SHARE EXCHANGE AGREEMENT By and Among BONANZA GOLD, INC., CERTAIN OFFICERS AND DIRECTORS OF BONANZA GOLD, INC., LEFT BEHIND GAMES INC., and the LEFT BEHIND GAMES INC. SHAREHOLDERS As of January 27, 2006
Exhibit
10.1
_____________________________________________________
By
and Among
BONANZA
GOLD, INC.,
CERTAIN
OFFICERS AND DIRECTORS OF BONANZA GOLD, INC.,
LEFT
BEHIND GAMES INC.,
and
the
LEFT
BEHIND GAMES INC. SHAREHOLDERS
As
of January 27, 2006
_____________________________________________________
1
TABLE
OF CONTENTS
ARTICLE
I - DEFINITIONS
1.01
Definitions.
ARTICLE
II - SHARE EXCHANGE
2.01 Plan
of Share Exchange
2.02 Closing
2.03 Conditions
to Closing for Bonanza
2.04 Conditions
to Closing for LBG
2.05 Other
Events Occurring at Closing
ARTICLE
III - REPRESENTATIONS OF BONANZA PARTIES
3.01
Authorization
3.02 Organization
3.03 Corporate
Power
3.04 Subsidiaries
3.05 Capitalization
3.06 Financial
Statements
3.07 Outstanding
Debt: Absence of Liabilities
3.08 Changes
in Condition
3.09 Contractual
Obligations
3.10 Insurance
3.11 Transactions
with Affiliates
3.12 Conformity
With Legal Requirements
3.13 Benefit
Plans
3.14 Employees
3.15 Taxes
3.16 Litigation
3.17 Patents,
Trademarks and Other Intellectual Property
3.18 Consents
3.19 Filings,
Broker’s Fees
3.20 Minute
Books
3.21 Real
Property Holding Corporation.
3.22 Accredited
Investor Status
3.23 Disclosure
2
ARTICLE
IV - REPRESENTATIONS OF LBG
4.01
Authorization
4.02 Organization
4.03 Corporate
Power
4.04 Subsidiaries
4.05 Capitalization
4.06 Financial
Statements
4.07 Outstanding
Debt: Absence of Liabilities
4.08 Changes
in Condition
4.09 Contractual
Obligations
4.10 Insurance
4.11 Transactions
with Affiliates
4.12 Conformity
With Legal Requirements
4.13 Benefit
Plans
4.14 Employees
4.15 Taxes
4.16 Litigation
4.17 Patents
and Trademarks
4.18 Consents
4.19 Filings,
Broker’s Fees
4.20 Minute
Books
4.21 Real
Property Holding Corporation.
4.22 Disclosure
ARTICLE
V - INDEMNIFICATION
5.01 Indemnification
5.02
Nature
and Survival of Representations
ARTICLE
VI - RESCISSION
6.01 Rescission
Right
ARTICLE
VII - MISCELLANEOUS
7.01 Further
Assurances
7.02 Binding
Effect; Assignment
7.03 Amendments
and Waivers
7.04 Counterparts
7.05 Notices
7.06 Governing
Law
7.07 Responsibility
and Costs
7.08 General
SCHEDULE
OF EXHIBITS
Exhibit
A
- Form of Investment Letter
3
This
Share Exchange Agreement (hereinafter the "Agreement")
is
entered into effective as of this 27th
day of
January, 2006, by and among BONANZA GOLD, INC., a Washington corporation
(hereinafter "Bonanza"),
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, LEFT BEHIND GAMES INC., a
Delaware corporation (hereinafter "LBG")
and
the owners of all the outstanding shares of LBG stock as identified on Annex
I
hereto (“Shareholders”).
LBG
and Shareholders are hereinafter referred to individually and collectively
as
“Sellers.”
RECITALS:
WHEREAS,
Shareholders own 16,042,784 shares
of
common stock of LBG,
and
3,586,246 shares of preferred Stock of LBG (the common stock and preferred
stock
are together referred to herein as the "LBG
Stock")
which
represents all of the issued and outstanding equity securities of LBG. Bonanza
desires to acquire LBG Stock solely in exchange for the number of shares of
restricted LBG Stock of Bonanza (the “Bonanza
Stock”)
as
detailed in Annex I, making LBG a subsidiary of Bonanza.
NOW
THEREFORE, for the mutual consideration set out herein and other good and
valuable consideration, the legal sufficiency of which is hereby acknowledged,
the parties agree as follows:
ARTICLE
I
DEFINITIONS
1.01
Definitions.
Accounting terms used in this Agreement and not otherwise defined herein shall
have the meanings provided by GAAP. Certain capitalized terms are used in this
Agreement as specifically defined in this Section 1.1 as follows:
“Bonanza”
is
defined in the Preamble.
“Bonanza
Parties”
means
Bonanza, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Hobart Teneff and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
“Bonanza
Financial Statements”
is
defined in Section 3.07.
“Bonanza
Stock”
is
defined in the Recitals.
4
“Affiliate”
means
any Person directly or indirectly controlling, controlled by or under direct
or
indirect common control with LBG (or other specified Person) and shall include
(a) any Person who is an officer, director or beneficial holder of at least
10%
of the outstanding capital stock of LBG (or other specified Person), (b) any
Person of which LBG (or other specified Person) or any officer or director
of
LBG (or other specified Person) shall, directly or indirectly, either
beneficially own at least 10% of the outstanding equity securities or constitute
at least a 10% participant, and (c) in the case of a specified Person who is
an
individual, Members of the Immediate Family of such Person; provided,
however,
that
Shareholders shall not be Affiliates of LBG for purposes of this Agreement.
“Agreement”
is
defined in the Preamble.
“Balance
Sheet Date”
is
December 31, 2005.
“Bylaws”
means
all written rules, regulations, procedures and bylaws and all other similar
documents, relating to the management, governance or internal regulation of
a
Person other than an individual, each as from time to time amended or
modified.
“Charter”
means
the articles or certificate of incorporation, statute, constitution, joint
venture or partnership agreement or articles or other charter of any Person
other than an individual, each as from time to time amended or
modified.
“Closing”
is
defined in Section 2.02.
“Code”
means
the federal Internal Revenue Code of 1986 or any successor statute, and the
rules and regulations thereunder, as from time to time amended and in
effect.
“Commission”
means
the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act, the Exchange Act or both.
“Contractual
Obligation”
means,
with respect to any Person, any contracts, agreements, deeds, mortgages, leases,
licenses, other instruments, commitments, undertakings, arrangements or
understandings, written or oral, or other documents, including any document
or
instrument evidencing indebtedness, to which any such Person is a party or
otherwise subject to or bound by or to which any asset of any such Person is
subject.
“Employee
Benefit Plan”
means
each and all “employee benefit plans” as defined in section 3(3) of ERISA,
maintained or contributed to by either Bonanza or LBG, any of their Affiliates
or any of their respective predecessors, or in which either Bonanza or LBG,
any
of their Affiliates or any of their respective predecessors participates or
participated and which provides benefits to employees of either Bonanza or
LBG
or their spouses or covered dependents or with respect to which either Bonanza
or LBG has or may have a material liability, including, (i) any such plans
that
are “employee welfare plans” as defined in section 3(1) of ERISA and (ii) any
such plans that are “employee pension benefit plans” as defined in section 3(2)
of ERISA.
5
“ERISA”
means
the Employee Retirement Income Security Act of 1974 or any successor statute
and
the rules and regulations thereunder, and in the case of any referenced section
of any such statute, rule or regulation, any successor section thereof,
collectively and as from time to time amended and in effect.
“ERISA
Group”,
with
respect to any entity, means any Person which is a member of the same
“controlled group” or under “common control”, within the meaning of section
414(b) or (c) of the Code or section 4001(b)(1) of ERISA, with such
entity.
“Exchange
Act”
means
the Securities Exchange Act of 1934, or any successor federal statute, and
the
rules and regulations of the Commission thereunder, all as from time to time
amended and in effect.
“GAAP”
means
United States generally accepted accounting principles, as in effect from time
to time, consistently applied.
“LBG”
is
defined in the Preamble.
“LBG
Financial Statements”
is
defined in Section 4.07.
“LBG
Intellectual Property”
is
defined in Section 4.17(b).
