EQUITY TRANSFER AGREEMENT
Exhibit 10.5
EQUITY TRANSFER AGREEMENT, dated as of September 29, 2022
(this “Agreement”), by and among I-On Digital Corp., a Delaware corporation (the “Company”), JFJ Digital Corp., a Delaware corporation (the “Buyer”), Xxx Xxxxx h, as
representative of the certain shareholders of the, Company set forth on Schedule I hereto (the “Shareholders”) and I–On Communications Co.
Ltd., a company organized under the laws of the Republic of South Korea (the “Subsidiary”).
RECITALS:
WHEREAS, Company is the owner of all of the issued and
outstanding capital stock of the Subsidiary which it acquired pursuant to that certain Agreement and Plan of Merger and Reorganization dated December 8, 2017; and
WHEREAS, the Shareholders are the owners of 15,306,119
shares (the “Exchange Shares”) of the outstanding common stock, par value $0.0001 per share of the Company (the “Common Stock”);
WHEREAS, the Company has entered into to issue 3,000 shares
of Series A Convertible Preferred Stock (the “Series A Stock”) pursuant to a Securities Purchase Agreement and 6,000 shares of Series B Convertible Preferred Stock (the “Series B Stock”) pursuant to which agreements (the “Purchase Agreements”) the Company shall change ownership, management, and its business focus following the consummation of the transactions set forth therein and in
this Agreement wherein the Subsidiary will be spun-off to the Buyer (the “Spinoff”); and
WHEREAS, in connection with the Spinoff, the Buyer shall
purchase all of the issued and outstanding shares of capital stock of the Subsidiary (the “Subsidiary Shares”) from Company, and assume, as
between Company and Buyer, all responsibilities for any debts, obligations and liabilities of the Subsidiary, on the terms and subject to the conditions specified in this Agreement; and
WHEREAS, in connection with the Spinoff, the Company shall
sell and transfer the Subsidiary Shares to Buyer, and assign, as between the Company and Buyer, all rights to any assets of the Subsidiary, on the terms and subject to the conditions specified in this Agreement.
WHEREAS, in connection with the Spinoff , the Shareholders
shall sell and transfer to the Company the Exchange Shares to be retired by the Company, on the terms and subject to the conditions specified in this Agreement
NOW, THEREFORE, in consideration of the premises and the
covenants, promises, and agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, agree as follows.
1. ASSIGNMENT AND ASSUMPTION OF ASSETS AND LIABILITIES.
1.1 ASSIGNMENT OF ASSETS. Company hereby contributes,
assigns, conveys and transfers to Buyer, and Xxxxx hereby receives, acquires and accepts, all assets and properties of the Subsidiary as of the Closing Date (as defined below).
1.2 ASSIGNMENT AND ASSUMPTION OF LIABILITIES. Company hereby
assigns to Buyer, and Xxxxx hereby assumes and agrees to pay, honor and discharge all debts, adverse claims, liabilities, judgments and obligations, including tax obligations, of the Subsidiary as of the Closing Date (as defined below), whether
accrued, contingent or otherwise and whether known or unknown, including those arising under any law or any rule or regulation of any governmental entity, or imposed by any court or any arbitrator in a binding arbitration resulting from, arising out
of or relating to the assets, activities, operations, actions or omissions of the Subsidiary, or products manufactured or sold thereby or services provided thereby, or under contracts, agreements (whether written or oral), leases, commitments or
undertakings thereof.
2. EXCHANGE OF STOCK.
2.1 THE EXCHANGE. Subject to the terms and conditions
provided below, on the Closing Date (as defined below), Company shall sell and transfer to Buyer and Buyer shall acquire from Company all the issued and outstanding Subsidiary Shares in exchange for the transfer and delivery by the Shareholders of
the Exchange Shares.
2.2 CLOSING. The closing of the transactions contemplated in
this Agreement (the “Closing”) shall take place as soon as practicable following the date hereof. The date on which the Closing occurs shall
be referred to herein as the Closing Date (the “Closing Date”).
3. CLOSING.
3.1 TRANSFER OF SHARES. At the Closing, the Company shall
deliver to Buyer certificates representing the Subsidiary Shares, duly endorsed to Buyer, or as otherwise directed by Xxxxx, which delivery shall vest Buyer with good and marketable title to all of the issued and outstanding shares of capital stock
of the Subsidiary, free and clear of all liens and encumbrances. At the Closing, the Shareholders shall deliver to the Company certificates representing the Exchange Shares, duly endorsed to the Company, for retirement and cancelation by the
Company, free and clear of all liens and encumbrances.
