AGREEMENT AND PLAN OF
REORGANIZATION AND
ASSET PURCHASE
AGREEMENT
This AGREEMENT AND PLAN OF
REORGANIZATION AND ASSET PURCHASE AGREEMENT dated as of
November 1, 2006 (the "Agreement") is entered into by and between
PRIMEDGE, INC., a Nevada corporation, ("Buyer")
and ROYAL PALM CAPITAL GROUP, INC., a Florida
corporation (“Seller”).
PREAMBLE
WHEREAS, the strategic intent of the Buyer and Seller
pursuant to this Agreement is to reorganize the ownership and
control of the Buyer, the Seller and certain subsidiaries of the
Seller as follows:
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Seller will
receive a principal equity interest in the Buyer with the intent
that the shareholders of the Seller will ultimately receive the
distribution of the stock representing this principal equity
interest,
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Seller will
receive the controlling voting interest in the Buyer,
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Seller intends
to use a portion of the principal equity interest in the Buyer to
satisfy a significant portion of its debt and the debt of a
wholly-owned subsidiary,
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Buyer will
receive the equity ownership interest in certain of Seller’s
wholly-owned and minority owned subsidiaries, which subsidiaries
will become subsidiaries of the Buyer; and
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WHEREAS, Seller desires to convey, sell and assign to
Buyer all of Seller’ right, title and interest in and to the
Assets (as more fully described below, the “Assets”),
upon the terms and conditions contained in this Agreement;
and
WHEREAS, Buyer desires to purchase the Assets upon the
terms and conditions contained in this Agreement.
NOW THEREFORE, in consideration of the mutual promises and
other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties agree as follows:
1.
Sale and Purchase of
Assets.
1.1 Sale and Purchase of Assets.
Subject to the terms and conditions of this Agreement, Seller
shall sell to Buyer, and Buyer shall purchase from Seller, the
following assets of Seller (the “Assets”).
(1) 25,498,335 shares of common stock in Media
Magic, Inc., a Florida corporation (“MMI”),
representing approximately 49% of the issued and
outstanding shares of MMI (“MMI Shares”),
(2) 6,676,249 shares of common stock in Cirilium
Holdings, Inc., a Delaware corporation (CRLU”), representing
approximately 12% of the issued and outstanding shares of
CRLU (“CRLU Shares”),
2. Purchase
Price; Payment; Allocation.
(3) limited liability membership interest in STS
Technologies, LLC, a Florida limited liability company
(“STS”), representing approximately 51% of the issued
and outstanding limited liability interest in STS (STS Membership
Interest”),
(4) 17,186,050 shares of common stock in the Buyer
(“PrimEdge Shares”), representing approximately 12.55%
of the issued and outstanding shares of the Buyer,
(5) Notes receivable in the amount of $295,429
(“Notes Receivable”) owed to the Seller by parties not
affiliated with the Seller, and
(6) cancellation of $260,819 in debt
(“DigiKidz Debt”) owed to the Seller by DigiKidz, Inc.,
a Delaware corporation and 95.1% owned subsidiary of the Buyer
(“DigiKidz”).
1.2 Liabilities Excluded. In
connection with Buyer’s purchase of the Assets, Buyer shall
not assume or become responsible for any of the indebtedness,
liabilities or obligations of Seller (the
“Liabilities”).
2.1 Purchase Price. The purchase price for the Assets shall be
paid by delivery to Seller at the Closing, of the
following:
(1) a certificate evidencing an aggregate of one
shares (1) of Series A Preferred Stock of the Buyer (the
“Series A Shares”), the designation of which is
attached hereto as Exhibit I, and
(2) a certificate evidencing an aggregate of
thirty million shares (30,000,000) of Series B Preferred Stock of
the Buyer (the “Closing Series B Shares”), the
designation of which is attached hereto as Exhibit
II.
2.2 Additional Consideration.
Seller is indebted to 101 persons (“Seller’s Note
Holders”) in the amount of $6,287,075 including accrued
interest (“Seller’s Notes”), and ACC is indebted
to 94 persons (“ACC Note Holders”) in the amount of
$4,588,400, including accrued interest (“ACC Notes”).
