REORGANIZATION AND STOCK PURCHASE AGREEMENT by and between STS Turbo, Inc. a Nevada corporation, on the one hand and Squires Turbo Systems, Inc. a Utah corporation and its Shareholders, on the other hand
REORGANIZATION
AND
STOCK
PURCHASE AGREEMENT
by and
between
STS
Turbo, Inc.
a Nevada
corporation,
on the
one hand
and
▇▇▇▇▇▇▇
Turbo Systems, Inc.
a Utah
corporation
and its
Shareholders,
on the
other hand
This
REORGANIZATION AND STOCK
PURCHASE AGREEMENT (the “Agreement”) is dated as of
September 10, 2008 (the “Effective Date”), by and among
STS Turbo, Inc., a Nevada corporation (“STS”), on the one hand, and
▇▇▇▇▇▇▇ Turbo Systems, Inc., a Utah corporation (“▇▇▇▇▇▇▇ Turbo”) and the
individuals identified on the signature page of this Agreement as the
shareholders of ▇▇▇▇▇▇▇ Turbo (the “Shareholders”), on the other
hand. Each of STS, ▇▇▇▇▇▇▇ Turbo, and the Shareholders shall be
referred to herein as a “Party” and collectively as the
“Parties.”
WITNESSETH
WHEREAS,
the Shareholders collectively own 100% of the issued and outstanding Shares of
▇▇▇▇▇▇▇ Turbo, as set forth in Exhibit A attached
hereto (the “▇▇▇▇▇▇▇ Turbo
Shares”);
WHEREAS,
the Shareholders desire to sell and STS desires to purchase all of the ▇▇▇▇▇▇▇
Turbo Shares in accordance with the terms set forth herein;
WHEREAS,
the Parties desire and intend that the transactions contemplated by this
Agreement will be a tax free reorganization under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
NOW
THEREFORE, in consideration of the premises and respective mutual agreements,
covenants, representations and warranties herein contained, it is agreed between
the Parties hereto as follows:
ARTICLE
1
SALE AND
PURCHASE OF THE ▇▇▇▇▇▇▇ TURBO SHARES
1.1 Sale of the ▇▇▇▇▇▇▇ Turbo
Shares. At the Closing (as defined in Section 4.1), subject to
the terms and conditions herein set forth, and on the basis of the
representations, warranties and agreements herein contained, the Shareholders
shall sell to STS and STS shall purchase from the Shareholders, all of the
▇▇▇▇▇▇▇ Turbo Shares.
1.2 Purchase
Price. As consideration for the purchase of the ▇▇▇▇▇▇▇ Turbo
Shares (the “Purchase Price”), STS shall issue to the Shareholders, as set forth
in Exhibit A
attached hereto and made a part hereof, a total of Twenty Million Four Hundred
Sixty Two Thousand Five Hundred (20,462,500) shares of STS common stock (the
“STS Common Shares”), and Five
Hundred Thousand (500,000) shares of STS Series A Convertible Preferred Stock
(the “STS Preferred
Shares” and together with the STS Common Shares, the “STS Securities”), the rights,
privileges, and preferences of which shall be as set forth in Exhibit F attached
hereto.
1
ARTICLE
2
REPRESENTATIONS
AND WARRANTIES
OF
▇▇▇▇▇▇▇ TURBO AND THE SHAREHOLDERS
2.1 Representations and
Warranties of ▇▇▇▇▇▇▇ Turbo and the Shareholders. To induce
STS to enter into this Agreement and to consummate the transactions contemplated
hereby, ▇▇▇▇▇▇▇ Turbo and the Shareholders, and each of them, represent and
warrant as of the date hereof and as of the Closing, as follows:
2.1.1 Authority of ▇▇▇▇▇▇▇ Turbo
and the Shareholders; Transfer of ▇▇▇▇▇▇▇ Turbo
Shares. ▇▇▇▇▇▇▇ Turbo and the Shareholders have the full
right, power and authority to enter into this Agreement and to carry out and
consummate the transactions contemplated herein. This Agreement, and
all of the Exhibits attached hereto, constitutes the legal, valid and binding
obligation of ▇▇▇▇▇▇▇ Turbo and the Shareholders. The Shareholders
shall transfer title in and to the ▇▇▇▇▇▇▇ Turbo Shares to STS free and clear of
all liens, security interests, pledges, encumbrances, charges, restrictions,
demands, and claims of any kind or nature whatsoever, whether direct or indirect
or contingent.
2.1.2 Corporate Existence and
Authority of ▇▇▇▇▇▇▇ Turbo. ▇▇▇▇▇▇▇ Turbo is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah. It has all requisite corporate power, franchises,
licenses, permits and authority to own its properties and assets and to carry on
its business as it has been and is being conducted. It is in good
standing in each state, nation or other jurisdiction in each state, nation or
other jurisdiction wherein the character of the business transacted by it makes
such qualification necessary.
2.1.3 Capitalization of ▇▇▇▇▇▇▇
Turbo. The authorized equity securities of ▇▇▇▇▇▇▇ Turbo
consist of 1,000,000 shares of common stock, no par value, of which 509,250
shares are issued and outstanding as set forth on Exhibit
A. No other shares of ▇▇▇▇▇▇▇ Turbo are issued and
outstanding. All of the issued and outstanding shares have been duly
and validly issued in accordance and compliance with all applicable laws, rules
and regulations and are fully paid and nonassessable. There are no
options, warrants, rights, calls, commitments, plans, contracts or other
agreements of any character granted or issued by ▇▇▇▇▇▇▇ Turbo which provide for
the purchase, issuance or transfer of any shares of ▇▇▇▇▇▇▇ Turbo, nor are there
any outstanding securities granted or issued by ▇▇▇▇▇▇▇ Turbo that are
convertible into any shares of the equity securities of ▇▇▇▇▇▇▇ Turbo, and none
is authorized. ▇▇▇▇▇▇▇ Turbo is not obligated or committed to
purchase, redeem or otherwise acquire any of its equity. All
presently exercisable voting rights in ▇▇▇▇▇▇▇ Turbo are vested exclusively in
its outstanding shares of common stock, each share of which is entitled to one
vote on every matter to come before it’s shareholders, and other than as may be
contemplated by this Agreement, there are no voting trusts or other voting
arrangements with respect to any of ▇▇▇▇▇▇▇ Turbo’s equity
securities.
