SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest event Reported): May 22, 2001
CARSUNLIMITED.COM, INC.
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(Exact name of registrant as specified in its charter)
Nevada 000-28195 11-3535204
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation ID Number)
or organization)
PO Box 446, Seacliff, New York 11579
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(Address of principal executive offices)
(516)671-5551
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(Registrant's Telephone Number)
ITEM 5. OTHER EVENTS.
On May 22, 2002, Anthony Genova Jr., the President of Carsunlimited.com, Inc.
(the "Company"), Lawrence Genova, a director of the Company, Joseph Marks, a
Director of the Company and the Company's VP of Internet Marketing Development,
William Quinn, a director of the Company, the Company's Treasurer and
Secretary and Michael Makropoulos, a director of the Company (collectively, the
"Sellers") entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") with Douglas Shih, Loyalty United (US), Inc. and CH Ventures, Inc.
(collectively, the "Buyers") pursuant to which the Sellers will sell to the
Buyers, in the aggregate, 21,000,000 shares of the Company's common stock for
$273,000 (the "Purchase Price"). The Purchase Price, however, will be reduced
by the amount of the Company's outstanding liabilities as of the closing (the
"Closing") of the transactions contemplated by the Stock Purchase Agreement.
The Closing is subject to various conditions, including, (i) the sale of
the Company's operating assets to Anthony Genova, Jr., (ii) the issuance of
1,000,000 shares of the Company's Common Stock to certain company creditors,
(iii) the satisfactory completion by the Buyers of due diligence regarding the
Company and (iv) other customary closing conditions. Neither the Seller or the
Company can give any assurances that the transaction will be consummated.
At the Closing, the existing officers and directors of the Company will
resign and persons designated by the Buyers will be appointed as officers and
directors of the Company.
The Buyers have advised the Sellers of the Buyers intention to identify one
or more qualified target entities in order to cause the Company to acquire those
qualified target entities or otherwise effect a business combination with those
entities after the Closing. The Buyers have agreed that during the period from
the Closing until the consummation of any such business combination, the Buyers
will not permit the Company to effect a reverse split of the Company's stock
unless the Buyers first obtain the written consent of Anthony Genova, Jr. In
addition, the Buyers and the Company agreed in the Stock Purchase Agreement that
the number of common shares issuable in connection with any such Business
Combination will not exceed 74,780,000 shares unless the Company first obtains
the written consent of Anthony Genova, Jr.
The Buyers also agreed in the Stock Purchase Agreement that, without the
prior written consent of Anthony Genova, Jr., the Buyers shall not permit the
Company to effect a business combination with an entity or entities unless, at
the consummation of the business combination, the target entities have had, on a
combined basis, revenues of at least $2,500,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2.1 Stock Purchase Agreement, dated May 22, 2002, among Anthony Genova,
Lawrence Genova, Joseph Marks, William Quinn, Michael Makropoulos,
Carsunlimited.Com, Inc., Douglas Shih, Loyalty United (US), Inc., and CH
Ventures, Inc.
[Signature page follows]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 23, 2002
CARSUNLIMITED.COM, INC.
By: /s/ Anthony Genova
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Anthony Genova, President
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of May 22, 2002 (this "Agreement"), by
and among the persons identified on Schedule I to this Agreement as the buyers
(each a "Buyer" and collectively, the "Buyers"), the persons identified on
Schedule I to this Agreement as the sellers (each a "Seller" and collectively,
the "Sellers") and CARSUNLIMITED.COM, INC., a Nevada corporation (the
"Company"). The Buyers, the Sellers and the Company are referred to
collectively herein as the "Parties".
BACKGROUND
The Sellers own 21,000,000 shares (the "Shares") of the issued and
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outstanding Common Stock, $0.001 par value per share ("Common Stock"), of the
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Company. The Buyers desire to purchase the Shares from the Sellers, and the
Sellers desire to sell the Shares to the Buyers in return for cash on the terms
set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties, intending to be legally bound, hereby
agree as follows.
1. DEFINITIONS. Capitalized terms used, but not otherwise defined, herein
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have the meanings ascribed to such terms in Appendix A hereto.
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2. PURCHASE AND SALE OF SHARES.
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(a) Basic Transaction. On and subject to the terms and conditions of this
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Agreement, the Buyers shall purchase from the Sellers, and the Sellers shall
sell to the Buyers, the Shares in the amounts set forth opposite their
respective names on Schedule I hereto, for the consideration specified below in
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this 2.
(b) Advance to Company; Escrowed Amounts. (i) Within 3 business days
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following the receipt of a written payment request from the Sellers, the Buyers
shall pay directly to certain Company trade creditors specified by the Sellers
up to $5,000 (the "Advance") to cover a portion of certain transfer agency fees,
fees incurred in causing the Company to qualify to do business in New York, and
fees incurred in causing the Company to file its tax return for the fiscal year
ended December 31, 2001. This payment by the Sellers shall be treated as a loan
to the Company and the Sellers that is due and payable upon demand of the Buyers
unless the Closing occurs, in which case the loan shall be forgiven by the
Buyers as of the Closing and the Advance shall then constitute a portion of the
Purchase Price.
(ii) On or before the 5th business day following the date that the
Sellers provide the Buyers with evidence that is reasonably satisfactory to the
Buyers, that (A) the Company's transfer agent is willing to take all actions
necessary of it to consummate the transactions contemplated hereby, (B) the
Company is in good standing and qualified to do business in New York and has
paid all franchise and other taxes owed to New York State; (C) the Company has
filed its tax return for fiscal year 2002 and that it has paid any taxes due
thereunder; and (D) the remaining balance of the Advance is sufficient to cover
the entire cost of the contemplated mailing of a Schedule 14f-1 by the Company
to its stockholders as contemplated elsewhere in this Agreement, the Buyers
shall deposit, in the aggregate, an amount equal to Fifty Thousand Dollars
($50,000.00) minus the amount of the Advance (the "Escrow Amount") into escrow
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with the Sellers' counsel (the "Escrow Agent") by wire transfer of immediately
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available funds to the following account: Account Name: Seth A. Farbman, PC as
Escrow Agent, Account No: 207004599465, ABA No: 021000021, Bank Name JP Morgan
Chase, 335 Rockaway Turnpike, Lawrence, NY 11559. The Escrow Agent shall hold
the Escrow Amount in trust for the benefit of the Buyers until returned to the
Buyers or delivered to the Sellers as herein required. The Escrow Amount shall
be considered a portion of the Purchase Price (as defined below) and shall be
delivered as set forth in this paragraph. If this Agreement is terminated
pursuant to Section 10(a)(i), 10(a)(ii) or 10(a)(iii), Escrow Agent shall
immediately return the Escrowed Amount to the Buyers, less the bank's standard
wire transfer charge. The Sellers shall use their best efforts to promptly
accomplish the matters specified in 2(b)(ii)(A) through (D).
