Document:

ex10_1.htm

EXHIBIT 10.1

[Execution Copy]

WORLD-WIDE INTELLECTUAL PROPERTY PURCHASE AGREEMENT

 

This World-Wide Intellectual Property Purchase Agreement (the “Agreement”) is made as of May 28, 2014 (the “Effective Date”), by and between FreshTec, Inc., a Delaware corporation (“Seller”), and Tara Minerals Corp., a Nevada corporation in the process of merging into Firma Holdings Corp., a Nevada corporation, (“Purchaser”).

 

RECITALS

 

WHEREAS, Seller is the owner of all right, title and interest in and to the Seller Assets and Rights (as defined below); and

 

WHEREAS, Seller and Purchaser are entering into this Agreement in order to provide for Purchaser to acquire the Seller Assets and Rights.

 

NOW, THEREFORE, in view of the following mutual covenants, and for other good and sufficient consideration, the adequacy of which is hereby acknowledged, the parties agree as follows:

 

Agreement as to Schedules.  The Parties hereby agree that:

 

	
  

	
(a)

	
For convenience, the Schedules specified in this Agreement have not yet been prepared by the Seller.

 

	
  

	
(b)

	
No later than ten (10) days after the Effective Date (or such later date as the Purchaser shall agree in writing), the Seller shall prepare and deliver to the Purchaser a complete draft set of Schedules for attachment to this Agreement as provided below.

	
  

	
(c)

	
The Purchaser shall be entitled in its sole and exclusive discretion to review and comment on such draft set of Schedules and any re-drafts provided by the Seller.  The Seller shall within two (2) days of each comment by the Purchaser provide a responsive set of Schedules to the Purchaser and respond to any additional questions and requests by the Purchaser for information or documents.

 

	
  

	
(d)

	
When the Purchaser is in its sole discretion satisfied with the form and substance of the Schedules, the Purchaser and the Seller shall so signify by a written instrument and shall attach the Schedules to this Agreement.

 

  

  

  

 

	
  

	
(e)

	
Notwithstanding anything in this Agreement to the contrary, (i) the Purchaser shall not be obligated to accept or be satisfied with any provision or term of, or any wording or disclosure made or referenced in, any draft Schedule provided by the Seller; (ii) the Purchaser may in its sole and absolute discretion determine at any time, for any reason or for no reason, prior to Closing without any liability or obligation of any nature whatsoever in respect of or in any way whatsoever connected with this Agreement, any transaction contemplated by this Agreement or any dealings or matters in the negotiation or execution of this Agreement to terminate this Agreement and not to proceed with the Closing, and if the Seller is a Party in Fault at the time of such termination, the Purchaser shall have the rights and remedies specified in Section 2.4(f); and (iii) neither the Purchaser’s having reviewed, commented on, accepted, approved or asked questions in respect of all or any provision of any Schedule, nor the attachment of Schedules to this Agreement, shall to any extent limit or reduce Purchaser’s rights or remedies in respect of any untruth, inaccuracy or incompleteness in the Schedules or the Seller’s representations and warranties in this Agreement or the Seller’s obligation to ensure that all of the Schedules and all of the Seller’s representations and warranties are true, accurate and complete in all respects at the times specified in this Agreement.

 

1.                Definitions.  In addition to the terms defined in the foregoing recitals, the following terms shall have the respective meanings set forth in this section.

 

1.1              “Affiliate” means in respect of any Person, any Person (directly or indirectly) controlling, controlled by or under common control with such Person.

 

1.2.             “Applicable Term” means in respect of a SmartPac Unit produced or sold in a particular nation, country or other jurisdiction that has issued one or more Seller Patents pertaining to the SmartPac  Unit, the period of time beginning on the Closing Date and continuing until the expiration of the last to expire of such Seller Patents and means in respect of the licensing by any Purchaser Entity of any Seller Patent the expiration or termination of such Seller Patent, in each case unless and until terminated prior thereto by written agreement of the Seller and Purchaser.

 

1.3.             “Closing” and “Closing Date” have the meanings set forth in Section 2.

 

1.4.             “Effective Date” has the meaning set forth in the preamble above.

 

1.5.              “EU” means all member states (i.e., nations or countries) that as of the Closing Date are part of the European Union.

 

1.6.             “EU Initial Purchase Price Amount” has the meaning set forth in Section 3.2(a).

 

1.7.             “EU Patents” means any patent that is included in the Seller Patents and that was issued to any Seller Entity prior to the Closing Date by, or as to which any Seller Entity filed prior to the Closing Date an application for a patent with, the appropriate governmental office of any nation included in the EU.

 

1.8.             “Extraordinary License” means in respect of any Seller Patent a license agreement between a Purchaser Entity and a Person other than a Purchaser Entity pursuant to which such Person is granted the right to use or exploit the Seller Patent on an exclusive basis for a specified term of more than ten (10) years in respect of an exclusive territory and whereby such Person pays a substantial royalty at the commencement of such license agreement and is not obligated to pay more than 25% of the Purchaser’s customarily charged ongoing license royalty charge.

 

  

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1.9.             “Guarantee” means the Guarantee by and between the Purchaser and Craig Machado being executed and delivered as of the Effective Date and providing for Craig Machado to guarantee the Seller’s obligations under this Agreement.

 

1.10.           “Issuing Authority” means the USPTO and each other governmental entity anywhere in the world which engages in the grant or registration of patents, trademarks or other intellectual property.

 

1.11.           “Key Seller Parties” means Craig Machado and Christian Machado, respectively the Chairman and President of the Seller and the Secretary of the Seller, and respectively the holders of 49.4% and 32.6% of the Seller’s issued and outstanding common stock.

 

1.12.           “Maximum Closing Payment” means Five Hundred Thousand Dollars ($500,000).

 

1.13.           “Net Third Party Licensing Royalties” means, except as provided below in this definition, cash or the fair market value of other consideration received or collected by a Purchaser Entity in connection with the licensing of Seller Intellectual Property to Persons who are not Purchaser Entities, less (i) costs and expenses incurred by a Purchaser Entity in arranging for and implementing the relevant licensing transaction, (ii) amounts refunded by a Purchaser Entity to the paying party, (iii) applicable sale and other excise, taxes, use taxes tariffs, export license fees and duties paid or allowed and (iv) commissions (not in excess of twelve percent (12%) of the  cash and fair market value of other consideration receivable by a Purchaser Entity) paid to employee or non-employee sales or licensing persons of a Purchaser Entity in respect of such transactions.  Net Third Party Licensing Royalties do not include any amount in respect of or determined on the basis of (a) Net Sales, (b) per-unit sales of SmartPac Units, (c) sales or leases of equipment or freight, shipping, insurance or related charges in connection with sales or leases of equipment, (d) fees for services provided to or at the request of any licensee or (e) Extraordinary Licenses.  Within forty-five (45) days following receipt of Seller’s reasonable written request, but not more often than once in any six-month period, the Purchaser shall provide the Seller with receipts or other reasonably available documentation to evidence amounts received and costs, expenses and other amounts used to determine the Net Third Party Licensing Royalties as defined herein.

 

1.14.           “Net Sales” means the cash or the fair market value of other consideration received or collected from commercial sales by any Purchaser Entity of Seller Products to Persons who are not Purchaser Entities less (i) trade, quantity or other discounts, (ii) shipping, storage, packing and insurance costs incurred by a Purchaser Entity in connection with such sale, (iii) amounts repaid or credited by reason of rejections, defects or returns or because of retroactive price reductions, (iv) applicable sales and other excise taxes, use taxes, tariffs, export license fees and duties paid or allowed and (v) commissions paid to employee or non-employee sales persons of a Purchaser Entity in respect of such sales.  Net Sales do not include any amount of Net Third Party Licensing Royalties or royalties or other payments in respect of Extraordinary Licenses. At Seller’s reasonable written request, but not more often than once per calendar quarter, the Purchaser shall provide the Seller with receipts or other reasonably available documentation to evidence amounts received and costs, expenses and other amounts used to determine the Net Sales as defined herein.

 

  

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1.15.           “Partial Unit Royalty” shall mean in respect of any particular provision of this Agreement pertaining to sales of Partial Units, the amount specified in Section 3.5 for such provision.

 

1.16.           “Parties” means the Seller and the Purchaser.

 

1.17.           “Party in Fault” shall have the meaning set forth in Section 2.4(f).

 

1.18.            “Person” means a natural person and any corporation, partnership, limited liability company, trust, unincorporated organization, body politic, government, governmental agency or instrumentality or other entity of any type whatsoever.

 

1.19.           “Purchase Price” has the meaning set forth in Section 3.

 

1.20.           “Purchaser Closing Payoff Amount” means $54,452, which represents funds advanced by Purchaser Entities to the Seller prior to the Effective Date.

 

1.21.           ”Purchaser Entities” means the Purchaser and any Affiliate of the Purchaser.

 

1.22.           “Purchaser Indemnified Parties” has the meaning set forth in Section 7.1.

 

1.23.           “Restrictive Covenants Agreement” means the Restrictive Covenants Agreement to be entered into by and among the Key Seller Parties and the Purchaser on the Closing Date in substantially the form attached as Exhibit C with respect to the Key Seller Parties’ agreements as to confidentiality, non-competition, non-solicitation and other matters,

 

1.24.           “Restricted Period” has the meaning set forth in Section 10.3.

 

1.25.           “ROW Initial Purchase Price Amount” has the meaning set forth in Section 3.3(a).

 

1.26.           “ROW Nation” means any nation other than the United States, Mexico, Canada or any nation included in the EU.

 

1.27.           “ROW Patents” means any patent that is included in the Seller Patents and that was issued to any Seller Entity prior to the Closing Date by, or as to which any Seller Entity filed prior to the Closing Date an application for a patent with, the appropriate governmental office of any ROW Nation.

 

1.28.           “Seller Assets and Rights” means the Seller Intellectual Property and the Seller License Agreements.

 

1.29.           “Seller Business” means the businesses of using, applying, licensing or otherwise exploiting, in whole or in part, any or all of the Seller Intellectual Property or of marketing, selling, leasing, distributing, assembling, making, manufacturing, producing, servicing or otherwise dealing with Seller Products.

 

  

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1.30.           “Seller Copyright” means all written, typed, printed, drawn, graphic, computer-designed or photographic depictions or materials owned or used by or licensed to any Seller Entity in connection with the Seller Business.

 

1.31.           “Seller Entities” means the Seller and all Affiliates of the Seller.

 

1.32.           “Seller Equipment” means machinery and equipment used at any time by any Seller Entity in connection with the Seller Business..

 

1.33.           “Seller Improvement” means any creation, development, idea, invention, discovery, enhancement or improvement that any Seller Entity conceives of, creates, develops or acquires, whether by license or otherwise, in respect of the subject matter of any other Seller Intellectual Property  or in respect of Seller Products.

 

1.34.            “Seller Intellectual Property” means all Seller Patents, Seller Trademarks, Seller Copyrights, Seller Knowhow, Seller Programs and all other types of intellectual property owned or used by or licensed to any Seller Entity of any nature or type whatsoever that has been used, licensed by or to any Seller Entity or is useable in connection with the Seller Business or any part thereof.

 

1.35.           “Seller Inventory” means all raw materials, goods, components, packaging, supplies and other materials of Seller Entities that exists or was acquired for use in the Seller Business.

 

1.36.           “Seller Knowhow” means all Seller Technical Information and all methods, technology, knowhow, trade secrets, inventions, processes, procedures and other knowledge that is or has been used or licensed by or to any Seller Entity or that is useable in any way in connection with any other Seller Intellectual Property or in connection with the Seller Business.

 

1.37.           “Seller License Agreements” means any agreement, understanding or arrangement whereby any Seller Entity has authorized or permitted any Person to use, apply, exploit or otherwise enjoy any Seller Intellectual Property.

 

1.38.           “Seller Patents” means all patents and patent applications owned, used or filed by or licensed to any Seller Entity and all divisions, reissues, substitutions, continuations, continuations-in-part, substitutions and extensions of any of the foregoing (whether related to such patent directly or through one or more intervening issued patents or pending patent applications) and any other patents or patent applications which claims any Seller Improvement.

 

1.39.           “Seller Products” mean any process, product or part thereof, the production, use, sale, lease or licensing of which relates to or is covered by or relates in any way, to in whole or in part, any Seller Intellectual Property or has been sold under or in connection with any Seller Trademark or that in any way embodies, contains or has been developed or made through use of any Seller Intellectual Property..

 

1.40.            “Seller Programs” means all programs, applications, instructions, commands, source code and object code, whether in printed, electronic or other format of computers, servers, processors or other electronic devices or processes.

 

  

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1.41.           “Seller Protective Rights” shall mean in respect of Seller Patents as specified in Section 11, the rights from time to time, either through its own employees or other representatives, (a) during normal business hours of Seller Entities (i) to review and make copies of extracts of, the books and records of Seller Entities in respect of such Seller Patents and the Seller Entities’ use and licensing thereof and (ii) to consult with and provide advice to the senior officers of the Seller as to the Seller Entities’ use and licensing thereof, (b) to review and make copies of extracts of such other information in respect of such Patents as the Seller may reasonably request in writing and (c) if the Seller reasonably believes that the Purchaser is not causing to be taken all steps required by the relevant Issuing Authority to be taken to preserve and maintain the grant by the relevant Issuing Authority of any such Seller Patent, to require the Purchaser at the Purchaser’s expense to take such steps, provided, however, that the Seller shall not be required to seek, apply for or otherwise pursue any Seller Patent before any Issuing Authority which as of the Closing Date shall not have issued or recorded such Seller Patent.

 

1.42.           “Seller Similar Intellectual Property” means any type of patent, trademark, knowhow or other intellectual property, whether registered with or under grant of right issued by any governmental office, which relates in whole or in part to the subject matter of the Seller Intellectual Property or to any Seller Product or which provides for any alternative means of accomplishing or producing the purpose or result of any material aspect of any Seller Intellectual Property or of any Seller Product.

 

1.43.           “Seller Technical Information” means all drawings, schematics, manuals, instructions, measurements, data, specifications, technology and information, including improvements, developments and enhancements in respect thereof, whether or not patentable, which is necessary or useful for the use, implementation, sale, leasing or other commercial exploitation of any other Seller Intellectual Property or the production, assembly, design, sale, leasing or licensing of Seller Products, which is now known to or hereafter becomes known any Seller Entity.

 

1.44.           “Seller Trademarks” means all registered or unregistered now or hereafter held or used by or licensed to any Seller Entity in connection any Seller Patent (whether relating to the United States or any other part of the world) or any Seller Product, together in each case with all designs, logos, styles and other materials used in connection therewith.

 

1.45.           “SmartPac Unit” means (i) a container system that incorporates the following aspects of the technology under Seller Patents (but not including modifications of technology in the future) and that provides a modified atmospheric packaging system for the produce, floral and other industries for the purpose of reducing spoilage and promoting freshness: a carton, a PET plastic lid, a system for managing environmental conditions specific to the product enclosed within, and a seal (a “Full Unit”) and (ii) a component of the container system described in clause (i) of this definition but only if that component incorporates the technology under Seller Patents (but not including modifications of technology in the future) and that component is used in a container system of the type described in such clause (i) (a “Partial Unit”).

 

1.46.           “Stock Option Agreement” means an agreement substantially in the form of Exhibit A providing for the issuance to the Seller of options to purchase shares of common stock of the Purchaser for the purchase price of thirty cents ($.30) per share on the terms and conditions set forth therein.

 

  

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1.47.            “Territory” means everywhere in the world.

 

1.48.           “Third party claim” has the meaning set forth in Section 7.3.

 

1.49.           “Third Party Proposal” has the meaning set forth in Section 2.8.

 

1.50.           “Third Party Transaction” has the meaning set forth in Section 2.8.

 

1.51.           “US/Mexico/Canada/Canada Patent” means any patent that is included in the Seller Patents and that was issued to any Seller Entity prior to the Closing Date by, or as to which any Seller Entity filed prior to the Closing Date an application for a patent with, the USPTO or the appropriate Issuing Authority of Mexico or Canada.

 

1.52.           “US/Mexico/Canada Royalty Amount” has the meaning set forth in Section 3.1(b)(i).

 

1.53.           “USPTO” means the United States Patent and Trademark Office.

 

1.54.           “US Patents” means any patent that is included in the Seller Patents and that was issued to any Seller Entity by, or as to which any Seller Entity filed an application with, the USPTO prior to the Closing Date.

 

2.                Seller Intellectual Property; Assignment of Certain Seller License Agreements; Equipment and Inventory Right of First Refusal.

 

2.1              Sale. Seller shall at the Closing sell, assign, transfer and convey to the Purchaser Seller’s entire right, title and interest in and to (i) all Seller Intellectual Property, together with the goodwill of the Seller Business carried on in connection with any Seller Intellectual Property (provided, however, that as to any Seller Intellectual Property licensed by any Person to a Seller Entity, the Seller Intellectual Property that shall be assigned, transferred and conveyed shall be the Seller Entity’s rights under such license); (ii) all claims, demands and rights of action, both statutory and based upon common law, that any Seller Entity has or might have by reason of any infringement of all or any part of any Seller Intellectual Property prior to, on or after the Effective Date, together with the right to prosecute such claims, demands and rights of action in Purchaser’s own name; and (iii) the Seller License Agreements listed on Schedule 2.1 (excluding, however, any liability or obligation in respect of any breach or claim of breach by any Seller Entity of any provision thereof).

 

2.2              Guarantee Agreement.  As of the Effective Date, Craig Machado is executing and delivering the Guarantee Agreement.

 

  

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2.3              ROFR as to Seller Equipment and Seller Inventory.  (a) If after the Effective Date the Seller wishes to sell or otherwise dispose of any Seller Equipment or Seller Inventory to any Person, Seller shall give the Purchaser not less than thirty (30) days prior written notice of such proposed sale or other disposition and offer to sell such Seller Equipment or Seller Inventory to the Purchaser on the same price, terms and conditions as were offered by such Person, which price, terms and conditions shall be disclosed in full in such notice.  The Purchaser shall have thirty (30) days after the giving of such notice to accept such offer by written notice to the Seller.  If the Purchaser fails to respond within such thirty (30) day period, the Purchaser shall be deemed to have rejected such offer.  If the Purchaser accepts such offer, then the closing of such purchase and sale shall take place on the sixtieth (60th) day after the Seller’s giving of the notice of the offer to sell (or such other date as the Purchaser and the Seller shall agree in writing).  If the Purchaser fails to accept such offer as provided above, then for a period of sixty (60) days after the Seller’s giving of the offer notice to the Purchaser, the Seller shall have the right to sell the Seller Equipment or Seller Inventory specified in the Seller’s offer notice to the same Person.  If such sale fails to occur within such sixty (60) day period, then the Seller’s ability to sell or otherwise dispose of the Seller Equipment or Seller Inventory shall continue to be subject to the terms of this Section 2.3.  If such sale does so occur but includes less than all Seller Equipment and Seller Inventory, then the remaining Seller Equipment and Seller Inventory shall remain subject to the terms of this Section 2.3.

