EXCHANGE AGREEMENT AND
PLAN OF REORGANIZATION
This Exchange Agreement ("Agreement") is made and entered into this
December 27, 1996 by and among ISO BLOCK PRODUCTS USA, INC., a Colorado
corporation ("Purchaser" or "ISO BLOCK"); FRANCHISE CONNECTION, INC., a Colorado
corporation ("Acquired Company" or "Franchise Connection"); and those persons
executing this Agreement in their capacity as Shareholders of Acquired Company
(the "Shareholders").
RECITALS:
WHEREAS, effective on October 16, 1996, Purchaser and Franchise Connection
entered into a letter of intent which expressed the parties' interest in, among
other things, consummating a transaction in which Purchaser would acquire all of
the issued and outstanding common stock of Franchise Connection; and
WHEREAS, Purchaser now desires to acquire all of the issued and outstanding
shares of capital stock of Franchise Connection (the "Control Shares"), in
exchange for shares of Purchaser's common stock; and Franchise Connection has
developed or acquired the franchise development rights to certain companies and
has the opportunity to acquire other rights, and desires to become a wholly
owned subsidiary of ISO Block; and
WHEREAS, the respective boards of directors of Purchaser and Franchise
Connection have approved the execution of this Agreement and performance of
their respective obligations hereunder.
NOW THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, and
subject to the terms and conditions of this Agreement, the parties hereto agree
as follows:
1. THE EXCHANGE.
1.01 Exchange of the Exchange Shares and Control Shares. Subject to and
upon the terms and conditions contained herein, at the closing of the
transactions contemplated in this Agreement ("Closing"):
(a) the Shareholders shall sell, transfer, assign, convey and deliver
the Control Shares respectively owned by them to Purchaser, free and clear
of all adverse claims, security interests, liens, claims and encumbrances
(other than restrictions under applicable securities laws) and Purchaser
shall purchase, accept and acquire the Control Shares from Shareholders,
such transaction being herein sometimes described as the "Exchange"; and
(b) in full payment for the Control Shares, Purchaser shall issue and
deliver to the Shareholders on a ratable basis an aggregate of Five Hundred
Thousand (500,000) shares of the authorized but unissued shares of
Purchaser's common stock, no par value, and One Million Five Hundred
Thousand (1,500,000) shares of the Series 1996 Non-Voting Convertible
Preferred Stock, no par value, of Purchaser, subject to adjustment as
provided below (collectively, the "Exchange Shares"). The preferred
Exchange Shares shall be convertible into shares of the no-par value common
stock of the Company ("Conversion Shares") three (3) years from the date of
issuance at the following conversion rate:
(i) if Franchise Connection has by then sold an aggregate of 150
franchises, consisting of all or any franchises marketed by Franchise
Connection, each preferred Exchange Share will be convertible into one
(1) Conversion Share; or
(ii) if Franchise Connection has by then sold an aggregate of
less than 150 franchises, the number of Conversion Shares into which
the preferred Exchange Shares are convertible will be proportionally
reduced.
(c) If Franchise Connection has sold an aggregate of less than 100
franchises by the third anniversary of the closing under the definitive
agreement, then in addition to the adjustment set forth in in paragraph
(b)(ii) above, Purchaser may at its election demand the surrender and
cancellation of and may unilaterally cancel a percentage of the 500,000
common Exchange Shares equal to the percentage of the shortfall of
franchises sold based on 150 franchises (ex: if only 75 are sold, then 50%
of such shares may be cancelled).
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(d) The number of Conversion Shares issuable upon conversion of the
preferred Exchange Shares will be subject to adjustment if the Company is
reorganized, merged, consolidated or party to a plan of exchange with
another corporation pursuant to which shareholders of the Company receive
any shares of stock or other securities, or in the event of any sale or
other transfer of all or substantially all of the Company's assets, or in
case of any reclassification of Company's common stock. Holders of
preferred Exchange Shares shall be entitled, after the occurrence of any
such event, to receive on conversion thereof the kind and amount of shares
of stock or other securities, cash or other property receivable upon such
event by a holder of the number of Common Shares issuable upon conversion
of the Exchange Warrant immediately prior to occurrence of the event. In
addition, the number of Conversion Shares issuable will be appropriately
adjusted if the Company's common stock is split or combined.
(e) This Agreement shall constitute a plan of reorganization within
the meaning of and is intended to constitute a tax-free exchange under
Section 368(a)(1)(B) and/or Section 351 of the Internal Revenue Code of
1986, as amended ("Code"). Each party hereto has consulted tax counsel or
other advisors of its choice to satisfy itself as to the tax effect to be
given under the Code to the Exchange and other transactions herein
contemplated.
1.02 Other Adjustments in Number of Exchange Shares. The number of Exchange
Shares issuable to the Shareholders shall be subject to further adjustment in
either of the following events:
(a) The parties acknowledge that an aggregate of 2,000,000 shares of
ISO BLOCK outstanding have been issued to and are held by Josef Ratey
and/or R-S Plus Investment Corp., a Florida corporation, and/or Arnold
Stolle, and/or Jan ter Stege and/or Helge Seidel and other German residents
(collectively, the "German Shares"). The Company is required to cancel a
total of 1,737,500 (all but 262,500) of the German Shares, and Purchaser's
Board of Directors has formally authorized the cancellation of such shares,
which are now deemed cancelled on Purchaser's stock book. In this
connection, Purchaser has entered in a Settlement Agreement with R-S Plus
Investment Corp., Josef Ratey and Helge Seidel contemplating the
cancellation of such shares. In the event that for any reason any portion
of the 1,737,500 shares thus cancelled are deemed by final, non-appealable
court order or admission or agreement of Purchaser to be not cancelled,
then in such event the number of Exchange Shares issuable shall be
increased so that the holders of the Franchise Shares acquire the same
percentage of ISO BLOCK as the 2,000,000 unadjusted Exchange Shares would
have constituted had 1,737,500 of the German Shares been cancelled and
rescinded.
(b) If ISO BLOCK declares any common stock dividend or effects any
reverse or forward split prior to closing, the number of Exchange Shares
shall be proportionally increased or decreased, as appropriate.
(c) If less than all of the Franchise Connection Shares are tendered
and conveyed to ISO BLOCK, the number of Exchange Shares issuable (subject
to adjustment, as hereinabove provided) shall be proportionally reduced;
however, in such event, ISO BLOCK shall have the right at its sole election
to rescind this Agreement and not complete the Exchange if any of the
Control Shares are not tendered and exchanged for Exchange Shares.