Upon the Closing, or if this Agreement is terminated pursuant to Section
10(a)(iv), Escrow Agent shall immediately deliver the Escrow Amount to the
Sellers and the Sellers shall be entitled to keep the Escrow Amount.
(c) Purchase Price. The Buyers shall pay to the Sellers, in the
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aggregate, at the Closing Two Hundred Seventy Three Thousand Dollars
($273,000.00) (which amount includes the Escrow Amount), subject to adjustment
as provided in Section 2(f) below by (i) delivery of cash in the amount of Two
Hundred Twenty Three Thousand Dollars ($223,000.00), payable by wire transfer or
delivery of other immediately available funds to the following account: Account
Name: Seth A. Farbman, PC as Escrow Agent, Account No: 207004599465, ABA No:
021000021, Bank Name JP Morgan Chase, 335 Rockaway Turnpike, Lawrence, NY
11559, and (ii) release of the Escrow Amount to the Sellers (collectively, the
"Purchase Price"). Upon receiving the $223,000 balance of the Purchase Price
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from Buyers, Escrow Agent shall immediately forward such funds to the Sellers.
The Purchase Price shall be paid by the Buyers and allocated among the Sellers
in the manner specified on Schedule I to this Agreement or in such other manner
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as the Sellers instruct the Escrow Agent.
(d) The Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place by exchange of documents among the
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Parties by fax or courier, as appropriate, following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as
the Buyers and the Sellers may mutually determine (the "Closing Date");
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provided, however, that the Closing Date shall not be later than 5:00 p.m.
(Eastern Time) on June 28, 2002, unless extended by written agreement of all
parties. Once the Buyers and Sellers each have made the respective deliveries
called for herein, the Closing shall be deemed to have occurred.
(e) Deliveries at the Closing. At the Closing, (i) the Sellers shall
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deliver to the Buyers the various certificates, instruments, and documents
referred to in 7(a) below, (ii) the Buyers shall deliver to the Sellers the
various certificates, instruments, and documents referred to in 7(b) below,
(iii) the Sellers shall deliver to the Buyers stock certificates representing
all of the Shares registered in the names of the respective Buyers as specified
in Schedule I or endorsed in blank or accompanied by duly executed assignment
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documents and including a Medallion Guarantee, and (iv) the Buyers shall deliver
to the Sellers the consideration specified in 2(b) above. The Escrow Agent's
delivery of the Escrow Amount, and the balance of the Purchase Price to Sellers
shall constitute delivery thereof by the Buyers for the purpose of this Section.
(f) Adjustment for Outstanding Indebtedness. The Purchase Price shall be
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decreased by the amount of any outstanding Indebtedness of the Company existing
as of the Closing Date. If, as of the Closing Date, there exists outstanding
Indebtedness, the Buyers shall pay off such indebtedness directly in accordance
with a disbursement letter to be mutually agreed upon among the Buyers and the
Sellers. Any amounts paid off by the Buyers pursuant to this Section 2(f) shall
be treated as a loan by the Buyers to the Company. In no event shall the Buyers
be required to make any payments in excess of the Purchase Price payable
hereunder.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
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(a) Representations and Warranties of the Sellers. The Sellers jointly
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and severally represent and warrant to the Buyers that the statements contained
in this 3(a) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this 3(a)), except as set forth in Annex I attached hereto.
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(i) Authorization of Transaction. Each of the Sellers has full power
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and authority to execute and deliver this Agreement and to perform his
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of each of the Sellers, enforceable against each of them in
accordance with its terms and conditions. No Seller need give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in order to consummate the transactions contemplated by
this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of
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this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which any of the Seller is subject, or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which any of the Sellers is a party or by
which any of them is bound or to which any of their assets is subject.
(iii) Brokers' Fees. Except for the fee that is due and payable to
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Constellation Partners LLC pursuant to that certain agreement, dated April 9,
2002, which is the sole and exclusive responsibility of the Sellers, the Sellers
do not have any Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which any Buyers or the Company could become liable or obligated.
The Sellers specifically represent and warrant to the Buyers that none of the
Buyers nor the Company is or will become obligated to Constellation Partners LLC
or any other finder, broker or agent, by reason of any actions taken or to be
taken by the Sellers or the Company.
(iv) Shares. Each Seller is the owner of record and the beneficial
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owner of the number of Shares set forth opposite his name on Schedule I, free
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and clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. None of the Sellers is a party to any option, warrant, purchase right,
or other contract or commitment that could require any Seller to sell, transfer,
or otherwise dispose of any capital stock of the Company (other than this
Agreement). No Seller is a party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any capital stock of the Company.
The Shares were duly and validly issued and are fully-paid and non-assessable.
Upon delivery of the Shares to the Buyers pursuant to this Agreement, the Buyers
will acquire valid title thereto, free and clear of any Security Interests.
(b) Representations and Warranties of the Buyers. The Buyers jointly and
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severally represent and warrant to the Sellers that the statements contained in
this 3(b) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
3(b)), except as set forth in Annex II attached hereto.
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(i) Authorization of Transaction. Each of the Buyers has full power
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and authority to execute and deliver this Agreement and to perform his or its
respective obligations hereunder, and the execution, delivery and performance of
this Agreement has been authorized by all requisite corporate action on the part
of any corporate Buyers. This Agreement constitutes the valid and legally
binding obligation of the Buyers, enforceable against each of them in accordance
with its terms and conditions. The Buyers need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in order to consummate the transactions contemplated by
this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of
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this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which any Buyer is subject, or (B) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which any Buyer is a party or by which it is bound or to
which any of its assets are subject.
(iii) Brokers' Fees. The Buyers have no Liability or obligation to
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pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any of the Sellers could
become liable or obligated.
(iv) Status of the Buyer. Each Buyer represents and warrants that
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(A) such Buyer is acquiring the Shares for its own account for investment and
not for the account of any other person and not with a view to or for
distribution, assignment or resale in connection with any distribution within
the meaning of the Securities Act, (B) such Buyer agrees not to sell or
otherwise transfer the Shares unless they are registered under the Securities
Act and any applicable state securities laws, or an exemption or exemptions from
such registration are available, (C) such Buyer represents that it has knowledge
and experience in financial and business matters such that it is capable of
evaluating the merits and risks of acquiring the Shares, (D) such Buyer has had
access to all documents, records, and books of the Company pertaining to the
investment and was provided the opportunity ask questions and receive answers
regarding the terms and conditions of the acquisition of the Shares and to
obtain any additional information which the Company possesses or was able to
acquire without unreasonable effort and expense, and such Buyer received
information concerning the Company, the Sellers and the Shares equivalent to
that which would have been included in a registration statement prepared under
the Securities Act of 1933, as amended, and (E) such Buyer has no need for the
liquidity in its investment in the Company and could afford the complete loss of
such investment.