 

(b)       If the Seller wishes to scrap or abandon any Seller Equipment or Seller Inventory, then Seller shall so inform the Purchaser at least thirty (30) days prior to the scrapping or abandonment of the Seller Equipment or Seller Inventory and offer to allow the Purchaser to take possession of such Seller Equipment or Seller Inventory for no consideration. The Purchaser shall have thirty (30) days after the giving of such notice to accept such offer by written notice to the Seller.  If the Purchaser fails to respond within such thirty (30) day period, the Purchaser shall be deemed to have rejected such offer.  If the Purchaser accepts such offer, then the Purchaser may take possession of such Seller Equipment or Seller Inventory at any time on or prior to the sixtieth (60th) day after the Seller’s giving of the notice of such offer(or such other date as the Purchaser and the Seller shall agree in writing).  If the Purchaser fails to accept such offer as provided above, then for a period of sixty (60) days after the Seller’s giving of the offer notice to the Purchaser, the Seller shall have the right to abandon or scrap the Seller Equipment or Seller Inventory for no consideration.  If such abandonment or scrapping fails to occur within such sixty (60) day period, then the Seller’s ability to abandon or scrap the Seller Equipment or Seller Inventory shall continue to be subject to the terms of this Section 2.3.  If such abandonment or scrapping does so occur but includes less than all Seller Equipment and Seller Inventory, then the remaining Seller Equipment and Seller Inventory shall remain subject to the terms of this Section 2.3.

 

2.4              Closing.

 

(a)              Date and Place.  The closing of the sale and purchase of the Seller Assets and  Rights and related matters (the “Closing”) shall take place on such business day in Chicago, Illinois (the “Closing Date”) as the Purchaser shall specify by not less than two days prior notice to the Seller but not later than the thirtieth (30th) day next following the date as of which the Seller delivers to the Purchaser a complete set of reasonably complete Schedules to this Agreement as contemplated by the introductory language to this Agreement (or the next following business day in Chicago, Illinois if such thirtieth (30th) day shall not be a business day in Chicago, Illinois) or on such other date as the Parties shall specify in writing.  The Closing shall take place at the offices of the Purchaser’s counsel in Chicago, Illinois.

 

  

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(b)           Closing Procedure.  At the Closing, each Party shall execute and deliver or cause to be executed and delivered to the other the agreements and instruments as shall be required of such Party and take such actions as shall be required of such Party as provided herein, and the Purchaser shall pay to the Seller the portion of the Purchase Price to be paid by the Purchaser at the Closing as specified in Section 3.1.

 

(c)            Ongoing Diligence; Mutual Cooperation.  From the Effective Date through the Closing Date, (i) the Purchaser shall be entitled to conduct and undertake any and all investigation, review and other diligence activities in respect of the Seller, the Seller Assets and Rights, the transactions contemplated by this Agreement and the Seller Business as the Purchaser may in its sole discretion deem necessary or appropriate; (ii) on request by the Purchaser, the Seller shall provide to the Purchaser any and all information and documents in its possession or control; and (iii) the Parties shall honor their respective obligations in this Agreement and in all other respects endeavor in good faith to take, and cooperate with the other Party in taking, all actions in respect of all matters deemed necessary or appropriate in connection with the transactions contemplated by this Agreement.

 

(d)           Conditions to Purchaser Obligations. The obligation of the Purchaser to consummate the purchase and sale of the Seller Assets and Rights and related matters at the Closing shall be subject to the satisfaction, in the Purchaser’s sole and exclusive discretion, with all of the following or the waiver by the Purchaser, in the Purchaser’s sole and exclusive discretion, of the satisfaction of any one or more of the following:

 

	
  

	
(i)

	
All representations and warranties by the Seller herein shall have been true and complete when made as of the Effective Date and on the Closing Date shall be  true and complete  as if made on and as of the Closing Date;

 

	
  

	
(ii)

	
The Seller shall have transferred to Purchaser Entities all of the Seller Assets and Rights and shall have fulfilled all covenants and agreements of the Seller hereunder required to be fulfilled by or on the Closing Date;

 

	
  

	
(iii)

	
The Seller’s Board of Directors and stockholders shall have duly and validly approved this Agreement and all transactions contemplated by this Agreement in accordance with the Seller’s articles of incorporation, bylaws and applicable law;

 

	
  

	
(iv)

	
The Seller shall have delivered to the Purchaser the written certification by the President of the Seller attesting to the matters in (i), (ii) and (iii) above and certified and attached copies of the Board of Director and stockholder resolutions contemplated in (iii) above and certified and attached copies of Seller’s articles of incorporation and bylaws, which certification shall be satisfactory in form and substance to the Purchaser;

 

	
  

	
(v)

	
The Seller shall have executed and delivered, or cause to be executed and delivered, to the Purchaser all agreements and instruments required by the terms of this Agreement to be delivered at the Closing;

 

  

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(vi)

	
Except as disclosed in Schedule 4.14 there shall not be pending against any Seller Entity any legal proceeding of any nature or type; any governmental investigation or proceeding before the USPTO or any other Issuing Authority anywhere in the world; or against any Person any legal proceeding or governmental investigation that challenges the legality, validity or propriety of any transaction contemplated by this Agreement;

 

	
  

	
(vii)

	
No Seller Entity shall have received any written communication claiming, stating or indicating, and no legal proceeding, governmental investigation or proceeding before the USPTO or any other Issuing Authority shall have been commenced, which claims, state or indicates, that any Seller Intellectual Property infringes, misappropriates or otherwise violates, or may infringe upon, misappropriate or otherwise violate, any intellectual property of any other Person or that any Seller Intellectual Property has not been validly issued or registered or is not being validly used;

 

	
  

	
(viii)

	
The Purchaser’s review of the Seller Assets and Rights, the Seller Business or other information shall not have revealed any indication that the purchase or use by the Purchaser of the Seller Assets and Rights or any portion thereof will cause any Purchaser Entity to incur or be named in any legal proceeding of any nature or type or any governmental investigation or proceeding before the USPTO or any other Issuing Authority;

 

	
  

	
(ix)

	
A search of Uniform Commercial Code, tax lien or judgment lien records in the States of California and Delaware shall not have revealed any records or liens, security interests or claims as to any Seller Assets and Rights except as disclosed in a Schedule to this Agreement;

 

	
  

	
(x)

	
A search of state and federal court records of state or federal courts sitting in the States of California and Delaware shall not have revealed the pendency of any legal proceeding against any Seller Entity except as disclosed in a Schedule to this Agreement;

 

	
  

	
(xi)

	
A review by patent counsel of the Seller Patents shall not have revealed, as determined in the sole discretion of the Purchaser, any material weakness in the strength of any Seller Patent, any material possibility of infringement by any Seller Patent of any rights of any other Person or any concern about the records of ownership of any Seller Patent;

 

	
  

	
(xii)

	
The Purchaser shall have obtained funds or binding commitments for funds equal in amount to the portion of the Purchase Price to be paid on the Closing Date;

 

	
  

	
(xiii)

	
The Purchaser shall have received the fully executed reaffirmation, satisfactory in form and substance to the Purchaser, of the Guarantee Agreement;

 

  

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(xiv)

	
The Key Seller Parties shall have executed and delivered the Restrictive Covenants Agreement; and

 

	
  

	
(xv)

	
From the Effective Date to the Closing Date, as determined by the Purchaser in its sole discretion, no material adverse event shall have occurred or become known to be reasonably likely to occur on or after the Closing Date with respect to any Seller Entity, the Seller Assets and Rights or the Seller Business.

 

(e)            Conditions to Seller Obligations. The obligation of the Seller to consummate the purchase and sale of the Seller Assets and Rights and related matters at the Closing shall be subject to the satisfaction, in the Seller’s sole and exclusive discretion, with all of the following or the waiver by the Seller, in the Seller’s sole and exclusive discretion, of the satisfaction of any one or more of the following:

 

	
  

	
(i)

	
All representations and warranties by the Purchaser herein shall have been true and complete when made as of the Effective Date and on the Closing Date shall be  true and complete  as if made on and as of the Closing Date;

 

	
  

	
(ii)

	
The Purchaser shall have paid the cash portion of the Purchase Price to be delivered to the Seller at the Closing and shall have fulfilled all other covenants and agreements of the Purchaser hereunder required to be fulfilled by or on the Closing Date;

 

	
  

	
(iii)

	
The Purchaser’s Board of Directors shall have duly and validly approved this Agreement and all transactions contemplated by this Agreement in accordance with the Purchaser’s articles of incorporation, bylaws and applicable law;

 

	
  

	
(iv)

	
The Purchaser shall have delivered to the Seller the written certification by the President of the Purchaser attesting to the matters in (i), (ii) and (iii) above and certified and attached copies of the Board of Director resolutions contemplated in (iii) above, which certification shall be satisfactory in form and substance to the Seller; and

 

	
  

	
(v)

	
The Purchaser shall have executed and delivered, or cause to be executed and delivered, to the Purchaser all agreements and instruments required by the terms of this Agreement to be delivered at the Closing.

 

  

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(f)           Termination.  Either Party shall be entitled to terminate this Agreement by written notice to the other Party on or prior to the Closing Date if any representation or warranty by the other Party shall have been false in any respect when made, if the other Party shall have failed to honor any obligation of such other Party in this Agreement or if any condition to the terminating Party’s obligations under this Agreement shall not have been satisfied as provided in this Section 2.3; provided, however, that a Party whose representations or warranties provided in or pursuant to this Agreement were false when made in any material respect or who is  in material breach of this Agreement (a “Party in Fault”) shall not be entitled to terminate.  If both Parties are Parties in Fault by the final date for Closing, then this Agreement shall terminate automatically without liability of either Party to the other in respect of this Agreement or the transactions contemplated hereby.  Termination of this Agreement shall be the sole remedy of the Parties hereto in the event the Closing fails to occur for any reason, except that a Party who is not a Party in Fault shall be entitled to specific performance by the Party if such other Party is a Party in Default and shall be entitled to recover from the Party in Default all costs and expenses, including but not limited to fees and expenses of counsel, incurred by the terminating Party in connection with evaluating, investigating and determining to engage in the transactions contemplated by this Agreement and in connection with the negotiation, execution and preparation for Closing of this Agreement and the transactions contemplated hereby.  For purposes of this Section 2.3(f), if any failure of any representation or warranty by a Key Seller Party in the Guarantee and Key Parties Restrictions Agreement and any failure by a Key Seller Party to honor an obligation of the Key Seller Party in the Guarantee and Key Parties Restrictions Agreement shall be attributed to the Seller and shall cause the Seller to be a Party in Fault.

 

2.5            Closing Deliveries. At the Closing:

 

(a)           Each transferring Seller Entity shall execute and deliver to the Purchaser an instrument for each of the Seller Patents and Seller Trademarks that have been issued by or filed with the USPTO, which instrument shall be suitable for recording with the USPTO the assignment of each such Seller Patent and Seller Trademark and shall be reasonably satisfactory in form and substance to the Purchaser.

 

(b)           Each transferring Seller Entity shall execute and deliver to the Purchaser a form of assignment reasonably satisfactory in form and substance to the Purchaser as to all Seller Patents and Seller Trademarks issued by or filed with any Issuing Authority other than the USPTO.

 

(c)           Each transferring Seller Entity shall execute and deliver to the Purchaser a form of Bill of Sale, Assignment and Assumption reasonably satisfactory in form and substance to the Purchaser in order to provide for the sale and assignment by each Seller Entity of the Seller Inventory and the Seller License Agreements set forth on Schedule 2.1 and the Purchaser shall execute and deliver the same instrument in acceptance and assumption of the future obligations of Seller Parties under such Seller License Agreements but not any obligation for any breach of any provision thereof by any Seller Entity or any obligation to pay any money in respect of any action, event, circumstance, period of time or transaction taking place or occurring on or prior to the Closing Date.

 

  

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2.6           Future Filings. In addition, from time to time from and after the Closing Date, each Seller Entity shall on request by a Purchaser Entity execute and deliver to the requesting Purchaser Entity such form or forms of transfer or assignment as may be necessary or appropriate, in the reasonable judgment of such Purchaser Entity in order to effectuate the transfer or assignment of each Seller Patent and each Seller Trademark in all jurisdictions of the world where it may be necessary or appropriate in the judgment of the requesting Purchaser Entity to record or file such form.  As of the Closing Date, the Seller shall also execute and deliver to the Purchaser an Irrevocable Power of Attorney reasonably satisfactory in form and substance to the Purchaser to authorize each Purchaser Entity to execute and record or file in any governmental office anywhere in the world any instrument deemed necessary or appropriate by any Purchaser Entity in order to provide for or facilitate the assignment of Seller Patents and Seller Trademarks as provide

 

2.7           Conduct of Business.  During the time period from the Effective Date until the earlier to occur of (a) the Closing and (b) the termination of this Agreement in accordance with the provisions of this Section 2, Seller covenants and agrees that, except as expressly contemplated by this Agreement, Seller will not, without Purchaser’s prior written consent:  (i) enter into any transaction that would reasonably be expected to materially and adversely affect the Seller Assets and Rights or any portion of them; (ii) enter into any, or amend, modify, terminate, release or waive in whole or in part any provision or rights under any, license agreement or other grant of permission for any Person to use, sublicense or otherwise exploit any Seller Intellectual Property; (iii) enter into any, or amend, modify, terminate, release or waive in whole or in part any provision or rights under any, material contract; (iv) grant or knowingly permit any lien, claim, encumbrance or security interest on any of the Seller Assets and Rights; (v) sell, transfer, assign, convey, lease, license or otherwise dispose of or license any of the Seller Assets and Rights; (vi) enter into any contract, option or other right for the purchase or sale of any of the Seller Assets and Rights; (vii) waive or release any material right or claim relating to the Seller Assets and Rights or any portion thereof; or (viii) take or agree in writing or otherwise to take, any of the actions described in clauses (i) through (vii) in this Section 2.7.

 

2.8           No Other Negotiations.  From and after the Effective Date until the Closing or termination of this Agreement pursuant to this Section 2, no Seller Entity will with respect to the Seller Assets and Rights or any portion of them, (i) solicit, initiate, seek, facilitate or induce the making, submission or announcement of any Third Party Proposal (as hereinafter defined), (ii) enter into, participate in, maintain or continue any communications or negotiations regarding, or deliver or make available to any Person any information with respect to, or take any other action regarding, any Third Party Proposal, (iii) agree to, accept, approve, endorse or recommend any Third Party Proposal, or (iv) enter into any letter of intent or any other contract contemplating or otherwise relating to any Third Party Proposal.  Each Seller Entity will immediately cease and cause to be terminated any and all existing activities, discussions or negotiations with any Persons conducted prior to or on the Effective Date with respect to any Third Party Proposal.  “Third Party Proposal” means any offer, proposal, inquiry or indication of interest (other than an offer, proposal, inquiry or indication of interest by the Purchaser) contemplating or otherwise relating to any Third Party Transaction. “Third Party Transaction” means the possible sale, purchase, lease or license of all or any of the Seller Assets and Rights. Seller shall promptly notify the Purchaser after receipt by Seller, of (i) any Third Party Proposal, or (ii) any request for information relating to the Seller Assets and Rights or any portion thereof or for access to any of the properties, books or records of Seller relating to the Seller Assets and Rights or any portion thereof by any Person or Persons other than the Purchaser.  Seller shall keep the Purchaser reasonably informed of the status of any such inquiry, proposal or offer and any correspondence or communications related thereto.

 

  

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3.           Purchase Price.  Purchaser hereby agrees to pay, and grant options to, the Seller as follows in respect of the sale, assignment, transfer and conveyance of the Seller Assets and Rights (such amounts and issuance being referred to herein as the “Purchase Price”).

 

3.1           US, Mexico and Canada.

 

(a)           At the Closing, Purchaser shall pay to the Seller in cash or other immediately avalable funds the amount determined by subtracting (i) the Purchaser Payoff Amount from (ii) the Maximum Closing Payment. 

 

	
  

	
(b)

	
(i)  Subject to Section 3.1(h) and Section 3.5, until such time as the amounts paid to Seller pursuant to this Section 3.1(b)(i) total in the aggregate FOURTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($14,500,000) (the “US/Mexico/Canada Royalty Amount”), Purchaser hereby agrees to pay to Seller as provided below the following amounts: As to sales by any Purchaser Entity of SmartPac Units in the United States, Mexico or Canada, (i) a royalty of TWENTY-FIVE CENTS ($.25) per Full  Unit and of the Partial Unit Royalty per Partial Unit and (ii) a royalty of FIFTY PERCENT (50%) of the Net Third Party Licensing Royalties received by the Purchaser Entities  from any licensee (other than any Purchaser Entity) in respect of the grant of the right to use or otherwise exploit Seller Patents in the United States, Mexico or Canada.