1.03 Entire Purchase Price. The Exchange Shares constitute the entire
purchase price payable for all of the Control Shares. The Exchange Shares and
Conversion Shares shall not be subject to any preemptive rights, options or
similar rights on the part of any shareholder or creditor of Purchaser or any
other person. Franchise Connection and the Shareholders acknowledge the
sufficiency of the purchase price. Upon consummation of the Exchange, the
Shareholders shall have no further rights in or claims as to Franchise
Connection and shall have only the rights of shareholders of Purchaser and
pursuant to this Agreement.
1.04 Included Assets. At the time of the Closing, Franchise Connection
shall own all of the assets and properties, both tangible and intangible of
every kind and description, owned by it on the effective date of the letter of
intent plus all assets and properties since acquired, excepting properties
disposed of and cash expended solely in the ordinary course of business, without
withdrawal or removal.
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1.05 Breaches and Violations. If and to the extent that the sale and
purchase of the Control Shares is alleged to constitute a breach of any lease,
loan or financing agreement or other contract, license, franchise, permit,
appproval or other property or contractual interest, or a violation of any law,
decree, order, regulation or other governmental edict, Franchise Connection and
the Purchaser shall exercise reasonable efforts at their expense, and Purchaser
will cooperate with them at Purchaser's expense, to obtain any consents and
waivers of third parties and to resolve any such breach or violation.
1.06 Assumption of Ownership and Possession. Purchaser shall at Closing
take ownership, possession and control of Franchise Connection and its books,
records, properties, assets and operations and shall take possession of and
assume control of all of its operations. At such time, all deliveries whatever
shall have been made to Purchaser, including but not limited to all door and
safe keys, safe combinations, filing cabinet and other keys, all ledgers and
journals (both paper and on computer floppy disk), together with all other
things, tangible and intangible, necessary or related to the properties and
business of Franchise Connection and its subsidiaries.
1.07 Continuing Obligation of the Parties. Franchise Connection, Purchaser
and the Shareholders executing this Agreement each agree that, should any thing
required to be done, conveyed or delivered by a party through inadvertence or
otherwise not be done, conveyed or delivered at the Closing, they will each do
such acts remaining to be done and do such other things as shall be necessary to
properly effect the conveyance and delivery of all such things. Officers,
directors and employees of Franchise Connection shall upon Purchaser's request,
at or following the Closing, execute all lawful documents helpful or necessary
to enable the new officers and directors of Franchise Connection to assume
control of Franchise Connection's bank and other accounts.
1.08 Securities not Registered. Franchise Connection and the Shareholders
acknowledge and agree that the Exchange Shares and Conversion Shares have not
been registered under the Securities Act of 1933, as amended ("Act"), in
reliance upon exemptions from registration provided by Section 4(2) of the Act
and under the securities or blue sky laws of any state or any rules or
regulations promulgated thereunder, on the grounds that the Exchange is a
transaction not involving any public offering. Each Shareholder is acquiring the
Exchange Shares for his, her or its own account, with no present intent to
resell or make a distribution of all or any portion thereof. Each Shareholder
acknowledges that the Exchange Shares are and the Conversion Shares will be
"restricted securities," as that term is defined in Rule 144 of the General
Rules and Regulations of the Securities and Exchange Commission ("SEC") under
the Act and understands that the Exchange Shares and Conversion Shares must be
held indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration requirements is available for their resale.
Each Shareholder understands and agrees that the prior written consent of
Purchaser will be necessary for any transfer of any or all of the Exchange
Shares and Conversion Shares unless and until the securities have been duly
registered under the Act or the transfer is made in accordance with Rule 144
under the Act. Purchaser similarly acknowledges that the Control Shares have not
been registered under the Act and are restricted securities.
1.09 Restrictive Legend. The Shareholders each acknowledge and agree that,
unless and until removed in accordance with law, any and all certificates which
are issued evidencing the Exchange Shares and Conversion Shares shall contain a
customary form of investment legend in substantially the following form:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
and are "restricted securities" as that term is defined in Rule 144
under the Act. These shares 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 must be established to the
satisfaction of the Company's counsel."
1.10 Closing. Subject to the conditions precedent set forth herein, the
closing of all transactions herein contemplated ("Closing") shall take place at
the offices of Purchaser's counsel, Brasher & Company, located at 90 Madison
Street, Suite 707, Denver, Colorado 80206, on or before December 15, 1996, at a
time mutually agreed by Franchise Connection and Purchaser, or such earlier or
later date and time mutually agreed to by Franchise Connection and Purchaser
("Closing Date"), of which date the Shareholders shall be given written notice
at least three days in advance of the Closing Date. This Agreement shall be
effective and binding when signed by Purchaser, Franchise Connection and all of
the Shareholders.
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1.11 Assignment of Interest, Rights and Agreements. (a) At the Closing,
Franchise Connection shall own, beneficially and of record, 100% of Brilliant
Marketing, Inc., a Colorado corporation ("BMI"), and thirty percent (30%) of the
total equity interest in Encore Nails, LLC, a Colorado limited liability
company, and one third (1/3rd) of the total equity membership interest in a
Colorado limited liability company to be formed named "Seller's Choice, LLC."
(b) At the Closing, Business Connection, Inc., a Colorado corporation
controlled by Johnny M. Wilson, shall have assigned to Franchise Connection
or to BMI all its rights, contracts and properties, including all rights
and interest in and to the Hydro-Physics, the Encore Nails, Foot Lab and IC
Sunclips franchise projects and related contracts, for no additional
consideration.
1.12 Employment Agreements. Johnny M. Wilson will at Closing enter into an
employment agreement with Purchaser, Franchise Connection and BMI for a three
(3)-year period in the form attached hereto as Exhibit A. He will perform duties
outlined in such employment agreement, to become effective at Closing. If this
Agreement is cancelled or rescinded for any reason, Purchaser may cancel the
employment agreement without further penalty or liability upon at least 30 days'
notice. He shall not compete with Franchise Connection or BMI or any franchise
project now or later undertaken by Franchise Connection or BMI or engage in any
franchise-related business whatsoever, as consultant, employee or otherwise,
except those operated by Franchise Connection and BMI. He shall prepare all
franchise offering circulars for franchises handled by Franchise Connection and
BMI as part of his regular salary.
