Exhibit 10.1
SHARE EXCHANGE
AGREEMENT
SHARE EXCHANGE
AGREEMENT , dated as of
September 30, 2009 (this “ Agreement ”) by and
among Color Accents Holdings, Inc. , a corporation organized
under the laws of the State of Nevada (“
Color Accents ”); M2 Systems Corporation
(“ M2 Systems ”); Michael Muscato and Joseph
Adams (the “ M2 Systems’ Shareholders
”); and Diane Pyun (“ Pyun ” or the
“ Color Principal Stockholder ”). Color ,
M2 Systems , the M2 Systems’ Shareholders , and
the Color Principal Stockholder hereinafter sometimes
individually referred to as a “ Party ” and
collectively referred to as the “ Parties
.”.
WHEREAS , the M2 Systems’ Shareholders own 100% of
the issued and outstanding ordinary shares of M2 Systems (such
shares being hereinafter referred to as the “M2
Shares”) ; and
WHEREAS , (i) the M2 Systems’ Shareholders and M2
Systems believe it is in their respective best interests for the M2
Systems’ Shareholders to exchange all of the M2 Shares for
6,600,000 newly-issued shares as set forth on Schedule I hereto
(the “ New Color AccentsShares ”) of common
stock, $0.0001 par value per share, of M2 Systems (the “
Common Stock ”), which, at the time of this Agreement,
shall constitute 81.2% of the issued and outstanding shares of
Color Accents’ Common Stock immediately after the closing of
the transaction contemplated herein, and (ii) Color Accents
believes it is in its best interest and the best interest of its
stockholders to acquire the M2 Shares in exchange for the New Color
Accents Shares, all upon the terms and subject to the conditions
set forth in this Agreement (the “ Share Exchange
”); and
WHEREAS, it is the intention of the parties that: (i) the
Share Exchange shall qualify as a tax-free reorganization under
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended (the “ Code ”); and (ii) the Share
Exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as
amended and in effect on the date of this Agreement (the “
Securities Act ”); and
NOW, THEREFORE,
in consideration of the mutual
terms, conditions and other agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
EXCHANGE OF M2 SYSTEMS SHARES FOR
COLOR ACCENTS SHARES
Section 1.1
Agreement to Exchange M2 Systems
Shares for Color Accents Shares . On the Closing Date (as hereinafter defined)
and upon the terms and subject to the conditions set forth in this
Agreement, the M2 Systems’ Shareholders shall assign,
transfer, convey and deliver the M2 Systems’ Shares to Color
Accents. In consideration and exchange for the M2 Systems’
Shares, Color Accents shall issue, transfer, convey and deliver the
New Color Accents Shares to the M2 Systems’
Shareholders.
Section 1.2
Closing and Actions at
Closing . The closing of the Share Exchange (the “
Closing ”) shall take place remotely via the exchange
of documents and signatures at 10:00 a.m. E.D.T. on the day the
conditions to closing set forth in Articles V and VI herein have
been satisfied or waived, or at such other time and date as the
parties hereto shall agree in writing (the “ Closing
Date ”).
Section 1.3
Directors of Color Accents at
Closing Date . On the
Closing Date, Diane Pyun, the current director of Color Accents,
shall resign from the board of directors of Color Accents (the
“ Color Accents Board ”) and Michael A. Muscato,
Joseph W. Adams and Malcolm Kirschenbaum’s appointment to the
Color Accents Board shall become effective.
Section 1.4
Officers of Color Accents at
Closing Date . On the
Closing Date, Diane Pyun shall resign from each officer position
held at Color Accents and immediately thereafter, the Color Accents
Board shall appoint Michael A. Muscato to serve as Chief Technology
Officer, Joseph Adams to serve as the Chief Executive Officer and
Randy Oveson to serve as Chief Financial Officer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
COLOR ACCENTS
Color Accents represents, warrants
and agrees that all of the statements in the following subsections
of this Article II are true and complete as of the date
hereof.