Buyer and Seller have agreed that Seller shall offer the
Seller’s Note Holders and the ACC Note Holder’s, within
30 days following the Closing Date, the right to convert the
Seller’s Notes and the ACC Notes into shares of common stock
of the Seller. As additional consideration for the Assets, Buyer
shall pay Seller up to an additional eleven million shares
(11,000,000) of Series B Preferred Stock of Buyer
(“Additional Series B Preferred Stock” and together
with the Closing Series B Preferred Stock, the “Series B
Preferred Stock”) as follows:
(1) for every $1.00 of the Seller’s Note
converted into shares of common stock of the Seller, Buyer shall
issue one (1) share of Additional Series B Preferred Stock,
and
(2) for every $1.00 of the ACC Notes converted into
shares of common stock of the Seller, Buyer shall issue one (1)
share of Additional Series B Preferred Stock.
2.3 Federal and State Filings.
Buyer is currently delinquent in its reporting requirements
with the Securities and Exchange Commission (“SEC”)
and, as of the date hereof, needs to filing its annual report on
Form 10-KSB for the year end December 31, 2005 and the quarterly
reports on Form 10-QSB for the quarters ended March 31, 2006 and
June 30, 2006 (“Delinquent Reports”). In addition,
Buyer does not have a sufficient amount of common stock authorized
to permit conversion of the Series B Preferred Stock. Subsequent to
the Closing Date, but no later than nine (9) months from the
Closing Date, Buyer will file (1) the Delinquent Reports and any
and all other reports then due, under the Securities Exchange Act
of 1934, as amended, (“1934 Act”) and (2) the
appropriate filings under the 1934 Act and with the State of Nevada
in order to increase its authorized common stock from 200,000,000
shares into an adequate quantity of shares of common stock in order
to provide for the automatic conversion of all the issued shares of
Series B Preferred Stock into shares of common stock of the Buyer
(the “Conversion Common Stock”). Such filings will also
provide for a reverse stock split of all the outstanding shares of
common stock of the Buyer.
2.4 Registration and Spin-Off.
Subsequent to the Closing Date, but no later than one (1)
year from the Closing Date, provided the conditions set forth in
Section 2.3 are satisfied, Buyer will prepare and file an
appropriate registration statement with the SEC for the
distribution of the Conversion Common Stock to the stockholders of
Seller of record on the 31st day following the Closing Date,
including the dissemination of appropriate information concerning
the distribution of the Conversion Common Stock to the stockholders
of Seller upon effectiveness of the registration statement, per the
terms and conditions of the separate Registration Rights Agreement,
a copy of which is attached hereto as Exhibit
III.
2.5 The Series A Preferred Stock and Series B
Preferred Stock. The Series A Preferred Stock, Series B
Preferred Stock and the Conversion Common Stock, have not been
registered under the Securities Act of 1933, as amended (the
“Act”), and such securities may not be sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of absent
registration under the Act or the availability of an applicable
exemption therefrom. Each certificate evidencing any of the Series
A Preferred Stock, Series B Preferred Stock and Buyer’s
Common Stock shall bear the following or substantially
legend:
These
securities have not been registered under the Securities Act of
1933, as amended, or any state securities laws and may not be sold
or otherwise transferred or disposed of except pursuant to an
effective registration statement under any applicable federal and
state securities laws, or an opinion of counsel satisfactory to the
Company that an exemption from registration is
available.
3. Representations and Warranties of
Seller. Except as otherwise set forth in a schedule
delivered by the Seller at the time this Agreement is executed and
delivered (the “Seller’s Schedule”), Seller
hereby makes the following representations and warranties to Buyer,
as of the date hereof and as of the Closing Date. Nothing in the
Seller’s Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however,
unless the Seller’s Schedule identifies the exception with
reasonable particularity and describes the relevant facts in
reasonable detail. The Seller’s Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement.