(v) Buyers not Insolvent; Accredited Investor. No Buyer is insolvent
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or bankrupt and no Buyer will be insolvent or bankrupt after purchasing the
Shares, and Closing of the transactions herein contemplated will constitute each
Buyer's acknowledgment that the Shares' value are equal to the Purchase Price.
Each Buyer is an "Accredited Investor" (as such term is defined in Rule 501(a)
of Regulation D of the Securities Act of 1933).
(vi) No General Solicitation. No Buyer was solicited by any Seller
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or anyone else on any Seller's behalf to enter into any transaction whatever by
any form of general solicitation or general advertising, as those terms are
defined in Regulation D under the Securities Act.
(vii) Risk Acknowledgment. Each Buyer acknowledges that at the time
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of the Closing the Company will have no assets or operating business and that
the Shares are speculative and involve a high degree of risk, including among
many other risks that the Shares will be restricted as elsewhere described in
this Agreement and will not be transferable unless first registered under the
Securities Act or pursuant to an exemption from such act's registration
requirements.
(viii) Restrictive Legend and Stop Order. The Shares when
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delivered to Buyers will not be registered under the Securities Act or
applicable state laws, but shall be transferred in reliance upon the exemptions
from registration provided by Section 4(1) of the Securities Act and under
analogous state securities laws, on the grounds that the sale of the Shares does
not involve any public offering and that Sellers are not thereby acting as an
issuer, underwriter or dealer. The Shares are "restricted securities" as that
term is defined in Rule 144(a) of the General Rules and Regulations under the
Securities Act and must be held indefinitely, and the prior written consent of
the Company will be necessary for their resale or other transfer, unless they
are subsequently registered under the Act or an exemption from the Act's
registration requirements is available for their resale or transfer. All
certificates delivered evidencing the Shares shall bear a restrictive legend
that refers to the Securities Act.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. Each of the
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Sellers jointly and severally represent and warrant to the Buyers that the
statements contained in this 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this 4), except as set forth in the disclosure schedule
attached hereto (the "Disclosure Schedule"). The Disclosure Schedule will be
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arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this 4.
(a) SEC Reports. The Company has filed all reports, registration
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statements, definitive proxy statements and other documents and all amendments
thereto and supplements thereof required to be filed by it with the U.S.
Securities and Exchange Commission since March 7, 2000 (the "SEC Reports"), all
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of which have complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"), the Securities
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Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
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regulations promulgated thereunder. As of the respective dates of filing in
final or definitive form (or, if amended or superseded by a subsequent filing,
then on the date of such subsequent filing), none of the Company's SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
(b) Organization of Company. The Company is a corporation duly
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organized, validly existing, and in good standing under the laws of the State of
Nevada. The Company is duly authorized to conduct business and is in good
standing under the laws in every jurisdiction in which the ownership or use of
property or the nature of the business conducted by it makes such qualification
necessary except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect. "Material Adverse Effect" means any
material adverse effect on the business, operations, assets, financial condition
or prospects of the Company or its Subsidiaries, if any, taken as a whole or on
the transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. The Company has full corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
its business. The Company has no subsidiaries and does not control any entity,
directly or indirectly, or have any direct or indirect equity participation in
any other entity. The Sellers has delivered to the Buyers true, correct and
complete copies of the Certificate of Incorporation and Bylaws of the Company,
as amended through the date hereof.
(c) Capitalization; No Restrictive Agreements. The Company's
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authorized capital stock, as of the date of this Agreement, consists of
50,000,000 shares of Common Stock, $0.001 par value per share, of which
25,500,000 shares are issued and outstanding.
As of May 21, 2002, the Company had 26,530,000 shares of its common stock
issued and outstanding. Such figure includes an aggregate of 1,130,000 shares
of the Company's common stock which has not yet been issued by the transfer
agent on the Company's books due to the Company's inability to make payment to
its transfer agent on outstanding invoices and such figure also includes
1,520,000 shares of common stock, authorized for issuance, which shares have not
yet been physically delivered to their respective shareholders due to the
Company's inability to make payment to its transfer agent on outstanding
invoices. Anthony Genova shall deliver shares of the Company's Common Stock
owned by him to cover the shares to be issued by the Company such that, after
the transfer agent issues the 1,520,000 shares and the Company issues 1,000,000
shares in accordance with Schedule II, the total number of shares outstanding
shall be 26,500,000.
The Company has not reserved any shares of its Common Stock for issuance
upon the exercise of options, warrants or any other securities that are
exercisable or exchangeable for, or convertible into, Common Stock. All of the
issued and outstanding shares of Common Stock are validly issued, fully paid and
non-assessable and have been issued in compliance with applicable laws,
including, without limitation, applicable federal and state securities laws.
There are no outstanding options, warrants or other rights of any kind to
acquire any additional shares of capital stock of the Company or securities
exercisable or exchangeable for, or convertible into, capital stock of the
Company, nor is the Company committed to issue any such option, warrant, right
or security. There are no agreements relating to the voting, purchase or sale
of capital stock (i) between or among the Company and any of its stockholders,
(ii) between or among the Sellers and any third party, or (iii) to the best
knowledge of the Sellers between or among any of the Company's stockholders.
The Company is not a party to any agreement granting any stockholder of the
Company the right to cause the Company to register shares of the capital stock
of the Company held by such stockholder under the Securities Act.
(d) Financial Statements. The Sellers have provided the Buyers with
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audited balance sheets and statements of operations, changes in stockholders'
deficit and cash flows for the years ended December 31, 2001 and 2000
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis, fairly present the financial
condition, results of operations and cash flows of the Company as of the
respective dates thereof and for the periods referred to therein and are
consistent with the books and records of the Company. The Company does not have
any liability (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
taxes, except for liabilities expressly specified in the Financial Statements
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
(e) Absence of Certain Changes. Since December 31, 2001, there has
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not been any event or condition of any character which has materially adversely
affected, or may be expected to materially adversely affect, the Company's
business or prospects, including, but not limited to any material adverse change
in the condition, assets, liabilities (existing or contingent) or business of
the Company from that shown in the Financial Statements.
(f) Legal Proceedings. Except as disclosed in the SEC Reports, as of
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the date of this Agreement, there is no legal, administrative, investigatory,
regulatory or similar action, suit, claim or proceeding which is pending or, to
the Sellers' knowledge, threatened against the Company which, if determined
adversely to the Company, could have, individually or in the aggregate, a
material adverse effect on the business, assets, or prospects of the Company or
which in any manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated by this Agreement.