3.2 TRANSFER OF RECORDS. On or before the Closing Date,
Company shall arrange for transfer to Buyer of all existing corporate books and records in Company’s possession relating to the Subsidiary and its business, including but not limited to all agreements, litigation files, real estate files,
intellectual property, Internet domain names, personnel files and filings with governmental agencies; provided, however, that when any such documents relate to both Company and the Subsidiary, only copies of such documents need be furnished. On or before the Closing, Buyer and the Subsidiary shall transfer to Company all existing
corporate books and records in the possession of Buyer or the Subsidiary relating to Company, including but not limited to all corporate minute books, stock ledgers, certificates and corporate seals of Company and all agreements, litigation files,
real property files, personnel files and filings with governmental agencies; provided, however,
when any such documents relate to both Company and the Subsidiary or its business, only copies of such documents need be furnished.
4. BUYER’S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants to Company that:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of the State of Delaware.
4.2 CAPACITY AND ENFORCEABILITY. Xxxxx has the legal capacity
to execute and deliver this Agreement and the documents to be executed and delivered by Xxxxx at the Closing pursuant to the transactions contemplated hereby. This Agreement and all such documents constitute valid and binding agreements of Buyer,
enforceable in accordance with their terms.
4.3 COMPLIANCE. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby by Buyer will result in the breach of any term or provision of, or constitute a default under, or violate any agreement, indenture, instrument, order, law or regulation to which
Buyer is a party or by which Buyer is bound.
4.4 LIABILITIES. Following the Closing, the Company will have
no liability for any debts, liabilities or obligations of the Subsidiary or its business or activities, and there are no outstanding guaranties, performance or payment bonds, letters of credit or other contingent contractual obligations that have been undertaken by Company directly or indirectly in relation to the Subsidiary or its business and that may survive the Closing.
5. THE COMPANY’S AND SUBSIDIARY’S REPRESENTATIONS AND WARRANTIES. Company and Subsidiary, jointly and severally,
represent and warrant to Buyer and the Shareholders that:
5.1 ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware. Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of the Republic of South Korea.
5.2 AUTHORITY AND ENFORCEABILITY. The execution and delivery
of this Agreement and the documents to be executed and delivered at the Closing pursuant to the transactions contemplated hereby, and performance in accordance with the terms
hereof and thereof, have been duly authorized by Company and the Subsidiary, and all such documents constitute the valid and binding agreements of Company and the Subsidiary enforceable in accordance with their terms.
5.3 TITLE TO SHARES. The Company is the sole record and
beneficial owner of the Subsidiary Shares. At Closing, Company will deliver good and marketable title to the Subsidiary Shares, which Subsidiary Shares are, and at the Closing will be, free and clear of all options, warrants,
pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Buyer, except for restrictions on transfer as contemplated by Section 3.3 above. The Subsidiary Shares constitute
all of the issued and outstanding shares of capital stock of the Subsidiary.
6. SHAREHOLDERS’ REPRESENTATIONS AND WARRANTIES. The Shareholders, jointly and severally, represent and warrant to Buyer and the Company that:
6.1 ORGANIZATION AND GOOD STANDING. If an entity, such
Shareholder is a corporation duly incorporated, validly existing, and in good standing under the laws of the place of its formation.
6.2 AUTHORITY AND ENFORCEABILITY. The execution and delivery
of this Agreement and the documents to be executed and delivered at the Closing pursuant to the transactions contemplated hereby, and performance in accordance with the terms
hereof and thereof, have been duly authorized by the Shareholders, and all such documents constitute the valid and binding agreements of the Shareholders enforceable in accordance
with their terms.
6.3 TITLE TO SHARES. The Shareholders are the sole record and
beneficial owner of the Exchange Shares. At Closing, the Shareholders will deliver good and marketable title to the Exchange Shares, which Exchange
Shares are, and at the Closing will be, free and clear of all options, warrants, pledges, claims, liens and encumbrances, and any restrictions or limitations prohibiting or restricting transfer to Company, except for restrictions
on transfer as contemplated by Section 3.3 above.
7. OBLIGATIONS OF BUYER PENDING CLOSING. Buyer covenants and agrees that between the date hereof and the Closing:
7.1 NOT IMPAIR PERFORMANCE. Buyer shall not take any
intentional action that would cause the conditions upon the obligations of the parties hereto to effect the transactions contemplated hereby not to be fulfilled, including, without limitation, taking or causing to be taken any action that would cause
the representations and warranties made by any party herein not to be true, correct and accurate as of the Closing, or in any way impairing the ability of Company to satisfy its obligations as provided in Section 7.
