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Exhibit 2 - Merger Agreement and Plan of Reorganization
MERGER AGREEMENT AND PLAN OF REORGANIZATION
Dated as of November 27, 2001
by and between
USA Dealers ▇▇▇▇▇▇▇.▇▇▇, Inc.
and
Brands Shopping Network, Inc.
TABLE OF CONTENTS
Page
ARTICLE I 1
THE MERGER 1
SECTION 1.1 The Merger. 1
SECTION 1.2 Effective Time of the Merger. 1
SECTION 1.3 Name Change. 1
SECTION 1.4 Articles of Incorporation; Bylaws. 1
SECTION 1.5 Directors and Officers. 2
ARTICLE II 2
CONVERSION AND PURCHASE OF SHARES 2
SECTION 2.1 Conversion of Brands Shares In the Merger. 2
SECTION 2.2 Exchange of Certificates. 2
SECTION 2.3 Cancellation of Options and Warrants. 2
SECTION 2.4 No Fractional Securities. 2
SECTION 2.5 Dissenting Shares. 2
SECTION 2.6 No Further Ownership Rights in Brands Capital Stock.
3
SECTION 2.7 Dissenting Shares After Payment of Fair Value. 3
SECTION 2.8 Tax and Accounting Consequences. 3
SECTION 2.9 Closing. 3
ARTICLE III 4
REPRESENTATIONS AND WARRANTIES OF BRANDS 4
SECTION 3.1 Organization and Qualification. 4
SECTION 3.2 Capitalization. 5
SECTION 3.3 Authority; Non-Contravention; Approvals. 5
SECTION 3.4 Reports and Financial Statements. 6
SECTION 3.5 Absence of Undisclosed Liabilities. 6
SECTION 3.6 Absence of Certain Changes or Events. 6
SECTION 3.7 Litigation. 6
SECTION 3.8 No Violation of Law. 6
SECTION 3.9 Material Agreements, Contracts and Commitments. 7
SECTION 3.10 Tax Matters. 8
SECTION 3.11 Employee Benefit Plan; ERISA. 9
SECTION 3.12 Investment Company Act. 9
SECTION 3.13 Labor Controversies. 9
SECTION 3.14 Interested Party Transactions. 10
SECTION 3.15 Insurance. 10
SECTION 3.16 Representations Complete. 10
ARTICLE IV 10
REPRESENTATIONS AND WARRANTIES OF USA DEALERS 10
SECTION 4.1 Organization and Qualification. 10
SECTION 4.2 Capitalization. 11
SECTION 4.3 Authority; Non-Contravention; Approvals. 12
SECTION 4.4 Reports and Financial Statements. 12
SECTION 4.5 Absence of Undisclosed Liabilities. 12
SECTION 4.6 Absence of Certain Changes or Events. 13
SECTION 4.7 Litigation. 13
SECTION 4.8 No Violation of Law. 13
SECTION 4.9 Material Agreements, Contracts and Commitments. 13
SECTION 4.10 Tax Matters.
14
SECTION 4.11 Employee Benefit Plan; ERISA. 15
SECTION 4.12 Investment Company Act. 15
SECTION 4.13 Labor Controversies. 16
SECTION 4.14 Environmental Matters. 16
SECTION 4.15 Insurance. 16
SECTION 4.16 Representations Complete. 17
ARTICLE V 17
CONDUCT PRIOR TO THE EFFECTIVE TIME 17
SECTION 5.1 Conduct of Business of USA Dealers and Brands. 17
ARTICLE VI 17
ADDITIONAL AGREEMENTS 17
SECTION 6.1 Access to Information. 17
SECTION 6.2 Brands and the Brands Principal Stockholders'
Approval. 18
SECTION 6.3 USA Dealers' Shareholders' Approval. 18
SECTION 6.4 Expenses. 19
SECTION 6.5 Agreement to Cooperate. 19
SECTION 6.6 Public Statements. 19
SECTION 6.7 Indemnification. 19
ARTICLE VII 20
CONDITIONS 20
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger. 20
SECTION 7.2 Conditions to Obligation of USA Dealers to Effect
the Merger. 20
SECTION 7.3 Conditions to Obligation of Brands to Effect the
Merger. 21
ARTICLE VIII 21
POST-CLOSING AGREEMENTS 21
SECTION 8.1 Post Closing Agreements. 21
ARTICLE IX 21
TERMINATION, AMENDMENT AND WAIVER 21
SECTION 9.1 Termination. 21
SECTION 9.2 Effect of Termination. 22
SECTION 9.3 Amendment. 22
SECTION 9.4 Waiver. 22
ARTICLE X 22
GENERAL PROVISIONS 22
SECTION 10.1 survival of Representations and Warranties. 22
SECTION 10.2 Brokers. 22
SECTION 10.3 Notices. 23
SECTION 10.4 Interpretation. 23
SECTION 10.5 Miscellaneous. 23
SECTION 10.6 Counterparts. 23
SECTION 10.7 Parties in Interest. 24
SECTION 10.8 Governing Law. 24
SECTION 10.9 Entire Agreement. 24
SECTION 10.10 Severability. 24
EXHIBITS
A Form of Merger Agreement
B Form of Consulting Agreement
C Form of Warrant
MERGER AGREEMENT AND PLAN OF REORGANIZATION
MERGER AGREEMENT AND PLAN OF REORGANIZATION, dated as of
November 27, 2001 (the "Agreement") is entered into by and among
Brands Shopping Network, Inc., a Nevada corporation ("Brands")
and the stockholders of Brands set forth on the signature pages
hereof (the "Brands Principal Stockholders") on the one hand, and
USA Dealers ▇▇▇▇▇▇▇.▇▇▇, Inc., a Nevada corporation ("USA
Dealers") on the other hand.
R E C I T A L S
WHEREAS, the Boards of Directors of Brands and USA Dealers
have approved the merger of Brands with and into USA Dealers
pursuant to this Agreement (the "Merger") and the transactions
contemplated hereby upon the terms and subject to the conditions
set forth herein; and
WHEREAS, it is intended that Brands and USA Dealers and
their respective stockholders will recognize no gain or loss for
federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations there under as
a result of the consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.
Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of Nevada law,
Brands shall be merged with and into USA Dealers and the separate
existence of Brands shall thereupon cease. USA Dealers shall be
the surviving corporation in the Merger (after the Merger,
referred to as the "Surviving Corporation").
SECTION 1.2 Effective Time of the Merger.
Unless this Agreement is earlier terminated pursuant to
Section 8.1, the Merger shall become effective at such time (the
"Effective Time") as the Merger Agreement, in the form set forth
as Exhibit A-1 hereto, is filed with the Secretary of State of
the State of Nevada (the "Merger Filing"); such filing shall be
made simultaneously with or as soon as practicable after the
closing of the transactions contemplated by this Agreement in
accordance with Section 2.10.
SECTION 1.3 Name Change.
Immediately following the Effective Time, USA Dealers shall
amend its Articles of Incorporation to change its name to "Brands
Holdings, Inc.".
SECTION 1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation
of USA Dealers shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by law
and such Articles of Incorporation.
(b) The Bylaws of USA Dealers, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
SECTION 1.5 Directors and Officers.
The directors of USA Dealers after the Merger shall be Art
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇, each to hold the
office of director of USA Dealers in accordance with the
provisions of the applicable laws of the State of Nevada and the
Articles of Incorporation and Bylaws of the Surviving Corporation
until their successors are duly qualified and elected. The
officers of USA Dealers immediately after the Effective Time
shall be Art ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer and President,
▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer and Treasurer, and ▇▇▇▇▇
▇▇▇▇▇▇, Secretary, each to hold office in accordance with the
provisions of its Bylaws.
ARTICLE II
CONVERSION AND PURCHASE OF SHARES
SECTION 2.1 Conversion of Brands Shares In the Merger.
At the Effective Time, by virtue of the Merger and without
any action on the part of any holder of any capital stock of
Brands each issued and outstanding share of Common Stock of
Brands ("Brands Common Stock"), shall, subject to Section 2.3
hereof, be converted into the right to receive, and become
exchangeable for, one share of common stock of USA Dealers ("USA
Dealers Common Stock").
SECTION 2.2 Exchange of Certificates.
(a) From and after the Effective Time, each holder of an
outstanding certificate which immediately prior to the Effective
Time represented shares of Brands Common Stock shall be entitled
to receive in exchange therefore, upon surrender thereof to USA
Dealers or to an exchange agent selected by USA Dealers (the
"Exchange Agent"), a certificate or certificates theretofore
representing the number of whole shares of USA Dealers Common
Stock to which such holder is entitled pursuant to Section 2.1.
(b) Promptly after the Effective Time, USA Dealers shall
make available to the Exchange Agent the certificates
representing shares of USA Dealers Common Stock required to
effect the exchange referred to in Section 2.2(a).
SECTION 2.3 Cancellation of Options and Warrants.
At the Effective Time, each option, warrant or other right
to acquire or purchase shares of Brands Common Stock (the
"Options") granted by Brands shall automatically, and without any
action required by the holders thereof, be cancelled and
terminated.
SECTION 2.4 No Fractional Securities.
Notwithstanding any other provision of this Agreement, no
certificates or scrip for fractional shares of USA Dealers Common
Stock shall be issued in the Merger and no USA Dealers Common
Stock dividend, stock split or interest shall relate to any
fractional security. In lieu of any such fractional shares, each
holder of Brands Common Stock who would otherwise have been
entitled to receive a fraction of a share of USA Dealers Common
Stock upon surrender of Brands Common Stock certificates for
exchange pursuant to this Article II shall be entitled to receive
from USA Dealers a stock certificate representing the next
highest whole number of shares.
SECTION 2.5 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Brands Common Stock issued and
outstanding immediately prior to the Effective Time that are held
by a shareholder who has exercised and perfected dissenters
rights for such shares in accordance with Section 300 et seq. of
Chapter 92A of the Nevada Revised Statutes and who, as of the
Effective Time, has not effectively withdrawn or lost such
dissenters rights ("Dissenting Shares"), shall not be converted
into or represent a right to receive USA Dealers Common Stock
pursuant to Section 2.1, but the holder thereof shall only be
entitled to such rights as are granted by Nevada law.