“LBG
Stock”
is
defined in the Recitals.
“Intellectual
Property”
is
defined in Section 4.17(a).
“Intellectual
Property Licenses”
is
defined in Section 4.17(d).
“Legal
Requirement”
means
any federal, state or local law, statute, standard, ordinance, code, order,
rule, regulation, resolution, promulgation or any final order, judgment or
decree of any court, arbitrator, tribunal or governmental authority, or any
license, franchise, permit or similar right granted under any of the
foregoing.
“Material
Adverse Effect”
means
a
material adverse effect upon the business, assets, financial condition, income
or prospects of the party in question.
“Members
of the Immediate Family,”
as
applied to any individual, means each parent, spouse, child, brother, sister
or
the spouse of a child, brother or sister of the individual, and each trust
created for the benefit of one or more of such persons and each custodian of
a
property of one or more such persons.
“Other
Intellectual Property”
is
defined in Section 4.17(c).
“Pension
Plan”
means
each pension plan (as defined in section 3(2) of ERISA) established or
maintained, or to which contributions are or were made by LBG or any of its
Subsidiaries or former Subsidiaries, or any Person which is a member of the
same
ERISA Group with any of the foregoing.
6
“Person”
means
an individual, partnership, corporation, company, association, trust, joint
venture, unincorporated organization and any governmental department or agency
or political subdivision.
“Securities
Act”
means
the Securities Act of 1933, as amended, or any successor federal statute, and
the rules and regulations of the Commission thereunder, all as the same shall
be
from time to time amended and in effect.
“Sellers”
is
defined in the Preamble.
“Subsidiary”
means
any Person of which either Bonanza or LBG now or hereafter shall at the time
(a)
own directly or indirectly through a Subsidiary at least 50% of the outstanding
capital stock (or other shares of beneficial interest) entitled to vote
generally or (b) constitute a general partner.
“Shareholders”
is
defined in the Preamble.
“Welfare
Plan”
means
each welfare plan (as defined in section 3(l) of ERISA) established or
maintained, or to which any contributions are or were made, by LBG or any of
its
Subsidiaries or any Person which is a member of the same ERISA Group with any
of
the foregoing.
ARTICLE
II
SHARE
EXCHANGE
2.01 Plan
of Share Exchange.
It is
hereby agreed that the LBG Stock shall be acquired by Bonanza solely in exchange
for the number of shares of restricted Bonanza Stock as detailed in Annex I.
It
is the intention of the parties hereto that this entire transaction qualify
as a
corporate reorganization under Section 368(a)(1)(B) of the Code, and related
or
other applicable sections thereunder. However, neither party is making any
representations or warranties regarding the tax treatment of this transaction.
2.02 Closing.
The
closing of the Agreement (the “Closing”)
shall
take place in Murrieta, California, at the offices of Left Behind Games. The
Closing shall take place on a date no later than February 1, 2006, or at such
other place and time as the parties may otherwise agree.
2.03 Conditions
to Closing for Bonanza. Bonanza’s
several obligations to purchase LBG Stock pursuant to this Agreement on the
Closing date are subject to the satisfaction, on or prior to the Closing date,
of the following conditions:
(a) Representations
and Warranties Correct.
The
representations and warranties made by Sellers herein shall have been true
and
correct when made and shall be true and correct on and as of the Closing date,
with the same force and effect as though made on and as of the Closing date,
except for representations and warranties that are made as of a specific date
which shall only be required to be true and correct as of such
date.
(b) Performance.
All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by Sellers on or prior to the Closing shall have been performed
or complied with and no Seller shall be in default in the performance of or
compliance with any provisions of this Agreement.
(c) Compliance
Certificates.
LBG
shall have delivered to Bonanza a certificate of the chief executive officer
of
LBG, dated the date of the Closing date, certifying to the matters stated in
Sections 2.3(a) and (b).
(d) Certified
Documents.
LBG
shall have delivered to Bonanza copies of each of the following which shall
be
true and correct copies in full force and effect as of the Closing date: (i)
the
Articles of Incorporation of LBG as of the Closing date certified by the
Delaware Department of Commerce, Division of Corporations as of a date not
more
than ten (10) days prior to the Closing; (ii) the Bylaws of LBG, certified
by
LBG’s secretary as of the Closing date; and (iii) resolutions of the Board of
Directors of LBG, certified by LBG’s secretary as of the Closing date, the form
and substance of which are reasonably satisfactory to Bonanza, authorizing
the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby and thereby.
(e) Acquisition
of LBG Stock.
Unless
otherwise agreed by Bonanza and LBG, this transaction shall close only in the
event Bonanza is able to acquire at least 80% of the outstanding LBG
Stock.
(f) Shareholder
Approval.
As of
the Closing, at least 80% of the Shareholders shall have approved this Agreement
and the transactions described herein.
(g) Consents.
All
consents and approvals to the transactions contemplated by this Agreement
required to be obtained by any Seller from any third party shall have been
obtained by such Seller.
(h) Legality.
All
authorizations, approvals or permits of any governmental authority or regulatory
body that are required in connection with the lawful issuance and sale of the
Bonanza Stock and the sale of LBG Stock pursuant to this Agreement shall have
been duly obtained and shall be in full force and effect.
(i) Due
Diligence.
After
completing its due diligence investigation prior to the Closing, Bonanza shall
have determined that, in
Bonanza’s sole discretion, the financial condition of LBG and the condition of
LBG otherwise is suitable to Bonanza and its Shareholders. In the event that
Bonanza determines, in its sole discretion, that LBG is not suitable to Bonanza
or its Shareholders for any reason whatsoever, then Bonanza may rescind this
Agreement by giving written notice to LBG. In the event of any such rescission,
this Agreement thereafter shall be null and void and neither party shall have
any obligation to the other.
(j) General.
All
instruments and legal and corporate proceedings in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory
in
form and substance to Bonanza, and Bonanza shall have received copies of all
documents, including records of corporate proceedings and officers’
certificates, which they may have reasonably requested in connection
therewith.
7
2.04 Conditions
to Closing for Sellers. Sellers’
several obligations to enter into the transactions described in this Agreement
on the Closing date are subject to the satisfaction, on or prior to the Closing
date, of the following conditions:
(a) Representations
and Warranties Correct.
The
representations and warranties made by Bonanza Parties herein shall have been
true and correct when made and shall be true and correct on and as of the
Closing date with the same force and effect as though made on and as of the
Closing date.
(b) Performance.
All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by Bonanza Parties on or prior to the Closing shall have been
performed or complied with and Bonanza shall not be in default in the
performance of or compliance with any provisions of this Agreement.
(c) Compliance
Certificates.
Bonanza
shall have delivered to LBG a certificate of the chief executive officer or
chief financial officer of Bonanza, dated the date of the Closing date,
certifying to the matters stated in Sections 2.4(a) and (b).
(d) Certified
Documents.
Bonanza
shall have delivered to LBG copies of each of the following which shall be
true
and correct copies in full force and effect as of the Closing date: (i) the
Articles of Incorporation of Bonanza as of the Closing date certified by the
Secretary of State of Washington as of a date not more than ten (10) days prior
to the Closing; (ii) the Bylaws of Bonanza, certified by Bonanza’s secretary as
of the Closing date; and (iii) resolutions of the Board of Directors of Bonanza,
certified by Bonanza’s secretary as of the Closing date, the form and substance
of which are reasonably satisfactory to LBG, authorizing the execution, delivery
and performance of this Agreement and the transactions contemplated hereby
and
thereby.
(e) Consents.
All
consents and approvals to the transactions contemplated by this Agreement
required to be obtained by any Bonanza Party from any third party shall have
been obtained by such Bonanza Party.
(f) Legality.
All
authorizations, approvals or permits of any governmental authority or regulatory
body that are required in connection with the lawful issuance and sale of the
Bonanza Stock and the sale of LBG Stock pursuant to this Agreement shall have
been duly obtained and shall be in full force and effect.
(g) Due
Diligence.
