Exhibit 10.1
ACQUISITION AGREEMENT
AMONG
AMERICAN SOIL TECHNOLOGIES, INC.,
SMART WORLD ORGANICS, INC.,
AND
THE STOCKHOLDERS LISTED ON EXHIBIT A HERETO
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TABLE OF CONTENTS
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
1.1 Issuance of the
Shares.................................................
1
1.2
Consideration..........................................................
1
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2. Representations and
Warranties of the Parties.......................... 2
2.1
Organization, Standing, Power...................................
2
2.2
Authority.......................................................
2
2.3
Capitalization of the Parties...................................
3
2.4
Subsidiaries....................................................
3
2.5
No
Defaults.....................................................
4
2.6
Governmental Consents...........................................
4
2.7
Financial
Statements............................................ 4
2.8
Absence of
Undisclosed Liabilities.............................. 4
2.9
Absence of
Changes.............................................. 4
2.10
Patents and
Trademarks........................................... 5
2.11
Certain
Agreements...............................................
6
2.12
Compliance with Other
Instruments................................ 6
2.13
Employee Benefit
Plans........................................... 6
2.14
Other Personal
Property.......................................... 6
2.15
Properties and
Liens............................................. 6
2.16
Inventory........................................................
6
2.17
Major
Contracts..................................................
7
2.18
Questionable
Payments............................................ 8
2.19
Recent
Transactions..............................................
8
2.20
Leases in
Effect.................................................
8
2.21
Taxes............................................................
8
2.22
Disputes and
Litigation.......................................... 9
2.23
Compliance with
Laws............................................. 9
2.24
Related Party
Transactions....................................... 9
2.25
Minute
Books..................................................... 10
2.26
Disclosure.......................................................
10
2.27
Reliance.........................................................
10
ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions to Each Party's
Obligations................................. 10
3.2 Conditions to Seller's
Obligations..................................... 10
3.3 Conditions to Buyer's
Obligations...................................... 11
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ARTICLE 4
CLOSING AND DELIVERY OF DOCUMENTS
4.1 Time and
Place........................................................
12
4.2 Deliveries by
Seller.................................................. 12
4.3 Deliveries by the
Company............................................. 12
4.4 Deliveries by
Buyer................................................... 13
ARTICLE 5
INDEMNIFICATION
5.1 Seller and the
Company's Indemnity Obligations........................ 13
5.2 Buyer's Indemnity
Obligations......................................... 14
ARTICLE 6
DEFAULT, AMENDMENT AND WAIVER
6.1
Default...............................................................
14
6.2 Waiver and
Amendment.................................................. 14
ARTICLE 7
MISCELLANEOUS
7.1
Expenses..............................................................
15
7.2
Notices...............................................................
15
7.3 Entire
Agreement......................................................
16
7.4 Survival of
Representations........................................... 16
7.5 Incorporated by
Reference............................................. 16
7.6 Remedies
Cumulative...................................................
16
7.7 Execution of
Additional Documents..................................... 16
7.8 Costs and
Fees........................................................ 16
7.9 Choice of
Law......................................................... 16
7.10
Jurisdiction..........................................................
17
7.11 Attorneys'
Fees....................................................... 17
7.12 Binding Effect and
Assignment......................................... 17
7.13 Counterparts; Facsimile
Signatures.................................... 17
7.14 Conflict
Waiver.......................................................
17
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TABLE OF CONTENTS
TABLE OF SCHEDULES AND EXHIBITS
Exhibit A Shareholders
of Smart World Organics, Inc.
Exhibit B American
Soil Technologies, Inc. Disclosure Schedule
Exhibit C Smart World
Organics, Inc. Disclosure Schedule
Exhibit D Smart World
Organics, Inc. Shareholders Disclosure Schedule
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ACQUISITION AGREEMENT
THIS
ACQUISITION AGREEMENT (the "Agreement"), dated July 7, 2006, is by
and
between AMERICAN SOIL
TECHNOLOGIES, INC., a
Nevada corporation
(the "Buyer"),
SMART WORLD ORGANICS,
INC., a Florida
corporation
(the "Company"), and the
persons and/or
entities listed on Exhibit A hereto who are
the holders in the
aggregate of 100% of
the issued and
outstanding capital
stock of the
Company
(referred to
collectively
as the "Seller") (individually, a "Party";
collectively, the "Parties").