(b) Notwithstanding any provision of this Agreement to the
contrary, any shares of USA Dealers Common Stock issued and
outstanding immediately prior to the Effective Time that are held
by a shareholder who has exercised and perfected dissenters
rights for such shares in accordance with Section 300 et seq. of
Chapter 92A of the Nevada Revised Statutes and who, as of the
Effective Time, has not effectively withdrawn or lost such
dissenters rights ("Dissenting Shares"), shall be converted into
such rights as are granted by Nevada law.
(c) Notwithstanding the provisions of subsection (a) or
(b), if any holder of Dissenting Shares shall effectively
withdraw or lose (through failure to perfect or otherwise) his or
her appraisal rights, then, as of the later of the Effective Time
and the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to
receive the shares of USA Dealers Common Stock to which such
shareholder would otherwise be entitled under Section 2.1 upon
surrender of the certificate representing such shares.
(d) Brands shall give USA Dealers (i) prompt notice of any
written demand for appraisal received by Brands pursuant to the
applicable provisions of Nevada law and (ii) the opportunity to
participate in all negotiations and proceedings with respect to
such demands. USA Dealers shall not, except with the prior
written consent of Brands, voluntarily make any payment with
respect to any such demands or offer to settle or settle any such
demands.
SECTION 2.6 No Further Ownership Rights in Brands Capital
Stock.
All shares of USA Dealers Common Stock issued upon the
surrender for exchange of shares of Brands Common Stock in
accordance with the terms hereof shall be deemed to be in full
satisfaction of all rights pertaining to such shares of Brands
Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares
of Brands Common Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, certificates
representing Brands Common Stock are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged
as provided in this Article II.
SECTION 2.7 Dissenting Shares After Payment of Fair
Value.
Dissenting Shares, if any, after payments of fair value in
respect thereto have been made to dissenting shareholders of
either Brands or USA Dealers, as the case may be, pursuant to
Nevada Law, shall be canceled.
SECTION 2.8 Tax and Accounting Consequences.
It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of
the Code. Each party has consulted with its own tax advisors and
accountants with respect to the tax and accounting consequences,
respectively, of the Merger.
SECTION 2.9 Closing.
(a) Time and Place. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at
the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇, LLP, on the business day
immediately after the last of the conditions set forth in Article
VII hereof is fulfilled or waived, or at such other time and
place as Brands and USA Dealers shall agree (the date on which
the Closing occurs being the "Closing Date").
(b) Deliveries by USA Dealers to Brands. On the Closing
Date, USA Dealers will deliver to Brands the following:
(i) a certificate from the Nevada Secretary of State
as to the good standing of USA Dealers, as of a date within five
(5) days of the Closing Date;
(ii) copies of the resolutions or consents of the
Board of Directors of USA Dealers approving the Merger and the
other agreements and transactions contemplated hereby, certified
by the corporate secretary or assistant corporate secretary of
USA Dealers, and certified copies of the resolutions or consents,
in form and substance reasonably satisfactory to Brands,
certified by the corporate secretary or assistant corporate
secretary of USA Dealers, constituting shareholder approval of
the Merger and all other agreements and transactions contemplated
hereby by a majority of the shareholders of USA Dealers;
(iii) the officers' certificate referred to in Section
7.3(a) hereof;
(iv) a certificate of the corporate secretary or an
assistant corporate secretary of USA Dealers certifying the name,
title and true signature of each officer of USA Dealers executing
any of the other documents and certificates to be delivered
pursuant to or in connection with this Agreement, as applicable;
and
(v) such other documents as are required to be
delivered prior to or on the Closing Date pursuant to this
Agreement or as may reasonably be requested by Brands.
(c) Deliveries by Brands to USA Dealers. On the Closing
Date, Brands will deliver to USA Dealers the following:
(i) a certificate from the Nevada Secretary of State
as to the good standing of Brands, as of a date within five (5)
days of the Closing Date;
(ii) copies of the resolutions or consents of the
Board of Directors of Brands approving the Merger and the other
agreements and transactions contemplated hereby, certified by the
corporate secretary or assistant corporate secretary of Brands,
and certified copies of the resolutions or consents, in form and
substance reasonably satisfactory to USA Dealers, certified by
the corporate secretary or assistant corporate secretary of
Brands, constituting shareholder approval of the Merger and all
other agreements and transactions contemplated hereby by a
majority of the shareholders of Brands;
(iii) the officers' certificate referred to in Section
7.2(a) hereof;
(iv) a certificate of the corporate secretary or an
assistant corporate secretary of Brands certifying the name,
title and true signature of each officer of Brands executing any
of the Agreements and the other documents and certificates to be
delivered pursuant to or in connection with this Agreement;
(v) the executed Consulting Agreement
(vi) all Approvals from third parties as are required
for Brands to consummate the Merger and the other transactions
contemplated by the Agreements hereto; and
(vii) such other documents as are required to be
delivered prior to or on the Closing Date pursuant to this
Agreement or as may be reasonably requested by USA Dealers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BRANDS
Brands represents and warrants to USA Dealers that on the
date hereof and at the Effective Time as follows:
SECTION 3.1 Organization and Qualification.
Brands is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation
and has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as
it is now being conducted. Brands is qualified to do business
and is in good standing in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary.
True, accurate and complete copies of Brands' Articles of
Incorporation and Bylaws, in each case as in effect on the date
hereof, including all amendments thereto, have heretofore been
delivered to USA Dealers.
SECTION 3.2 Capitalization.
(a) The authorized capital stock of Brands consists of
25,000,000 shares of Brands Common Stock, $0.001 par value per
share and 5,000,000 shares of preferred stock, $0.001 par value
per share. As of the date hereof, there were 17,435,000 shares
of Brands Common Stock issued and outstanding as set forth on
Schedule 3.2(a) hereto and no shares of preferred stock issued
and outstanding. All of the issued and outstanding shares of
Brands Common Stock are validly issued, fully paid, non-
assessable and free of preemptive rights.
(b) As of the date hereof, there are no outstanding
subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any
outstanding security, instrument or other agreement obligating
Brands or any subsidiary of Brands to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the
capital stock of Brands or obligating Brands or any subsidiary of
Brands to grant, extend or enter into any such agreement of
commitment, except for this Agreement. There are no outstanding
or authorized stock appreciation, phantom stock, stock
participation, or other similar rights with respect to Brands.
There are no voting trusts, proxies or other agreements or
understandings to which Brands or any subsidiary of Brands is a
party or is bound with respect to the voting of any shares of
capital stock of Brands, except as set forth on Schedule 3.2(c)
hereto.
SECTION 3.3 Authority; Non-Contravention; Approvals.
(a) Brands has full corporate power and authority to enter
into this Agreement and, subject to Brands' stockholders'
approval, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, and the
consummation by Brands of the transactions contemplated hereby,
have been duly authorized by Brands' Board of Directors and no
other corporate proceedings on the part of Brands are necessary
to authorize the execution and delivery of this Agreement and the
consummation by Brands of the transactions contemplated hereby,
except for Brands' Stockholders' Approval. This Agreement has
been duly and validly executed and delivered by Brands and,
assuming the due authorization, execution and delivery hereof by
USA Dealers constitutes a valid and binding agreement of Brands,
enforceable against Brands, in accordance with its terms, except
that such enforcement may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights
generally and (b) general equitable principles.
(b) The execution and delivery of this Agreement by Brands
does not, and the consummation by Brands of the transactions
contemplated hereby will not, violate, conflict with or result in
a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of
the properties or assets of Brands or any of its subsidiaries
under any of the terms, conditions or provisions of (i) the
respective charters or bylaws of Brands or any of its
subsidiaries, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any court or governmental authority applicable to Brands or any
of its subsidiaries or any of their respective properties or
assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or
other instrument obligation or agreement of any kind to which
Brands or any of its subsidiaries is now a party or by which
Brands or any of its subsidiaries or any of their respective
properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not
in the aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other),
results of operations or prospects of Brands and its
subsidiaries, taken as a whole.
(c) No declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and
delivery of this Agreement by Brands or the consummation by
Brands of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case
may be, would not, in the aggregate, have a material adverse
effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of
Brands and its subsidiaries, taken as a whole.
SECTION 3.4 Reports and Financial Statements.
Brands shall deliver to USA Dealers copies of its financial
statements for the October 31, 2001 (the "Brands Financial
Statements"). The Brands Financial Statements shall have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and shall fairly
present the financial position of Brands and its subsidiaries as
of the dates thereof and the results of the operations and
changes in financial position for the periods then ended,
subject, to normal year-end adjustments and any other adjustments
described therein.
SECTION 3.5 Absence of Undisclosed Liabilities.
Except as expressly disclosed and described in the Brands
Financial Statements, Brands does not have at October 31, 2001,
nor has it incurred since that date, any liabilities,
indebtedness, expense, claim deficiency, guarantee or obligations
of any type (whether absolute, accrued, contingent, matured,
unmatured or otherwise) of any nature, except liabilities,
obligations or contingencies which were incurred in the ordinary
course of business and as found on Exhibit 1 Liabilities.
SECTION 3.6 Absence of Certain Changes or Events.
From October 31, 2001 through the date hereof, there has not
been any material adverse change in the business, operations,
properties, assets, liabilities, condition (financial or other),
results of operations or prospects of Brands and its
subsidiaries, taken as a whole.
SECTION 3.7 Litigation.
There are no claims, suits, actions or proceedings pending
or, to the knowledge of Brands, threatened against, relating to
or affecting Brands or any of its subsidiaries, before any court,
governmental department, commission, agency, instrumentality or
authority, or any arbitrator, except as disclosed on Schedule 3.7
hereto. Neither Brands nor any of its subsidiaries is subject to
any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or
authority or any arbitrator which prohibits or restricts the
consummation of the transactions contemplated hereby or would
have any material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of
operations or prospects of Brands and its subsidiaries.