 

(ii) If on or prior to the end of the fifteen-year period commencing on the Closing Date (or such longer period as the Seller and Purchaser may agree in writing), the Purchaser shall not have paid to the Seller royalties pursuant to Section 3.1(b)(i) which aggregate at least the US/Mexico/Canada Royalty Amount, then (unless (x) the Seller or a Key Seller Party shall have materially breached this Agreement, the Guaranty or the Key Parties Restriction Agreement and not cured the same to the satisfaction of the Purchaser is its sole discretion or (y) the Seller or a Key Seller Party shall have made a material misrepresentation therein or in any other agreement or instrument delivered in connection therewith) the Purchaser shall at the Purchaser’s sole option, either pay to the Seller the difference between the US/Mexico/Canada Royalty Amount and the aggregate amount of such royalties paid or re-convey all of the US/Mexico/Canada Patents to the Seller to the extent they exist and have not expired by such time.  All amounts paid by a Purchaser Entity pursuant to Section 3.1(b)(i) and this Section 3.1(b)(ii) shall be counted toward the payment of the US/Mexico/Canada Royalty Amount.  Such re-conveyance of the US/Mexico/Canada Patents shall be the Seller’s sole right and remedy for the failure of the Purchaser to pay the US/Mexico/Canada Royalty Amount.  If the Seller wishes to exercise its right to have the US/Mexico/Canada Patents re-conveyed to the Seller, the Seller must within thirty (30) days after the end of such fifteen-year period so notify the Purchaser in writing and reimburse the Purchaser Entities for any and all costs and expenses incurred by any Purchaser Entity in maintaining or pursuing the US/Mexico/Canada Patents during such fifteen-year period.  If the Seller fails to take such actions prior to the end of such thirty (30) day period, the Seller shall be deemed to have forfeited its right to have the US/Mexico/Canada Patents re-conveyed, and all of the same shall irrevocably belong to the Purchaser.  SUCH RE-CONVEYANCE SHALL BE ON AN “AS IS,WHERE IS” BASIS ENTIRELY WITHOUT REPRESENTATION, WARRANTY, COST, EXPENSE OR LIABILITY TO THE PURCHASER ENTITIES, PROVIDED, HOWEVER, THAT THE PURCHASER SHALL REPRESENT AND WARRANT IN WRITING AFTER RECEIPT OF THE SELLER’S NOTICE THAT IT WISHES TO EXERCISE ITS RIGHT TO RECONVEYANCE THAT THE US/MEXICO/CANADA PATENTS ARE NOT SUBJECT TO ANY LIEN, CLAIM OR ENCUMBRANCE CREATED BY A PURCHASER ENTITY OTHER THAN LICENSES OR OTHER RIGHTS TO USE GRANTED BY A PURCHASER ENTITY (OTHER THAN TO OTHER PURCHASER ENTITIES).  AT THE TIME OF RE-CONVEYANCE OF THE US/MEXICO/CANADA PATENTS, THE SELLER SHALL ASSUME ALL SUCH LICENSES AMD OTHER RIGHTS (OTHER THAN OBLIGATIONS FOR BREACH BY A PURCHASER ENTITY PRIOR TO SUCH RE-CONVEYANCE). NO PURCHASER ENTITY SHALL HAVE ANY OBLIGATION TO MAINTAIN OR SAFEGUARD ANY US/MEXICO/CANADA PATENT.  ALL REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE AND ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, ARE HEREBY EXPRESSLY DISCLAIMED.

 

  

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(iii) Subject to Section 3.1(h), in addition to the amounts payable pursuant to Sections 3.1(b)(ii), until such time as the sum of (A) the royalties paid to Seller pursuant to this Section 3.1(b)(iii), (B) the royalties paid to Seller pursuant to Section 3.2(b) and (c) and (C) all other amounts paid by Purchaser to Seller pursuant to Section 3.2(a) total in the aggregate ONE MILLION DOLLARS ($1,000,000), Purchaser hereby agrees to pay to Seller as provided below a royalty of TWENTY-FIVE PERCENT (25%) of the Net Third Party Licensing Royalties received from any licensee of Purchaser (other than any Purchaser Entity) in respect of the grant of the right to use or otherwise exploit Seller Patents in the United States, Mexico or Canada; provided, however, that such TWENTY-FIVE PERCENT (25%) of the Net Third Party Licensing Royalties shall no longer be payable after the end of the six-month period specified in Section 3.2(b) (as extended by mutual written agreement of the Parties).

 

(c)           Subject to Section 3.1(h) and Section 3.5, from and after the time as of which the royalties paid to the Seller pursuant to Section 3.1(b)(i) and (ii) shall have aggregated FOURTEEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($14,500,000 Purchaser shall pay to Seller as provided below (i) a royalty of FIFTEEN CENTS ($.15) per Full Unit and of the Partial Unit Royalty per Partial Unit sold by a Purchaser Entity in the United States, Mexico or Canada and (ii) a royalty of TWENTY-FIVE PERCENT (25%) of the Net Third Party Licensing Royalties received by the Purchaser Entities  from any licensee (other than any Purchaser Entity) in respect of the grant of the right to use or otherwise exploit Seller Patents in the United States, Mexico or Canada.

 

  

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(d)           If Purchaser Entities re-sell (other than to another Purchaser Entity) all or any portion of the Seller Intellectual Property that includes all or substantially all of the US/Mexico/Canada Patents or grant an Extraordinary License of the Seller Intellectual Property (other than to another Purchaser Entity) that both includes substantially all of the the US/Mexico/Canada Patents and is for all or substantially all of the United States, Canada and Mexico prior to the payment of the US/Canada/Mexico Royalty Amount, the Purchaser shall pay to the Seller the sum of (x) the amount by which  the US/Canada/Mexico Royalty Amount exceeds  the aggregate amount of payments by Purchaser Entities under Section 3.1(b)(i), plus (y) the amount (if any) of 50% of the net resale value received by Purchaser Entities in excess of FIFTEEN MILLION DOLLARS ($15,000,000).  The net resale value shall be the aggregate value of all consideration received by the Purchaser in respect of the re-sale of all or any portion of the Seller Intellectual Property that includes the US/Mexico/Canada Patents (including for purposes of this clause (d) the aggregate amount of upfront royalties paid in respect of an Extraordinary License thereof), reduced by the sum of (i) all costs and expenses, including reasonable fees of counsel, incurred by Purchaser Entities in connection with such re-sale or Extraordinary License (which may include a reasonable allocation of costs and expenses that relate to a transaction that involves more than the US/Mexico/Canada Patents) and (ii) all taxes incurred by the Purchaser Entities in connection with such re-sale or grant of Extraordinary License.  If any consideration other than cash is received by Purchaser Entities in such re-sale, such consideration shall, at the Purchaser’s option, either be transferred pro-rata to the Seller or be retained by the Purchaser Entities which shall then pay to the Seller 50% of the reasonably determined fair market value thereof.

 

(e)           If the Purchaser re-sells (other than to another Purchaser Entity) all or any portion of the Seller Intellectual Property that includes the US/Mexico/Canada Patents or grants an Extraordinary License (other than to another Purchaser Entity) of all or any portion of the Seller Intellectual Property that includes the US/Mexico/Canada Patents after the payment of the US/Canada/Mexico Royalty Amount pursuant to Section 3.1(b)(i), the Purchaser shall pay to the Seller the amount (if any) of 25% of the net resale value received by the Purchaser in excess of FIFTEEN MILLION DOLLARS ($15,000,000).  The net resale value shall be the aggregate value of all consideration received by the Purchaser in respect of the re-sale of the the Seller Intellectual Property that includes US/Mexico/Canada Patents (including for purposes of this clause (e) the aggregate amount of upfront royalties paid in respect of an Extraordinary License thereof), reduced by the sum of (i) all costs and expenses, including reasonable fees of counsel, incurred by Purchaser Entities in connection with such re-sale or grant of an Extraordinary License (which may include a reasonable allocation of costs and expenses that relate to a transaction that involves more than the US/Mexico/Canada Patents) and (ii) all taxes incurred by the Purchaser Entities in connection with such re-sale or grant.  If any consideration other than cash is received by Purchaser Entities in such re-sale or grant, such consideration shall, at the Purchaser’s option, either be transferred pro-rata to the Seller or be retained by the Purchaser Entities which shall then pay to the Seller 25% of the reasonably determined fair market value thereof.

 

  

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(f)           Payment of royalties and other amounts by the Purchaser under this Section 3.1 shall be subject to receipt by a Purchaser Entity of, (i) in respect of sales by a Purchaser Entity, the purchase price of the SmartPac Unit, (ii) in respect of Net Third Party Licensing Royalties to a Purchaser Entity, the receipt of such Net Third Party Licensing Royalties and (iii) in respect of amounts payable on account of re-sale of, or grant of Extraordinary License of Seller Intellectual Property that includes any, US/Mexico/Canada Patents, the receipt of the re-sale or Extraordinary License consideration payable therefore.

 

(g)           All payments required of the Purchaser pursuant to this Section 3.1 shall be by wire transfer to the account set forth on Exhibit B.  All royalties payable pursuant to Section 3.1(b) or (c) shall be determined on a calendar quarter basis and shall be payable by the Purchaser no later than ninety (90) days after the end of each calendar quarter.

 

(h)           Notwithstanding anything to the contrary in this Agreement and subject to Section 3.5, (i) the amounts to be paid under Section 3.1(b) or (c) shall from and after the end of the Applicable Term in respect of any sale of any SmartPac Unit be reduced to SEVEN AND ONE-HALF CENTS ($.075) per Full Unit and to the Partial Unit Royalty per Partial Unit and (ii) no royalty or other payment under Section 3.1(b) or (c) shall be payable from or after the end of the Applicable Term in respect of any grant, whether before or after the Closing Date, of any right to use or exploit any Seller Intellectual Property in the United States, Mexico or Canada or any resale of, or grant of Extraordinary License as to, any Seller Intellectual Property that includes any United States/Mexico/Canada Patent.

 

  

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3.2

	
European Union

 

(a)           Prior to the end of the six-month period commencing on the Closing Date (or such longer period as the Seller and Purchaser may agree in writing), unless (x) the Seller or a Key Seller Party shall have materially breached this Agreement, the Guaranty or the Key Parties Restriction Agreement and not cured the same to the satisfaction of the Purchaser is its sole discretion or (y) the Seller or a Key Seller Party shall have made a material misrepresentation therein or in any other agreement or instrument delivered in connection therewith, the Purchaser shall, at the Purchaser’s sole option, either pay to the Seller in cash or other immediately available funds the aggregate amount of ONE MILLION DOLLARS ($1,000,000) (the “EU Initial Purchase Price Amount”) or re-convey all of the EU Patents to the Seller to the extent they exist and have not expired by such time.  All amounts paid by a Purchaser Entity pursuant to Secton 3.1(b)(iii) and Section 3.2(b) or (c) during such six-month period shall be counted toward the payment of, and as having been paid by the Purchaser toward, the EU Initial Purchase Price Amount.  Such re-conveyance of the EU Patents shall be the Seller’s sole right and remedy for the failure of the Purchaser to pay the EU Patent Initial Purchase Price Amount.  If the Seller wishes to exercise its right to have EU Patents re-conveyed to the Seller, the Seller must (i) within thirty (30) days after the end of such six (6) month period so notify the Purchaser in writing and reimburse the Purchaser Entities for any and all costs and expenses incurred by any Purchaser Entity in maintaining or pursuing EU Patents, (ii) execute and deliver to the Purchaser a promisory note reasonably satisfactory in form and substance to the Purchaser having as its initial principal amount the sum of all amounts paid to a Seller Entity pursuant to Section 3.1(b)(iii) and (iii) if requested by the Purchaser execute and deliver such agreements and instruments as the Purchaser may request, the terms of which shall be reasonably satisfactory to the Purchaser and the Seller, providing for the grant to the Purchaser of liens and security interests in and to the Seller Patents in order to secure the obligations of Seller Entities in respect of the promissory note delivered pursuant to clause (ii) above and such agreements and instruments providing for the grant of such liens and security interests.   If the Seller fails to take such actions prior to the end of such thirty (30) day period, the Seller shall be deemed to have forfeited its right to have the EU Patents re-conveyed, and all of the same shall irrevocably belong to the Purchaser.  SUCH RE-CONVEYANCE SHALL BE ON AN “AS IS,WHERE IS” BASIS ENTIRELY WITHOUT REPRESENTATION, WARRANTY, COST, EXPENSE OR LIABILITY TO THE PURCHASER ENTITIES, PROVIDED, HOWEVER, THAT THE PURCHASER SHALL REPRESENT AND WARRANT IN WRITING AFTER RECEIPT OF THE SELLER’S NOTICE THAT IT WISHES TO EXERCISE ITS RIGHT TO RECONVEYANCE THAT THE EU PATENTS ARE NOT SUBJECT TO ANY LIEN, CLAIM OR ENCUMBRANCE CREATED BY A PURCHASER ENTITY OTHER THAN LICENSES OR OTHER RIGHTS TO USE GRANTED BY A PURCHASER ENTITY (OTHER THAN TO OTHER PURCHASER ENTITIES).  AT THE TIME OF RE-CONVEYANCE OF THE EU PATENTS, THE SELLER SHALL ASSUME ALL SUCH LICENSES AND OTHER RIGHTS (OTHER THAN OBLIGATIONS FOR BREACH BY A PURCHASER ENTITY PRIOR TO SUCH RE-CONVEYANCE).  NO PURCHASER ENTITY SHALL HAVE ANY OBLIGATION TO MAINTAIN OR SAFEGUARD ANY EU PATENT.  ALL REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE AND ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, ARE HEREBY EXPRESSLY DISCLAIMED.

 

(b)           Subject to Section 3.2(h) and Section 3.5, until such time as the aggregate royalties paid to Seller Entities pursuant to this Section 3.2(b) total in the aggregate FOURTEEN MILLION DOLLARS ($14,000,000), Purchaser hereby agrees to pay to Seller as provided below the following royalty amounts: (i) as to sales by any Purchaser Entity of SmartPac Units in any nation that is part of the European Union, a royalty of TWENTY-FIVE CENTS ($.25) per Full Unit and of the Partial Unit Royalty per Partial Unit and (ii) as to Net Third Party Licensing Royalties received by the Purchaser Entities  a royalty of FIFTY PERCENT (50%) of the Net Third Party Licensing Royalties received by Purchaser from any licensee of Purchaser (other than any Purchaser Entity) in respect of the grant of the right to use or otherwise exploit Seller Patents in any nation within the European Union.  Royalties applied toward payment of the amount specified in Section 3.2(a) shall not be counted toward the FOURTEEN MILLION DOLLARS ($14,000,000) amount specified above.

 

  

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(c)           Subject to Section 3.2(h) and Section 3.5, from and after such time as the royalties paid to Seller Entities pursuant to Section 3.2(b) total in the aggregate FOURTEEN MILLION DOLLARS ($14,000,000) Purchaser hereby agrees to pay to Seller as provided below the following royalty amounts for the Applicable Term: (i) as to sales after such time by any Purchaser Entity of SmartPac Units in any nation that is part of the European Union, (i) a royalty of FIFTEEN CENTS ($.15) per Full Unit and of the Partial Unit Royalty per Partial Unit, and (ii) as to Net Third Party Licensing Royalties received by the Purchaser Entities after such time a royalty of TWENTY-FIVE PERCENT (25%) of the Net Third Party Licensing Royalties received by Purchaser from any licensee of Purchaser (other than any Purchaser Entity) in respect of the grant of the right to use or otherwise exploit Seller Patents in any nation within the European Union.

 

(d)           If Purchaser Entities re-sell (other than to another Purchaser Entity) all or any portion of the Seller Intellectual Property that includes all or substantially all of the EU Patents or grant an Extraordinary License (other than to another Purchaser Entity) of the Seller Intellectual Property that includes all or substantially all of the the EU Patents and that is for all or substantially all of the territory of the EU prior to the payment of the maximum amounts payable to the Seller pursuant to Sections 3.2(a) and (b), the Purchaser shall pay to the Seller the sum of (x) the amount by which FIFTEEN MILLION DOLLARS ($15,000,000) exceeds the aggregate amount of payments by Purchaser Entities under Sections 3.2(a) and (b), plus (y) the amount (if any) of 50% of the net resale value received by Purchaser Entities in excess of FIFTEEN MILLION DOLLARS ($15,000,000).  The net resale value shall be the aggregate value of all consideration received by Purchaser Entities in respect of the re-sale of all or any portion of the Seller Intellectual Property that includes the EU Patents (including for purposes of this clause (d) the aggregate amount of upfront royalties paid in respect of an Extraordinary License thereof), reduced by the sum of (i) all costs and expenses, including reasonable fees of counsel, incurred by Purchaser Entities in connection with such re-sale or Extraordinary License (which may include a reasonable allocation of costs and expenses that relate to a transaction that involves more than the EU Patents) and (ii) all taxes incurred by the Purchaser Entities in connection with such re-sale or grant of Extraordinary License.  If any consideration other than cash is received by Purchaser Entities in such re-sale, such consideration shall, at the Purchaser’s option, either be transferred pro-rata to the Seller or be retained by the Purchaser Entities which shall then pay to the Seller 50% of the reasonably determined fair market value thereof.

 

  

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(e)           If Purchaser Entities re-sell all or any portion of the Seller Intellectual Property that includes the EU Patents or grant an Extraordinary License of all or any portion of the Seller Intellectual Property that includes the EU Patents after the payment of the maximum amounts payable to the Seller pursuant to Section 3.2(a) and (b), the Purchaser shall pay to the Seller the amount of 25% of the net resale value received by the Purchaser in excess of the sum of FIFTEEN MILLION DOLLARS ($15,000,000).  The net resale value shall be the aggregate value of all consideration received by the Purchaser in respect of the re-sale of the Seller Intellectual Property that includes EU Patents (including for purposes of this clause (e) the aggregate amount of upfront royalties paid in respect of an Extraordinary License thereof), reduced by the sum of (i) all costs and expenses, including reasonable fees of counsel, incurred by Purchaser Entities in connection with such re-sale or grant of an Extraordinary License (which may include a reasonable allocation of costs and expenses that relate to a transaction that involves more than the EU Patents) and (ii) all taxes incurred by the Purchaser Entities in connection with such re-sale or grant.  If any consideration other than cash is received by Purchaser Entities in such re-sale or grant, such consideration shall, at the Purchaser’s option, either be transferred pro-rata to the Seller or be retained by the Purchaser Entities which shall then pay to the Seller 25% of the reasonably determined fair market value thereof.

 

(f)           Payment of royalties and other amounts by the Purchaser under this Section 3.2 shall be subject to receipt by a Purchaser Entity of, (i) in respect of sales by a Purchaser Entity, the purchase price of the SmartPac Unit, (ii) in respect of Net Third Party Licensing Royalties to a Purchaser Entity, the receipt of such Net Third Party Licensing Royalties and (iii) in respect of amounts payable on account of re-sale of, or grant of Extraordinary License of Seller Intellectual Property that includes any, EU Patents, the receipt of the re-sale or Extraordinary License consideration payable therefor.

 

(g)           All payments required of the Purchaser pursuant to this Section 3.2 shall be in United States dollars and shall be by wire transfer to the account set forth on Exhibit B.  All royalties payable pursuant to Section 3.2(b) or (c) shall be determined on a calendar quarter basis and shall be payable by the Purchaser no later than ninety (90) days after the end of each calendar quarter.  The conversion of non-US dollar currencies into US dollars for purposes of payments required of the Purchaser pursuant to this Section 3.2 shall be made on the basis of such generally published exchange rates as shall be reasonably available to the Purchaser at or around the time of payment to the Seller.

