudent businessperson would reasonably have obtained in the management
of such Person’s business affairs after making due inquiry and exercising the
due diligence which a prudent businessperson should have made or exercised,
as
applicable, with respect thereto. Actual or imputed knowledge of any director
or
officer or Seller shall be deemed to be knowledge of the Issuer.
(i)
There
are
no material claims, actions, suits, proceedings, inquiries, labor disputes
or
investigations (whether or not purportedly on behalf of the Issuer) pending
or,
to the knowledge of the Issuer, threatened against the Issuer or any of its
assets, at law or in equity or by or before any governmental entity or in
arbitration or mediation. No bankruptcy, receivership or debtor relief
proceedings are pending or, to the best of the Issuer’s knowledge, threatened
against the Issuer.
(j)
The
Issuer has complied with, is not in violation of, and has not received any
notices of violation with respect to, any federal, state, local or foreign
laws,
judgment, decree, injunction or order, applicable to it, the conduct of its
business, or the ownership or operation of its business. References in this
Agreement to “Laws” shall refer to any laws, rules or regulations of any
federal, state or local government or any governmental or quasi-governmental
agency, bureau, commission, instrumentality or judicial body (including,
without
limitation, any federal or state securities law, regulation, rule or
administrative order).
(k) The
Issuer has properly filed all tax returns (if any) required to be filed and
has
paid all taxes shown thereon to be due, including, but not limited to, the
tax
return for the 2007 tax year. To the knowledge of the Issuer, all tax returns
previously filed are true and correct in all material respects.
(l) The
Issuer has no outstanding liabilities or obligations to any party except
as
reflected in the Issuer’s Form 10-Q for the three months ended June 30, 2008,
other than charges since such date similar to those incurred in past periods
and
consistent with past practice, all of which will be discharged prior to or
at
the Closing so that, at the Closing, the Issuer will have no direct, contingent
or other obligations of any kind or any commitment or contractual obligations
of
any kind and description, except under this Agreement, the Other Warrants,
the
Reverse Split Liabilities, the Registration Rights Obligations and the Note.
(m) All
of
the business and financial transactions of the Issuer have been fully and
properly reflected in the books and records of the Issuer in all material
respects and in accordance with generally accepted accounting principles
consistently applied.
(n) The
Issuer is current with its reporting obligations under the Exchange Act.
None of
the Issuer’s filings, as amended, made pursuant to the Exchange Act
(collectively, the “Issuer
SEC Documents”)
contain any misstatements of material fact or omit to state a material fact
necessary to make the statements made therein not misleading. The Issuer
SEC
Documents, as of their respective dates, complied in all material respects
with
the requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder, and are available on the Commission’s XXXXX system. The
financial statements included in the Issuer SEC Documents fairly present
and
reflect, in all material respects, in accordance with generally accepted
accounting principles, consistently applied, the financial condition of the
Issuer on the balance sheet dates and the results of its operations, cash
flows
and changes in stockholders’ equity for the periods then ended in accordance
with generally accepted accounting principles, consistently applied, except
as
may be otherwise specified in such financial statements or the notes thereto.
The accountants who audited the Issuer’s financial statements are independent,
within the meaning of the Securities Act and are a member of the PCAOB. There
has not occurred any material adverse change, or any development involving
a
prospective material adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Issuer, from that set forth
in
the Issuer’s Annual Report on Form 10-KSB for the year ended December 31, 2007,
except to the extent reflected in the Issuer’s periodic report on Form 10-Q for
the three months ended June 30, 2008.
(o) The
execution and delivery of this Agreement by the Issuer and the consummation
of
the transactions contemplated by this Agreement will not result in any material
violation of the Issuer’s certificate of incorporation or by-laws.
(p) All
representations, covenants and warranties of the Issuer contained in this
Agreement shall be true and correct on and as of the Closing date with the
same
effect as though the same had been made on and as of such date, except for
the
representations and warranties made as of a specific date, in which case
the
same shall, on the Closing Date, be true and correct as of such specific
date.
(q) The
Issuer has the corporate power, authority and capacity to carry on its business
as presently conducted.