SECTION 3.8 No Violation of Law.
Neither Brands nor any of its subsidiaries is in violation
of, or has been given notice or been charged with any violation
of, any law, statute, order, rule, regulation, ordinance, or
judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in
the aggregate, do not have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations or prospects of Brands and its
subsidiaries, taken as a whole. As of the date of this
Agreement, to the knowledge of Brands, no investigation or review
by any governmental or regulatory body or authority is pending or
threatened, nor has any governmental or regulatory body or
authority indicated an intention to conduct the same.
SECTION 3.9 Material Agreements, Contracts and
Commitments.
(a) Except for the agreements set forth on Schedule 3.9,
neither Brands nor any of its subsidiaries is a party to nor is
it bound by:
(i) any employment or consulting agreement, contract
or commitment with an employee or individual consultant or
salesperson or consulting or sales agreement, contract or
commitment with a firm or other organization;
(ii) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan
or stock purchase plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property with fixed annual
rental payments in excess of $10,000;
(v) any agreement, contract or commitment containing
any covenant limiting the freedom of Brands or any of its
subsidiaries to engage in any line of business or to compete with
any person;
(vi) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of
$10,000 either individually or in the aggregate;
(vii) any agreement, contract or commitment relating
to the disposition or acquisition of assets or any interest in
any business enterprise outside the ordinary course of Brands'
business;
(viii) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or
instruments relating to the borrowing of money or extension of
credit;
(ix) any purchase order or contract for the purchase
of materials involving in excess of $10,000 either individually
or in the aggregate;
(x) any construction contracts;
(xi) any dealer, distribution, joint marketing or
development agreement;
(xii) any sales representative, original equipment
manufacturer, value added, remarketer or other agreement for
distribution of Brands' products or services; or
(xiii) any other agreement, contract or commitment
that involves $1,000 or more or is not cancelable without penalty
within thirty (30) days.
(b) Each of Brands and its subsidiaries is in compliance
with and has not breached, violated or defaulted under, or
received notice that it has breached, violated or defaulted
under, any of the terms or conditions of any agreement, contract,
covenant, instrument, lease, license or commitment to which each
of Brands and its subsidiaries is a party or by which it is bound
(collectively, a "Contract"), nor is Brands or the Brands
Principal Stockholders aware of any event that would constitute
such a breach, violation or default with the lapse of time,
giving of notice or both. Each Contract is in full force and
effect and is not subject to any default there under by any party
obligated to Brands or its subsidiaries pursuant thereto. Brands
and its subsidiaries have obtained, or will obtain prior to the
Closing Date, all necessary consents, waivers and approvals of
parties to any Contract as are required there under in connection
with the Merger or for such Contracts to remain in effect without
modification after the Closing. Following the Effective Time,
Brands and its subsidiaries will be permitted to exercise all of
its rights under the Contracts without the payment of any
additional amounts or consideration other than ongoing fees,
royalties or payments which Brands or its subsidiaries would
otherwise be required to pay had the transactions contemplated by
this Agreement not occurred.
SECTION 3.10 Tax Matters.
(a) Definition of Taxes. For the purposes of this
Agreement, "Tax" or, collectively, "Taxes," means (i) any and all
federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts; (ii) any
liability for the payment of any amounts of the type described in
clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii)
any liability for the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or
implied obligation to indemnify any other person or as a result
of any obligations under any agreements or arrangements with any
other person with respect to such amounts and including any
liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) As of the Effective Time, Brands and its
subsidiaries will have prepared and timely filed all required
federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to any and all Taxes
concerning or attributable to Brands or its operations and such
Returns are true and correct and have been completed in
accordance with applicable law.
(ii) As of the Effective Time, Brands and its
subsidiaries (A) will have paid all Taxes it is required to pay
and will have withheld with respect to its employees all federal
and state income taxes, Federal Insurance Contribution Act
("FICA"), Federal Unemployment Tax Act ("FUTA") and other Taxes
required to be withheld, and (B) will have accrued on the Brands
Financial Statements all Taxes attributable to the periods
covered by the Brands Financial Statements and will not have
incurred any liability for Taxes for the period prior to the
Effective Time other than in the ordinary course of business.
(iii) Neither Brands nor any of its subsidiaries has
not been delinquent in the payment of any Tax nor is there any
Tax deficiency outstanding, assessed or proposed against Brands
or any of its subsidiaries, nor has Brands or any of its
subsidiaries executed any waiver of any statute of limitations on
or extending the period for the assessment or collection of any
Tax.
(iv) No audit or other examination of any Return of
Brands or any of its subsidiaries is presently in progress, nor
has Brands or any of its subsidiaries been notified of any
request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by
Brands or its subsidiaries has been proposed formally or
informally by any Tax authority to Brands or its subsidiaries or
any representative thereof.
(vi) Neither Brands nor any of its subsidiaries have
any liabilities for unpaid federal, state, local and foreign
Taxes which have not been accrued or reserved against in
accordance with GAAP on the Brands Financial Statements, whether
asserted or unasserted, contingent or otherwise, and neither
Brands nor any of its subsidiaries have incurred any liability
for Taxes since the date of the Brands Financial Statements other
than in the ordinary course of business.
(vii) Brands and its subsidiaries have made available
to USA Dealers or its legal counsel, copies of all foreign,
federal and state income and all state sales and use Returns for
Brands and its subsidiaries filed for all periods since its
inception.
(viii) There are (and immediately following the
Effective Time there will be) no liens, pledges, charges, claims,
restrictions on transfer, mortgages, security interests or other
encumbrances of any sort (collectively, "Liens") on the assets of
Brands or its subsidiaries relating to or attributable to Taxes
other than Liens for Taxes not yet due and payable.
(ix) Neither Brands nor the Brands Principal
Stockholders have knowledge of any basis for the assertion of any
claim relating or attributable to Taxes that, if adversely
determined, would result in any Lien on the assets of Brands.
(x) None of Brands' or its subsidiaries assets is
treated as "tax-exempt use property," within the meaning of
Section 168(h) of the Code.
(xi) As of the Effective Time, there will not be any
contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any
employee or former employee of Brands or its subsidiaries that,
individually or collectively, could give rise to the payment of
any amount that would not be deductible by Brands or its
subsidiaries as an expense under applicable law.
(xii) Neither Brands nor any of its subsidiaries have
filed any consent agreement under Section 341(f) of the Code or
agreed to have Section 341(f)(4) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by Brands or its subsidiaries.
(xiii) Neither Brands nor any of its subsidiaries is a
party to any tax sharing, indemnification or allocation agreement
nor does Brands or any of its subsidiaries owe any amount under
any such agreement.
(c) Executive Compensation Tax. There is no contract,
agreement, plan or arrangement to which Brands or any of its
subsidiaries is a party, including but not limited to the
provisions of this Agreement, covering any employee or former
employee of Brands or any of its subsidiaries that, individually
or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G, 404 or
162(m) of the Code.
SECTION 3.11 Employee Benefit Plan; ERISA.
At the date hereof, Brands and its subsidiaries do not
maintain or contribute to any material domestic employee benefit
plans, programs, arrangements or practices (such plans, programs,
arrangements or practices of Brands and its subsidiaries being
referred to as the "Brands Plans"), including employee benefit
plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other similar material arrangements for the
provision of benefits (excluding any Multiemployer Plan within
the meaning of Section 3(37) of ERISA or a "Multiple Employer
Plan" within the meaning of Section 413(c) of the Code). Neither
Brands nor its subsidiaries have any obligation to create any
such plan.
SECTION 3.12 Investment Company Act.
Brands and each of its subsidiaries either (a) is not an
"investment company", or a company "controlled" by, or an
"affiliated company" with respect to, an "investment company",
within the meaning of the Investment Company Act of 1940 (the
"Investment Company Act") or (b) satisfies all conditions for an
exemption from the Investment Company Act, and, accordingly,
neither Brands nor any of its subsidiaries is required to be
registered under the Investment Company Act.
SECTION 3.13 Labor Controversies.
There are no significant controversies pending or, to the
knowledge of Brands, threatened between Brands or its
subsidiaries and their employees, to the knowledge of Brands,
there are no material organizational efforts presently being made
involving any of the presently unorganized employees of Brands
and its subsidiaries, Brands and its subsidiaries have, to the
knowledge of Brands, complied in all material respects with all
laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, and
the payment of social security and similar taxes, and no person
has, to the knowledge of Brands, asserted that Brands or any of
its subsidiaries is liable in any material amount for any arrears
of wages or any taxes or penalties for failure to comply with any
of the foregoing.
SECTION 3.14 Interested Party Transactions.
Neither Brands nor any of its subsidiaries is a party to any
oral or written (a) consulting or similar agreement with any
present or former director, officer or employee or any entity
controlled by any such person, (b) agreement with any executive
officer or other key employee of Brands or any of its
subsidiaries the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a
transaction involving Brands or any of its subsidiaries of the
nature contemplated by this Agreement, (c) agreement with respect
to any executive officer or other key employee of Brands or any
of its subsidiaries providing any term of employment or
compensation guarantee or (d) agreement or plan, including any
stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of the
transactions contemplated by this Agreement.
SECTION 3.15 Insurance.
Schedule 3.15 lists all insurance policies and fidelity
bonds covering the assets, business, equipment, properties,
operations, employees, officers and directors of Brands or any of
its subsidiaries. There is no claim by Brands or any of its
subsidiaries pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid, and
Brands and its subsidiaries are otherwise in compliance with the
terms of such policies and bonds (or other policies and bonds
providing substantially similar insurance coverage). Brands and
the Brands Principal Stockholders have no knowledge of any
threatened termination of, or premium increase with respect to,
any of such policies.
SECTION 3.16 Representations Complete.