 

(h)           Notwithstanding anything to the contrary in this Agreement and subject to Section 3.5, (i) the amounts to be paid under Section 3.2(b) or (c) shall from and after the end of the Applicable Term in respect of any sale of any SmartPac Unit be reduced to SEVEN AND ONE-HALF CENTS ($.075) per Full Unit and to the Partial Unit Royalty per Partial Unit and (ii)  no royalty or other payment under Section 3.2(b) or (c)  shall be payable after the end of the Applicable Term in respect of any grant, whether before or after the Closing Date, of any right to use or exploit any Seller Patent in any nation that is part of the European Union or any re-sale of, or grant of Extraordinary License of any Seller Intellectual property that includes any EU Patents.

 

  

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3.3

	
Rest of the World.

 

(a)           Prior to the end of the eighteen (18) month period commencing on the Closing Date (or such longer period as the Seller and Purchaser may agree in writing), unless (x) the Seller or a Key Seller Party shall have materially breached this Agreement, the Guaranty or the Key Parties Restriction Agreement and not cured the same to the satisfaction of the Purchaser is its sole discretion or (y) the Seller or a Key Seller Party shall have made a material misrepresentation therein or in any other agreement or instrument delivered in connection therewith, the Purchaser shall, at the Purchaser’s sole option, either pay to the Seller in cash or other immediately available funds the aggregate amoun of ONE MILLION DOLLARS ($1,000,000) (the “ROW Initial Purchase Price Amount”),  or re-convey all of the ROW Patents to the Seller to the extent they exist and have not expired by such time.  All amounts paid by a Purchaser Entity pursuant to Section 3.3(b) or (c) during such eighteen (18) month period shall be counted toward the payment of the ROW Initial Purchase Price Amount.  Such re-conveyance of the ROW Patents shall be the Seller’s sole right and remedy for the failure of the Purchaser to pay such ROW Initial Purchase Price Amount.  If the Seller wishes to exercise its right to have ROW Patents re-conveyed to the Seller, the Seller must within thirty (30) days after the end of such eighteen (18) month period so notify the Purchaser in writing and reimburse the Purchaser Entities for any and all costs and expenses incurred by any Purchaser Entity in maintaining or pursuing ROW Patents.  If the Seller fails to take such actions prior to the end of such thirty (30) day period, the Seller shall be deemed to have forfeited its right to have the ROW Patents re-conveyed, and all of the same shall irrevocably belong to the Purchaser.  SUCH RE-CONVEYANCE SHALL BE ON AN “AS IS,WHERE IS” BASIS ENTIRELY WITHOUT REPRESENTATION, WARRANTY, COST, EXPENSE OR LIABILITY TO THE PURCHASER ENTITIES, PROVIDED, HOWEVER, THAT THE PURCHASER SHALL REPRESENT AND WARRANT IN WRITING AFTER RECEIPT OF THE SELLER’S NOTICE THAT IT WISHES TO EXERCISE ITS RIGHT TO RECONVEYANCE THAT THE ROW PATENTS ARE NOT SUBJECT TO ANY LIEN, CLAIM OR ENCUMBRANCE CREATED BY A PURCHASER ENTITY OTHER THAN LICENSES OR RIGHTS TO USE GRANTED BY A PURCHASER ENTITY (OTHER THAN TO OTHER PURCHASER ENTITIES). AT THE TIME OF RE-CONVEYANCE OF THE ROW PATENTS, THE SELLER SHALL ASSUME ALL SUCH LICENSES AND RIGHTS (OTHER  THAN FOR BREACH BY A PURCHASER ENTITY PRIOR TO SUCH RE-CONVEYANCE). NO PURCHASER ENTITY SHALL HAVE ANY OBLIGATION TO MAINTAIN OR SAFEGUARD ANY ROW PATENT.  ALL REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE AND ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, ARE HEREBY EXPRESSLY DISCLAIMED.

 

(b)           Subject to Section 3.3(h and Section 3.5, until such time as the aggregate royalties paid to Seller Entities pursuant to this Section 3.3(b) total in the aggregate NINE MILLION DOLLARS ($9,000,000), Purchaser hereby agrees to pay to Seller as provided below the following royalty amounts: (i) as to sales by any Purchaser Entity of SmartPac Units in any ROW Nation, (i) a royalty of TWENTY-FIVE CENTS ($.25) per Full Unit and of the Partial Unit Royalty per Partial Unit and (ii) as to Net Third Party Licensing Royalties received by the Purchaser Entities  a royalty of FIFTY PERCENT (50%) of the Net Third Party Licensing Royalties received by Purchaser from any licensee of Purchaser (other than any Purchaser Entity) in respect of the grant of the right to use or otherwise exploit Seller Patents in any ROW Nation.  Royalties applied toward payment of the amount specified in Section 3.3(a) shall not be counted toward the NINE MILLION DOLLARS ($9,000,000) amount specified above.

 

  

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(c)            Subject to Section 3.3(h) and Section 3.5, from and after such time as the royalties paid to Seller Entities pursuant to Section 3.3(b) total in the aggregate NINE MILLION DOLLARS ($9,000,000), Purchaser hereby agrees to pay to Seller as provided below the following royalty amounts for the Applicable Term: (i) as to sales after such time by any Purchaser Entity of SmartPac Units in any ROW Nation, a royalty of FIFTEEN CENTS ($.15) per Full Unit and of the Partial Unit Royalty per Partial Unit and (ii) as to Net Third Party Licensing Royalties received by the Purchaser Entities after such time a royalty of TWENTY-FIVE PERCENT (25%) of the Net Third Party Licensing Royalties received by Purchaser from any licensee of Purchaser (other than any Purchaser Entity) in respect of the grant of the right to use or otherwise exploit Seller Patents in any ROW Nation.

 

(d)           If Purchaser Entities re-sell all or any portion of the Seller Intellectual Property that includes all or substantially all of the the ROW Patents or grant an Extraordinary License of all or any portion of the Seller Intellectual Property that includes all or substantially all of the ROW Patents and that is for all or substantially all of the territory of the ROW Nations prior to the payment of the maximum amounts payable to the Seller pursuant to Section 3.3(a) and (b), the Purchaser shall pay to the Seller the sum of (x) the amount by which TEN MILLION DOLLARS ($10,000,000) exceeds the aggregate amount of payments by Purchaser Entities under Sections 3.3(a) and (b), plus (y) the amount (if any) of 50% of the net resale value received by the Purchaser Entities in excess of TEN MILLION DOLLARS ($10,000,000).  The net resale value shall be the aggregate value of all consideration received by the Purchaser in respect of the re-sale of all or any portion of the ROW Patents (including for purposes of this clause (d) the aggregate amount of upfront royalties paid in respect of an Extraordinary License thereof),  reduced by the sum of (i) all costs and expenses, including reasonable fees of counsel, incurred by Purchaser Entities in connection with such re-sale or grant (which may include a reasonable allocation of costs and expenses that relate to a transaction that involves more than the ROW Patents) and (ii) all taxes incurred by the Purchaser Entities in connection with such re-sale or grant.  If any consideration other than cash is received by Purchaser Entities in such re-sale, such consideration shall, at the Purchaser’s option, either be transferred pro-rata to the Seller or be retained by the Purchaser Entities which shall then pay to the Seller 50% of the reasonable determined fair market value thereof.

 

(e)           If the Purchaser Entities re-sell all or any portion of the Seller Intellectual Property that includes the ROW Patents or grant an Extraordinary License of all or any portion of the Seller Intellectual Property that includes the ROW Patents after the payment of the maximum amounts payable to the Seller pursuant to Section 3.3(a) and (b), the Purchaser shall pay to the Seller the amount of 25% of the net resale value received by the Purchaser Entities in excess of the sum of TEN MILLION DOLLARS ($10,000,000).  The net resale value shall be the aggregate value of all consideration received by the Purchaser in respect of the re-sale of the Seller Intellectual Property that includes the ROW Patents  (including for purposes of this clause (e) the aggregate amount of upfront royalties paid in respect of an Extraordinary License thereof), reduced by the sum of (i) all costs and expenses, including reasonable fees of counsel, incurred by Purchaser Entities in connection with such re-sale or grant of an Extraordinary License (which may include a reasonable allocation of costs and expenses that relate to a transaction that involves more than the ROW Patents) and (ii) all taxes incurred by the Purchaser Entities in connection with such re-sale or grant.  If any consideration other than cash is received by Purchaser Entities in such re-sale or grant, such consideration shall, at the Purchaser’s option, either be transferred pro-rata to the Seller or be retained by the Purchaser Entities which shall then pay to the Seller 25% of the reasonably determined fair market value thereof.

 

  

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(f)            Payment of royalties or other amounts by the Purchaser under this Section 3.3 shall be subject to receipt by a Purchaser Entity of, (i) in respect of sales by a Purchaser Entity, the purchase price of the SmartPac Unit, (ii) in respect of Net Third Party Licensing Royalties to a Purchaser Entity, the receipt of such Net Third Party Licensing Royalties and (iii) in respect of amounts payable on account of re-sale of, or grant of Extraordinary License of Seller Intellectual Property that includes any ROW Patents, the receipt of the re-sale or Extraordinary License consideration payable therefor.

 

(g)           All payments required of the Purchaser pursuant to this Section 3.3 shall be in United States dollars and shall be by wire transfer to the account set forth on Exhibit B.  All royalties payable pursuant to Section 3.3(b) or (c) shall be determined on a calendar quarter basis and shall be payable by the Purchaser no later than ninety (90) days after the end of each calendar quarter.  The conversion of non-US dollar currencies into US dollars for purposes of payments required of the Purchaser pursuant to this Section 3.3 shall be made on the basis of such generally published exchange rates as shall be reasonably available to the Purchaser at or around the time of payment to the Seller.

 

(h)           Notwithstanding anything to the contrary in this Agreement and subject to Section 3.5, (i) the amounts to be paid under Section 3.3(b) or (c) shall from and after the end of the Applicable Term in respect of any sale of any SmartPac Unit be reduced to SEVEN AND ONE-HALF CENTS ($.075) per Full Unit and to the Partial Unit Royalty per Partial Unit and (ii)  no royalty or other payment under Section 3.3(b) or (c)  shall be payable after the end of the Applicable Term in respect of any grant, whether before or after the Closing Date, of any right to use or exploit any Seller Patent in any ROW Nation or any re-sale of, or grant of Extraordinary License of any Seller Intellectual Property that includes, any ROW Patents.

3.4           Stock Option Issuance.  At the Closing the Purchaser shall issue options to the Seller to purchase at any time and from time to time after the Closing Date and prior to the first anniversary of the Closing Date up to an aggregate of one million (1,000,000) shares of common stock ($.001 par value per share) of the Purchaser for the purchase price of thirty cents ($.30) per share on the terms and conditions set forth in the Stock Option Agreement.

 

  

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3.5           Sales of SmartPac Unit Components.  For all purposes of this Section 3, if a  SmartPac Unit is a Partial Unit, then for each relevant provision above, the Partial Unit Royalty shall be the percentage of the purchase price payable to the Purchaser Entity for the sale of the Partial Unit determined by dividing the amount specified in that provision in respect of a Full Unit by the Purchaser’s then-generally prevailing sale price for a Full Unit, provided, however, that in no case shall the Partial Unit Royalty exceed the amount payable under the relevant provision in respect of a Full Unit.

4.             Representations, Warranties and Covenants of Seller.  Seller hereby represents and  warrants to, and agrees with, Purchaser as follows, it being agreed that such representations and warranties in the case of the Effective Date are made as of the Effective Date and in the case of the Closing Date are made on and as of the Closing Date:

 

4.1           Due Organization.  Seller is a corporation duly organized, validly existing and existing in good standing under the laws of the State of Delaware.

 

4.2           Due Authorization and Approval.  The execution, delivery and performance by Seller of this Agreement have been duly authorized by the Seller’s board of directors and stockholders and by all other necessary corporate action by Seller.

 

4.3           Valid and Binding Obligations.  This Agreement and all instruments and agreements executed and delivered by any Seller Entity pursuant hereto constitute valid and binding obligations of each executing Seller Entity enforceable against each executing Seller Entity in accordance with their respective terms, subject only to the effect, if any, of (i) applicable bankruptcy and other similar laws affecting the rights of creditors generally and (ii) rules of law governing specific performance, equitable relief and other equitable remedies.

 

4.4           Capital Structure. Schedule 4.4 lists the names of each holder of any share of capital stock of each Seller Entity and the number and type of shares of each type of capital stock held by such holder.  Except as set forth in Schedule 4.4, no Person has any option, warrant, conversion right or other right to acquire any shares of any type of capital stock of Seller or any Seller Entity.

 

4.5           Title. Seller is the sole owner of all Seller Rights and Assets free and clear of any and all liens, claims, security interests and encumbrances (other than rights granted pursuant to the Seller License Agreements listed in Schedule 4.5), and has the right, power and authority to sell, assign, transfer and convey the Seller Rights and Assets to Purchaser pursuant to this Agreement.  Neither Seller nor any other Seller Entity has granted to any Person other than Purchaser any license or right to use or exploit in whole or in part any Seller Intellectual Property or to distribute, sell or resell any Seller Product anywhere in the world except as expressly stated in the Seller License Agreements listed in Schedule 4.5. The Seller has furnished to the Purchaser a true and complete copy of all Seller License Agreements listed in Schedule 4.5 and all amendments to each such Seller License Agreement.  No third party has any right, lien, claim or encumbrance in, on or to Seller Rights and Assets or any portion thereof.

 

  

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4.6           Seller Patents.  Schedule 4.6 sets forth a true and complete list of all Seller Patents, including for each the date of issuance, the Issuing Authority, the date of expiration and the claim covered thereby and, in the case of applications, the date of application and the status thereof .  No Seller Entity owns, licenses or uses any patent other than the Seller Patents and has filed no patent application in respect of all or any portion of the subject matter of any Seller Patent except as listed on Schedule 4.6.  Seller neither owns nor has any interest in any Seller Similar Intellectual Property.

 

4.7           Trademarks.  Schedule 4.7 sets forth a true and complete list of all Seller Trademarks including for each the date of issuance, the Issuing Authority, and the mark covered thereby and, in the case of applications, the date of application and the status thereof.  Seller neither owns nor licenses any trademark and has filed no trademark application except as listed on Schedule 4.7.

 

4.8           Subsidiaries and Investments.  Schedule 4.8 sets forth a true and complete list of all Seller Entities.    Except as set forth in Schedule 4.8, Seller does not own any shares of capital stock, limited liability company membership interests or other equity interest of any Person and is not a partner or participant in any joint venture with any other Person.  Schedule 4.8 accurately list the number and type of shares or other instruments issued by each Seller Entity and the holder of such shares or other instruments.

 

4.9           No Conflict.  Seller has the full right, power and authority to enter into and perform this Agreement.  Neither Seller’s execution and delivery of this Agreement nor its performance of its obligations hereunder will (i) conflict with or violate any governmental law, rule or regulation binding on any Seller Entity or (ii) conflict with, violate or result in a default under any contract, agreement, license, sublicense or other binding commitment or obligation of any Seller Entity.

 

4.10           No Infringement by Seller IP.  Neither the Seller Intellectual Property nor any part thereof nor the exercise by Purchaser of its rights as the owner of the Seller Intellectual Property infringes upon or violates, or will infringe upon or violate, any intellectual property or right of any Person. There is no claim, action, suit, or proceeding relating to this Agreement, the Seller Intellectual Property, the use of the Seller Intellectual Property, any Seller Product or any component, process or product used in any Seller Product or the production of any Seller Product that is pending before any court or governmental agency or, to the Seller’s knowledge, threatened.  Seller has received no written statement or notice from or on behalf of any Person alleging that the Seller Intellectual Property, any part thereof, any use or application thereof, any Seller Product or any component, process or product used in any Seller Product or the production of any Seller Product infringes in whole or in part any alleged patent, right or other property of such Person.

4.11          No Infringement of Seller IP.  To the best of the Seller’s knowledge, no Person is infringing upon Seller Intellectual Property or any portion thereof or selling Seller Products without authorization from Seller.

 

4.12          Restrictive Agreements. Seller is not a party to or bound by any secrecy or confidentiality agreement or other agreement that restricts or will restrict the use or disclosure in accordance with this Agreement of the Seller Assets and Rights or any part thereof.

  

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4.13          Material Contracts.  Schedule 4.13 attached hereto is a true and complete list of all material contracts (i.e., any contracts whereby a Seller Entity is or may reasonably be expected to become obligated to any Person for any amount in excess of $5,000 or performance or provision of property having value in excess of that amount or whereby any Person is or may reasonably be expected to become obligated to a Seller Entity for any amount in excess of $5,000 or performance or provision of property having value in excess of that amount) to which any Seller Entity is a party.  No Seller Entity has committed or suffered to occur any breach of any such contract that would entitle any other party thereto to terminate or recover damages from any Seller Entity.  Each such contract is valid, binding and enforceable in accordance with its terms.  To the best of the Seller’s knowledge no party to any such contract is in breach of any provision thereof.

 

4.14          Litigation and Claims.  Except as set forth and described in Schedule 4.14, there are no legal proceedings or governmental investigations pending or, the Seller’s knowledge, threatened against any Seller Entity, and no Seller Entity is a party to any legal proceeding against any other Person.  Seller has not received any written notice from any governmental authority asserting that any Seller Entity is or may be in violation of any law, rule or regulation.

 

4.15          Seller Licenses.  Seller has not committed or suffered to occur any breach of any Seller License Agreement that would entitle any other party thereto to terminate or recover damages from the Seller.  Each Seller License Agreement is valid, binding and enforceable in accordance with its terms.  To the best of the Seller’s knowledge no party to any Seller License Agreement is in breach of any provision thereof.

 

4.16          IP Filings. Seller is current in all filing, renewal, maintenance, tax, issuance or other charge required by any Issuing Authority in respect of any Seller Intellectual Property which has been issued by any Issuing Authority or which is the subject of a registration or filing with an Issuing Authority.

 

4.17          Employee Agreements.  Schedule 4.17 is a true and complete list of the names of each current Seller employee and each employee of any Seller Entity within the five (5) years preceding the Effective Date with whom the Seller Entity has entered into an agreement pertaining to the assignment of inventions, confidentiality of information, non-competition or similar matters.  The Seller has furnished a true and complete copy of each such agreement to the Purchaser, together with all amendments thereto.  Each such agreement is valid, binding and enforceable in accordance with its terms, and no Seller Entity has terminated, waived, released or consented to any violation of any provision of any such agreement or agreed to grant any such termination, waiver, release or consent. No Seller Entity is in breach of any provision of any such agreement and, to the Seller’s knowledge, no employee who is the party thereto is in breach of any provision of any such agreement.

