EXCHANGE AGREEMENT By and Between Aussie Soles International LLC and The Aussie Soles Equity Owner as of February 15, 2008
By
and Between
Aussie
Soles International LLC
and
The
Aussie Soles Equity Owner
as
of February 15, 2008
THIS
EXCHANGE AGREEMENT (“Agreement”)
is
made as of February 15, 2008, by and between K-9
Concepts, Inc.,
a
Nevada corporation, or its designee (including a wholly owned subsidiary
thereof) (“K-9” or the “Buyer”
or
the
“Company”);
Aussie
Soles International LLC,
a
limited liability company incorporated under the laws of the state of Nevada
(“Aussie
Soles”);
and
the person who has executed this Agreement on the signature page hereof (the
“Aussie
Soles Equity Owner”)
or his
designee, with reference to the following facts:
The
Parties hereto desire to enter into an agreement under the terms of which the
Aussie Soles Equity Owner will contribute and exchange the “Aussie Soles Equity”
(as hereinafter defined) to the capital of the Buyer, solely in exchange for
the
“Exchange Shares” (as hereinafter defined). Immediately after the contribution
and exchange of the Aussie Soles Equity for the Exchange Shares, as contemplated
hereby, Aussies Soles will become a direct subsidiary of the Buyer.
NOW,
THEREFORE, in consideration of the promises and the mutual covenants and
agreements herein contained, the Parties do hereby agree as
follows:
ARTICLE
I
DEFINITIONS
1.1 Definitions.
As used
in this Agreement, the Schedules and Exhibits hereto, the following terms shall
have the meanings set forth below:
“Agreement”
means
this Agreement, including all amendments and modifications thereof (if any),
and
all Exhibits and Schedules, which are fully incorporated herein by reference.
“Applicable
Law”
means
all applicable international, national/federal, state, provincial, local and
other governmental or judicial laws (including, without limitation, common
law),
statutes, codes, rules, regulations, ordinances, and, to the extent promulgated
or issued, decrees and orders.
“Assets”
means
the Properties and all other real and personal property, tangible and
intangible, wherever located, that are held or owned from time to time by Aussie
Soles,
and
used in connection with the operation of the Aussie Soles Businesses, listed
on
Schedule
1.1,
including, without limitation, all of the following:
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(a)
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all
patents, patent rights, trademarks, trademark rights, trade names,
domain
names, trade name rights, service marks, copyrights, and any applications
for any of the foregoing, designs, maskworks, net lists, schematics,
industrial models, inventions, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs
or
applications (in both source code and object code form), and tangible
or
intangible proprietary information or material, and other intellectual
property relating to the Aussie Soles Businesses, including, but
not
limited to those set forth on Schedule
1.1
annexed hereto (collectively, “Intellectual
Property”);
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(b)
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all
leases, certificates, governmental approvals, registrations, permits,
register of rights, contracts, agreements, licenses, sales agreements,
purchase orders and other documentation and other legal rights relating
to
the Aussie Soles Businesses (the “Contract
Rights and Permits”);
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(c)
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all
machinery and equipment, real estate (owned or leased) and improvements
(collectively, ‘Fixed
Assets”);
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(d)
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all
tools, molds, dyes, spare parts, material handling equipment, and
other
related items of personal property; and certain scheduled office
equipment, including furniture and computers, including but not limited
to
those set forth on Schedule
1.1
(the “Personal
Property”);
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(e)
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all
computer programs, software, customer and vendor lists, billing and
materials records and other written and computer data and information
(collectively, “Business
Data”);
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(f)
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all
inventories of raw materials, work in progress and finished goods,
including but not limited to those set forth on Schedule
1.1
(the “Inventory”);
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“Aussie
Soles Business(es)”
means
the business(es) engaged in by Aussie Soles.
“Aussie
Soles Equity”
means
100%
of
the equity capital, member interest and all other equity interests of Aussie
Soles.
“Aussie
Soles Equity Owner”
means
the owner of the Aussie Soles Equity on the Effective Date of this Agreement;
such Person being: ▇▇▇▇▇ ▇▇▇▇▇▇.
“Closing”
means
the closing of the Exchange Agreement pursuant to Article VI of this
Agreement.
“Closing
Date”
means
the date upon which this Agreement is executed.
“Consent”
means
any consent, authorization, approval, ratification or waiver.
“Contract”
means
any legally binding agreement, contract, obligation, promise, arrangement or
undertaking (whether written or oral and whether express or
implied).
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“Effective
Date”
means
12:01 a.m., local
time in New York, NY on
February 15, 2008
“Employment
Agreement”
means
the Employment Agreement to be entered into between Aussie Soles and ▇▇▇▇▇
▇▇▇▇▇▇ containing
the terms and conditions customary for a company of the size and development,
and in the industry, of Aussie Soles,
pursuant
to Section 7.3 of this Agreement.
“Escrow
Shares”
means
ten percent (10%) of the Exchange Shares, or 2,100,000 shares of K-9 Common
Stock, which shall be held in escrow and distributed in accordance with Section
7.1 of this Agreement.
“Exchange”
means
the transaction by which the Aussie Soles Equity shall be exchanged for the
Exchange Shares, all as contemplated by this Agreement.
“Exchange
Shares”
means
21,000,000
shares of K-9 Common Stock.
“K-9
Common Stock”
means
the common stock of Buyer, par value $0.001 per
share.
“License”
means
all licenses, permits and other rights, as required, to conduct the Aussie
Soles
Business.