3.1 Organization and Good Standing.
Seller is a Florida corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
formation, with full power and authority to own, lease and operate
its business and properties and to carry on its business in the
places and in the manner as presently conducted or proposed to be
conducted. Seller is in good standing as a foreign corporation in
each jurisdiction in which the properties owned, leased or
operated, or the business conducted, by it requires such
qualification, except where the failure to so qualify would not
have a material adverse effect on the business of Seller, taken as
a whole, or consummation of the transactions contemplated hereby (a
“Seller Material Adverse Effect”).
3.2 Authority and Enforcement.
Seller has all requisite power and authority to execute and
deliver this Agreement, and to consummate the transactions
contemplated hereby, including stockholder approval. Seller has
taken all action necessary for the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby, and this Agreement constitutes the valid and binding
obligation of Seller, enforceable against Seller in accordance with
its terms, except as may be affected by bankruptcy, insolvency,
moratoria or other similar laws affecting the enforcement of
creditors’ rights generally and subject to the qualification
that the availability of equitable remedies is subject to the
discretion of the court before which any proceeding therefore may
be brought.
3.3 No Conflicts or Defaults.
Except as set forth on the Seller’s Schedule, the
execution and delivery of this Agreement by Seller and the
consummation of the transactions contemplated hereby do not and
shall not (a) with or without the giving of notice or the passage
of time (i) violate, conflict with, or result in a material breach
of, or a material default or loss of rights under, any covenant,
agreement, mortgage, indenture, lease, instrument, permit or
license to which either Seller is a party or by which either Seller
is bound, or any judgment, order or decree, or any law, rule or
regulation to which Seller are subject, (ii) result in the creation
of, or give any party the right to create, any lien, charge,
encumbrance, security interest or any other right or adverse
interest (“Liens”) upon any of the Assets, (iii)
terminate or give any party the right to terminate, amend, abandon
or refuse to perform, any material agreement, arrangement or
commitment relating to the Assets, or (iv) result in a Seller
Material Adverse Effect.
3.4 Consents of Third Parties.
Except as set forth on the Seller’s Schedule, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Seller does
not require the consent of any person, or such consent has or will
be obtained, in writing, prior to the Closing.
3.5 No Litigation. Except as set
forth on the Seller’s Schedule there are no legal, equitable,
administrative, arbitration, governmental, regulatory or other
proceedings pending against Seller, or, to the best knowledge of
Seller, threatened against it, an adverse determination to which
would result in a Seller Material Adverse Effect.
3.6 No Options or Other Agreements.
There are no options or agreements of any character to which
Seller is a party, or by which Seller is bound that, if exercised
or consummated, would result in a Seller Material Adverse
Effect.
3.7 Title to Assets. Seller is the
owner of the Assets, free and clear of all liens. Upon consummation
of the transactions contemplated hereby, Buyer will acquire good
and marketable title to the Assets, free and clear of all
Liens.
3.8 Absence of Liabilities. Except as set forth on the Seller’s
Schedule, Seller has no liabilities, contingent or otherwise, that
would result in a Seller Material Adverse Effect.
3.9 Contract Rights. Each of the
agreements, contracts or contract rights included in the Assets is
in full force and effect, and no party to any such agreement,
contract or right is in material breach of any provision thereof.
Each agreement, contract or contract right included in the Assets
may be assigned to Buyer without the consent or approval of any
third party, or, if such consent or approval is required, it has or
will be obtained at or prior to the Closing.
3.10 Intellectual Property. To the
extent that the Assets include any trademarks, copyrights, trade
names, service marks, trade secrets, license agreements,
proprietary processes, business methods or similar tangible or
intangible property (“Intellectual Property”), such
Intellectual Property is owned by Seller, free and clear of all
Liens. To the best of Seller’s knowledge, such Intellectual
Property does not infringe upon or otherwise violate the rights of
any third person, and Seller have received no notice of any such
infringement or violation. To the extent that any such Intellectual
Property is licensed by Seller to any third party, the license is
in full force and effect, the licensee is not in breach or
violation of the license agreement and Seller have no knowledge
that any such Intellectual Property is being used in violation of
Seller’ proprietary rights.
