SPLIT-OFF AGREEMENT
This
SPLIT-OFF AGREEMENT ,
dated as of this 18th day of December, 2007 (this
“Agreement”), is entered into by and among UFood
Restaurant Group, Inc., formerly known as UFood Franchise Company,
a Nevada corporation (“Seller”), Brent Hahn
(“Hahn” or “Buyer”), Axxent Media, Inc., a
Nevada corporation (“Media”), and KnowFat Franchise
Company, Inc., a Delaware corporation
(“KnowFat”).
RECITALS:
WHEREAS ,
Seller
is the owner of all of the issued and outstanding capital stock of
Media. Media is a newly-formed, wholly-owned subsidiary of Seller
which was organized to acquire, and has so acquired, the business
assets and liabilities previously held by Seller. Seller has no
other businesses or operations;
WHEREAS ,
contemporaneously with the execution of this Agreement, Seller,
KnowFat and a newly-formed wholly-owned Arizona subsidiary of
Seller, KnowFat Acquisition Corp. (“Acquisition
Corp.”), will enter into an Agreement and Plan of Merger and
Reorganization (the “Merger Agreement”) pursuant to
which Acquisition Corp. will merge with and into KnowFat with
KnowFat remaining as the surviving entity (the
“Merger”). The equity holders of KnowFat will receive
securities of Seller in exchange for their equity interests in
KnowFat;
WHEREAS ,
the execution and delivery of this Agreement is required by KnowFat
as a condition to its execution of the Merger Agreement. The
consummation of the purchase and sale transaction contemplated by
this Agreement is also a condition to the completion of the Merger
pursuant to the Merger Agreement. Seller has represented to KnowFat
in the Merger Agreement that the purchase and sale transaction
contemplated by this Agreement will be consummated immediately
following with the closing of the Merger, and KnowFat relied on
such representation in entering into the Merger
Agreement;
WHEREAS ,
Buyer desires to purchase the Shares (as defined in
Section 1.1 )
from Seller, and to assume, as between Seller and Buyer, all
responsibilities for any debts, obligations and liabilities of
Media, on the terms and subject to the conditions specified in this
Agreement; and
WHEREAS ,
Seller desires to sell and transfer the Shares to the Buyer, 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:
I.
PURCHASE AND SALE OF STOCK .
1.1
Purchased Shares .
Subject to the terms and conditions provided below, Seller shall
sell and transfer to Buyer and Buyer shall purchase from Seller, on
the Closing Date (as defined in
Section 1.3 ),
all of the issued and outstanding shares of capital stock of Media
(the “Shares”).
1.2
Purchase Price .
The purchase price for the Shares shall be the transfer and
delivery by Buyer to Seller of 16,200,000 shares of common stock of
Seller that Buyer owns (the “Purchase Price Shares”),
deliverable as provided in
Section 2.2 .
1.3
Closing .
The closing of the transactions contemplated in this Agreement (the
“Closing”) shall take place as soon as practicable
following the execution of this Agreement;
provided, however, that
the Closing must occur immediately after the closing of the Merger.
The date on which the Closing occurs shall be referred to herein as
the Closing Date (the “Closing Date”).
II.
CLOSING .
2.1
Transfer of Shares .
At the Closing, Seller shall deliver to Buyer certificates
representing the Shares, duly endorsed to Buyer or as directed by
Buyer, which delivery shall vest Buyer with good and marketable
title to all of the issued and outstanding shares of capital stock
of Media, free and clear of all liens and
encumbrances.
2.2
Payment of Purchase Price .
At the Closing, Buyer shall deliver to Seller a certificate or
certificates representing the Purchase Price Shares duly endorsed
to Seller, which delivery shall vest Seller with good and
marketable title to the Purchase Price Shares, free and clear of
all liens and encumbrances.
2.3
Transfer of Records .
On or before the Closing, Seller shall transfer to Media all
existing corporate books and records in Seller’s possession
relating to Media and its business, including but not limited to
all agreements, litigation files, real estate files, personnel
files and filings with governmental agencies;
provided ,
however ,
when any such documents relate to both Seller and Media, only
copies of such documents need be furnished. On or before the
Closing, Buyer and Media shall transfer to Seller all existing
corporate books and records in the possession of Buyer or Media
relating to Seller, including but not limited to all corporate
minute books, stock ledgers, certificates and corporate seals of
Seller and all agreements, litigation files, real property files,
personnel files and filings with governmental agencies;
provided ,
however ,
when any such documents relate to both Seller and Media or its
business, only copies of such documents need be
furnished.