 

  

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4.18          Private Placement.

(a)           The Seller understands that the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof (i) have not been registered with the United States Securities and Exchange Commission or pursuant to any state securities laws in reliance on the exemption afforded by Section 4(2) of the Securities Act and comparable exemptions from applicable state laws, and (ii) that such options shares will be restricted securities under the United States Securities Act of 1933, as amended, and various states' securities laws, and that these laws impose limitations on the Persons to whom sales and resales of options and shares may be made.  The certificates representing shares of the common stock of the Purchaser to be delivered to the Seller upon exercise of options under the Stock Option Agreement will bear a legend substantially as follows:

 

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED (BY MERGER OR OTHERWISE), ASSIGNED, DEVISED, EXCHANGED, GIFTED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH TRANSFER IS EXEMPT FROM REGISTRATION, AND FIRMA HOLDINGS, CORP. (THE "COMPANY") SHALL HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, TO SUCH EFFECT.”

 

(b)           The Seller represents and warrants that (i) it has such knowledge, sophistication and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the in the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof; (ii) it has carefully reviewed on its own and with its legal, accounting, tax, investment and other advisers the risks of investing in the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof; (iii) it understands that an investment in the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof is a very high-risk investment that may result in the loss of some or all of the Seller’s investment;  (iv) it is able to bear the economic risk of its investment in the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof; (v) it is acquiring the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof for its own account for investment and not with a present view to, or for sale or other disposition in connection with, any distribution of all or any part of such options or shares; (vi) it understands and agrees that neither the Purchaser nor any Person representing the Purchaser has made any representation to the Seller with respect to the Purchaser or the options under the Stock Option Agreement or shares of common stock of the Purchaser that may be issued upon exercise thereof other than as contained in this Agreement; and (vii) the Seller has had access to such financial and other information concerning the Purchaser and the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof as the Seller has deemed necessary in connection with its investment decision to acquire the options under the Stock Option Agreement and shares of common stock of the Purchaser that may be issued upon exercise thereof, including an opportunity to ask questions of and request information from the Purchaser.

 

  

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4.19          Licenses to Seller Entities.  Except as listed on Schedule 4.19, no Seller Entity is a party to any license, sublicense, arrangement or agreement for the use or other exploitation of any intellectual property of any Person.  The Seller has provided to the Purchaser a true and complete copy of each such license, sublicense, arrangement or agreement and all amendments thereto.  Neither the Seller nor, to the Seller’s knowledge, any other party thereto is in breach of any term or provision of such license, sublicense, arrangement or agreement.  Except as set forth on Schedule 4.19, each Seller Entity which is a party to such license, sublicense, arrangement or agreement has full legal power, right and authority to sell, transfer, assign and convey its rights in, to and under such license, sublicense, arrangement or agreement to the Purchaser without breach of any provision thereof.

4.20          Seller Equipment and Inventory.  Except as listed on Schedule 4.20 no Seller Entity owns or is in possession of any Seller Equipment or Seller Inventory.  Schedule 4.20 accurately describes the type, quantity, location, and party in possession of each item of Seller Equipment and Seller Inventory.

 

4.21          Seller Programs. Except as listed on Schedule 4.20 no Seller Entity owns, licenses or uses any Seller Programs (other than licenses of programs pursuant to “shrink-wrap” licenses of widely available programs commonly used in office operations).  Schedule 4.21 accurately describes the type, location of usage and function of each listed Seller Program..

4.22          Representations Complete. None of the representations or warranties made by the Seller herein or in any exhibit or schedule hereto or in any agreement or certificate entered into or furnished by the Seller pursuant to this Agreement contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading.

5.             Representations and Warranties of Purchaser.  Purchaser hereby represents and warrants to Seller, and agrees with Seller, as follows, it being agreed that such representations and warranties in the case of the Effective Date are made as of the Effective Date and in the case of the Closing Date are made on and as of the Closing Date:

5.1           Purchaser is a corporation duly organized and existing in good standing under the laws of the State of Nevada.

5.2           Purchaser has the full right, power and authority to enter into and perform this Agreement.  The execution, delivery and performance by Purchaser of this Agreement have been or by the Closing Date will have been duly authorized by all necessary action by Purchaser.  Neither Purchaser’s execution and delivery of this Agreement nor its performance of its obligations hereunder will (i) conflict with or violate any governmental law, rule or regulation binding on Purchaser or (ii) conflict with, violate or result in a default under any contract, agreement, license, sublicense or other binding commitment or obligation of Purchaser.

6.             Infringement By Others.  In the event that the Seller has reason to believe that any person may be infringing the Seller Intellectual Property or any other Seller Intellectual Property Right anywhere in the Territory, Seller will promptly notify the Purchaser by providing all material information in its possession, custody or control to permit the Purchaser to determine whether such infringement is occurring.  Seller will fully cooperate with Purchaser in its enforcement efforts at, subject to Section 7, Purchaser’s expense.

 

 

  

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7.

	
Indemnification; Third Party Claims

 

7.1           Seller shall defend, indemnify and hold harmless all Purchaser Entities, their  successors and assigns, and the respective directors, officers, members, employees, and agents of all Purchaser Entities and their successors and assign (the “Purchaser Indemnified Parties”), from and against any and all claims, losses, liabilities, obligations, damages, expenses, demands, suits, judgments, penalties, and costs of any kind whatsoever, including reasonable attorneys’ fees and expenses, arising from or attributable to (i) Seller’s breach of any representation, warranty or agreement of Seller set forth in this Agreement, or in any agreement or instrument executed and delivered by the Seller in connection with this Agreement; (ii) any breach by any Seller Entity of any representation, warranty or agreement of such Seller Entity under this Agreement, any joinder of such Seller Entity hereto or any agreement or instrument executed and delivered by such Seller Entity in connection with this Agreement;  (iii) any actual or alleged matter, event, transaction, circumstance or happening on or prior to the Closing Date or as a result of the consummation of the transactions contemplated by this Agreement, including but not limited to claims in respect of periods after the Closing Date arising from actual or alleged matters on or prior to the Closing Date but not including obligations under License Agreements to the extent expressly assumed by the Purchaser pursuant to this Agreement; (iv) any assertion or claim by any Person that Purchaser’s use, application, implementation, licensing or other exploitation of any Seller Intellectual Property or any part thereof misappropriates or infringes in whole or in part any right of such Person; (v) any actual or alleged event, occurrence, transaction, circumstance, action, happening, license, agreement, transaction, dealings, business, arrangement or other matter on or prior to the Closing Date with or pertaining to FreshTec, LLC, a California limited liability company (including but not limited to claims in respect of periods after the Closing Date arising from actual or alleged matters on or prior to the Closing Date); and (vi) any actual or alleged event, occurrence, transaction, circumstance, action, happening, license, agreement, transaction, dealings, business, arrangement or other matter on or prior to the Closing Date with or pertaining to Innovative Systems Corporation or any other Person organized or existing under Canadian federal or provincial law or any member, stockholder, equity holder, creditor, lender, supplier, contractor, partner, joint venture, officer, director, employee, investor or manager of any such Person (including but not limited to claims in respect of periods after the Closing Date arising from actual or alleged matters on or prior to the Closing Date).

7.2           Purchaser shall defend, indemnify and hold harmless Seller and Seller’s Affiliates, their agents and successors, and their respective directors, officers, members, employees, and agents, from and against any and all claims, losses, damages, expenses, demands, suits, judgments, penalties, and costs of any kind whatsoever, including reasonable attorneys’ fees and expenses, arising from or attributable to Purchaser’s breach of any representation, warranty or covenant of Purchaser set forth in this Agreement.

  

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7.3           If either Party becomes aware of any claim or assertion by a third party that may give rise to a claim for indemnification under Section 7.1 or 7.2 (“third party claim”), such Party shall promptly notify the other Party, provided, however, that no delay on the part of any Party seeking indemnification (i.e., the indemnified Party) in providing such notice shall relieve the indemnifying Party from any obligation hereunder unless (and then solely to the extent) the indemnifying Party is thereby actually prejudiced.

 

7.4           The indemnifying Party shall not have the right, as part of any settlement to adversely affect any of the indemnified Party’s rights under this Agreement, to limit in any way the indemnified Party’s course of doing business (including in each case where the indemnified Party is the Purchaser the right of the Purchaser to use and exploit any of the Seller Intellectual Property or to sell Seller Products in any way deemed desirable by the Purchaser) or to bind the indemnified Party in any way without the express written consent of the indemnified Party.  An indemnified Party shall cooperate at the indemnifying Party’s expense in the defense of a third party claim.

 

7.5           All rights of the parties under this Section 7 shall survive the expiration of all Applicable Terms or permitted termination of this Agreement.

 

8.             No Revocation.  Except as expressly provided in this, Agreement shall remain in full force and effect and may not be cancelled, terminated or revoked by either Party, whether for breach or other reason, except with the written consent of the other.  Notwithstanding the foregoing, the sale, assignment, transfer and conveyance of the Seller Assigned Rights and Assets pursuant hereto shall continue forever except as otherwise expressly provided in this Agreement.

9.             Seller and Purchaser Entities.  In each case where reference herein is made to the “Seller Entities” or a “Seller Entity” or to the “Purchaser Entities” or a “Purchaser Entity,” each of the Seller and the Purchaser agrees that it is responsible for ensuring that each of its Affiliates included within such terms shall take all action required of it by and will honor the terms of this Agreement. On written request by the Purchaser from time to time, the Seller shall cause each other Seller Entity to execute and deliver to the Purchaser a joinder, satisfactory in form and substance to the Purchaser, whereby the Seller Entity would agree to be bound by and to honor all provisions of this Agreement binding the Seller to the same extent as if the Seller Entity were a party hereto in place of the Seller.  Each of the Seller and the Purchaser agrees that it shall be fully responsible and liable for any failure by any of its Affiliates to take such action or honor such terms.

10.           Exclusivity, Confidentiality and Non-Compete.

10.1           As to the Seller Intellectual Property, the Purchaser’s ownership and rights as of the Closing Date shall be completely exclusive.  From and after the Closing Date, no Seller Entity may in any way, whether directly or indirectly, use, implement, apply, sell, assign, license, exploit, enjoy, possess, publish or otherwise deal with any Seller Intellectual Property anywhere in the world, it being the express intention of all Parties that all right, title and interest in or to all Seller Intellectual Property, including without limitation all right to use, implement, apply, sell, assign, license, exploit, enjoy, possess, publish or otherwise deal with any Seller Intellectual Property, shall belong solely and exclusively to the Purchaser.

 

  

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10.2           Seller shall keep all information included in or relating in any way to Seller Intellectual Property strictly confidential and shall not disclose all or any part of such information to any Person (except that such information may be disclosed to employees of a Seller Entity, but only to the extent strictly necessary for their ordinary services to the Seller Entity, who are advised of the strictly confidential nature of such information and required to keep such information confidential to the same extent that the Seller is obligated). Notwithstanding the foregoing provision of this Section 10.2, this Section 10.2 shall not preclude disclosure of information that (i) is as of the Closing Date generally publicly available or (ii) after the Closing Date becomes generally publicly available through no fault of any Seller Entity.

 

10.3           The Seller agrees that for a period of three (3) years from and after the Closing Date (subject to adjustment as provided below, the “Restricted Period”)  it will not anywhere in the world where any Seller Entity has engaged in business in connection with the Seller Rights and Assets, directly or indirectly, whether alone or with others and whether as consultant, joint venture, licensee, licensor, stockholder, member, partner or in any other capacity of any nature whatsoever, conduct, engage in, assist, provide services to or participate in any other way whatsoever in, or directly or indirectly own any stock, membership interest, partnership interest or other equity of any nature whatsoever in any Person which conducts, engages in, assists, provide services to or participates in any other way whatsoever in the businesses of creating, developing, inventing, conceiving of, marketing, selling, leasing, distributing, assembling, making, manufacturing, producing, servicing, providing or otherwise dealing with goods, systems or services for the packaging of perishable products. If any Seller Entity violates any provision of this Section 10.3, the Restricted Period shall automatically be extended by the entire duration of the time during which any Seller Entity shall be in such violation.  The Parties hereby mutually affirm their intention that this Section 10.3 be enforceable to the maximum extent allowed by applicable law.  For that reason, if a court reviewing this Section 10.3 determines that the Restricted Period, scope of activity or other aspect of the provisions hereof is not enforceable as written, the court is hereby requested and authorized to enforce this Section 10.3 to the remaining maximum extent that would be permitted by applicable law.

 

10.4           Seller hereby acknowledges that a violation of any provision of this Section 10 may cause irreparable damage to the Purchaser, the amount of which may be impossible to quantify and will not be adequately compensated for by monetary damages, and it is therefore agreed and understood that in the event of such a violation, Purchaser shall be entitled to injunctive relief against such violation (without being required to post any bond or other security in connection therewith), in addition to such other remedies as the Purchaser may have at law or in equity.

 

10.5           If any Seller Entity violates any of covenants or agreements set forth in this Section 10, (i) the Purchaser shall be entitled to an accounting and repayment of all profits, compensation, commissions, remunerations or benefits which any Seller Entity, directly or indirectly, has realized or may realize as a result of, growing out of in connection with such violation and (ii) the Purchaser may offset and retain from amounts otherwise payable under this Agreement the amount of any and all loss, damages and expenses (including but not limited to reasonable fees and expenses of counsel) resulting from or relating to such violation and recovery of such profits, compensation, commissions, remunerations and benefits.

 

  

31

  

 

10.6           The exercise by the Purchaser of any right or remedy available at law or in equity or under this Agreement shall not be deemed an exclusive election of remedies, and the Purchaser shall at all times have and retain the right to exercise any or all remedies available at law or in equity or under this Agreement in any order or simultaneously.

 

10.7           Except as the Purchaser may agree in writing, no Seller Entity shall terminate, waive, release or consent to any violation of any provision of any agreement of the type referenced in Section 4.17 or agree to grant any such termination, waiver, release or consent.

 

11.           Seller Protective Rights.  In order to assist the Seller in protecting and preserving its rights in respect of the US/Mexico/Canada Patents, the EU Patents and the ROW Patents, the Seller shall have the following rights:

11.1         US/Mexico/Canada Patents. Until the earlier of (i) the end of the fifteen (15) year period next following the Closing Date or (ii) such time as the Seller shall have been paid the full amount of the US/Mexico/Canada Royalty Amount pursuant to Section 3.1(b) (i), the Seller shall be entitled to exercise the Seller Protective Rights in respect of the US/Mexico/Canada Patents.

11.2         EU Patents. Until the earlier of (i) the end of the six (6) month period next following the Closing Date or (ii) such time as the Seller shall have been paid the full amount of the EU Initial Purchase Price Amount pursuant to Section 3.2(a), the Seller shall be entitled to exercise the Seller Protective Rights in respect of the EU Patents.

11.3         ROW Patents. Until the earlier of (i) the end of the eighteen month (18) month period next following the Closing Date or (ii) such time as the Seller shall have been paid the full amount of the ROW Initial Purchase Price Amount pursuant to Section 3.3(a), the Seller shall be entitled to exercise the Seller Protective Rights in respect of the ROW Patents.

11.4          Exercise of Protective Rights.  To exercise Seller Protective Rights, Seller shall give the Purchaser at least ten (10) days prior written notice of the date, time, manner and extent of, and the records which the Seller wishes to review and the Purchaser officers with whom the Seller wishes to speak, in connection with such exercise.  All information received by the Seller in connection with the exercise of Seller Protective Rights shall be subject to the provisions of Section 10.2 hereof, which the Seller agrees to honor.  The Purchaser shall be entitled to require each person who is not an employee of the Seller to execute and deliver to the Purchaser confidentiality and non-use agreement providing for the protection of information of the Purchaser to substantially the same extent provided in Section 10.2.  Each exercise by Seller of Seller Rights shall be subject to the qualification that no exercise may unreasonably disrupt any business or operations of any Seller Entity.

 

  

32

  

 

12.           Assignability. This Agreement may not be assigned by Purchaser or Seller without the express written consent of the other party, which consent will not be unreasonably withheld, except that each party may, at its discretion, with notice to the other, assign this Agreement to (i) an Affiliate of the assigning party; (ii) any successor of the assigning party or any Person acquiring substantially all of the related business and assets of the assigning party, and except the Seller expressly acknowledges and agrees that Tara Minerals Corp. is merging into Firma Holdings Corp. which as the surviving entity of such merger shall be the Purchaser and shall be entitled to and obligated by all of the rights and obligations of Tara Minerals Corp.  under this Agreement and all agreements and instruments executed and delivered in connection herewith.  No assignment shall relieve the assigning party of any breach of any provision hereof.

 

13.           Further Assurance.  Seller agrees that it shall do, execute, acknowledge and deliver, at Seller’s expense, all acts, agreements, instruments, notices and assurances as may be reasonably requested by Purchaser to further effect and evidence the transactions contemplated hereby.

 

14.           Enforceability.  If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, or as applied to any circumstance, under the laws of any jurisdiction which may govern for such purpose, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, either generally or as applied to such circumstance, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law as if such provision had been originally incorporated herein as so modified or restricted, or as if such provision had not been originally incorporated herein, as the case may be.

 

15.           Certain Remedies.

 

15.1     Seller acknowledges and agrees that (i) breach or threatened by the Seller of any provision of Section 2 would cause irreparable injury to Purchaser for which damages would be difficult or impossible to determine and would not be an adequate remedy for Purchaser and (ii) that in the event of such breach by Seller, Purchaser shall be entitled to the award of injunctive relief or specific performance, including but not limited to temporary or preliminary awards, against Seller in respect of such breach or threatened breach without the requirement of Purchaser’s posting bond or otherwise providing financial insurance.  Seller agrees not to assert as a defense or otherwise in any action brought by Purchaser in respect of such breach that damages would be an adequate remedy for Purchaser.

 

15.2          Each party shall be entitled in the event of breach by the other of any provision of this agreement to set off and retain any damages suffered as a result of such breach against any amount owed hereunder to the breaching party.

 

16.           Amendment.  This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.

 

  

33

  

 

17.           No Third-Party Beneficiaries.  Nothing expressed or implied in this Agreement is intended to confer upon any person, other than the Seller, the Purchaser and, with respect to indemnification and hold-harmless rights, the persons mentioned in Section 7, or their respective successors or permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

18.           Notices. All notices and other communications in connection with this Agreement will be in writing and will be given at the respective addresses of the parties set forth below, or at such changed address as the recipient will have provided in writing:

 

 

	         Purchaser:	
Firma Holdings Corp.