None of the representations or warranties made by Brands or
the Brands Principal Stockholders, nor any statement made in any
Schedule or certificate furnished by Brands or the Brands
Principal Stockholders pursuant to this Agreement or furnished in
or in connection with documents mailed or delivered to the USA
Dealers Shareholders for use in soliciting their consent to this
Agreement and the Merger contains or will contain at the
Effective Time any untrue statement of a material fact, or omits
or will omit at the Effective Time to state any material fact
necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF USA DEALERS
USA Dealers represents and warrants to Brands as follows:
SECTION 4.1 Organization and Qualification.
USA Dealers is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Nevada and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. USA Dealers is
qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by
it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified and in good standing will not, when taken together with
all other such failures, have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations or prospects of USA Dealers, taken
as a whole. True, accurate and complete copies of USA Dealers'
Articles of Incorporation and Bylaws, in each case as in effect
on the date hereof, including all amendments thereto have
heretofore been delivered to Brands.
SECTION 4.2 Capitalization.
(a) The authorized capital stock of USA Dealers consists of
50,000,000 shares of USA Dealers Common Stock, $0.001 par value
per share, and 5,000,000 shares of Preferred Stock, $0.001 par
value per share. As of the date hereof and before giving effect
to the reverse stock split provided for in Section 7.1(b),
26,366,600 shares of Common Stock and no shares of Preferred
Stock were issued and outstanding. All of the issued and
outstanding shares of USA Dealers Common Stock are validly
issued, fully paid and non-assessable, and were issued in
compliance with applicable federal and state securities laws.
(b) Except as set forth in Schedule 4.2(b) hereof, as of
the date hereof there are no outstanding subscriptions, options,
calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument
or other agreement, obligating USA Dealers or any subsidiary of
USA Dealers to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of USA
Dealers or obligating USA Dealers to grant, extend or enter into
any such agreement or commitment. Except as set forth in
Schedule 4.2(b) hereof, there are no voting trusts, proxies or
other agreements or understandings to which USA Dealers is a
party or is bound with respect to the voting of any shares of
capital stock of USA Dealers. The shares of USA Dealers Common
Stock issued to stockholders of Brands in the Merger will be at
the Effective Time duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights.
SECTION 4.3 Authority; Non-Contravention; Approvals.
(a) USA Dealers has full corporate power and authority to
enter into this Agreement and, subject to USA Dealers'
stockholders' approval, to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement, and the consummation by USA Dealers of the
transactions contemplated hereby, have been duly authorized by
USA Dealers' Board of Directors and no other corporate
proceedings on the part of USA Dealers are necessary to authorize
the execution and delivery of this Agreement and the consummation
by USA Dealers of the transactions contemplated hereby, except
for USA Dealers' stockholders' approval. This Agreement has been
duly and validly executed and delivered by USA Dealers, and,
assuming the due authorization, execution and delivery hereof by
Brands, constitutes a valid and binding agreement of USA Dealers,
enforceable against USA Dealers in accordance with its terms,
except that such enforcement may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights
generally and (b) general equitable principles.
(b) The execution and delivery of this Agreement by USA
Dealers does not, and the consummation by USA Dealers of the
transactions contemplated hereby will not, violate, conflict with
or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of USA Dealers under any of
the terms, conditions or provisions of (i) the charter or bylaws
of USA Dealers, (ii) subject to the receipt of USA Dealers'
stockholders' approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any court or governmental authority applicable to USA
Dealers or any of its properties or assets, or (iii) any note,
bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which USA Dealers is now a
party or by which USA Dealers or any of its properties or assets
may be bound or affected, excluding from the foregoing clauses
(ii) and (iii) such violations, conflicts, breaches, defaults,
terminations, accelerations or creation of liens, security
interest, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other),
results of operations or prospect of USA Dealers, taken as a
whole.
(c) No declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and
delivery of this Agreement by USA Dealers or the consummation by
USA Dealers of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or
obtained, as the case may be, would not, in the aggregate, have a
material adverse effect on the business, operations, properties
assets, condition (financial or other), results of operations or
prospects of USA Dealers, taken as a whole.
SECTION 4.4 Reports and Financial Statements.
USA Dealers has previously delivered to Brands copies of its
financial statements (balance sheets and statement of income) for
the three months and nine months ended September 30, 2001 (the
"USA Dealers Financial Statements"). The USA Dealers Financial
Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes thereto) and
fairly present the financial position of USA Dealers as of the
dates thereof and the results of the operations and changes in
financial position for the periods then ended, subject, to normal
year-end adjustments and any other adjustments described therein.
SECTION 4.5 Absence of Undisclosed Liabilities.
Except as expressly disclosed and described in USA Dealers'
Financial Statements and on Appendix A hereto, USA Dealers did
not have at September 30, 2001, and has not incurred since that
date, any liabilities, indebtedness, expense, claim deficiency,
guarantee or obligations of any type (whether absolute, accrued,
contingent, matured, unmatured or otherwise) of any nature,
except liabilities, obligations or contingencies which are
accrued or reserved against in the USA Dealers' Financial
Statements or reflected in the notes thereto.
SECTION 4.6 Absence of Certain Changes or Events.
From September 30, 2001, through the date hereof, there has
not been any material adverse change in the business, operations,
properties, assets, liabilities, condition (financial or other),
results of operations or prospects of USA Dealers, taken as a
whole.
SECTION 4.7 Litigation.
There are no claims, suits, actions or proceedings pending
or, to the knowledge of USA Dealers, threatened against, relating
to or affecting USA Dealers, before any court, governmental
department, commission, agency, instrumentality or authority, or
any arbitrator, except as disclosed on Schedule 4.7 hereto. USA
Dealers is not subject to any judgment, decree, injunction, rule
or order of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator which
prohibits or restricts the consummation of the transactions
contemplated hereby or would have any material adverse effect on
the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of USA
Dealers.
SECTION 4.8 No Violation of Law.
USA Dealers is not in violation of, or been given notice or
been charged with any violation of, any law, statute, order,
rule, regulation, ordinance, or judgment (including, without
limitation, any applicable environmental law, ordinance or
regulation) of any governmental or regulatory body or authority,
except for violations which, in the aggregate, do not have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or
prospects of USA Dealers, taken as a whole. As of the date of
this Agreement, to the knowledge of USA Dealers, no investigation
or review by any governmental or regulatory body or authority is
pending or threatened, nor has any governmental or regulatory
body or authority indicated an intention to conduct the same.
SECTION 4.9 Material Agreements, Contracts and
Commitments.
(a) Except for the agreements set forth on Schedule 4.9 and
on Appendix A hereto, USA Dealers is not a party to nor is it
bound by:
(i) any employment or consulting agreement, contract
or commitment with an employee or individual consultant or
salesperson or consulting or sales agreement, contract or
commitment with a firm or other organization except for the
remaining balance of $35,000 to Al Tamasebi under his current
consulting agreement paid at $5,000 per month.
(ii) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan
or stock purchase plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any lease of personal property with fixed annual
rental payments in excess of $5,000;
(v) any agreement, contract or commitment containing
any covenant limiting the freedom of USA Dealers to engage in any
line of business or to compete with any person;
(vi) any agreement, contract or commitment relating to
capital expenditures and involving future payments in excess of
$5,000 either individually or in the aggregate;
(vii) any agreement, contract or commitment relating
to the disposition or acquisition of assets or any interest in
any business enterprise outside the ordinary course of USA
Dealers' business;
(viii) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or
instruments relating to the borrowing of money or extension of
credit;
(ix) any purchase order or contract for the purchase
of materials involving in excess of $5,000 either individually or
in the aggregate;
(x) any construction contracts;
(xi) any dealer, distribution, joint marketing or
development agreement;
(xii) any sales representative, original equipment
manufacturer, value added, remarketer or other agreement for
distribution of USA Dealers' products or services; or
(xiii) any other agreement, contract or commitment
that involves $1,000 or more or is not cancelable without penalty
within thirty (30) days.
(b) USA Dealers is in compliance with and has not breached,
violated or defaulted under, or received notice that it has
breached, violated or defaulted under, any of the terms or
conditions of any agreement, contract, covenant, instrument,
lease, license or commitment to which USA Dealers is a party or
by which it is bound (collectively, a "Contract"), nor is USA
Dealers aware of any event that would constitute such a breach,
violation or default with the lapse of time, giving of notice or
both. Each Contract is in full force and effect and is not
subject to any default there under by any party obligated to USA
Dealers pursuant thereto. USA Dealers has obtained, or will
obtain prior to the Closing Date, all necessary consents, waivers
and approvals of parties to any Contract as are required there
under in connection with the Merger or for such Contracts to
remain in effect without modification after the Closing.
Following the Effective Time, USA Dealers will be permitted to
exercise all of its rights under the Contracts without the
payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which USA Dealers would
otherwise be required to pay had the transactions contemplated by
this Agreement not occurred.
SECTION 4.10 Tax Matters.
(a) Tax Returns and Audits.
(i) As of the Effective Time, USA Dealers will have
prepared and timely filed all required federal, state, local and
foreign returns, estimates, information statements and reports
("Returns") relating to any and all Taxes concerning or
attributable to it or its operations and such Returns are true
and correct and have been completed in accordance with applicable
law.
(ii) As of the Effective Time, USA Dealers (A) will
have paid all Taxes it is required to pay and will have withheld
with respect to its employees all federal and state income taxes,
Federal Insurance Contribution Act ("FICA"), Federal Unemployment
Tax Act ("FUTA") and other Taxes required to be withheld, and (B)
will have accrued on the USA Dealers Financial Statements all
Taxes attributable to the periods covered by the USA Dealers
Financial Statements and will not have incurred any liability for
Taxes for the period prior to the Effective Time other than in
the ordinary course of business.
(iii) USA Dealers has not been delinquent in the
payment of any Tax nor is there any Tax deficiency outstanding,
assessed or proposed against USA Dealers, nor has USA Dealers or
any of its subsidiaries executed any waiver of any statute of
limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of
USA Dealers is presently in progress, nor has USA Dealers been
notified of any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by USA
Dealers has been proposed formally or informally by any Tax
authority to USA Dealers or any representative thereof.
