EX-2.1
CONTRIBUTION
AGREEMENT
dated as of
December 8,
2006
by and among
NEW ERA MARKETING,
INC.
FEARLESS YACHTS,
LLC,
and
THE MEMBERS OF FEARLESS
YACHTS, LLC
CONTRIBUTION
AGREEMENT
THIS
CONTRIBUTION AGREEMENT is entered into as of December
8, 2006 (the “
Agreement
” ), by and among Fearless
Yachts, LLC, a Missouri limited liability company (the
“ Company
” ), New Era Marketing, Inc., a
Nevada corporation ( “ Parent
” ), Joseph MacKenzie, the
holder of a majority of the shares of Common Stock (as hereinafter
defined) of Parent (the “ Majority Holder ”) and
the other signatories whose names appear on the signature page
hereto (collectively, the “ Members
” ). The Company, Parent and the
Members are at times referred to herein individually as a “
Party ” and collectively as the “ Parties
.”
WHEREAS
, the Company and
Parent have determined that a reverse acquisition whereby the
Company becomes the wholly owned subsidiary of Parent (the “
Transaction ”) is advisable and presents an
opportunity for their respective companies to achieve long-term
strategic and financial benefits;
WHEREAS
, the Company and
Parent have determined that the Transaction is to be effected by a
transfer described in Section 1.1 hereof by the Members of all of
their respective membership interests in the Company (the “
Membership Interests ”) to Parent in exchange for an
aggregate of 27,000,000 shares (the “ Contribution
Shares ”
) of common stock,
par value $0.001 per share, of Parent (the “ Common
Stock ”), upon the terms and subject to the conditions
set forth herein;
WHEREAS
, the Company sold
certain promissory notes (the “ Company Notes ”)
in the aggregate principal face amount of $1,257,620.87 in a bridge
financing commenced in April, 2006, and in connection therewith
issued certain warrants (the “ Company Warrants
”) to purchase membership interests in the Company to the
purchasers of the notes (the “ Investors
” );
WHEREAS
, Parent has (a)
determined that the Transaction is fair to, and in the best
interests of, Parent and its shareholders (the “
Shareholders ”) and (b) approved and declared the
advisability of entering into this Agreement;
WHEREAS
, the obligations
of each of Parent and the Company to effect the Transaction is
conditioned as further described in Article IX hereof;
WHEREAS
, the Parties are
executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the provisions
of Section 4(2) of the Securities Act of 1933, as amended (the
“ Securities Act ”).
NOW,
THEREFORE , in consideration of the
premises and the mutual covenants, representations and warranties
contained herein, the Parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
THE
TRANSACTION
Section 1.1
Transaction.
(a)
At the closing of the Transaction (the “ Closing
”), and subject to the terms and conditions of this
Agreement, Parent shall deliver to the Members 27,000,000 shares of
Common Stock to be used as the Contribution Shares.
(b)
At the Closing, and
subject to the terms and conditions of this Agreement, the Members
shall contribute their respective percentage of the Membership
Interests of the Company to Parent in exchange for the Contribution
Shares, each as set forth on Schedule 1.1(b)
hereto.
(c)
At the Closing, and
subject to the terms and conditions of this Agreement, Parent shall
issue to
the Investors
the notes (the “ Notes ”) and warrants (the
“ Warrants ”) attached hereto as Exhibit
A and Exhibit B , respectively (collectively,
the “ Issuable Securities ”), in the amounts set
forth on Schedule 1.1(c) hereto and the Investors shall
surrender to parent their Company Notes and Company Warrants. Each
Investor and Member shall contemporaneously therewith furnish to
Parent a representation as to “ accredited investor
” status within the meaning of
Section 501 under Regulation D of the Securities Act with respect
to each Investor.
(d)
If any portion of
the Contribution Shares or the Issuable Securities is to be
delivered to any Person other than a Member or an Investor, it
shall be a condition that such Person shall pay to Parent any
transfer or other taxes (as defined in Section 10.13) required as a
result of such delivery to other than a Member or Investor or
establish to the satisfaction of Parent that such tax has been paid
or is not payable.
Section 1.2
Closing.