3.11 Compliance with Laws. Seller
is in compliance with all laws, rules, regulations, codes, orders,
rulings and judgments of federal, state, local and foreign
governments and regulatory bodies, except where the failure to
comply would not result in a Seller Material Adverse
Effect.
3.12 Tax Matters. Seller has filed
all federal, state, local and foreign tax returns required to be
filed by it, and has paid all taxes shown to be due thereon. All
such tax returns are true, complete and accurate. No tax return of
Seller has been audited or is currently under audit, nor has Seller
been notified that any such audit is to take place.
3.13 Securities Representations;
Acknowledgment of Risks. Seller is acquiring the Series A
Preferred Stock and Series B Preferred Stock for its own account,
for investment purposes only and not with a view towards the
distribution or resale of the Series A Preferred Stock, Series B
Preferred Stock or Conversion Common Stock except in compliance
with applicable law. Seller has such experience in financial and
business matters that it is able to evaluate the risks and merits
of an investment in Buyer. Seller acknowledges that it has received
all information, and has conducted its owned due diligence on
Buyer, that is necessary to make an investment decision to receive
the securities of Buyer. Seller recognizes and acknowledges that
the transactions contemplated by this Agreement, including
Seller’s receipt of the Series A Preferred Stock and Series B
Preferred Stock as consideration for the Assets, are speculative
and involve a high degree of risk. Such risks include, but are not
limited to, the following:
(1) the business of the Buyer consists of the
operation of DigiKidz, and is subject to all of the risks inherent
of a developmental stage business;
(2) DigiKidz has generated only a limited amount
of revenues and at June 30, 2006, had year-to-date net losses of
$643,785, an accumulate deficit of $1,092,490, and total
liabilities of $475,099 and there is no assurance that Buyer or
DigiKidz will operate profitably;
(3) Buyer’s common stock is quoted on the
Pink Sheets and there is currently only a limited market for the
Buyer’s securities and, Seller, or Seller’s
stockholders, may have difficulty reselling the Conversion Common
Stock, at a profit or at all;
(4) Buyer, and DigiKidz will require additional
financing in order to continue its business plans and there is no
assurance that required financing will be available to Buyer or
DigiKidz on acceptable terms, or at all;
(5) future equity financings will dilute the
relative ownership of Buyer by its existing shareholders, and
depending on the price at which additional shares are issued, may
dilute the book value per share of Buyer’s common
stock;
(6) Buyer and DigiKidz will have to overcome the
challenges of marketing, on-line commerce and introduction of a new
product in order to succeed, and there is no assurance that it will
be able to do so;
(7) Buyer and DigiKidz will face competition from
many entities, most of whom have greater financial and physical
resources than does Buyer and DigiKidz; and
(8) as its business develops, Buyer may have
difficulty attracting and retaining qualified personnel.
3.14 Disclosure. The
representations, warranties and acknowledgments of Seller set forth
herein are true, complete and accurate in all material respects, do
not omit to state any material fact, or omit any fact necessary to
make such representations, warranties and acknowledgments, in light
of the circumstances under which they are made, not
misleading.
4. Representations and Warranties of
Buyer. Except as otherwise set forth in a schedule
delivered by Buyer not later than three business days prior to the
Closing (the “Buyer’s Schedule”), Buyer hereby
makes the following representations and warranties to Seller, as of
the date hereof and as of the Closing Date. Nothing in the
Buyer’s Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however,
unless the Buyer’s Schedule identifies the exception with
reasonable particularity and describes the relevant facts in
reasonable detail. The Buyer’s Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement.
4.1 Organization and Good
Standing. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of formation, with full corporate power and authority
to own, lease and operate its business and properties and to carry
on its business in the places and in the manner as presently
conducted or proposed to be conducted. Buyer is in good standing as
a foreign corporation in each jurisdiction in which the properties
owned, leased or operated, or the business conducted, by it
requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the business of Buyer,
taken as a whole, or consummation of the transactions contemplated
hereby (a “Buyer Material Adverse Effect”).