(r) All
actions taken by the Issuer within the past two years have been duly approved
by
the Issuer’s Board of Directors, as reflected in the minutes of the Board of
Directors.
2.3 Purchasers,
severally, and not jointly, represent and warrant to Seller and Issuer as
follows:
(a) Purchasers
understand that neither the Shares nor the Note have been registered with
the
United States Securities and Exchange Commission or any state or foreign
securities agencies, and that the Shares being acquired from the Seller are
restricted securities as that term is defined in Rule 144 of the Act.
(b) Purchasers
have the requisite competence and authority to execute and deliver this
Agreement and any other agreements and undertakings referenced herein, to
perform their obligations hereunder and to consummate the transactions
contemplated hereby. This Agreement and any other agreements executed by
Purchasers in connection herewith have been duly executed and delivered by
it
and constitute the valid, binding and enforceable obligation of Purchasers,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and the rights of stockholders.
(c) Purchasers
are capable of evaluating the merits and risks of its investment in the
Issuer.
Purchasers acknowledge that they must bear the economic risk of this investment
indefinitely, unless the Shares are subsequently registered pursuant to the
Act,
or an exemption from registration is available. Purchasers understand that
the
Issuer
has no
present intention of registering the Shares.
(d) Purchasers
are not an underwriter and are acquiring the Shares and the Note for Purchaser’s
own account for investment only and not with a view towards distribution
thereof
within the meaning of the Act, the state securities laws and any other
applicable laws.
(e) Purchasers
have the capacity to protect their interests in connection with the transactions
contemplated hereby as a result of their business or financial
expertise.
(f) Purchasers
acknowledge that the Shares purchased
herein
may not be transferred, encumbered, sold, hypothecated, or otherwise disposed
of
to any person in violation of federal
and/or state securities laws. Disposition shall include, but is not limited
to
acts of selling, assigning, transferring, pledging, encumbering, hypothecating,
gifting, and any form of conveying, whether voluntary or not.
(g) Purchasers
acknowledge that neither the Issuer
nor the
Seller is under an obligation to register or seek an exemption under any
federal, state or foreign securities acts for any of the Shares or any shares
of
common stock of the Issuer
into
which the Note may be converted or to cause or permit such stock to be
transferred in the absence of any registration or exemption and that the
Purchasers herein may not transfer the Shares unless such stock is subsequently
registered under any federal and/or state securities acts or an exemption
from
registration is available.
(h) The
Purchasers have had the opportunity to ask questions of the Issuer
and the
Seller and receive additional information from the Issuer
and the
Seller to the extent that the Issuer
and the
Seller possessed such information or could acquire it without unreasonable
effort or expense necessary to evaluate the merits and risks of any investment
in the Issuer.
Further, the Purchasers have been given or has had access to: (1) all material
books and records of the Issuer
that
Purchaser has requested;
(2) all
material contracts and documents relating to the Issuer
and this
proposed transaction that Purchaser has requested; and (3) an opportunity
to
question the Seller and the appropriate executive officers of the Issuer.
3. SURVIVAL
OF REPRESENTATIONS; INDEMNIFICATION
3.1 Survival
of Representations.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, all
covenants, agreements, representations and warranties made hereunder or pursuant
hereto or in connection with the transaction contemplated hereby shall survive
the execution and delivery of this Agreement and continue in effect for 18
months after the execution and delivery of this Agreement (the “Survival
Period”), except that Seller’s title representations in Section 2.1 shall
survive for the period that is permitted for third-party claims by the
applicable statute of limitations.
3.2 Indemnification.
(a)
Seller agrees to indemnify Purchasers, and hold them harmless from and in
respect of any assessment, loss, damage, liability, cost and expense (including,
without limitation, interest, penalties, and reasonable attorneys’ fees) imposed
upon or incurred by Purchasers resulting from (i) any breach of representation
or warranty, in any material respect, made by Seller or the Issuer in this
Agreement, and in any certificate delivered by Seller or the Issuer pursuant
to
this Agreement, (ii) any breach by Seller or the Issuer of any covenant,
obligation or other agreement made by Seller or the Issuer in this Agreement,
and (iii) a third-party claim based on any acts or omissions by Seller or the
Issuer through and including the Closing Date; provided, however, that in the
event of a third-party claim brought against Purchasers based upon Section
3.2
during the Survival Period, the Survival Period shall be extended up to
applicable expiration of statute of limitations for any such respective claim.