After
completing its due diligence investigation prior to the Closing, Sellers shall
have determined that, in
each
Sellers sole discretion, the financial condition of Bonanza and the condition
of
Bonanza otherwise is suitable to each Seller. In the event that any of the
Sellers determines, in such Seller’s sole discretion, that Bonanza is not
suitable for any reason whatsoever, then any Seller may rescind this Agreement
by giving written notice to Bonanza. In the event of any such rescission, this
Agreement thereafter shall be null and void and neither party shall have any
obligation to the other than complying with the terms and conditions of any
confidentiality and non-disclosure agreements entered into prior to this
Agreement.
8
(h) SEC
Filings.
Bonanza
shall have filed all of its annual reports on Form 10-KSB, quarterly reports
on
Form 10-QSB and other required filings with the Securities and Exchange
Commission. Furthermore,
Bonanza shall be prepared to file with the SEC a current report on Form 8-K
reporting this transaction immediately following the Closing and Bonanza shall
have prepared to file with the SEC and mail to its security holders the Form
14F-1 reporting the change in control.
(i) General.
All
instruments and legal and corporate proceedings in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory
in
form and substance to LBG, and LBG shall have received copies of all documents,
including records of corporate proceedings and officers’ certificates, which
they may have reasonably requested in connection therewith.
2.05 Other
Events Occurring at Closing.
At
Closing, the following shall be accomplished:
(a) All
of
the officers and directors of Bonanza shall resign and the nominees identified
by LBG shall have been appointed. Notwithstanding the foregoing, the
resignations of the directors shall be coordinated so that they do not occur
prior to the expiration
of the ten day time period following the mailing of the Form 14F-1 by the
Company.
(b) Investment
Letters in the form attached hereto as Exhibit
“A”,
shall
have been duly authorized, executed and delivered by the parties thereto and
a
copy of such executed agreements shall have been delivered to both Bonanza
and
LBG.
(c) This
Agreement shall have been duly authorized, executed and delivered by the parties
hereto and a copy of such executed agreement shall have been delivered to both
Bonanza and LBG.
(d) Such
other instruments, documents and certificates, if any, as are required to be
delivered pursuant to the provisions of this Agreement shall have been duly
authorized, executed and delivered by the parties thereto and a copy of such
executed instruments, documents and certificates shall have been delivered
to
both Bonanza and LBG.
(e) All
of
the certificates representing the LBG Stock shall be delivered to Bonanza,
or a
designated escrow agent, duly and validly endorsed for transfer to
Bonanza.
(f) The
Bonanza Stock certificates representing the shares to be issued and sold to
the
Shareholders as described herein shall be delivered to a representative of
LBG
for delivery to Shareholders.
(g) Bonanza
shall deliver to LBG a certificate of good standing of Bonanza issued by the
Secretary of State of Washington and such certificate dated no earlier than
ten
(10) business days prior to the Closing.
9
(h) LBG
shall
deliver to Bonanza a certificate of good standing of LBG issued by the Delaware
Department of Commerce, Division of Corporations and such certificate dated
no
earlier than ten (10) business days prior to the Closing.
ARTICLE
III
REPRESENTATIONS
OF BONANZA PARTIES
The
Bonanza Parties hereby jointly and severally represent and warrant to Sellers
as
follows:
3.01
Authorization.
All
shareholder approval and corporate action on the part of Bonanza necessary
for
the due authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated herein has been or will be taken
prior to the Closing date. This Agreement is a legal, valid and binding
agreement of Bonanza, enforceable in accordance with its terms. The execution,
delivery and performance by Bonanza of this Agreement and the sale of Bonanza
Stock will not result in any violation of or be in conflict with, or result
in a
breach of or constitute a default under, any term or provision of any Legal
Requirement to which Bonanza is subject, or Bonanza’s Charter or Bylaws, or any
Contractual Obligation to which Bonanza is a party or by which Bonanza is
bound.
3.02 Organization.
Bonanza
is a duly organized and validly existing corporation in good standing under
the
laws of Washington. Bonanza is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which it does
business, except where the failure to be so qualified would not have a Material
Adverse Effect.
3.03 Corporate
Power.
Bonanza
has all necessary power and authority to enter into and perform this Agreement
and to sell the Bonanza Stock hereunder. Bonanza has all necessary power and
authority to own all the properties owned by it and to carry on the businesses
now conducted or presently proposed to be conducted by it. Bonanza has taken
all
action necessary to authorize this Agreement and the sale of the Bonanza Stock
to be sold hereunder.
3.04 Subsidiaries.
Bonanza
has no Subsidiaries.
10
3.05 Capitalization.
The
authorized capital stock of Bonanza as of the date of the Agreement is
200,000,0000 shares of common stock and 20,000,000 shares of preferred stock.
There are no outstanding warrants or options as of the date of the Agreement.
All of the outstanding shares of capital stock of Bonanza are validly issued,
fully paid, nonassessable and subject to no lien or restriction on transfer,
except restrictions on transfer imposed by applicable securities laws. All
of
the outstanding shares of capital stock and warrants have been offered and
sold
in compliance with applicable federal and state securities laws. Bonanza has
no
outstanding (i) rights (either preemptive or otherwise) or options to subscribe
for or purchase, or any warrants or other agreements providing for or requiring
the issuance of, any capital stock or any securities convertible into or
exchangeable for its capital stock, (ii) obligation to repurchase or otherwise
acquire or retire any of its capital stock, any securities convertible into
or
exchangeable for its capital stock or any rights, options or warrants with
respect thereto, (iii) rights that require it to register the offering of any
of
its securities under the Securities Act or (iv) any restrictions on voting
any
of its securities.
3.06 Financial
Statements.
LBG has
been furnished with complete and correct copies of the following financial
statements of Bonanza (the “Bonanza
Financial Statements”):
(a)
the unaudited balance sheet of Bonanza as of December 31, 2005 and the
respective related consolidated statements of income, retained earnings and
cash
flows for the nine month period then ended, and (b) the audited consolidated
balance sheet of Bonanza as of March 31, 2005 together with the related
consolidated statements of operations, retained earnings and cash flows for
the
nine month period then ended. The Bonanza Financial Statements have been
prepared in accordance with GAAP consistently applied, and fairly and accurately
present the financial condition of Bonanza at the date thereof and the results
of its operations for the period covered thereby. All the books, records and
accounts of Bonanza are accurate and complete, are in accordance with good
business practice and all laws, regulations and rules applicable to Bonanza
and
the conduct of its business and accurately present and reflect all of the
transactions described therein.
3.07 Outstanding
Debt: Absence of Liabilities.
Bonanza
(i) does not have any outstanding indebtedness for borrowed money or for any
other purpose except as reflected in the Bonanza Financial Statements and (ii)
except as reflected, is not a guarantor or otherwise contingently liable on
such
indebtedness of any other Person. Bonanza does not have any liabilities or
obligations, contingent or otherwise, which are not reflected or provided for
in
the Bonanza Financial Statements.
3.08 Changes
in Condition.
Since
the Balance Sheet Date, there have occurred no event or events that,
individually or in the aggregate, have caused or will cause a Material Adverse
Effect. Since the Balance Sheet Date, Bonanza has not (a) declared any dividend
or other distribution on any shares of its capital stock, (b) made any payment
(other than compensation to its directors, officers and employees at rates
in
effect prior to the Balance Sheet Date or for bonuses accrued in accordance
with
normal practice prior to the Balance Sheet Date) to any of its Affiliates,
(c)
increased the compensation, including bonuses, payable or to be payable to
any
of its directors, officers, employees or Affiliates, or (d) entered into any
Contractual Obligation, or entered into or performed any other transaction,
not
in the ordinary and usual course of business and consistent with past practice,
other than as specifically contemplated by this Agreement.
3.09 Contractual
Obligations.
Bonanza
has no Contractual Obligations of a material nature of the types described
below:
(a) collective
bargaining agreements, all employment, bonus or consulting agreements, all
pension, profit sharing, deferred compensation, stock option, stock purchase,
retirement, welfare or incentive plans or agreements, and all plans, agreements
or practices that constitute “fringe benefits” to any of the employees of
Bonanza.
(b) Contractual
Obligations under which Bonanza is restricted from carrying on any business,
venture or other activities anywhere in the world.
(c) Contractual
Obligations to sell or lease (as lessor) any of the properties or assets of
Bonanza, except in the ordinary course of business, or to purchase or lease
(as
lessee) any real property.