4.2 Authority and Enforcement.
Buyer has all requisite corporate power and authority to
execute and deliver this Agreement, and to consummate the
transactions contemplated hereby. Buyer has taken all corporate
action necessary for the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and
this Agreement constitutes the valid and binding obligation of
Buyer, enforceable against each in accordance with its terms,
except as may be affected by bankruptcy, insolvency, moratoria or
other similar laws affecting the enforcement of creditors’
rights generally and subject to the qualification that the
availability of equitable remedies is subject to the discretion of
the court before which any proceeding therefore may be
brought.
4.3 No Conflicts or Defaults.
Except as set forth on the Buyer’s Schedule, the
execution and delivery of this Agreement by Buyer and the
consummation of the transactions contemplated hereby do not and
shall not (a) contravene the Certificate of Incorporation or Bylaws
of Buyer or (b) with or without the giving of notice or the passage
of time (i) violate, conflict with, or result in a material breach
of, or a material default or loss of rights under, any covenant,
agreement, mortgage, indenture, lease, instrument, permit or
license to which Buyer is a party or by which Buyer is bound, or
any judgment, order or decree, or any law, rule or regulation to
which Buyer is subject, (ii) result in the creation of, or give any
party the right to create, any Lien upon any assets or properties
of Buyer, (iii) terminate or give any party the right to terminate,
amend, abandon or refuse to perform, any material agreement,
arrangement or commitment relating to which Buyer a party, or (iv)
result in a Buyer Material Adverse Effect.
4.4 Consents of Third Parties.
Except as set forth on the Buyer’s Schedule, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by Buyer does
not require the consent of any person, or such consent has been or
will be obtained, in writing, prior to the Closing.
4.5 Buyer Capitalization. Buyer is
authorized to issue (a) 200,000,000 shares of common stock, $.001
par value per share, of which 136,908,136 shares are issued and
outstanding and (b) 50,000,000 shares of preferred stock, $.001 par
value per share, of which one (1) share has been designated as
Series A Preferred Stock, none of which are issued and outstanding,
and forty million (40,000,000) shares have been designated as
Series B Preferred Stock, none of which are issued or outstanding.
Except as set forth on the Buyer’s Disclosure Schedules,
there are no options, warrants or other securities convertible into
common stock of Buyer. The issued and outstanding capital stock of
Buyer has been duly authorized and validly issued, and is
fully-paid and non-assessable and not subject to the preemptive or
similar rights of any person.
4.6 Securities. The Series A
Preferred Stock and Series B Preferred Stock have been duly
authorized, and upon issuance pursuant to the provisions hereof,
will be validly issued, fully paid and non-assessable.
4.7 No Litigation. Except as set
forth on the Buyer’s Schedule, there are no legal, equitable,
administrative, arbitration, governmental, regulatory or other
proceedings pending against Buyer, or, to the best knowledge of
Buyer, threatened against it, an adverse determination to which
would result in a Buyer Material Adverse Effect.
4.8 Financial Statements. Buyer has
delivered to Seller (a) the unaudited consolidated balance sheet of
Buyer as of June 30, 2006 and the related statements of operations,
stockholders’ equity and cash flows for the quarter then
ended, including the notes thereto (the “Buyer’s
Financial Statements”). The Buyer’s Financial
Statements have been prepared in accordance with U.S. generally
accepted accounting principles (“GAAP”) applied on a
basis consistent throughout all periods presented, subject to
normal recurring adjustments upon audit, and present fairly the
financial position of Buyer as of the dates and for the periods
indicated.
4.9 No Undisclosed Liabilities.
Buyer has engaged in no
material transactions other than negotiations relating to this
Agreement and the transactions contemplated hereby. Buyer has no
liabilities, obligations, claims or losses (whether liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance
sheet of Buyer in conformity with GAAP which are not disclosed in
the Buyer’s Financial Statements, other than those disclosed
elsewhere herein or incurred in the ordinary course of
Buyer’s business since the date of the Buyer’s
Financial Statements, which, individually or in the aggregate, do
not or would not have a Buyer Material Adverse Effect.