The Closing of the
Transaction and the other transactions contemplated by this
Agreement shall take place at 11:00 a.m. on a date to be specified
by the parties, which shall be the date of satisfaction (or waiver
in accordance with this Agreement) of all of the conditions set
forth in Article IX (the “ Closing Date
” ), unless another time or date
is agreed to by the parties hereto. The Closing shall be held at
the offices of Hodgson Russ LLP, 60 East 42 nd Street,
Floor 37, New York, New York 10165.
Section 1.3
Restrictions
On Resale. Neither the Contribution
Shares nor the Issuable Securities will be registered under the
Securities Act, or the securities laws of any state, and cannot be
transferred, hypothecated, sold or otherwise disposed of until; (i)
a registration statement with respect to such securities is
declared effective under the Securities Act, or (ii) Parent
receives an opinion of counsel for the stockholder, reasonably
satisfactory to counsel for Parent, that an exemption from the
registration requirements of the Securities Act is available. The
certificates representing the Contribution Shares as well as the
Issuable Securities shall contain a legend substantially as
follows:
“ THE SECURITIES WHICH ARE
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A
REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE
UNDER SUCH ACT, OR FEARLESS INTERNATIONAL, INC. RECEIVES AN OPINION
OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR
FEARLESS INTERNATIONAL, INC. THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
”
Section 1.4
Additional
Closing Events . At the Closing, in addition
to the deliveries referred to in Section 1.1 and elsewhere herein,
each of the respective Parties hereto shall execute, acknowledge,
and/or deliver, as applicable, or shall ensure to be executed,
acknowledged, and delivered, as applicable, the
following:
(a)
In the case of the
Company: (i) this Agreement duly executed by the Company and each
of the Members; (ii) the security agreement dated the date hereof,
by and among the Company and the agent for the Investors (the
“ Agent ”), in the form of Exhibit
C attached hereto duly executed by the Agent on behalf of
the Investors (the “ Security Agreement ”);
(iii) the Secretary’s certificate provided for in Section
8.2(c) hereof; (v) a certificate of an officer of the Company
stating that the operating agreement of the Company is in full
force and effect and has not been amended since the date hereof;
(v) the Company Notes; (vi) the Company Warrants; and (vii)
certificates evidencing the ownership by the Members of the
Membership Interests or other evidence thereof reasonably
satisfactory to Parent.
(b)
In the case of the
Parent: (i) this Agreement duly executed by the Parent; (ii) the
Security Agreement duly executed by the Parent; (iii) the Notes
duly executed by the Parent; (iv) the Warrants duly executed by the
Parent; (v) share certificates evidencing the ownership by the
Members of the Contribution Shares; (vi) the Articles of
Incorporation and Bylaws of Parent certified by an officer of the
Parent as being in force as of the Closing Date; and (vii) the
Secretary’s certificate provided for in Section 8.1(d)
hereof.
(c)
Any and all certificates, together with such other items as may be
reasonably requested by the Parties
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hereto and
their respective legal counsel in order to effectuate or evidence
the transactions contemplated hereby.
ARTICLE II
PARENT
POST-CLOSING
Section
2.1 Resignation
of Directors and Officers. Effective as of the Closing, each of
the Officers of Parent then in office shall resign.
Section
2.2 Appointment
of New Director and Officers. Effective as of the Closing, the
Officers and Directors of the Company shall be those Persons listed
on Schedule 2.2 hereof.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF PARENT AND THE MAJORITY HOLDER
Parent and the
Majority Holder hereby jointly and severally represent and warrant
to the Company and the Members as of the date hereof and as of the
Closing Date as follows:
Section 3.1
Corporate
Existence and Power. Parent is a corporation duly
incorporated, validly existing and in good standing under the
Nevada Revised Statutes (the “ NRS ” ) and has all corporate
powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not, individually
or in the aggregate, have a Material Adverse Effect (as defined in
Section 10.13) on Parent. Parent is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on
Parent. Parent has heretofore delivered to the Company true and
complete copies of its Articles of Incorporation and By-laws as
currently in effect.
Section 3.2
Authorization.