1.13 Officers and Directors. At the Closing, Johnny Wilson shall be elected
to Purchaser's board of directors and will continue to be a director of
Franchise Connection. Johnny Wilson will serve as chief executive and chief
operating officer of Franchise Connection. Egin Bresnig and Dean Wicker will be
elected to the board of directors of Franchise Connection, and Dean Wicker shall
serve as Chairman of the board of Franchise Connection.
2. ISO BLOCK ADVANCE OF FUNDS. ISO BLOCK has to date advanced an aggregate
of $50,000 to Franchise Connection pursuant to the Letter of Intent, to be used
as working capital. All such funds shall, until consummation of the Exchange at
the Closing, constitute bridge loans to Franchise Connection, bearing simple
interest at 8% per annum, principal and all interest being repayable in a single
installment within nine months from the dates of advance. At the Closing, such
notes and all interest owed shall be converted to an equity investment in
Franchise Connection by ISO BLOCK and shall serve to increase ISO BLOCK's basis
in Franchise Connection.
Commencing at Closing, ISO BLOCK will over the twelve (12) months following
the Closing make available to Franchise Connection an aggregate of an additional
$300,000, subject to adjustment as herein provided, to be advanced monthly. Such
funds will be advanced within five days prior to the month in which needed upon
written request of Franchise Connection, which shall specify the amount needed
and general use intended. Such amounts shall be loaned to Franchise Connection
on customary commercial terms.
3. REPRESENTATIONS AND WARRANTIES OF FRANCHISE CONNECTION. Franchise
Connection hereby represents and warrants to Purchaser that the following are
true and correct as of the date hereof and will be true and correct through the
Closing Date as if made on that date:
(a) Franchise Connection and BMI are corporations duly organized,
validly existing and in good standing under the laws of the State of
Colorado, with all requisite power and authority to carry on the business
in which they are respectively engaged.
(b) There are no claims, actions, suits, proceedings or investigations
of any kind pending or threatened against or affecting Franchise Connection
or BMI or any of their properties, subsidiaries or business anywhere in the
world.
(c) Franchise Connection and BMI have complied in all material
respects with all applicable laws, regulations and rules, applicable to
their business or properties.
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(d) All taxes, assessments and other charges owing by Franchise
Connection or BMI to any taxing authority therein at the time of Closing
shall have been duly paid or shall be deducted from payments due to
Franchise Connection, and all applicable tax returns have been properly
filed.
(e) The execution, delivery and performance by Franchise Connection of
this Agreement and any other agreements contemplated hereby, and the
consummation of the transactions contemplated hereby and thereby, have been
duly authorized by all requisite corporate action of Franchise Connection.
This Agreement and any other agreement contemplated hereby have been or
will be as of the Closing Date duly executed and delivered by Franchise
Connection and constitutes and will constitute legal, valid and binding
obligations of Franchise Connection, enforceable against it in accordance
with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
(f) No consent, approval, authorization or order of any court, or
other agency or authority or any other person whatever is required for
Franchise Connection to execute, deliver or consummate this Agreement.
(g) Capitalization. As of the execution date of this Agreement, the
authorized capital stock of Franchise Connection consists of 1,0000,000
shares of common stock, $.001 par value, all of which (the Control Shares)
have been issued and are outstanding. No shares of preferred stock are
authorized. No other shares of capital stock are authorized or have been
issued. All of the issued and outstanding shares of capital stock of
Franchise Connection have been duly authorized, validly issued, and are
fully paid and nonassessable. Franchise Connection is not a party to or
bound by nor does it or any Shareholder have any knowledge of, any
agreement, instrument, arrangement, contract, obligation, commitment or
understanding of any character, whether written or oral, express or
implied, whereby Franchise Connection is bound to issue shares of its
capital stock or any instrument or right convertible into or exchangeable
for its capital stock, nor relating to the sale, assignment, encumbrance,
conveyance, transfer or delivery of any capital stock of Franchise
Connection of any type or class. Franchise Connection shall provide to
Purchaser a list of all registered holders of Franchise Connection's
capital stock, the number of shares held by each and the number of each
certificate held, duly certified by the Secretary of Franchise Connection.
(h) Outstanding Options, Warrants or Other Rights. Franchise
Connection has no outstanding warrants, options or similar rights, whether
issued pursuant to a benefit or other plan or not, whereby any person may
subscribe for or purchase shares of its capital stock, nor are there any
other securities outstanding which are convertible into or exchangeable for
its capital stock.
(i) Stock or Other Benefit Plans. As of the date of this Agreement and
the Closing, Franchise Connection has not and will not have authorized or
have in effect any stock option plan, employee stock option or stock
purchase plan, dividend reinvestment plan or similar plan pursuant to which
any person is entitled to acquire capital stock of Franchise Connection or
securities convertible into or exchangeable for capital stock of Franchise
Connection.
(j) Pension and Similar Plans. As of the date of this Agreement and
the Closing, Franchise Connection has not and will not have authorized or
have in effect any bonus, deferred compensation, pension, profit-sharing,
retirement or similar plan covering its directors, officers, employees or
other persons whatsoever.
(k) Financial Statements. Prior to the Closing, Franchise Connection
shall have furnished to Purchaser copies of Franchise Connection's
unaudited Balance Sheets, Statements of Income and Expense, Statements of
Cash Flows, Statement of Changes in Financial Position and Statement of
Shareholders' Equity for the year ended December 31, 1995, and the same
financial statements, unaudited, as of September 30, 1996 (collectively,
the "Financial Statements") reflecting the operations and financial
condition of Franchise Connection and all subsidiaries. All such statements
shall fairly present the assets, liabilities and financial condition of
Franchise Connection and all subsidiaries as of the respective dates
thereof, and shall have been prepared in conformity with generally accepted
accounting principles, consistently applied during the periods covered. For
purposes of this Agreement, such statements shall include all notes and
schedules thereto. In addition, Franchise Connection shall provide
Purchaser with such of Franchise Connection's financial information and
books and records as Purchaser shall request.
Page 5
(l) No Undisclosed Material Liabilities. Franchise Connection has not
incurred any liabilities or obligations whatever (whether direct, indirect,
accrued, contingent, absolute, secured or unsecured or otherwise),
including liabilities as guarantor or surety or otherwise for the
obligations of others and tax liabilities due or to become due, except as
described in the Financial Statements or otherwise described in writing to
Purchaser.