7.2 ASSIST PERFORMANCE. Buyer shall exercise its reasonable
best efforts to cause to be fulfilled those conditions precedent to Company’s obligations to consummate the transactions contemplated hereby which are dependent
upon actions of Buyer and to make and/or obtain any necessary filings and consents in order to consummate the sale transaction contemplated by this Agreement.
8. OBLIGATIONS OF SELLER PENDING CLOSING. Company covenants and agrees that between the date hereof and the Closing:
8.1 NOT IMPAIR PERFORMANCE. Company shall not take any
intentional action that would cause the conditions upon the obligations of the parties hereto to effect the transactions contemplated hereby not to be fulfilled, including, without limitation, taking or causing to be taken any
action which would cause the representations and warranties made by any party herein not to be materially true, correct and accurate as of the Closing, or in any way impairing the ability of Buyer to satisfy his obligations as
provided in Section 6.
8.2 ASSIST PERFORMANCE. Company shall exercise its reasonable
best efforts to cause to be fulfilled those conditions precedent to
Buyer’s obligations to consummate the transactions contemplated hereby which are dependent upon the actions of Company and to work with Buyer to make and/or obtain any necessary filings and consents. Company shall cause the
Subsidiary to comply with its obligations under this Agreement.
9. SELLER’S AND SUBSIDIARY’S CONDITIONS PRECEDENT TO CLOSING. The obligations of Company and the Subsidiary to close
the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing of each of the following conditions precedent (any or all of which may be waived by Xxxxx in writing):
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. All
representations and warranties of Buyer and Shareholders contained in this Agreement shall have been true and correct, in all material respects, when made and shall be true and correct, in all material respects, at and as of
the Closing, with the same effect as though such representations and warranties were made at and as of the Closing. Buyer and Shareholders shall have performed
and complied with all covenants and agreements and satisfied all conditions, in all material respects, required by this Agreement to be performed or complied with or satisfied by Buyer and the Shareholders at or prior to the Closing.
9.2 ADDITIONAL DOCUMENTS. Buyer and Shareholders shall
deliver or cause to be delivered such additional documents as may be necessary in connection with the consummation of the transactions contemplated by this Agreement and the performance of Buyer’s or Shareholders’ obligations hereunder.
9.3 CLOSING OF THE MERGER. The closing of the Merger shall
have been consummated prior to the Closing Date.
10. BUYER’S AND SHAREHOLDERS’ CONDITIONS PRECEDENT TO CLOSING. The obligation of Buyer and Shareholders to close the transactions contemplated by this Agreement is subject to the satisfaction at or prior to
the Closing of each of the following conditions precedent (any and all of which may be waived by Xxxxx in writing):
10.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. All
representations and warranties of Company and the Subsidiary contained in this Agreement shall have been true and correct, in all material respects, when made and shall be true and correct, in all material respects, at and
as of the Closing with the same effect as though such representations and warranties were made at and as of the Closing. Company and Subsidiary shall have performed and complied with all covenants and agreements and satisfied
all conditions, in all material respects, required by this Agreement to be performed or complied with or satisfied by them at or prior to the Closing.
10.2 ADDITIONAL DOCUMENTS. Company and Subsidiary shall
deliver or cause to be delivered such additional documents as may be necessary in connection with the consummation of the transactions contemplated by this Agreement and the performance of Company’s and the Subsidiary’s obligations hereunder.
10.3 CLOSING OF THE PURCHASE AGREEMENTS. The closing of the
transactions set forth in the Purchase Agreements shall have been consummated prior to the Closing Date.