(b)
Purchasers, severally, and not jointly, agree to indemnify and hold Seller
harmless from and in respect of any assessment, loss, damage, liability, cost
and expense (including, without limitation, interest, penalties, and reasonable
attorneys’ fees) imposed upon or incurred by Seller resulting from the
respective Purchaser’s representations or warranties set forth in this Agreement
being incorrect in any material respect. Assertion by a party of their right
to
indemnification under this Section 3.2 shall not preclude any other rights
or
remedies of the party in respect thereof.
(c)
If
any claim, action or proceeding is brought against a party arising out of a
claim that is the subject of indemnification under this Agreement (“Indemnified
Party”), the Indemnified Party shall provide the other party (“Indemnifying
Party”) prompt written notice of the same, together with the basis for seeking
indemnification (the “Indemnification Notice”). Upon receipt of an
Indemnification Notice by the Indemnifying Party, the Indemnifying Party shall
inform the Indemnified Party (delivering the Indemnification Notice), within
5
business days after receipt of the Indemnification Notice, whether the
Indemnifying Party elects to compromise or defend such claim, action or
proceeding. The Indemnifying Party shall have the right, at its
option, to compromise the claim, at its own expense. In the event the
Indemnifying Party elects to defend, the Indemnified Party shall have the right
to control the defense of any claim brought against him or her that is the
subject of this indemnification. All costs and expenses incurred,
including legal fees, in connection with the compromise or defense of any claim
shall be paid by the Indemnifying Party.
4. MISCELLANEOUS
4.1 Expenses.
All
fees and expenses incurred by the Purchasers, the Issuer and Seller in
connection with the transactions contemplated by this Agreement shall be borne
by the respective parties hereto.
4.2 Further
Assurances.
From
time to time, at a party’s request and without further consideration, the other
party, at the requesting party’s expense, will execute and transfer such
documents and will take such action as may reasonably be requested in order
to
effectively consummate the transactions contemplated herein.
4.3 Parties
in Interest.
All the
terms and provisions of this Agreement shall be binding upon, shall inure to
the
benefit of, and shall be enforceable by the prospective heirs, beneficiaries,
representatives, successors and assigns of the parties hereto.
4.4
Resignation
as Officer/Director.
On
the
Closing Date:
(a)
Effective
as of the Closing Date, or such later date as agreed to between the Issuer
and
its current officers, (i) the Issuer’s officers and directors shall resign and
be duly replaced by the Purchasers’ Chief Executive Officer designee, who is
Xxxxx
Xxxxxxxxx;
and
(ii) the Issuer will cause the Purchasers’ director designee to be duly
appointed, who is Xxxxx
Xxxxxxxxx.
Attached hereto as Appendix B, and made a part hereof, is biographical
information for Xx. Xxxxxxxxx, for the past five (5) years, with respect to
which Xx. Xxxxxxxxx has executed and delivered a representation to the Issuer
and to Seller in the form annexed hereto as Appendix B.
(b)
The
Seller agrees to remain a director until the expiration of the 10-day period
beginning on the date of the filing of the Information Statement relating to
a
change in majority of directors of the Issuer with the SEC pursuant to Rule
14f-1 promulgated under the Exchange Act (“Information Statement”). Purchaser
agrees promptly to prepare a report on Schedule 14f-1 disclosing the change
in
directors of the Company and file
the
same with the SEC and transmit the same to the Company’s shareholders promptly
after the Closing Date.
(c) Concurrently
with the execution of this Agreement, Seller shall return to the Issuer without
further consideration the Warrants which she currently owns, and the Seller
and
the Issuer shall have entered into an Agreement, in the form annexed hereto
as
Appendix A, in that regard.
4.5 Entire
Agreement.
This
Agreement supersedes all prior agreements and understandings between the parties
with respect to the subject matter hereof. This Agreement shall not be amended
except by a writing signed by both parties or their respective successors or
assigns.
4.6 Headings.
The
section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretations
of
this Agreement.