“Liens”
means
any and all liens, encumbrances, mortgages, pledges, charges, royalties, claims,
demands, leases, options, security interests, rights of first refusal, equitable
interests, rights, titles, interests and restrictions of any kind, including
any
restriction on use.
“Material
Adverse Effect”
means
a
material adverse effect on the business, results of operation, financial
condition or prospects of Aussie Soles, the Aussie Soles Businesses and/or
the
Assets.
“Milestone
Shares”
means
six million (6,000,000) of the Exchange Shares, which shall be held in escrow
and issued to the Aussie Soles Equity Owner in accordance with Section 7.2
of
this Agreement.
“Organizational
Documents”
means
those documents under which a Party has been organized or which otherwise
evidence its organization under applicable law.
“Parties”
means
the
collective reference to the Buyer, Aussie Soles and the Aussie Soles Equity
Owner, and“Party”
means the reference to one of the Parties.
“Securities
Act”
means
the United States Securities Act of 1933, as amended.
“Securities
Laws”
means
the Securities Act, the United States Securities Exchange Act of 1934, as
amended, or any state securities laws of the United States and the rules and
regulations promulgated thereunder.
“Taxes”
means
any and all governmental, national, state, provincial, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp duty,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, transfer,
registration, value added, alternative or other tax of any kind whatsoever
in
each case whether of the United States, Canada, or elsewhere in the world,
including any interest, penalty, or addition thereto, whether disputed or
not.
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“Transfer”
means
sell, grant, option, assign, mortgage, hypothecate, encumber, pledge, or
otherwise commit or dispose of in any manner.
1.2 Currency.
Unless
otherwise expressly specified, all currency amounts set forth herein are stated
in the lawful currency of the United States of America.
ARTICLE
II
REPRESENTATIONS,
WARRANTIES, DISCLOSURES AND AGREEMENTS
2.1 Representations
and Warranties of Aussie Soles and Aussie Soles Equity Owner.
Aussie
Soles and the Aussie Soles Equity Owner jointly and severally represent and
warrant to the Buyer that the statements contained in this Section 2.1 are
correct and complete as of the date of the Closing Date.
2.1.1 Capacity
and Authorization.
Aussie
Soles and the Aussie Soles Equity Owner each has the legal right and full power
and authority to enter into, deliver and perform this Agreement; all actions
required to be taken in order to permit Aussie Soles and the Aussie Soles Equity
Owner to enter into, deliver and perform this Agreement have been properly
and
validly taken; and all Consents, if any, currently required to be obtained
for
such purposes have been obtained and remain in effect.
2.1.2 Notices
and Consents.
Aussie
Soles and the Aussie Soles Equity Owner is not and will not be required to
give
any notice to or obtain any Consent from any person or entity in connection
with
the execution, delivery and performance of this Agreement,
except
for the notices and consents set forth on Schedule
2.1.2
annexed
hereto.
2.1.3 Valid
and Binding Obligations.
This
Agreement has been duly executed and delivered by Aussie Soles and the Aussie
Soles Equity Owner and is valid, binding and enforceable against Aussie Soles
and the Aussie Soles Equity Owner in accordance with its terms, except as may
be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors’ rights generally, and except as may be
limited by general principles of equity, regardless of whether such
enforceability is considered in a proceeding at law or in equity.
2.1.4 Organization
and Good Standing of Aussie Soles.
Aussie
Soles is duly organized and validly existing under the laws of Nevada and is
qualified to conduct business and is in good standing in those jurisdictions
where necessary to carry on its business where conducted. Aussie
Soles has all requisite legal rights and full power and authority to own and
operate its assets as currently owned and operated and to carry on its business
as now being conducted.
2.1.5 Organizational
Documents and Ownership Interests.
(a) Aussie
Soles has delivered to the Buyer a true and correct copy of its Articles of
Organization or other charter documents of Aussie Soles as amended to date.
Aussie Soles is not in violation of any of the provisions of Article of
Organization or equivalent Organizational Documents.
There is
no operating agreement in effect which governs the operations of Aussie Soles.
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(b) ▇▇▇▇▇
▇▇▇▇▇▇ is the sole Aussie Soles Equity Owner, the sole manager and the sole
member of Aussie Soles as of the date of this Agreement. There are no
certificates representing the membership interest of the Aussie Soles Equity
Owner in Aussie Soles. The execution, delivery and performance of this Agreement
and the Closing shall be the effective transfer of the Aussie Soles Equity
by
the Aussie Soles Equity Owner to the Buyer, and following the Closing, the
Aussie Soles Equity Owner shall have no further claim or interest in Aussie
Soles, the Assets or the Aussie Soles Businesses other than as contemplated
by
this Agreement.
2.1.6 Registered
and Principal Office.
Aussie
Sole’s registered
office
and principal office
is
located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
2.1.7 No
Conflicts.
The
execution,
delivery or performance of this Agreement by Aussie Soles and the Aussie Soles
Equity Owner will not contravene,
conflict with or result in a violation or breach of any of the following: (a)
any provision of the Organizational Documents of Aussie Soles; (b) any existing
legal requirements, order, decree or Contract to which Aussie Soles or the
Aussie Soles Equity Owner may be subject; or (c) any existing governmental
Consent
or
License.
Other
than this Agreement, there are no preemptive rights, rights of first refusal,
commitments or agreements by Aussie Soles or the Aussie Soles Equity Owner
to
sell or transfer any of the Aussie Soles Equity or Assets to any person or
entity. Other than this Agreement, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require the Aussie
Soles Equity Owner to issue, sell, or otherwise cause to become outstanding
any
additional participating interest or that could directly or indirectly affect
their ability to perform its obligations to the Buyer under this Agreement.