11. RELEASE AND WAIVER
11.3 RELEASE AND WAIVER BY THE SUBSIDIARY. For, and in
consideration of, the covenants and promises contained herein, the receipt and sufficiency of which are hereby acknowledged, the Subsidiary, on behalf of itself and its assigns, representatives and agents, if any, hereby covenants not to sue and
fully, finally and forever completely releases the Company, along with its present, future and former officers, directors, stockholders, members, employees, agents, attorneys and representatives (collectively, the “Company Released Parties”), of and from any and all claims, actions, obligations, liabilities, demands and/or causes of action, of whatever kind or character, whether now
known or unknown, which the Subsidiary has or might claim to have against the Company Released Parties for any and all injuries, harm, damages (actual and punitive), costs, losses, expenses, attorneys’ fees and/or liability or other detriment, if
any, whenever incurred or suffered by the Subsidiary arising from, relating to, or in any way connected with, any fact, event, transaction, action or omission that occurred or failed to occur at or prior to the Closing. The Subsidiary understands
that it may later discover facts relating to the matters described herein in addition to or different from the facts now known or believed by it to be true and accepts and assumes said risk. The Subsidiary waives and releases the Company from any
claims that the granting of this full and final release was procured by fraud or signed under duress or coercion so as to make it not binding or unenforceable. The Parties hereto agree that the Subsidiary’s release set forth herein does not include
any claims the Subsidiary may have against the Company for the Company’s failure to comply with, or breach of, any provision in this Agreement.
10.2 RELEASE AND WAIVER BY THE BUYER. For, and in
consideration of, the covenants and promises contained herein, the receipt and sufficiency of which are hereby acknowledged, the Buyer, on behalf of itself and its assigns, representatives and agents, if any, hereby covenants not to sue and fully,
finally and forever completely releases the Company Released Parties of and from any and all claims, actions, obligations, liabilities, demands and/or causes of action, of whatever kind or character, whether now known or unknown, which the Subsidiary
has or might claim to have against the Company Released Parties for any and all injuries, harm, damages (actual and punitive), costs, losses, expenses, attorneys’ fees and/or liability or other detriment, if any, whenever incurred or suffered by the
Subsidiary arising from, relating to, or in any way connected with, any fact, event, transaction, action or omission that occurred or failed to occur at or prior to the Closing. The Buyer understands that it may later discover facts relating to the
matters described herein in addition to or different from the facts now known or believed by it to be true and accepts and assumes said risk. The Buyer waives and releases the Company from any claims that the granting of this full and final release
was procured by fraud or signed under duress or coercion so as to make it not binding or unenforceable. The Parties hereto agree that the Buyer’s release set forth herein does not include any claims the Subsidiary may have against the Company for
the Company’s failure to comply with, or breach of, any provision in this Agreement.
12. OTHER AGREEMENTS.
12.1 EXPENSES. Each party hereto shall bear its expenses
separately incurred in connection with this Agreement and with the performance of its obligations hereunder.
12.2 BROKERS’ FEES. No party to this Agreement has employed
the services of a broker and each agrees to indemnify the other against all claims of any third parties for fees and commissions of any brokers claiming a fee or commission related to the transactions contemplated hereby.
12.3 ACCESS TO INFORMATION POST-CLOSING; COOPERATION.
(a) Following the Closing, Buyer and the Subsidiary shall
afford to Company and its authorized accountants, counsel, and other designated representatives reasonable access (and including using reasonable efforts to
give access to persons or firms possessing information) and duplicating rights during normal business hours to allow records, books, contracts, instruments, computer data and other data and information (collectively, “Information”) within the possession or control of Buyer or the Subsidiary insofar as such access is reasonably required by Company. Information may be requested under this Section 12.4(a) for, without limitation, audit,
accounting, claims, litigation and tax purposes, as well as for purposes of fulfilling disclosure and reporting obligations and performing this Agreement and
the transactions contemplated hereby. No files, books or records of the Subsidiary existing at the Closing Date shall be destroyed by Buyer or the Subsidiary
after Closing but prior to the expiration of any period during which such files, books or records are required to be maintained and preserved by applicable law without giving the Company at least 30 days’ prior written notice, during which time Company shall have the right to examine and
to remove any such files, books and records prior to their destruction.
(b) Following the Closing, Company shall afford to the
Subsidiary and its authorized accountants, counsel and other designated representatives reasonable access (including using reasonable efforts to give access to persons or firms possessing information) duplicating
rights during normal business hours to Information within Company’s possession or control relating to the business of the Subsidiary. Information may be
requested under this Section 9.4(b) for, without limitation, audit, accounting, claims, litigation and tax purposes as well as for purposes of fulfilling disclosure and reporting obligations and for performing this Agreement
and the transactions contemplated hereby. No files, books or records of the Subsidiary existing at the Closing Date shall be destroyed by Company after Closing but prior to the expiration of any period during which such files, books or records are required to be maintained and preserved by applicable law without giving the Buyer at least 30 days prior written notice, during
which time Buyer shall have the right to examine and to remove any such files, books and records prior to their destruction.