RECITALS
A.
The capital stock of the Company consists of 100 authorized shares of
Common Stock, of which
100 are currently
issued and
outstanding
and held by
Seller (the "Shares").
B.
Upon the terms and
conditions set forth
below, Seller desires
to sell
all of the Company Shares to Buyer, such that, following such transaction,
the
Company will be a 100% owned subsidiary of Buyer.
NOW,
THEREFORE,
in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement,
the Parties hereto
agree as follows:
ARTICLE 1
SALE AND PURCHASE OF THE SHARES
1.1
Issuance of the Shares. Subject to the terms and
conditions herein set
forth, and on the basis of the representations, warranties and
agreements herein
contained, Seller
shall sell and
transfer to Buyer that certain number of the
Company Shares that will constitute 100% of the issued and
outstanding
common
stock of the Company.
1.2
Consideration.
The purchase price for the Company Shares shall be
2,300,000 shares of common stock of Buyer (the "Buyer's
Stock").
1.3
Earnest Money Deposit. The Buyer shall deposit with the Seller
$100,000
as an earnest money deposit which shall be refundable if the
acquisition
fails
to close.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.
Representations and Warranties of the Parties. Except as disclosed in a
document referring
specifically to the
representations and
warranties in this
Agreement that
identifies by section number the section and subsection to
which
such disclosure
relates and is
delivered by each
Party to the others prior to
the execution
of this Agreement (the "Disclosure Schedules"), the Parties
represent and
warrant each to the other, as of the date hereof and as of
the
Closing, as follows:
1
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2.1
Organization, Standing, Power.
(a)
Buyer. Buyer is a corporation duly organized, validly existing, and in
good standing
under the laws of the state of Nevada. It has all requisite
corporate power,
franchises,
licenses, permits, and authority to own its
properties and assets
and to carry on its
business as it has been and is being
conducted. Buyer is
duly qualified and in
good standing to do business in each
jurisdiction in which
a failure to so
qualify would
have a Material
Adverse
Effect (as defined
below) on Buyer. For
purposes of this
Agreement, the
term
"Material Adverse Effect" means any change or effect that,
individually or
when
taken together with
all other such changes or effects which have occurred prior
to the date of
determination of the
occurrence of the Material Adverse Effect,
is or is reasonably
likely to be
materially adverse to
the business,
assets
(including intangible assets), financial condition, or results of
operations of
the entity.
(b)
The Company.
The Company is a
corporation
duly organized, validly
existing, and in good
standing under the
laws of the state of Florida. It has
all requisite corporate power, franchises, licenses, permits, and authority to
own its properties and assets and to carry on its business as it
has been and is
being conducted.
The Company is duly qualified and in good standing to do
business in each
jurisdiction
in which a failure to
so qualify
would have a
Material Adverse Effect (as defined above) on the Company.