(vi) USA Dealers has no liabilities for unpaid
federal, state, local and foreign Taxes which have not been
accrued or reserved against in accordance with GAAP on the USA
Dealers Financial Statements, whether asserted or unasserted,
contingent or otherwise, and USA Dealers has not incurred any
liability for Taxes since the date of the USA Dealers Financial
Statements other than in the ordinary course of business.
(vii) USA Dealers has made available to Brands or its
legal counsel, copies of all foreign, federal and state income
and all state sales and use Returns for USA Dealers filed for all
periods since its inception.
(viii) There are (and immediately following the
Effective Time there will be) no liens, pledges, charges, claims,
restrictions on transfer, mortgages, security interests or other
encumbrances of any sort (collectively, "Liens") on the assets of
USA Dealers relating to or attributable to Taxes other than Liens
for Taxes not yet due and payable.
(ix) USA Dealers has no knowledge of any basis for the
assertion of any claim relating or attributable to Taxes that, if
adversely determined, would result in any Lien on the assets of
USA Dealers.
(x) None of USA Dealers' assets are treated as "tax-
exempt use property," within the meaning of Section 168(h) of the
Code.
(xi) As of the Effective Time, there will not be any
contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any
employee or former employee of USA Dealers that, individually or
collectively, could give rise to the payment of any amount that
would not be deductible by USA Dealers as an expense under
applicable law.
(xii) USA Dealers has not filed any consent agreement
under Section 341(f) of the Code or agreed to have Section
341(f)(4) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by
USA Dealers.
(xiii) USA Dealers is not a party to any tax sharing,
indemnification or allocation agreement, nor does USA Dealers owe
any amount under any such agreement.
(b) Executive Compensation Tax. There is no contract,
agreement, plan or arrangement to which USA Dealers is a party,
including but not limited to the provisions of this Agreement,
covering any employee or former employee of USA Dealers that,
individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Sections
280G, 404 or 162(m) of the Code.
SECTION 4.11 Employee Benefit Plan; ERISA.
At the date hereof, USA Dealers does not maintain or
contribute to any material domestic employee benefit plans,
programs, arrangements or practices (such plans, programs,
arrangements or practices of USA Dealers being referred to as the
"USA Dealers Plans"), including employee benefit plans within the
meaning set forth in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or other
similar material arrangements for the provision of benefits
(excluding any Multiemployer Plan within the meaning of Section
3(37) of ERISA or a "Multiple Employer Plan" within the meaning
of Section 413(c) of the Code). USA Dealers has no obligation to
create any such plan.
SECTION 4.12 Investment Company Act.
USA Dealers either (a) is not an "investment company", or a
company "controlled" by, or an "affiliated company" with respect
to, an "investment company", within the meaning of the Investment
Company Act of 1940 (the "Investment Company Act") or (b)
satisfies all conditions for an exemption from the Investment
Company Act, and, accordingly, USA Dealers is not required to be
registered under the Investment Company Act.
SECTION 4.13 Labor Controversies.
There are no significant controversies pending or, to the
knowledge of USA Dealers, threatened between USA Dealers and its
employees, to the knowledge of USA Dealers, there are no material
organizational efforts presently being made involving any of the
presently unorganized employees of USA Dealers, USA Dealers has,
to the knowledge of USA Dealers, complied in all material
respects with all laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to
wages, hours, and the payment of social security and similar
taxes, and no person has, to the knowledge of USA Dealers,
asserted that USA Dealers is liable in any material amount for
any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing.
SECTION 4.14 Environmental Matters.
(a) Hazardous Material. USA Dealers has not: (i) operated
any underground storage tanks at any property that USA Dealers
has at any time owned, operated, occupied or leased; or (ii)
illegally released any material amount of any substance that has
been designated by any Governmental Entity or by applicable
federal, state or local law to be radioactive, toxic, hazardous
or otherwise a danger to health or the environment, including,
without limitation, PCBs, asbestos, petroleum, and urea-
formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined
as a hazardous waste pursuant to the United States Resource
Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws (a "Hazardous
Material"), but excluding office and janitorial supplies properly
and safely maintained. No Hazardous Materials are present as a
result of the deliberate actions of USA Dealers, or to USA
Dealers' knowledge, as a result of any actions of any other
person or otherwise, in, on or under any property, including the
land and the improvements, ground water and surface water
thereof, that USA Dealers has at any time owned, operated,
occupied or leased.
(b) Hazardous Materials Activities. USA Dealers has not
transported, stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Effective Time.
USA Dealers has not disposed of, transported, sold, or
manufactured any product containing a Hazardous Material (any or
all of the foregoing being collectively referred to as "Hazardous
Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or
control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. USA Dealers currently holds all environmental
approvals, permits, licenses, clearances and consents (the
"Environmental Permits") necessary for the conduct of Hazardous
Material Activities, respectively, and other businesses of USA
Dealers as such activities and businesses are currently being
conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or
claim is pending, or, to USA Dealers' knowledge, threatened
concerning any Environmental Permit, Hazardous Material or any
Hazardous Materials Activity of the Company. USA Dealers is not
aware of any fact or circumstance that could involve USA Dealers
in any environmental litigation or impose upon USA Dealers any
environmental liability.
SECTION 4.15 Insurance.
Schedule 4.15 lists all insurance policies and fidelity
bonds covering the assets, business, equipment, properties,
operations, employees, officers and directors of USA Dealers.
There is no claim by USA Dealers pending under any of such
policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds.
All premiums due and payable under all such policies and bonds
have been paid, and USA Dealers is otherwise in compliance with
the terms of such policies and bonds (or other policies and bonds
providing substantially similar insurance coverage). USA Dealers
has no knowledge of any threatened termination of, or premium
increase with respect to, any of such policies.
SECTION 4.16 Representations Complete.
None of the representations or warranties made by USA
Dealers, nor any statement made in any Schedule or certificate
furnished by USA Dealers pursuant to this Agreement or furnished
in or in connection with documents mailed or delivered to the
Brands shareholders for use in soliciting their consent to this
Agreement and the Merger contains or will contain at the
Effective Time any untrue statement of a material fact, or omits
or will omit at the Effective Time to state any material fact
necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not
misleading.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 5.1 Conduct of Business of USA Dealers and
Brands.
During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement
or the Effective Time, each of USA Dealers and Brands agree
(except to the extent that the other shall otherwise consent in
writing), to carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as
heretofore conducted, to pay the debts and their respective Taxes
when due, to pay or perform other obligations when due, and, to
the extent consistent with such business, use its reasonable best
efforts consistent with past practice and policies to preserve
intact their respective present business organizations, keep
available the services of their respective present officers and
key employees and preserve their respective relationships with
customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, all with the goal of
preserving unimpaired their respective goodwill and ongoing
businesses at the Effective Time. Each party shall promptly
notify the other of any event or occurrence or emergency not in
the ordinary course of business.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Access to Information.
(a) Brands and its subsidiaries shall afford to USA Dealers
and its accountants, counsel, financial advisors and other
representatives (the "USA Dealers Representatives") full access
during normal business hours throughout the period prior to the
Effective Time to all of their respective properties, books,
contracts, commitments and records (including, but not limited
to, Tax Returns) provided that no investigation pursuant to this
Section 6.1(a) shall affect any representations or warranties
made herein or the conditions to the obligations of the
respective parties to consummate the Merger. USA Dealers and
each of its subsidiaries shall hold and shall use their best
efforts to cause the USA Dealers Representatives to hold, and USA
Dealers shall hold in strict confidence all non-public documents
and information furnished to USA Dealers and its subsidiaries or
to USA Dealers Representatives, as the case may be, in connection
with the transactions contemplated by this Agreement. In the
event that this Agreement is terminated in accordance with its
terms, each party shall promptly redeliver to the other all non-
public written material provided pursuant to this Section 6.1 and
shall not retain any copies, extracts or other reproductions in
whole or in part of such written materials.
(b) USA Dealers shall afford to Brands and its accountants,
counsel, financial advisors and other representatives (the
"Brands Representatives") full access during normal business
hours throughout the period prior to the Effective Time to all of
their respective properties, books, contracts, commitments and
records (including, but not limited to, Tax Returns) provided
that no investigation pursuant to this Section 6.1(b) shall
affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to
consummate the Merger. Brands shall hold and shall use its best
efforts to cause the Brands Representatives to hold, and Brands
and each of its subsidiaries shall hold in strict confidence all
non-public documents and information furnished to Brands or any
of its subsidiaries or to Brand Representatives, as the case may
be, in connection with the transactions contemplated by this
Agreement. In the event that this Agreement is terminated in
accordance with its terms, each party shall promptly redeliver to
the other all non-public written material provided pursuant to
this Section 6.1(b) and shall not retain any copies, extracts or
other reproductions in whole or in part of such written
materials.
SECTION 6.2 Brands and the Brands Principal
Stockholders' Approval.
Both Brands and each of its subsidiaries shall promptly
submit this Agreement and the transactions contemplated hereby
for the approval of its stockholders at a meeting of stockholders
or pursuant to written consent and, subject to the fiduciary
duties of the Board of Directors of both Brands and each of its
subsidiaries under applicable law, shall use its best efforts to
obtain stockholder approval and adoption (the "Brands and
Subsidiary Stockholders' Approval") of this Agreement and the
transactions contemplated hereby. Such meeting shall be held as
soon as practicable following the date hereof, but not later than
the Closing Date. Subject to the fiduciary duties of the Board
of Directors of Brands and each of its subsidiaries under
applicable law, Brands and each of its subsidiaries shall,
through their respective Board of Directors, recommend to its
stockholders approval of the transaction contemplated by this
Agreement.
SECTION 6.3 USA Dealers' Shareholders' Approval.