(c) At all times following the Closing, Company, Buyer and Subsidiary shall use reasonable efforts to make available to the other party on written request, the current and former officers, directors, employees
and agents of Company or the Subsidiary for any of the purposes set forth in Section 12.4(a) or (b) above or as witnesses to the extent that such persons may reasonably be required in connection with any legal, administrative or other proceedings in which Company or the Subsidiary may from time to be involved.
(d) The party to whom any Information or witnesses are provided under this Section 12.4 shall reimburse the provider thereof for all out-of-pocket expenses actually and reasonably incurred in providing such Information or witnesses.
(e) Company, Buyer, Subsidiary and their respective employees and agents shall each hold in strict confidence all Information concerning the other party in their possession or furnished by the other or the other’s
representative pursuant to this Agreement with the same degree of care as such party utilizes as to such party’s own confidential information (except to the extent that such Information is (i) in the public domain through no fault
of such party or (ii) later lawfully acquired from any other source by such party), and each party shall not release or disclose such Information to any other person, except such party’s auditors, attorneys, financial
advisors, bankers, other consultants and advisors or persons with whom such party has a valid obligation to disclose such Information, unless compelled to disclose such Information by judicial or administrative process or, as
advised by its counsel, by other requirements of law.
(f) Company, Buyer and Subsidiary shall each use their best efforts to forward promptly to the other party all notices, claims, correspondence and other materials which are received and determined to pertain to
the other party.
12.4 GUARANTEES, SURETY BONDS AND OBLIGATIONS. In the event
that Company is obligated for any debts, obligations or liabilities of the Subsidiary by virtue of any outstanding guarantee, performance or surety bond or letter of credit provided or arranged by Company on or prior to the Closing Date, Buyer and the Subsidiary shall use best efforts to cause to be issued replacements of such bonds, letters of credit and guarantees and to obtain any amendments, novations, releases and approvals necessary to release and discharge fully Company from any liability thereunder following the Closing. Buyer and the Subsidiary, jointly and severally, shall be responsible for, and shall indemnify, hold harmless and defend Company from and against, any costs or losses incurred by Company
arising from such bonds, letters of credits and guarantees and any liabilities arising therefrom and shall reimburse Company for any payments that Company may be required to pay pursuant to enforcement of its obligations relating to such bonds,
letters of credit and guarantees.
12.5 FILINGS AND CONSENTS. Buyer, at its risk, shall
determine what, if any, filings and consents must be made and/or obtained prior to Closing to consummate the purchase and sale of the Subsidiary Shares. Buyer shall indemnify the Company Indemnified Parties (as defined in Section 14.1 below) against any Losses (as defined in Section 14.1 below) incurred by any Company Indemnified Parties by virtue of the failure to make and/or obtain any
such filings or consents. Recognizing that the failure to make and/or obtain any filings or consents may cause Company to incur Losses or otherwise adversely affect Company, Buyer and the Subsidiary confirm that the provisions of
this Section 11.6 will not limit Company’s right to treat such failure as the failure of a condition precedent to Company’s obligation to close pursuant to Section 8 above.
12.6 INSURANCE. Buyer acknowledges that on the Closing Date,
effective as of the Closing, all insurance coverage and bonds provided by Company for the Subsidiary, and all certificates of insurance evidencing that the Subsidiary maintains any required insurance by virtue of insurance provided
by Company, will terminate with respect to any insured damages resulting from matters occurring subsequent to Closing.
12.7 AGREEMENTS REGARDING TAXES.
(a) TAX SHARING AGREEMENTS. Any tax sharing agreement between Company and the Subsidiary is terminated as of the Closing Date and will have no further
effect for any taxable year (whether the current year, a future year, or a past year).
(b) RETURNS FOR PERIODS THROUGH THE CLOSING DATE. Company will include the income and loss of the Subsidiary (including any deferred income triggered into income by Reg. ss.1.1502-13 and any excess loss accounts taken
into income under Xxx. ss.1.1502-19) on Company’s consolidated federal income tax returns for all periods through the Closing Date and pay any federal income taxes attributable to such income. Company and Subsidiary agree to
allocate income, gain, loss, deductions and credits between the period up to Closing (the “Pre-Closing Period”) and the period after Closing (the “Post-Closing Period”) based on a closing of the books of the Subsidiary and both Company and Subsidiary
agree not to make an election under Reg. ss.1.1502-76(b)(2)(ii) to ratably allocate the year’s items of income, gain, loss, deduction and credit. Company, Subsidiary and Buyer agree to report all transactions not in the ordinary
course of business occurring on the Closing Date after Xxxxx’s purchase of the Shares on the Subsidiary’s tax returns to the extent permitted by Xxx. ss.1.1502-76(b)(1)(ii)(B). Xxxxx agrees to indemnify Company for any
additional tax owed by Company (including tax owned by Company due to this indemnification payment) resulting from any transaction engaged in by the subsidiary
during the Pre-Closing Period or on the Closing Date after Xxxxx’s purchase of the Subsidiary Shares. Subsidiary will furnish tax information to Company for
inclusion in Company’s consolidated federal income tax return for the period which includes the Closing Date in accordance with the Subsidiary’s past custom and practice.