(g) Legal Compliance. The Company has complied in all material
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respects with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of all
Governmental Authorities, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against the Company alleging any failure so to comply. To the
Sellers' knowledge, neither the Company, nor any officer, director, employee,
consultant or agent of the Company has made, directly or indirectly, any payment
or promise to pay, or gift or promise to give or authorized such a promise or
gift, of any money or anything of value, directly or indirectly, to any
governmental official, customer or supplier for the purpose of influencing any
official act or decision of such official, customer or supplier or inducing him,
her or it to use his, her or its influence to affect any act or decision of a
Governmental Authority or customer, under circumstances which could subject the
Company or any officers, directors, employees or consultants of the Company to
administrative or criminal penalties or sanctions.
(h) Tax Matters.
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(i) The Company has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all material respects.
All Taxes owed by the Company have been paid. The Company is not currently the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of the
Company that arose in connection with any failure (or alleged failure) to pay
any Tax.
(ii) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(iii) The Sellers do not expect any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Liability with respect to any Taxes (a "Tax
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Liability") of the Company either (A) claimed or raised by any authority in
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writing or (B) as to which the Sellers have Knowledge based upon personal
contact with any agent of such authority. No tax returns of the Company have
ever been audited or are currently the subject of an audit. The Sellers have
delivered to the Buyers correct and complete copies of all federal and state
income and other material Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company since inception.
(i) Disclosure. No representation or warranty by the Sellers
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contained in this Agreement, and no statement contained in the any document,
certificate or other instrument delivered or to be delivered by or on behalf of
the Sellers pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omit or will omit to state any material fact
necessary, in light of the circumstances under which it was or will be made, in
order to make the statements herein or therein not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
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the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to take
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all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
7 below).
(b) Notices and Consents. The Sellers will cause the Company to give any
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notices to third parties, and will cause the Company to use its best efforts to
obtain any third party consents, that the Buyers may reasonably request. Each
of the Parties will (and the Sellers will cause the Company to) give any notices
to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of Governmental Authorities necessary in
order to consummate the transactions contemplated hereby. The parties
acknowledge that SEC Rule 14f-1 under the Securities Exchange Act requires that
an information statement containing certain specified disclosures be filed with
the SEC and mailed to the Company's shareholders at least 10 days before any
person designated by Buyers can become a director of the Company. The Buyers
and the Sellers agree to cooperate fully with the Company in the preparation and
filing of such information statement and to provide all information therefor
respectively needed from them in a timely manner, so as not to cause undue delay
in the filing of the information statement or any amendment thereto. Otherwise,
neither the Company nor Sellers is aware of any third party consent nor other
filing or notice to third parties that is necessary in respect of this
Agreement.
(c) Operation of Business. The Sellers will not cause or permit the
-----------------------
Company to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Sellers will not cause or permit the Company to
(i) declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any of
its capital stock except as otherwise expressly specified herein, (ii) issue,
sell, or otherwise dispose of any of its capital stock, or grant any options,
warrants, preemptive or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock, (iii) make any
capital expenditures, loans, or incur any other obligations or liabilities, (iv)
enter into any agreements involving expenditures individually, or in the
aggregate, of more than $1,000 (other than agreements for professional services
which will be paid in full at or prior to the Closing) or (ii) otherwise engage
in any practice, take any action, or enter into any transaction out of the
ordinary course of business.
(d) Preservation of Business. The Sellers will cause the Company to keep
-------------------------
its business and properties substantially intact, including the filing of all
reports required to be filed with the Securities and Exchange Commission and the
NASD in order to maintain the Company's status as a reporting company and in
order to continue the quotation of the Company's Common Stock on the NASD's
Over-the-Counter Bulletin Board.
(e) Full Access. The Sellers will permit, and the Sellers will cause the
------------
Company to permit, representatives of the Buyers to have full access at all
reasonable times, to all properties, personnel, accountants, suppliers, and
third party service providers, books, records (including Tax records),
contracts, and documents of or pertaining to the Company.
(f) Notice of Developments. The Sellers will give prompt written notice
------------------------
to the Buyers of any material adverse development causing a breach of any of the
representations and warranties in 4 above. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of his own representations and warranties in 3 above. No disclosure by any
Party pursuant to this 5(f), however, shall be deemed to amend or supplement
Annex I, Annex II, or the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. The Sellers and the Company will not (and the Sellers
-----------
will not cause or permit the Company to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any assets of the Company
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Sellers will not vote the Shares in favor of, or otherwise
participate in, any such acquisition structured as a merger, consolidation, or
share exchange. The Sellers and the Company will notify the Buyers immediately
of any written proposal or offer respecting the Shares or the Company received
by Sellers of the types covered by this paragraph.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
-----------------------
the period following the Closing.
(a) General. In case at any time after the Closing any further action is
-------
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under 8 below). The
Sellers acknowledges and agree that from and after the Closing the Buyers will
be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Company.
(b) Litigation Support. In the event and for so long as any Party
-------------------
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, the other Party will cooperate with
him or it and his or its counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under 8 below).
(c) Transition. The Sellers will not take any action that is designed or
----------
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relationships with the Company after the Closing as it maintained with
the Company prior to the Closing.
(d) Maintenance. The Buyers shall cause the filing of all reports
-----------
required to be filed with the Securities and Exchange Commission and NASD in
order to maintain the Company's status as a reporting company and in order to
continue the quotation of the Company's Common Stock on the NASD's
Over-the-Counter Bulletin Board.
(e) Restriction on Reverse Stock Splits and Stock Issuances. The Buyers
---------------------------------------------------------
have advised the Sellers of the Buyers intention to identify one or more
qualified target entities in order to acquire those qualified target entities or
otherwise effect a business combination of those entities with the Company (the
"Business Combination") after the Closing. During the period from the Closing
---------------------
until the consummation of the Business Combination, the Buyers shall not permit
the Company to, and shall take any and all necessary actions to prohibit the
Company from, effecting a reverse split of the Company's Common Stock unless it
first obtains the written consent of Anthony Genova. In addition, the Buyers
and the Company agree that the number of common shares issuable in connection
with a Business Combination shall not exceed Seventy Four Million, Seven Hundred
Eighty Thousand (74,780,000) unless the Company obtains the prior written
consent of Anthony Genova.
(f) Minimum Revenues. Without the prior written consent of Anthony
-----------------
Genova, which consent may be withheld in his sole and exclusive discretion, the
Buyers shall not permit the Company to effect a Business Combination with an
entity or entities unless, at the consummation of the Business Combination, or
series of Business Combinations, the target entities have had, on a combined
basis, revenues of at least Two Million, Five Hundred Thousand Dollars
($2,500,000) for the last fiscal year. This covenant shall terminate and be of
no further force or effect upon the closing of the first Business Combination in
which the Company acquires a target meeting such revenue requirement.