USA Dealers shall promptly submit this Agreement and the
transactions contemplated hereby for the approval of its
shareholders at a meeting of shareholders or pursuant to written
consent and, subject to the fiduciary duties of the Board of
Directors of USA Dealers and its subsidiaries under applicable
law, shall use its best efforts to obtain shareholder approval
and adoption (the "USA Dealers Shareholders' Approval") of this
Agreement and the transactions contemplated hereby. Such meeting
shall be held as soon as practicable following the date hereof,
but not later than the Closing Date. Subject to the fiduciary
duties of the Board of Directors of USA Dealers and its
subsidiaries under applicable law, USA Dealers shall, through its
Board of Directors, recommend to its stockholders approval of the
transaction contemplated by this Agreement.
SECTION 6.4 Expenses.
Except as set forth herein, all costs and expenses incurred
in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
expenses.
SECTION 6.5 Agreement to Cooperate.
Subject to the terms and conditions herein provided, each of
the parties hereto shall use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents
and approvals and to effect all necessary registrations, filings
and submissions and to lift any injunction or other legal bar to
the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the requisite
votes of the stockholders of Brands and USA Dealers.
SECTION 6.6 Public Statements.
The parties shall consult with each other prior to issuing
any press release or any written public statement with respect to
this Agreement or the transactions contemplated hereby and shall
not issue any such press release or written public statement
prior to such consultation.
SECTION 6.7 Indemnification.
(a) By Brands. Brands agrees to indemnify and hold USA
Dealers harmless with respect to any and all claims, losses,
damages, obligations, liabilities and expenses, including without
limitation reasonable legal and other costs and expenses of
investigating and defending any actions or threatened actions,
which USA Dealers or Brands may incur or suffer following the
Closing by reason of any breach of any of the representations and
warranties of Brands contained herein.
(b) By USA Dealers. USA Dealers agrees to indemnify and
hold Brands harmless with respect to any and all claims, losses,
damages, obligations, liabilities and expenses, including without
limitation reasonable legal and other costs and expenses of
investigating and defending any actions or threatened actions,
which USA Dealers or Brands may incur or suffer following the
Closing by reason of any breach of any of the representations and
warranties of USA Dealers contained herein.
ARTICLE VII
CONDITIONS
SECTION 7.1 Conditions to Each Party's Obligation to
Effect the Merger.
The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the affirmative vote of
USA Dealers' shareholders owning a majority of USA Dealers'
Common Stock entitled to vote on the Merger;
(b) USA Dealers shall have taken all steps and filed all
documents necessary to have effected prior to the Effective Time
a reverse stock split of the outstanding USA Dealers Common Stock
on an up to eighteen (18) to one (1) basis so that the existing
shares equal eight and one half percent (8%) of the total
issued shares upon the consummation of the merger;
(c) No preliminary or permanent injunction or other order
or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in
effect (each party agreeing to use its reasonable efforts to have
any such injunction, order or decree lifted);
(d) No action shall have been taken, and no statute, rule
or regulation shall have been enacted, by any state or federal
government or governmental agency in the United States which
would prevent the consummation of the Merger; and
(e) All governmental consents, orders and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at
the Effective Time, and all consents, orders and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby shall have become final orders.
SECTION 7.2 Conditions to Obligation of USA Dealers to
Effect the Merger.
Unless waived by USA Dealers, the obligation of USA Dealers
to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the following additional conditions:
(a) Brands shall have performed in all material respects
its agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations
and warranties of Brands contained in this Agreement shall be
true and correct in all material respects on and as of (i) the
date made and (ii) the Closing Date, and USA Dealers shall have
received a certificate of the President and Secretary of Brands
to that effect;
(b) Brands has entered into a consulting agreement
("Consulting Agreement") with BET Capital Corporation that shall
become effective at the Effective Time. The Consulting Agreement
shall be for a period of two (2) years at a rate of Ten Thousand
Dollars ($10,000) per month, payable in registered shares of USA
Dealers Common Stock or the equivalent thereof;
(c) Since the date hereof, (i) there shall have been no
changes that constitute, and (ii) no event or events shall have
occurred which have resulted in or constitute, a material adverse
change in the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of
Brands and its subsidiaries, taken as a whole (exclusive of
changes or events resulting from regulatory, business or economic
conditions of general applicability); and
(d) All governmental consents, orders, and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be
in effect at the Closing Date.
SECTION 7.3 Conditions to Obligation of Brands to Effect
the Merger.
Unless waived by Brands, the obligation of Brands to effect
the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the additional following conditions:
(a) USA Dealers shall have performed in all material
respects its agreements contained in this Agreement required to
be performed on or prior to the Closing Date and the
representations and warranties of USA Dealers contained in this
Agreement shall be true and correct in all material respects on
and as of (i) the date made and (ii) the Closing Date, and Brands
shall have received a Certificate of the President and Chief
Executive Officer or of a Vice President of USA Dealers to that
effect;
(b) Since the date hereof, (i) there shall have been no
changes that constitute, and (ii) no event or events shall have
occurred which have resulted in or constitute, a material adverse
change in the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of USA
Dealers, taken as a whole (exclusive of changes or events
resulting from regulatory, business or economic conditions of
general applicability); and
(c) All governmental consents, orders, and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be
in effect at the Closing Date.
ARTICLE VIII
POST-CLOSING AGREEMENTS
SECTION 8.1 Post Closing Agreements.
Following the Effective Time, the parties agree as follows:
(a) USA Dealers (i) agrees to arrange and pay for the
filing of a registration statement covering the resale by certain
shareholders of two million (2,000,000) shares, including shares
owned by Ashford Capital or its assignee (ii) arrange and pay for
the preparation of USA Dealers' 10-QSB for the quarter ended
September 30, 2001 and the Form 8-K to be filed following the
Merger, and (iii) pay to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ the sum of Five
Thousand Dollars ($5,000) as his consulting fee.
(b) USA Dealers shall issue a warrant to BET Capital
Corporation for the purchase of 1,000,000 of USA Dealers Common
Stock at a price equal to a seventy-five percent (75%) discount
from the average closing bid price of USA Dealers Common Stock
for the thirty (30) trading days following the Effective Time
(the "Warrant"). USA Dealers shall file a registration statement
covering the resale by BET Capital Corporation of the shares
underlying the Warrant. The form of warrant is attached as
Exhibit C.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination.
This Agreement may be terminated at any time prior to the
Closing Date, whether before or after approval by the
stockholders of USA Dealers or Brands:
(a) by mutual consent of Brands and USA Dealers;
(b) unilaterally by Brands if Brands is not in breach of
any material agreement, covenants or representation contained in
this Agreement and USA Dealers fails to perform or breaches any
material agreement, covenant or representation in this Agreement,
and does not cure the failure in all material respects within 30
business days after the terminating party delivers written notice
of the alleged failure or if any condition to the obligations of
that party is not satisfied (other than by reason of a breach by
that party of its obligations hereunder), and it reasonably
appears that the condition cannot be satisfied prior to January
15, 2002;
(c) unilaterally by USA Dealers if USA Dealers is not in
breach of any material agreement, covenants or representation
contained in this Agreement and Brands fails to perform or
breaches any material agreement, covenant or representation in
this Agreement, and does not cure the failure in all material
respects within 30 business days after the terminating party
delivers written notice of the alleged failure or if any
condition to the obligations of that party is not satisfied
(other than by reason of a breach by that party of its
obligations hereunder), and it reasonably appears that the
condition cannot be satisfied prior to January 15, 2002;
(d) by either party if any material adverse effect has
occurred with respect to the other party; or
(e) by either party if the Closing Date has not occurred by
January 15, 2002; provided, however, that the right to terminate
this Agreement under this Section 9.1(e) shall not be available
to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a
breach of this Agreement.
SECTION 9.2 Effect of Termination.
In the event of termination of this Agreement by either
Brands or USA Dealers, as provided in Section 9.1, this Agreement
shall forthwith become void and there shall be no further
obligation on the part of either USA Dealers, Brands, or their
respective officers or directors. Nothing in this Section 9.2
shall relieve any party from liability for any breach of this
Agreement.
SECTION 9.3 Amendment.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto and in
compliance with applicable law.
SECTION 9.4 Waiver.
At any time prior to the Effective Time, the parties hereto
may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive
any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant thereto and (c)
waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Survival of Representations and Warranties.
All representations and warranties in this Agreement shall
survive the Merger for a period of one year.
SECTION 10.2 Brokers.
USA Dealers represents and warrants that no broker, finder
or investment banker is entitled to any brokerage, finders' or
other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of USA Dealers. Brands
represents and warrants that no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions
contemplated by this Agreement based upon arrangements made by or
on behalf of Brands.
SECTION 10.3 Notices.
All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, mailed
by registered or certified mail (return receipt requested) or
sent via facsimile to the parties at the following addresses (or
at such other address for a party as shall be specified by like
notice):
(a) If to Brands to: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
(b) If to USA Dealers USA Dealers ▇▇▇▇▇▇▇.▇▇▇, Inc.
to:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Al Tamasebi
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., LTD.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SECTION 10.4 Interpretation.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.5 Miscellaneous.
This Agreement (including the documents and instruments
referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect
to the subject matter hereof; (b) shall not be assigned by
operation of law or otherwise; and (c) shall be governed in all
respects, including validity, interpretation and effect, by the
laws of the State of California (without giving effect to the
provisions thereof relating to conflicts of law).
SECTION 10.6 Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement
SECTION 10.7 Parties in Interest.
This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, nothing in this Agreement, express
or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of
this Agreement.
SECTION 10.8 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless
of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. Each of the parties
hereto irrevocably consents to the exclusive jurisdiction and
venue of any court within Orange County, State of California, in
connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process
may be served upon them in any manner authorized by the laws of
the State of California for such persons and waives and covenants
not to assert or plead any objection which they might otherwise
have to such jurisdiction, venue and such process.
SECTION 10.9 Entire Agreement.