4.10 Compliance with Laws. Buyer is
in compliance with all laws, rules, regulations, codes, orders,
rulings and judgments of federal, state, local and foreign
governments and regulatory bodies, except where the failure to
comply would not result in a Buyer Material Adverse
Effect.
4.11 Tax Matters. Buyer has filed
all federal, state, local and foreign tax returns required to be
filed by it, and has paid all taxes shown to be due thereon. All
such tax returns are true, complete and accurate. No tax return of
Buyer has been audited or is currently under audit, nor has Buyer
been notified that any such audit is to take place.
4.12 Absence of Certain Business
Practices. Neither Buyer nor any director, officer,
employer, or agent of the foregoing, nor any person acting on its
behalf, directly or indirectly has to Buyer’s knowledge given
or agree to give any gift or similar benefit to any customer,
supplier, governmental employee or other person which (a) might
subject Buyer to any damage or penalty in any civil, criminal, or
governmental litigation or proceeding, (b) if not given in the
past, might have had a Material Adverse Effect on Buyer, or (c) if
not continued in the future, might have a Material Adverse Effect
on Buyer or which might subject Buyer to suit or penalty in any
private or governmental litigation or proceeding.
4.13 SEC Reports. Buyer has filed
with the Commission all forms, reports, schedules, statements and
other documents required to be filed by it pursuant to Section 13
or 15 of the Exchange Act through September 30, 2005 (as such
documents have been amended since the time of their filing,
collectively, the "Buyer’s Reports"), and has not filed its
annual report on Form 10-KSB for the fiscal year ended December 31,
2005 or the quarterly report on Form 10-QSB for the quarter ended
March 31, 2006 and June 30, 2006. As of their respective dates or,
if amended, as of the date of the last such amendment, the
Buyer’s Reports, including, without limitation, any financial
statements or schedules included therein, to the best of
Buyer’s knowledge, complied in all material respects with the
Securities Act or the Exchange Act, as the case may be, and the
rules and regulations of the Commission promulgated thereunder
applicable to such Buyer’s Reports, and did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading. No Subsidiary of Buyer is required
to file any forms, reports or other documents with the Commission
pursuant to Sections 13 or 15 of the Exchange Act.
4.14 Internal Accounting Controls.
Buyer maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
4.15 Disclosure. The
representations, warranties and acknowledgments of Buyer set forth
herein are true, complete and accurate in all material respects and
do not omit any fact necessary to make such representations,
warranties and acknowledgments not misleading.
5.
Conditions to Closing.
5.1 Conditions Precedent to Buyer’s
Obligation to Close. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is
subject to satisfaction of the following conditions on or prior to
the Closing Date:
(1) The representations and warranties of Seller
set forth in Section 3 above shall be true and correct in all
material respects at and as of the Closing Date.
(2) Seller shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing Date.
(3) No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i)
prevent or adversely affect Buyer’s consummation of any of
the transactions contemplated by this Agreement or (ii) cause any
of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect).
(4) No material adverse change shall have taken
place with respect to the Assets, and no event shall have occurred,
that could result in a Seller Material Adverse Effect.
(5) Buyer shall be reasonably satisfied with the
results of its due diligence review of Seller and the
Assets;
(6) Seller shall have delivered to Buyer the Seller
Disclosure Schedule in form and substance reasonably satisfactory
to Buyer; and
(7) All actions to be taken by Seller in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to the
Buyers.
5.2 Conditions Precedent to Seller’s
Obligation to Close. The obligation of Seller to
consummate the transactions contemplated by this Agreement is
subject to satisfaction of the following conditions on or prior to
the Closing Date:
(1) The representations and warranties of Buyer set
forth in Section 4 above shall be true and correct in all material
respects at and as of the Closing Date.
(2) Buyer shall have performed and complied with
all of their respective covenants hereunder in all material
respects through the Closing Date.
(3) No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i)
prevent or adversely affect Seller’s consummation of any of
the transactions contemplated by this Agreement or (ii) cause any
of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(4) No material adverse change shall have taken
place with respect to Buyer, and no event shall have occurred, that
could result in a Buyer Material Adverse Effect.