4.7 Governing
Law.
For all
purposes this Agreement will be governed exclusively by and construed and
enforced in accordance with the laws of the State of New York and the Courts
prevailing in the State of New York.
4.8 Notices.
All
notices, requests, demands, and other communication hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed
(registered or certified mail, postage prepaid, return receipt requested) as
follows:
If
to
Seller:
Xxxxx
X
Xxxxxxxx
380
XX
Xxxxxxx Xxxxx Xxxxxx
Xxxxxxxx,
XX 00000
With
a
copy to:
Xxxxxx
X.
Xxxxx, Esq.
P.X.
Xxx
000
Xxxxxxxxxx,
XX 00000
If
to
Castle:
Castle
Bison, Inc.
31200
ViaColinas, Suxxx 000
Xxxxxxxx
Xxxxxxx, XX
Attn:
Xxxx Xxxxxxxxx, Esq.
With
a
copy to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
61
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
If
to
Castle or the Castle Purchasers:
Castle
Bison, Inc.
31200
ViaColinas, Suxxx 000
Xxxxxxxx
Xxxxxxx, XX
Attn:
Xxxx Xxxxxxxxx, Esq.
With
a
copy to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
61
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
If
to
Vision:
Vision
Opportunity China LP
Sarnia
House
Suites
13
and 15
Xx
Xxxxxxx, St-Xxxxx Port
Guernsey
GYI 4NA
With
a
copy to:
Vision
Capital Advisors LLC
20
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxx
Xxxxxxx, Esq.
Legal
and
Operations
And
Xxxxxxxxx
Xxxxxxx, LLP
200
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxxxx, Esq.
If
to the
Issuer:
First
Transaction Management, Inc.
380
XX
Xxxxxxx Xxxxx Xxxxxx
Xxxxxxxx,
XX 00000
4.9 Effect.
In the
event any portion of this Agreement is deemed to be null and void under any
state, provincial, or federal law, all other portions and provisions not deemed
void or voidable shall be given full force and effect.
4.10 Counterparts.
This
Agreement may be executed in one or more counterparts and by transmission of
a
facsimile or digital image containing the signature of an authorized person,
each of which shall be deemed and accepted as an original, and all of which
together shall constitute a single instrument. Each party represents and
warrants that the person executing on behalf of such party has been duly
authorized to execute this Agreement.
4.11 Transfer. This
Agreement will constitute, and may be presented to the Issuer’s transfer agent
and registrar as, Seller’s irrevocable authorization to transfer the record
ownership of the Shares to the Purchasers on the books of the Issuer (in the
respective amounts set forth in Exhibit B attached hereto.).
IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
Seller, the Purchaser and the Issuer on the date first written
above.
*
* * * *
* * * *
(signature
page follows)
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first written above.
SELLER:
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx
|
ISSUER:
First
Transaction Management, Inc.
|
By:
|
/s/
Xxxxx X. Xxxxxxxx
|
|
Name:
Xxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
PURCHASERS:
Castle
Bison, Inc., for itself and
as
agent
for the individual purchasers
| By: | /s/ Xxxx Xxxxxxxxx |
|
Name:
Xxxx Xxxxxxxxx
Title:
President
|
|
Vision
Opportunity China LP
| By: | /s/ Xxxx Xxxxxxxx |
|
Name:
Xxxx Xxxxxxxx
Title:
Authorized Signatory
|
|
EXHIBIT
A
SCHEDULE
OF CASTLE PURCHASERS
|
Name
|
Principal Amount
|
Accrued Interest
|
Convertible Shares
|
|||||||
|
Castle
Bison
|
$
|
216,018.98
|
$
|
78,054.35