(c) AUDITS. Company will allow Subsidiary and its counsel to participate at Subsidiary’s expense in any audits of Company’s consolidated federal
income tax returns to the extent that such audit raises issues that relate to and increase the tax liability of Subsidiary. Company shall have the absolute right, in its sole discretion, to engage professionals and direct the
representation of Company in connection with any such audit and the resolution thereof, without receiving the consent of Buyer or the Subsidiary or any other
party acting on behalf of Buyer or Subsidiary, provided that Company will not settle any such audit in a manner which would materially adversely affect Subsidiary after the Closing Date unless such settlement would be reasonable
in the case of a person that owned the Subsidiary both before and after the Closing Date. In the event that after Closing any tax authority informs the Buyer or Subsidiary of any notice of proposed audit, claim, assessment, or other dispute
concerning an amount of taxes which pertain to the Company, or to Subsidiary during the period prior to Closing, Buyer or Subsidiary must promptly notify the
Company of the same within 15 calendar days of the date of the notice from the tax authority. In the event Buyer or Subsidiary does not notify the Company within such 15 day period, Buyer and Subsidiary, jointly and severally,
will indemnify the Company for any incremental interest, penalty or other assessments resulting from the delay in giving notice. To the extent of any conflict or inconsistency, the provisions of this Section 11.8 shall
control over the provisions of Section 13.2 below.
(d) COOPERATION ON TAX MATTERS. Buyer, Company and Subsidiary shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of tax returns pursuant to this Section and any audit, litigation or other proceeding with respect to
taxes. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Subsidiary shall (i) retain all books and records with respect to tax matters pertinent to Subsidiary relating
to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Company, any extensions thereof) of the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority, and (ii) give Company reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the Company so requests, Xxxxx agrees
to cause Subsidiary to allow Company to take possession of such books and records.
13. TERMINATION. This Agreement may be terminated at, or at any time prior to, the Closing by mutual written consent
of Company, Buyer and the Company. If this Agreement is terminated as provided herein, it shall become wholly void and of no further force and effect and there shall be no further liability or obligation on the part of any
party except to pay such expenses as are required of such party.
14. INDEMNIFICATION.
14.1 INDEMNIFICATION BY BUYER. Buyer covenants and agrees to
indemnify, defend, protect and hold harmless Company, and its officers, directors, employees, stockholders, agents, representatives and affiliates (collectively, together with Company, the “Company Indemnified Parties”)
at all times from and after the date of this Agreement from and against all losses, liabilities, damages, claims, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), whether or not involving a third party claim and regardless of any negligence of any Company Indemnified Party (collectively, “Losses”), incurred by any Company Indemnified Party as a result of or arising from (i) any breach
of the representations and warranties of Buyer set forth herein or in certificates delivered in connection herewith, (ii) any breach or non-fulfillment of any
covenant or agreement (including any other agreement of Buyer to indemnify Company set forth in this Agreement) on the part of Buyer under this Agreement, (iii)
any debt, liability or obligation of Subsidiary, (iv) the conduct and operations of the business of Subsidiary whether before or after Closing, (v) claims asserted against Subsidiary whether before or after Closing, or (vi) any federal
or state income tax payable by Company and attributable to the transaction contemplated by this Agreement.