(m) Material Transactions and Adverse Changes. Except as has been
disclosed in writing to Purchaser or reflected in the Financial Statements,
since December 31, 1995, Franchise Connection has not and as of the Closing
Date will not have (i) suffered any materially adverse change in its
assets, liabilities or financial condition taken as a whole; (ii) suffered
any damage or destruction in the nature of a casualty loss to any one or
more of its properties, whether or not covered by insurance, which singly
or in the aggregate are materially adverse to the properties or business of
Franchise Connection; (iii) purchased or redeemed any of its capital stock,
or authorized or paid any stock dividends, or authorized or paid any cash
dividends or made any distribution of capital or earnings, or authorized or
made any split, combination (reverse split) or other reclassification of or
affecting any of its capital stock; (iv) made any change in any method of
accounting or accounting practice, including the revaluation of any asset;
(v) increased or made any commitment to increase the salary, fees or other
forms of compensation of any employee, officer or director; or (vi) agreed
in writing or otherwise to take any action prohibited described in this
Section.
(n) Contracts. Franchise Connection has provided or will provide to
Purchaser prior to Closing a copy of all contracts to which Franchise
Connection is a party, all contracts entered into by or in the name of
"Business Connection, Inc." and all contracts entered into by or in the
name of Brilliant Marketing, Inc.
(o) Patents, Trademarks, etc. Franchise Connection and its
subsidiaries do not hold any letters patent, have made any patent
applications, do not hold any registered trademarks, servicemarks,
copyrights or licenses, nor registered any trade names, except as disclosed
in writing to Purchaser.
(p) Litigation. There are no claims, actions, suits, proceedings or
investigations pending or threatened against or affecting Franchise
Connection or any subsidiary thereof or any of its or their properties in
any court or by or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, or arbitration tribunal or other
forum which, if determined adversely to Franchise Connection, would
materially affect its business, prospects, properties or financial
condition or its or their right to conduct its business as being conducted
or expected to be conducted, except as disclosed in writing to ISO BLOCK.
There are no judgments, decrees, injunctions, writs, orders or other
mandates outstanding to which Franchise Connection or any subsidiary is a
party or by which it is bound or affected, except as disclosed in writing
to ISO BLOCK.
(q) Affiliate Relationships. Franchise Connection and subsidiaries are
not indebted to any officer, director, employee, shareholder or agent
thereof as of the date of this Agreement, and no money or property is owed
to Franchise Connection or any subsidiary thereof by any officer, director,
employee or shareholder thereof, except as disclosed in writing to
Purchaser.
(r) Salaries. Franchise Connection has delivered to Purchaser a true
and correct description of the annual rate of compensation (including
benefits) of all employees of Franchise Connection and every subsidiary.
There is no obligation, commitment or past repetitive historical practice
of Franchise Connection or any subsidiary to pay bonuses, royalties or
other similar compensation designed to reward past performance, create
incentive for future performance or otherwise to any director or officer or
other employee of Franchise Connection or a subsidiary except as disclosed
in writing to Purchaser.
(s) Documents Genuine. All originals and/or copies of Franchise
Connection's and each subsidiary's articles of incorporation and bylaws,
each amended to date, and all minutes of meetings and written consents in
lieu of meetings of shareholders, directors and committees of directors of
Franchise Connection and each subsidiary, financial data, and any and all
other documents, material, data, files, or information which have been or
will be furnished to Purchaser, are and will be true, complete, correct and
unmodified originals and/or copies of such documents, information, data,
files or material.
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(t) Restrictive Covenants. Prior to the consummation of the Exchange,
Franchise Connection and subsidiaries shall conduct its and their business
in the ordinary and usual course without unusual commitments and in
compliance with all applicable laws, rules, and regulations. Furthermore,
Franchise Connection will not, without the prior written consent of
Purchaser, (i) make any changes in its capital structure, (ii) incur any
liability or obligation other than current liabilities incurred in the
ordinary and usual course of business, (iii) incur any indebtedness for
borrowed money, (iv) make any loans or advances other than advances to
employees in the ordinary and usual course of business, (v) declare or pay
any dividend or make any other distribution with respect to its capital
stock, (vi) issue, sell, or deliver or purchase or otherwise acquire for
value any of its stock or other securities, (vii) mortgage, pledge, or
subject to encumbrance any of its assets or properties, (viii) sell or
transfer any of its assets or properties except in the ordinary and usual
course of business, (ix) make any investment of a capital nature, (x) adopt
or amend in any material respect any collective bargaining agreement or
employee benefit plan, or (xi) enter into any contract, agreement, or other
commitment which is material to the business, assets, properties, or
financial position of Franchise Connection.
(u) Law Violations. Franchise Connection has never been convicted in
any criminal proceedings or named subject of a pending criminal proceeding
(excluding minor offenses), nor has it been subject of any order, judgment,
or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently enjoining it from, or otherwise
limiting the engagement in any type of business practice; or engaging in
any activity in connection with the purchase or sale of any security or
commodity in connection with any violation of federal or state securities
laws.
(v) Access to Information. Franchise Connection agrees to make
available access to any and all corporate and financial files and records
whatever of Franchise Connection and subsidiaries for inspection prior to
Closing.
(w) Disclaimer of Further Warranties. Except as expressly set forth in
this Agreement and the schedules and exhibits hereto, Purchaser has made
not any representation or warranty to Franchise Connection in connection
with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The Shareholders
each and severally represent and warrant to Purchaser that the following are
true and correct as of the date hereof and will be true and correct through the
Closing Date as if made on that date:
(a) I have received and carefully reviewed in its entirety information
otherwise provided to me in writing by Purchaser and any other information
from books and records of the Purchaser and have relied on the information
contained therein. I understand that additional information concerning
Purchaser has been made available for inspection by me and my attorney,
accountant or other adviser(s). I and my adviser(s) have had a reasonable
opportunity to ask questions of and receive answers from Purchaser, or a
person or persons acting on its behalf, concerning the Exchange, and all
such questions have been answered to my or their full satisfaction.
(b) I recognize that an investment in the Exchange Shares is
speculative and involves a high degree of risk and that there currently is
no trading market for the Exchange Shares, or Conversion Shares and no
assurance that any such market will develop.