III.
BUYER’S REPRESENTATIONS AND WARRANTIES
.
Buyer represents and warrants to Seller and KnowFat
that:
3.1
Capacity and Enforceability .
Buyer has the legal capacity to execute and deliver this Agreement
and the documents to be executed and delivered by Buyer 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.
3.2
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.
3.3
Purchase for Investment .
Buyer is financially able to bear the economic risks of acquiring
an interest in Media and the other transactions contemplated
hereby, and has no need for liquidity in this investment. Buyer has
such knowledge and experience in financial and business matters in
general, and with respect to businesses of a nature similar to the
business of Media, so as to be capable of evaluating the merits and
risks of, and making an informed business decision with regard to,
the acquisition of the Shares. Buyer is acquiring the Shares solely
for his own account and not with a view to or for resale in
connection with any distribution or public offering thereof, within
the meaning of any applicable securities laws and regulations,
unless such distribution or offering is registered under the
Securities Act of 1933, as amended (the “Securities
Act”), or an exemption from such registration is available.
Buyer has (i) received all the information he has deemed
necessary to make an informed investment decision with respect to
the acquisition of the Shares; (ii) had an opportunity to make
such investigation as he has desired pertaining to Media and the
acquisition of an interest therein, and to verify the information
which is, and has been, made available to him; and (iii) had
the opportunity to ask questions of Seller concerning Media. Buyer
acknowledges that Buyer is a current director and officer of
Seller, and a current director and officer of Media
and,
as such, has actual knowledge of the business, operations and
financial affairs of Media. Buyer has received no public
solicitation or advertisement with respect to the offer or sale of
the Shares. Buyer realizes that the Shares are “restricted
securities” as that term is defined in Rule 144 promulgated
by the Securities and Exchange Commission under the Securities Act,
the resale of the Shares is restricted by federal and state
securities laws and, accordingly, the Shares must be held
indefinitely unless their resale is subsequently registered under
the Securities Act or an exemption from such registration is
available for their resale. Buyer understands that any resale of
the Shares by him must be registered under the Securities Act (and
any applicable state securities law) or be effected in
circumstances that, in the opinion of counsel for Media at the
time, create an exemption or otherwise do not require registration
under the Securities Act (or applicable state securities laws).
Buyer acknowledges and consents that certificates now or hereafter
issued for the Shares will bear a legend substantially as
follows:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR QUALIFIED UNDER ANY
APPLICABLE STATE SECURITIES LAWS (THE “STATE
ACTS”), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO
EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION
REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT,
THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT
AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH
TRANSFER, THE ISSUER OF THESE SECURITIES SHALL BE FURNISHED
WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF
EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY
SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES
LAWS.
Buyer
understands that the Shares are being sold to him pursuant to
the exemption from registration contained in Section 4(1) of
the Securities Act and that the Seller is relying upon the
representations made herein as one of the bases for claiming
the Section 4(1) exemption.
3.4
Liabilities .
Following the Closing, Seller will have no liability for any debts,
liabilities or obligations of Media 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 Seller directly or
indirectly in relation to Media or its business and that may
survive the Closing.
3.5
Title to Purchase Price Shares .
Buyer is the sole record and beneficial owner of the Purchase Price
Shares. At Closing, Buyer will have good and marketable title to
the Purchase Price Shares, which Purchase Price 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 Seller, except
for restrictions on transfer as contemplated by applicable
securities laws.
IV.
SELLER’S AND MEDIA’S REPRESENTATIONS AND
WARRANTIES .
Seller and Media, jointly and severally, represent and warrant to
Buyer that:
4.1
Organization and Good Standing .
Each of the Seller and Media is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State
of Nevada.
4.2
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
Seller and all such documents constitute valid and binding
agreements of Seller enforceable in accordance with their
terms.
4.3
Title to Shares .
Seller is the sole record and beneficial owner of the Shares. At
Closing, Seller will have good and marketable title to the Shares,
which 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 Shares constitute all of the issued and outstanding shares of
capital stock of Media.