2
2.1.4 Subsidiaries. “Subsidiary” or “Subsidiaries” means all
corporations, trusts, partnerships, associations, joint ventures or other
Persons, as defined below, of which a corporation or any other Subsidiary of
such corporation owns not less than twenty percent (20%) of the voting
securities or other equity or of which such corporation or any other Subsidiary
of such corporation possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies, whether through ownership of
voting shares, management contracts or otherwise. “Person” means any individual,
corporation, trust, association, partnership, proprietorship, joint venture or
other entity. ▇▇▇▇▇▇▇ Turbo does not have any
Subsidiaries.
2.1.5 Execution of
Agreement. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not: (a)
violate, conflict with, modify or cause any default under or acceleration of (or
give any Party any right to declare any default or acceleration upon notice or
passage of time or both), in whole or in part, any charter, article of
incorporation, bylaw, mortgage, lien, deed of trust, indenture, lease,
agreement, instrument, order, injunction, decree, judgment, law or any other
restriction of any kind to which ▇▇▇▇▇▇▇ Turbo or the Shareholders are a party
or by which any of them or any of their properties are bound; (b) result in the
creation of any security interest, lien, encumbrance, adverse claim,
proscription or restriction on any property or asset (whether real, personal,
mixed, tangible or intangible), right, contract, agreement or business of
▇▇▇▇▇▇▇ Turbo or the Shareholders; (c) violate any law, rule or regulation of
any federal or state regulatory agency; or (d) permit any federal or state
regulatory agency to impose any restrictions or limitations of any nature on
▇▇▇▇▇▇▇ Turbo or the Shareholders or any of their respective
actions.
2.1.6 Taxes.
2.1.6.1 All
taxes, assessments, fees, penalties, interest and other governmental charges
with respect to ▇▇▇▇▇▇▇ Turbo which have become due and payable on the date
hereof have been paid in full or adequately reserved against by ▇▇▇▇▇▇▇ Turbo,
(including without limitation, income, property, sales, use, franchise, capital
stock, excise, added value, employees’ income withholding, social security and
unemployment taxes), and all interest and penalties thereon with respect to the
periods then ended and for all periods thereto;
2.1.6.2 There
are no agreements, waivers or other arrangements providing for an extension of
time with respect to the assessment of any tax or deficiency against ▇▇▇▇▇▇▇
Turbo, nor are there any actions, suits, proceedings, investigations or claims
now pending against ▇▇▇▇▇▇▇ Turbo, nor are there any actions, suits,
proceedings, investigations or claims now pending against ▇▇▇▇▇▇▇ Turbo in
respect of any tax or assessment, or any matters under discussion with any
federal, state, local or foreign authority relating to any taxes or assessments,
or any claims for additional taxes or assessments asserted by any such
authority, and there is no basis for the assertion of any additional taxes or
assessments against ▇▇▇▇▇▇▇ Turbo; and
3
2.1.6.3 The
consummation of the transactions contemplated by this Agreement will not result
in the imposition of any additional taxes on or assessments against ▇▇▇▇▇▇▇
Turbo.
2.1.7 Disputes and
Litigation. Except as set forth in Schedule 2.1.7, (a) there
are no suits, actions, litigation, proceedings, investigations, claims,
complaints, or accusations pending, threatened against, or affecting ▇▇▇▇▇▇▇
Turbo or any of its properties, assets or business or to which it is a party, in
any court or before any arbitrator of any kind or before or by any governmental
agency (including, without limitation, any federal, state, local, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality), and there is no basis for such suit, action, litigation,
proceeding, investigation, claim, complaint, or accusation; (b) there is no
pending or threatened change in any environmental, zoning or building laws,
regulations or ordinances which affect or could affect ▇▇▇▇▇▇▇ Turbo or any of
its properties, equipment, assets or businesses; and (c) there is no outstanding
order, writ, injunction, decree, judgment or award by any court, arbitrator or
governmental body against or affecting ▇▇▇▇▇▇▇ Turbo or any of its properties,
assets or businesses. There is no litigation, proceeding,
investigation, claim, complaint or accusation, formal or informal, or
arbitration pending, or any of the aforesaid threatened, or any contingent
liability which would give rise to any right of indemnification or similar right
on the part of any director or officer of ▇▇▇▇▇▇▇ Turbo or any such person’s
heirs, executors or administrators as against ▇▇▇▇▇▇▇ Turbo.
2.1.8 Compliance with
laws. ▇▇▇▇▇▇▇ Turbo has at all times been, and presently is,
in full compliance with, and has not received notice of any claimed violation
of, any applicable federal, state, local, foreign and other laws, rules and
regulations. ▇▇▇▇▇▇▇ Turbo has filed all returns, reports and other
documents and furnished all information required or requested by any federal,
state, local or foreign governmental agency and all such returns, reports,
documents and information are true and complete in all respects. All
permits, licenses, orders, franchises and approvals of all federal, state, local
or foreign governmental or regulatory bodies required of ▇▇▇▇▇▇▇ Turbo for the
conduct of its business have been obtained, no violations are or have been
recorded in respect of any such permits, licenses, orders, franchises and
approvals, and there is no litigation, proceeding, investigation, arbitration,
claim, complaint or accusation, formal or informal, pending or threatened, which
may revoke, limit, or question the validity, sufficiency or continuance of any
such permit, license, order, franchise or approval. Such permits,
licenses, orders, franchises and approvals are valid and sufficient for all
activities presently carried on by ▇▇▇▇▇▇▇ Turbo.