(g) Change of Name. As soon as practicable after the Closing, the Buyers
---------------
shall cause the Company to amend its certificate of incorporation to change the
name of the Company to a name to be selected by the Buyers that is not
confusingly similar to the name "Carsunlimited.com."
7. CONDITIONS TO OBLIGATION TO CLOSE.
-------------------------------------
(a) Conditions to Obligation of the Buyer. The obligation of the Buyers
---------------------------------------
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in 3(a) and 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Sellers shall have performed and complied with all of his
covenants hereunder in all material respects through the Closing;
(iii) the Company shall have procured all of the third party consents
specified in 5(b) above, and the staff of the SEC shall have either declined to
review the Company's 14f-1 information statement, or its review thereof shall
have been completed and the requisite time period shall have elapsed;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of the Buyers to own the
Shares and to control the Company, or (D) affect adversely the right of the
Company to own its assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(v) the Sellers shall have delivered to the Buyers a certificate to
the effect that (A) each of the conditions specified above in 7(a)(i)-(iv) is
satisfied in all respects, and (B) as of the Closing, the Company has no
Liabilities or Indebtedness, except for Indebtedness or Liabilities that are
being paid at or immediately after the Closing from proceeds received by the
Sellers at the Closing;
(vi) the Buyers shall have received the resignations, effective as of
the Closing, of each director and officer of the Company and the designees
specified by the Buyers shall have been appointed as officers and directors of
the Company;
(vii) there shall not have been any occurrence, event, incident,
action, failure to act, or transaction since December 31, 2001 which has had or
is reasonably likely to cause a material adverse effect on the business, assets,
properties, financial condition, results of operations or prospects of the
Company;
(viii) the Buyers shall have completed its business, accounting and
legal due diligence review of the Company, and the results thereof shall not
have revealed any material breach of this Agreement by Sellers or the Company,
nor that any representation or warranty of Sellers or the Company in this
Agreement is false in any material respect;
(ix) the Buyers shall have received such pay-off letters and releases
relating to Indebtedness and Liabilities as it shall have reasonably requested
and such pay-off letters and releases shall be in form and substance reasonably
satisfactory to the Buyers;
(x) the Buyers shall have conducted UCC, judgment lien and tax lien
searches with respect to the Company, the results of which indicate no liens on
the assets of the Company;
(xi) the Company shall have delivered evidence reasonably
satisfactory to Buyers of the Company's corporate organization and proceedings
and its existence in each jurisdiction in which it is incorporated or qualified
to do business, including evidence of such existence as of the Closing and the
Company shall have delivered to the Buyers the Company's original minute book
and corporate seal and all other original corporate documents;
(xii) the Company shall have filed all of the reports required to be filed
under the Exchange Act during the 12 months preceding the Closing (or such
shorter period as the Company was required to file such reports) and the Company
shall have otherwise met all of the requirements of Rule 144(c) of the
Securities Act;
(xiii) the Company shall have maintained at and immediately after the
Closing its status as a company whose Common Stock is quoted on the OTC Bulletin
Board that is maintained by the National Association of Securities Dealers,
Inc.;
(xiv) the Buyers shall have received an opinion of counsel to the
Sellers and the Company relating to the matters set forth in this Agreement and
such opinion shall be in form and substance reasonably satisfactory to the
Buyers;
(xv) The Company shall have sold all of its operating assets
(i.e., the assets of the Company that relate to its auto industry web-based
business) to Anthony Genova pursuant to a bona fide purchase agreement in form
and substance reasonably satisfactory to the Buyers and such purchase agreement
shall include, among other things, an indemnity by the Anthony Genova in favor
of the Company relating to breaches of representations and warranties in such
purchase agreement and any and all liabilities arising from the use of the sold
assets whether arising prior or subsequent to the sale of such assets;
(xvi) the Company shall have issued 1,000,000 shares of its common
stock, in the aggregate, to the persons listed on Schedule II to this Agreement
-----------
in satisfaction of amounts owed to those people by the Company and, as of the
Closing, no more than 26,500,000 shares of the Company's Common Stock shall be
outstanding on a fully-diluted basis;
(xvii) the Purchase Price and all outstanding Indebtedness as of
the Closing shall be paid off in accordance with a disbursement letter to be
mutually agreed upon by the Buyers and the Sellers and, after all payments are
made in accordance with such disbursement letter, the Company shall have no
outstanding liabilities or accrued expenses whatsoever;
(xviii) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Buyers.
The Buyers may waive any condition specified in this 7(a) at or prior to the
Closing, and its delivery to Sellers of the things required in Section 2(e)
shall constitute Buyers' declaration that all conditions precedent to its
obligation to close have been satisfied.
(b) Conditions to Obligation of the Sellers. The obligation of the
--------------------------------------------
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in 3(b) above shall
be true and correct in all material respects at and as of the Closing Date;
(ii) the Buyers shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(iv) the Buyers shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in 7(b)(i)-(iii) is
satisfied in all respects;
(v) the Company shall have issued 1,000,000 shares of its common stock, in
the aggregate, to the persons listed on Schedule II to this Agreement in
------------
satisfaction of amounts owed to those people by the Company;
(vi) the Company shall have sold its operating assets to Anthony Genova as
contemplated by Section 7(a)(xv) above.
(vii) all actions to be taken by the Buyers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Seller.
The Sellers may waive any condition specified in this 7(b) at or prior to the
Closing and their delivery to Buyers of the things required in Section 2(e)
shall constitute Seller's declaration that all conditions precedent to its
obligation to close have been satisfied.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
--------------------------------------------
(a) Survival of Representations and Warranties.
----------------------------------------------
All of the representations and warranties of the Parties shall survive the
Closing hereunder (even if a Party knew or had reason to know of any
misrepresentation or breach of warranty by another Party at the time of Closing)
and continue in full force and effect for a period of three years thereafter;
provided, however, that the representations and warranties contained in Sections
3(a), 3(b) and 4(c) shall survive the Closing hereunder (even if a Party knew or
had reason to know of any misrepresentation or breach of warranty by another
Party at the time of Closing) and continue in full force and effect for a period
equal to the applicable statute of limitations.
(b) Indemnification Provisions for Benefit of the Buyer.
---------------------------------------------------------
(i) In the event the Sellers breach (or in the event any third party
alleges facts that, if true, would mean the Sellers have breached) any of their
representations, warranties, and covenants contained herein, and, if there is an
applicable survival period pursuant to 8(a) above, provided that the Buyers
make a written claim for indemnification against the Sellers pursuant to 11(h)
below within such survival period, then the Sellers shall, jointly and
severally, indemnify the Buyers from and against the entirety of any Adverse
Consequences the Buyers may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Buyers may suffer after
the end of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach).