2.2
Authority. The Parties
have all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by the Parties of this Agreement and the
consummation of
the transactions
contemplated hereby have been duly authorized by all necessary
action on the parts of
the Parties,
including the approval of the Board of
Directors of each Party. This Agreement has been duly
executed and delivered by
the Parties to each other and constitutes a valid and binding
obligation of each
Party enforceable in accordance with its terms, except that such
enforceability
may be subject to: (a) bankruptcy, insolvency, reorganization, or other
similar
laws relating to enforcement of creditors' rights generally; and (b) general
equitable principles. Subject to the satisfaction of the conditions
set forth in
Article 3 below, the
execution and delivery
of this Agreement do
not, and the
consummation of the transactions contemplated hereby will not,
conflict with or
result in any violation of, or default (with or without notice or
lapse of time,
or both) under, or give rise to a right of termination, cancellation, or
acceleration of any obligation, or to loss of a material
benefit under, or
the
creation of a lien, pledge, security interest, charge, or other encumbrance
on
any assets of any of the Parties (any such conflict, violation, default, right,
loss, or creation being referred to herein as a
"Violation")
pursuant to: (i)
any provision of the organization documents of the Parties; or (ii)
any loan or
credit agreement,
note, bond, mortgage,
indenture, contract,
lease, or other
agreement, or instrument, permit, concession, franchise, license, judgment,
order, decree,
statute, law, ordinance, rule, or regulation applicable to
each
of the Parties' respective properties or assets, other than in the case of any
such Violation which
individually or in the aggregate would not have a Material
Adverse Effect on any of the Parties.
2
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2.3
Capitalization of the Parties.
(a)
The Company. The capital stock of the Company consists of 100
authorized shares
of Common Stock, of which 100 are currently issued and
outstanding and held by Seller.
(c)
Upon issuance pursuant to the terms of this Agreement, the Shares will
be duly and
validly issued, fully paid and nonassessable, and issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Act"), and any relevant state
securities laws or
pursuant to valid exemptions therefrom. The Shares are free of
restrictions on
transfer other than
restrictions
on transfer
as set forth in the
Disclosure
Schedules and under
applicable state and
federal securities
laws. The Shares
shall be issued in a private transaction and consequently
will be deemed to
be
"Restricted Securities" as set forth in Rule 144 promulgated under
the Act.
(d)
Except as set forth on the Disclosure Schedules, there are no options,
warrants, rights,
calls, commitments,
plans, contracts, or other agreements of
any character
granted or issued by
any of the Parties
which provide for the
purchase, issuance, or transfer of any additional shares of the
capital stock of
the Parties nor are there any outstanding securities granted or
issued by any of
the Parties that are convertible into any shares of the equity
securities of the
Parties, and none is authorized. None of the Parties have
outstanding any bonds,
debentures, notes, or
other indebtedness the holders of which have the right to
vote (or convertible or exercisable into securities having the right to vote)
with holders of the Parties' capital stock on any matter.
(e)
Except as set forth on the Disclosure Schedules, none of the Parties
are a party or subject to any agreement or understanding, and, to the best of
the Parties'
knowledge,
there is no agreement
or understanding between any
persons and/or
entities, which affects or relates to the voting
or giving of
written consents with respect to any security or by a shareholder
or director of
any of the Parties.
(f)
Except as set forth on the Disclosure Schedules, none of the Parties
have granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity.
2.4
Subsidiaries.
"Subsidiary" or
"Subsidiaries" means
all corporations,
trusts, partnerships, associations, joint ventures, or other
Persons, as defined
below, of which any of
the Parties or any Subsidiary of any of the Parties owns
not less than 20% of the voting securities or other equity or of which any of
the Parties or any
Subsidiary
of any of the
Parties possesses, directly or
indirectly, the power
to direct or cause the
direction of the
management and
policies, whether
through ownership of voting shares, management contracts, or
otherwise. "Person"
means any individual, corporation, trust, association,
partnership,
proprietorship, joint
venture, or other entity. Prior to the
Closing of this Agreement, there are no Subsidiaries of any of the
Parties other
than as disclosed herein or disclosed on the Disclosure
Schedules.
3
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2.5
No Defaults. None of
the Parties has
received notice that
they would
be, with the passage of time, in default or violation of any term,
condition, or
provision of: (i) their Articles of Incorporation or Bylaws;
(ii) any judgment,
decree, or order
applicable to any of the Parties; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, contract, agreement,
lease, license,
or other instrument to
which any of the Parties is now a party or by which they
or any of their
properties or assets
may be bound,
except for
defaults and
violations which,
individually or in the
aggregate, would not
have a Material
Adverse Effect on any of the Parties.
