Exhibit 10.1
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of
September 15, 2008 (this “Agreement”), by and between
PARAGON CAPITAL LP, a Delaware limited partnership (the
“Purchaser”); and TIMBERJACK SPORTING SUPPLIES, INC., a
Nevada corporation (“Company,” and together with the
Purchaser, the “parties” or
“Party”).
W I T N E S S E T H
WHEREAS, the Purchaser desires to subscribe and
purchase a total of 375,500,000 shares (the “ Shares
”) of common stock of the Company, par value $0.001 per share
(the “Common Stock”), which will represent
approximately 90.01% of the Company’s issued and outstanding
shares of the Common Stock of the Company upon the consummation of
the transaction(s) contemplated by this Agreement pursuant to the
terms and conditions set forth herein;
WHEREAS, the Shares shall be delivered to
Purchaser in two (2) tranches, the first such tranche for a total
of 75,500,000 shares to be delivered concurrent with the execution
of this Subscription Agreement on the date as set forth in Section
1.2 below, (the “Tranche I Shares”) and the second
tranche, for a total of 300,000,000 shares to be delivered subject
to certain enumerated conditions as set forth in Section 3.7 below
on such date as further specified in Section 1.2 below (the
“Tranche II Shares,” and together with the Tranche I
Closing Shares, the “Shares”);
WHEREAS, the Purchaser desires to buy the Shares
pursuant on the terms and conditions set forth herein,
and
NOW THEREFORE, in consideration of the promises
and respective mutual agreements herein contained, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as to the following:
SALE AND PURCHASE OF THE
SHARES
Sale of the Shares
. Subject to the terms
and conditions set forth herein, on the basis of the
representations, warranties and covenants herein contained, at the
Closing(s) as described in Section 1.2 below, the Company hereby
agrees to sell, assign, transfer and deliver the Shares to the
Purchaser, and the Purchaser agrees to purchase the Shares from the
Company.
The Closing(s)
. The purchase of the
Shares shall take place at the office of the Company in San Dimas,
California or such other place as the Purchaser and Company may
mutually agree.
The Tranche I Shares shall be delivered to
Purchaser simultaneously with the due execution and
delivery of this Agreement and further subject to satisfactory
payment at the direction of Company in the amount of $56,625.00 for
the Tranche I Shares, on or about September 15, 2008, herein
referred to as the “Tranche I Closing Date.”
(b) The
Tranche II Shares shall be delivered to Purchaser, if at all, on a
date termed herein as the “Tranche II Closing Date,”
and with the Tranche I Closing Date, the “Closings.”
This date shall one (1) business day subsequent to the satisfaction
of certain conditions and contingencies as specified in Section 3.7
below. Until such time as the Tranche II Shares are paid
for in full at the direction of the Company, the term or phrase
“Direction of the Company” as used in this Agreement,
shall mean the direction of the presently appointed Chief Executive
Officer or in the case of his demise or incapacitation, his duly
appointed successor subject to the terms and conditions as set
forth in Sections 3.8 and 3.9.
Instruments of Conveyance and
Transfer . At
the each of the respective Closings, Company shall deliver a
certificate(s) representing the Shares to the Purchaser in the name
of the Purchaser (“Certificate(s)”), as shall be
effective to vest in the Purchaser all right, title and interest in
and to all of the Shares.
Consideration and Payment for the
Shares . In
consideration for the Shares, the Purchaser shall pay to the
Company a total purchase price of $281,625 (the “ Purchase
Price ”). The Purchase Price shall be placed into an
escrow account and disbursed pursuant to an escrow agreement
attached hereto as Exhibit A .
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE COMPANY
The Company hereby represents,
warrants and covenants to the Purchaser that, to the best of its
Knowledge, the following. “
Knowledge” means the actual knowledge of any officers
or directors of the Company, or the Company after making
appropriate inquiry of others in the organization having
responsibility in the areas of the matters covered by this
Agreement.