14.2 THIRD PARTY CLAIMS. (a) DEFENSE. If any claim or
liability (a “Third-Party Claim”) should be asserted
against any of the Company Indemnified Parties (the “Indemnitee”) by a third party after the Closing for which Xxxxx has an indemnification obligation under the terms of Section 14.1, then the
Indemnitee shall notify Buyer and Subsidiary (the “Indemnitor”)
within 20 days after the Third-Party Claim is asserted by a third party (said notification being referred to as a “Claim Notice”) and give the Indemnitor a reasonable opportunity to take part in any examination
of the books and records of the Indemnitee relating to such Third-Party Claim and to assume the defense of such Third-Party Claim and in connection therewith and to conduct any proceedings or negotiations relating thereto and
necessary or appropriate to defend the Indemnitee and/or settle the Claim. The expenses (including reasonable attorneys’ fees) of all negotiations, proceedings, contests, lawsuits or settlements with respect to any Third-Party Claim
shall be borne by the Indemnitor. If the Indemnitor agrees to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, through counsel reasonably
satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the conduct of such defense, and any decision to settle such Third-Party Claim, and shall be responsible for any expenses of the Indemnitee in
connection with the defense of such Third-Party Claim so long as the Indemnitor continues such defense until the final resolution of such Third-Party Claim. The Indemnitor shall be responsible for paying all settlements made or judgments entered with respect to any Third-Party Claim the defense of which has
been assumed by the Indemnitor. Except as provided on subsection (b) below, both the Indemnitor and the Indemnitee must approve any settlement of a Third Party Claim. A failure by the Indemnitee to timely give the Claim Notice
shall not excuse Indemnitor from any indemnification liability except only to the extent that the Indemnitor is materially and adversely prejudiced by such failure.
(b) FAILURE TO DEFEND. If the Indemnitor shall not agree to assume the defense of any Third-Party Claim in writing within 20 days after the Claim Notice of such Third-Party Claim has been delivered, or shall fail to
continue such defense until the final resolution of such Third-Party Claim, then the Indemnitee may defend against such Third-Party Claim in such manner as it may deem appropriate and the Indemnitee may settle such Third-Party
Claim on such terms as it may deem appropriate. The Indemnitor shall promptly reimburse the Indemnitee for the amount of all settlement payments and expenses, legal and otherwise, incurred by the Indemnitee in connection
with the defense or settlement of such Third-Party Claim. If no settlement of such Third-Party Claim is made, then the Indemnitor shall satisfy any judgment rendered with respect to such Third-Party Claim before the Indemnitee is
required to do so, and pay all expenses, legal or otherwise, incurred by the Indemnitee in the defense against such Third-Party Claim.
14.3 NON-THIRD-PARTY CLAIMS. Upon discovery of any claim for
which Xxxxx has an indemnification obligation under the terms of Section 14.1 which does not involve a claim by a third party against the Indemnitee, the
Indemnitee shall give prompt notice to Buyer of such claim and, in any case, shall give Buyer such notice within 30 days of such discovery. A failure by Indemnitee to timely give the foregoing notice to Buyer shall not excuse Buyer from any indemnification liability except to the extent that Buyer is materially and adversely
prejudiced by such failure.
14.4 SURVIVAL. Except as otherwise provided in this Section
14.4, all representations and warranties made by Buyer, Subsidiary and Company in connection with this Agreement shall survive the Closing. Anything in this
Agreement to the contrary notwithstanding, the liability of all Indemnitors under this Section 14 shall terminate on the third (3rd) anniversary of the Closing
Date, except with respect to (a) liability for any item as to which, prior to the third (3rd) anniversary of the Closing Date, any Indemnitee shall have asserted
a Claim in writing, which Claim shall identify its basis with reasonable specificity, in which case the liability for such Claim shall continue until it shall have been finally settled, decided or adjudicated, (b)
liability of any party for Losses for which such party has an indemnification obligation, incurred as a result of such party’s breach of any covenant or
agreement to be performed by such party after the Closing, (c) liability of Buyer for Losses incurred by a Company Indemnified Party due to breaches of their
representations and warranties in Section 4 of this Agreement, and (d) liability of Buyer for Losses arising out of Third-Party Claims for which Xxxxx has an
indemnification obligation, which liability shall survive until the statute of limitation applicable to any third party’s right to assert a Third-Party Claim
bars assertion of such claim.
15. MISCELLANEOUS.
15.1 NOTICES. All notices and communications required or
permitted hereunder shall be in writing and deemed given when received by means of the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, or personal
delivery, or overnight courier, as follows:
(a) If to Company, addressed to:
00 Xxxxxx-xx 00-xxx
Xxxxxx-xx, Xxxxx, Xxxxx
Attn.: Xxxxx Xxxxxxx Xxx
Email: xxxxx@x-xx.xxx
With a copy to (which shall not constitute notice hereunder):
XxXXXXXX & ENGLISH, LLP
Xxx Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxxx, Esq.