2.6
Governmental Consents. Any consents, approvals, orders, or
authorizations of or registrations, qualifications, designations,
declarations,
or filings
with or exemptions by (collectively "Consents"), any court,
administrative agency,
or commission, or other federal, state, or local
governmental authority
or instrumentality,
whether domestic or foreign (each a
"Governmental
Entity"), which may be
required by or with respect to any of the
Parties in connection
with the execution and delivery of this Agreement or the
consummation by the Parties of the transactions contemplated hereby, except
for
such Consents
which if not obtained
or made would not have a Material Adverse
Effect on any
of the Parties for the transactions contemplated by this
Agreement, are the
responsibility of the
respective Party. Each of the Parties
hereby represents and warrants that such Consents have been
obtained by them, if
necessary.
2.7
Financial Statements.
The Company has
furnished Buyer with a true and
complete copy of its financial statements for the years ending
December 31, 2004
and 2005 and the period ending May 3, 2006 (the "Financial
Statements"),
which,
in reliance upon the Company's outside independent auditing firm, comply as to
form in all material respects with all applicable accounting requirements with
respect thereto
and have been
prepared internally and fairly present the
financial positions
of the Company as at
the dates thereof and
the results of
its operations and cash flows for the periods then ended
(subject, in the case
of unaudited statements, to normal, recurring audit
adjustments not material in
scope or amount). To the best of the Company's directors' knowledge and
belief,
there has been no change in the Company's accounting policies or the methods
of
making accounting
estimates or changes
in estimates
that are material to
the
Financial Statements, except as described in the notes thereto.
2.8
Absence of Undisclosed Liabilities. To the best of their knowledge
and
belief, none of the
Parties have any liabilities or obligations (whether
absolute, accrued,
or contingent)
except: (i)
liabilities that are accrued or
reserved against
in their respective Balance Sheets; or (ii) additional
liabilities reserved
against since May 3, 2006 that (x) have arisen in the
ordinary course of business; (y) are accrued or reserved
against on their books
and records; and (z) amount in the aggregate to less than
$10,000.
2.9
Absence of Changes. To
the best of their
knowledge and belief,
since
May 3, 2006, the Parties have conducted their businesses in the ordinary
course
and there has not
been: (i) any Material Adverse Effect on the business,
financial condition, liabilities, or assets of the Parties or any
development or
combination of
developments
of which management of the Parties has
knowledge
which is reasonably
likely to result in such an effect; (ii) any damage,
destruction, or loss,
whether or not covered
by insurance,
having a Material
4
<PAGE>
Adverse Effect on the Parties; (iii) any declaration,
setting aside or
payment
of any dividend or other distribution (whether in cash, stock, or
property) with
respect to the capital stock of the Parties; (iv) any increase or change in
the
compensation or
benefits payable or to
become payable by the Parties to any of
their employees,
except in the ordinary course of business consistent with past
practice; (v) any
sale, lease,
assignment,
disposition,
or abandonment of
a
material amount of
property of the Parties, except in the ordinary course of
business; (vi) any increase or modification in any bonus, pension,
insurance, or
other employee benefit plan, payment, or arrangement made to, for, or
with any
of their employees;
(vii) the granting of stock options, restricted stock
awards, stock
bonuses, stock appreciation rights, and similar equity based
awards; (viii) any resignation or termination of employment of any
office of the
Parties; and the
Parties, to the best
of their knowledge,
do not know of the
impending resignation
or termination of employment of any such office; (ix) any
merger or
consolidation with
another entity,
or acquisition of assets from
another entity
except in the ordinary course of business; (x) any loan or
advance by the Parties
to any person or entity, or guaranty by the Parties of
any loan or
advance; (xi) any amendment or termination of any contract,
agreement, or
license to which any
of the Parties
is a party,
except in the
ordinary course of business; (xii) any mortgage, pledge, or other
encumbrance of
any asset of any of the Parties; (xiii) any waiver or release of any right
or
claim of the Parties, except in the ordinary course of business;
(xiv) any write
off as uncollectible any note or account receivable or portion
thereof; or (xv)
any agreement
by any of the Parties
to do any of the things described in this
Section 2.9.