(c) The Shareholders own or record and beneficially the Control Shares
in the respective numbers shown on the signature page to this Agreement,
and the address of each Shareholder has been provided in writing to ISO
BLOCK; the Control Shares are free and clear of all liens, claims, rights
or other encumbrances whatever and of all options and similar rights of
third persons; no person has or will have any right in and to such shares
under except as are created by force of law under any marital, community
property or similar rights; and no person owns or will own any right of
first refusal, pre-emptive right, option or similar right to acquire any of
the Control Shares, in either case except as disclosed to Purchaser in
writing prior to the Closing.
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(d) Each Shareholder has the full right, power and legal capacity to
enter into this Agreement and sell and deliver the Control Shares to
Purchaser on the terms herein. As to each Shareholder which is a
corporation or other entity, all requisite corporate or equivalent action
has been taken necessary to approve the execution and performance of this
Agreement.
(e) Each Shareholder represents and warrants that he, she or it is not
now insolvent and will not be insolvent after selling and delivering the
Control Shares to Purchaser on the terms of this Agreement, and each
Shareholder is receiving new consideration at least equal to the full and
fair value of the Control Shares being sold.
(f) Each Shareholder acknowledges and agrees that he, she or it or
his, her or its representatives have been furnished with substantially the
same kind of information regarding Purchaser and the Exchange Shares and
Purchaser's business, assets, results of operations, and financial
condition as would be contained in a registration statement and included
prospectus prepared in connection with a public offering of the Exchange
Shares under the Act.
(g) The Exchange Shares are being acquired solely for the
Shareholder's own account for investment and not for the account of any
other person and not for distribution, assignment or resale to others, or
for pledge or hypothecation, and no other person has or is intended to have
a direct or indirect ownership or contractual interest in the Exchange
Shares except as may exist or arise under marital property laws or
otherwise by operation of law.
(h) The Shareholder, alone or together with the Shareholders'
adviser(s), possesses such knowledge and experience in financial, tax and
business matters as to enable Shareholder to utilize the information made
available by Purchaser, in connection with the Exchange and issuance of the
Exchange Shares, to evaluate the merits and risks of exchanging the Control
Shares for the Exchange Shares and to make an informed investment decision
with respect thereto.
(i) Each Shareholder realizes that he, she or it will not be able to
sell or dispose of the Exchange Shares unless they have first been
registered under the Act, they are sold in compliance with Rule 144 under
the Act or they are sold or otherwise disposed of in reliance upon another
exemption from registration under the Act. Each Shareholder further
understands that every certificate issued by Purchaser evidencing Exchange
Shares will bear a legend restricting transfer as provided in this
Agreement.
(j) All information which each Shareholder has provided or will
provide to Purchaser is or will be correct and complete as of the date
furnished to Purchaser, and, if there should be any material change in such
information prior to the Closing as to a Shareholder, that Shareholder will
immediately provide Purchaser with such information.
(k) No Shareholder was solicited by Purchaser by any form of general
solicitation or general advertising, including but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio,
or made available over telephone lines by any information service, or (ii)
any seminar or meeting whose attendees had been invited by any means of
general solicitation or general advertising.
(l) Except as expressly set forth in this Agreement and the schedules
and exhibits hereto, Purchaser has not made any representation or warranty
to any Shareholder in connection with this Agreement, and Purchaser has
made no communication to any Shareholder that constitutes tax or investment
advice.
(m) To the best of the knowledge of each Shareholder, all of the
representations and warranties of Franchise Connection set forth in this
Agreement are accurate and true.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Unless specifically stated
otherwise in this Agreement, Purchaser represents and warrants to the
Shareholders that the following are true and correct as of the date hereof and
will be true and correct through the Closing Date as if made on that date.
Page 8
(a) Exchange Shares Duly Authorized. The Exchange Shares will be, when
issued, validly issued, fully paid and nonassessable, the sale, issuance
and delivery of the Exchange Shares on the terms herein contemplated has
been authorized by all requisite corporate action of Purchaser, and the
Exchange Shares will not be be subject to any preemptive rights, options or
similar rights on the part of any shareholder or creditor of Purchaser or
any other person.
(b) Restricted Securities; Etc. Purchaser acknowledges that the
Control Shares have not been registered pursuant to the Act or any
applicable state securities laws, that the Control Shares will be
characterized as "restricted securities" under the Act, and that under such
laws and applicable regulations the Control Shares cannot be sold or
otherwise disposed of without registration under the Act or an exemption
therefrom. Purchaser acknowledges that all certificates issued to it
respecting the Control Shares will bear an appropriate investment legend.
Purchaser is acquiring the Control Shares for its own account for
investment and not with a view to, or for sale or other disposition in
connection with, any distribution of all or any part thereof, except (i) in
an offering covered by a registration statement filed with the Securities
and Exchange Commission under the Act covering the Control Shares, or (ii)
pursuant to applicable exemption under the Securities Act.
(c) Organization and Good Standing. Purchaser is and on the Closing
Date will be duly organized, validly existing and in good standing under
the laws of the State of Colorado, with all requisite power and authority
to carry on the business in which it is engaged and is duly qualified and
licensed to do business and is in good standing in all jurisdictions where
the nature of its business makes such qualification necessary.
(d) Capitalization. As provided in its Articles of Incorporation, the
authorized capital stock of Purchaser consists of 60,000,000 shares; of
which 50,000,000 shares without par value are designated as common stock,
_________ shares of which have been issued and are outstanding; and of
which 10,000,000 shares without par value are designated as preferred
stock, _________ of which have been issued or are outstanding. The terms,
rights, preferences and privileges of the preferred stock are described in
Purchaser's articles of incorporation, as amended and restated to date,
which have been furnished to the other parties.
(e) Outstanding Options, Warrants or Other Rights. Except as described
to Franchise Connection in writing, Purchaser has no outstanding warrants,
options or similar rights to subscribe for or purchase shares of its
capital stock (nor any securities convertible into or exchangeable for its
capital stock), nor are there any other securities outstanding convertible
into or exchangeable for its common stock, and there are no contracts or
commitments pursuant to which any person may acquire or Purchaser may
become bound to issue any shares of its capital stock.
(f) Litigation. There are no claims, actions, suits, proceedings or
investigations pending or threatened against or affecting Purchaser in any
court or by or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or other instrumentality,
domestic or foreign, or arbitration tribunal or other forum, except as
disclosed to Franchise Connection in writing. There are no judgments,
decrees, injunctions, writs, orders or other mandates outstanding to which
Purchaser is a party or by which it is bound or affected.