(5) Buyer shall have delivered to Seller the Buyer
Disclosure Schedule in form and substance reasonably satisfactory
to Seller;
(6) Seller shall be reasonably satisfied with the
results of its due diligence review of Buyer; and
(7) All actions to be taken by Buyer in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to the
Seller.
6. Closing; Closing Date. A closing
of the transactions contemplated hereby (the “Closing”)
will take place upon the execution of this Agreement, at the
offices of Buyer, or at such other place, date and time that is
agreed upon by Seller and Buyer. The date on which the Closing is
held is referred to in this Agreement as the "Closing
Date."
7. Documents
to be Delivered at the Closing.
7.1 Documents to be Delivered by Seller.
At the Closing, Seller shall
deliver, or cause to be delivered, to Buyer the
following:
(1) a duly executed bill of sale, dated the Closing
Date, transferring to Buyer all of Seller's right, title and
interest in and to the Assets together with possession of the
Assets;
(2) a duly executed assignment, transferring to
Buyer all of Seller’s right, title and interest in and to the
contracts, agreements and contract rights included in the Assets,
including the Note Receivable, accompanied by any third party
consents, if any, contemplated by Section 3.9;
(3)
Satisfaction of indebtedness for
the DigiKidz Debt;
(4) a certificate evidencing the MMI Shares, duly
endorsed for transfer (or with executed stock powers) so as to
convey good and marketable title to the MMI Shares to
Buyer;
(5) a certificate evidencing the CRLU Shares,
duly endorsed for transfer (or with executed stock powers) so as to
convey good and marketable title to the CRLU Shares to
Buyer;
(6) a certificate evidencing the STS Membership
Interest, duly endorsed for transfer (or with executed stock
powers) so as to convey good and marketable title to the STS
Membership Interest to Buyer;
(7) a certificate evidencing the PrimEdge
Shares, duly endorsed for transfer (or with executed stock powers)
so as to convey good and marketable title to the PrimEdge Shares to
Buyer;
(8) a copy of resolutions of the board of directors
and shareholders of Seller authorizing the execution, delivery and
performance of this Agreement by Seller; and
(9) such other certificates, documents and
instruments as Buyer may have reasonably requested in connection
with the transaction contemplated hereby.
7.2 Documents to be Delivered by Buyer.
At the Closing, Buyer shall
deliver to Seller the following:
(1) a copy of resolutions of the board of directors
of Buyer authorizing the execution, delivery and performance of
this Agreement by Buyer;
(2) a certificate evidencing the Series A
Preferred Stock and Series B Preferred Stock, or irrevocable
instructions to Buyer’s transfer agent to issue the Series A
Preferred Stock and Series B Preferred Stock to Seller;
(3)
executed Registration Rights
Agreement, attached as Exhibit C hereto;
and
(4) such other certificates, documents and
instruments as Seller may have reasonably requested in connection
with the transaction contemplated hereby.
8.1 Further Assurances. If, at any
time after the Closing, the parties shall consider or be advised
that any further deeds, assignments or assurances in law or that
any other things are necessary, desirable or proper to complete the
transactions contemplated hereby in accordance with the terms of
this agreement or to vest, perfect or confirm, of record or
otherwise, the title to any property or rights of the parties
hereto, the parties agree that their proper officers and directors
shall execute and deliver all such proper deeds, assignments and
assurances in law and do all things necessary, desirable or proper
to vest, perfect or confirm title to such property or rights and
otherwise to carry out the purpose of this Agreement, and that the
proper officers and directors the parties are fully authorized to
take any and all such action.
8.2 No Public Disclosure. Without
the prior written consent of the other, which written consent will
not be unreasonably withheld, no party to this Agreement will, and
will each cause their respective representatives not to, make any
release to the press or other public disclosure with respect to
either the fact that discussions or negotiations have taken place
concerning the transactions contemplated by this Agreement, the
existence or contents of this Agreement or any prior correspondence
relating to this transactions contemplated by this Agreement,
except for such public disclosure as may be necessary, in the
written opinion of outside counsel (reasonably satisfactory to the
other parties) for the party proposing to make the disclosure not
to be in violation of or default under any applicable law,
regulation or governmental order. If either party proposes to make
any disclosure based upon such an opinion, that party will deliver
a copy of such opinion to the other party, together with the text
of the proposed disclosure, as far in advance of its disclosure as
is practicable, and will in good faith consult with and consider
the suggestions of the other party concerning the nature and scope
of the information it proposes to disclose.