|
183,796
|
|||||
|
Xxxxx
Xxxxxxxxx
|
$
|
21,181.86
|
$
|
7,653.66
|
18,022
|
|||||
|
Ronitt
Sucoff
|
$
|
21,181.86
|
$
|
7,653.66
|
18,022
|
|||||
|
Xxxxx
Xxxx
|
$
|
21,181.86
|
$
|
7,653.66
|
18,022
|
|||||
|
Xxx
Xxxx
|
$
|
10,590.93
|
$
|
3,826.83
|
9,011
|
|||||
|
Xxxxxxx
Xxxx
|
$
|
7,074.74
|
$
|
2,556.32
|
6,019
|
|||||
|
Xxxx
Xxxx
|
$
|
8,811.65
|
$
|
3,183.92
|
7,497
|
|||||
|
Xxx
Xxxxxxx
|
$
|
8,811.65
|
$
|
3,183.92
|
7,497
|
|||||
|
Xxxxx
Xxxxxxx
|
$
|
7,074.74
|
$
|
2,556.32
|
6,019
|
|||||
|
Xxxxxx
Xxxx
|
$
|
21,181.88
|
$
|
7,653.69
|
18,024
|
|||||
|
Total
|
$
|
343,110.15
|
$
|
123,976.33
|
291,929
|
|||||
EXHIBIT
B
SCHEDULE
OF PURCHASERS AND ACQUIRED INTERESTS
|
Name
|
Principal Amount
|
Accrued Interest
|
Convertible Shares
|
|||||||
|
Vision
|
$
|
428,680.85
|
$
|
154,895.67
|
364,735
|
|||||
|
Castle
Bison
|
$
|
216,018.98
|
$
|
78,054.35
|
183,796
|
|||||
|
Xxxxx
Xxxxxxxxx
|
$
|
21,181.86
|
$
|
7,653.66
|
18,023
|
|||||
|
Ronitt
Sucoff
|
$
|
21,181.86
|
$
|
7,653.66
|
18,023
|
|||||
|
Xxxxx
Xxxx
|
$
|
21,181.86
|
$
|
7,653.66
|
18,023
|
|||||
|
Xxx
Xxxx
|
$
|
10,590.93
|
$
|
3,826.83
|
9,011
|
|||||
|
Xxxxxxx
Xxxx
|
$
|
7,074.74
|
$
|
2,556.32
|
6,019
|
|||||
|
Xxxx
Xxxx
|
$
|
8,811.65
|
$
|
3,183.92
|
7,497
|
|||||
|
Xxx
Xxxxxxx
|
$
|
8,811.65
|
$
|
3,183.92
|
7,497
|
|||||
|
Xxxxx
Xxxxxxx
|
$
|
7,074.74
|
$
|
2,556.32
|
6,019
|
|||||
|
Xxxxxx
Xxxx
|
$
|
21,181.88
|
$
|
7,653.69
|
18,022
|
|||||
|
Sub
Total
|
$
|
771,791.00
|
$
|
278,872.00
|
656,665
|
|||||
|
Additional
Vision shares acquired from Seller
|
262,798
|
|||||||||
|
Total
Securities
|
919,463
|
|||||||||
EXHIBIT
C
ASSIGNMENT
OF SECURED PROMISSORY NOTE
THIS
ASSIGNMENT OF SECURED PROMISSORY NOTE (this
“Assignment”) is made this __day
of
August 2008, by Xxxxx X. Xxxxxxxx (“Assignor”), to Castle Bison, Inc. (the
“Castle Assignee”) and Vision
Opportunity China LP
(the
“Vision Assignee” and, together with the Castle Assignee, referred to
collectively as “Assignee”).
RECITALS
WHEREAS,
Assignor is the owner and holder of a certain Secured Promissory Note
made
by
First Transaction Management, Inc. (the “Issuer”), as borrower, to Assignor, as
lender, dated July 12, 2000, having a principal balance as of July 31, 2008
of
not less than $771,971, which note can be converted, in whole (principal and
interest) or in part into common stock of Issuer at the rate of $1.60 per share
(the “Note”);
and
WHEREAS,
the
Note is secured by a certain Security Agreement, dated July 12, 2000, granting
to Seller a security interest in all of the assets of Issuer set forth on
Schedule I attached thereto (the “Security
Agreement”);
and
WHEREAS,
Assignor and Assignee are parties to that certain Stock Purchase Agreement
(the
“SPA”), dated as of the date hereof, pursuant to which Assignor has agreed,
among other things, to sell and transfer to Assignee all of Assignor’s right,
title and interest in, to and under the Note and the Security Agreement, subject
to the terms, covenants and conditions contained in the SPA;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which is hereby acknowledged, the parties hereto agree as follows:
1. Assignment.
Assignor, as of the date hereof, assigns, transfers and conveys to the Castle
Assignee 44.4564%, and to the Vision Assignee 55.5436%, of all of Assignor's
right, title and interest in and to the Note and the Security
Agreement.