(g) Financial Statements. Purchaser will provide to Franchise
Connection and to any requesting Shareholder Purchaser's audited balance
sheet and the other financial statements of Purchaser for such periods as
the Shareholders reasonably request. All such statements shall fairly
present the assets, liabilities and financial condition of Purchaser as of
the respective dates thereof, and all shall have been prepared in
conformity with generally accepted accounting principles, consistently
applied during the periods covered. For purposes of this Agreement, such
statements shall include all notes thereto.
(h) No Undisclosed Material Liabilities. Purchaser has not incurred
any liabilities or obligations whatever (whether direct, indirect, accrued,
contingent, absolute, secured or unsecured or otherwise), which singly or
in the aggregate are material to its assets, operations or financial
condition, except as reflected in Purchaser's financial statements or
disclosed in writing to Franchise Connection.
Page 9
(i) Taxes. All income, excise, unemployment, social security,
occupational, franchise and other taxes, duties, assessments or charges
levied, assessed or imposed upon Purchaser by the United States or by any
state or municipal government or subdivision or instrumentality thereof
have been duly paid or adequately provided for, and all required tax
returns or reports concerning any such items have been duly filed or will
be so filed.
(j) Authorization and Validity. The execution, delivery and
performance by Purchaser of this Agreement and any other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite corporate
action of Purchaser. This Agreement and any other agreement contemplated
hereby have been or will be as of the Closing Date duly executed and
delivered by Purchaser and constitutes and will constitute legal, valid and
binding obligations of Purchaser, enforceable against it in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The approval of Purchaser's
shareholders is not necessary for Purchaser's execution and performance of
this Agreement.
(k) Consents; Approvals; Conflict. No consent, approval, authorization
or order of any court or governmental agency or other body is required for
Purchaser to execute and perform its obligations under this Agreement.
Neither the execution, delivery, consummation or performance of this
Agreement shall conflict with, constitute a breach of Purchaser's articles
of incorporation and bylaws, as amended to date, or any note, mortgage,
indenture, deed of trust or other agreement of instrument to which
Purchaser is a party or by which it is bound nor, to the best of
Purchaser's knowledge and belief, any existing law, rule, regulation, or
any decree of any court or governmental department, agency, commission,
board or bureau, domestic or foreign, having jurisdiction over Purchaser.
(l) Disclaimer of Further Warranties. Except as expressly set forth in
this Agreement and the schedules and exhibits hereto, neither Franchise
Connection nor any Shareholder has made any representation or warranty to
Purchaser in connection with this Agreement.
(m) Miscellaneous. The execution and performance of this Agreement and
compliance with the provisions hereof will not violate, with or without
giving notice and/or the passage of time, any provisions of law applicable
to Purchaser. All statements made by Purchaser in this Agreement, or in any
EXHIBIT or SCHEDULE hereto, or in any document or certificate executed and
delivered herewith, are true, correct and complete as of the date of this
Agreement and will be so as of the Closing Date. All copies of documents
provided and to be provided by Purchaser are and shall be true and correct
copies of such documents.
6. CONDITIONS TO OBLIGATIONS OF THE PARTIES; DELIVERIES. All obligations of
the parties under this Agreement are subject to the fulfillment, prior to the
Closing, of all conditions precedent and to performance of all covenants and
agreements and completion of all deliveries contemplated herein, unless
specifically waived in writing by the party entitled to performance or to demand
fulfillment of the covenant or delivery of the documents. Purchaser's
obligations to purchase and pay for the Control Shares are further subject to
the representations and warranties of Franchise Connection and Shareholders
being true and correct at the Closing, and the obligation of the Shareholders to
sell, transfer, assign, convey and deliver the Control Shares is further subject
to the representations and warranties of Purchaser being true and correct at the
Closing.
6.01 Documents to be Delivered to Purchaser. At the Closing, the following
documents shall be delivered to Purchaser by Franchise Connection or the
Shareholders, as the case may be, which documents shall be satisfactory in form
and content to Purchaser's counsel:
(a) Certificates executed by chief financial or accounting officer of
Franchise Connection, dated the Closing Date, certifying that the
representations and warranties of Franchise Connection, contained in this
Agreement and the information set forth in all schedules and exhibits of
Franchise Connection hereto are then true and correct and that Franchise
Connection has complied with all agreements and conditions required by this
Agreement and all related agreements to be performed or complied with by
Franchise Connection; and a legal opinion as to such matters as Purchaser
shall request.
Page 10
(b) A shareholder list, reflecting the names, addresses and
shareholdings of the Shareholders and an incumbency certificate naming the
officers and directors of Franchise Connection and specifying the offices
held by each, both duly certified by the Secretary of Franchise Connection.
(c) A copy of the directors' resolution or the minutes of the meeting
of the directors of Franchise Connection approving the execution and
performance of this Agreement.
(d) All schedules, exhibits and other information called for in this
Agreement, properly completed.
(e) Upon receiving delivery of the original certificates evidencing
the Control Shares, Franchise Connection shall cancel such certificates and
issue and deliver to Purchaser one certificate registered in the name of
Purchaser, one evidencing all of the Control Shares purchased hereunder
through such date.
6.02 Documents to be Delivered by the Shareholders. At the Closing, the
Shareholders shall deliver to Franchise Connection, for cancellation, all of the
certificates evidencing the Control Shares, each certificate endorsed by the
Shareholder transferring it, or accompanied by a stock power signed by the
Shareholder transferring it, duly notarized or medallion guaranteed.
6.03 Documents to be Delivered to Franchise Connection and the
Shareholders. At the Closing, the following documents shall be delivered to
Franchise Connection and the Shareholders by Purchaser, which documents shall be
satisfactory in form and content to Franchise Connection's counsel:
(a) To the Shareholders, certificates evidencing the Exchange Shares
in the proper denominations.
(b) To Franchise Connection, a certificate executed by Purchaser dated
the Closing Date, certifying that the representations and warranties of
Purchaser contained in this Agreement are then true and correct and that
Purchaser has complied with all agreements and conditions required by this
Agreement to be performed or complied with by it.
(c) To Franchise Connection, a copy of the directors' resolution or
the minutes of the meeting of the directors of Purchaser approving the
execution and performance of this Agreement.