(a)
The execution, delivery and performance by Parent of this
Agreement, the performance of its obligations hereunder, and the
consummation of the Transaction and the other transactions and
developments contemplated hereby are within Parent
=
s corporate powers
and have been duly authorized by all necessary corporate action,
including the affirmative vote of the Majority Holder. This
Agreement has been duly and validly executed and delivered by
Parent and, assuming the due authorization, execution and delivery
thereof by the Company and the Members, is a legal, valid and
binding obligation of Parent, enforceable against it in accordance
with its terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other similar laws now or hereafter in effect
relating to creditors = rights generally or by general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(b)
Parent = s Board of Directors, at a
meeting duly called and held, has (i) determined that this
Agreement and the transactions contemplated hereby, including the
Transaction, are fair to and in the best interests of the
Shareholders and (ii) approved and adopted this Agreement and the
transactions contemplated hereby, including the Transaction, which
approval satisfies in full any applicable requirements of the
NRS.
Section 3.3
Governmental
Authorization. The execution and delivery of
this Agreement and the performance by Parent of its obligations
under this Agreement relating to the Transaction and the
transactions contemplated hereby require no action by or in respect
of, or filing with, any governmental body, agency, official or
authority other than (a) compliance with any applicable
requirements of the Securities Act, the Securities Exchange Act of
1934, as amended (the “ Exchange Act
” ), foreign or state securities
laws or regulations of various states ( “ Blue Sky Laws
” ), (b) any filings required
to be made by or in connection with the Security Agreement, and (c)
any other filings, approvals or authorizations which, if not
obtained, would not, individually or in the aggregate, have a
Material Adverse Effect on Parent, or materially impair the ability
of Parent to consummate the Transaction and the transactions
contemplated by this Agreement.
3
Section 3.4
Non-contravention.
The execution and
delivery by Parent of this Agreement and the consummation by Parent
of the transactions contemplated hereby and performance of its
obligations under this Agreement do not and will not (a) violate
Parent = s Articles of Incorporation or
By-Laws, (b) assuming compliance with the matters referred to in
Section 3.3, violate any applicable law, rule, regulation,
judgment, injunction, order or decree, (c) require any consent or
other action by any Person under, constitute a default under,
result in a violation of, conflict with, or give rise to any right
of termination, cancellation or acceleration of any right or
obligation of Parent, or to a loss of any benefit to which Parent
is entitled under any provision of any agreement or other
instrument binding upon Parent, or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or
relating in any way to, the assets or business of Parent or (d)
result in the creation or imposition of any Lien on any asset of
Parent, except, in the case of clauses (b), (c) and (d), for such
matters as would not, individually or in the aggregate, have a
Material Adverse Effect on Parent or materially impair the ability
of Parent to consummate the transactions contemplated by this
Agreement.
Section 3.5
Capitalization.
(a)
The authorized capital stock of Parent consists of 840,000,000
shares of Common Stock and 5,000,000 shares of preferred stock, par
value $0.001 per share (the “ Preferred Stock
” ). The outstanding
capitalization of Parent will at Closing consist of (i) 30,100,000
shares of Common Stock and (ii) no shares of Preferred Stock. The
list of Shareholders attached hereto as Schedule 3.5 is the
true and correct list of such Shareholders of record of outstanding
shares of Common Stock on the date hereof and such list will remain
true and correct through and including the Closing of this
Agreement. All outstanding shares of capital stock of Parent have
been duly authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive
rights or other preferential rights of subscription or purchase.
There are no outstanding options, warrants, subscriptions,
conversion or other rights, agreements or other commitments
obligating Parent to issue any shares of its capital stock or any
securities convertible into, exchangeable for or evidencing the
right to subscribe for any shares of its capital stock.
(b)
There are no
outstanding obligations, contingent or otherwise, of Parent to
redeem, purchase or otherwise acquire any capital stock or other
securities of Parent.
(c)
Parent is not in
violation of and has not violated any federal or state securities
laws in connection with any transaction relating to Parent and/or
an Affiliate, including without limitation, the acquisition of any
stock, business or assets of any third party or the issuance of any
capital stock of Parent.
(d)
There are not as of
the date hereof, and there will not be at the Closing, any
shareholder agreements, voting trusts or other agreements or
understandings to which Parent is a party or by which it is bound
relating to the voting of any shares of the capital stock of
Parent.
