STOCK PURCHASE AGREEMENT AMONG HOMELAND SECURITY NETWORK, INC., AS SELLER AND MONET ACQUISITION, LLC, AS PURCHASER SEPTEMBER 26, 2006
AMONG
HOMELAND
SECURITY NETWORK, INC., AS SELLER
AND
MONET
ACQUISITION, LLC,
AS
PURCHASER
SEPTEMBER
26, 2006
THIS
STOCK PURCHASE AGREEMENT ("Agreement")
has
been made and entered into as of this 26th day of September, 2006, between
HOMELAND SECURITY NETWORK. INC., a Nevada corporation having its principal
business address at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
("Seller"),
and
Monet Acquisition, LLC, a Delaware limited liability company having its
principal business address at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Purchaser").
R
E C I T
A L S:
A. The
parties hereto desire to effect a stock sale (the "Stock
Sale")
pursuant to which Purchaser will purchase from the Seller an aggregate of
40,000,000 shares (the "Transferred
Shares")
of the
common stock of Pacific Auto Group, Inc., a Nevada corporation (the
"Company"),
par
value $0.001 per share (the "Company
Stock"),
to be
purchased by Purchaser for the consideration set forth herein.
B. It
is the
intent and desire of the Seller and the Purchaser, through the Stock Sale and
through their diligent efforts following such Stock Sale, to effectuate the
Stock Sale such that it is a qualified spin-off of the Company from the Seller
and to cooperate together to effect a post spin-off public registration of
the
Company.
C. Pursuant
to the Stock Sale, the Seller will sell, and Purchaser will purchase, the
Transferred Shares.
NOW,
THEREFORE,
in
consideration of the mutual agreements and covenants contained herein, the
parties hereto agree as follows and do thereby adopt this
Agreement.
ARTICLE
I.
DEFINITIONS
DEFINITIONS
The
terms
defined in this Article (except as otherwise expressly provided in this
Agreement) for all purposes of this Agreement shall have the respective meanings
specified in this Article.
"Affiliate"
shall
mean any entity controlling or controlled by another person, under common
control with another person, or controlled by any entity which controls such
person.
"Agreement"
shall
mean this Agreement, and all the exhibits, schedules and other documents
attached to the Agreement, and all amendments and supplements, if any, to this
Agreement.
"Closing"
shall
mean the closing of the Transaction at which the Closing Documents shall be
exchanged by the parties, except for those documents or other items specifically
required to be exchanged at a later time.
"Closing
Date"
shall
mean no more than five days from the date of this Agreement plus any extension
as provided herein, or such other date as agreed in writing to by the parties
on
which the Closing occurs.
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"Closing
Documents"
shall
mean the papers, instruments and documents required to be executed and delivered
at the Closing pursuant to this Agreement.
"Code"
shall
mean the Internal Revenue of 1986, or any successor law, and regulations issued
by the Internal Revenue Service pursuant to the Internal Revenue Code or any
successor law.
"Encumbrance"
shall
mean any charge, claim, encumbrance, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting
(in the case of any security), transfer, receipt of income, or exercise of
any
other attribute of ownership.
"Exchange
Act"
shall
mean the Securities Exchange Act of 1934, as amended.
"GAAP"
shall
mean United States generally accepted accounting principles applied in a manner
consistent with prior periods.
"Investment
Letter"
shall
mean the investment letter in the form attached hereto as
Appendix A.
"Legal
Requirement"
any
federal, state, local, municipal, foreign, international, multinational, or
other administrative order, constitution, law, ordinance, principle of common
law, regulations, statue, or treaty.
"Material
Adverse Effect"
means
any change (individually or in the aggregate) in the general affairs,
management, business, goodwill, results of operations, condition (financial
or
otherwise), assets, liabilities or prospects (whether or not the result thereof
would be covered by insurance) that would be material and adverse to the
designated party.
"Ordinary
Course of Business"
shall
mean actions consistent with the past practices of the designated party which
are similar in nature and style to actions customarily taken by the designated
party and which do not require, and in the past have not received, specific
authorization by the Board of Directors of the designated party.