Section 2.1 Corporate Organization
a. Color Accents is a
corporation duly organized, validly existing and in good standing
under the laws of Nevada, and has all requisite corporate power and
authority to own its properties and assets and governmental
licenses, authorizations, consents and approvals to conduct its
business as now conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the nature of its
activities makes such qualification and being in good standing
necessary, except where the failure to be so qualified and in good
standing will not have a Material Adverse Effect on the activities,
business, operations, properties, assets, condition or results of
operation of Color Accents. “ Material Adverse Effect
” means, when used with respect to Color Accents, any event,
occurrence, fact, condition, change or effect, which, individually
or in the aggregate, would reasonably be expected to be materially
adverse to the business, operations, properties, assets, condition
(financial or otherwise), or operating results of Color Accents, or
materially impair the ability of Color Accents to perform its
obligations under this Agreement, excluding any change, effect or
circumstance resulting from (i) the announcement, pendency or
consummation of the transactions contemplated by this Agreement, or
(ii) changes in the United States securities markets
generally.
b. Copies of the certificate of
incorporation and by-laws of Color Accents with all amendments
thereto, as of the date hereof (the “ Color Accents
Charter Documents ”), have been furnished to the M2
Systems Shareholders and to M2 Systems, and such copies are
accurate and complete as of the date hereof. The minute books of
Color Accents are current as required by law, contain the minutes
of all meetings of the Color Accents Board and stockholders of
Color Accents from its date of incorporation to the date of this
Agreement, and adequately reflect all material actions taken by the
Color Accents Board and stockholders of Color Accents. Color
Accents is not in violation of any of the provisions of the Color
Accents Charter Documents.
Section 2.2
Capitalization of Color
Accents
a. The authorized capital stock
of Color Accents consists of 100,000,000 shares authorized as
Common Stock, of which 8,127,500 shares are issued and outstanding
immediately prior to this Share Exchange and 10,000,000 shares of
Preferred Stock authorized for issuance but no preferred shares are
issued.
b. All of the issued and
outstanding shares of Common Stock of Color Accents immediately
prior to this Share Exchange are, and all shares of Common Stock of
Color Accents when issued in accordance with the terms hereof will
be, duly authorized, validly issued, fully paid and non-assessable,
have been issued in compliance with all applicable U.S. federal and
state securities laws and state corporate laws, and have been
issued free of preemptive rights of any security holder. Except
with respect to securities to be issued to the M2 Systems’
Shareholders pursuant to the terms hereof, as of the date of this
Agreement there are no outstanding or authorized options, warrants,
agreements, commitments, conversion rights, preemptive rights or
other rights to subscribe for, purchase or otherwise acquire or
receive any shares of Color Accents’ capital stock, nor are
there or will there be any outstanding or authorized stock
appreciation, phantom stock, profit participation or similar
rights, pre-emptive rights or rights of first refusal with respect
to Color Accents or any Common Stock, or any voting trusts, proxies
or other agreements, understandings or restrictions with respect to
the voting of Color Accents’ capital stock.
There are no registration or anti-dilution
rights, and there is no voting trust, proxy, rights plan,
anti-takeover plan or other agreement or understanding to which
Color Accents is a party or by which it is bound with respect to
any equity security of any class of Color Accents. Color Accents is
not a party to, and it has no knowledge of, any agreement
restricting the transfer of any shares of the capital stock of
Color Accents. The issuance of all of the shares of
Color Accents described in this Section 2.2 have been, or will be,
as applicable, in compliance with U.S. federal and state securities
laws and state corporate laws and no stockholder of Color Accents
has any right to rescind or bring any other claim against Color
Accents for failure to comply with the Securities Act of 1933, as
amended (the “Securities Act”), or state securities
laws.
c. There are no outstanding
contractual obligations (contingent or otherwise) of Color Accents
to retire, repurchase, redeem or otherwise acquire any outstanding
shares of capital stock of, or other ownership interests in, Color
Accents or to provide funds to or make any investment (in the form
of a loan, capital contribution or otherwise) in any other
person.