(e)
The shares of
Common Stock to be issued as the Contribution Shares will be duly
authorized for issuance and when issued and delivered in accordance
with the terms of this Agreement, will be validly issued, fully
paid and non-assessable and the issuance thereof will not be
subject to any preemptive or other similar right.
Section 3.6
Subsidiaries.
Parent has no
subsidiaries.
Section
3.7 Parent
Financial Statements; SEC Documents.
(a)
Schedule 3.7 sets forth the Parent’s unaudited balance
sheet as of September 30, 2006 (the “ Parent Financial
Statements Date ”) and the related unaudited consolidated
statements of operations, stockholders’ equity and cash flows
for the six-month period then ended (collectively with the Parent
Financial Statements, the “ Parent Financials
”). The Parent Financials are correct in all material
respects and have been prepared in accordance with generally
accepted accounting principles (“ GAAP ”)
applied on a basis consistent throughout the periods indicated and
consistent with each other. The Parent Financials present fairly
the financial condition and operating results of the Parent as of
the dates and during the periods indicated therein, subject to
normal year-end adjustments, which will not be
4
material in
amount or significance.
(b)
Parent has furnished or made available and will continue to make
available to the Company true and complete copies of all reports or
registration statements filed by it with the U.S. Securities and
Exchange Commission (the “ SEC ”) under the
Exchange Act, all in the form so filed (all of the foregoing being
collectively referred to as the “ SEC Documents
”). All SEC Documents were timely filed. As of their
respective filing dates, the SEC Documents complied and will
continue to comply in all material respects with the requirements
of the Securities Act and the Exchange Act, and none of the SEC
Documents contained or will contain any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances in which they were made, not misleading,
except to the extent corrected by a subsequently filed document
with the SEC. The financial statements of Parent, including the
notes thereto, included in the SEC Documents (the “ Parent
Financial Statements ”) comply as to form in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with generally accepted accounting
principles consistently applied (except as may be indicated in the
notes thereto) and present fairly the financial position of Parent
at the dates thereof and of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal, recurring audit adjustments). There has been no change
in Parent accounting policies except as described in the notes to
the Parent Financial Statements.
(c)
Other than in connection with this Agreement, Parent has no current
business activity whatsoever.
(d)
Schedule 3.7 hereof lists, and Parent has delivered to the
Company, copies of the documentation creating or governing, all
securitization transactions and "off-balance sheet arrangements"
(as defined in Item 303(c) of Regulation S-K of the SEC) effected
by Parent since inception.
Section
3.8
Absence of Certain Changes. Since the Parent Financial
Statements Date, except as applicable to the Issuable Securities
and the Security Agreement as disclosed to the Company, there has
not been:
(a)
any event, occurrence, development or state of circumstances or
facts which would, individually or in the aggregate, have a
Material Adverse Effect on Parent;
(b)
any amendment of any material term of any outstanding security of
Parent;
(c)
any incurrence, assumption or guarantee by Parent of any
indebtedness for borrowed money; (d) any creation or other
incurrence by Parent of any Lien on any material asset; (e) the
making of any loan, advance or capital contributions to or
investment in any Person;
(f)
any damage,
destruction or other casualty loss (whether or not covered by
insurance) affecting the business or any asset(s) of Parent which
would, individually or in the aggregate, have a Material Adverse
Effect on Parent;
(g)
any transaction or commitment made, or any contract or agreement
entered into, by Parent or any relinquishment by Parent of any
contract or other right;
(h)
any change in any method of accounting, method of tax accounting,
or accounting practice by Parent;
(i)
any (i) grant of
any severance or termination pay to any current or former director,
officer or employee of Parent, (ii) increase in benefits payable
under any existing severance or termination pay policies or
employment agreements, (iii) entering into any employment, deferred
compensation or other similar agreement (or any amendment to any
such existing agreement) with any current or former director,
officer or employee of Parent, (iv) establishment, adoption or
amendment (except as required by applicable law) of any collective
bargaining, bonus, profit sharing, thrift, pension, retirement,
deferred compensation, compensation, stock option, restricted stock
or other benefit plan or
5
arrangement
covering any current or former director, officer or employee of
Parent, or (v) increase in compensation, bonus or other benefits
payable or otherwise made available to any current or former
director, officer or employee of Parent;
(j)
any labor dispute,
other than routine individual grievances; or
(k)
any tax election or
any settlement or compromise of any tax liability, in either case
that is material to Parent.