"Proceeding"
any
action, arbitration, audit, hearing, investigation, litigation, or suit (whether
civil, criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any governmental
body
or arbitrator.
"Purchase
Price" means
the
purchase price in the amount of Ten Thousand Dollars and no cents ($10,000.00)
payable by the Purchaser to the Seller pursuant to Section 2.1 of this
Agreement.
"SEC"
shall
mean the Securities and Exchange Commission.
"Securities
Act"
shall
mean the Securities Act of 1933, as amended.
"Taxes"
shall
include federal, state and local income taxes, capital gains tax, value-added
taxes, franchise, personal property and real property taxes, levies,
assessments, tariffs, duties (including any customs duty), business license
or
other fees, sales, use and any other taxes relating to the assets of the
designated party or the business of the designated party for all periods up
to
and including the Closing Date, together with any related charge or amount,
including interest, fines, penalties and additions to tax, if any, arising
out
of tax assessments.
2
"Transaction"
shall
mean the Stock Sale contemplated by this Agreement.
The
following appendices and schedules are attached to and form part of this
Agreement:
APPENDICES
Description
Appendix
A Investment
Letter
SCHEDULES
Description
Schedule 3.1.15
Insurance Policies
Schedule
5.2.1 Directors
of the Company upon Closing
ARTICLE II.
THE
TRANSACTION
2.1. Stock
Sale.
Subject
to the terms and conditions of the Closing Documents, the Seller hereby agrees
to sell, transfer and deliver to Purchaser, and Purchaser hereby agree to
purchase and accept, the Transferred Shares, in consideration for the payment
of
the Purchase Price by Purchaser to the Seller, free and clear of any liens,
claims or Encumbrances.
2.2. Securities
Law Matters.
2.2.1. Private
Offering.
The
Purchaser understands that the Transferred Shares to be acquired and delivered
to it pursuant to terms of this Agreement will not be registered under the
Securities Act, but will be transferred in reliance upon exemptions available
for resales by Affiliates in private transactions, and that the Seller is
relying upon the truth and accuracy of the representations set forth in the
Investment Letter delivered concurrently with the execution of this Agreement.
Each certificate representing the Transferred Shares registered in the name
of
the Purchaser pursuant to terms of this Agreement shall bear the following
legend:
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED PURSUANT TO
THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND
MAY
NOT BE TRANSFERRED UNLESS THEY ARE SO REGISTERED OR, IN THE OPINION OF COUNSEL
ACCEPTABLE TO THIS CORPORATION, SUCH TRANSFER IS EXEMPT FROM
REGISTRATION.
3
ARTICLE
III.
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES
3.1. Representations
and Warranties of the Seller.
The
Seller hereby represents and warrants to Purchaser that:
3.1.1. Organization
of the Company; Foreign Qualification.
The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the state of Nevada and has all requisite corporate power,
authority, franchises, and licenses to own its property and conduct the business
in which it is engaged. Each of the Company and the Seller have the full power
and authority (corporate or otherwise) to execute, deliver and perform their
respective obligations under this Agreement and the Closing Agreements to which
it is a party. A complete set of the Company’s corporate records as currently in
effect, including its Certificate of Incorporation, Bylaws, minutes, transfer
records, have been delivered or made available to Purchaser. The Company is
duly
qualified and in good standing as a foreign corporation in every jurisdiction
in
which
such qualification is necessary, except to the extent the failure to be so
qualified is not reasonably expected to result in a Material Adverse
Effect.
3.1.2. Capitalization;
Ownership of Transferred Shares.