4.4
WARN Act .
Media does not have a sufficient number of employees to make it
subject to the Worker Adjustment and Retraining Notification Act
(“WARN Act”).
4.5
Representations in Merger Agreement .
Media represents and warrants that all of the representations and
warranties by Seller, insofar as they relate to Media, contained in
the Merger Agreement are true and correct.
V.
OBLIGATIONS OF BUYER PENDING CLOSING
.
Buyer covenants and agrees that between the date hereof and the
Closing:
5.1
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 Seller to satisfy its
obligations as provided in
Article VI .
5.2
Assist Performance .
Buyer shall exercise its reasonable best efforts to cause to be
fulfilled those conditions precedent to Seller’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.
VI.
OBLIGATIONS OF SELLER PENDING CLOSING
.
Seller covenants and agrees that between the date hereof and the
Closing:
6.1
Business as Usual .
Media shall operate and Seller shall cause Media to operate in
accordance with past practices and shall use best efforts to
preserve its goodwill and the goodwill of its employees, customers
and others having business dealings with Media. Without limiting
the generality of the foregoing, from the date of this Agreement
until the Closing Date, Media shall (a) make all normal and
customary repairs to its equipment, assets and facilities,
(b) keep in force all insurance, (c) preserve in full
force and effect all material franchises, licenses, contracts and
real property interests and comply in all material respects with
all laws and regulations, (d) collect all accounts receivable
and pay all trade creditors in the ordinary course of business at
intervals historically experienced, and (e) preserve and
maintain Media’s assets in their current operating condition
and repair, ordinary wear and tear excepted. From the date of this
Agreement until the Closing Date, Media shall not (i) amend,
terminate or surrender any material franchise, license, contract or
real property interest, or (ii) sell or dispose of any of its
assets except in the ordinary course of business. Neither Media nor
Buyer shall take or omit to take any action that results in Seller
incurring any liability or obligation prior to or in connection
with the Closing.
6.2
Not Impair Performance .
Seller 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
Article V .
6.3
Assist Performance .
Seller 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 Seller and to work with Buyer to make
and/or obtain any necessary filings and consents. Seller shall
cause Media to comply with its obligations under this
Agreement.
VII.
SELLER’S AND LEASECO’S CONDITIONS PRECEDENT TO
CLOSING .
The obligations of Seller and Media 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 Seller and KnowFat
in writing):
7.1
Representations and Warranties; Performance
.
All representations and warranties of Buyer 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 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 at or prior to the Closing.
7.2
Additional Documents .
Buyer 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 their obligations hereunder.
7.3
Release by Media .
At the Closing, Media shall execute and deliver to Seller and
KnowFat a general release which in substance and effect releases
Seller and KnowFat from any and all liabilities and obligations
that Seller and KnowFat may owe to Media in any capacity, and from
any and all claims that Media may have against Seller, KnowFat, or
their respective managers, members, officers, directors,
stockholders, employees and agents (other than those arising
pursuant to this Agreement or any document delivered in connection
with this Agreement).
VIII.
BUYER’S CONDITIONS PRECEDENT TO
CLOSING .
The obligation of Buyer 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 Buyer in writing):
8.1
Representations and Warranties; Performance
.
All representations and warranties of Seller and Media 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. Seller and Media 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.
IX.
OTHER AGREEMENTS .
9.1
Expenses .
Each party hereto shall bear its expenses separately incurred in
connection with this Agreement and with the performance of its
obligations hereunder.
9.2
Confidentiality .
The parties hereto shall not make any public announcements
concerning this transaction other than in accordance with mutual
agreement reached prior to any such announcement(s) and other than
as may be required by applicable law or judicial process. If for
any reason the transactions contemplated hereby are not
consummated, then Buyer shall return any information received by
Buyer from Seller or Media, and Buyer shall cause all confidential
information obtained by Buyer concerning Media and its business to
be treated as such.
9.3
Brokers’ Fees .
In connection with the transaction specifically contemplated by
this Agreement, 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.
9.4
Access to Information Post-Closing; Cooperation
.
(a)
Following
the Closing, Buyer and Media shall afford to Seller and its
authorized accountants, counsel and other designated
representatives, reasonable access (and including using
reasonable efforts to give access to persons
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