Email: xxxxxxxxxxxx@xxxxxxxx.xxx
(b) If to Buyer or the Subsidiary, addressed to:
JFJ Digital Corp.
00 Xxxxxx-xx 00-xxx
Xxxxxx-xx, Xxxxx, Xxxxx
Attn.: Xxxxx Xxxxxxx Xxx
Email: xxxxx@x-xx.xxx
or to such other address as any party hereto shall specify pursuant to this Section 14.1 from time to time.
15.2 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or
after that waiver.
15.3. REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either case the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.
15.5 FURTHER ACTS. Company, Buyer and Subsidiary shall
execute any and all documents and perform such other acts which may be reasonably necessary to effectuate the purposes of this Agreement.
15.6 ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains
the entire understanding of the parties relating to the subject matter contained herein. No modification, amendment or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by the parties hereto. No waiver
by any party hereto of any breach of any term hereof shall be construed as a waiver of any subsequent breach of that term or any other term of the same or different nature.
15.7 ASSIGNMENT. No party may assign his or its rights or
obligations hereunder, in whole or in part, without the prior written consent of the other Parties.
15.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts or choice of laws thereof.
15.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, with the same effect as if all parties had signed the same document. Each such counterpart shall be an original, but all such counterparts taken together shall constitute a single agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page was an
original thereof.
15.10 SECTION HEADINGS AND GENDER. The Section headings used
herein are inserted for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. All personal pronouns used in this Agreement shall include the other genders, whether used in the masculine, feminine or
neuter, and the singular shall include the plural, and vice versa, whenever and as often as may be appropriate.
15.11 SPECIFIC PERFORMANCE; REMEDIES. Each of Company, Buyer
and Subsidiary acknowledges and agrees that the Company would be damaged irreparably if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, each of Company, Buyer and
Subsidiary agrees that the Company will be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its terms and provisions in any action instituted in any
court of the United States or any state thereof having jurisdiction over the parties and the matter, subject to Section 12.8, in addition to any other remedy to which they may be entitled, at law or in equity. Except as expressly provided herein, the
rights, obligations and remedies created by this Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity, and nothing herein will be considered an election of remedies.
15.12 SUBMISSION TO JURISDICTION; PROCESS AGENT; NO JURY TRIAL.
Each party to the Agreement hereby submits to the jurisdiction of any state or federal court sitting in the State of New York, in any action arising out of or
relating to this Agreement and agrees that all claims in respect of the action may be heard and determined in any such court. Each party to the Agreement also agrees not to bring any action arising out of or relating to this Agreement in any other
court. Each party to the Agreement agrees that a final judgment in any action so brought will be conclusive and may be enforced by action on the judgment or in any other manner provided at law or in equity. Each party to the Agreement waives any
defense of inconvenient forum to the maintenance of any action so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto.
EACH PARTY TO THE AGREEMENT XXXXXX AGREES TO WAIVE HIS OR HER RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope of this waiver is intended to be all encompassing of any and all actions that may be filed in any court and that
relate to the subject matter of the transactions, including, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Each party to the Agreement hereby acknowledges that this waiver is a material inducement
to enter into a business relationship and that they will continue to rely on the waiver in their related future dealings. Each party to the Agreement further represents and warrants that it has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND THE
WAIVER WILL APPLY TO ANY AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of commencement of any action, this Agreement may be filed as a written consent to
trial by a court.
15.13 CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto and no presumption or burden of proof will arise
favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local, or foreign law will be deemed also to refer to law as amended and all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties hereto intend that each representation, warranty, and covenant contained herein will have independent significance. If any party
hereto has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of
specificity) which that party has not breached will not detract from or mitigate the fact that such party is in breach of the first representation, warranty, or covenant
[SIGNATURE PAGE FOLLOWS THIS PAGE.]
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands as of the day and year first above written.
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COMPANY:
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By:
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Name: Xxx Xxxxx Xx
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Title: Chief Executive Officer
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SUBSIDIARY:
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I-ON COMMUNICATIONS CO., LTD
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By:
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Name: Xxx Xxxxx Xx
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Title: Chief Executive Officer
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BUYER:
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JFJ DIGITAL CORP.
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By:
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Name: Xxx Xxxxx Xx
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Title: Chief Executive Officer
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SCHEDULE I
SHAREHOLDERS
Xxxxx Xx : 14,292,723
XxxxXxx Xxx : 1,013,396