(ii) The Sellers shall, jointly and severally, indemnify the Buyers
from and against the entirety of any Adverse Consequences the Buyers may suffer
resulting from, arising out of, relating to, in the nature of, or caused by any
Liability of the Company (whether or not accrued or otherwise disclosed) (x) for
any Taxes of the Company with respect to any Tax year or portion thereof ending
on or before the Closing Date ((or for any Tax year beginning before and ending
after the Closing Date to the extent allocable (determined in a manner
consistent with 9(b)) to the portion of such period beginning before and ending
on the Closing Date)) and (y) for the unpaid Taxes of any Person (other than the
Company) under Reg. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(iii) The Sellers shall, jointly and severally, indemnify the Buyers
from and against the entirety of any Liabilities arising out of the ownership of
the Shares or operation of the Company prior to the Closing.
(iv) The Sellers shall, jointly and severally, indemnify the Buyers
from and against the entirety of any Adverse Consequences the Buyers may suffer
resulting from, arising out of, relating to, in the nature of, or caused by any
Indebtedness of the Company existing as of the Closing Date.
(c) Indemnification Provisions for Benefit of the Seller. In the event
-------------------------------------------------------
the Buyers breach (or in the event any third party alleges facts that, if true,
would mean the Buyers has breached) any of their representations, warranties,
and covenants contained herein, and, if there is an applicable survival period
pursuant to 8(a) above, provided that the Sellers make a written claim for
indemnification against the Buyers pursuant to 11(h) below within such survival
period, then the Buyers shall, jointly and severally, indemnify the Sellers from
and against the entirety of any Adverse Consequences the Sellers may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Sellers may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
----------------------------------
(i) If any third party shall notify any Party (the "Indemnified
-----------
Party") with respect to any matter (a "Third Party Claim") which may give rise
-----------------
to a claim for indemnification against any other Party (the "Indemnifying
------------
Party") under this 8, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay on the
-----------------
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 10 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (D) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with 8(d)(ii) above, (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in 8(d)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this 8.
(e) Other Indemnification Provisions.
----------------------------------
Each Seller hereby agrees that he will not make any claim for
indemnification against the Company by reason of the fact that he was a
director, officer, employee, or agent of the Company or was serving at the
request of the Company as a partner, trustee, director, officer, employee, or
agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyers against such Sellers (whether
such action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
9. TAX MATTERS. The following provisions shall govern the allocation of
------------
responsibility as between the Buyers and the Sellers for certain tax matters
following the Closing Date. Sellers have caused federal and applicable state
tax returns to be filed for the Company covering the year ended December 31,
2001, and no taxes were owed under any such returns. Buyers shall cause the
Company to prepare and file all tax returns due for 2002 and subsequent years.
(a) Cooperation on Tax Matters. Sellers agree to provide to Buyers copies
--------------------------
of all tax returns in Sellers' possession filed by the Company and of all books
and records of the Company in Sellers' possession. Each Seller also agrees to
cooperate with Buyers and the Company to answer their questions regarding all
tax returns filed by the Company while any Seller was an executive officer and
director of the Company.
(b) Certain Taxes. All transfer, documentary, sales, use, stamp,
--------------
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Sellers when due, and Sellers will, at their own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if required by
applicable law, the Buyers will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
10. TERMINATION.
-----------
(a) Termination of Agreement. The Parties may terminate this Agreement as
------------------------
provided below:
(i) the Buyers and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyers may terminate this Agreement by giving written notice
to the Sellers on or before the 10th day following the date of this Agreement if
the results its legal, business and accounting due diligence shall have revealed
any material breach of this Agreement by Sellers or the Company, or that any
representation or warranty of Sellers or the Company in this Agreement is false
in any material respect; provided, however, that the 10 day period referred to
above shall be extended by the number of days that elapse between the date that
the Buyers or their agent make a reasonable due diligence request and the date
that the items requested by the Buyers are received by the Buyers or their
agent;
(iii) the Buyers may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing (A) in the event the
Sellers have breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Buyers have notified
the Sellers of the breach, and the breach has continued without cure for a
period of 10 days after the notice of breach or (B) if the Closing shall not
have occurred on or before June 30, 2002 by reason of the failure of any
condition precedent under 7(a) hereof (unless the failure results primarily
from the Buyers themselves breaching any representation, warranty, or covenant
contained in this Agreement); and
(iv) the Sellers may terminate this Agreement by giving written
notice to the Buyers at any time prior to the Closing (A) in the event the
Buyers have breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Sellers have notified
the Buyers of the breach, and the breach has continued without cure for a period
of 10 days after the notice of breach or (B) if the Closing shall not have
occurred on or before June 30, 2002, by reason of the failure of any condition
precedent under 7(b) hereof (unless the failure results primarily from the
Sellers themselves breaching any representation, warranty, or covenant contained
in this Agreement).
(b) Effect of Termination.
-----------------------
(i) If this Agreement terminates pursuant to 10(a)(i), 10(a)(ii) or
10(a)(iii) above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party, except for any
Liability of the Sellers if the Sellers are then in breach. Notwithstanding the
foregoing, if the Buyers terminate this Agreement as the result of the Sellers'
breach of Section 5(g) (Exclusivity) hereof, the Sellers shall reimburse the
Buyers' fees and expenses incurred in connection with the negotiation of this
Agreement and all related agreements and documents and the transactions
contemplated by this Agreement and such related documents, including attorneys'
fees, and any due diligence work performed by the Buyers whether incurred prior
to or after the date of this Agreement, all of which shall not in the aggregate
exceed Fifty Thousand Dollars ($50,000).
(ii) If the Sellers terminate this Agreement pursuant to Section 10(a)(iv)
above, all rights and obligations of the Parties hereunder shall terminate
without any Liability of any Party to any other Party and the Sellers may retain
the Escrow Amount pursuant to, and in accordance with, Section 2(b) hereof as
liquidated damages.
11. LIABILITY AND RESPONSIBILITIES OF THE ESCROW AGENT. The Escrow Agent
---------------------------------------------------
shall act as set forth in Sections 2 and 11 of this Agreement and shall have
only such liability and responsibilities as are expressly set forth in such
Sections. Escrow Agent shall have no duties under any part of this Agreement
except Sections 2 and 11 hereof, nor any agreement or other document executed in
connection with this Agreement, except as may be expressly stated herein. The
term "Escrow Agent" shall include all successors of Escrow Agent.
(a) Termination of the Escrow. Once the Escrow Amount has either been
delivered to Sellers or returned to Buyers as appropriate, the escrow herein
created shall terminate. Escrow Agent shall deliver to Sellers and Buyers a
written accounting of all funds placed into Escrow.