3.1.2.1.The
authorized equity securities of the Company consists of 100,000,000 shares
of
common stock, par value $0.001 per share, of which 50,000,000 shares are issued
and outstanding and 100,000 shares of preferred stock, par value $0.001 per
share, of which no preferred shares are issued and outstanding. All of the
outstanding equity securities of the Company have been duly authorized and
validly issued, fully paid, are non-assessable, and were issued in compliance
with any preemptive or similar rights and in compliance with applicable federal
and state securities laws. All shares held by the Seller were issued in
compliance with the exemption set forth in Section 4(2) of the Securities Act,
and all other outstanding shares were issued in compliance with either this
exemption or the exemption set forth in Regulation S promulgated under the
Securities Act.
3.1.2.2.There
are
no subscriptions, options, rights, warrants, convertible securities or other
agreements or commitments to issue, or contracts or any other agreements
regarding the issuance, sale or transfer of any equity securities or other
securities of the Company. No persons who are now holders of Company Stock,
and
no persons who previously were holders of Company Stock, are or ever were
entitled to preemptive rights other than persons who exercised or waived those
rights.
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3.1.2.3.There
is
no vote, plan, pending proposal or right of any person or entity to cause any
redemption of any equity securities or other securities of the Company. There
is
no obligation, contract or other arrangement to register (or maintain the
registration of) any of the Company’s securities under federal or state
securities laws.
3.1.2.4.These
is
no agreement, voting trust, proxy or other agreement or understanding of any
character, whether written or oral, with any stockholders of the Company with
respect to or concerning the purchase, sale or transfer or voting of the equity
securities of the Company or any other security of the Company.
3.1.2.5.There
are
no legal obligations, absolute or contingent, to any other person or entity
to
sell the assets, or any equity securities or any other security of the Company
or any of its subsidiaries or affect any merger, consolidation or other
reorganization of the Company or any of its subsidiaries or to enter into any
agreement with respect thereto, except pursuant to this Agreement.
3.1.2.6.The
Seller is the sole beneficial and record holder of the Transferred Shares.
The
Seller holds the Transferred Shares free and clear of any Encumbrance of any
kind whatsoever.
3.1.3. Subsidiaries.
The
Company does not have any subsidiaries (whether held directly or indirectly)
or
any equity investment in any corporation, partnership, joint venture or other
business.
3.1.4. Real
Estate and Title to Assets.
The
Company does not own any real estate or any interest in any real
estate.
The
Company has good and marketable title in and to all of the assets and properties
reflected in the most recent Company Financial Statements, and all assets and
properties purchased or acquired by the Company since the date of the Company
Financial Statements, less all assets and properties that the Company has
disposed of in the Ordinary Course of Business, are free and clear of any
Encumbrance.
3.1.5. Authority
Relative to the Closing Documents; Enforceability.
This
Agreement constitutes the legal, valid, and binding obligation of Seller,
enforceable against Seller in accordance with its terms. Upon the execution
and
delivery by Seller of this Agreement and the Closing Documents, this Agreement
and the Closing Documents will constitute the legal, valid, and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms. Seller has the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and the Closing
Documents and to perform its obligations under this Agreement and the Closing
Documents.
3.1.6. Material
Contracts.
The
Company is not a party to or bound by any agreement or contract.
5
3.1.7. Labor
Matters.
There
are no employment or consulting contracts with, or covenants against competition
by, any present or former employees of the Company and has no obligations to
any
Employee Benefit Plan or pursuant to any statute concerning employees or
employee benefits under any law of any jurisdiction. The Company has no
employees other than its officers.
3.1.8. Undisclosed
Liabilities.
The
Company has no liabilities and to the best of Seller's knowledge there are
no
contingent liabilities, except liabilities that would not have a Material
Adverse Effect.
3.1.9. Compliance
with Other Instruments; Consents.
Neither
the execution of any Closing Document nor the consummation of the Transaction
will trigger any affirmative obligation (including notice) conflict with,
violate or result in a breach or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default), or result in
a
termination of, or accelerate the performance required by, or result in the
creation of any Encumbrance upon any assets of the Company under any provision
of the Articles of Incorporation, Bylaws, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, judgment, decree, statute, ordinance,
regulation or any other restriction of any kind or character to which the
Company is bound.
3.1.10. Financial
Statements.