Due Organization
. The Company is a
corporation duly formed, validly existing and in good standing
under the laws of the state of its incorporation with full power
and authority to own, lease, use, and operate its properties and to
carry on its business as and where now owned, leased, used,
operated and conducted. The Company is duly qualified to conduct
its business in all states and jurisdictions which require the
Company to be so qualified.The copy of the Articles of
Incorporation and the Bylaws of the Company, which has previously
been delivered to Purchaser, is a true, complete and correct copy
of such document as in effect as of the date of this Agreement.
Other than provided to the Purchaser, there have been no
amendments, restatements or other changes to the Company’s
Certificate of Incorporation or amendments, restatements or other
changes made to the Company’s bylaws.
Subsidiaries
. The Company has no
subsidiaries.
Company Authority
. The Company has all
requisite corporate power and authority to enter into and perform
this Agreement and to consummate the transactions contemplated
herein.
Due Authorization
. The execution,
delivery and performance by the Company of this Agreement has been
duly and validly authorized and no further consent or authorization
of the Company, its Board of Directors or its stockholders is
required.
Binding Agreement
. This Agreement
constitutes, and upon execution and delivery thereof by the
Company, will constitute, a valid and binding agreement of the
Company, enforceable by and against the Parties in accordance with
its terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditor’s rights
generally or the availability of equitable remedies.
No Violation of Corporate
Documents or Agreements . The execution and delivery of this
Agreement by the Company and the performance by the Company of its
obligations hereunder will not cause, constitute, or conflict with
or result in (i) any breach or violation, or give rise to a right
of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person
under any of the provisions of, or constitute a default under, any
license, indenture, mortgage, charter, instrument, certificate of
incorporation, bylaw, judgment, order, decision, writ, injunction,
or decree or other agreement or instrument or proceeding to which
the Company or stockholders are a party, or by which they may be
bound, nor will any consents or authorizations of any party other
than those hereto by required, (ii) an event that would cause the
Company to be liable to any party, or (iii) an event that would
result in the creation or imposition or any lien, charge or
encumbrance on any asset of the Company or on the Shares to be
acquired by the Purchaser.
Authorized Capital, No Preemptive
Rights, No Liens; Anti-Dilution . As of the date hereof, the
authorized capital of the Company is 980,000,000 shares of Common
Stock, par value $0.001 per share, and 5,000,000 shares of
Preferred Stock, par value $0.001 per share. The issued
and outstanding capital stock of the Company as of the date of this
Agreement is 45,500,000 shares of Common Stock and no issued or
outstanding shares of Preferred Stock. All of the shares
of capital stock are duly authorized, validly issued, fully paid
and non-assessable. No shares of capital stock of the
Company are subject to preemptive rights or similar rights of the
stockholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company, or
otherwise. As of the date hereof, (i) there are no
outstanding options, warrants, convertible securities, scrip,
rights to subscribe for, puts, calls, rights of first refusal,
tag-along agreements, nor any other agreements, understandings,
claims or other commitments or rights of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company, or
arrangements by which the Company is or may become bound to issue
additional shares of capital stock of the Company, (ii) there are
no agreements or arrangements under which the Company is obligated
to register the sale of any of its securities under the Securities
Act of 1933, as amended (the “Securities Act”), and
(iii) there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in the
Company’s certificate of incorporation or bylaws or in any
agreement providing rights to security holders) that will be
triggered by the transactions contemplated by this Agreement. The
Company has furnished to the Purchaser true and correct copies of
the Company’s certificate of incorporation and bylaws in full
force and effect and certified by the Secretary of the Company to
such effect as of the Closing(s) Date.
Private Placement
. The Company is selling
the Shares to the Purchaser without registration pursuant to the
exemptions afforded the Company under Section 4(2) of the
Securities Act and will take any and all actions to make such
exemption available. Upon the requisite time under
Rule 144 of the Securities Act and at such that the Purchaser shall
request any and all restrictive legends to be removed from the
Certificate(s) evidencing the Shares which would prevent the sale
thereof, and upon the delivery of an opinion of counsel acceptable
to the Company and such other customary forms, the Company shall
take any and all actions available to it to have such restrictive
legends removed from such Certificate(s) in order that they may be
traded by the Purchaser or sold in a privately negotiated
sale. The Company shall at no time place a “Stop
Order” on the Shares.