Section 3.9
Operations
Since Parent Financial Statements Date. Since the Parent Financial
Statements Date, except for as contemplated by this Agreement or in
the Parent Financial Statements, Parent:
(a)
has operated its
businesses substantially as it was operated prior to that date and
only in the ordinary course;
(b)
has not declared or
otherwise become liable with respect to any dividend or
distribution of cash, assets or capital stock;
(c)
has maintained or
kept current its books, accounts, records, payroll, and filings in
the usual and ordinary course of business, consistent in all
material respects with past practice; and
(d)
has not made any
capital expenditure, commitment or investment other than in the
ordinary course of business.
Section 3.10
Compliance with Laws and Court
Orders. Parent holds all permits,
licenses, variances, exemptions, orders, franchises and approvals
of all governmental entities necessary for the lawful conduct of
its business (the “ Parent Permits
” ), except where the failure
so to hold would not have a Material Adverse Effect on Parent.
Parent is in compliance with the terms of Parent Permits, except
where the failure so to comply would not have a Material Adverse
Effect on Parent. Parent is and has been in compliance with, and to
the best knowledge of Parent, is not under investigation with
respect to and has not been threatened to be charged with or given
notice of any violation of, any applicable law, rule, regulation,
judgment, injunction, order or decree, except for such matters as
would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 3.11
Litigation. There is no action, suit,
investigation, audit or proceeding pending against, or to the best
knowledge of Parent threatened against or affecting, Parent or any
of its assets or properties before any court or arbitrator or any
governmental body, agency or official.
Section 3.12
Taxes. Parent has (i) duly filed with
the appropriate taxing authorities all Tax Returns required to be
filed by or with respect to its business, or are properly on
extension and all such duly filed Tax Returns are true, correct and
complete in all material respects, and (ii) paid in full or made
adequate provisions for on its respective balance sheet (in
accordance with GAAP) all Taxes shown to be due on such Tax
Returns. There are no liens for Taxes upon the assets of Parent
except for statutory liens for current Taxes not yet due and
payable or which may thereafter be paid without penalty or are
being contested in good faith. Parent has not received any notice
of audit, is not undergoing any audit of its Tax Returns, or has
received any notice of deficiency or assessment from any taxing
authority with respect to liability for Taxes of its business which
has not been fully paid or finally settled. There have been no
waivers of statutes of limitations by Parent with respect to any
Tax Returns. Parent has not filed a request with the Internal
Revenue Service for changes in accounting methods within the last
two years which change would effect the accounting for tax
purposes, directly or indirectly, of its business. Parent has not
executed an extension or waiver of any statute of limitations on
the assessment or collection of any Taxes due (excluding such
statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities)
that is currently in effect. The provision for Taxes, if any, due
or to become due for Parent for the period or periods through and
including the date of the Parent Financial Statements that has been
made and is reflected on such financial statements is sufficient to
cover all such Taxes. Deferred Taxes, if any, of Parent included in
the Parent Financial Statements have been computed in
6
accordance with
GAAP. Parent is not a party to any Tax allocation or Tax sharing
agreement and Parent has not been a member of an affiliated group
filing a consolidated federal income Tax Return or has any
Liability for Taxes of any Person under Treasury Regulation Section
1.1502 -6 (or any similar provision of state, local or foreign Law)
as a transferee or successor or by contract or otherwise. Parent
has not made any payments, is not obligated to make any payments,
and is not a party to any Contract that could obligate it to make
any payments that would be disallowed as a deduction under Section
280G or 162(m) of the Internal Revenue Code.
Section 3.13
Patents and Other Proprietary
Rights. Parent does not have rights
to use, whether through ownership, licensing or otherwise any
patents, trademarks, service marks, trade names, copyrights, trade
secrets or other proprietary rights and processes. Parent has not
and does not violate or infringe any intellectual property right of
any Person, and Parent has not received any communication alleging
that it violates or infringes the intellectual property right of
any other Person. Parent has not been sued for infringing any
intellectual property right of another Person.