2.10
Patents and
Trademarks. The
Parties each have
sufficient title
and
ownership of all patents, trademarks, service marks, trade names,
copyrights,
trade secrets,
information,
proprietary rights,
and processes
(collectively,
"Intellectual Property") necessary for their businesses as now
conducted without
any conflict
with or infringement of the rights of others. There are no
outstanding options,
licenses, or agreements of any kind relating to the
Intellectual Property,
nor are any of the
Parties bound by or a party to any
options, licenses,
or agreements of any
kind with respect to the Intellectual
Property of any other
person or entity. None
of the Parties has
received any
communications
alleging that
they have violated or, by conducting their
businesses as proposed, would violate any of the
Intellectual
Property of any
other person
or entity. None of the Parties are aware that any of their
employees is obligated under any contract (including licenses, covenants, or
commitments of any
nature) or other
agreement,
or subject to any judgment,
decree, or order of
any court or
administrative agency,
that would
interfere
with the use of his or her best efforts to promote the interests of the Parties
or that would conflict with each of the Parties' respective
business as proposed
to be conducted.
Neither the execution or delivery of this Agreement, nor the
carrying on of each of the Parties' respective business by their respective
employees, nor the
conduct of each of the Parties' respective business as
proposed, will, to the
best of the Parties' knowledge, conflict with or result
in a breach of the terms, conditions or provisions
of, or constitute a
default
under, any contract,
covenant, or
instrument under which any of such employees
is now obligated. None of the Parties believe that it is or will be
necessary to
utilize any inventions
of any of its employees (or people it currently intends
to hire) made prior to their employment by any of the Parties.
2.11
Certain Agreements. To
the best of the Parties' knowledge and belief,
neither the execution and delivery of this Agreement nor the
consummation of the
transactions
contemplated hereby
will: (i) result in
any payment
(including,
without limitation,
severance,
unemployment
compensation,
parachute payment,
5
<PAGE>
bonus, or otherwise),
becoming due to any
director, employee,
or independent
contractor of any of
the Parties, from any
other Party under any
agreement or
otherwise; (ii)
materially increase
any benefits otherwise
payable under any
agreement; or (iii) result in the acceleration of the time of
payment or vesting
of any such benefits.
2.12
Compliance
with Other Instruments. To the best of the Parties'
knowledge and belief,
none of the Parties
are in violation
or default of any
provision of their respective articles of incorporation or bylaws, or of any
instrument, judgment, order, writ, decree, or contract to which
they are a party
or by which they are bound, or, to the best of their knowledge, of
any provision
of any federal or state statute, rule, or regulation which may be
applicable to
them. The execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby will not
result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree, or contract, or an event
that results
in the creation of any lien, charge, or encumbrance upon any assets
of any Party
or the suspension,
revocation,
impairment,
forfeiture,
or nonrenewal of
any
material permit,
license,
authorization, or
approval applicable to any Party,
its businesses, or operations, or any of its assets or
properties.
2.13
Employee Benefit
Plans. The Parties have no employee
benefit plans
(including without
limitation all plans
which authorize the
granting of stock
options, restricted stock, stock bonuses, or other equity based
awards) covering
active, former, or
returned employees,
other than as listed
in the Disclosure
Schedules.
2.14
Other Personal Property. The books and records of each of
the Parties
contain a complete and accurate description, and specify the location,
of all
trucks, automobiles,
machinery,
equipment,
furniture,
supplies, and other
tangible personal
property owned by, in the possession of, or used by the
Parties in
connection
with their businesses. Except as set forth in the
Disclosure Schedules,
no personal
property used by the Parties in
connection
with their businesses is held under any lease, security agreement, conditional
sales contract, or other title retention or security
arrangement.
2.15
Properties and Liens. Except as reflected in the Financial
Statements
or as