2.1.9 Guaranties. ▇▇▇▇▇▇▇
Turbo has not guaranteed any dividend, obligation or indebtedness of any Person;
nor has any Person guaranteed any dividend, obligation or indebtedness of
▇▇▇▇▇▇▇ Turbo other than as set forth in Schedule 2.1.9.
4
2.1.10 Books and
Records. ▇▇▇▇▇▇▇ Turbo keeps its books, records and accounts
(including, without limitation, those kept for financial reporting purposes and
for tax purposes) in accordance with good business practice and in sufficient
detail to reflect the transactions and dispositions of its assets, liabilities
and equities. The minute books of ▇▇▇▇▇▇▇ Turbo contain records of
its Shareholders’ meetings and of action taken by such
Shareholders. The Shareholders’ meetings referred to in such minute
books were duly called and held, and the resolutions appearing in such minute
books were duly adopted. The signatures appearing on all documents
contained in such minute books are the true signatures of the persons purporting
to have signed the same. Attached hereto as Exhibit B is (a) an
income statement and a balance sheet of ▇▇▇▇▇▇▇ Turbo as of and for the years
ended December 31, 2006 and 2007, and as of and for the six months ended June
30, 2008. Attached hereto as Exhibit C is a list
of all contracts to which ▇▇▇▇▇▇▇ Turbo is a party or obligated as of the
Closing Date, and ▇▇▇▇▇▇▇ Turbo hereby represents and warrants that there are no
other material contracts or agreements in existence as of the Closing
Date.
2.1.11 STS Securities to be
Restricted Securities. The Shareholders acknowledge that the
STS Securities will be “restricted securities” (as such term is defined in Rule
144 promulgated under the Securities Act of 1933, as amended (“Rule 144”)), will include the
customary restrictive legend, and, except as otherwise set forth in this
Agreement, that the shares cannot be sold for a period of at least one year from
the date of issuance unless registered with the United States Securities and
Exchange Commission (the “SEC”) and qualified by
appropriate state securities regulators, or unless the Shareholders obtain
written consent from STS and otherwise complies with an exemption from such
registration and qualification (including, without limitation, compliance with
Rule 144).
2.1.12 Certain STS Common Shares
Subject to Buyback. The Shareholders acknowledge that the
▇▇▇▇▇▇▇ Turbo Shares held by ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ are subject to
buyback in accordance with the terms of their respective employment agreement,
and that the STS Common Shares that each will receive in exchange for their
▇▇▇▇▇▇▇ Turbo Shares will remain subject to the buyback, on a pro-rata
basis.
2.1.13 Leases. ▇▇▇▇▇▇▇
Turbo either owns or has valid and existing leases with all facilities where its
offices are located or where any of ▇▇▇▇▇▇▇ Turbo’s equipment or other assets
are located.
5
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF STS
3.1 Representations and
Warranties of STS. To induce ▇▇▇▇▇▇▇ Turbo and the
Shareholders to enter into this Agreement and to consummate the transactions
contemplated hereby, STS represents and warrants, as of the date hereof and as
of the Closing, as follows:
3.1.1 Authority of
STS. STS has the full right, power and authority to enter into
this Agreement and to carry out and consummate the transactions contemplated
herein. This Agreement, and all of the Exhibits attached hereto,
constitutes the legal, valid and binding obligation of STS.
3.1.2 Corporate Existence and
Authority of STS. STS is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Nevada. It has all requisite corporate power, franchises, licenses,
permits and authority to own its properties and assets and to carry on its
business as it has been and is being conducted. It is in good
standing in each state, nation or other jurisdiction in each state, nation or
other jurisdiction wherein the character of the business transacted by it makes
such qualification necessary.
3.1.3 Capitalization of
STS. The authorized equity securities of STS consists of
100,000,000 shares of common stock, par value $0.001 per share, none of which
are issued and outstanding as of the date hereof, and 10,000,000 shares of
preferred stock, par value $0.001 per share, none of which are issued and
outstanding as of the date hereof. As of the Closing, STS will have
established a series of preferred stock consisting of 500,000 shares and known
as the Series A Convertible Preferred Stock. No other shares of
capital stock of STS are issued and outstanding. All of the issued
and outstanding shares have been duly and validly issued in accordance and
compliance with all applicable laws, rules and regulations and are fully paid
and nonassessable. All presently exercisable voting rights in STS are
vested exclusively in its outstanding shares of common stock, each share of
which is entitled to one vote on every matter to come before its
shareholders. Other than as may be contemplated by this Agreement,
there are no voting trusts or other voting arrangements with respect to any of
STS’s equity securities.
3.1.4 Subsidiaries. STS
does not have any subsidiaries.
3.1.5 Execution of
Agreement. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby will not: (a)
violate, conflict with, modify or cause any default under or acceleration of (or
give any Party any right to declare any default or acceleration upon notice or
passage of time or both), in whole or in part, any charter, article of
incorporation, bylaw, mortgage, lien, deed of trust, indenture, lease,
agreement, instrument, order, injunction, decree, judgment, law or any other
restriction of any kind to which STS is a party or by which it or any of its
properties are bound; (b) result in the creation of any security interest, lien,
encumbrance, adverse claim, proscription or restriction on any property or asset
(whether real, personal, mixed, tangible or intangible), right, contract,
agreement or business of STS; (c) violate any law, rule or regulation of any
federal or state regulatory agency; or (d) permit any federal or state
regulatory agency to impose any restrictions or limitations of any nature on STS
or any of its actions.