Section 2.3
Subsidiaries and Equity
Investments . Color
Accents does not directly or indirectly own any capital stock or
other securities of, or any beneficial ownership interest in, or
hold any equity or similar interest, or have any investment in any
corporation, limited liability company, partnership, limited
partnership, joint venture or other company, person or other
entity.
Section 2.4
Authorization, Validity and
Enforceability of Agreements . Color Accents has all corporate power and
authority to execute and deliver this Agreement and all agreements,
instruments and other documents to be executed and delivered in
connection with the transactions contemplated by this Agreement to
perform its obligations hereunder and to consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by Color Accents and the consummation by
Color Accents of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action of
Color Accents, and no other corporate proceedings on the part of
Color Accents are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby and thereby. This
Agreement constitutes the valid and legally binding obligation of
Color Accents and is enforceable in accordance with its terms,
except as such enforcement may be limited by general equitable
principles, or by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors’ rights generally.
Color Accents does not need to give any notice to, make any filings
with, or obtain any authorization, consent or approval of any
government or governmental agency or other person in order for it
to consummate the transactions contemplated by this Agreement,
other than filings that may be required or permitted under states
securities laws, the Securities Act and/or the Exchange Act
resulting from the issuance of the New Color Accents
Shares.
Section 2.5
No Conflict or
Violation . Neither the
execution and delivery of this Agreement by Color Accents, nor the
consummation by Color Accents of the transactions contemplated
hereby will: (i) contravene, conflict with, or violate any
provision of the Color Accents Charter Documents; (ii) violate
any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any
government, governmental agency, court, administrative panel or
other tribunal to which Color Accents is subject,
(iii) conflict with, result in a breach of, constitute a
default (or an event or condition which, with notice or lapse of
time or both, would constitute a default) under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other
arrangement to which Color Accents is a party or by which it is
bound, or to which any of its assets or properties are subject; or
(iv) result in or require the creation or imposition of any
encumbrance of any nature upon or with respect to any of Color
Accents’ assets, including without limitation the Color
Accents Shares.
Section 2.6 Agreements . Except as disclosed on Schedule 2.6, Color
Accents is not a party to or bound by any contracts, including, but
not limited to, any:
a. employment, advisory or consulting
contract;
b. plan providing for employee benefits of
any nature, including any severance payments;
c. lease with respect to any property or
equipment;
d. contract, agreement,
understanding or commitment for any future expenditure in excess of
$5,000 in the aggregate;
e. contract or commitment
pursuant to which it has assumed, guaranteed, endorsed, or
otherwise become liable for any obligation of any other person,
entity or organization; or
f. agreement with any person
relating to the dividend, purchase or sale of securities, that has
not been settled by the delivery or payment of securities when due,
and which remains unsettled upon the date of this Agreement, except
with respect to the Color Accents Shares.
Color Accents has provided to M2
Systems and the M2 Systems’ Shareholders, prior to the date
of this Agreement, true, correct and complete copies of each
contract (whether written or oral), including each amendment,
supplement and modification thereto (the “ Color Accents
Contracts ”). The Company shall satisfy all
liabilities due under the Color Accents Contracts as of the date of
Closing. All such liabilities shall be satisfied or
released at or prior to Closing. Any amounts accrued
post-Closing shall be the sole responsibility of M2
Systems.
Section 2.7
Litigation
. There is no action, suit,
proceeding or investigation (“ Action ”) pending
or, to the knowledge of Color Accents, currently threatened against
Color Accents or any of its affiliates, that may affect the
validity of this Agreement or the right of Color Accents to enter
into this Agreement or to consummate the transactions contemplated
hereby or thereby. There is no Action pending or, to the knowledge
of Color Accents, currently threatened against Color Accents or any
of its affiliates, before any court or by or before any
governmental body or any arbitration board or tribunal, nor is
there any judgment, decree, injunction or order of any court,
governmental department, commission, agency, instrumentality or
arbitrator against Color Accents or any of its affiliates. Neither
Color Accents nor any of its affiliates is a party or subject to
the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no
Action by Color Accents or any of its affiliates relating to Color
Accents currently pending or which Color Accents or any of its
affiliates intends to initiate.