Section 3.14
Anti-takeover Statutes.
The Board of
Directors of Parent has approved this Agreement and the
transactions contemplated hereby, and neither the anti-takeover
provisions of the NRS nor those of any other similar statute or
regulation applies to the Transaction or any of the other
transactions contemplated hereby.
Section 3.15
Consents . The Parent is not subject to
any law, ordinance, regulation, rule, order, judgment, injunction,
decree, charter, bylaw, contract, commitment, lease, agreement,
instrument or other restriction of any kind which would prevent the
Parent from performing the terms of this Agreement or any of the
transactions contemplated hereby without the consent of any third
party, or which would require the consent of any third party for
the consummation of this Agreement or any of the transactions
contemplated hereby, or which would result in any penalty,
forfeiture or other termination as a result of such
consummation.
Section
3.16 No
Bankruptcy . There has not been filed any petition or
application, nor any proceeding commenced by or against Parent with
respect to any assets of Parent under any law, domestic or foreign,
relating to bankruptcy, reorganization, fraudulent transfer,
compromise, arrangements, insolvency, readjustment of debt or
creditors' rights, and no assignment has been made by Parent for
the benefit of creditors generally.
Section 3.17
Acquisition of Equity
Securities . There is no share option
plan or other arrangement to acquire any equity securities of the
Parent or securities convertible or exercisable into or
exchangeable for, or which otherwise confer on the holder thereof
any right to acquire, any such additional equity securities, as the
case may be, except (i) as disclosed in this Agreement, or (ii) as
provided on Schedule 3.17 hereto.
Section 3.18
Guarantees . The Parent does not have any
outstanding contracts or commitments guaranteeing (or indemnifying
or making contribution to others for breaches in connection with)
the payment or collection or the performance of the obligations of
others, and it has not entered into any deficiency agreements, or
issued any comfort letters, or otherwise granted any material
financial assistance to any person, firm, corporation or other
entity.
Section 3.19
Books And Records
. The books of
account, minute books, stock record books and other records of
Parent are complete and correct in all material respects and have
been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal
controls. The minute books of Parent contain accurate and complete
records of all meetings of, and corporate action taken by, the
Shareholders, Parent’s board of directors and all committees
thereof, and no meeting of the Shareholders, Parent’s board
of directors or such committees has been held for which minutes
have not been prepared and are not contained in such minute books.
True and complete copies of all minute books and all stock record
books of Parent have heretofore been delivered to the
Company.
Section 3.20
Title To Properties; Liens
. Parent does not
own any real property. All of the assets of Parent, except those
disposed of in the ordinary course of business, are free and clear
of all Liens, security interests, charges and encumbrances, except
(i) as disclosed in the Parent Financial Statements, (ii) Liens for
current taxes not yet due and payable, (iii) Liens in favor of any
lessor with respect to capital lease obligations disclosed in
Schedule 3.20 attached hereto, (iv) such imperfections of
title or zoning restrictions, easements or encumbrances, if any, as
do not
7
materially
interfere with the present use of such property or assets, and (vi)
Liens which arise by operation of law.
Section 3.21
Lease . Schedule 3.21
contains an accurate list of each Lease. A true and complete copy
of each Lease has heretofore been delivered to the Company. Each
Lease is valid, binding and enforceable in accordance with its
terms and is in full force and effect. The leasehold estate created
by each Lease is free and clear of all Liens. There are no existing
defaults by Parent under any of the Leases. No event has occurred
that (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a
default under any Lease. Parent has not received any notice, and
does not have any other reason to believe, that any lessor under
any Lease will not consent (where such consent is necessary) to the
consummation of the Transaction and other transactions contemplated
hereby without requiring any modification of the rights or
obligations of the lessee thereunder.
Section 3.22
Issuance of Securities Exempt from
Registration . In reliance upon the
representations and warranties made to Parent herein, the issuance
of the Contribution Shares to the Members and the Issuable
Securities to the Investors will be exempt from registration under
United States federal and state securities laws and
regulations.