(d) Contractual
Obligations pursuant to which Bonanza guarantees any liability of any Person,
or
pursuant to which any Person guarantees any liability of Bonanza.
(e) Contractual
Obligations pursuant to which Bonanza provides goods or services involving
payments to Bonanza of more than $1,000 annually, which Contractual Obligation
is not terminable by Bonanza without penalty upon notice of thirty (30) days
or
less.
(f) Contractual
Obligations with any Affiliate of Bonanza.
(g) Contractual
Obligations providing for the disposition of the business, assets or shares
of
Bonanza or the merger or consolidation or sale or purchase of all or
substantially all of the assets or business of any Person, and any letters
of
intent relating to the foregoing.
(h) Contractual
Obligations of Bonanza relating to the borrowing of money or to the mortgaging
or pledging of, or otherwise placing a lien on, any asset of Bonanza (including
liens imposed by operation of law in favor of landlords, suppliers, mechanics
or
others who provide services to Bonanza).
(i) Contractual
Obligations of Bonanza that are enforceable against Bonanza and, to Bonanza’s
knowledge, the other parties thereto in accordance with their terms, except
that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws, from time to time in effect, which affect
enforcement of creditors’ rights generally. Bonanza is not in default under nor,
to Bonanza’s knowledge, are there any liabilities arising from any breach or
default by any Person prior to the date of this Agreement of, any provision
of
any such Contractual Obligation.
11
3.10 Insurance.
To
Bonanza’s knowledge after investigation its insurance policies are in full force
and effect, written by reputable insurers licensed to write insurance in the
states in which Bonanza conducts business, which insurance contracts provide
for
coverages which are usual and customary in its business as to amount and scope.
Correct and complete copies of insurance policies owned by Bonanza have been
made available to LBG. Bonanza is not in default under any of its insurance
policies, nor has Bonanza received any notice of cancellation or intent to
cancel or increase premiums with respect to present insurance policies. Bonanza
has no pending claims with any insurance company and no instances of a denial
of
coverage of Bonanza by any insurance company.
3.11 Transactions
with Affiliates.
No
Affiliate of Bonanza is a customer or supplier of, or is party to, any
Contractual Obligation with Bonanza.
3.12 Conformity
With Legal Requirements.
The
operations of Bonanza as now conducted are not in violation of, nor is Bonanza
in default under, any Legal Requirements presently in effect or Bonanza’s
Charter or Bylaws. Bonanza has all franchises, licenses, permits or other
authority presently necessary for the conduct of its business as now
conducted.
3.13 Benefit
Plans.
Bonanza
has no Employee Benefit Plans or Welfare Plans applicable to the employees
of
Bonanza. Bonanza does not have any obligation under any Welfare Plan to provide
for the continuation of benefits (other than disability payments and medical
benefits incurred for illness arising in the course of employment) for more
than
one year after retirement or other termination of employment. No “reportable
events” within the meaning of section 4043 of ERISA have occurred with respect
to any Employee Benefit Plan. No Pension Plan is a “multiemployer plan” as
defined in ERISA. The present value of benefits liabilities as described in
Title IV of ERISA of Employee Benefit Plans does not exceed the current value
of
such Employee Benefit Plans assets allocable to such benefits liabilities by
more than $50,000.
3.14 Employees.
None of
the employees of Bonanza are presently represented by a labor union, and no
petition has been filed or proceedings instituted by any employee or group
of
employees with any labor relations board seeking recognition of a bargaining
representative. Bonanza has no knowledge of any controversies or disputes are
pending between Bonanza and any of its employees. To Bonanza’s knowledge, no
employee of Bonanza is in violation of any term of any Contractual Obligation
with a former employer relating to the right of any such employee to be employed
by Bonanza because of the nature of Bonanza’s business or the use of any trade
secrets or proprietary information. Each employee of Bonanza is an “employee at
will” and may be terminated by Bonanza without payment of any amounts other than
accrued wages.
12
3.15 Taxes.
Bonanza
has filed all federal, state and local tax and information returns which are
required to be filed by it and such returns are true and correct. Bonanza has
paid all taxes, interest and penalties, if any, reflected in such tax returns
or
otherwise due and payable by it. Bonanza has no knowledge of any material
additional assessments or any basis therefor. The charges, accruals and reserves
on the balance sheet of Bonanza as of the Balance Sheet Date in respect of
taxes
or other governmental charges are adequate in amount for the payment of all
liabilities for such taxes or other governmental charges. Bonanza has withheld
or collected from each payment made to its employees the amount of all taxes
required to be withheld or collected therefrom and has paid over such amounts
to
the appropriate taxing authorities. Any deficiencies proposed as a result of
any
governmental audits of such tax returns have been paid or settled or are being
contested in good faith, and there are no present disputes as to taxes payable
by Bonanza.
3.16 Litigation.
No
litigation or proceeding before, or investigation by, any foreign, federal,
state or municipal board or other governmental or administrative agency or
any
arbitrator is pending or, to Bonanza’s knowledge, threatened (nor to Bonanza’s
knowledge, does any basis exist therefor) against Bonanza or, to Bonanza’s
knowledge, any officer of Bonanza, which individually or in the aggregate could
result in any material liability or which may otherwise result in a Material
Adverse Effect, or which seeks rescission of, seeks to enjoin the consummation
of, or which questions the validity of, this Agreement or any other Related
Agreement or any of the transactions contemplated hereby or
thereby.
3.17 Patents,
Trademarks and Other Intellectual Property.
Bonanza
owns no Intellectual Property.
3.18 Consents.
No
consent, approval, qualification, order or authorization of, or filing with
any
governmental authority is required in connection any Bonanza Parties’ valid
execution, delivery or performance of this Agreement or the offer, issue or
sale
of the Bonanza Stock by Shareholders or the consummation of any other
transaction pursuant to this Agreement on the part of any Bonanza Party, except
for filings under applicable federal securities or blue sky laws.
3.19 Filings,
Broker’s Fees.
Bonanza
is not obligated to pay any broker’s fee, finder’s fee, investment banker’s fee
or other similar transaction fee in connection with the transactions
contemplated hereby.
3.20 Minute
Books.
The
minute books of Bonanza, which shall have been provided to counsel for LBG
prior
to the Closing, if requested, contain a complete record of actions taken at
all
meetings of directors and Shareholders during the four year period immediately
preceding the date of this Agreement and reflect all such actions accurately
in
all material respects.
3.21 Real
Property Holding Corporation.
Bonanza
is not a “United States real property holding corporation” as defined in section
897(c)(2) of the Code and Treasury Regulation section
1.897-2(b).
13
3.22 Accredited
Investor Status.
Bonanza
is a sophisticated and an “accredited investor” as defined under Rule 501 of
Regulation D as promulgated under the Securities Act.
3.23 Disclosure.
Bonanza’s Annual Report on Form 10-KSB for the year ended March 31, 2005 does
not contain any untrue statement of a material fact, nor omit to state any
material fact necessary in order to make the statements contained therein,
in
light of the circumstances under which they were made, not misleading. Neither
this Agreement, nor any agreement, certificate, statement or document furnished
in writing by or on behalf of Bonanza to Sellers in connection herewith or
therewith contains any untrue statement of a material fact or omits to state
a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. Bonanza has furnished the Sellers with an accurate and complete
copy
of its Annual Report on Form 10-KSB for the 2005 fiscal year and all other
reports or documents required to be filed by the Company pursuant to the
Exchange Act and the rules and regulations of the Commission thereunder, since
the filing of the most recent annual report on Form 10-KSB. As of the Closing,
Bonanza shall have made all filings with the Commission that it has been legally
required to make.
ARTICLE
IV
REPRESENTATIONS
OF SELLERS
LBG
hereby represents and warrants solely for the benefit of Bonanza as follows:
4.01
Authorization.
All
shareholder approval and corporate action on the part of LBG necessary for
the
due authorization, execution and delivery of this Agreement and the consummation
of the transactions contemplated herein has been or will be taken prior to
the
Closing date. This Agreement is a legal, valid and binding agreements of the
Sellers, enforceable in accordance with their terms. The execution, delivery
and
performance by Sellers of this Agreement and the sale of LBG Stock will not
result in any violation of or be in conflict with, or result in a breach of
or
constitute a default under, any term or provision of any Legal Requirement
to
which any of the Sellers is subject, or LBG’s Charter or Bylaws, or any
Contractual Obligation to which any of the Sellers is a party or by which any
of
the Sellers is bound.