8.3 Confidentiality. Each Party
will, and will cause its Affiliates, employees, agents and
representatives to, treat and hold as such all of the Confidential
Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to
the receiving Party or destroy, at the request and option of the
disclosing Party, all tangible embodiments (and all copies) of the
Confidential Information which are in the receiving Party’s
possession in each case, forever. If any Party is ever requested or
required (by oral question or request for information or documents
in any Action) to disclose any Confidential Information of the
other Party, such Party will notify the other Party promptly of the
request or requirement so that the other Party may seek an
appropriate protective Order or waive compliance with this
Section 8.4 . If, in the absence of a protective Order or
the receipt of a waiver hereunder, either Party, on the written
advice of counsel, is compelled to disclose any Confidential
Information to any Governmental Body, arbitrator, or mediator or
else stand Liable for contempt, then such Party may disclose the
Confidential Information to the Governmental Body, arbitrator, or
mediator; provided, however; that such Party will use its
Best Efforts to obtain, at the request of the other Party, an Order
or other assurance that confidential treatment will be accorded to
such portion of the Confidential Information required to be
disclosed as the other Party may designate.
8.4 Taxes. Seller will be Liable
for and will pay all Taxes (whether assessed or unassessed)
applicable to the Assets, in each case attributable to periods (or
portions thereof) ending on or prior to the Closing Date,
including, without limitation, any Taxes arising out of the
consummation of the transactions contemplated hereby. Buyer will be
Liable for and will pay all Taxes (whether assessed or unassessed)
applicable to the Assets, in each case attributable to periods (or
portions thereof) beginning after the Closing Date. For purposes of
this Section 8.4, any period beginning before and ending
after the Closing Date will be treated as two partial periods, one
ending on the Closing Date and the other beginning after the
Closing Date, except that Taxes (such as property Taxes) imposed on
a periodic basis will be allocated on a daily basis.
8.5 Payment of Non-Assumed Liabilities.
In addition to payment of Taxes pursuant to Section
8.4, Seller will timely pay, or make adequate provision for
the timely payment, in full of all Seller’s Liabilities. If
any such Seller’s Liabilities are not so paid or provided
for, or if Buyer reasonably determines that failure to make any
payments will impair Buyer’s use or enjoyment of the Assets,
Buyer may, at any time after the Closing, elect to pay any or all
of such Seller’s Liabilities directly (but will have no
obligation to do so) and treat such payment as damages under this
Agreement so that Buyer will be entitled to exercise the remedies
available to it under ARTICLE 9 of this
Agreement.
8.6 Approval. Seller will, as soon
as reasonably practicable but no later than 5 days following the
Closing Date, solicit the adoption and approval of this Agreement
by all its stockholders, either through a stockholders meeting or
by written consent. Seller will, through its Board of Directors,
recommend to its stockholders adoption of this Agreement, and shall
not withdraw, amend or modify in a manner adverse to Buyer its
recommendation. Seller shall ensure that such stockholders’
meeting or written consent is called, noticed, convened, held and
conducted, and that all proxies solicited in connection therewith,
in compliance with applicable Law. Seller shall properly provide
each stockholder appraisal and dissenter’s rights pursuant to
Florida Statutes.
8.7 Registration Rights. As more
fully set forth in the Registration Rights Agreement attached
hereto as Exhibit C, on or prior to the one (1) year anniversary of
the Closing Date, the Buyer shall prepare and file with the
Commission a Registration Statement covering the Conversion Common
Stock issuable upon conversion of the Series B Preferred Stock for
an offering to be made on a continuous basis pursuant to Rule 415.
The Registration Statement shall be on Form SB-2 (except if the
Buyer is not then eligible to register for r