6
ARTICLE
4
CLOSING
AND DELIVERY OF DOCUMENTS
4.1 Closing. The
Closing (the “Closing”)
shall take place remotely at the offices of The Lebrecht Group, APLC, ▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, no later than the
close of business (Mountain Standard Time) on September 12, 2008, or at such
other place, date and time as the Parties may agree in writing (the “Closing Date”).
4.2 Deliveries by
STS. At the Closing, STS shall deliver the
following:
4.2.1 STS
shall deliver to the Shareholders:
(a) written
confirmation of the approval of this Agreement and the herein described
transactions by STS’s Board of
Directors; and
(b) the STS Securities
subject to no liens, security interests, pledges, encumbrances, charges,
restrictions, demands or claims in any other party whatsoever;
4.2.2 STS
shall deliver to ▇▇▇▇▇▇▇ Turbo:
(a) written
confirmation of the approval of this Agreement and the herein described
transactions by STS’s Board of Directors; and
(b) an
officer’s certificate, executed by the President of STS, in the form attached
hereto as Exhibit
D;
4.3 Delivery by ▇▇▇▇▇▇▇
Turbo: At the Closing, or as otherwise set forth below,
▇▇▇▇▇▇▇ Turbo shall deliver the following:
4.3.1 ▇▇▇▇▇▇▇
Turbo shall deliver to STS:
(a) an
officer’s certificate, executed by the President of ▇▇▇▇▇▇▇ Turbo, in the form
attached hereto as Exhibit
E;
(b) written
confirmation of the approval of this Agreement and the herein described
transactions by ▇▇▇▇▇▇▇ Turbo’s Board of Directors;
7
(c) the
financial statements of ▇▇▇▇▇▇▇ Turbo as set forth in Section
2.1.10.
4.4 Delivery by the
Shareholders: At the Closing, the Shareholders shall deliver
the following:
4.4.1 The
Shareholders shall deliver to STS:
(a) the
▇▇▇▇▇▇▇ Turbo Shares subject to no liens, security interests, pledges,
encumbrances, charges, restrictions, demands or claims in any other party
whatsoever.
ARTICLE
5
CONDITIONS,
TERMINATION, AMENDMENT AND WAIVER
5.1 Conditions
Precedent. This Agreement, and the transactions contemplated
hereby, shall be subject to the following conditions precedent:
5.1.1 The
obligation of STS to pay the Purchase Price and to satisfy its other obligations
hereunder shall be subject to the fulfillment (or waiver by STS), at or prior to
the Closing, of the following conditions, which ▇▇▇▇▇▇▇ Turbo agrees to use its
best efforts to cause to be fulfilled:
(a) Representations,
Performance. If the Closing Date is not the date hereof, the
representations and warranties contained in Section 2.1 hereof shall be true at
and as of the date hereof and shall be repeated and shall be true at and as of
the Closing Date with the same effect as though made at and as of the Closing
Date, except as affected by the transactions contemplated hereby; ▇▇▇▇▇▇▇ Turbo
and the Shareholders shall have duly performed and complied with all agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date; and ▇▇▇▇▇▇▇ Turbo shall have delivered to STS a
certificate dated the Closing Date, and signed by its President to the effect
set forth above in this section.
(b) Consents. Any
required consent to the transactions contemplated by this Agreement shall have
been obtained or waived.
(c) Litigation. No
suit, action, arbitration or other proceeding or investigation shall be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit or to obtain material damages or other material
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby or which is likely to affect materially the value of ▇▇▇▇▇▇▇
Turbo, other than as set forth in Schedule 2.1.7.
8
(d) Proceedings and
Documentation. All proceedings of ▇▇▇▇▇▇▇ Turbo in connection
with the transactions contemplated by this Agreement, and all documents and
instruments incident to such proceedings, shall be satisfactory in form and
substance to STS and STS’s counsel, and STS and STS’s counsel shall have
received all such receipts, documents and instruments, or copies thereof,
certified if requested, to which STS is entitled and as may be reasonably
requested.
(e) Property
Loss. No portion of ▇▇▇▇▇▇▇ Turbo’s assets shall have been
destroyed or damaged or taken by condemnation under circumstances where the loss
thereof will not be substantially reimbursed to STS through the proceeds of
applicable insurance or condemnation award.
(f) Consents and
Approvals. All material licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental or
regulatory bodies which are (1) necessary to enable STS to fully operate the
business of ▇▇▇▇▇▇▇ Turbo as contemplated from and after the Closing shall have
been obtained and be in full force and effect, or (2) necessary for the
consummation of the transactions contemplated hereby, shall have been
obtained. Any notices to or consents of any party to any agreement or
commitment constituting part of the transactions contemplated hereby, or
otherwise required to consummate any such transactions, shall have been
delivered or obtained.
(g) As
of the Closing Date, the balance of all bank accounts for ▇▇▇▇▇▇▇ Turbo shall be
at least $100 after accounting for any outstanding debits and/or credits, and
all accounts payable will have been timely paid in accordance with their
terms.
5.1.2 The
obligation of ▇▇▇▇▇▇▇ Turbo and the Shareholders to deliver the ▇▇▇▇▇▇▇ Turbo
Shares and to satisfy their other obligations hereunder shall be subject to the
fulfillment (or waiver by ▇▇▇▇▇▇▇ Turbo and the Shareholders), at or prior to
the Closing, of the following conditions, which STS agrees to use its best
efforts to cause to be fulfilled:
(a) Representations,
Performance. If the Closing Date is not the date hereof, the
representations and warranties contained in Section 3.1 hereof shall be true at
and as of the date hereof and shall be repeated and shall be true at and as of
the Closing Date with the same effect as though made at and as of the Closing
Date, except as affected by the transactions contemplated hereby; STS shall have
duly performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date.