4.02 Organization.
LBG is
a duly organized and validly existing corporation in good standing under the
laws of Delaware. LBG is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which it does business, except
where the failure to be so qualified would not have a Material Adverse
Effect.
4.03 Corporate
Power.
Sellers
have all necessary power and authority to enter into and perform this Agreement
and to sell the LBG Stock hereunder. LBG has all necessary power and authority
to own all the properties owned by it and to carry on the businesses now
conducted or presently proposed to be conducted by it. Sellers have taken all
action necessary to authorize this Agreement and the sale of the LBG Stock
to be
sold hereunder.
14
4.04 Subsidiaries.
LBG
has
no Subsidiaries.
4.05 Capitalization.
The
authorized capital stock of LBG as of the date of the Agreement is set forth
in
Annex 1 to this Agreement and contains a true and correct list of all
outstanding capital stock, warrants and options as of the date of the Agreement,
and, with respect to the warrants and options, the exercise price and the dates
of issuance and termination. All of the outstanding shares of capital stock
of
LBG are validly issued, fully paid, nonassessable and subject to no lien or
restriction on transfer.. All of the outstanding shares of capital stock and
warrants have been offered and sold in compliance with applicable federal and
state securities laws. LBG has no outstanding (i) rights (either preemptive
or
otherwise) or options to subscribe for or purchase, or any warrants or other
agreements providing for or requiring the issuance of, any capital stock or
any
securities convertible into or exchangeable for its capital stock, (ii)
obligation to repurchase or otherwise acquire or retire any of its capital
stock, any securities convertible into or exchangeable for its capital stock
or
any rights, options or warrants with respect thereto, (iii) rights that require
it to register the offering of any of its securities under the Securities Act
or
(iv) any restrictions on voting any of its securities.
4.06 Financial
Statements.
Bonanza
has been furnished with complete and correct copies of the following financial
statements of LBG (the “LBG
Financial Statements”):
(a)
the unaudited balance sheet of LBG as of December 31, 2005 and the respective
related consolidated statements of income, retained earnings and cash flows
for
the nine month period then ended, and (b) the audited consolidated balance
sheet
of LBG as of March 31, 2005 together with the related consolidated statements
of
operations, retained earnings and cash flows for the twelve-month period then
ended. The
LBG
Financial Statements have been prepared in accordance with GAAP consistently
applied, except that the LBG Financial Statements do not contain the notes
required by generally accepted accounting principles, and fairly and accurately
present the financial condition of LBG at the date thereof and the results
of
its operations for the period covered thereby.
All the
books, records and accounts of LBG are accurate and complete, are in accordance
with good business practice and all laws, regulations and rules applicable
to
LBG and the conduct of its business and accurately present and reflect all
of
the transactions described therein.
4.07 Outstanding
Debt: Absence of Liabilities.
LBG (i)
does not have any outstanding indebtedness for borrowed money or for any other
purpose except as reflected in the LBG Financial Statements and (ii) except
as
reflected, is not a guarantor or otherwise contingently liable on such
indebtedness of any other Person. LBG does not have any liabilities or
obligations, contingent or otherwise, which are not reflected or provided for
in
the LBG Financial Statements.
15
4.08 Changes
in Condition.
Since
the Balance Sheet Date, there have occurred no event or events that,
individually or in the aggregate, have caused or will cause a Material Adverse
Effect. Since the Balance Sheet Date, LBG has not (a) declared any dividend
or
other distribution on any shares of its capital stock, (b) made any payment
(other than compensation to its directors, officers and employees at rates
in
effect prior to the Balance Sheet Date or for bonuses accrued in accordance
with
normal practice prior to the Balance Sheet Date) to any of its Affiliates,
(c)
increased the compensation, including bonuses, payable or to be payable to
any
of its directors, officers, employees or Affiliates, or (d) entered into any
Contractual Obligation, or entered into or performed any other transaction,
not
in the ordinary and usual course of business and consistent with past practice,
other than as specifically contemplated by this Agreement.
4.09 Contractual
Obligations.
LBG has
disclosed to Bonanza all Contractual Obligations of a material nature of LBG
of
the types described below:
(a) All
collective bargaining agreements, all employment, bonus or consulting
agreements, all pension, profit sharing, deferred compensation, stock option,
stock purchase, retirement, welfare or incentive plans or agreements, and all
plans, agreements or practices that constitute “fringe benefits” to any of the
employees of LBG.
(b) All
Contractual Obligations under which LBG is restricted from carrying on any
business, venture or other activities anywhere in the world.
(c) All
Contractual Obligations to sell or lease (as lessor) any of the properties
or
assets of LBG, except in the ordinary course of business, or to purchase or
lease (as lessee) any real property.
(d) All
Contractual Obligations pursuant to which LBG guarantees any liability of any
Person, or pursuant to which any Person guarantees any liability of
LBG.
(e) All
Contractual Obligations pursuant to which LBG provides goods or services
involving payments to LBG of more than $1,000 annually, which Contractual
Obligation is not terminable by LBG without penalty upon notice of thirty (30)
days or less.
(f) All
Contractual Obligations with any Affiliate of LBG.
(g) All
Contractual Obligations providing for the disposition of the business, assets
or
shares of LBG or the merger or consolidation or sale or purchase of all or
substantially all of the assets or business of any Person, and any letters
of
intent relating to the foregoing.
(h) All
Contractual Obligations of LBG relating to the borrowing of money or to the
mortgaging or pledging of, or otherwise placing a lien on, any asset of LBG
(including liens imposed by operation of law in favor of landlords, suppliers,
mechanics or others who provide services to LBG).
16
(i) All
of
the Contractual Obligations of LBG that are enforceable against LBG and, to
LBG’s knowledge, the other parties thereto in accordance with their terms,
except that enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect, which
affect enforcement of creditors’ rights generally. LBG is not in default under
nor, to LBG’s knowledge, are there any liabilities arising from any breach or
default by any Person prior to the date of this Agreement of, any provision
of
any such Contractual Obligation. Upon request by counsel for Bonanza, LBG will,
prior to Closing, furnish to counsel for Bonanza true and correct copies of
all
Contractual Obligations referred to in this section 4.09.
4.10 Insurance.
To
LBG’s knowledge after investigation its insurance policies are in full force and
effect, written by reputable insurers licensed to write insurance in the states
in which LBG conducts business, which insurance contracts provide for coverages
which are usual and customary in its business as to amount and
scope.
Correct
and complete copies of all insurance policies owned by LBG have been made
available to Bonanza. LBG is not in default under any of its insurance policies,
nor has LBG received any notice of cancellation or intent to cancel or increase
premiums with respect to present insurance policies. There are no pending claims
with any insurance company and any instances of a denial of coverage of LBG
by
any insurance company.
4.11 Transactions
with Affiliates.
Other
than previously disclosed to Bonanza, no Affiliate of LBG is a customer or
supplier of, or is party to, any Contractual Obligation with LBG.
4.12 Conformity
With Legal Requirements.
The
operations of LBG as now conducted are not in violation of, nor is LBG in
default under, any Legal Requirements presently in effect or LBG’s Charter or
Bylaws. LBG has all franchises, licenses, permits or other authority presently
necessary for the conduct of its business as now conducted.
4.13 Benefit
Plans.
LBG
currently has no Employee Benefit Plans or Welfare Plans applicable to the
employees of LBG. Each Employee Benefit Plan and Welfare Plan has been
administered in substantial compliance with its terms and all applicable laws,
including the Code and ERISA. LBG does not have any obligation under any Welfare
Plan to provide for the continuation of benefits (other than disability payments
and medical benefits incurred for illness arising in the course of employment)
for more than one year after retirement or other termination of employment.
No
“reportable events” within the meaning of section 4043 of ERISA have occurred
with respect to any Employee Benefit Plan. No Pension Plan is a “multiemployer
plan” as defined in ERISA. The present value of benefits liabilities as
described in Title IV of ERISA of Employee Benefit Plans does not exceed the
current value of such Employee Benefit Plans assets allocable to such benefits
liabilities by more than $50,000.