The
Company's financial statements and notes thereto (the "Company
Financial Statements")
are
true and complete in all material respects, and have been prepared in accordance
with GAAP for the period covered by such statements, and fairly present, in
accordance with GAAP, the properties, assets and financial condition of the
Company, and results of its operations as of the dates and for the periods
covered thereby. There has been no material adverse change in the business
operations, assets, properties, prospects or condition (financial or otherwise)
of the Company, taken as a whole, from that reflected in the Company Financial
Statements. As of the date hereof and as of the Closing Date, the Company does
not have any debts, liabilities or obligations of any nature, whether accrued,
absolute, unmatured, contingent, or otherwise, whether due or to become due,
that are not fully reflected in the Company Financial Statements.
3.1.11. Litigation.
There
are no legal, administrative, arbitration actions, audits, hearings,
investigations, suits or other proceedings or claims involving the Company,
nor
is the Company subject to any existing judgment which might affect the financial
condition, business, property or prospects of the Company; nor has the Company
received any inquiry from an agency of the federal or of any state or local
government about the Transaction, or about any violation or possible violation
of any law, regulation or ordinance affecting its business or
assets.
3.1.12. Taxes.
The
Company either: (a) has timely filed with the appropriate taxing authority
all
Tax and information returns required to have been filed by the Company or (b)
has timely filed for any required extensions with regard to such returns. All
Taxes of the Company have been paid (or provision for the full payment thereof)
to the extent such payments are required prior to the date hereof or accrued
on
the books of the Company. The returns were correct when filed. There are no
pending investigations of the Company concerning any Tax returns by any federal,
state or local Taxing authority, and there are no federal, state, local or
foreign Tax liens upon any of the Company’s assets.
6
3.1.13. Compliance
with Law and Government Regulations.
The
Company is in compliance with, and is not in violation of, applicable federal,
state, local or foreign statutes, laws and regulations (including without
limitation, any applicable environmental, building, zoning or other law,
ordinance or regulation) affecting the Company or its properties or the
operation of its business. The Company is not subject to any order, decree,
judgment or other sanction of any court, administrative agency or other
tribunal.
3.1.14. Insurance.
Schedule 3.1.15 sets forth a list of all insurance policies, fidelity and
surety bonds and fiduciary liability policies (the "Insurance
Policies"),
as
well as all self-insurance programs, covering the operations, employees,
officers and directors of the Company and true and complete copies of all such
Insurance Policies have been delivered to Purchaser. There is no claim by the
Company pending under any of such Insurance Policies as to which coverage has
been questioned, denied or disputed by the underwriters of such Insurance
Policies or requirement by any insurer to perform work which has not been
satisfied. No premiums payable under such Insurance Policies are overdue and
the
Company is in compliance in all respects with the terms and conditions of all
such Insurance Policies. All Insurance Policies are in full force and effect.
3.1.15 Trade
Names and Rights.
The
Company does not use any trademark, service ▇▇▇▇, trade name, or copyright
in
its business, nor does it own any trademarks, trademark registrations or
applications, trade names, service marks, copyrights, copyright registrations
or
applications. No person owns any trademark, trademark registration or
application, service ▇▇▇▇, trade name, copyright or copyright registration
or
application, the use of which is necessary or contemplated in connection with
the operation of the Company’s business.
3.1.16 Transaction
with Affiliates.
Neither
the Seller, nor any Affiliate of the Seller or of the Company has any interest
in any property (whether real, personal, or mixed and whether tangible or
intangible) used in or pertaining to the Company's business. Neither the Seller,
nor any Affiliate of the Seller or of the Company is, or has owned (of record
or
as a beneficial owner) an equity interest or other financial or profit interest
in, a person or entity that has (i) had business dealings or a material
financial interest in any transaction with the Company, or (ii) engaged in
competition with the Company with respect to the business of the Company.
Neither the Seller nor any Affiliate of the Seller is a party to any contract
or
other agreement with, or has any claim or right against, the
Company
3.1.17 Investment
Company Act.