(d) To Franchise Connection, all schedules and exhibits called for in
this Agreement.
6.04 Conditions Precedent. The obligations of the parties under this
Agreement are subject to the satisfaction of the following conditions (in
addition to other conditions and terms of this Agreement), unless waived in
writing, on or prior to the Closing, in addition to any other conditions
precedent set forth in this Agreement:
(a) Representations and Warranties Correct. The representations and
warranties of every party contained in this Agreement shall be in all
material respects true and correct on and as of the Closing Date as if made
on such date.
(b) Compliance. Purchaser, Franchise Connection and the Shareholders
each shall have performed all covenants and agreements, satisfied all
conditions and complied with all other terms and provisions of this
Agreement to be respectively performed, satisfied or complied with by it as
of the Closing Date.
(c) No Errors or Misrepresentations. Purchaser shall not have
discovered any material error, misstatement or omission in or failure of
any representation or warranty made by Franchise Connection or any
Shareholder, and Franchise Connection shall not have discovered any
material error, misstatement or omission in or failure of any
representation or warranty made by Purchaser.
(d) Due Diligence Examination. Purchaser shall have completed a due
diligence examination of Franchise Connection reasonably satisfactory to
Purchaser covering all books, records, contracts and other documents and
all financial affairs of Franchise Connection. Franchise Connection shall
have completed a due diligence examination of Purchaser reasonably
satisfactory to Franchise Connection covering all books, records, contracts
and other documents and all financial affairs.
Page 11
(e) No Material Change. Between the date of this Agreement and the
Closing Date, Franchise Connection shall not have incurred any liabilities
or obligations, direct or contingent, or entered into any material
transactions of the kind contemplated in Section 3(m) except those which
are in the usual and ordinary course of business or previously agreed to by
Purchaser, shall have no material undisclosed liabilities as contemplated
in Section 3(l) hereof, and shall not have done any act or engaged in any
course of conduct prohibited in Section 3(t) without the necessary consent
of the other party.
(f) Legal Matters. All legal matters in connection with this Agreement
and the consummation of all transactions herein contemplated, and all
documents and instruments delivered in connection herewith shall be
reasonably satisfactory in form to each party.
(g) No injunction or restraining order of any federal or state court
is in effect which prevents the purchase of the Control Shares or issuance
and delivery of the Exchange Shares, and no lawsuit or other proceeding has
been filed by any person by the Closing Date contesting or attempting to
enjoin either action, and no action is taken and no law is passed after the
date of this Agreement which prevents the purchase of the Control Shares or
issuance and delivery of the Exchange Shares.
7. ADDITIONAL COVENANTS OF THE PARTIES. The parties agree that, prior to
the Closing:
(a) Effectuation of this Agreement. The parties hereto each will use
their best efforts to cause this Agreement and all related agreements to
become effective, and all transactions herein and therein contemplated to
be consummated, in accordance with its and their terms, to obtain all
required consents, waivers and authorizations of governmental entities and
other third parties, to make all filings and give all notices to those
regulatory authorities or other third parties which may be necessary or
reasonably required in order to effect the transactions contemplated in
this Agreement, and to comply with all federal, local and state laws, rules
and regulations as may be applicable to the contemplated transactions.
(b) Restriction on Action. The parties each agree that he, she or it
will not do any thing or act prohibited by this Agreement or any related
agreement, or fail to do any thing or act which he or it has undertaken to
do in this Agreement or any related agreement.
(c) Stand-Still Agreement. Franchise Connection and Purchaser each
agree not to solicit from any third party an offer or expression of
interest in or with respect to any acquisition, combination or similar
transaction involving the two parties and further agree that each will
promptly inform the other of the existence of any unsolicited such offer or
expression of interest.
(d) As promptly as possible after the Closing, Purchaser shall take
the necessary steps to change its fiscal year end to December 31st.
8. TERMINATION OF THIS AGREEMENT.
8.01 Grounds for Termination. This Agreement shall terminate:
(a) By mutual written consent of Purchaser and Franchise Connection;
(b) By Franchise Connection or Purchaser, if:
(i) all the conditions precedent to its respective obligations
hereunder have not been satisfied or waived prior to the Closing Date,
as it may be accelerated or extended, or if any Shareholders fail or
refuse to execute this Agreement and deliver his, her or its the
Control Shares to Purchaser at Closing as called for herein;
Page 12
(ii) any party shall have defaulted or refused to perform in any
material respect under this Agreement, or if Purchaser or Franchise
Connection should have reasonable cause to believe there has been a
material representation concerning, or failure or breach of, any
representation or warranty by the other party, or if it appears that
either Franchise Connection or Purchaser has committed any unlawful
acts affecting the other party;
(iii) the transactions contemplated in this Agreement and related
agreements have not been consumated on the Closing Date, as it may be
accelerated or extended, OR
(iv) either Purchaser or Franchise Connection shall reasonably
determine that the transactions contemplated in this Agreement have
become inadvisable by reason of the institution or threat by any
federal, state or municipal governmental authorities or by other
person whatever of a formal investigation or of any action, suit or
proceeding of any kind against either or both parties which in one
party's reasonable belief is material in light of the other party's
business, prospects, properties or financial condition;
8.02 Manner of Termination. Any termination of this Agreement shall be made
in accordance with the above listed grounds and, if terminated by a corporation,
shall be evidenced by written resolution of the terminating party's board of
directors. Written notice of termination shall be given to the other party as
required in this Agreement as promptly as is practical under the circumstances.
Upon a party's receipt of such termination notice, this Agreement shall
terminate and the transactions herein contemplated shall be abandoned without
further action by the parties.
8.03 Survival of Confidentiality Provisions. Upon termination of this
Agreement for any reason, (i) the covenants of the parties concerning the
confidentiality and proprietary nature of all docuemnts and other information
furnished hereunder shall remain in force except as to information which has
otherwise become public knowledge, and (ii) each party shall promptly return all
documents received from the other party in connection with this Agreement. This
Section constitutes a mutual covenant of the parties, and either may judicially
enforce it.
9. NECESSARY INFORMATION. Franchise Connection shall furnish to Purchaser
promptly upon its request all information regarding Franchise Connection and its
business, assets, properties, and financial condition which, in the judgment of
Purchaser, is necessary to enable Purchaser to conduct its due diligence
examination relating to the proposed purchase of the Control Shares. Each of the
parties hereto shall furnish to the others all information concerning such party
required for inclusion in any application or statement to be filed or made by
the other party with or to any governmental agency or other third party in
connection with the proposed sale of the Control Shares.