2. Representation
and Warranty.
Assignor represents and warrants to Assignee that the outstanding principal
balance of the Note as of July 31, 2008 is $771,791 and that the aggregate
sum
of accrued but unpaid interest under the Note as of July 31, 2008 is
$278,872.
3. Assumption.
Assignee accepts the foregoing assignment and assumes the Note and the Security
Agreement as of the date hereof.
4. Entire
Agreement.
This
Assignment, together with the SPA, contains the entire understanding of the
parties hereto in respect of the transactions described herein.
There
are
no restrictions, promises, representations and warranties, covenants or
undertakings as to such transactions other than those expressly set forth
or
referred to herein or in such other agreements dated the date
hereof.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.
|
Xxxxx
X. Xxxxxxxx
|
||||
|
Castle
Bison, Inc.
|
Vision
Opportunity China LP
|
|||
|
By:
|
By:
|
|||
|
Xxxx
Xxxxxxxx
|
||||
|
Authorized
Signatory
|
||||
EXHIBIT
D
Shareholders
List of Issuer
EXHIBIT
E
Certificate
of Incorporation of Issuer
EXHIBIT
F
By
Laws of Issuer
APPENDIX
A
AGREEMENT
THIS
AGREEMENT is
made as of the __ day of August,
2008
BETWEEN:
First
Transaction Management, Inc.,
a
corporation formed pursuant to the laws of the State of Delaware (the
“Company”)
AND:
Xxxxx
X.
Xxxxxxxx (the “Warrantholder”).
WHEREAS:
A. The
Warrantholder is the registered and beneficial owner of a warrant to purchase
an
aggregate of 5,000 shares of the Company’s common stock at an exercise price of
$30.00 per share (the “Warrant”).
B. The
Seller has entered into a Stock Purchase Agreement with Castle Bison, Inc.,
Vison Opportunity China LP (Castel Bison and Vision are hereinafter collectively
referred to as the “Purchasers”) and the Company (the “Stock Purchase
Agreement”).
C. As
a
condition to the aforementioned Stock Purchase Agreement, the Warrantholder
has
agreed with the Purchasers and the Company to return the Warrant held by her
to
the Company for the sole purpose of the Company terminating the
Warrant.
NOW
THEREFORE THIS AGREEMENT WITNESSETH THAT
in
consideration of the premises and sum of $1.00 now paid by the Company to the
Warrantholder, the receipt and sufficiency whereof is hereby acknowledged,
the
parties hereto hereby agree as follows:
Surrender
of Warrant
1. The
Warrantholder hereby surrenders to the Company the Warrant for cancellation
by
delivering to the Company herewith the Warrant (with stock power or otherwise)
duly endorsed for transfer in blank, signatures medallion guaranteed. The
Company hereby acknowledges receipt from the Warrantholder of the Warrantfor
the
sole purpose of terminating the Warrant.
Termination
of Warrant
2. The
Company agrees, subject to section 3 hereof, to forthwith after the closing
of
the Stock Purchase Agreement to terminate the Warrant in accordance with the
provisions of the Delaware General Corporation Law.
Condition
Precedent
3. Notwithstanding
any other provision herein, in the event that the transactions contemplated
by
the Stock Purchase Agreement do not close on or before the deadline set forth
is
said Stock Purchase Agreement, this Agreement shall terminate and the Company
shall forthwith return to the Warrantholder the Warrant.
Representations
and Warranties
4. The
Warrantholder represents and warrants to the Company that it is the sole owner
of the Warrant and that it has good and marketable title to the Warrant and
that
the Warrant is free and clear of all liens, security interests or pledges of
any
kind whatsoever.
General
5. Each
of
the parties will execute and deliver such further and other documents and do
and
perform such further and other acts as any other party may reasonably require
to
carry out and give effect to the terms and intention of this
Agreement.
6. Time
is
expressly declared to be the essence of this Agreement.