The
Company is not, and upon completion of the Transaction will not be, subject
to
registration as an investment company under the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
3.1.18 Corrupt
Practices.
Neither
the Company, nor any director, officer, agent, employee or other person acting
on behalf of the Company has, in the course of his actions for, or on behalf
of,
the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977 or U.S. Patriot
Act
of 2001; or made any bribe, rebate, payoff, influence payment, kickback or
other
unlawful payment to any foreign or domestic government official or
employee.
7
3.1.19 Full
Disclosure.
None of
the representations and warranties made by the Seller herein, or in any Closing
Document furnished or to be furnished by them hereunder contain or will contain
as of the Closing Date, any untrue statement of material fact, or omits any
material fact, the omission of which would be misleading.
3.1.20. Exchange
Act Filings of Company. The
Company is not delinquent in filing any reports, statements, or other documents
that Company was required to file with the SEC under the Securities Act and
the
Exchange Act, if any. The Company does not have a class of stock registered
under Section 12 of the Exchange Act and the Company is not obligated to file
periodic reports under Section 13 or 15(d) of the Exchange Act.
3.1.21 Filings
of Seller.
(a) With
respect to Seller, during the one (1) year period immediately preceding the
date
hereof, Seller has filed all reports, proxy statements, registration statements
and documents that Seller was required to file with the SEC under the Securities
Act and the Exchange Act, all of which complied as to form in all material
respects with applicable requirements of the Securities Act or the Exchange
Act,
as the case may be, and the rules and regulations adopted thereunder. As of
their respective filing dates, each such report, proxy statement, registration
statement or other document, including any financial statements or schedules
included therein, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make
the statements made therein, in light of the circumstances under which they
were
made, not misleading.
(b) The
financial information set forth by Seller in its most recent filing with the
SEC
on Form 10-Q fairly presents, in all material respects, the financial condition
of Seller and its consolidated subsidiaries and the results of operations of
Seller and its consolidated subsidiaries as at the end of such reporting period
and for the period covered thereby.
ARTICLE IV.
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
4.1. Brokers
or Finders.
Each
party agrees to hold the others harmless and to indemnify them against the
claims of any persons or entities claiming to be entitled to any brokerage
commission, finder’s fee, advisory fee or like payment from such other party
based upon actions of the indemnifying party in connection with the
Transaction.
4.2. Dividend.
To
the
extent allowed by law and to the extent such dividend would not affect the
adequate capitalization of the Company, the Purchaser and Seller agree that
the
Company shall declare and pay a dividend in respect of its Company Stock within
three (3) months of the Closing Date.
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ARTICLE
V.
CLOSING DELIVERIES
CLOSING DELIVERIES
5.1. The
Closing.
The
Closing shall take place on or before the Closing Date (unless such date is
extended by the mutual agreement of the parties) at such location as agreed
to
by the parties. Notwithstanding
the location of the Closing, each party agrees that the Closing may be completed
by the exchange of undertakings between the respective legal counsel for the
Seller and Purchaser, provided such undertakings are satisfactory to each
party’s respective legal counsel. Notwithstanding any other provision of this
Agreement to the contrary, Purchaser shall have the option to extend the Closing
Date for one fifteen (15) day period, upon payment to the Seller of $1.00
(non-refundable).
5.2. Deliveries
by the Seller.
The
Seller hereby agrees to deliver, or cause to be delivered, to Purchaser the
following items on Closing:
5.2.1. Certified
Resolutions. Copies
of
the resolutions, certified by an officer of the Company, of the Board of
Directors of the Company: (a) duly electing the persons set forth on
Schedule
5.2.1
to serve
as directors of the Company effective on the closing date of this agreement
(the
"Closing
Date");
and
(b) approving the terms of this Agreement for purposes of Nev. Rev. Stat. Sec.
78.438(1) and 78.378 - 78.3793.
5.2.2. Charter
Documents.