This Agreement, the Exhibits hereto and the documents and
instruments and other agreements among the parties hereto
referenced herein constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede
all prior agreements and understandings both written and oral,
among the parties with respect to the subject matter hereof.
SECTION 10.10 Severability.
In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the
remainder of this Agreement will continue in full force and
effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement
with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of
such void or unenforceable provision.
IN WITNESS WHEREOF, Brands and USA Dealers have caused this
Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
USA DEALERS ▇▇▇▇▇▇▇.▇▇▇, INC.
By:___________________________
Name:_________________________
Title:________________________
BRANDS SHOPPING NETWORK, INC.
By:___________________________
Name:_________________________
Title:________________________
BRANDS PRINCIPAL STOCKHOLDERS
______________________________
______________________________
______________________________
______________________________
-PAGE-
EXHIBIT A
FORM OF CONSULTING AGREEMENT
November 1, 2001
CONSULTING AGREEMENT
This Consulting Agreement (the "Consulting Agreement") made as of
November 1, 2001 by and between BET Capital Corporation, a
California corporation of ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇ ("Consultant") and Brands Shopping Network, a Nevada
corporation (the "Company").
WITNESSETH
WHEREAS, the Company requires and will continue to require
consulting services relating to the operations of the business,
and strategic planning & positioning; and
WHEREAS, Consultant can provide the Company with advice on
the operations of the business, and strategic planning &
positioning, and
WHEREAS, the Company wishes to induce Consultant to provide
these consulting services to the Company,
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter stated, it is agreed as follows:
1. APPOINTMENT.
The Company hereby engages Consultant and Consultant agrees
to render services to the Company as a consultant upon the terms
and conditions hereinafter set forth.
2. TERM.
The term of this Consulting Agreement began as of December
15, 2001 and shall terminate on December 15, 2003, unless earlier
terminated in accordance with paragraph 7 herein or extended as
agreed to between the parties.
3. SERVICES.
During the term of this Agreement, Consultant shall provide
advice to undertake for and consult with the Company concerning
strategic planning, matters in connection with the operation of
the businesses of the Company, acquisitions and business
opportunities, and shall review and advise the Company regarding
its overall progress, needs and condition. Consultant agrees to
provide on a timely basis the following enumerated services plus
any additional services contemplated thereby:
(a) Advice on implementation of short-term operating budgets to
assist the Company in establishing an understanding of its
current operational status, and methods to measure same;
(b) Advice on implementation of short-range and long-term
strategic planning to fully develop and enhance the Company's
assets, resources, products and services;
(c) Advice to the Company relative to the recruitment,
employment, and development of key executives consistent with the
operations of the Company;
(d) Advice on the evaluation, structuring, negotiating and
closing of joint ventures, strategic alliances, business
acquisitions. Advice with regard to the ongoing management and
operation of such acquisitions upon consummation thereof.
4. DUTIES OF THE COMPANY.
The Company shall provide Consultant, on a regular and
timely basis, with all approved data and information about it,
its subsidiaries, its management, its products and services and
its operations as shall be reasonably requested by Consultant,
and shall advise Consultant of any facts which would affect the
accuracy of any data and information previously supplied pursuant
to this paragraph. The Company shall promptly supply Consultant
with full and complete copies of all financial reports, all
fillings with all federal and state securities agencies; with
full and complete copies of all stockholder reports; with all
data and information supplied by any financial analyst, and with
all brochures or other sales materials relating to its products
or services. Additionally, the Company shall also provide all
information regarding lawsuits, claims, or other related issues.
5. COMPENSATION.
The Company shall pay Consultant $10,000.00 per month. In
the event the Consultant is required to spend more than 4 days in
any month, the Company shall pay $2,500.00 per day per person
above the base monthly fee. Said fees shall be considered earned
and due on the first day of each month prior to delivery of
services. The Consultant can with the prior written permission
of the Company engage other third-party professionals to assist
in their duties. Any costs for third-party Consultants will be
the sole responsibility of the Company. Consultant in providing
the foregoing services shall not be responsible for any out-of-
pocket costs, including, without limitation, travel, lodging,
telephone, postage and Federal Express charges.
6. REPRESENTATION AND INDEMNIFICATION.
The Company shall be deemed to have made a continuing
representation of the accuracy of any and all facts, material
information and data which it supplies to Consultant and
acknowledges its awareness that Consultant will rely on such
continuing representation in disseminating such information and
otherwise performing its advisory functions. Consultant in the
absence of notice in writing from the Company will rely on the
continuing accuracy of material, information and data supplied by
the Company. Consultant represents that he has knowledge of and
is experienced in providing the aforementioned services.
7. MISCELLANEOUS.
Guarantee: Since all results can be affected by variables
other than the advice of the Consultant, no specific outcomes,
results, or guarantees are implied in this agreement.
Termination: After 24 months, this Agreement may be
terminated by either Party upon written notice to the other Party
for any reason, which shall be effective ninety (90) business
days from the date of such notice.
Modification: This Consulting Agreement sets forth the
entire understanding of the Parties with respect to the subject
matter hereof. This Consulting Agreement may be amended only in
writing signed by both Parties.
Notices: Any notice required or permitted to be given
hereunder shall be in writing and shall be mailed or otherwise
delivered in person or by facsimile transmission at the address
of such Party set forth above or to such other address or
facsimile telephone number as the Party shall have furnished in
writing to the other Party.
Waiver: Any waiver by either Party of a breach of any
provision of this Consulting Agreement shall not operate as or be
construed to be a waiver of any other breach of that provision or
of any breach of any other provision of this Consulting
Agreement. The failure of a Party to insist upon strict
adherence to any term of this Consulting Agreement on one or more
occasions will not be considered a waiver or deprive that Party
of the right thereafter to insist upon adherence to that term of
any other term of this Consulting Agreement.
Severability: If any provision of this Consulting Agreement
is invalid, illegal, or unenforceable, the balance of this
Consulting Agreement shall remain in effect, and if any provision
is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and
circumstances.
Disagreements: Any dispute or other disagreement arising
from or out of this Consulting Agreement shall be submitted to
binding arbitration under the rules of the American Arbitration
Association and the decision of the arbiter(s) shall be
enforceable in any court having jurisdiction thereof.
Arbitration shall occur only in Orange County, CA. California
Law shall govern the interpretation and the enforcement of this
Agreement as applied to residents of the State of California
relating to contracts executed in and to be performed solely
within the State of California. In the event any dispute is
arbitrated, the prevailing Party (as determined by the
arbiter(s)) shall be entitled to recover that Party's incurred
reasonable attorney's fees (as determined by the arbiter(s)).
IN WITNESS WHEREOF, this Consulting Agreement has been
executed by the Parties as of the date first above written.
COMPANY
______________________________
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, Executive V.P
Brands Shopping Network, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone (▇▇▇) ▇▇▇-▇▇▇▇
CONSULTANT
______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Director
BET Capital Corporation
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EXHIBIT B
FORM OF WARRANT
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS WARRANT AND THE COMMON SHARES ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO RNETHEALTH, INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase XXXXXXXX Shares of
Common Stock of xxxxxx, Inc. (subject to
adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
-1 Issue Date: xxxxxx 2001
XXXXXX, INC., a corporation organized under the laws of the
State of Nevada (the "Company"), hereby certifies that, for value
received, XXXXXXXXXX, or assigns, is entitled, subject to the
terms set forth below, to purchase from the Company from and
after xxxxxx, 2001 and at any time or from time to time before
5:00 p.m., California time, through xxxxx (xx) years after such
date (the "Expiration Date"), up to xxxxxxxxx fully paid and
nonassessable shares of Common Stock (as hereinafter defined),
$xxxx par value per share, of the Company, at a price equal to a
XXXXXXXpercent (xx%) discount from the average closing bid price
of USA Dealers Common Stock for the thirty (30) trading days
following the Effective Time (the "Warrant")(such purchase price
per share provided is referred to herein as the "Purchase
Price"). The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided
herein.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include XXXXXX, Inc. and any
corporation which shall succeed or assume the obligations of
XXXXXXX, Inc. hereunder.
(b) The term "Common Stock" includes (a) the Company's
Common Stock, $xxxx par value per share, as authorized on the
date of the Subscription Agreement referred to in Section 9
hereof, (b) any other capital stock of any class or classes
(however designated) of the Company, authorized on or after such
date, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to
preference, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of
a majority of directors of the Company (even if the right so to
vote has been suspended by the happening of such a contingency)
and (c) any other securities into which or for which any of the
securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any
other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in
addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 4 or
otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and
after the date hereof through and including the Expiration Date,
the holder hereof shall be entitled to receive, upon exercise of
this Warrant in whole in accordance with the terms of subsection
1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to
adjustment pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in
full by the holder hereof by delivery of an original or fax copy
of the form of subscription attached as Exhibit A hereto (the
"Subscription Form") duly executed by such holder and surrender
of the original Warrant within seven days of exercise, to the
Company at its principal office or at the office of its Warrant
agent (as provided hereinafter), accompanied by payment, in cash,
wire transfer, or by certified or official bank check payable to
the order of the Company, in the amount obtained by multiplying
the number of shares of Common Stock for which this Warrant is
then exercisable by the Purchase Price (as hereinafter defined)
then in effect.
1.3. Partial Exercise. This Warrant may be exercised
in part (but not for a fractional share) by surrender of this
Warrant in the manner and at the place provided in subsection 1.2
except that the amount payable by the holder on such partial
exercise shall be the amount obtained by multiplying (a) the
number of shares of Common Stock designated by the holder in the
Subscription Form by (b) the Purchase Price then in effect. On
any such partial exercise, the Company, at its expense, will
forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant of like tenor, in the name of the holder
hereof or as such holder (upon payment by such holder of any
applicable transfer taxes) may request, the number of shares of
Common Stock for which such Warrant may still be exercised.