10. MISCELLANEOUS PROVISIONS. The parties further agree that:
(a) Amendments. This Agreement may be amended, modified, or
supplemented only by instrument in writing executed by all parties.
(b) Assignment. Neither this Agreement nor any right created hereby or
in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto without the
written consent of the parties not seeking assignment, except that
Purchaser may direct that the Control Shares be transferred to a wholly
owned subsidiary corporation of Purchaser. No such assignment shall relieve
the assignor of any obligations created under this Agreement.
(c) Parties in Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Neither
this Agreement nor any other agreement contemplated hereby shall be deemed
to confer upon any person not a party hereto or thereto any rights or
remedies hereunder or thereunder.
(d) Entire Agreement. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the parties regarding the subject
matter hereof, and supersede all prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
Page 13
(e) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Further, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid and
enforceable.
(f) Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of all parties contained herein
shall survive the Closing, and all statements contained in any certificate,
exhibit, schedule or other instrument delivered by or on behalf of
Purchaser or Franchise Connection, as the case may be, and, notwithstanding
any provision in this Agreement to the contrary, shall survive the Closing.
(g) Interpretation. This Agreement shall be governed by and construed
under the laws of the State of Colorado. If any action is brought to
enforce or interpret any term of this Agreement, venue shall be in the
District Court of Arapahoe County, State of Colorado. This Agreement shall
be interpreted as if all parties participated equally in its drafting and
preparation.
(h) Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
(i) Gender and Number, etc. Whenever the context requires, the gender
of all words used herein shall include the masculine, feminine and neuter,
and the number of all words shall include the singular and plural. Use of
the words "herein", "hereof", "hereto" and the like in this Agreement shall
be construed as references to this Agreement as a whole and not to any
particular Article, Section or provision in this Agreement, unless
otherwise noted.
(j) Confidentiality, etc. Each party shall keep this Agreement and its
terms confidential, and shall make no press release or public disclosure,
either written or oral, regarding the transactions contemplated by this
Agreement without the prior knowledge and consent of the other parties
hereto; provided that the foregoing shall not prohibit any disclosure (i)
by press release, Form 8-K filing or otherwise that is required by federal
securities laws, and (ii) to attorneys, accountants, investment bankers or
other agents of the parties assisting the parties in connection with the
transactions contemplated by this Agreement. In the event that the
transactions contemplated hereby are not consummated for any reason
whatsoever, the parties hereto agree not to disclose or use any
confidential information they may have concerning the affairs of the other
parties, except for information that is required by law to be disclosed.
(k) Notice. Any notice or communication hereunder or in any agreement
entered into in connection with the transactions contemplated hereby must
be in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, by telefax transmission or by
delivery by use of a messenger which regularly retains its delivery
receipts. Such notice shall be deemed received on the date on which it is
delivered to the addressee. For purposes of notice, the addresses of the
parties shall be, if to a Shareholder, sent to Franchise Connection for
forwarding, and:
If to ISO BLOCK: If to Franchise Connection:
8037 South Datura Street 4155 East Jewell Avenue, Suite 1001
Littleton, Colorado 80120 Denver, Colorado 80222
Attn: Egin Bresnig, CEO Attn: Johnny M. Wilson, CEO
(l) No Finders. Each party represents and warrants to the others and
agrees that it has not employed or engaged, and will not employ or engage,
any person as a finder or broker in connection with the transactions
contemplated herein, and that no person is entitled to compensation as a
finder or broker. Each party hereby indemnifies the other parties and holds
the other parties harmless from and against any claims of any third persons
claiming to have acted as a finder or broker in connection with the
transactions herein contemplated, and such indemnity shall include all
expenses, costs and damages arising from or related to such claims,
including reasonable attorneys fees.
Page 14
(m) Expenses. Except as may otherwise be expressly provided herein,
each party shall pay its costs and expenses incurred in connection with the
Exchange and any other foregoing proposed transactions. The Purchaser will
pay for any audit of Franchise Connection required, but such amount shall
be deducted from the $300,000 required to be made available by ISO BLOCK.
(n) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Execution and
delivery of this Agreement by exchange of facsimile copies bearing
facsimile signature of a party shall constitute a valid and binding
execution and delivery of this Agreement by such party. Such facsimile
copies shall constitute enforceable original documents.
(o) Prevailing Party Clause. In the event of any litigation or
proceeding arising as a result of the breach of this Agreement or the
failure to perform hereunder, or failure or untruthfulness of any
representation or warranty herein, the party or parties prevailing in such
litigation or proceeding shall be entitled to collect the costs and
expenses of bringing or defending such litigation or proceeding, including
reasonable attorneys' fees, from the party or parties not prevailing.
(p) Specific Performance. All parties agree that his, her or its legal
remedy for damages based upon the breach by them of their respective
obligations under this Agreement will be inadequate to the other parties
and that, in addition to any other remedies a party may have, the aggrieved
party shall be entitled to obtain specific performance of this Agreement
and temporary and permanent injunctive relief without the necessity of
proving actual damages.
IN WITNESS WHEREOF, all parties have executed this Agreement, and Franchise
Connection and ISO BLOCK have initialled every preceding page hereof, as of the
dates respectively indicated below.
ISO BLOCK PRODUCTS USA, INC. ("Purchaser")
By: /s/ Egin Bresnig
- --------------------
Egin Bresnig, CEO
DATED: 12-27-96
FRANCHISE CONNECTION, INC. ("Acquired Company")
By: /s/ Johnny M. Wilson
- ------------------------
Johnny M. Wilson, CEO
DATED: 12-27-96
SHAREHOLDERS' SIGNATURE PAGE
By: /s/ Johhny M. Wilson By: /s/ Robert Boulerice
- ------------------------ ------------------------
Johnny M. Wilson - 725,000 Shares Robert Boulerice - 250,000 Shares
By: /s/ Robert Lyman By: /s/ Lisa Sheffield
- -------------------- ----------------------
Robert Lyman - 5,000 Lisa Sheffield - 10,000
By: /s/ Donald E. Israel / Cynthia J. Israel
- --------------------------------------------
Donald E. Israel and Cynthia J. Israel - 10,000
Page 15