Section 3.23
No Materially Adverse Undisclosed
Facts . There is no fact known to
the management of the Parent which has not previously been
disclosed in writing to the Company which may in the reasonable
expectation of the Parent’s management materially adversely
affect the Parent or its respective assets, properties, business,
prospects, operation or condition (financial or otherwise) and no
state of facts is known to the management of the Parent that would
operate to prevent the Parent from continuing to carry on its
business in the manner in which carried on at the date
hereof.
Section 3.24
Assets and Liabilities at the Time of
Closing . At the time of the Closing
, Parent shall have no liabilities other than those incurred in
connection with the Transaction payable to its transfer agent,
attorneys and independent registered public accounting firm (the
“ Transaction Fees ”), and no assets other than
the cash in the Parent’s bank account in an amount that will
not be material.
Section 3.25
Interested Party
Transactions . Except as set forth in
Schedule 3.25(a) attached hereto, Parent is not indebted to
any officer or director of Parent (except for compensation and
reimbursement of expenses incurred in the ordinary course of
business), and no such person is indebted to Parent, except as
disclosed on Schedule 3.25(b) hereof.
Section 3.26
Sarbanes-Oxley
Compliance.
(a)
Parent maintains
accurate books and records reflecting its assets and liabilities
and maintains proper and adequate internal accounting controls
which provide assurance that (i) transactions are executed with
management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial
statements of parent to maintain accountability for Parent's
consolidated assets; (iii) access to the Parent's assets is
permitted only in accordance with management's authorization; (iv)
the reporting of Parent's assets is compared with existing assets
at regular intervals; and (v) accounts, notes and other receivables
and inventory are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a
current and timely basis.
(b)
Parent has not,
since its inception, extended or maintained credit, arranged for
the extension of credit, or renewed an extension of credit, in the
form of a personal loan to or for any director or executive officer
(or equivalent thereof) of Parent. Schedule 3.27(d)
identifies any loan or extension of credit maintained by Parent to
which the second sentence of Section 13(k)(1) of the Exchange Act
applies.
Section 3.27
Listing and Maintenance
Requirements. The Parent’s Common
Stock is registered pursuant to Section 12(g) of the Exchange Act,
and Parent has taken no action designed to, or which to its
knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has
Parent received any notification that the Commission is
contemplating terminating such registration. Parent has not, in the
12 months preceding the date hereof, received notice from any
market on which the Common Stock is or has been listed or quoted (a
“ Trading Market ”) to the effect that Parent is
not in compliance with the listing or maintenance requirements of
such Trading Market. Parent is, and has no reason to believe that
it will not in the foreseeable future continue to be, in
8
compliance with
all such listing and maintenance requirements.
Section 3.28
No Integrated
Offering . Neither the Parent, nor any
of its affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause the issuance of the Issuable
Securities or the Contribution Shares to be integrated with prior
offerings by the Parent for purposes of the Securities Act or any
applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market
on which any of the securities of the Company are listed or
designated.
Section 3.29
No
Disagreements with Accountants and Lawyers . There are no material
disagreements of any kind presently existing, or reasonably
anticipated by Parent to arise, between the accountants and lawyers
presently employed by Parent and Parent is current with respect to
any fees owed to its accountants and lawyers other than such fees
as may be incurred in connection with the Transaction.
Section 3.30
Disclosure.
Neither this
Agreement nor any exhibit or schedule hereto nor any statement,
list or certificate delivered to the Company pursuant hereto or
pursuant to any written request therefor, contains an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and
therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The Company
represents and warrants to Parent, as of the date hereof and as of
the Closing Date, as follows:
Section 4.1
Corporate
Existence and Power. The Company is a limited
liability company duly organized and in good standing under the
laws of the State of Missouri. The Company has all powers and
governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and
approvals the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. At the
Closing, the Company will be duly qualified to do business as a
foreign corporation and will be in good standing in each
jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on
the Company. The Company has heretofore delivered to Parent true
and complete copies of the Articles of Formation and Operating
Agreement as currently in effect.
Section 4.2
Authorization.
The execution,
delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby
are within the powers of the Company, and have been duly authorized
by all necessary action. This Agreement, assuming the due
authorization, execution and delivery thereof by Parent