1.4. Fair Market Value. Fair Market Value of a share of
Common Stock as of a particular date (the "Determination Date")
shall mean the Fair Market Value of a share of the Company's
Common Stock. Fair Market Value of a share of Common Stock as of
a Determination Date shall mean:
(a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") National Market
System or the NASDAQ SmallCap Market, then the closing or last
sale price, respectively, reported for the last business day
immediately preceding the Determination Date.
(b) If the Company's Common Stock is not traded
on an exchange or on the NASDAQ National Market System or the
NASDAQ SmallCap Market but is traded in the over-the-counter
market, then the mean of the closing bid and asked prices
reported for the last business day immediately preceding the
Determination Date.
(c) Except as provided in clause (d) below, if
the Company's Common Stock is not publicly traded, then as the
Holder and the Company agree or in the absence of agreement by
arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to
be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided.
(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be
a liquidation, dissolution or winding up pursuant to the
Company's charter, then all amounts to be payable per share to
holders of the Common Stock pursuant to the charter in the event
of such liquidation, dissolution or winding up, plus all other
amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common
Stock then issuable upon exercise of all of the Warrants are
outstanding at the Determination Date.
1.5. Company Acknowledgment. The Company will, at the
time of the exercise of the Warrant, upon the request of the
holder hereof acknowledge in writing its continuing obligation to
afford to such holder any rights to which such holder shall
continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the holder shall fail to make
any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder any such
rights.
1.6. Trustee for Warrant Holders. In the event that a
bank or trust company shall have been appointed as trustee for
the holders of the Warrants pursuant to Subsection 3.2, such bank
or trust company shall have all the powers and duties of a
warrant agent (as hereinafter described) and shall accept, in its
own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
2. Delivery of Stock Certificates, etc. on Exercise. The
Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the
holder hereof as the record owner of such shares as of the close
of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As
soon as practicable after the exercise of this Warrant in full or
in part, and in any event within 7 days thereafter, the Company
at its expense (including the payment by it of any applicable
issue taxes) will cause to be issued in the name of and delivered
to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct in compliance
with applicable Securities Laws, a certificate or certificates
for the number of duly and validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities) to
which such holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such holder would otherwise
be entitled, cash equal to such fraction multiplied by the then
Fair Market Value of one full share, together with any other
stock or other securities and property (including cash, where
applicable) to which such holder is entitled upon such exercise
pursuant to Section 1 or otherwise.
3. Adjustment for Reorganization, Consolidation, Merger,
etc.
3.1. Reorganization, Consolidation, Merger, etc. In
case at any time or from time to time, the Company shall (a)
effect a reorganization, (b) consolidate with or merge into any
other person, or (c) transfer all or substantially all of its
properties or assets to any other person under any plan or
arrangement contemplating the dissolution of the Company, then,
in each such case, as a condition to the consummation of such a
transaction, proper and adequate provision shall be made by the
Company whereby the holder of this Warrant, on the exercise
hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled
upon such consummation or in connection with such dissolution, as
the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment
thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of
the Company following the transfer of all or substantially all of
its properties or assets, the Company, prior to such dissolution,
shall at its expense
deliver or cause to be delivered the stock and other securities
and property (including cash, where applicable) receivable by the
holders of the Warrants after the effective date of such
dissolution pursuant to this Section 3 to a bank or trust company
having its principal office in New York, NY, as trustee for the
holder or holders of the Warrants.
3.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be
applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or
the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not
continue in full force and effect after the consummation of the
transaction described in this Section 3, then only in such event
will the Company's securities and property (including cash, where
applicable) receivable by the holders of the Warrants be
delivered to the Trustee as contemplated by Section 3.2.
3.4. Share Issuance. Except for the Excepted
Issuances as described in Section 11 of the Subscription
Agreement, if the Company at any time shall issue any shares of
Common Stock prior to the complete exercise of this Warrant for a
consideration less than the Purchase Price that would be in
effect at the time of such issue, then, and thereafter
successively upon each such issue, the Purchase Price shall be
reduced as follows: (i) the number of shares of Common Stock
outstanding immediately prior to such issue shall be multiplied
by the Purchase Price in effect at the time of such issue and the
product shall be added to the aggregate consideration, if any,
received by the Company upon such issue of additional shares of
Common Stock; and (ii) the sum so obtained shall be divided by
the number of shares of Common Stock outstanding immediately
after such issue. The resulting quotient shall be the adjusted
Purchase Price. For purposes of this adjustment, the issuance of
any security of the Company carrying the right to convert such
security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in an adjustment to
the Purchase Price upon the issuance of shares of Common Stock
upon exercise of such conversion or purchase rights.
4. Extraordinary Events Regarding Common Stock. In the
event that the Company shall (a) issue additional shares of the
Common Stock as a dividend or other distribution on outstanding
Common Stock, (b) subdivide its outstanding shares of Common
Stock, or (c) combine its outstanding shares of the Common Stock
into a smaller number of shares of the Common Stock, then, in
each such event, the Purchase Price shall, simultaneously with
the happening of such event, be adjusted by multiplying the then
Purchase Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to
such event and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such event,
and the product so obtained shall thereafter be the Purchase
Price then in effect. The Purchase Price, as so adjusted, shall
be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4.
The number of shares of Common Stock that the holder of this
Warrant shall thereafter, on the exercise hereof as provided in
Section 1, be entitled to receive shall be increased to a number
determined by multiplying the number of shares of Common Stock
that would otherwise (but for the provisions of this Section 4)
be issuable on such exercise by a fraction of which (a) the
numerator is the Purchase Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the
denominator is the Purchase Price in effect on the date of such
exercise.
5. Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or
Other Securities) issuable on the exercise of the Warrants, the
Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or
sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this
Warrant. The Company will forthwith mail a copy of each such
certificate to the holder of the Warrant and any Warrant agent of
the Company (appointed pursuant to Section 11 hereof).
6. Reservation of Stock, etc. Issuable on Exercise of
Warrant; Financial Statements. The Company will at all times
reserve and keep available, solely for issuance and delivery on
the exercise of the Warrants, all shares of Common Stock (or
Other Securities) from time to time issuable on the exercise of
the Warrant. This Warrant entitles the holder hereof to receive
copies of all financial and other information distributed or
required to be distributed to the holders of the Company's Common
Stock.
7. Assignment; Exchange of Warrant. Subject to compliance
with applicable Securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder
hereof (a "Transferor") with respect to any or all of the Shares.
On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto
(the Transferor Endorsement Form") and together with evidence
reasonably satisfactory to the Company demonstrating compliance
with applicable Securities Laws, the Company at its expense but
with payment by the Transferor of any applicable transfer taxes)
will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of
the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a "Transferee"), calling in the
aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant so
surrendered by the Transferor.
8. Replacement of Warrant. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the
Company at its expense will execute and deliver, in lieu thereof,
a new Warrant of like tenor.
9. Non-Registration Event. If the Company is unable to
issue Common Stock upon exercise of this Warrant that has been
registered in the Registration Statement, then upon written
demand made by the Holder, the Company will pay to the Holder of
this Warrant, in lieu of delivering Common Stock, a sum equal to
the closing price of the Company's Common Stock on the Principal
Market or such other principal trading market for the Company's
Common Stock on the trading date immediately preceding the date
notice is given by the Holder, less the Purchase Price, for each
share of Common Stock designated in such notice from the Holder.
10. Maximum Exercise. The Holder shall not be entitled to
exercise this Warrant on an exercise date, in connection with
that number of shares of Common Stock which would be in excess of
the sum of (i) the number of shares of Common Stock beneficially
owned by the Holder and its affiliates on an exercise date, and
(ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to
which the determination of this proviso is being made on an
exercise date, which would result in beneficial ownership by the
Holder and its affiliates of more than xxxx% of the outstanding
shares of Common Stock of the Company on such date. For the
purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended,
and Regulation 13d-3 thereunder. Subject to the foregoing, the
Holder shall not be limited to aggregate exercises which would
result in the issuance of more than xxxxx%. The restriction
described in this paragraph may be revoked upon 75 days prior
notice from the Holder to the Company. The Holder may allocate
which of the equity of the Company deemed beneficially owned by
the Subscriber shall be included in the xxxxx% amount described
above and which shall be allocated to the excess above xxxxx%.
11. Warrant Agent. The Company may, by written notice to
the each holder of the Warrant, appoint an agent for the purpose
of issuing Common Stock (or Other Securities) on the exercise of
this Warrant pursuant to Section 1, exchanging this Warrant
pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be
made at such office by such agent.
12. Transfer on the Company's Books. Until this Warrant is
transferred on the books of the Company, the Company may treat
the registered holder hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
13. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company
an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
14. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the laws of California. Any dispute relating to this Warrant
shall be adjudicated in the State of California. The headings in
this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other
provision.
IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.
XXXXXXX, INC.
By:_____________________________________
Witness:
______________________________
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Exhibit A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: XXXXXX, Inc.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, shares of Common Stock of XXXXXX,
Inc. and herewith makes payment of $ therefor, and
requests that the certificates for such shares be issued in the
name of, and delivered to whose address is
_________________________________________________________________
__________.
The undersigned represents and warrants that all offers and sales
by the undersigned of the securities issuable upon exercise of
the within Warrant shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933, as amended (the
"Securities Act") or pursuant to an exemption from registration
under the Securities Act.
Dated:___________________
___________________________________
(Signature must conform to name of
holder as specified on the face of
the Warrant)
_____________________________________
(Address)
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Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells,
assigns, and transfers unto the person(s) named below under the
heading "Transferees" the right represented by the within Warrant
to purchase the percentage and number of shares of Common Stock of
XXXXXXX, Inc. to which the within Warrant relates specified under
the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the
books of XXXXXXX, Inc. with full power of substitution in the
premises.
Transferees Percentage Number
Transferred Transferred
------------ ------------------- -----------------
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Dated:
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(Signature must conform to name of holder as specified on the
face of the warrant)
Signed in the presence of:
------------------------- -----------------------------------
(Name) (address)
-----------------------------------
ACCEPTED AND AGREED: (address)
[TRANSFEREE]
---------------------------
(Name)
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