Section 2.8
Compliance with Laws.
Color Accents has been and is in
compliance with, and has not received any notice of any violation
of any, applicable law, order, ordinance, regulation or rule of any
kind whatsoever, including without limitation the Securities Act,
the Exchange Act, the applicable rules and regulations of the SEC
or the applicable securities laws and rules and regulations of any
state.
Section 2.9
Financial Statements; SEC
Filings .
a. Color Accents’
financial statements (the “ Financial Statements
”) contained in its periodic reports filed with the SEC have
been prepared in accordance with generally accepted accounting
principles applicable in the United States of America (
“U.S. GAAP” ) applied on a consistent basis
throughout the periods indicated, except that those Financial
Statements that are not audited do not contain all footnotes
required by U.S. GAAP. The Financial Statements fairly present the
financial condition and operating results of Color Accents as of
the dates, and for the periods, indicated therein, subject to
normal year-end audit adjustments. Color Accents has no material
liabilities (contingent or otherwise). Color Accents is not a
guarantor or indemnitor of any indebtedness of any other person,
entity or organization. Color Accents maintains a standard system
of accounting established and administered in accordance with U.S.
GAAP.
b. Color Accents has timely
made all filings with the SEC that it has been required to make
under the Securities Act and the Exchange Act ( the “
Public Reports ”). Each of the Public Reports has
complied in all material respects with the applicable provisions of
the Securities Act, the Exchange Act, and the Sarbanes/Oxley Act of
2002 (the “ Sarbanes/Oxley Act ”) and/or
regulations promulgated thereunder. None of the Public Reports, as
of their respective dates, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements made therein not misleading. There is no event, fact
or circumstance that would cause any certification signed by any
officer of Color Accents in connection with any Public Report
pursuant to the Sarbanes/Oxley Act to be untrue, inaccurate or
incorrect in any respect. There is no revocation order, suspension
order, injunction or other proceeding or law affecting the trading
of Color Accents’ Common Stock.
Section 2.10
Books, Financial Records and
Internal Controls . All
the accounts, books, registers, ledgers, Color Accents Board
minutes and financial and other records of whatsoever kind of Color
Accents have been fully, properly and accurately kept and
completed; there are no material inaccuracies or discrepancies of
any kind contained or reflected therein; and they give and reflect
a true and fair view of the financial, contractual and legal
position of Color Accents. Color Accents maintains a system of
internal accounting controls sufficient, in the judgment of Color
Accents, 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 GAAP
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 actions are taken with respect to any
differences.
Section 2.11
Employee Benefit Plans
. Color Accents does not have any
“Employee Benefit Plan” as defined in the U.S. Employee
Retirement Income Security Act of 1974 or similar plans under any
applicable laws.
Section 2.12
Tax Returns, Payments and
Elections . Color Accents
has filed all Tax (as defined below) returns, statements, reports,
declarations and other forms and documents (including, without
limitation, estimated tax returns and reports and material
information returns and reports) (“ Tax Returns
”) required pursuant to applicable law to be filed with any
Tax Authority (as defined below). All such Tax Returns are
accurate, complete and correct in all material respects, and Color
Accents has timely paid all Taxes due and adequate provisions have
been and are reflected in Color Accents’ Financial Statements
for all current taxes and other charges to which Color Accents is
subject and which are not currently due and payable. None of Color
Accents’ federal income tax returns have been audited by the
Internal Revenue Service. Color Accents has no knowledge of any
additional assessments, adjustments or contingent tax liability
(whether federal or state) of any nature whatsoever, whether
pending or threatened against the Color Accents for any period, nor
of any basis for any such assessment, adjustment or contingency.