9
(b) Proceedings and
Documentation. All corporate and other proceedings of STS in
connection with the transactions contemplated by this Agreement, and all
documents and instruments incident to such corporate proceedings, shall be
satisfactory in form and substance to ▇▇▇▇▇▇▇ Turbo and ▇▇▇▇▇▇▇ Turbo’s counsel,
and ▇▇▇▇▇▇▇ Turbo and ▇▇▇▇▇▇▇ Turbo’s counsel shall have received all such
receipts, documents and instruments, or copies thereof, certified if requested,
to which ▇▇▇▇▇▇▇ Turbo is entitled and as may be reasonably
requested.
5.2 Termination. Notwithstanding
anything to the contrary contained in this Agreement, this Agreement may be
terminated and the transactions contemplated hereby may be abandoned prior to
the Closing Date only by the mutual consent of all of the Parties.
5.3 Waiver and
Amendment. Any term, provision, covenant, representation,
warranty or condition of this Agreement may be waived, but only by a written
instrument signed by the Party entitled to the benefits thereof. The
failure or delay of any Party at any time or times to require performance of any
provision hereof or to exercise its rights with respect to any provision hereof
shall in no manner operate as a waiver of or affect such Party’s right at a
later time to enforce the same. No waiver by any Party of any
condition, or of the breach of any term, provision, covenant, representation or
warranty contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach or waiver of any other condition or of the breach of any
other term, provision, covenant, representation or warranty. No
modification or amendment of this Agreement shall be valid and binding unless it
be in writing and signed by all Parties hereto.
ARTICLE
6
COVENANTS,
INDEMNIFICATION
6.1 To
induce STS to enter into this Agreement and to consummate the transactions
contemplated hereby, and without limiting any covenant, agreement,
representation or warranty made, ▇▇▇▇▇▇▇ Turbo and the Shareholders covenant and
agree as follows:
6.1.1 Notices and
Approvals. ▇▇▇▇▇▇▇ Turbo and the Shareholders agree: (a) to
give all notices to third parties which may be necessary or deemed desirable by
STS in connection with this Agreement and the consummation of the transactions
contemplated hereby; (b) to use its best efforts to obtain all federal and state
governmental regulatory agency approvals, consents, permit, authorizations, and
orders necessary or deemed desirable by STS in connection with this Agreement
and the consummation of the transaction contemplated hereby; and (c) to use its
best efforts to obtain all consents and authorizations of any other third
parties necessary or deemed desirable by STS in connection with this Agreement
and the consummation of the transactions contemplated hereby.
10
6.1.2 Information for STS’s
Statements and Applications. ▇▇▇▇▇▇▇ Turbo and the
Shareholders and their employees, accountants and attorneys shall cooperate
fully with STS in the preparation of any statements or applications made by STS
to any federal or state governmental regulatory agency in connection with this
Agreement and the transactions contemplated hereby and to furnish STS with all
information concerning ▇▇▇▇▇▇▇ Turbo and the Shareholders necessary or deemed
desirable by STS for inclusion in such statements and applications, including,
without limitation, all requisite financial statements and
schedules.
6.1.3 Access to
Information. STS, together with its appropriate attorneys,
agents and representatives, shall be permitted to make the full and complete
investigation of ▇▇▇▇▇▇▇ Turbo and the Shareholders and have full access to all
of the books and records of ▇▇▇▇▇▇▇ Turbo during reasonable business
hours. Notwithstanding the foregoing, such parties shall treat all
such information as confidential and shall not disclose such information without
the prior consent of the other.
6.2 To
induce ▇▇▇▇▇▇▇ Turbo and the Shareholders to enter into this Agreement and to
consummate the transactions contemplated hereby, and without limiting any
covenant, agreement, representation or warranty made, STS covenants and agrees
as follows:
6.2.1 Access to
Information. ▇▇▇▇▇▇▇ Turbo and the Shareholders, together with
their appropriate attorneys, agents and representatives, shall be permitted to
make the full and complete investigation of STS and have full access to all of
the books and records of the other during reasonable business
hours. Notwithstanding the foregoing, such parties shall treat all
such information as confidential and shall not disclose such information without
the prior consent of the other.
6.3 Indemnification.
6.3.1 Indemnity of ▇▇▇▇▇▇▇ Turbo
and the Shareholders. STS agrees to indemnify, defend and hold
the ▇▇▇▇▇▇▇ Turbo and the Shareholders harmless from and against any and all
Losses (as hereinafter defined) arising out of or resulting from the breach by
STS of any representation, warranty, covenant or agreement of STS contained in
this Agreement or the schedules and exhibits hereto. For purposes of
Section 6.3, the term “Losses” shall mean all
damages, costs and expenses (including reasonable attorneys’ fees) of every
kind, nature or description, it being the intent of the Parties that the amount
of any such Loss shall be the amount necessary to restore the indemnified party
to the position it would have been in (economically or otherwise), including any
costs or expenses incident to such restoration, had the breach, event,
occurrence or condition occasioning such Loss never
occurred. Notwithstanding the foregoing provisions of this section,
no claim for indemnification shall be made by ▇▇▇▇▇▇▇ Turbo or the Shareholders
under this Section unless and until the aggregate amount of all Losses of
▇▇▇▇▇▇▇ Turbo and the Shareholders in respect thereof shall exceed
$5,000. STS’s liability under this Section shall not exceed the
Purchase Price.