17
4.14 Employees.
None of
the employees of LBG are presently represented by a labor union, and no petition
has been filed or proceedings instituted by any employee or group of employees
with any labor relations board seeking recognition of a bargaining
representative. LBG has no knowledge of any controversies or disputes that
are
pending between LBG and any of its employees. To LBG’s knowledge, no employee of
LBG is in violation of any term of any Contractual Obligation with a former
employer relating to the right of any such employee to be employed by LBG
because of the nature of LBG’s business or the use of any trade secrets or
proprietary information. Except for ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇, each employee of LBG is an “employee at will” and may
be terminated by LBG without payment of any amounts other than accrued
wages.
4.15 Taxes.
LBG has
filed all federal, state and local tax and information returns which are
required to be filed by it and such returns are true and correct. LBG has paid
all taxes, interest and penalties, if any, reflected in such tax returns or
otherwise due and payable by it. LBG has no knowledge of any material additional
assessments or any basis therefor. The charges, accruals and reserves on the
balance sheet of LBG as of the Balance Sheet Date in respect of taxes or other
governmental charges are adequate in amount for the payment of all liabilities
for such taxes or other governmental charges. LBG has withheld or collected
from
each payment made to its employees the amount of all taxes required to be
withheld or collected therefrom and has paid over such amounts to the
appropriate taxing authorities.
Any
deficiencies proposed as a result of any governmental audits of such tax returns
have been paid or settled or are being contested in good faith, and there are
no
present disputes as to taxes payable by LBG.
4.16 Litigation.
No
litigation or proceeding before, or investigation by, any foreign, federal,
state or municipal board or other governmental or administrative agency or
any
arbitrator is pending or, to LBG’s knowledge, threatened (nor to LBG’s
knowledge, does any basis exist therefor) against LBG or, to LBG’s knowledge,
any officer of LBG, which individually or in the aggregate could result in
any
material liability or which may otherwise result in a Material Adverse Effect,
or which seeks rescission of, seeks to enjoin the consummation of, or which
questions the validity of, this Agreement or any other Related Agreement or
any
of the transactions contemplated hereby or thereby.
18
4.17 Patents
and Trademarks.
(a) "Intellectual
Property"
shall
mean any or all of the following and all rights in, arising out of, or
associated therewith anywhere in the world held by such Person and not otherwise
in the public domain: (1) all United States, international and foreign patents
and applications therefor (including provisional applications) and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (2) all inventions (whether patentable or not),
patterns, drawings, blueprints, specifications, products in development,
processes, applications, circuits, invention disclosures, improvements, trade
secrets, proprietary information, know how, technology, technical data and
customer lists, and all documentation relating to any of the foregoing; (3)
all
copyrights, copyright registrations and applications therefor; (4) all
industrial designs and any registrations and applications therefor throughout
the world; (5) all trade names, logos, common law trademarks and service marks,
trademark and service ▇▇▇▇ registrations and applications therefor and all
goodwill associated therewith throughout the world; (6) all databases and data
collections and all rights therein throughout the world; (7) all software,
as
well as call source code, object code, firmware, development tools, files,
records and data, all media on which any of the foregoing is recorded; (8)
all
books; (9) all permits, privileges or royalties; (10) all domain names and
website addresses; (11) any similar, corresponding or equivalent rights to
any
of the foregoing and (12) all documentation related to any of the
foregoing.
(b) Schedule
4.17
sets
forth each item of Intellectual Property that is owned by LBG and that is used
in or material to the conduct of LBG's business as it is currently conducted
(the "LBG
Intellectual Property"),
including, without limitation, all software programs and databases, including
any registration and/or application numbers therefor. Except as set forth on
Schedule 4.17,
LBG
owns and will own on the Closing date each item of LBG Intellectual Property
set
forth on Schedule
4.17.
LBG’s
patents, trademarks and copyrights that have been duly registered with, filed
in
or issued by, as the case may be, the U.S. Patent and Trademark Office and
U.S.
Copyright Office or other filing offices, domestic or foreign are listed on
Schedule 4.17,
and the
same remain in full force and effect.
(c) Schedule 4.17
lists
each item of Intellectual Property other than LBG Intellectual Property that
is
necessary for the conduct of, or otherwise material to, LBG’s business as
currently conducted and as planned to be conducted ("Other
Intellectual Property"),
including without limitation, all software programs. LBG has the right, by
license or other agreement, to use each item of Other Intellectual
Property.
(d) Schedule 4.17
sets
forth all written or oral licenses, permissions and arrangements pursuant to
which (a) LBG permits any Person to use any item of LBG Intellectual Property
(b) LBG uses any Intellectual Property owned by any Person (the subject matter
of clauses (a) and (b) are collectively referred to as the "Intellectual
Property Licenses").
Except as set forth on Schedule 4.17,
all
Intellectual Property Licenses are in full force and effect in accordance with
their terms, and are free and clear of any Liens.
19
(e) LBG
has
delivered to Bonanza correct and complete copies of (1) all registrations and
applications for any LBG Intellectual Property; (2) all Intellectual Property
Licenses listed on Schedule 4.17;
and (3)
copies of any assignments pursuant to which LBG owns any LBG Intellectual
Property.
(f) Except
as
set forth on Schedule 4.17:
To
LBG’s knowledge (1) LBG is not in material default under any Intellectual
Property License, and to LBG’s knowledge, no such material default is currently
threatened; (2) the operation of LBG’s business as currently conducted does
not infringe the proprietary rights of any Person or constitute unfair
competition or trade practices under the laws of any jurisdiction and LBG has
not received any notice, oral or written, that alleges the contrary; (3) to
LBG’s knowledge, no LBG Intellectual Property and no Other Intellectual Property
used by LBG under any Intellectual Property License is being infringed by any
third party or group thereof; and (4) there is no claim or demand of any
Person pertaining to, or any proceeding which is pending or, to LBG's knowledge,
threatened, that challenges LBG's rights with respect to any item of LBG
Intellectual Property or any Other Intellectual Property used by LBG, or the
validity or enforceability of any item of LBG Intellectual Property, nor are
there any claims that any default exists under any Intellectual Property
License.
(g) Except
as
set forth on Schedule 4.17,
no item
of LBG Intellectual Property or Other Intellectual Property, or any Intellectual
Property License, is subject to any outstanding order, ruling, decree, judgment
or stipulation by or with any court, tribunal arbitrator, or other Governmental
Authority that could affect the Seller's ability to use, license, or transfer
such LBG Intellectual Property or its validity or enforceability.
(h) LBG
has
taken all steps that are reasonably required to protect LBG's rights in
confidential information and trade secrets of LBG or LBG’s business or provided
by any third party to LBG. Without limiting the foregoing, LBG has, and
enforces, a policy requiring each employee and applicable third-party contractor
to execute (A) proprietary information and confidentiality agreements in
connection with LBG Intellectual Property and (B) invention assignment
agreements, substantially in LBG's standard forms, and all current employees
and
contractors of LBG have executed such agreements.
4.18 Consents.
No
consent, approval, qualification, order or authorization of, or filing with
any
governmental authority is required in connection any Seller’s valid execution,
delivery or performance of this Agreement, or the offer, issue or sale of the
LBG Stock by Shareholders or the consummation of any other transaction pursuant
to this Agreement on the part of any of the Sellers, except for filings under
applicable federal securities or blue sky laws.
4.19 Filings,
Broker’s Fees.
LBG is
not obligated to pay any broker’s fee, finder’s fee, investment banker’s fee or
other similar transaction fee in connection with the transactions contemplated
hereby.
20
4.20 Minute
Books.
The
minute books of LBG, which shall have been provided to counsel for Bonanza
prior
to the Closing, if requested, contain a complete record of actions taken at
all
meetings of directors and Shareholders during the four year period immediately
preceding the date of this and reflect all such actions accurately in all
material respects.
4.21 Real
Property Holding Corporation.
LBG is
not a “United States real property holding corporation” as defined in section
897(c)(2) of the Code and Treasury Regulation section 1.897-2(b).
4.22 Disclosure.
Neither
this Agreement, nor any agreement, certificate, statement or document furnished
in writing by or on behalf of LBG to Bonanza in connection herewith or therewith
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein,
in
light of the circumstances under which they were made, not
misleading.