(b) Resignation of Escrow Agent. Escrow Agent may resign at any time or
cease to serve for any reason without penalty or liability to any person, except
to transfer the funds in escrow as required in this paragraph. Upon Escrow
Agent's resignation or inability to serve for any reason, he shall turn over all
funds then in escrow to a successor Escrow Agent chosen by mutual written
agreement of Buyers and Sellers, or as he is otherwise jointly instructed in
writing by Buyers and Sellers. If Escrow Agent should decease or become
physically or mentally incapable of transferring the funds in escrow as herein
required, Buyers may apply to the appropriate District Court of the State of New
York for an order releasing the escrowed funds to a successor Escrow Agent or to
Buyers, and neither Seth A. Farbman nor Seth A. Farbman, PC, nor their
respective successors or estates shall be liable to any person for any expenses,
attorneys' fees or other charges arising from such acts taken by Buyers to
recover the escrow funds. Escrow Agent's resignation or other failure to serve
hereunder shall not terminate the escrow unless the Buyers and Sellers agree in
writing to terminate the escrow.
(c) Fees and Expenses of the Escrow Agent. All fees and expenses of the
Escrow Agent shall be paid by Sellers.
(d) Status of Escrow Agent. In performing his duties, Escrow Agent shall
not be deemed an agent, attorney or servant of the Company or Buyers.
(e) Liability of the Escrow Agent. In performing any of his duties
hereunder, the Escrow Agent shall not incur any liability to anyone for any
damages, losses or expenses, except for willful misconduct or gross negligence
and he shall, accordingly, not incur any such liability with respect to:
(i) any action taken or omitted in good faith upon written advice of his
counsel given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent under this Agreement, or
(ii) any action taken or omitted in reliance upon any instrument, including
the written advices provided for herein, not only as to its due execution and
the validity and effectiveness of its provisions, but also as to the truth and
accuracy of any information contained therein, which the Escrow Agent shall in
good faith believe to be genuine, to have been signed or presented by a proper
person or persons, and to conform with the provisions of this Agreement.
(f) Information and Indemnity. Buyers and Sellers each agree to provide
to Escrow Agent all information necessary to facilitate the administration of
the escrow herein created, and Escrow Agent may rely upon any representation so
made. Buyers and Sellers hereby agree to indemnify and hold harmless the Escrow
Agent against any and all claims, losses, damages, liabilities, costs and
expenses, including reasonable costs of investigation and counsel fees and
disbursements, which may be imposed upon Escrow Agent or incurred by Escrow
Agent in connection with his acceptance of appointment as Escrow Agent hereunder
or the performance of his duties hereunder, including any litigation arising
from this Agreement or involving the subject matter hereof. However, such
indemnity shall not include acts or omissions to act of Escrow Agent which
involve gross negligence or willful misconduct.
(g) Interpleader. If at any time a dispute arises as to the duties of
Escrow Agent and the terms hereof, whether brought by a Party to this Agreement
or a non-party, Escrow Agent may deposit the funds in escrow with the Clerk of
the District Court of New York and may interplead the other Parties hereto.
Upon so depositing such things and funds and filing its complaint in
interpleader, Escrow Agent shall be completely discharged and released from all
further liability or responsibility hereunder. The other Parties hereto, for
themselves, their heirs, successors and assigns, do hereby submit themselves to
the jurisdiction of said Court and do hereby appoint the Clerk of said Court as
their agent for service of all process in connection with any such proceedings.
(h) Notices; Orders of Court, Etc. Escrow Agent is hereby expressly
authorized and directed to disregard any and all notices or warnings not
specifically called for in or permitted by this Agreement, or by any other
person or entity not party to this Agreement, excepting only orders or process
of court, and is hereby expressly authorized to comply with and obey any and all
orders, judgments, or decrees of any court, and in case Escrow Agent obeys or
complies with any such order, judgment, or decree of any court, it shall not be
liable to any of the parties hereto or to any other person, firm or corporation
by reason of such compliance, notwithstanding that any such order, judgment, or
decree may be subsequently reversed, modified, annulled, set aside or vacated,
or found to have been entered without jurisdiction. Escrow Agent assumes no
responsibility for the validity or sufficiency of any documents, papers or
payments deposited or called for hereunder, nor shall Escrow Agent have any
duties or responsibilities, except as shall be expressly set forth in this
Agreement in unambiguous language.
(i) Notices to Parties. All notices, demands or requests required or
authorized hereunder by Escrow Agent shall be given as provided in Section12 of
this Agreement.
12. MISCELLANEOUS.
--------------
(a) Facsimile Execution and Delivery. Facsimile execution and delivery of
--------------------------------
this Agreement is legal, valid and binding execution and delivery for all
purposes.
(b) Press Releases and Public Announcements. No Party shall issue any
-------------------------------------------
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
---------
however, that any Party may make any public disclosure it believes in good faith
- -------
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its best
efforts to advise the other Parties prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
------------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
----------------
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
---------------------------
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Buyers and the Sellers; provided, however, that the Buyers may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates, and (ii) designate one or more of its Affiliates to perform its
obligations hereunder, but no such assignment shall operate to release Buyers or
a successor from any obligation hereunder unless and only to the extent that the
Sellers agree in writing.
(f) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Sellers:
---------------------
Mr. Anthony Genova
16 Cleveland Place
Glen Cove, New York 11542
Fax: (516) 671 - 8899
With a copy (which shall not constitute notice) to:
-----------------------------------------------------------
Seth A. Farbman PC
301 Eastwood Road
Woodmere, New York 11598
Fax: (516) 569-6084
If to the Buyers:
--------------------
Ronald C. H. Lui
Loyalty United (US), Inc.
54 Pine Street, 4th Floor
New York, New York 10005
Fax (212) 809-8016
With a copy (which shall not constitute notice) to:
----------------------------------------------------------
Louis A. Bevilacqua, Esq.
Bevilacqua, P.C.
54 Pine Street, 4th Floor
New York, New York 10005
Fax: (203) 286-1108
If to the Escrow Agent:
--------------------------
Seth A. Farbman PC
301 Eastwood Road
Woodmere, New York 11598
Fax: (516) 569-6084
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(j) Amendments and Waivers. No amendment of any provision of this
------------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyers and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties and the Company will bear his or its
--------
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Sellers agree that the Company has not borne nor will it bear any of the
Seller's costs and expenses (including any legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant. Nothing
in the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein, however, unless the Disclosure
Schedule identifies the exception with particularity and describes the relevant
facts in detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself).
(n) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
------------------------------------------------------
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees
---------------------
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in 10(p) below), in
addition to any other remedy to which they may be entitled, at law or in equity.