Color Accents has withheld or collected from each payment made to
each of its employees, if applicable, the amount of all Taxes
(including, but not limited to, United States income taxes and
other foreign taxes) required to be withheld or collected
therefrom, and has paid the same to the proper Tax Authority. For
purposes of this Agreement, the following terms have the following
meanings: “ Tax ” (and, with correlative
meaning, “ Taxes ” and “ Taxable
”) means any and all taxes including, without limitation, (x)
any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise,
profits, value added, net worth, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any United States,
local or foreign governmental authority or regulatory body
responsible for the imposition of any such tax (domestic or
foreign) (a “ Tax Authority ”), (y) any
liability for the payment of any amounts of the type described in
(x) as a result of being a member of an affiliated, consolidated,
combined or unitary group for any taxable period or as the result
of being a transferee or successor thereof, and (z) any liability
for the payment of any amounts of the type described in (x) or (y)
as a result of any express or implied obligation to indemnify any
other person.
Section 2.13
No Debt Obligations
. Upon the Closing Date, Color
Accents will have no debt, obligations or liabilities of any kind
whatsoever other than with respect to the transactions contemplated
hereby. Color Accents is not a guarantor of any indebtedness of any
other person, entity or corporation.
Section 2.14
No Broker Fees
. No brokers, finders or
financial advisory fees or commissions will be payable by or to
Color Accents or any of their affiliates with respect to the
transactions contemplated by this Agreement.
Section 2.15
No Disagreements with Accountants
and Lawyers . There are
no disagreements of any kind presently existing, or anticipated by
Color Accents to arise, between Color Accents and any accountants
and/or lawyers formerly or presently engaged by Color Accents.
Color Accents is current with respect to fees owed to its
accountants and lawyers.
Section 2.16
Disclosure
. This Agreement and any certificate
attached hereto or delivered in accordance with the terms hereby by
or on behalf of Color Accents in connection with the transactions
contemplated by this Agreement do not contain any untrue statement
of a material fact or omit any material fact necessary in order to
make the statements contained herein and/or therein not
misleading.
Section 2.17
Absence of Undisclosed
Liabilities . Since the
date of the filing of its annual report on Form 10-K for the fiscal
year ended July 31, 2009, except as specifically disclosed in the
Public Reports: (A) there has been no event, occurrence or
development that has resulted in or could result in a Material
Adverse Effect; (B) Color Accents has not incurred any liabilities,
obligations, claims or losses, contingent or otherwise, including
debt obligations, other than professional fees; (C) Color Accents
has not declared or made any dividend or distribution of cash or
property to its shareholders, purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock,
or issued any equity securities other than with respect to
transactions contemplated hereby; (D) Color Accents has not made
any loan, advance or capital contribution to or investment in any
person or entity; (E) Color Accents has not discharged or satisfied
any lien or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities paid in
the ordinary course of business; (F) Color Accents has not suffered
any substantial losses or waived any rights of material value,
whether or not in the ordinary course of business, or suffered the
loss of any material amount of prospective business; and (G) except
for the Share Exchange, Color Accents has not entered into any
other transaction other than in the ordinary course of business, or
entered into any other material transaction, whether or not in the
ordinary course of business.
Section 2.18
No Integrated
Offering. Color Accents
does not have any registration statement pending before the
Commission or currently under the Commission’s review and
since the Closing Date, except as contemplated under this
Agreement, Color Accents has not offered or sold any of its equity
securities or debt securities convertible into shares of Common
Stock.
Section 2.19
Employees .
a. Color Accents has no
employees.
b. Other than Diane Pyun, Color
Accents does not have any officers or directors. No director or
officer of Color Accents is a party to, or is otherwise bound by,
any contract (including any confidentiality, non-competition or
proprietary rights agreement) with any other person that in any way
adversely affects or will materially affect (a) the performance of
his duties as a director or officer of Color Accents or (b) the
ability of Color Accents to conduct its business.
Section 2.20
No Undisclosed Events or
Circumstances . No event
or circumstance has occurred or exists with respect to Color
Accents or its respective businesses, properties, prospects,
operations or financial condition, which, under applicable law,
rule or regulation, requires public disclosure or announcement by
Color Accents but which has not been so publicly announced or
disclosed. Color Accents has not provided to M2 Systems, or the M2
Systems’ Shareholders, any material non-public information or
other information which, according to applicable law,