11
6.3.2 Indemnity of
STS. ▇▇▇▇▇▇▇ Turbo and the Shareholders, and each of them,
hereby agrees to indemnify, defend and hold STS harmless from and against any
and all Losses arising out of or resulting from the breach by ▇▇▇▇▇▇▇ Turbo or
the Shareholders of any representation, warranty, agreement or covenant
contained in this Agreement or the exhibits and schedules hereto, including,
without limitation, the failure to disclose any liabilities or material
contracts or agreements pursuant to Section 2.1.10. STS shall have the right to
offset any Losses incurred and actually paid pursuant to this Section 6.3.2
against any amounts due from STS to ▇▇▇▇▇▇▇ Turbo or the Shareholders, however,
any offset shall not act as STS’s sole remedy. Notwithstanding the
foregoing provisions of this Section, no claim for indemnification shall be made
by STS under this Section unless and until the aggregate amount of all Losses of
STS in respect thereof shall exceed $5,000.
6.3.3 Indemnification
Procedure.
(a) An
indemnified party shall notify the indemnifying party of any claim of such
indemnified party for indemnification under this Agreement within thirty days of
the date on which such indemnified party or an executive officer or
representative of such indemnified party first becomes aware of the existence of
such claim. Such notice shall specify the nature of such claim in
reasonable detail and the indemnifying party shall be given reasonable access to
any documents or properties within the control of the indemnified party as may
be useful in the investigation of the basis for such claim. The
failure to so notify the indemnifying party within such thirty-day period shall
not constitute a waiver of such claim but an indemnified party shall not be
entitled to receive any indemnification with respect to any additional loss that
occurred as a result of the failure of such person to give such
notice.
In the
event any indemnified party is entitled to indemnification hereunder based upon
a claim asserted by a third party (including a claim arising from an assertion
or potential assertion of a claim for Taxes), the indemnifying party shall be
given prompt notice thereof, in reasonable detail. The failure to so
notify the indemnifying party shall not constitute a waiver of such claim but an
indemnified party shall not be entitled to receive any indemnification with
respect to any Loss that occurred as a result of the failure of such person to
give such notice. The indemnifying party shall have the right
(without prejudice to the right of any indemnified party to participate at its
expense through counsel of its own choosing) to defend or prosecute such claim
at its expense and through counsel of its own choosing if it gives written
notice of its intention to do so not later than twenty days following notice
thereof by the indemnifying party or such shorter time period as required so
that the interests of the indemnified party would not be materially prejudiced
as a result of its failure to have received such notice; provided, however,
that if the defendants in any action shall include both an indemnifying party
and an indemnified party and the indemnified party shall have reasonably
concluded that counsel selected by the indemnifying party has a conflict of
interest because of the availability of different or additional defenses to the
indemnified party, the indemnified party shall have the right to select separate
counsel to participate in the defense of such action on its behalf, at the
expense of the indemnifying party. If the indemnifying party does not
so choose to defend or prosecute any such claim asserted by a third party for
which any indemnified party would be entitled to indemnification hereunder, then
the indemnified party shall be entitled to recover from the indemnifying party,
on a monthly basis, all of its attorneys’ reasonable fees and other costs and
expenses of litigation of any nature whatsoever incurred in the defense of such
claim. Notwithstanding the assumption of the defense of any claim by
an indemnifying party pursuant to this paragraph, the indemnified party shall
have the right to approve the terms of any settlement of a claim (which approval
shall not be unreasonably withheld).
12
(b) The
indemnifying party and the indemnified party shall cooperate in furnishing
evidence and testimony and in any other manner which the other may reasonably
request, and shall in all other respects have an obligation of good faith
dealing, one to the other, so as not to unreasonably expose the other to an
undue risk of loss. The indemnified party shall be entitled to
reimbursement for out-of-pocket expenses reasonably incurred by it in connection
with such cooperation. Except for fees and expenses for which
indemnification is provided pursuant to Section 6.3, as the case may be, and as
provided in the preceding sentence, each party shall bear its own fees and
expenses incurred pursuant to this paragraph (b).
ARTICLE
7
MISCELLANEOUS
7.1 Expenses. Except
as otherwise specifically provided for herein, whether or not the transactions
contemplated hereby are consummated, each of the Parties hereto shall bear the
cost of all fees and expenses relating to or arising from its compliance with
the various provisions of this Agreement and such Party’s covenants to be
performed hereunder, and except as otherwise specifically provided for herein,
each of the Parties hereto agrees to pay all of its own expenses (including,
without limitation, attorneys and accountants’ fees and printing expenses)
incurred in connection with this Agreement, the transactions contemplated
hereby, the negotiations leading to the same and the preparations made for
carrying the same into effect, and all such fees and expenses of the Parties
hereto shall be paid prior to Closing.
7.2 Notices. Any
notice, request, instruction or other document required by the terms of this
Agreement, or deemed by any of the Parties hereto to be desirable, to be given
to any other Party hereto shall be in writing and shall be delivered by
facsimile or overnight courier to the following addresses:
13
To
STS:
STS
Turbo, Inc.
▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
with a
copy to:
The
Lebrecht Group, APLC
▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq.
To
▇▇▇▇▇▇▇ Turbo or the Shareholders:
▇▇▇▇▇▇▇
Turbo Systems, Inc.
▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
The
persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. Notice shall be conclusively deemed given
at the time of delivery if made during normal business hours, otherwise notice
shall be deemed given on the next business day.