7. The
provisions contained herein constitute the entire agreement among the Company
and the Warrantholder respecting the subject matter hereof and supersede all
previous communications, representations and agreements, whether verbal or
written, among the Company and the Warrantholder with respect to the subject
matter hereof.
8. This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, administrators, successors and permitted
assigns.
9. This
Agreement is not assignable without the prior written consent of the parties
hereto.
10. This
Agreement may be executed in counterparts, 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.
IN
WITNESS WHEREOF
the
parties have executed this Agreement effective as of the day and year first
above written.
|
FIRST
TRANSACTION MANAGEMENT, INC.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
WARRANTHOLDER:
|
|
|
Xxxxx
X. Xxxxxxxx
|
|
APPENDIX
B
____________
____________
____________
Gentlemen:
This
is
to confirm that I have reviewed the attached biographical data, and that all
information contained therein is true and accurate.
Further,
I hereby affirm that during the past ten years, I have not been:
(1) The
subject of a petition under the Federal bankruptcy laws or any state insolvency
law filed by or against me, or a receiver, fiscal agent or similar officer
appointed by a court for the business or property of myself, or any partnership
in which I was a general partner, at or within two years before the time of
such
filing, or any corporation or business association of which I was an executive
officer at or within two years before the time of such filing;
(2) Convicted
in a criminal proceeding or a subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(3) The
subject of any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining me from, or otherwise limiting, my involvement in any type of
business, securities or banking activities including, but not limited to, any
of
the following activities:
(i) acting
as
a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker
or dealer in securities, or as an affiliated person, director or employee of
any
investment company, bank, savings and loan association or insurance company,
or
engaging in or continuing any conduct or practice in connection with such
activity;
(ii) engaging
in any type of business practice; or
(iii)
engaging in any activity in connection with the purchase or sale of any security
or commodity or in connection with any violation of Federal or State securities
law or Federal commodities laws;
(4) The
subject of any order, judgment or decree, not subsequently reversed, suspended
or vacated of any Federal or State authority barring, suspending or otherwise
limiting for more than 60 days my right to engage in any activity described
in
paragraph A(3)(i) of this letter, or be associated with persons engaged in
any
such activity;
(5) Found
by
any court of competent jurisdiction in a civil action or by the Securities
and
Exchange Commission ("Commission") to have violated any Federal or State
securities law, and the judgment in such civil action or finding by the
Commission has not been subsequently reversed, suspended or vacated;
(6) Found
by
a court of competent jurisdiction in a civil action or by the Commodity Futures
Trading Commission to have violated any Federal Commodities Law, and the
judgment in such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or vacated; or
(7) The
subject of a United States Postal Service false representation order entered
under Section 3005 of Title 39, United States Code, nor am I subject to a
restraining order or preliminary injunction entered under Section 3007 of Title
39, United States
Code,
with respect to conduct alleged to have violated Section 3005 of Tixxx 00,
Xxxxxx Xxxxxx Xode.
|
|
|
Signature
|
|
|
|
Title
|
|
|
|
Print
Name and Address
|
Dated:
August __, 2008
Xx.
Xxxxxxxxx has for more than the past nine years been president of Radnor
International Consulting Inc., based in Radnor, Pennsylvania and partner and
member of the Investment Committee of Strategic Capital Advisors, based in
West
Conshocken, Pennsylvania. Xx. Xxxxxxxxx is also a director of Franklin Bank
of
Texas and TMGI, a Nordic exchange listed company. For more than the past 25
years Xx. Xxxxxxxxx has been an economic consultant advising financial
institutions and government agencies on the state of the United States and
world
economics, on specific industries and business sectors, and on the impact of
economic conditions on decision making, budgeting, and strategic planning.
He
has served on the House of Representatives Task Force on International
Competitiveness, the Census Advisory Committee and the Economic Policy Board
of
the Department of Commerce. He is the author or editor of several books as
well
as articles that have appeared in the New York Times, Washington Post, and
American Economic Review. Xx. Xxxxxxxxx has been a director of House of Xxxxxx
Jewelry, Inc., a publicly held Los Angeles-based international jewelry company,
since September 2005.