Copies
of: (a) the Certificate of Incorporation of the Company, certified by the
Secretary of State of Nevada; and (b) good standing certificates and
certificates of existence from the Secretary of State of Nevada, evidencing
that
the Company is in existence and in good standing under the laws of the State
of
Nevada.
5.2.3. Resignations.
A copy
of the resignations of the existing director and officer of the Company, to
be
effective as of the Resignation Date.
5.2.4. Stock
Certificates.
A stock
certificate or certificates representing the Transferred Shares, together with
such stock powers, legal opinions and all other documentation required by the
Company's transfer agent to reissue such shares in the name of
Purchaser.
5.2.5. Transfer
Agent Direction.
A
direction of the Company to the Company’s transfer agent to register the
Transferred Shares in the name of the Purchaser with the legend set forth in
paragraph 2.2.1 of this Agreement or such legend as is otherwise required by
law.
5.2.6. Minute
Books.
A copy
of the minute books of the Company.
5.2.7. Officer’s
Certificate.
A
certificate, certified by a duly authorized officer of the Seller, stating
that
the respective representations and warranties of the Seller and the Company
contained in this Agreement are true and correct in all material respects on
and
as of the Closing Date.
5.3. Deliveries
by Purchaser.
Purchaser hereby agrees to deliver to the Seller the following items on
Closing:
5.3.1. Purchase
Price. The
Purchase Price, payable by cashier’s cheque, bank draft or wire transfer as may
be reasonably required by Seller.
9
5.3.2. Investment
Letter. The
Investment Letter, executed by the Purchaser.
ARTICLE
VI.
CONDITIONS PRECEDENT TO PURCHASER’ OBLIGATION TO CLOSE
CONDITIONS PRECEDENT TO PURCHASER’ OBLIGATION TO CLOSE
The
Purchaser’s obligation to purchase the Transferred Shares and to take the other
actions required to be taken by Purchaser at the Closing is subject to the
satisfaction, at or prior to Closing, of each of the following conditions (any
of which may be waived by Purchaser, in whole or in part):
6.1. Performance
of Covenants.
The
Seller shall have performed all covenants and agreements required to be
completed prior to or on closing, including completion of the deliveries
required by Section 5.2 of this Agreement.
6.2. Accuracy
of Representations.
All of
Seller’s representations and warranties in this Agreement (considered
collectively), and each of Seller’s representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
ARTICLE VII.
CONDITIONS
PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
The
Seller’s obligation to sell the Transferred Shares and to take the other actions
required to be taken by the Seller at the Closing is subject to the
satisfaction, at or prior to Closing, of each of the following conditions (any
of which may be waived by the Seller, in whole or in part):
7.1. Performance
of Covenants.
The
Purchaser shall have performed all covenants and agreements required to be
completed prior to or on closing, including completion of the deliveries
required by Section 5.3 of this Agreement.
7.2. Accuracy
of Representations.
All of
Purchaser’s representations and warranties in this Agreement (considered
collectively), and each of Purchaser’s representations and warranties
(considered individually), must have been accurate in all material respects
as
of the date of this Agreement, and must be accurate in all material respects
as
of the Closing Date as if made on the Closing Date.
ARTICLE
VIII.
COVENANTS,
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
8.1. Covenants
of Parties Post Closing. Seller
agrees to cooperate with and provide reasonable assistance to Purchaser and
the
Company in compiling and completing the information and documentation required
for the filing of public registration documents on behalf of the
Company.
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8.2 Representations,
Warranties and Covenants to Survive Closing.
All
representations, warranties, covenants, and obligations in this Agreement,
the
Closing Documents, the certificates delivered pursuant to Section 5, and any
other certificate or document delivered by Seller pursuant to this Agreement
will survive the Closing of the Transaction for a period of two (2) years
following the Closing. The right to indemnification, payment of Damages (as
defined below) or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) at
any
time, whether before or after the execution and delivery of this Agreement
or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver
of
any condition based on the accuracy of any representation or warranty, or on
the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages, or other remedy based on
such
representations, warranties, covenants, and obligations. Each party acknowledges
and agrees that, except as expressly set forth in this Agreement or any Closing
Document, no party has made (and no party is relying on) any representation
or
warranties of any nature, express or implied, regarding any or relating to
any
of the transactions contemplated by this Agreement.