ARTICLE
V
INDEMNIFICATION
5.01 Indemnification.
For a
period of four years from the Closing, Bonanza Parties agree to indemnify and
hold harmless LBG and each of the other Sellers, and for the same period LBG
agree to indemnify and hold harmless Bonanza, against and in respect of any
liability, damage or deficiency, all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses including attorney's fees incident
to
any of the foregoing, resulting from any material misrepresentations made by
an
indemnifying party to an indemnified party, an indemnifying party's breach
of
any covenant or warranty or an indemnifying party's nonfulfillment of any
agreement hereunder, or from any material misrepresentation in or omission
from
any certificate furnished or to be furnished hereunder.
5.02
Nature
and Survival of Representations.
All
representations, warranties and covenants made by any party in this Agreement
shall survive the Closing and the consummation of the transactions contemplated
hereby for four years from the Closing date. All of the parties hereto are
executing and carrying out the provisions of this Agreement in reliance solely
on the representations, warranties and covenants and agreements contained in
this Agreement and not upon any investigation upon which it might have made
or
any representation, warranty, agreement, promise or information, written or
oral, made by the other party or any other person other than as specifically
set
forth herein.
21
ARTICLE
VI
RESCISSION
6.01 Rescission.
In
the
event of rescission of this Agreement and in accordance with the terms herein,
Bonanza shall transfer and convey the LBG Stock back to the original
Shareholders and the Bonanza Stock shall be cancelled without any further action
of the Shareholders.
ARTICLE
VII
MISCELLANEOUS
7.01 Further
Assurances.
At any
time, and from time to time, after the Closing date, each party will execute
such additional instruments and take such action as may be reasonably requested
by the other party to confirm or perfect title to any property transferred
hereunder or otherwise to carry out the intent and purposes of this
Agreement.
7.02 Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the personal
representatives, successors and assigns of the respective parties hereto. The
parties shall not have the right to assign their rights or obligations hereunder
or any interest herein without obtaining the prior written consent of the
Bonanza Parties, LBG and Shareholders holding at the relevant time greater
than
sixty-six and two-thirds percent (66-2/3%) of the voting power of the LBG
Stock.
7.03 Amendments
and Waivers.
Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of (i) Bonanza,
(ii) LBG, and (iii) Shareholders holding greater than sixty-six and two-thirds
percent (66-2/3%) of (a) the voting power of the LBG Stock, if such amendment
takes place before the Closing, or (b) the Bonanza Stock issued to Shareholders
under this Agreement, if such amendment takes place after the Closing. Any
amendment or waiver effected in accordance with this Section 7.03 shall be
binding upon each Shareholder.
7.04 Counterparts.This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to
the
other parties, it being understood that all parties need not sign the same
counterpart. One or more counterparts of this Agreement or any Exhibit or
Schedule hereto may be delivered via facsimile and such facsimile counterpart
shall have the same effect as an original counterpart hereof.
22
7.05 Notices.
Any
notice or other communication in connection with this Agreement shall be deemed
to be delivered if in writing addressed as provided below and if either (a)
actually delivered at said address, (b) in the case of a letter, seven business
days shall have elapsed after the same shall have been deposited in the United
States mail, postage prepaid and registered or certified, return receipt
requested or (c) transmitted to any address outside of the United States, by
telecopy and confirmed by overnight or two-day courier:
If
to
Bonanza, to it at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇., ▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as Bonanza shall have specified by
notice to the parties.
If
to
LBG, to it at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, or at such other address as LBG shall have specified
by notice to the parties.
Shareholders’
respective addresses set forth on Annex I, or at such other address as
Shareholders shall have specified by notice to the parties.
7.06 Governing
Law.
This
Agreement shall be construed and enforced in accordance with the laws of the
State of Delaware (excluding that body of law relating to choice of laws) and
of
the United States of America.
7.07 Responsibility
and Costs.
All
fees, expenses and out-of-pocket costs and expenses, including, without
limitation, fees and disbursements of counsel, advisors and accountants,
incurred by the parties hereto shall be borne solely and entirely by the party
that has incurred such costs and expenses.
7.08 General.
The
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of any other term or provision hereof. The
headings in this Agreement are for convenience of reference only and shall
not
alter or otherwise affect the meaning hereof. This Agreement and the other
items
referred to herein or therein constitute the entire understanding of the parties
hereto with respect to the subject matter hereof and thereof and supersede
all
present and prior agreements, whether written or oral.
[signature
page follows]
23
SIGNATURE
PAGE
Share
Exchange Agreement By And Among
Bonanza
Gold, Inc., Certain Officers And Directors Of Bonanza Gold, Inc., Left Behind
Games Inc., and The Left Behind Games Inc. Shareholders As of January 27,
2006
IN
WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first above
written.
LEFT
BEHIND GAMES INC. BONANZA
GOLD, INC.
By:
____________________________ By:
____________________________
Name:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Name:
Title:
President and Secretary
Title:
________________________________
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇
________________________________
Hobart
Teneff
________________________________
▇▇▇▇▇▇▇▇
▇▇▇▇▇
24
Counterpart
Signature Page to Share Exchange Agreement
The
undersigned hereby agrees to become a party as a Shareholder to the Share
Exchange Agreement dated January 27, 2006 (the “Agreement”)
among
Bonanza Gold, Inc., ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇, Hobart Teneff, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Left
Behind Games Inc. and the Shareholders named therein, and hereby authorizes
Left
Behind Games Inc. (i) to attach this Counterpart Signature Page to such
Agreement and (ii) to add the name of the undersigned to the list of
Shareholders set forth in Annex I to such Agreement.
_________________________________
Date:
____________________
25
ANNEX
I
SHAREHOLDERS
|
Number
of Shares of Bonanza
|
|
|
Stock
to be Received at the
Closing
|
|
| Series "A" Preferred | |
| Stock Shareholders |
Shares
|
|
Southpointe Financial
|
1,434,498
|
| Damon and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
1,434,498
|
| ▇▇▇ ▇▇▇▇▇▇ |
717,249
|
|
|
|
| Common Stock |
|
| Shareholders |
Shares
|
| Damon and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
170,347
|
| Charter Financial Holdings, LLC |
159,995
|
| White Beacon Inc. |
3,496,589
|
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
1,429,717
|
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
1,429,717
|
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
194,255
|
| ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ |
333,999
|
| ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. |
5,977
|
| ▇▇▇▇ ▇▇▇▇▇▇▇ |
1,195
|
| ▇▇▇▇ ▇▇▇▇▇▇ |
1,195
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
1,195
|
| ▇▇▇▇▇▇ ▇▇▇▇ |
358,625
|
| Louis and ▇▇▇▇▇ ▇▇▇▇▇ |
59,771
|
| ▇▇▇ ▇▇▇▇▇▇▇▇ |
34,667
|
| ▇▇▇▇▇▇▇▇▇ ▇▇ |
2,690
|
| SBI-USA |
203,221
|
| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
29,560
|
| Igor Anatsko |
17,931
|
| ▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
35,862
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
11,954
|
| Aspect Technology & Eqpt, Inc. |
23,908
|
| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
5,977
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇, III |
5,977
|
| ▇▇▇ ▇▇▇▇▇▇ |
5,977
|
| ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇ |
17,931
|
| ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇▇ Revocable Living Trust |
119,542
|
| ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ Rollover |
23,908
|
| Geir & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
29,885
|
26
|
|
|
| ▇▇▇ ▇▇▇▇▇ |
11,954
|
| Victoria & ▇▇▇▇▇▇ ▇▇▇▇▇▇ |
23,908
|
| ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
1,045,988
|
| Love Family Trust |
17,931
|
| ▇▇▇▇▇▇ and ▇▇▇▇▇ Love |
11,954
|
| ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
5,526
|
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
23,908
|
| IAM, LTD |
71,725
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
29,885
|
| TGC, LTD |
11,954
|
| Global Media Solutions Inc. |
298,854
|
| Euro Marketing Systems, Inc. |
298,854
|
| ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ |
239,083
|
| Richmond Jaymes Love |
2,989
|
| Robilyn Lyndon |
59,771
|
| ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
59,771
|
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
5,977
|
| ▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇ |
35,862
|
| IAM, LTD |
11,655
|
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ |
8,966
|
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
29,885
|
| ▇▇▇ ▇▇▇▇▇ |
30,640
|
| ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ |
17,931
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Family Trust |
1,219,324
|
| ▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
20,920
|
| ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
5,977
|
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
14,943
|
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
5,977
|
| Leeg Family Trust |
59,771
|
| ▇▇▇▇ ▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
11,954
|
| ▇▇▇▇▇ ▇▇▇▇▇ |
5,977
|
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
10,759
|
| ▇▇▇▇ ▇▇▇▇▇▇▇ |
5,977
|
| ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ |
59,771
|
| Ray Via |
2,439
|
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
298,854
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇ |
5,977
|
| ▇▇▇▇▇▇ Group Inc. |
59,771
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇ |
50,805
|
| ▇▇▇▇▇▇ ▇▇▇▇▇▇ |
2,989
|
| Total LBG Shares |
16,042,784
|
SCHEDULE
4.17
(Intellectual
Property that is owned by LBG and that is used in or material to the conduct
of
LBG's business as it is currently conducted.)