	 	
375 N. Stephanie St. 

	 	
Bldg. 2 

	 	
Henderson, NV 89014

	 	
Attn: Francis R. Biscan

	 	 
	 	
Email: taragoldresources@comcast.net

 

	                 With a copy to: 	David Barefoot
	 	1625 Tioga Tr
	 	Winter Park, FL 32789
	 	Email: david@taraminerals.com
	 	 

 

	 Seller:	FreshTec, Inc.
	 	PO Box 2108
	 	Pismo Beach, CA 93448
	 	Attn: Craig Machada
	 	Email: craig.machado@freshtecinc.com

 

All notices will be sent by reputable overnight delivery service (with written confirmation of delivery), by facsimile or by email.  Notices sent by reputable overnight delivery service will be deemed given upon the date of delivery and notices sent by facsimile or email will be deemed given on the date of receipt, provided, that in each case such date of delivery or receipt is a business day at the place of delivery or receipt and that if such date is not a business date, the date of delivery or receipt will be the next business day.

 

19.           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEVADA (WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF).  EACH PARTY HEREBY IRREVOCABLY COMMITS TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN LAS VEGAS, NEVADA AS TO ANY MATTER PERTAINING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.   EACH PARTY HEREBY WAIVES ANY DEFENSE TO ANY ACTION BROUGHT IN ANY SUCH COURT THAT THE LOCATION OF SUCH COURT IS INCONVENIENT OR AN UNDUE BURDEN ON SUCH PARTY.

 

  

34

  

 

20.           Successors and Assigns.  This Agreement shall be binding upon the Seller and its successors and assigns and shall inure to the benefit of the Purchaser and its successors and assigns.

 

21.           Survival.  All representations, warranties, covenants, indemnifications and obligations set forth in this Agreement and any instrument or agreement executed and delivered pursuant hereto shall survive the execution and delivery of this Agreement, such instrument or such agreement and shall remain in full force and effect in accordance with their respective terms.

 

22.           Counterparts.  This Agreement may be executed in one or more counterpart, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Execution may take place by means of electronic exchange of copies of executed signature pages.

 

 

 

[signature page follows]

 

 

 

 

 

 

  

35

  

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above.

 

	 	
FRESHTEC, INC.

	 
	 	(“Seller”)	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Craig Machado	 
	 	Name:   	Craig Machado	 
	 	Title: 	President and CEO	 

 

 

 

	 	
TARA MINERALS CORP.

	 
	 	
(“Purchaser”)

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/s/ Francis R. Biscan, Jr	 
	 	Name:   	Francis R. Biscan, Jr.	 
	 	Title: 	President	 

 

 

36

 

 

List of Exhibits and Schedules

 

	
Exhibits

	
A

	
Stock Option Agreement

	
B

	
Seller Wire Transfer Instructions

	
C

	
Restrictive Covenants Agreement

	  	  
	
Schedules

	
2.1

	
Seller Licenses to be Assumed by Purchaser

	
4. 4

	
Seller Entity Capital Structure

	
4. 5

	
Liens, Claims and Encumbrances

	
4. 6

	
Seller Patents

	
4. 7

	
Seller Trademarks

	
4. 8

	
Subsidiaries and Investments

	
4.13

	
Material Contracts

	
4.14

	
Litigation and Claims

	
4.17

	
Employee Information

	
4.19

	
Licenses to Seller

	
4.20

	
Seller Equipment and Seller Inventory

	
4.21

	
Seller Programs

 

 

 

 

 

 

37Converted by EDGARwiz

EXHIBIT 10.1

DEFINITIVE SHARE EXCHANGE AGREEMENT

This Share Exchange Agreement (“Agreement”), dated as of July 31, 2014 has been reached between Goldstar North American Mining, Inc., located at 19425 - G, Liverpool Parkway, Cornelius, NC 28031 (“Seller”), its shareholders, holding the 100 shares which are issued and outstanding, and executing below (“Seller Parties”), with the number of shares of XFormity Technologies Inc. to be received by each Seller Party, designated below by their respective signature space, and XFormity Technologies, Inc., located at 2005 Keats Lane, Highland Park, IL 60035 (the “Company (the Company, Seller Parties and the Seller, who are collectively referred to herein as the “Parties.”

RECITALS

WHEREAS, the respective boards of directors and shareholders of each of the Seller and the Company have agreed to exchange shares of the Company for one hundred percent (100%) of the outstanding shares of the Seller, held by the Seller Parties (the “Share Exchange”), upon the terms, and subject to the conditions, set forth in this Agreement;

WHEREAS, it is intended that, for federal income tax purposes, the Share Exchange shall qualify as a reorganization under the provisions of Section 368(a)(1)(B) and/or Section 368(a)(1)(C)of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated there under (the “Code”); and

WHEREAS, the Seller Parties, the Seller and the Company desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual promises herein made, and in consideration of the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the Parties agree as follows: 

ARTICLE I

DEFINITIONS

I.1

Certain Definitions.  The following terms shall, when used in this Agreement, have the following meanings:

“Acquisition” means the acquisition of any businesses, assets or property other than in the ordinary course, whether by way of the purchase of assets or stock, by the Company acquiring all of the outstanding shares of the Seller pursuant to this Share Exchange Agreement.

“Affiliate” means, with respect to any Person: (i) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of such other Person (other than passive or institutional investors); (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (iii) any Person 

directly or indirectly controlling, controlled by or under common control with such other Person; and (iv) any officer, director or partner of such other Person. “Control” for the foregoing purposes shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise.

“Business Day” means any day other than Saturday, Sunday or a day on which banking institutions in Los Angeles, California, are required or authorized to be closed.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Collateral Documents” mean the Exhibits and any other documents, instruments and certificates to be executed and delivered by the Parties hereunder or there under.

“Commission” means the Securities and Exchange Commission or any Regulatory Authority that succeeds to its functions.

“The Seller Assets” mean all properties, assets, privileges, powers, rights, interests and claims of every type and description that are owned, leased, held, used or useful in the Seller Business and in which the Seller has any right, title or interest or in which the Seller acquires any right, title or interest on or before the Closing Date, wherever located, whether known or unknown, and whether or not now or on the Closing Date on the books and records of the Seller, but excluding any of the foregoing, if any, transferred prior to the Closing pursuant to this Agreement or any Collateral Documents.  A list of the Seller Assets is attached hereto as “Schedule A – List of the Seller Assets.”

“the Seller Business” means the leasing and operating of the Seller Assets.

“the Seller Common Stock” means the percentage of ownership and/or shares of the Seller.

“the Seller Parties” means, as of any particular date, the holders of the Seller Common Stock on that date.

“Effective Time” means, the moment in time when the shares of the Seller are exchanged for the shares of the Company.

“Encumbrance” means any material mortgage, pledge, lien, encumbrance, charge, security interest, security agreement, conditional sale or other title retention agreement, limitation, option, assessment, restrictive agreement, restriction, adverse interest, restriction on transfer or exception to or material defect in title or other ownership interest (including restrictive covenants, leases and licenses).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations there under.

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

“Legal Requirement” means any statute, ordinance, law, rule, regulation, code, injunction, judgment, order, decree, ruling, or other requirement enacted, adopted or applied by any Regulatory Authority, including judicial decisions applying common law or interpreting any other Legal Requirement.

“Losses” shall mean all damages, awards, judgments, assessments, fines, sanctions, penalties, charges, costs, expenses, payments, diminutions in value and other losses, however suffered or characterized, all interest thereon, all costs and expenses of investigating any claim, lawsuit or arbitration and any appeal there from, all actual attorneys’, accountants’ investment bankers’ and expert witness’ fees incurred in connection therewith, whether or not such claim, lawsuit or arbitration is ultimately defeated and, subject to Section 9.4, all amounts paid incident to any compromise or settlement of any such claim, lawsuit or arbitration.

“Liability” means any liability or obligation (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.

“Material Adverse Effect” means a material adverse effect on (i) the assets, Liabilities, properties or business of the Parties, (ii) the validity, binding effect or enforceability of this Agreement or the Collateral Documents or (iii) the ability of any Party to perform its obligations under this Agreement and the Collateral Documents; provided, however, that none of the following shall constitute a Material Adverse Effect on the Company: (i) the filing, initiation and subsequent prosecution, by or on behalf of shareholders of any Party, of litigation that challenges or otherwise seeks damages with respect to the Share Exchange, this Agreement and/or transactions contemplated thereby or hereby, (ii) occurrences due to a disruption of a Party’s business as a result of the announcement of the execution of this Agreement or changes caused by the taking of action required by this Agreement, (iii) general economic conditions, or (iv) any changes generally affecting the industries in which a Party operates.

“Share Exchange Shares” means the shares of the Seller Common Stock deliverable by the Seller Parties in exchange for the Company Series A Preferred Stock pursuant to Section 2.7.

“the Company Business” means the business conducted by the Company.

“the Company Common Stock” means the common shares of the Company.

“the Company Preferred Stock” means Series A Convertible Preferred Stock.

“the Company Securities Filings” means the Company’s Annual Report on Form 10-K and its quarterly reports on Form 10-Q, and all other reports filed and to be filed with the Commission prior to the Effective Time.

“Permit” means any license, permit, consent, approval, registration, authorization, qualification or similar right granted by a Regulatory Authority.

“Permitted Liens” means (i) liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings; (ii) rights reserved to any Regulatory Authority to regulate the affected property; (iii) statutory liens of banks and rights of set off; (iv) as to leased assets, interests of the lessors and sublessors thereof and liens affecting the interests of the lessors and sublessors thereof; (v) inchoate material men’s, mechanics’, workmen’s, repairmen’s or other like liens arising in the ordinary course of business; (vi) liens incurred or deposits made in the ordinary course in connection with workers’ compensation and other types of social security; (vii) licenses of trademarks or other intellectual property rights granted by the Company or the Seller, as the case may be, in the ordinary course and not interfering in any material respect with the ordinary course of the business of the Company or the Seller, as the case may be; and (viii) as to real property, any encumbrance, adverse interest, constructive or other trust, claim, attachment, exception to or defect in title or other ownership interest (including, but not limited to, reservations, rights of entry, rights of first refusal, possibilities of reverter, encroachments, easement, rights of way, restrictive covenants, leases, and licenses) of any kind, which otherwise constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, under any contract or otherwise, that do not, individually or in the aggregate, materially and adversely affect or impair the value or use thereof as it is currently being used in the ordinary course.

“Person” means any natural person, corporation, partnership, trust, unincorporated organization, association, Limited Liability Company, Regulatory Authority or other entity.

“Proposed Acquisition” means any of the following transactions (other than the transactions contemplated by this Agreement): (i) a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company pursuant to which the shareholders of the Company immediately preceding such transaction hold less than fifty percent (50%) of the aggregate equity interests in the surviving or resulting entity of such transaction, (ii) a sale or other disposition by the Company of assets representing in excess of fifty percent (50%) of the aggregate fair market value of the Company Business immediately prior to such sale or (iii) the acquisition by any person or group (including by way of a tender offer or an exchange offer or issuance by the Company), directly or indirectly, of beneficial ownership or a right to acquire beneficial ownership of shares representing in excess of fifty percent (50%) of the voting power of the then outstanding shares of capital stock of the Company.

“Regulatory Authority” means: (i) the United States of America; (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, municipalities and the like); (iii) Canada and any other foreign (as to the United States of America) sovereign entity and any political subdivision thereof; or (iv) any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board.

“Representative” means any director, officer, employee, agent, consultant, advisor or other representative of a Person, including legal counsel, accountants and financial advisors.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations there under.

“Subsidiary” of a specified Person means (a) any Person if securities having ordinary voting power (at the time in question and without regard to the happening of any contingency) to elect a majority of the directors, trustees, managers or other governing body of such Person are held or controlled by the specified Person or a Subsidiary of the specified Person; (b) any Person in which the specified Person and its subsidiaries collectively hold a fifty percent (50%) or greater equity interest; (c) any partnership or similar organization in which the specified Person or subsidiary of the specified Person is a general partner; or (d) any Person the management of which is directly or indirectly controlled by the specified Person and its Subsidiaries through the exercise of voting power, by contract or otherwise.

“Tax” means any U.S. or non U.S. federal, state, provincial, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible property, recording, occupancy, sales, use, transfer, registration, value added minimum, estimated or other tax of any kind whatsoever, including any interest, additions to tax, penalties, fees, deficiencies, assessments, additions or other charges of any nature with respect thereto, whether disputed or not.

“Tax Return” means any return, declaration, report, claim for refund or credit or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Treasury Regulations” means regulations promulgated by the U.S. Treasury Department under the Code.

ARTICLE II

THE SHARE EXCHANGE

II.1

Share Exchange.  In accordance with and subject to the provisions of this Agreement and the Texas Corporations Code (“DCC”), at the Effective Time the Seller shall become a wholly subsidiary of the Company, and the Company shall be the only shareholder of the Seller. The Seller shall continue in its existence with one owner, the Company, until the merger, as provided for herein.

(a)

It is hereby agreed that the following paragraphs of Article II shall take place simultaneously at the Effective Time: Clause 2(a)(2) and (3), 3, 4, 5 and 6.  Clause 2(a)(1) shall take place immediately upon signing this Agreement and clause 2(b) at an undetermined time.

II.2

Purchase of Drobny Shares. 

(a)

The Seller shall pay one hundred twenty-five thousand US dollars ($125,000) to Sheldon Drobny, in accordance with the following schedule in consideration of the 548,258 Preferred Shares held by Mr. Drobny:

1.

USD $25,000 upon signing of this Definitive Share Exchange Agreement;

2.

USD $33,000 due thirty days from completion of the name change and symbol change are effective; 

3.

USD $33,000 due sixty days from the name and symbol change are effective;

4.

USD $34,000 due ninety days from the date of the name and symbol change are effective,

of which up to $25,000 is designated for legal fees and accounting fees necessary to enable the Company to become current in its SEC filings.

II.3

Share Exchange Shares; Conversion and Cancellation of Securities, Other Corporate Actions, and Other Recent Transactions.

The Seller Parties shall exchange all of their shares in the Seller for 99,451,742 of the Company’s Preferred Shares (the other 548,258 Preferred Shares of which were acquired by the Seller, from Sheldon Drobny, are to be distributed by the Seller to the Seller Parties, pro rata), designated as voting and convertible, both voting and convertible at a ratio of 139.5 shares of Common Stock for every share of Preferred Stock (the “Share Exchange Shares”), the one hundred million (100,000,000) convert into forty-six million five hundred thousand (46,500,000) shares of the Company Common Stock post-reverse split (one-for-300), thirteen billion nine hundred fifty million (13,950,000,000), calculated pre-reverse split. The number of Preferred Shares to be issued to each Seller Party, is set forth below, representing all one hundred million (100,000,000) Preferred Shares:

			
	 
	                   Corrected/adjusted

	 

	 
	Post 300 to 1 split

	 

	 
	Common share

	100,000,000

	 
	Equivalency

	Preferred shares

	John Hansel Esq.

	   500,000 

	1,075,269 

	Craig Parkinson

	2,000,000 

	4,301,075 

	Joseph Bonocore

	240,000 

	516,129 

	Mike Jones

	4,200 

	9,032 

	Richard Ziminski

	1,500,000 

	3,225,806 

	Mike Showers

	1,400,000 

	3,010,753 

	Matthew Hay 

	5,000,000 

	10,752,688 

	Spencer Showers

	400,000 

	860,215 

	Owen Meals

	175,000 

	376,344 

	Gold Miner's Ventures, 

Inc.

	35,280,800 

	75,872,688 

	 
	46,500,000 

	100,000,000 

It is hereby agreed that upon closing, or shortly thereafter, the Company shall have no Preferred Stock outstanding, and shall be cancelled and retired; the Company will have 62,185,272 shares of Common Stock issued and outstanding. The 62,185,272 shares of outstanding Common Stock shall consist of the 55,581,553 presently outstanding, reduced by a 1-for-300 reverse split, taking the issued and outstanding down to 185,272, increased by the issuance of 15,500,000 shares of common, among 8 persons, 2,500,000 to Adobe International, Inc., 2,700,000 to Topspot Holdings, Inc., 2,600,000 to Lanham & Lanham, LLC, 2,250,000 to Zodiac Investments, LLC, 2,450,000 to Midway International, LLC, and 2,500,000 to Elite International Partners, Inc., and the 500,000 share balance, would be issued 250,000 shares to Securities Counselors, Inc. (SCI) for the balance due for its unpaid legal services and 250,000 shares to Shelly Drobny for the balance due for his unpaid professional services. These shares are being issued to such parties as a consequence of the fact that SCI has sold 98.361% of its claim, collectively, to: Adobe International, Inc., Topspot Holdings, Inc., Lanham & Lanham, LLC, Zodiac Investments, LLC, Midway International, LLC, Elite International Partners, Inc. (the “Purchasers”) at a discount, collectively for $25,000, SCI retaining its right to receive 250,000 shares of XFormity Common Stock (represented by the balance, or the unsold portion of its claim), which right has been assigned by SCI to Ryan D Goulding, CPA, SCI’s Assignee. Mr. Drobny also agreed to accept in satisfaction of his $97,500 claim for services to or on behalf of XFormity for 250,000 shares of XFormity Common Stock and 548,258 shares of Preferred Stock), which Preferred Stock is being acquired hereby, by the Seller.

At the closing, or shortly thereafter, the Seller shall merge into and become the Company, after which the Seller shall cease to exist, and each certificate formerly representing any issued or paid in respect thereof.

(a)

Fractional Shares.  No certificates or scrip evidencing fractional shares of the Seller Stock shall be issued in exchange for the Company Common Stock.  All fractional share amounts shall be rounded up to the nearest whole share.

(b)

Reverse Split.

It is hereby agreed that given the intent of the Seller to do a 1 for 300 split, when the Seller is able, given the legal requirements and impediments associated therewith, that in the event of a reverse stock split by XFormity, within (1) year from the court order permitting the issuance of such settlement shares, each of Adobe International, Inc., Topspot Holdings, Inc., Lanham & Lanham, LLC, Zodiac Investments, LLC, Midway International, LLC, Elite International Partners, Inc., SCI, its Assignee, Ryan Goulding, or Sheldon Drobny, shall be protected against the reverse split such that each shall be entitled to additional shares to replace the unsold shares lost as a consequence of the reverse stock split. 