ARTICLE IX.
INDEMNITY
INDEMNITY
9.1. Seller
Indemnity.
Seller
will indemnify and hold harmless the Purchaser, the Company, and their
respective representatives, officers, directors, stockholders, controlling
persons and Affiliates (collectively, the "Purchaser Indemnified Persons")
for,
and will pay to the Purchaser Indemnified Persons the amount of, any loss,
liability, claim or damage (including incidental and consequential damages),
expenses (including costs of investigation and defense and reasonable attorney's
fees) or diminution of value, whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from or in
connection with:
9.1.1 any
breach of any representation or warranty made by the Seller in this Agreement
or
the Closing Documents, or any other certificate or document delivered by Seller
pursuant to this Agreement;
9.1.2
any
breach by Seller of any covenant or obligation of the Seller in this
Agreement.
9.2. Purchaser
Indemnity.
Purchaser will indemnify and hold harmless the Seller and its representatives,
officers, directors, stockholders, controlling persons and Affiliates
(collectively, the "Seller Indemnified Persons") for, and will pay to the Seller
Indemnified Persons the amount of, any loss, liability, claim or damage
(including incidental and consequential damages), expenses (including costs
of
investigation and defense and reasonable attorney's fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
11
9.2.1 any
breach of any representation or warranty made by the Purchaser in this Agreement
or the Closing Documents, or any other certificate or document delivered by
Purchaser pursuant to this Agreement;
9.2.2 any
breach by Purchaser of any covenant or obligation of the Purchaser in this
Agreement.
9.3. Procedure
for Indemnification, Third Party Claims.
9.3.1 Promptly
after receipt by an indemnified party under Section 9.1 or 9.2 of notice of
the
commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section 9.1 or 9.2, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to an indemnified party, except to me extent that the
indemnifying party demonstrates that the defense of such action is prejudiced
by
the indemnifying party's failure to give such notice.
9.3.2 If
any
Proceeding referred to in Section
9.3.1 is brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the indemnifying
party will, unless the claim involves taxes, be entitled to participate in
such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party to such Proceeding and the indemnified party determines in
good
faith that joint representation would be inappropriate, or (ii) the indemnifying
party fails to provide the reasonable assurance to the indemnified party of
its
financial capacity to defend such Proceeding), to assume the defense of such
Proceeding with counsel satisfactory to the indemnified party and, after notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will not, as long as
it
diligently conducts such defense, be liable to the indemnified party under
this
Section 9.3.3 for any fees of other counsel or any other expenses with respect
to the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other
than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims
may
be effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on
any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect
to
any compromise or settlement of such claims effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten (10) days after the indemnified
party's notice is given, give notice to the indemnified party of its election
to
assume the defense of such Proceeding, the indemnifying party will be bound
by
any determination made in such Proceeding or any compromise or settlement
effected by the indemnified party.
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9.3.3 Notwithstanding
the foregoing, if an indemnified party determines in good faith that there
is a
reasonable probability that a Proceeding may adversely affect it or its
affiliates other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the indemnified party may,
by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party will not
be
bound by any determination of a Proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).
9.3.4 Each
of
the parties hereby consents to the non-exclusive jurisdiction of any court
in
which a Proceeding is brought against any Indemnified Person for purposes of
any
claims that an Indemnified Person may have under this Agreement with respect
to
such Proceeding or the matters alleged therein, and agree that process may
be
served on an indemnifying party with respect to such a claim anywhere in the
world.
ARTICLE
X.