No Governmental Action
Required . The
execution and delivery by the Company of this Agreement does not
and will not, and the consummation of the transactions contemplated
hereby will not, require any action by or in respect of, or filing
with, any governmental body, agency or governmental
official.
Compliance with Applicable Law
and Corporate Documents. To the best of its Knowledge (which shall mean
the actual and constructive knowledge of the officer, directors,
agents and representatives of the Company), the Company is in
compliance with and conforms to all statutes, laws, ordinances,
rules, regulations, orders, restrictions and all other legal
requirements of any domestic or foreign government or any
instrumentality thereof having jurisdiction over the conduct of its
businesses or the ownership of its properties
Financial Statements
. (a) The Purchaser has
received a copy of the reviewed financial statements of the Company
for the quarter ended June 30, 2008 and an unaudited Balance Sheet
as of the date of the Closing(s) or such other time as may be
reasonably agreed to by the Company and the Purchaser (“
Financial Statements ”). The Financial
Statements fairly present the financial condition of the Company at
the dates indicated and its results of their operations and cash
flows for the periods then ended and, except as indicated therein,
reflect all claims against, debts and liabilities of the Company,
fixed or contingent, and of whatever
nature. (b) Since June 30, 2008 (the “
Balance Sheet Date ”), there has been no material
adverse change in the assets or liabilities, or in the business or
condition, financial or otherwise, or in the results of operations
or prospects, of the Company, whether as a result of any
legislative or regulatory change, revocation of any license or
rights to do business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation, act of God,
public force or otherwise and no material adverse change in the
assets or liabilities, or in the business or condition, financial
or otherwise, or in the results of operation or prospects, of the
Company except in the ordinary course of
business. (c) Since the Balance Sheet Date, the
Company has not suffered any damage, destruction or loss of
physical property (whether or not covered by insurance) affecting
its condition (financial or otherwise) or operations (present or
prospective), nor has the Company issued, sold or otherwise
disposed of, or agreed to issue, sell or otherwise dispose of, any
capital stock or any other security of the Company and have not
granted or agreed to grant any option, warrant or other right to
subscribe for or to purchase any capital stock or any other
security of the Company or has incurred or agreed to incur any
indebtedness for borrowed money. (d) The Financial
Statements are contained in the Company’s filings and reports
made with the Securities and Exchange Commission
(“SEC”) since the Company’s formation (the
“SEC Reports”).
SEC Reports.
The Company’s SEC Reports are
(i) accurate and complete, (ii) contain all information
required to be filed under the rules and regulations of the SEC,
(iii) are not subject to any outstanding SEC comment letters or
inquiries, and (iv) do not contain any false statement of fact
or fail to state any fact necessary to make the facts stated
therein not misleading. The Company has timely filed all
periodic reports, registrations and statements, including any
amendment thereto, required to be filed with the SEC. The Company
has never been subject to any investigation, injunction or cease
and desist action by the Securities and Exchange Commission or
other federal or state regulatory agency and to its Knowledge is
not currently subject to such pending or threatened
actions.
SEC Status
. The Company is a
“filer” under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”).
No Litigation
. The Company is not a
party to any suit, action, arbitration, or legal, administrative,
or other proceeding, or to their Knowledge, pending or threatened
governmental investigation. The Company is not subject
to or in default with respect to any order, writ, injunction, or
decree of any federal, state, local, or foreign court, department,
agency, or instrumentality.