There are no outstanding or authorized equity appreciation, phantom equity,
profit appreciation, or similar rights as applied to and understood in the
context of limited liability companies with respect to Aussie Soles. There
are
no voting trusts, proxies, or other agreements or understandings with respect
to
the ownership or operation of any of the Aussie Soles Equity or the Assets.
Upon
the sale of the Aussie Soles Equity to Buyer pursuant to this Agreement, Buyer
will own one hundred percent (100%) of the Assets, and no other person or entity
shall have any right, title or interest whatsoever in the Assets.
2.1.8 Capitalization.
The
issued and outstanding indebtedness for borrowed money and equity capital or
other equity of Aussie Soles is set forth on Schedule
2.1.8 hereto.
2.1.9 Financial
Records.
Aussie Soles has delivered to the Buyer its financial records to date (the
“Financial Records”), and such Financial Records fairly and accurately in all
material respects present the financial condition of Aussie Soles as of such
dates are correct and complete in all material respects. None of the
Financial Records contains, as of its date, any untrue statement of a material
fact or any omission to state a material fact required to be stated therein
or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Buyer understands that Aussie
Soles is an early stage company with little or no operating history.
2.1.10 Taxes.
Aussie
Soles has filed or caused to be filed all tax returns that are or were required
to be filed by it pursuant to Applicable Law; all such tax returns are true,
correct and complete in all material respects; Buyer has received copies of
all
such tax returns; Aussie Soles has paid all Taxes, levies, fines and assessments
required to have been paid by it as of the date of this Agreement; and there
exists no Tax inquiry, audit or assessment involving Aussie Soles or any of
its
Assets.
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2.1.11 Books
and Records.
The
books of account, minute books, and similar or related records of Aussie Soles
have been made available to the Buyer, are correct and complete in all material
respects and have been maintained in all material respects in accordance with
sound business practices and the requirements of Applicable Law. To the best
knowledge and belief of the Aussie Soles Equity Owner, such minute books contain
accurate and complete records of all meetings held, and action taken by, the
participants and/or other governing body, and no meeting of any participants
or
other governing body has been held for which minutes have not been prepared
and
are not contained in such minute books.
2.1.12 Licenses.
Aussie
Soles has obtained and currently hold all licenses, permits, and authorizations
required for the conduct of the Aussie Soles Businesses, including any and
all
approvals and permits necessary to conduct its business under all applicable
federal, state, and local laws, except as would not have a Material Adverse
Effect on Aussie Soles or operations of the Aussie Soles
Businesses.
2.1.13 Contract
Rights and Permits.
Schedule
2.1.13
lists
all of the material Contract Rights and Permits. All amounts
required to have been paid and all obligations required to have been performed
by it under such Contract Rights and Permits have been paid or performed by
Aussie Soles, and neither the Aussie Soles Equity Owner nor Aussie Soles has
received any notice of any default or adverse claim with respect to any such
Contract
Rights
or Permits and no event has occurred which, with the passage of time or the
giving of notice or both, would result in a default, breach or event of
noncompliance under any such Contract Rights and Permits.
Neither
the Aussie Soles Equity Owner nor Aussie Soles has any present expectation
or
intention of not fully performing on a timely basis all such obligations
required to be performed by it under any Contract Rights and Permits to which
it
or they are subject and there has been no breach or cancellation by the other
Parties to any Contract Rights and Permits. Neither the Aussie Soles Equity
Owner nor Aussie Soles is a party to any oral contract, agreement or other
arrangement, which, if reduced to written form, would be required to be listed
under the terms of this Subsection.
2.1.14 Legal
Compliance.
To the
best of the knowledge and belief of the Aussie Soles Equity Owner, Aussie Soles
has complied with Applicable Law, except where the failure to so comply would
not have a Material Adverse Effect.
2.1.15 Litigation
and Claims.
Except
as set forth on Schedule
2.1.15,
Aussie
Soles is not subject to any pending or
threatened litigation,
lawsuits, claims, actions, demands, arbitrations or proceedings, nor to the
best
knowledge and belief of the Aussie Soles Equity Owner, is there any pending
or
threatened litigation, lawsuit, claim, action, demand, arbitration or proceeding
that relates to
the
Aussie Soles, the Aussie Soles Businesses or the Assets.
2.1.16 Liens.
Except
as set forth on Schedule
2.1.16 annexed
hereto, Aussie Soles owns the Assets free and clear of all Liens. Furthermore,
each Aussie Soles Equity Owner’s ownership interest in Aussie Soles is owned
free and clear of all Liens.
2.1.17 Full
Disclosure.
To the
best knowledge and belief of the Aussie soles Equity Owner, there exist no
material facts or circumstances which have not been disclosed to Buyer and
which
should be disclosed to prevent the representations and warranties set forth
in
this Section 2.1 from being materially misleading.
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2.1.18 Restrictions
on Business Activities.
There
is no agreement, judgment, injunction, order or decree binding upon Aussie
Soles
that has or could reasonably be expected to have the effect of prohibiting
or
materially impairing any current or future business practice of Aussie Soles,
any acquisition of property by Aussie Soles or the overall conduct of the Aussie
Soles Businesses as currently conducted or as proposed to be conducted by Aussie
Soles. Aussie Soles has not entered into any agreement under which Aussie Soles
is restricted from selling, licensing or otherwise distributing any of its
products to any class of customers, in any geographic area, during any period
of
time or in any segment of the market.