TERMINATION
TERMINATION
10.1. Termination.
This
Agreement may, by notice given prior to or at the Closing, be
terminated:
10.1.1
by
either
Seller or Purchaser if a material breach of any provision of this Agreement
has
been committed by the other party and such breach is not waived;
10.1.2
(i) by
Purchaser if any of the conditions in Article
VI have not been satisfied as of the Closing Date; or (ii) by Seller if any
of
the conditions in Article VII have
not
been satisfied as of the Closing Date;
10.1.3 by
mutual
written consent of Purchaser and Seller;
10.1.4 in
the
event Seller amends any disclosure schedule or provides any disclosure schedule
previously not yet provided to Purchaser as of the date of this Agreement,
and
Purchaser elects to terminate pursuant to its right set forth in Section
11.9.
ARTICLE
XI.
MISCELLANEOUS
MISCELLANEOUS
11.1. Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed delivered (i) on next business day if delivered
by
hand and (ii) on the fifth business day following mailing if by courier or
mailed by certified or registered mail, postage prepaid, addressed as
follows:
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If
to the Seller:
▇▇▇
▇.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
If
to Purchaser:
Monet
Acquisition, LLC
▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
Atten:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
11.2. Assignability
and Parties in Interest.
This
Agreement shall not be assignable by any of the parties hereto without the
consent of all other parties hereto; provided, however, that Purchaser may
assign this Agreement without consent of the Seller if such assignment is to
an
Affiliate of the Purchaser. This Agreement shall inure to the benefit of and
be
binding upon the parties hereto and their respective successors. Nothing in
this
Agreement is intended to confer, expressly or by implication, upon any other
person any rights or remedies under or by reason of this Agreement.
11.3. Expenses.
Each
party shall bear its own expenses and costs, including the fees of any attorney
retained by it, incurred in connection with the preparation of the Closing
Documents and consummation of the Transaction.
11.4. Governing
Law. This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Nevada. Each of the parties hereto consents to the
personal jurisdiction of the federal and state courts in the State of Nevada
in
connection with any action arising under or brought with respect to this
Agreement.
11.5. Counterparts.
This
Agreement may be executed as of the same effective date in one or more
counterparts, each of which shall be deemed an original.
11.6. Headings.
The
headings and subheadings contained in this Agreement are included solely for
ease of reference, and are not intended to give a full description of the
contents of any particular Section and shall not be given any weight whatever
in
interpreting any provision of this Agreement.
11.7. Pronouns,
Etc. Use
of
male, female and neuter pronouns in the singular or plural shall be understood
to include each of the other pronouns as the context requires. The word "and"
includes the word "or". The word "or" is disjunctive but not necessarily
exclusive.
14
11.8. Complete
Agreement. This
Agreement, the Schedules, and the Appendices hereto, and the documents delivered
pursuant hereto or referred to herein or therein contain the entire agreement
between the parties with respect to the Transaction and, except as provided
herein, supersede all previous negotiations, commitments and
writings.
11.9. Modifications,
Amendments and Waivers.
This
Agreement shall not be modified or amended except by a writing signed by each
of
the parties hereto. Subject to Purchaser’s right pursuant to the provisions of
Section 10.1.4 to terminate this Agreement without liability to the Seller
or
the Company prior to the Closing, the Seller may amend any of the disclosure
schedules referenced herein by giving Purchaser prior written notice of such
amendments.
11.10. Severability.
If any
term or other provision of this Agreement is invalid, illegal, or incapable
of
being enforced by any rule of law or public policy, all other terms and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the Transaction is not affected
in
any manner adverse to any party hereto. Upon any such determination that any
term or other provision is
invalid, illegal, or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in any acceptable manner to the
end
that the Transaction are consummated to the extent possible.
[Signature
page follows.]
15
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the day and year first above
written.
| PURCHASER: | ||
| MONET ACQUISITION, LLC | ||
| By: /s/▇▇▇▇ ▇▇▇▇▇▇ | ||
| Name: ▇▇▇▇ ▇▇▇▇▇▇ | ||
| Title: Chairman | ||
| SELLER: | ||
| HOMELAND SECURITY NETWORK, INC. | ||
| By: /s/▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||
|
Title:
President, Chief Financial
Officer
|
16