No Taxes . The Company is not, and will not, to the best
of its knowledge, become with respect to any periods ending on or
prior to the Closing(s) Date, liable for any income, sales,
withholding, franchise, excise, license, real or personal property
taxes (a “ Tax ”) to any foreign, United States
federal, state or local governmental agencies whatsoever. All
United States federal, state, county, municipality local or foreign
income Tax returns and all other material Tax returns (including
information returns) that are required, or have been required, to
be filed by or on behalf of the Company has been or will be filed
as of the Closing(s) Date and all Taxes due pursuant to such
returns or pursuant to any assessment received by the Company have
been or will be paid as of the Closing(s) Date. The
charges, accruals and reserves on the books of the Company in
respect of taxes or other governmental charges have been
established in accordance with the tax method of accounting. All
returns of the Company that have been filed relating to Tax are
true and accurate in all material respects. No audit,
action, suit, proceeding or other examination regarding taxes for
which the Company may have any liability is currently pending
against or with respect to the Company and the Company has not
received any notice (formally or informally) of any audit, suit,
proceeding or other examination. No material adjustment
relating to any Tax returns, no Closing(s) or similar agreement
have been entered into or issued or have been proposed (formally or
informally) by any tax authority (insofar as such action relate to
activities or income of or could result in liability of the Company
for any Tax) and no basis exists for any such
actions. The Company has not changed any election,
adopted or changed any accounting method or period, filed any
amended return for any Tax, settled any claim or assessment of any
Tax, or surrendered any right to claim any refund of any Tax, or
consented to any extension or waiver of the statute of limitations
for any Tax. The Company has not had an “ownership
change” as that term is defined in Section 382 of the
Internal Revenue Code of 1986, as amended and in effect.
Conduct of the
Business . The
Company is a shell company as defined in Rule 12b-2 of the
Exchange. From and after June 30, 2008 until the
Closing(s) Date:
The Company has not made any expenditures or
entered into any commitments which, when compared to past
operations of their businesses, are unusual or extraordinary or
outside the scope of the normal course of routine
operations;
The Company has kept in a normal state of repair
and operating efficiency all tangible personal property used in the
operation of their businesses;
The Company has used their best efforts to
maintain the good will associated with their businesses, and the
existing business relationships with their agents, customers,
lessors, key employees, suppliers and other persons having
relations with them;
The Company has not entered into any contract,
agreement or action, or relinquished or released any rights or
privileges under any contracts or agreements, the performance,
violation, relinquishment or release of which could, on the date on
which such contract or agreement was entered into, or such rights
or privileges were relinquished or released, be reasonably foreseen
to have a material adverse effect;
The Company has not made, or agreed to make, any
acquisition of stock or assets of, or made loans to, any person not
in the ordinary course of business;
The Company has not sold or disposed of any
assets or created or permitted to exist any encumbrance on their
assets except (x) in the ordinary course of business and which
could not, on the date of such sale, disposition, creation or
permission, be reasonably foreseen to have a material adverse
effect or (y) as otherwise permitted by this Agreement;
The Company has kept true, complete and correct
books of records and accounts with respect to their businesses, in
which entries will be made of all transactions on a basis
consistent with past practices and in accordance with the tax
method of accounting consistently applied by the
Company;
The Company has paid current liabilities as and
when they became due and have paid or incurred no fees and expenses
not in the ordinary course of their businesses;
There has been no declaration, setting aside or
payment of any dividend or other distribution in respect of any
Shares or any other securities of the Company (whether in cash or
in kind);
The Company has not redeemed, repurchased, or
otherwise acquired any of their securities or entered into any
agreement to do so;
The Company has not made any loan to, or entered
into any other transaction with, any of their directors, officers,
and employees;
The Company has not made or pledged to make any
charitable or other capital contribution outside the ordinary
course of business; and
There has not been any other occurrence, event,
incident, action, failure to act or transaction outside the
ordinary course of business that would have a material adverse
effect.
Except as set forth in the Financial Statements,
the Company has no liabilities or obligations. It is a condition to
Closing(s) that the Company will have no liabilities upon transfer
of the Shares to the Purchaser.
Since June 30, 2008, the Company has
not:
subjected to encumbrance, or agreed to do so to
any of their assets, tangible or intangible other than purchase
money liens in the ordinary course of business on equipment used in
the conduct of business and incurred to finance the purchase price
of the equipment involved and which do not cover any other asset of
the Company;
except as otherwise contemplated hereby, engaged
in any transactions affecting their businesses or properties not in
the ordinary course of business consistent with past practice or
suffered any extraordinary losses or waived any rights of
substantial value except in the ordinary course of business;
or
other than in the ordinary course of business
consistent with past practice, granted or agreed to grant, or paid
or agreed to pay any increase in the rate of wages, salaries,
bonuses or other remuneration of any officer, director or
consultant of the Company or any increase of 5% or more in the rate
of wages, salaries, bonuses or other remuneration of any
non-officer/director or employee or become a party to any
employment contract or arrangement with any of its directors,
officers, consultants or employees or become a party to any
contract or arrangement with any director, officer, consultant or
employee providing for bonuses, profit sharing payments, severance
pay or retirement benefits, other than as set forth in any Exhibit
or Schedule hereto.