2.1.19 Subsidiaries;
Affiliates. Aussie
Soles has no subsidiaries and has the following affiliates: Aussie Soles
Footwear and Aussie Soles Australia Pty Ltd. (each, an “Affiliate,” and
collectively, the “Affiliates”). Each Affiliate
is duly organized and validly existing under the laws of its organization and
is
qualified to conduct business and is in good standing in those jurisdictions
where necessary to carry on its business where conducted. Each Affiliate has
all
requisite legal rights and full power and authority to own and operate its
assets as currently owned and operated and to carry on its business as now
being
conducted.
2.1.20 The
Assets.
Aussie
Soles has good title to, or a valid leasehold interest in, all of the Assets
utilized in the Aussie Soles Businesses, except for any such properties or
assets sold or otherwise disposed of in the ordinary course of the Aussie Soles
Businesses or with respect to which such failure of title or validity of a
leasehold interest would not have a Material Adverse Effect on Aussie Soles
or
operations of the Aussie Soles Businesses.
2.1.21 The
Inventory.
Schedule
1.1
contains
a complete and accurate list of all Inventory owned by Aussie Soles and its
Affiliates as of the date of this Agreement, and there is no other Inventory
other than as so disclosed.
2.1.22 Equipment. All
equipment (the “Equipment”)
owned
or leased by Aussie Soles, and such Equipment is, taken as a whole,
(i) adequate for the conduct of Aussie Soles’ Business, consistent with its
past practice, and (ii) in good operating condition (except for ordinary
wear and tear).
2.1.23 Absence
of Material Changes in the Assets.
Except
as previously disclosed to the Buyer, there has not been: (i) any Material
Adverse Event,
except
as disclosed on Schedule
2.1.23;
(ii)
any change in the Aussie Soles Equity Owner or its membership interest in Aussie
Soles or in the Assets; or (iii) any damage, destruction or casualty loss
materially and adversely affecting the Assets or the Aussie Soles Businesses,
liabilities, operations or financial or other conditions of the Assets whether
or not insured.
2.1.24 Intellectual
Property Rights.
(a) Aussie
Soles owns, or is licensed or otherwise possesses legally enforceable rights
to
use all Intellectual
Property (the “Intellectual
Property Rights”)
that
are used or proposed to be used in the Aussie Soles Businesses as currently
conducted or as proposed to be conducted by Aussie Soles, except to the extent
that the failure to have such rights have not had and could not reasonably
be
expected to have a Material Adverse Effect on Aussie Soles.
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(b) There
is
no material unauthorized use, disclosure, infringement or misappropriation
of
any Intellectual Property Rights of Aussie Soles, any trade secret material
to
Aussie Soles or any intellectual property right of any third party to the extent
licensed by or through Aussie Soles, by any third party, including any employee
or former employee of Aussie Soles. Aussie Soles has not entered into any
agreement to indemnify any other person against any charge of infringement
of
any Intellectual Property Right, other than indemnification provisions contained
in purchase orders arising in the ordinary course of business.
(c) Aussie
Soles is not or will not be as a result of the execution and delivery of this
Agreement or the performance of its obligations under this Agreement, in breach
of any license, sublicense or other agreement relating to the Intellectual
Property Rights or third party intellectual property rights, the breach of
which
would have a Material Adverse Effect on Aussie Soles.
2.1.25 Acquisition
of Exchange Shares For Own Account.
The
Aussie Soles Equity Owner is acquiring the Exchange Shares pursuant to this
Agreement for its own account, not as a nominee or agent, and not with a view
toward the immediate distribution or resale thereof.
2.1.26 Restricted
Nature Of Exchange Shares.
The
Aussie Soles Equity Owner is able to bear the economic risk of its investment
in
the Exchange Shares and is aware that he must be prepared to hold the Exchange
Shares for an indefinite period and that the Exchange Shares have not been
registered under the United States Securities Act of 1933, as amended (the
“Securities
Act”),
or
any other securities law, on the ground, among others, that no distribution
or
public offering of Exchange Shares is to be effected and Exchange Shares are
being issued by the Buyer without any public offering within the meaning of
section 4(2) of the Act and Regulation D thereunder, and comparable provisions
of the Securities Act and other Securities Laws.
2.1.27 Sophistication.
Each
Aussie Soles Equity Owner has such knowledge and experience in financial and
business matters that he or she is capable of evaluating the merits and risks
of
the investment in the Exchange Shares contemplated by this Agreement and has
the
capacity to protect the interests of such Aussie Soles Equity Owner,
respectively.
2.1.28 Agreement
To Refrain From Resales.
The
Aussie Soles Equity Owner further agrees that he shall not encumber, pledge,
hypothecate, sell, transfer, assign or otherwise dispose of, or receive any
consideration for, any Exchange Shares or any interest in any Exchange Shares,
unless and until prior to any proposed encumbrance, pledge, hypothecation,
sale,
transfer, assignment or other disposition, either (a) a registration statement
on Form S-1 (or any other form appropriate for the purpose or replacing such
form) under the Securities Act with respect to the Exchange Shares proposed
to
be transferred or otherwise disposed of shall be then effective or (b) after
furnishing the Buyer and its counsel with a detailed statement of the
circumstances of the proposed disposition, (i) the Aussie Soles Equity Owner
shall have furnished the Buyer with an opinion of counsel (obtained at their
expense) in form and substance satisfactory to the Buyer to the effect that
such
disposition will not require registration of such Exchange Shares under the
Securities Act or registration or qualification of such Exchange Shares under
the Securities Act or any other securities law and (ii) counsel for the Buyer
shall have concurred in such opinion of counsel.