7.3 Entire
Agreement. This Agreement, together with the schedules and
exhibits hereto, sets forth the entire agreement and understanding of the
Parties hereto with respect to the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No understanding, promise, inducement,
statement of intention, representation, warranty, covenant or condition, written
or oral, express or implied, whether by statute or otherwise, has been made by
any Party hereto which is not embodied in this Agreement, or exhibits hereto or
the written statements, certificates, or other documents delivered pursuant
hereto or in connection with the transactions contemplated hereby, and no Party
hereto shall be bound by or liable for any alleged understanding, promise,
inducement, statement, representation, warranty, covenant or condition not so
set forth.
14
7.4 Survival of
Representations. All statements of fact (including financial
statements) contained in the schedules, the exhibits, the certificates or any
other instrument delivered by or on behalf of the Parties hereto, or in
connection with the transactions contemplated hereby, shall be deemed
representations and warranties by the respective Party hereunder. All
representations, warranties, agreements, and covenants hereunder shall survive
the Closing and remain effective regardless of any investigation or audit at any
time made by or on behalf of the Parties or of any information a Party may have
in respect thereto. Consummation of the transactions contemplated
hereby shall not be deemed or construed to be a waiver of any right or remedy
possessed by any Party hereto, notwithstanding that such Party knew or should
have known at the time of Closing that such right or remedy
existed.
7.5 Incorporated by
Reference. All documents (including, without limitation, all
financial statements) delivered as part hereof or incident hereto are
incorporated as a part of this Agreement by reference.
7.6 Remedies
Cumulative. No remedy herein conferred upon any Party is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
7.7 Execution of Additional
Documents. Each Party hereto shall make, execute, acknowledge
and deliver such other instruments and documents, and take all such other
actions as may be reasonably required in order to effectuate the purposes of
this Agreement and to consummate the transactions contemplated
hereby.
7.8 Finders’ and Related
Fees. Each of the Parties hereto is responsible for, and shall
indemnify the other against, any claim by any third party to a fee, commission,
bonus or other remuneration arising by reason of any services alleged to have
been rendered to or at the instance of said Party to this Agreement with respect
to this Agreement or to any of the transactions contemplated
hereby.
7.9 Governing
Law. This Agreement has been negotiated and executed in the
State of Utah and shall be construed and enforced in accordance with the laws of
such state.
7.10 Forum. Each
of the Parties hereto agrees that any action or suit which may be brought by any
Party hereto against any other Party hereto in connection with this Agreement or
the transactions contemplated hereby may be brought only in a federal or state
court in Salt Lake County, Utah.
7.11 Attorneys’
Fees. Except as otherwise provided herein, if a dispute should
arise between the Parties including, but not limited to arbitration, the
prevailing Party shall be reimbursed by the nonprevailing Party for all
reasonable expenses incurred in resolving such dispute, including reasonable
attorneys’ fees exclusive of such amount of attorneys’ fees as shall be a
premium for result or for risk of loss under a contingency fee
arrangement.
7.12 Binding Effect and
Assignment. This Agreement shall inure to the benefit of and
be binding upon the Parties hereto and their respective heirs, executors,
administrators, legal representatives and assigns.
15
7.13 Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date
first written hereinabove.
|
“STS”
|
“▇▇▇▇▇▇▇
Turbo”
|
|||
|
STS
Turbo, Inc.,
|
▇▇▇▇▇▇▇
Turbo Systems, Inc.,
|
|||
|
a
Nevada corporation
|
a
Utah corporation
|
|||
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
|||
|
By
:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
By:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
|
|
Its:
|
President
|
Its:
|
President
|
|
| “Shareholders” | ||||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | /s/ ▇▇▇▇ ▇▇▇▇ | |||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, an individual
|
▇▇▇▇
▇▇▇▇, an individual
|
|||
| /s/ ▇▇▇ ▇▇▇▇▇▇ | /s/ ▇▇▇▇ ▇▇▇▇ | |||
|
▇▇▇
▇▇▇▇▇▇, an individual
|
▇▇▇▇
▇▇▇▇, an individual
|
|||
| /s/ ▇▇▇▇ South | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
|
▇▇▇▇
South, an individual
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, an individual
|
|||
| /s/ ▇▇▇▇ ▇▇▇▇▇▇ | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||
|
▇▇▇▇
▇▇▇▇▇▇, an individual
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇, an
individual
|
|||
16
Schedule
2.1.7
Litigation
1. ▇▇▇▇▇▇
▇▇▇▇▇▇, et al. ▇. ▇▇▇▇▇▇▇ Turbo Systems, Inc., et al., Case No. 088200181 in the
small claim division of the Justice/District Court of Utah County, Provo
City.
17
Schedule
2.1.9
Loans
Guaranteed by a Third Party on behalf of STS Turbo
|
Bank Name
|
Credit Limit
|
Third Party Guarantee Notes
|
|||
|
▇▇▇▇▇
Fargo
|
$ | 100,000 |
Guaranteed
by ▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
Advanta
|
$ | 18,000 |
Credit
card - applied for using Rick's info
|
||
|
American
Express
|
$ | 50,000 |
Credit
card - applied for using Rick's info
|
||
|
Discover
|
$ | 15,000 |
Credit
card - applied for using Rick's info
|
||
|
American
Express
|
$ | 20,000 |
Enoch's
personal credit card
|
||
|
Capitol
One
|
$ | 20,000 |
Enoch's
personal credit
card
|
||
18
Exhibit
A
▇▇▇▇▇▇▇
Turbo Shareholders
|
Name
|
No. of ▇▇▇▇▇▇▇
Turbo Shares to be
Exchanged
|
No. of STS
Common Shares
to be Received
|
No. of STS
Preferred
Shares to be
Received
|
|||||||||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
300,000 | 10,000,000 | 500,000 | |||||||||
|
▇▇▇▇
▇▇▇▇
|
78,000 | 3,900,000 | -0- | |||||||||
|
▇▇▇
▇▇▇▇▇▇
|
26,750 | 1,337,500 | -0- | |||||||||
|
▇▇▇▇
▇▇▇▇
|
40,000 | 2,000,000 | -0- | |||||||||
|
▇▇▇▇
South
|
25,000 | 1,250,000 | -0- | |||||||||
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ (1)
|
25,000 | 1,250,000 | -0- | |||||||||
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
2,000 | 100,000 | -0- | |||||||||
|
▇▇▇▇ ▇▇▇▇▇▇ (1)
|
12,500 | 625,000 | -0- | |||||||||
|
Total
|
509,250 | 20,462,500 | 500,000 | |||||||||
(1) ▇▇▇▇▇▇▇
Turbo Shares held by these shareholders are subject to a buyback provision as
set forth in their employment agreement. Those buyback provisions
will apply, on a pro-rata basis, to the STS Common Shares received as a result
of this Agreement.