(c)

When the Seller is able, given the legal requirements and impediments associated therewith, the Seller will make the appropriate filing with FINRA to do a 1-for-300 reverse stock split and change the name of the company, both with FINRA and with the Secretary of State of the State of Colorado to effect a change of name to “Goldstar North American Mining, Inc.”

II.4

Surrender of Company Certificates.

(a)

Exchange Procedures.  Promptly after the Effective Time, the Seller or its appointed designee shall mail to each holder of a certificate or certificates of its Common Stock (“Company Certificates”) whose shares are exchanged for the Share Exchange Shares, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Company Certificates shall pass to the Seller, only upon delivery of the Company Certificates to the Seller and which shall be in such form and have such other provisions as the Seller may reasonably specify) and (ii) instructions for use in effecting the surrender of the Seller Certificates in exchange for the Share Exchange Shares. Upon surrender of the Seller Certificates for cancellation to the Company, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, the holders of such the Seller Certificates shall be entitled to receive the Share Exchange Shares in exchange therefore and the Seller Certificates so surrendered shall forthwith be canceled.  Notwithstanding the foregoing, if any the Seller Certificate is lost, stolen, destroyed or mutilated, such holder shall provide evidence reasonably satisfactory to the Seller as to such loss, theft, destruction or mutilation and an affidavit in form and substance satisfactory to the Seller, and, thereupon, such holder shall be entitled to receive the Share Exchange Shares in exchange therefore and the Company Certificates so surrendered shall forthwith be canceled.

II.5

Stock Transfer Books.  At the Effective Time, the stock transfer books of the Seller shall be closed, and there shall be no further registration of transfers of shares of the Seller Common Stock thereafter on the records of the Company.

II.6

Restriction on Transfer.  The Share Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Share Exchange Shares or any available exemption from registration under the Act, the Share Exchange Shares must be held indefinitely.  The Seller Parties are aware that the Share Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Act unless all of the conditions of that Rule are met.  Among the conditions for use of Rule 144 may be the availability of current information to the public about the Surviving Company.

II.7

Restrictive Legend.  All certificates representing the Share Exchange Shares shall contain the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE, ARE SUBJECT TO THE TERMS OF A SHARE EXCHANGE AGREEMET DATED AS OF JULY __, 2014, BETWEEN GOLDSTAR NORTH AMERICAN MINING, INC. AND XFORMITY TECHNOLOGIES, INC., A COPY OF WHICH IS ON FILE IN THE PRINCIPAL OFFICE OF THE ISSUER. FURTHER, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER THE ACT OR AN EXEMPTION THEREFROM.”

Closing.  The closing of the transactions contemplated by this Agreement and the Collateral Documents (the “Closing”) shall take place at the offices of Randall J. Lanham, Esq., Lanham & Lanham, LLC, located at 28562 Oso Parkway, Unit D, Rancho Santa Margarita, CA 92588, or at 

such other location as the parties may agree at 11:00 a.m., Pacific Time on the agreed date, which, shall be within sixty (60) days of the signing hereof (the “Closing Date”). 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Seller that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement and, except as provided in Section 7.1, 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 ARTICLE III, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by this Agreement).

III.1

Organization and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization.  The Company has all requisite power and authority to own, lease and use its assets as they are currently owned, leased and used and to conduct its business as it is currently conducted.  The Company is duly qualified or licensed to do business in and is in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it make such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed would not have a Material Adverse Effect on the Company or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of the Company to perform its obligations under this Agreement or any of the Collateral Documents.

III.2

Capitalization.

(a)

The authorized capital stock and other ownership interests of the Company consist of one hundred twenty-five million (125,000,000) shares of Common Stock, of which 55,581,553 shares were issued and outstanding as of March 31, 2014, and one hundred million (100,000,000) shares of Preferred Stock, 548,258 of which are outstanding, held by Sheldon Drobny.  All of the outstanding the Company Common and Preferred Stock have been duly authorized and are validly issued, fully paid and nonassessable. 

(b)

Other than what has been described herein or in the Company’s SEC Documents, there are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests (collectively “Options”).

(c)

All of the issued and outstanding shares of the Company Common Stock have been duly authorized and are validly issued and outstanding, fully paid and nonassessable and have been issued in compliance with applicable securities laws and other applicable Legal Requirements or transfer restrictions under applicable securities laws.

III.3

Authority and Validity.  The Company has all requisite corporate power to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement (subject to the approval of the Company Shareholders as contemplated herein and subject to the receipt of any necessary consents, approvals, authorizations or other matters referred to herein).  The execution and delivery by the Company of, the performance by the Company of its obligations under, and the consummation by the Company of the transactions contemplated by, this Agreement have been duly authorized by all requisite action of the Company (subject to the approval of the Company Shareholders as contemplated herein).  This Agreement has been duly executed and delivered by the Company and (assuming due execution and delivery by the Seller Parties and approval by the Company Shareholders) is the legal, valid, and binding obligation of the Company, enforceable against it in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.  Upon the execution and delivery of the Collateral Documents by each Person (other than by the Seller Parties) that is required by this Agreement to execute, or that does execute, this Agreement or any of the Collateral Documents, and assuming due execution and delivery thereof by the Seller Parties, the Collateral Documents will be the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.

III.4

No Breach or Violation.  Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by the Company of this Agreement and the Collateral Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of the Company under, or result in the creation or imposition of any Encumbrance upon the Company, the Company Assets, the Company Business or the Company Common Stock by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of the Company or any Subsidiary of the Company, (ii) any material contract, agreement, lease, indenture or other instrument to which the Company is a party or by or to which the Company, or the Assets may be bound or subject and a violation of which would result in a Material Adverse Effect on the Company, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to the Company or (iv) any Permit of the Company, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on the Company or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of the Company to perform its obligations under this Agreement or any of the Collateral Documents.

III.5

Consents and Approvals.  Except for requirements described in Schedule 3.5, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by the 

Company in connection with the execution, delivery and performance by the Company of this Agreement or any Collateral Document or for the consummation by the Company of the transactions contemplated hereby or thereby, except to the extent the failure to obtain any such consent, approval, authorization or order or to make any such registration or filing would not have a Material Adverse Effect on the Company or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of the Company to perform its obligations under this Agreement or any of the Collateral Documents.

III.6

Intellectual Property. The Seller warrants that it has good title to or the right to use all material company intellectual property rights and all material inventions, processes, designs, formulae, trade secrets and know how necessary for the operation of the Company Business without the payment of any royalty or similar payment, as described in the “Goldstar North American Mining, Inc., Executive Summary” attached hereto as Exhibit A.

III.7

Compliance with Legal Requirements.  The Company has operated its Business in compliance with all Legal Requirements applicable to the Company except to the extent the failure to operate in compliance with all material Legal Requirements would not have a Material Adverse Effect on the Company or Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.  

III.8

Litigation.  There are no outstanding judgments or orders against or otherwise affecting or related to the Company, the Company Business or the Company Assets and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to the Company’s knowledge, threatened that, if adversely determined, would have a Material Adverse Effect on the Company or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents, except as noted in the audited Company Financial Statements or documented by the Company to the Seller.

III.9

Taxes.  The Company has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Regulatory Authority, and has paid all taxes required to be paid in respect thereof except where such failure would not have a Material Adverse Effect on the Company, except where, if not filed or paid, the exception(s) have been documented by the Company to the Seller.

III.10

Books and Records.  The books and records of the Company accurately and fairly represent the Company Business and its results of operations in all material respects.

III.11

Brokers or Finders.  All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by the Company and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither the Company, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.

III.12

Disclosure.  No representation or warranty of the Company in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by 

the Company pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

III.13

No Undisclosed Liabilities.  The Company is not subject to any material liability (including unasserted claims), absolute or contingent, which is not shown or which is in excess of amounts shown or reserved for in the balance sheet as of June 30, 2014 other than liabilities of the same nature as those set forth in the Company Financial Statements and reasonably incurred in the ordinary course of its business after June 30, 2014.

III.14

Absence of Certain Changes.

Since June 30, 2014, the Company has not: (a) suffered any material adverse change in its financial condition, assets, liabilities or business; (b) contracted for or paid any capital expenditures; (c) incurred any indebtedness or borrowed money, issued or sold any debt or equity securities, declared any dividends or discharged or incurred any liabilities or obligations except in the ordinary course of business as heretofore conducted; (d) mortgaged, pledged or subjected to any lien, lease, security interest or other charge or encumbrance any of its properties or assets; (e) paid any material amount on any indebtedness prior to the due date, forgiven or cancelled any material amount on any indebtedness prior to the due date, forgiven or cancelled any material debts or claims or released or waived any material rights or claims; (f) suffered any damage or destruction to or loss of any assets (whether or not covered by insurance); (g) acquired or disposed of any assets or incurred any liabilities or obligations; (h) made any payments to its affiliates or associates or loaned any money to any person or entity; (i) formed or acquired or disposed of any interest in any corporation, partnership, limited liability company, joint venture or other entity; (j) entered into any employment, compensation, consulting or collective bargaining agreement or any other agreement of any kind or nature with any person. Or group, or modified or amended in any respect the terms of any such existing agreement; (k) entered into any other commitment or transaction or experience any other event that relates to or affect in any way this Agreement or to the transactions contemplated hereby, or that has affected, or may adversely affect the Company’s business, operations, assets, liabilities or financial condition; or (1) amended its Articles of Organization or By-laws, except as otherwise contemplated herein.

III.15

Contracts.  A true and complete list of all contracts, agreements, leases, commitments or other understandings or arrangements, written or oral, express or implied, to which the Company is a party or by which it or any of its property is bound or affected requiring payments to or from, or incurring of liabilities by, the Company in excess of $100,000 (the “Contracts”). The Company has complied with and performed, in all material respects, all of its obligations required to be performed under and is not in default with respect to any of the Contracts, as of the date hereof, nor bas any event occurred which has not been cured which, with or without the giving of notice, lapse of time, or both, would constitute a default in any respect there under. To the best knowledge of the Company, no other party has failed to comply with or perform, in all material respects, any of its obligations required to be performed under or is in material default with respect to any such Contracts, as of the date hereof, nor has any event occurred which, with or without the giving of notice, lapse of time or both, would constitute a material default in any respect by such party there under. The Company knows of and has no 

reason to believe that there are any facts or circumstances which would make a material default by any party to any contract or obligation likely to occur subsequent to the date hereof.

III.16

Permits and Licenses. The Company has all certificates of occupancy, rights, permits, certificates, licenses, franchises, approvals and other authorizations as are reasonably necessary to conduct its business and to own, lease, use, operate and occupy its assets, at the places and in the manner now conducted and operated, except those the absence of which would not materially adversely affect its business. The Company has not received any written or oral notice or claim pertaining to the failure to obtain any material permit, certificate, license, approval or other authorization required by any federal, state or local agency or other regulatory body, the failure of which to obtain would materially and adversely affect its business.

III.17

Assets Necessary to Business. The Seller owns or leases all properties and assets, real, personal, and mixed, tangible and intangible, and is a party to all licenses, permits and other agreements necessary to permit it to carry on its business as presently conducted.

III.18

Labor Agreements and Labor Relations.  The Company has no collective bargaining or union contracts or agreements. The Company is in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practices; there are no charges of discrimination or unfair labor practice charges” or complaints against the Company pending or threatened before any governmental or regulatory agency or authority; and, there is no labor strike, dispute, slowdown or stoppage actually pending or threatened against or affecting the Company.

III.19

Employment Arrangements.  The Company has no employment or consulting agreements or arrangements, written or oral, which are not terminable at the will of the Company, or any pension, profit-sharing, option, other incentive plan, or any other type of employment benefit plan as defined in ERISA or otherwise, or any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, insurance or other benefits. No employee of the Company is in violation of any employment agreement or restrictive covenant.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SELLER PARTIES

Each of the Seller Parties, jointly and severally, represents and warrants to the Company that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement and, except as provided in Section 8.1, 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 ARTICLE IV, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by the Agreement).

IV.1

Organization and Qualification.  The Seller has all requisite power and authority to own, lease and use its assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. The Seller is duly qualified or licensed to do business in 

and are each in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on the Seller or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of the Company or the Seller to perform its obligations under this Agreement or any of the Collateral Documents.

IV.2

Capitalization.

(a)

The authorized capital stock of the Seller consists of 100 Shares of Common Stock and zero shares of Preferred Stock.  All 100 Shares of Common Stock are issued and outstanding, held by the Seller Parties, and have been duly authorized, validly issued and outstanding and fully paid and non-assessable, which shares are exchanged hereby, as above provided.

(b)

Schedule 4.2(b) lists all outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require the Seller or any of its Subsidiaries to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests.  

(c)

All of the issued and outstanding shares of the Seller Capital Stock have been duly authorized and are validly issued and outstanding, fully paid and nonassessable (with respect to Subsidiaries that are corporations) and have been issued in compliance with applicable securities laws and other applicable Legal Requirements.

IV.3

Authority and Validity.  Each the Seller Party has all requisite power to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement and the Collateral Documents.  The execution and delivery by each the Seller Party of the performance by each the Seller Party of its obligations under, and the consummation by each the Seller Party of the transactions contemplated by, this Agreement and the Collateral Documents have been duly authorized by all requisite action of each the Seller Party. This Agreement has been duly executed and delivered by each of the Seller Parties and (assuming due execution and delivery by the Company) is the legal, valid and binding obligation of each the Seller Party, enforceable in accordance with its terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.  Upon the execution and delivery by each of the Seller Parties of the Collateral Documents to which each of them is a party, and assuming due execution and delivery thereof by the other parties thereto, the Collateral Documents will be the legal, valid and binding obligations of each such Person, as the case may be, enforceable against each of them in accordance with their respective terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.

IV.4

No Breach or Violation.  Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to 

Regulatory Authorities and Persons identified herein, the execution, delivery and performance by the Seller Parties of this Agreement and the Collateral Documents to which each is a party and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of any the Seller Party under, or result in the creation or imposition of any Encumbrance upon the property of any the Seller Party by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of any the Seller Party, (ii) any contract, agreement, lease, indenture or other instrument to which any the Seller Party is a party or by or to which any the Seller Party or its property may be bound or subject and a violation of which would result in a Material Adverse Effect on the Seller taken as a whole, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to any the Seller Party or (iv) any Permit of the Seller or subsidiary, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on the Seller or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of any the Seller Party to perform its obligations hereunder or there under.

IV.5

Consents and Approvals.  Except for requirements under applicable United States or state securities laws, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by any the Seller Party in connection with the execution, delivery and performance by them of this Agreement or any Collateral Documents or for the consummation by them of the transactions contemplated hereby or thereby, except to the extent the failure to obtain such consent, approval, authorization or order or to make such registration or filings or to give such notice would not have a Material Adverse Effect on the Seller or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of the Company or the Seller to perform its obligations under this Agreement or any of the Collateral Documents.

IV.6

Compliance with Legal Requirements.  The Seller Business has operated in compliance with all material Legal Requirements including, without limitation, the Exchange Act and the Securities Act applicable to the Seller, except to the extent the failure to operate in compliance with all material Legal Requirements, would not have a Material Adverse Effect on the Seller or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.

IV.7

Litigation.  There are no outstanding judgments or orders against or otherwise affecting or related to the Seller, or their business or assets; and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to the best knowledge of the Seller, threatened that, that has not been disclosed and if adversely determined, would have a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.

IV.8

Ordinary Course.  Since the date of the balance sheet included in the most recent the Seller Securities Filings filed through the date hereof, there has not been any occurrence, 

event, incident, action, failure to act or transaction involving the Seller, which is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on the Seller.

IV.9

Assets and Liabilities.  As of the date of this Agreement, neither the Seller nor any of its Subsidiaries has any Assets or Liability, except for the (i) Liabilities disclosed in the balance sheet disclosed to the Company through the date hereof and (ii) the mining claims and intellectual property described in the “Goldstar North American Mining, Inc., Executive Summary” attached hereto as Exhibit A.

IV.10

Taxes.  The Seller and each of its Subsidiaries, has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Governmental Authority, except where such failure to file would not have a Material Adverse Effect on the Seller.  

IV.11

Books and Records.  The books and records of the Seller and its Subsidiaries accurately and fairly represent the Seller Business and its results of operations in all material respects.  All accounts receivable and inventory of the Seller Business are reflected properly on such books and records in all material respects.

IV.12

Financial and Other Information.

(a)

Two years of audited historical financial statements of the Seller and all subsidiaries will be prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and present fairly the financial condition of the Seller and its results of operations as of the dates and for the periods indicated, subject in the case of the unaudited financial statements only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.

(b)

To the knowledge of current management, the Seller’s financials do not contain (directly or by incorporation by reference) any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (or incorporated therein by reference), in light of the circumstances under which they were or will be made, not misleading.

IV.13

Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by the Seller and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither the Seller, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.

IV.14

Disclosure.  No representation or warranty of the Seller in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by the Seller pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

IV.15

Filings.  The Seller has or will make all of the filings required by the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended, required to be made and no such filing contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made, not misleading.

IV.16

Conduct of Business.  Prior to the Closing Date, the Seller shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of the Company, except in the regular course of business. Except as otherwise provided herein, the Seller shall not amend its Articles of Incorporation or By-Laws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount or enter into any other transaction other than in the regular course of business.

ARTICLE V

COVENANTS OF THE COMPANY

Between the date of this Agreement and the Closing Date:

V.1

Additional Information.  The Company shall provide to the Seller and its Representatives such financial, operating and other documents, data and information relating to the Company, the Company Business and the Company Assets and Liabilities of the Company, as the Seller or its Representatives may reasonably request.  In addition, the Company shall take all action necessary to enable the Seller and its Representatives to review, inspect and audit the Company Assets, the Company Business and Liabilities of the Company and discuss them with the Company’s officers, employees, independent accountants, customers, licensees, and counsel.  Notwithstanding any investigation that the Seller may conduct of the Company, the Company Business, the Company Assets and the Liabilities of the Company, the Seller may fully rely on the Company’s warranties, covenants and indemnities set forth in this Agreement.  

V.2

Consents and Approvals.  As soon as practicable after execution of this Agreement, the Company shall use commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give any notice to, any Regulatory Authority or Person as is required to be obtained, made or given by the Company to consummate the transactions contemplated by this Agreement and the Collateral Documents.  