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2.1.29 Certificates
To Be Legended.
Each
Aussie Soles Equity Owner understands and agrees that each certificate
representing Exchange Shares will bear a legend on the face thereof (or on
the
reverse thereof with a reference to such legend on the face thereof) in
substantially the form set forth below, which legend restricts the sale,
transfer or other disposition of Exchange Shares otherwise than in accordance
with this Agreement:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SHARES MAY NOT BE ENCUMBERED, PLEDGED,
HYPOTHECATED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER SAID ACT
OR
AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE CORPORATION
AND
CONCURRED IN BY THE CORPORATION’S COUNSEL TO THE EFFECT THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR SUCH TRANSACTION COMPLIES WITH RULES
PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER SAID
ACT.
2.1.30 Complete
Copies of Materials.
Aussie
Soles has delivered or made available true and copies of each document that
has
been requested by the Buyer or their counsel in connection with their legal
and
accounting review of Aussie Soles.
2.1.31 Brokers’
and Finders’ Fees.
Aussie
Soles has not incurred, nor will it incur, directly or indirectly, any liability
for brokerage or finders’ fees or agents’ commissions or investment bankers’
fees or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.1.32 No
Vote Required.
Upon
the execution of this Agreement by Aussie Soles, no other vote of the holders
of
Aussie Soles membership interests is necessary to approve this Agreement and
the
transactions contemplated hereby.
2.2 Representations
and Warranties of the Buyer.
The
Buyer represents and warrants to Aussie Soles and the Aussie Soles Equity Owner
that the statements contained in this Section 2.2
are
correct and complete as of the date of the Closing Date.
2.2.1 Organization
and Good Standing.
The
Buyer is a company duly incorporated and validly existing under the laws of
Nevada and is qualified to conduct business in those jurisdictions where
necessary to carry out the purposes of this Agreement; and it has all requisite
legal rights, full power and authority to own and operate its assets and
properties as currently owned and operated and to carry on its business as
now
being conducted.
2.2.2 Capacity
and Authorization.
The
Buyer has the legal rights and full power and authority to enter into, deliver
and perform this Agreement; all actions required to be taken in order to permit
it to enter into, deliver and perform this Agreement have been properly and
validly taken; and all government, shareholder and other Consents, if any,
currently required to be obtained for such purposes have been obtained and
remain in effect.
2.2.3 No
Conflicts.
Neither
the execution, delivery nor performance of this Agreement by the Buyer will
contravene, conflict with or result in a violation or breach of any of the
following: (a) any provision of its Organizational Documents or of any
resolution of its shareholders or any other governing body; (b) any existing
legal requirements, order, decree or Contract to which it may be subject; or
(c)
any existing governmental Consent.
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2.2.4 Consents.
Except
as otherwise disclosed with respect to shareholder approval of this Agreement,
the Buyer is not and will not be required to give any notice to or obtain any
Consent from any person or entity in connection with the execution, delivery,
and performance of this Agreement.
2.2.5 Valid
and Binding Obligations.
This
Agreement has been duly executed and delivered by the Buyer and is valid,
binding and enforceable against it in accordance with its terms, except as
may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors’ rights generally, and except as
may be limited by general principles of equity, regardless of whether such
enforceability is considered in a proceeding at law or in equity.
2.2.6 Brokers.
The
Buyer represents and warrants that it has not retained the services of a broker
or finder in this transaction, and each indemnifies and holds harmless the
other
against and in respect of any and all claims, suits, actions and proceedings
as
and when incurred arising out of or based upon any claim to a fee, commission
or
other compensation on account of alleged employment of a broker or
finder.
2.3 Survival.
All of
the representations and warranties set forth in this Section 2 shall survive
the
execution of this Agreement and the Closing and shall remain in full force
and
effect thereafter.
2.4 Exchange
Shares Will Be “Restricted Securities”.
The
Aussie Soles Equity Owner understands and agrees that the Exchange Shares will
be “restricted securities” as that term is defined in Rule 144 under the Act
and, accordingly, that the Exchange Shares must be held indefinitely unless
they
are subsequently registered under the Act or an exemption from such registration
is available.
2.5 Buyer
May Refuse To Transfer.
If at
any time, in the opinion of counsel for the Buyer, Aussie Soles or the Aussie
Soles Equity Owner has acted or acts in any manner not consistent with its
representations and agreements, the Buyer may refuse to transfer Exchange Shares
until such time as counsel for the Buyer is of the opinion that such transfer
is
in all respects in compliance with this Agreement and will not require
registration of such Exchange Shares under the Securities Act or registration
or
qualification of such Exchange Shares under any other securities
law.
2.6 No
Additional Representations or Warranties.
Anything in this Agreement to the contrary notwithstanding, neither the Aussie
Soles Equity Owner nor Aussie Soles is making nor will it or they make any
representation or warranty with respect to any matter except as expressly set
forth in this Agreement.
2.7 Representations
Complete.
None of
the representations or warranties made by Aussie Soles or the Aussie Soles
Equity Owner herein or in any Schedule or Exhibit hereto, or certificate(s)
furnished by Aussie Soles or the Aussie Soles Equity Owner pursuant to this
Agreement, when all such documents are read together in their entirety, contains
any untrue statement of a material fact, or omits 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.
10
2.8 Limitation
on Damage and Claims.
NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF
THIS AGREEMENT, EACH OF THE PARTIES HERETO DO HEREBY AGREE THAT THE RECOVERY
OF
ANY DAMAGES SUFFERED OR INCURRED AS A RESULT OF ANY BREACH BY ANY PARTY OF
ANY
OF ITS OR THEIR REPRESENTATIONS, WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT
SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING
PARTY OR PARTIES AS A RESULT OF THE BREACH BY THE BREACHING PARTY OR PARTIES
OF
SUCH REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER AND IN NO EVENT SHALL
THE BREACHING PARTY OR PARTIES BE LIABLE TO THE NON-BREACHING PARTY OR PARTIES
FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES
(INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR
OPPORTUNITIES) SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A RESULT
OF
THE BREACH BY THE BREACHING PARTY OR PARTIES OF ANY OF ITS OR THEIR
REPRESENTATIONS, WARRANTIES OR OBLIGATIONS HEREUNDER. ADDITIONALLY, NO CLAIM
SHALL BE MADE FOR BREACH OF ANY REPRESENTATIONS OR WARRANTIES UNDER THIS
AGREEMENT UNLESS AND UNTIL THE CLAIMANT HAS INCURRED IN EXCESS OF $25,000
IN
AGGREGATE DAMAGES AS A RESULT OF SUCH BREACHES.
THE
PARITES SPECIFICALLY AGREE THAT, UPON THE SIX
(6)
MONTH ANNIVERSARY
OF THE CLOSING DATE, AUSSIE SOLES AND THE BUYER WILL ASSUME AND BECOME LIABLE
FOR AND WILL ACCORDINGLY RELEASE THE AUSSIE SOLES EQUITY OWNERS AND AUSSIE
SOLES
FROM ALL OBLIGATIONS AND LIABILITIES RELATED TO THE ASSETS, THE AUSSIE SOLES
BUSINESSES, OR AUSSIE SOLES ATTRIBUTABLE TO ANY PERIOD OF TIME BEFORE OR AFTER
THE CLOSING DATE, AND THE ESCROW SHARES SHALL BE RELEASED TO THE AUSSIE SOLES
EQUITY OWNERS.
This
Section 2.8 shall operate only to limit a Party’s liability and shall not
operate to increase or expand any contractual obligation of a Party hereunder
or
cause any contractual obligation of a Party hereunder to survive longer than
provided in Section 2.8.
ARTICLE
III
BASIC
TRANSACTION
3.1 Sale
and Transfer of Aussie Soles Equity.
The
Aussie Soles Equity Owner hereby agree to assign, transfer, and deliver to
the
Buyer, free and clear of all Liens, pledges, encumbrances, charges, restrictions
or known claims of any kind, nature, or description, all of the Aussie Soles
Equity, and the Buyer hereby agrees to acquire such Aussie Soles Equity by
issuing and delivering to the Aussie Soles Equity Owner in exchange therefor
the
Exchange Shares. Accordingly, on
and
subject to the terms and conditions of this Agreement, on the Closing Date,
the
Buyer shall acquire from the Aussie Soles Equity Owner and the Aussie Soles
Equity Owner shall sell, transfer, convey and deliver to Buyer, 100% of the
Aussie Soles Equity, solely in exchange for the Exchange Shares, to be issued
and delivered by the Buyer to the Aussie Soles Equity Owner or its designee(s)
allocated in the manner set forth on Schedule
3.1 annexed
hereto and subject to subject to Sections 6.2.1, 7.1 and 7.2 of this Agreement.
11
ARTICLE
IV
INDEMNIFICATION
4.1 Indemnification.
4.1.1 The
Aussie Soles Equity Owner agrees to defend, indemnify and hold harmless, the
Buyer and its respective officers, directors, employees and agents, from and
against any and all loss, claims, liabilities, damages, costs and expenses,
including attorneys fees (“Damages”)
incurred with respect to or resulting from, based upon, or arising out of the
breach by Aussie Soles or the Aussie Soles Equity Owner’s representations and
warranties set forth in Section 2.1, or the failure by the Aussie Soles Equity
Owner to perform any of its covenants and agreements contained herein.
4.1.2 The
Buyer
agrees to save, defend, indemnify and hold harmless the Aussie Soles Equity
Owner and the officers, directors, employees and agents of Aussie Soles from
and
against any Damages incurred with respect to or resulting from, based upon,
or
arising out of the breach by the Buyer of its representations and warranties
set
forth in Section 2.2, or the failure by the Buyer to perform any of their
covenants and agreement contained herein.
4.2 Determination
of Damages; Claims.
In
calculating any amounts payable to the Buyer pursuant to Section 4.1.1 or
payable to the Aussie Soles Equity Owner pursuant to Section 4.1.2, the
indemnifying party or parties, as the case may be, shall receive credit for
any
insurance recoveries.
4.3 Defense
of Claims by Third Parties.
If any
claim is made by any third party against any Party or Parties that, if
sustained, would give rise to indemnification under this Agreement, the
indemnified Party or Parties, as the case may be, shall promptly cause notice
of
the claim to be delivered to the indemnifying Party or Parties and shall afford
the indemnifying Party or Parties and its counsel, at their sole expense, the
opportunity to defend, with counsel reasonably satisfactory to the indemnified
Party or Parties against which such claim is made, or settle the claim. If
any
Party or Parties takes said opportunity to settle the claim, such Party shall
obtain a release of the other Party or Parties in any settlement agreement
with
the third party.
4.4 Limitations
on Indemnification. Notwithstanding
anything to the contrary, express or implied, contained herein, the provisions
of Section 2.8 of this Agreement shall apply at all times with respect to any
claims for indemnification hereunder.