A -
1
Exhibit
B
Assets
and Liabilities
and
Financial Statements
of
▇▇▇▇▇▇▇ Turbo
B -
1
Exhibit
C
Contracts
to which ▇▇▇▇▇▇▇ Turbo
is
a party or is obligated
as
of the Closing Date
[insert]
C -
1
Exhibit
D
STS
Officer’s Certificate
OFFICERS
CERTIFICATE
The
undersigned hereby certifies on behalf of STS Turbo, Inc., a Nevada corporation
(“STS” or the “Company”), pursuant to that certain Reorganization and Stock
Purchase Agreement (the “Purchase Agreement”) dated September 10, 2008, by and
among the Company, on the one hand, and ▇▇▇▇▇▇▇ Turbo Systems, Inc., a Utah
corporation (“▇▇▇▇▇▇▇ Turbo”) and the shareholders of ▇▇▇▇▇▇▇ Turbo
(collectively, the “Shareholders”), on the other hand, that they are the duly
appointed President and Secretary of the Company, and further certify on behalf
of the Company that:
1. The
representations and warranties of the Company set forth in the Purchase
Agreement are true and correct as of the date hereof as though made on and as of
the date hereof (except for any representation or warranty that expressly
relates to an earlier date, in which case such representation or warranty shall
have been true and correct as of such earlier date).
2. All
of the terms, covenants and conditions of the Purchase Agreement to be complied
with or performed by the Company at or prior to the date hereof have been
complied with and performed by the Company in all material
respects.
3. Attached
hereto as Exhibit
A is a true, correct and complete copy of resolutions adopted by
unanimous written consent by the Board of Directors of the Company on September
10, 2008, which resolutions have not been modified, amended, rescinded or
revoked in any way and remain in full force and effect as of the date
hereof. Such resolutions constitute the only resolutions adopted by
the Board of Directors of the Company relating to the Purchase
Agreement.
4. The
following is a list of those executive officers of the Company who may be
signing any document or certificate in connection with the Purchase Agreement
and their respective positions; (ii) each such executive officer has been duly
elected and qualified and continues to act in and hold that position; and (iii)
the signatures of those appearing adjacent to their respective names and
positions below are the genuine and original signatures of such
officers:
|
Name
|
Position
|
Signature
|
||
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
President
|
IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of September
12, 2008.
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, President
|
▇▇▇▇▇
▇▇▇▇▇▇▇,
Secretary
|
D -
1
Exhibit
A
Unanimous
Written Consent of Directors
D -
2
Exhibit
E
▇▇▇▇▇▇▇
Turbo Officer’s Certificate
OFFICERS
CERTIFICATE
The
undersigned hereby certifies on behalf of ▇▇▇▇▇▇▇ Turbo Systems, Inc., a Utah
corporation (“▇▇▇▇▇▇▇ Turbo” or the “Company”), pursuant to that certain
Reorganization and Stock Purchase Agreement (the “Purchase Agreement”) dated
September 10, 2008, by and among the Company and its shareholders (collectively,
the “Shareholders”), on the one hand, and STS Turbo, Inc., a Nevada corporation
(“STS”), on the other hand, that they are the duly appointed President and
Secretary of the Company, and further certify on behalf of the Company
that:
1. The
representations and warranties of the Company set forth in the Purchase
Agreement are true and correct as of the date hereof as though made on and as of
the date hereof (except for any representation or warranty that expressly
relates to an earlier date, in which case such representation or warranty shall
have been true and correct as of such earlier date).
2. All
of the terms, covenants and conditions of the Purchase Agreement to be complied
with or performed by the Company at or prior to the date hereof have been
complied with and performed by the Company in all material
respects.
3. Attached
hereto as Exhibit
A is a true, correct and complete copy of resolutions adopted by
unanimous written consent by the Board of Directors of the Company on September
10, 2008, which resolutions have not been modified, amended, rescinded or
revoked in any way and remain in full force and effect as of the date
hereof. Such resolutions constitute the only resolutions adopted by
the Board of Directors of the Company relating to the Purchase
Agreement.
4. The
following is a list of those executive officers of the Company who may be
signing any document or certificate in connection with the Purchase Agreement
and their respective positions; (ii) each such executive officer has been duly
elected and qualified and continues to act in and hold that position; and (iii)
the signatures of those appearing adjacent to their respective names and
positions below are the genuine and original signatures of such
officers:
|
Name
|
Position
|
Signature
|
||
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
President
|
IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of September
12, 2008.
|
|
||
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, President
|
▇▇▇▇▇
▇▇▇▇▇▇▇, Secretary
|
E -
1
Exhibit
A
Unanimous
Written Consent of Directors
E -
2
Exhibit
F
Certificate
of Designation
STS
Series A Convertible Preferred Stock
F -
1