27
EXHIBIT
A
FORM
OF INVESTMENT LETTER
In
connection with the Agreement and Plan of Share Exchange effective January
27, 2006 (the “Agreement”),
by
and between Bonanza Gold, Inc. (“Bonanza”),
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Hobart Teneff, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Left Behind Games Inc.
(“LBG”)
and
the LBG Shareholders named therein, the undersigned hereby represents and
warrants as follows:
(a) The
undersigned's representations in this letter are complete and accurate to the
best of the undersigned's knowledge, and Bonanza and LBG may rely upon
them.
(b) The
undersigned is able to bear the economic risk of an investment in the Bonanza
Stock (the “Securities”)
for an
indefinite period of time, can afford the loss of the entire investment in
the
Securities, and will, after making an investment in the Securities, have
sufficient means of providing for the undersigned’s current needs and possible
future contingencies. Additionally, the undersigned's overall commitment to
investments that are not readily marketable is not disproportionate to the
undersigned’s net worth and the share exchange described in the Agreement will
not cause such overall commitment to become excessive.
(c) The
Securities will not be sold by the undersigned without registration under
applicable securities acts or a proper exemption from such registration.
(d) The
Securities are being acquired for the undersigned's own account and risk, for
investment purposes, and not on behalf of any other person or with a view to,
or
for resale in connection with, any distribution thereof within the meaning
of
the Securities Act of 1933. The undersigned is aware that there are substantial
restrictions on the transferability of the Securities.
(e) The
undersigned has had access to any and all information concerning Bonanza that
the undersigned and the undersigned's financial, tax and legal advisors required
or considered necessary to make a proper evaluation of this investment.
Specifically, the undersigned has had access to the Bonanza Financial Statements
and annual report on Form 10-KSB referenced in Sections 3.06 and 3.23 of the
Agreement. In making the decision to purchase the Securities by entering into
the Agreement, the undersigned and his or her advisers have relied solely upon
their own independent investigations, and fully understand that there are no
guarantees, assurances or promises in connection with any investment hereunder
and understand that the particular tax consequences arising from this investment
in Bonanza will depend upon the individual circumstances of the undersigned.
The
undersigned further understands that no opinion is being given as to any
securities or tax matters involving the transactions contemplated by the
Agreement.
(f) All
of
the representations and warranties of the undersigned contained herein and
all
information furnished by the undersigned to Bonanza are true, correct and
complete in all respects, and the undersigned agrees to notify Bonanza
immediately of any change in any representation, warranty or other information
set forth herein.
28
(g) The
undersigned also understands and agrees that stop transfer instructions relating
to the Securities will be placed in Bonanza's stock transfer ledger, and that
the Securities sold will bear legends in substantially the following
form:
|
The
securities represented by this certificate have not been registered
under
the Securities Act of 1933 (the "Act") and are "restricted securities"
as
that term is defined in Rule 144 under the Act. The securities may
not be
offered for sale, sold or otherwise transferred except pursuant to
an
effective registration statement under the Act or pursuant to an
exemption
from registration under the Act, the availability of which is to
be
established to the satisfaction of the
issuer.
|
(h) The
undersigned knows that the Securities are offered and sold pursuant to
exemptions from registration under the Securities Act of 1933, and state
securities law based, in part, on these warranties and representations, which
are the very essence of this Agreement, and constitute a material part of the
bargained-for consideration without which this Agreement would not have been
executed.
(i) The
undersigned has the capacity to protect the undersigned’s own interest in
connection with this transaction or has a pre-existing personal or business
relationship with Bonanza or one or more of its officers, directors or
controlling persons consisting of personal or business contacts of a nature
and
duration such as would enable a reasonably prudent purchaser to be aware of
the
character, business acumen and general business and financial circumstances
of
such person with whom such relationship exists.
(j) The
Securities offered hereby were not offered to the undersigned by way of general
solicitation or general advertising and at no time was the undersigned presented
with or solicited by means of any leaflet, public promotional meeting, circular,
newspaper or magazine article, radio or television advertisement.
(k) If
initialed below, The undersigned represents that The undersigned is an
"accredited investor" as defined under Rule 501 of Regulation D by reason
of:
FOR
INDIVIDUALS ONLY (INITIAL IF APPLICABLE):
|
_____
Initial
Here
|
1. I
had individual income (exclusive of any income attributable to my
spouse)
in excess of $200,000 in each of the most recent two years and I
reasonably expect to have an individual income in excess of $200,000
for
the current year, or I had joint income with my spouse in excess
of
$300,000 in each of those years and I reasonably expect to have a
joint
income with my spouse in excess of $300,000 for the current
year.
|
|
|
_____
Initial
Here
|
2. I
have an individual net worth, or my spouse and I have a combined
individual net worth, in excess of $1,000,000. For
purposes of this Agreement, "individual net worth" means the excess
of
total assets at fair market value, including home and personal property,
over total liabilities.
|
|
|
_____
Initial
Here
|
3. I
am qualified as an "accredited investor" pursuant to Rule 501(a)
of
Regulation D of the 1933 Act for the following reason:
_________________________________________________________________
_________________________________________________________________
|
|
FOR
CORPORATIONS AND PARTNERSHIPS ONLY (INITIAL IF APPLICABLE):
|
_____
Initial
Here
|
1. The
undersigned hereby certifies that the Partnership or Corporation
that
he/she represents possesses total assets in excess of $5,000,000
and was
not formed for the specific purpose of acquiring the securities offered
by
Bonanza.
|
|
_____
Initial
Here
|
2. The
undersigned hereby certifies personally, and on behalf of the Partnership
or Corporation that he/she represents, that all of the beneficial
owners
of equity qualify individually as accredited investors under the
individual accredited investor test set forth above.
|
|
FOR
TRUSTS ONLY (INITIAL IF APPLICABLE):
|
_____
Initial
Here
|
1. The
undersigned hereby certifies that the trust which he/she represents
possesses total assets in excess of $5,000,000 and was not formed
for the
specific purpose of acquiring the securities offered by Bonanza,
and that
the purchase of the securities is directed by a sophisticated person
as
described in Rule 506(b)(2)(ii) of the Act.
|
|
|
_____
Initial
Here
|
2. The
undersigned hereby certifies personally, and on behalf of the trust
that
he/she represents, that such trust is a revocable trust that may
be
amended or revoked at any time by the grantors, and all the grantors
are
accredited individual investors under the individual accredited investor
test set forth above.
|
|
FOR
TRUSTEES AND AGENTS (READ AND INITIAL BOTH STATEMENTS):
|
_____
Initial
Here
|
1.
The
undersigned hereby acknowledges that he/she is acting as an agent
or
trustee for the following person or entity:
|
|
|
_____
Initial
Here
|
2. The
undersigned hereby agrees to provide to Bonanza, upon Bonanza’s request,
the following documents:
(a) a
copy of the trust agreement, power of attorney or other instrument
granting the power and authority to execute and deliver the Agreement,
or
(b) an
opinion of counsel verifying the undersigned's power and authority
to
execute and deliver the Agreement and this letter.
|
29
The
representations and warranties contained herein shall survive the Closing of
the
transaction described in the Agreement.
Date:
________________ _____________________________
_____________________________
(print
name)
30