ARTICLE
V
CONDITIONS
PRECEDENT TO CLOSING
5.1 Conditions
Precedent to Buyer’s Obligations. The
obligations of the Buyer under this Agreement are subject to the satisfaction,
at or before the Closing Date, of the following conditions.
5.1.1 Accuracy
of Representations
The
representations and warranties made by Aussie Soles and the Aussie Soles Equity
Owner in this Agreement shall have been true at and as of the Closing Date,
and
Aussie Soles shall have performed and complied with all covenants and conditions
required by this Agreement to be performed or complied with by Aussie Soles
and
the Aussie Soles Equity Owner prior to or at the Closing.
5.1.2 Preferential
Rights. There
shall exist no preferential right with respect to any of the Properties or
Assets of Aussie Soles (or in the event that such preferential rights exist,
such third party shall not have exercised its preferential right and have closed
(or be proceeding to closing) its purchase thereunder) and any and all
preferential rights with respect to any of the Properties or Assets of Aussie
Soles shall have been waived in writing.
12
5.1.3 Consents. All
necessary consents of the partners, licensees or licensors of Aussie Soles
and/or the Aussie Soles Equity Owner shall have been obtained.
5.1.4 No
Material Adverse Effect.
Prior
to the Closing Date, there shall not have occurred any Material Adverse Effect
with respect to Aussie Soles or its Assets.
5.1.5 Due
Diligence.
The
Buyer shall have completed to its own satisfaction its due diligence
investigation in relation to Aussie Soles and the Assets.
5.1.6 Access
to Information.
Prior
to the Closing Date, Aussie Soles and the Aussie Soles Equity Owner shall have
(i) given the Buyer and its authorized representatives reasonable access
to all employees, offices, and other facilities regarding the Aussie Soles
Businesses and all books and records of Aussie Soles regarding the Aussie Soles
Businesses, (ii) permitted the Buyer and its authorized representatives to
make such inspection(s) as it may reasonably require, and (iii) caused
Aussie Soles’ officers to provide the Buyer with such financial and operating
data with respect to the Aussie Soles Businesses as Buyer requested from time
to
time.
5.1.7 Reasonableness
Letter.
The
Buyer shall have obtained to a letter from Pickwick Capital Partners LLC
providing guidance as to whether the proposed exchange of the Exchange Shares
for the Assets of Aussie Soles is reasonable consideration.
5.2 Conditions
Precedent to Aussie Soles Equity Owner’s Obligations. The
obligations of the Aussie Soles Equity Owner under this Agreement are subject
to
the satisfaction, at or before the Closing Date, of the following conditions.
5.2.1 Accuracy
of Representations
The
representations and warranties made by the Buyer in this Agreement shall have
been true at and as of the Closing Date, and the Buyer shall have performed
and
complied with all covenants and conditions required by this Agreement to be
performed or complied with by the Buyer prior to or at the Closing.
5.3 Waiver. Any
Party
may waive a condition precedent to its obligations, as set forth in this
Article
5
by
executing a writing so stating at or prior to the Closing. In the event that
the
conditions precedent to Closing described in this Article 5
are not
satisfied or waived on or before the Closing Date, then, unless the Closing
Date
is extended by the mutual written agreement of the Parties, this Agreement
and
all rights and obligations of the Parties hereunder shall terminate and be
of no
further force or effect.
ARTICLE
VI
CLOSING
6.1 The
Closing.
The
Closing of the Exchange and the other transactions contemplated by this
Agreement shall occur simultaneously with the signing of this Agreement, at
the
offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
on the Closing Date or at such earlier time and place as the Parties may
mutually agree.
6.2 Closing
Events.
At the
Closing, each of the respective Parties hereto shall execute, acknowledge,
and/or deliver, as applicable, or shall ensure to be executed, acknowledged,
and
delivered, as applicable, the following:
13
6.2.1 The
Aussie Soles Equity Owner or its designee(s) shall have received certificate(s)
representing 12,900,000 of K-9 Common Stock of the Buyer, representing the
Exchange Shares less the Escrow Shares and the Milestone Shares, which shall
be
held by the Buyer in accordance with Sections 7.1 and 7.2, respectively, of
this
Agreement.
6.2.2 Each
of
the parties shall have received all other certificates, agreements and items
contemplated by this Agreement, or as may otherwise be reasonably requested
by
the Parties and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
ARTICLE
VII
COVENANTS,
AGREEMENTS AND UNDERTAKINGS
7.1 Escrow
Shares. The
Parties agree that the Escrow Shares shall be held by Buyer in escrow for a
period of six (6) months after the Closing Date (the “Escrow
Period”),
and
shall be forfeited by Aussie Soles and the Aussie Soles Equity Owner in the
event of Damages incurred with respect to or resulting from, based upon, or
arising out of the breach by Aussie Soles or the Aussie Soles Equity Owner’s
representations and warranties set forth in Section 2.1, or the failure by
the
Aussie Soles Equity Owner to perform any of its covenants and agreements
contained in this Agreement. At the end of the Escrow Period, if no damages
have
been claimed by the Buyer as set forth herein, then the Escrow Shares shall
be
issued
and delivered by the Buyer to the Aussie Soles Equity Owner or its designee(s)
allocated in the manner set forth on Schedule
7.1 annexed
hereto.