(p) Submission to Jurisdiction. Each of the Parties submits to the
----------------------------
jurisdiction of any state or federal court sitting in New York, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party with respect
thereto. Any Party may make service on any other Party by sending or delivering
a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in 11(h) above. Nothing in this 11(p),
however, shall affect the right of any Party to bring any action or proceeding
arising out of or relating to this Agreement in any other court or to serve
legal process in any other manner permitted by law or at equity. Each Party
agrees that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement as
of the date first above written.
SELLERS:
/s/ Anthony Genova
--------------------
Anthony Genova
/s/ Lawrence Genova
---------------------
Lawrence Genova
/s/ Joseph Marks
--------------------
Joseph Marks
/s/ William Quinn
-------------------
William Quinn
/s/ Michael Makropoulos
--------------------------------
Michael Makropoulos
COMPANY:
CARSUNLIMITED.COM, INC.
By:/s/ Anthony Genova
--------------------
Anthony Genova, President
BUYERS:
/s/ Douglas Shih
------------------
Douglas Shih
LOYALTY UNITED (US), INC.
By:/s/ Ronald C. H. Lui
------------------------
Ronald C. H. Lui, President
C H VENTURES, INC.
By:/s/ Ronald C. H. Lui
---------------------------------------
Ronald C. H. Lui, President
IN WITNESS WHEREOF, the undersigned Escrow Agent has executed this
Agreement as of the date first above written in order to evidence his assent to
Sections 2(b) and 11 of this Agreement only. The Escrow Agent shall not be
bound by any of the other provisions of this Agreement.
SETH A. FARBMAN, PC,
As Escrow Agent
By: /s/ Seth A. Farbman
----------------------
Seth A. Farbman, Esq.
Principal
APPENDIX A
DEFINITIONS
As used herein, the following terms have the respective meanings set forth
below:
"Adverse Consequences" means all actions, suits, proceedings, hearings,
---------------------
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, lost value,
expenses, and fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
---------
promulgated under the Securities Exchange Act.
"Buyer" has the meaning set forth in the preface above.
-----
"Closing" has the meaning set forth in 2(d) above.
-------
"Closing Date" has the meaning set forth in 2(d) above.
-------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company" means Carsunlimited.com and its subsidiaries, if any.
-------
"Disclosure Schedule" has the meaning set forth in 4 above.
--------------------
"Financial Statements" has the meaning set forth in 4(d) above.
---------------------
"GAAP" means United States generally accepted accounting principles as in
----
effect from time to time.
"Governmental Authority" means any federal, state, municipal or other
-----------------------
governmental department, commission, board, bureau, agency or instrumentality,
or any court of the United States of America or any political subdivision
thereof, or of any other country.
"Indebtedness" of any Person means, in each case whether or not accrued on
------------
the books of such Person, (a) all indebtedness of such Person for borrowed money
or for the deferred purchase price of property or services, (b) all obligations
of such Person upon which interest charges are customarily paid or which are
evidenced by notes, bonds, debentures, credit agreements or similar agreements
or investments, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets purchased by
such Person, (d) all obligations of such Person under capitalized leases, (e)
all obligations of such Person in respect of acceptances, letters of credit or
letters of guaranty issued or created for the account of such Person, and (f)
all liabilities secured by any Security Interest on any property owned by such
Person, whether or not such Person has assumed or otherwise become liable for
the payment thereof.
"Indemnified Party" has the meaning set forth in 8(d)(i) above.
------------------
"Indemnifying Party" has the meaning set forth in 8(d)(i) above.
-------------------
"Liability" means any liability (whether known or unknown, whether asserted
---------
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Ordinary Course of Business" means the ordinary course of business
------------------------------
consistent with past custom and practice (including with respect to quantity and
-
frequency).
"Parties" has the meaning set forth in the preface above.
-------
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in 2(b) above.
---------------
"SEC" means the U.S. Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended.
---------------
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-------------------------
amended.
"Security Interest" means any adverse claim, mortgage, pledge, lien,
------------------
encumbrance, option, restriction on transfer, easement, right of way, matter of
survey, charge, or other security interest.
"Seller" has the meaning set forth in the preface above.
------
"Shares" has the meaning set forth in the recitals above.
------
"Subsidiary" means any corporation with respect to which a specified Person
----------
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" means any federal, state or local income, gross receipts, license,
---
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Liability" has the meaning set forth in 4(h)(iii) above.
--------------
"Tax Return" means any return, declaration, report, claim for refund, or
-----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in 8(d)(i) above.
-------------------
SCHEDULE I
PURCHASE AND SALE OF SHARES
SELLERS:
PURCHASE PRICE
NUMBER OF SHARES PER SHARE
NAME OF SELLER ADDRESS OF SELLER TO BE SOLD AT THE CLOSING TOTAL PURCHASE PRICE
------------------------------------ --------------------------- ----------------- ------------------------
Anthony Genova 15,650,000 $0.013 $203,450
Lawrence Genova 150,000 $0.013 $1,950
Joseph Marks 4,450,000 $0.013 $57,850
William Quinn 300,000 $0.013 $3,900
Michael Makropoulos 450,000 $0.013 $5,850
TOTAL: 21,000,000 $273,000
NUMBER OF
SHARES TO BE
PURCHASED AT
NAME OF BUYER ADDRESS OF BUYER THE CLOSING PURCHASE PRICE TOTAL PURCHASE
PER SHARE PRICE
1359 Broadway
Suite 1814
Douglas Shih New York, NY 10018 10,500,000 $0.013 $136,500
54 Pine Street
4th Floor
Loyalty United (US), Inc. New York, NY 10005 2,500,000 $0.013 $32,500
54 Pine Street
4th Floor
C H Ventures Inc. New York, NY 10005 8,000,000 $0.013 $104,000
SCHEDULE II
SHARES ISSUABLE BY COMPANY AT CLOSING
NAME, ADDRESS AND SOCIAL SECURITY NO. (OR EIN)
NUMBER OF SHARES TO BE ISSUED
Russell Machover
52 Maple Run Drive
Jericho, New York 11753
SSN ###-##-#### 850,000
Seth A. Farbman, PC
301 Eastwood Road
Woodmere, New York 11598
06-1581519 100,000
Jon Gilchrist
[ADDRESS]
[SOCIAL SECURITY NUMBER] 50,000
TOTAL - 1,000,000
ANNEX I
Exceptions to the Sellers' Representations and Warranties
Concerning the Transaction
None.
ANNEX II
Exceptions to the Buyer' Representations and Warranties
Concerning the Transaction
None.
DISCLOSURE SCHEDULE
"None" below indicates that no exception is taken to the specified
representation and warranty and that such representation and warranty is made as
specified in the Agreement.
None