ERISA Compliance
. The Company maintains
no “employee benefit plan” within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974
(“ ERISA ”), under which the Company or any
ERISA Affiliate has any current or future obligation or liability
or under which any employee of the Company or any ERISA Affiliate
has any current or future right to benefits.
Compliance with Law
. To the best of its
Knowledge, the Company has complied with, and is not in violation
of any provision of laws or regulations of federal, state or local
government authorities and agencies, including any environmental
laws and regulations. There are no pending or threatened
proceedings against the Company by any federal, state or local
government, or any department, board, agency or other body
thereof.
Consents; No Preemptive
Rights . No
third parties consents are required to be obtained in connection
with the execution and delivery of this Agreement and Escrow
Agreement and the consummation of the transactions contemplated by
this Agreement and the Escrow Agreement nor as a result of the
change of control of the Company hereby. There are no preemptive
rights of any third party to purchase securities of the
Company.
Agreements
. The Company is not a
party to any material agreement, loan, credit, lease, sublease,
franchise, license, contract, commitment or instrument or subject
to any corporate restriction. True, correct and complete
copies of all such loan or credit agreements have been delivered to
the Purchaser. Neither the Company nor any other party
is in default under any such agreement, loan, credit, lease,
sublease, franchise, license, contract, commitment, instrument or
restriction. No such instrument requires the consent of
any other party thereto in order to consummate the sales of the
Shares hereby.
No Broker’s Fees
. There are no brokers or
dealers of the Company. There are no fees issued or
outstanding nor will there by upon the consummation of the
transaction(s) be, payable to any brokers or finder.
Title to Assets
. The Company has good and
marketable title to, or a valid leasehold interest in, the
properties and assets used by it, located on its premises, or shown
on the Company Balance Sheet or were acquired after the date of
such balance sheet. The Company owns or has valid contractual
rights to use all of the assets of the business and rights
necessary to operate the business of the Company as currently
conducted.
2.24 Bank
Accounts . The Company has disclosed to the
Purchaser
a list of and other pertinent
information relating to all bank accounts maintained by the Company
and identifies each individual having signatory authority with
respect to each such account.
Affiliate Transactions
. There are no material agreements,
contracts, transfers of assets or liabilities or other commitments
or transactions, whether or not entered into in the ordinary course
of business, to or by which the Company or any of its Affiliates
are or have been a party or otherwise bound or affected, and that
(a) are currently pending, in effect or have been in effect at
any time since June 30, 2008 or (b) involve continuing liabilities
and obligations that, individually or in the aggregate, have been,
are or will be material to the Company taken as a whole.
Derivative Transactions and
Hedging . There are no
Derivative Transactions (including each outstanding commodity or
financial hedging position) entered into by the Company or for the
account of any of its customers as of the date of this
Agreement. All such Derivative Transactions were, and
any Derivative Transactions entered into after the date of this
Agreement will be, entered into in accordance with applicable Laws,
and in accordance with the investment, securities, commodities,
risk management and other policies, practices and procedures
employed by the Company, and were, and will be, entered into with
counterparties believed at the time, still believes to be
financially responsible and able to understand (either alone or in
consultation with their advisers) and to bear the risks of such
Derivative Transactions.
The Company has, and will have, duly performed
all of its obligations under the Derivative Transactions to the
extent that such obligations to perform have accrued, and there are
and will be no breaches, violations, collateral deficiencies,
requests for collateral or demands for payment, or defaults or
allegations or assertions of such by any party thereunder. "
Derivative Transaction " means any swap transaction, option,
warrant, forward
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