7.2 Milestone
Shares. The
Parties agree that the Milestone Shares shall be held by Buyer, in escrow,
following the Closing Date, and shall be issued and released to the Aussie
Soles
Equity Owner in three
tranches of two million (2,000,000) shares of K-9 Common Stock each upon
satisfaction of three milestones (each, a “Milestone”) as set forth on
Schedule
7.2
annexed
hereto. In the event that the Milestones are not reached then the Parties agree
that such Milestone Shares shall be forfeited by Aussie Soles and the Aussie
Soles Equity Owner.
7.3 Employment
Agreement. The
Parties agree to use their best efforts to negotiate and enter into the
Employment Agreement within ninety (90) days of the Closing Date.
ARTICLE
VIII
MISCELLANEOUS
8.1 Notices.
Any
notices, request, consents, demands, approvals or other communications required
or permitted hereunder shall be given in writing (unless otherwise specified
herein) and shall be deemed effectively given upon (i) personal delivery, (ii)
two business days after deposit with Federal Express or another nationally
recognized overnight courier service, (iii) five business days after deposit
in
the United States Postal Service, sent certified mail return receipt requested,
addressed to each of the other parties thereunto entitled at the following
addresses, or at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto, or (iv) the same
day
upon transmission by means of facsimile transmission or electronic mail (if
attached in a commonly readable format and the sender has received no generated
notice that the email message has not been successfully delivered).
14
If
to
Aussie Soles:
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
If
to the
Aussie Soles Equity Owner:
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇
▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
If
to the
Buyer:
c/o
Gersten ▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile:
212-980-5192
Email:
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
The
designation of any such address may be changed at any time by any party upon
written notice given pursuant to the requirements of this Section
8.1.
8.2 Waiver.
The
failure of a Party to insist on the strict performance of any provision of
this
Agreement or to exercise any right, power or remedy upon a breach hereof shall
not constitute a waiver of any provision of this Agreement or limit the Party’s
right thereafter to enforce any provision or exercise any right.
8.3 Modification.
No
modification of this Agreement shall be valid unless made in writing and duly
executed after the date of this Agreement by all of the Parties.
8.4 Governing
Law; Arbitration.
This
Agreement is made pursuant to and shall be governed by and construed in
accordance with the laws of the State of Nevada, without regard to its
provisions as to conflicts or choice of laws. Any controversy or claim arising
out of or relating to this Agreement, or the breach thereof shall be settled
by
arbitration, using three (3) arbitrators, in accordance with the rules of the
American Arbitration Association. The arbitrators shall have authority to award
interest and costs, and attorneys’ fees and expenses to the prevailing party.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The arbitrators may only award compensatory damages
and may not award punitive damages.
8.5 Headings.
The
headings inserted in this Agreement are inserted only for convenience and in
no
way define, limit, or describe the scope or intent of this Agreement or affect
its terms and provisions.
15
8.6 No
Implied Covenants.
There
are no implied covenants contained in this Agreement. The Parties expressly
acknowledge obligations of good faith and fair dealing in their relations with
each other pursuant to this Agreement. The Parties expressly disclaim any
fiduciary duty to each other.
8.7 Further
Assurances.
Each of
the Parties shall take from time to time such actions and execute such
additional instruments as may be reasonably necessary or convenient to implement
and carry out the intent and purpose of this Agreement.
8.8 Severability.
Any
provision or provisions of this Agreement that in any way contravenes the laws
of any state or country in which this Agreement is effective shall, in such
state or country as the case may be, and to the extent of such contravention
of
local law, be deemed separable and shall not affect any other provision or
provisions of this Agreement.
8.9 Entire
Agreement.
This
Agreement contains the entire understanding of the Parties and supersedes all
prior agreements and understandings between the Parties relating to the subject
matter hereof. The Exhibits to this Agreement shall be construed with and as
an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein. In the event of any conflict between this Agreement and any
Schedule attached hereto, the terms of this Agreement shall be controlling.
8.10 Counterparts,
Successors and Assigns.
This
Agreement may be executed in one or more original counterparts (including
by way of fax transmission or electronic transmission),
all of
which shall constitute one and the same instrument. Evidence of execution of
this Agreement may be provided by facsimile transmission. This Agreement shall
be binding upon and inure to the benefit of the respective successors and
permitted assigns of the Parties.
8.11 Non-Reliance.
Each of
the Parties acknowledges that it has not been induced to enter into this
Agreement by any representation, warranty or undertaking not expressly set
forth
in this Agreement.
8.12 Legal
Advice.
Each of
the Parties acknowledges and confirms that it has obtained its own independent
legal advice with respect to this Agreement and the negotiation thereof and
the
transactions contemplated thereunder.
8.13 Expenses.
Each of
the Parties shall bear its own costs and expenses incurred in connection with
the negotiation, execution and performance of this Agreement and the
transactions contemplated hereby.
8.14 Assignment.
Neither
of the Parties shall assign any of their rights or obligations under this
Agreement without the express prior written consent of the other Party;
provided, however, that Buyer may assign its rights and obligations hereunder
to
an entity wholly owned by Buyer.
[Reminder
of page intentionally left blank.]
16
IN
WITNESS WHEREOF, this Agreement has been duly executed by or on behalf of the
Parties hereto as of the date first above written.
| AUSSIE SOLES INTERNATIONAL LLC | K-9 CONCEPTS, INC. | ||
| By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | By: /s/ ▇▇▇▇▇▇ ▇▇ | ||
|
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ |
Name: ▇▇▇▇▇▇ ▇▇ |
||
| Title: Manager | Title: President |
| AUSSIE SOLES EQUITY OWNER: | |||
| /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||
|
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ |
17