V.3

Non-circumvention.  It is understood that in connection with the transactions contemplated hereby, the Seller has been and will be seeking to find investors willing to provide loans and/or capital investments to finance business plans.  In connection therewith, the Company will not, and it will cause its directors, officers, employees, agents and representatives not to attempt, directly or indirectly, (i) to contact any party introduced to it by the Seller, or (ii) deal with, or otherwise become involved in any transaction with any party which has been introduced to it by the Seller, without the express written permission of the introducing party and without having entered into a commission agreement with the introducing party.  Any violation 

of the covenant shall be deemed an attempt to circumvent the Seller, and the party so violating this covenant shall be liable for damages in favor of the circumvented party.

V.4

No Solicitations.  From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, the Company will not nor will it authorize or permit any of its officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, (i) solicit or initiate the making, submission or announcement of any other acquisition proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to any other acquisition proposal, (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal. 

V.5

Notification of Adverse Change.  The Company shall promptly notify the Seller of any material adverse change in the condition (financial or otherwise) of the Company.

V.6

Notification of Certain Matters.  The Company shall promptly notify the Seller of any fact, event, circumstance or action known to it that is reasonably likely to cause the Company to be unable to perform any of its covenants contained herein or any condition precedent in ARTICLE VII not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to the Seller pursuant to this Agreement or the existence or occurrence of which would cause any of the Company’s representations or warranties under this Agreement not to be correct and/or complete.  The Company shall give prompt written notice to the Seller of any adverse development causing a breach of any of the representations and warranties in ARTICLE III as of the date made.

V.7

The Company Disclosure Schedule.  The Company shall, from time to time prior to Closing, supplement the Company Disclosure Statement with additional information that, if existing or known to it on the date of delivery to the Seller, would have been required to be included therein.  For purposes of determining the satisfaction of any of the conditions to the obligations of the Seller in ARTICLE VII, the Company Disclosure Statement shall be deemed to include only (a) the information contained therein on the date of this Agreement and (b) information added to the Company Disclosure Statement by written supplements delivered prior to Closing by the Company that (i) are accepted in writing by the Seller, or (ii) reflect actions taken or events occurring after the date hereof prior to Closing.  

V.8

State Statutes.  The Company and its Board of Directors shall, if any state takeover statute or similar law is or becomes applicable to the Share Exchange, this Agreement or any of the transactions contemplated by this Agreement, use all reasonable efforts to ensure that the Share Exchange and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Share Exchange, this Agreement and the transactions contemplated hereby.

V.9

Conduct of Business.  Prior to the Closing Date, the Company shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of the Seller, except in the regular course of business.  Except as otherwise provided herein, the Company shall not amend its Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount, or enter into any other transaction other than in the regular course of business.

V.10

Securities Filings.  The Company will timely file all reports and other documents relating to the operation of the Company required to be filed with the Securities and Exchange Commission, which reports and other documents do not and will not contain any misstatement of a material fact, and do not and will not omit any material fact necessary to make the statements therein not misleading.

V.11

Election to the Company’s Board of Directors.  At the Effective Time of the Share Exchange, the Company shall take all steps necessary so that there will be a one (1) continuing director (the “the Company Director”) and the remaining directors shall be designated by the Seller.

ARTICLE VI

COVENANTS OF THE SELLER

Between the date of this Agreement and the Closing Date,

VI.1

Additional Information.  The Seller shall provide to the Company and its Representatives such financial, operating and other documents, data and information relating to the Seller, the Seller Business and the Seller Assets and the Liabilities of the Seller and its Subsidiaries, as the Company or its Representatives may reasonably request.  In addition, the Company shall take all action necessary to enable the Company and its Representatives to review and inspect the Seller Assets, the Seller Business and the Liabilities of the Seller and discuss them with the Company’s officers, employees, independent accountants and counsel.  Notwithstanding any investigation that the Company may conduct of the Seller, the Seller Business, the Seller Assets and the Liabilities of the Seller, the Company may fully rely on the Seller’s warranties, covenants and indemnities set forth in this Agreement.  

VI.2

No Solicitations.  From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, the Seller will not nor will it authorize or permit any of its officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, (i) solicit or initiate the making, submission or announcement of any other acquisition proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to any other acquisition proposal, (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal or (v) enter into 

any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal.

VI.3

Notification of Adverse Change.  The Seller shall promptly notify the Company of any material adverse change in the condition (financial or otherwise) of the Seller.

VI.4

Consents and Approvals.  As soon as practicable after execution of this Agreement, the Seller shall use its commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give notice to, any Regulatory Authority or Person as is required to be obtained, made or given by the Seller to consummate the transactions contemplated by this Agreement and the Collateral Documents. 

VI.5

Notification of Certain Matters.  The Seller shall promptly notify the Company of any fact, event, circumstance or action known to it that is reasonably likely to cause the Seller to be unable to perform any of its covenants contained herein or any condition precedent if not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to the Company pursuant to this Agreement or the existence or occurrence of which would cause the Seller’s representations or warranties under this Agreement not to be correct and/or complete.  The Seller shall give prompt written notice to the Company of any adverse development causing a breach of any of the representations and warranties in ARTICLE IV.  

VI.6

The Seller Disclosure Schedule.  The Seller shall, from time to time prior to Closing, supplement the Seller Disclosure Statement with additional information that, if existing or known to it on the date of this Agreement, would have been required to be included therein.  For purposes of determining the satisfaction of any of the conditions to the obligations of the Company in the Seller Disclosure Statement shall be deemed to include only (a) the information contained therein on the date of delivery to the Company and (b) information added to the Seller Disclosure Statement by written supplements delivered prior to Closing by the Seller that (i) are accepted in writing by the Company or (ii) reflect actions taken or events occurring after the date hereof and prior to Closing.  

VI.7

Audited Financial Statements. Prior to Closing, the Seller shall provide the Company with financial statements: two calendar years, 2013 and 2012, of audited historical financial statements of the Seller and all subsidiaries, prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and presenting fairly the financial condition of the Seller and its results of operations as of the dates and for the periods indicated, subject only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.

ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES

All obligations of the Seller Parties under this Agreement shall be subject to the fulfillment at or prior to Closing of each of the following conditions, it being understood that the Seller Parties may, in their sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.

VII.1

Accuracy of Representations.  All representations and warranties of the Company contained in this Agreement, the Collateral Documents and any certificate delivered by any of the Company at or prior to Closing shall be, if specifically qualified by materiality, true in all respects and, if not so qualified, shall be true in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement.  The Company shall have delivered to the Seller a certificate dated the Closing Date to the foregoing effect.

VII.2

Covenants.  The Company shall, in all material respects, have performed and complied with each of the covenants, obligations and agreements contained in this Agreement and the Collateral Documents that are to be performed or complied with by them at or prior to Closing.  The Company shall have delivered to the Seller a certificate dated the Closing Date to the foregoing effect.

VII.3

Consents and Approvals.  All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.  

VII.4

Delivery of Documents.  The Company shall have delivered, or caused to be delivered, to the Seller the following documents:

(i)

Certified copies of the Company articles of incorporation and bylaws and certified resolutions of the board of directors of the Company authorizing the execution of this Agreement and the Collateral Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby.

(ii)

Such other documents and instruments as the Seller may reasonably request: (A) to evidence the accuracy of the Company’s representations and warranties under this Agreement, the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by the Company of, or the compliance by the Company with, any covenant, obligation, condition and agreement to be performed or complied with by the Company under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents.

(iii)

Letters of resignation from the Company’s current officers and directors to be effective upon the Closing.

(iv)

Board resolutions from the Company’s current directors appointing the designees of the Seller to the Company’s board of directors.

VII.5

No Material Adverse Change.  Since the date hereof, there shall have been no material adverse change in the Company Assets, the Company Business or the financial condition or operations of the Company, taken as a whole.

ARTICLE VIII

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY

All obligations of the Company under this Agreement shall be subject to the fulfillment at or prior to Closing of the following conditions, it being understood that the Company may, in its sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.

VIII.1

Accuracy of Representations.  All representations and warranties of the Seller contained in this Agreement and the Collateral Documents and any other document, instrument or certificate delivered by any of the Seller at or prior to the Closing shall be, if specifically qualified by materiality, true and correct in all respects and, if not so qualified, shall be true and correct in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement.  The Seller shall have delivered to the Company a certificate dated the Closing Date to the foregoing effect.

VIII.2

Covenants.  The Seller shall, in all material respects, have performed and complied with each obligation, agreement, covenant and condition contained in this Agreement and the Collateral Documents and required by this Agreement and the Collateral Documents to be performed or complied with by the Seller at or prior to Closing.  The Seller shall have delivered to the Company a certificate dated the Closing Date to the foregoing effect.

VIII.3

Consents and Approvals.  All consents; approvals, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.  

VIII.4

Delivery of Documents.  The Seller, as applicable, shall have executed and delivered, or caused to be executed and delivered, to the Company the following documents:

Documents and instruments as the Company may reasonably request: (A) to evidence the accuracy of the representations and warranties of the Seller under this Agreement and the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by the Seller of, or the compliance by the Seller with, any covenant, obligation, condition and agreement to be performed or complied with by the Seller under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents, including:

VIII.5

No Material Adverse Change.  There shall have been no material adverse change in the business, financial condition or operations of the Seller and its Subsidiaries taken as a whole.

VIII.6

No Litigation.  No action, suit or proceeding shall be pending or threatened by or before any Regulatory Authority and no Legal Requirement shall have been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this 

Agreement and the Collateral Documents that would: (i) prevent consummation of any of the transactions contemplated by this Agreement and the Collateral Documents; (ii) cause any of the transactions contemplated by this Agreement and the Collateral Documents to be rescinded following consummation; or (iii) have a Material Adverse Effect on the Seller.

ARTICLE IX

INDEMNIFICATION

IX.1

Indemnification by the Company.  The Company shall indemnify, defend and hold harmless (i) the Seller, (ii) each of the Seller’s assigns and successors in interest to the Company Shares, and (iii) each of their respective shareholders, members, partners, directors, officers, managers, employees, agents, attorneys and representatives, from and against any and all Losses which may be incurred or suffered by any such party and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of the Company contained in this Agreement.  All claims to be assorted hereunder must be made for the first anniversary of the Closing.

IX.2

Indemnification by the Seller Parties.  The Seller Parties shall indemnify, defend and hold harmless the Company and each of the Company Shareholders from and against any and all Losses which may be incurred or suffered by any such party hereto and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of the Seller Parties contained in this Agreement.  All claims to be assorted hereunder must be made for the first anniversary of the Closing.

IX.3

Notice to Indemnifying Party.  If any party (the “Indemnified Party”) receives notice of any claim or other commencement of any action or proceeding with respect to which any other party (or parties) (the “Indemnifying Party”) is obligated to provide indemnification pursuant to Sections 9.1 or 9.2, the Indemnified Party shall promptly give the Indemnifying Party written notice thereof, which notice shall specify in reasonable detail, if known, the amount or an estimate of the amount of the liability arising here from and the basis of the claim.  Such notice shall be a condition precedent to any liability of the Indemnifying Party for indemnification hereunder, but the failure of the Indemnified Party to give prompt notice of a claim shall not adversely affect the Indemnified Party’s right to indemnification hereunder unless the defense of that claim is materially prejudiced by such failure.  The Indemnified Party shall not settle or compromise any claim by a third party for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party (which shall not be unreasonably withheld or delayed) unless suit shall have been instituted against it and the Indemnifying Party shall not have taken control of such suit after notification thereof as provided in Section 9.4.

IX.4

Defense by Indemnifying Party.  In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the Indemnifying Party at its sole cost and expense may, upon written notice to the Indemnified Party, assume the defense of any such claim or legal proceeding (i) if it acknowledges to the Indemnified Party in writing its obligations to indemnify the Indemnified Party with respect to all elements of such claim (subject to any limitations on such liability contained in this Agreement) and (ii) if it provides assurances, reasonably 

satisfactory to the Indemnified Party, that it will be financially able to satisfy such claims in full if the same are decided adversely.  If the Indemnifying Party assumes the defense of any such claim or legal proceeding, it may use counsel of its choice to prosecute such defense, subject to the approval of such counsel by the Indemnified Party, which approval shall not be unreasonably withheld or delayed.  In this regard, Randall Lanham, Esq. is hereby approved by the Seller as counsel to the Company (in its capacity as the Indemnifying Party).  The Indemnified Party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if the Indemnified Party, in its sole discretion, determines that there exists a conflict of interest between the Indemnifying Party (or any constituent party thereof) and the Indemnified Party, the Indemnified Party (or any constituent party thereof) shall have the right to engage separate counsel, the reasonable costs and expenses of which shall be paid by the Indemnified Party.  If the Indemnifying Party assumes the defense of any such claim or legal proceeding, the Indemnifying Party shall take all steps necessary to pursue the resolution thereof in a prompt and diligent manner.  The Indemnifying Party shall be entitled to consent to a settlement of, or the stipulation of any judgment arising from, any such claim or legal proceeding, with the consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that no such consent shall be required from the Indemnified Party if (i) the Indemnifying Party pays or causes to be paid all Losses arising out of such settlement or judgment concurrently with the effectiveness thereof (as well as all other Losses theretofore incurred by the Indemnified Party which then remain unpaid or unreimbursed), (ii) in the case of a settlement, the settlement is conditioned upon a complete release by the claimant of the Indemnified Party and (iii) such settlement or judgment does not require the encumbrance of any asset of the Indemnified Party or impose any restriction upon its conduct of business.

ARTICLE X

TERMINATION

X.1

Termination.  This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to it being fully executed, or thereafter:

(a)

by mutual written agreement of the Seller, the Seller Parties and the Company hereto duly authorized by action taken by or on behalf of their respective Boards of Directors; or

(b)

by either the Company or the Seller upon notification to the non-terminating party by the terminating party:

(i)

if the terminating party is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement on the part of the non-terminating party set forth in this Agreement such that the conditions will not be satisfied; provided, however, that if such breach is curable by the non-terminating party and such cure is reasonably likely to be completed prior to the date specified in Section 10.1(b)(i), then, for so long as the non-terminating party continues to use 

commercially reasonable efforts to effect and cure, the terminating party may not terminate pursuant to this Section 10.1(b)(i); or

(ii)

if any court of competent jurisdiction or other competent Governmental or Regulatory Authority shall have issued an order making illegal or otherwise permanently restricting, preventing or otherwise prohibiting the Share Exchange and such order shall have become final; or

(iii) 

for any reason, or no reason, if the Agreement and the Exchange 

have not been consummated on or before December 31, 2014.

(c)

Effect of Termination.  If this Agreement is validly terminated by either the Company or the Seller pursuant to Section 10.1, this Agreement will forthwith become null and void and there will be no liability or obligation on the part of the parties hereto, except that nothing contained herein shall relieve any party hereto from liability for willful breach of its representations, warranties, covenants or agreements contained in this Agreement.

ARTICLE XI

MISCELLANEOUS

XI.1

Parties Obligated and Benefited.  This Agreement shall be binding upon the Parties and their respective successors by operation of law and shall inure solely to the benefit of the Parties and their respective successors by operation of law, and no other Person shall be entitled to any of the benefits conferred by this Agreement.  Without the prior written consent of the other Party, no Party may assign this Agreement or the Collateral Documents or any of its rights or interests or delegate any of its duties under this Agreement or the Collateral Documents.

XI.2

Publicity.  The initial press release shall be a joint press release and thereafter the Company and the Seller each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Share Exchange and the other transactions contemplated by this Agreement and prior to making any filings with any third party and/or any Regulatory Authorities (including any national securities inter dealer quotation service) with respect thereto, except as may be required by law or by obligations pursuant to any listing agreement with or rules of any national securities inter dealer quotation service.

XI.3

Notices.  Any notices and other communications required or permitted hereunder shall be in writing and shall be effective upon delivery by hand or upon receipt if sent by certified or registered mail (postage prepaid and return receipt requested) or by a nationally recognized overnight courier service (appropriately marked for overnight delivery) or upon transmission if sent by telex or facsimile (with request for immediate confirmation of receipt in a manner customary for communications of such respective type and with physical delivery of the communication being made by one or the other means specified in this Section as promptly as practicable thereafter).  Notices shall be addressed as follows:

		
	If to the Seller to:

	Randall J. Lanham, Esq.

		
	 
	28562 Oso Parkway, Unit D

Rancho Santa Margarita, CA 92688

		
	If to the Company to:   Randall Goulding, Esq.

	 
	Securities Counselors, Inc.

	 
	1333 Sprucewood Deerfield, IL 60015

	 
	 

Any Party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section.

XI.4

Attorneys’ Fees.  In the event of any action or suit based upon or arising out of any alleged breach by any Party of any representation, warranty, covenant or agreement contained in this Agreement or the Collateral Documents, the prevailing Party shall be entitled to recover reasonable attorneys’ fees and other costs of such action or suit from the other Party.

XI.5

Headings.  The Article and Section headings of this Agreement are for convenience only and shall not constitute a part of this Agreement or in any way affect the meaning or interpretation thereof.

XI.6

Choice of Law.  This Agreement and the rights of the Parties under it shall be governed by and construed in all respects in accordance with the laws of the State of Colorado, without giving effect to any choice of law provision or rule (whether of the State of California or any other jurisdiction that would cause the application of the laws of any jurisdiction other than the State of Colorado).

XI.7

Rights Cumulative.  All rights and remedies of each of the Parties under this Agreement shall be cumulative, and the exercise of one or more rights or remedies shall not preclude the exercise of any other right or remedy available under this Agreement or applicable law.

XI.8

Further Actions.  The Parties shall execute and deliver to each other, from time to time at or after Closing, for no additional consideration and at no additional cost to the requesting party, such further assignments, certificates, instruments, records, or other documents, assurances or things as may be reasonably necessary to give full effect to this Agreement and to allow each party fully to enjoy and exercise the rights accorded and acquired by it under this Agreement.

XI.9

Time of the Essence.  Time is of the essence under this Agreement.  If the last day permitted for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a Business Day, the time for the giving of such notice or the performance of such act shall be extended to the next succeeding Business Day.

XI.10

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

XI.11

Entire Agreement.  This Agreement (including the Exhibits, the Company Disclosure Statement, the Seller Disclosure Statement and any other documents, instruments and 

certificates referred to herein, which are incorporated in and constitute a part of this Agreement) contains the entire agreement of the Parties.  

XI.12

Survival of Representations and Covenants.  Notwithstanding any right of the Seller to fully investigate the affairs of the Company and notwithstanding any knowledge of facts determined or determinable by the Seller pursuant to such investigation or right of investigation, the Seller shall have the right to rely fully upon the representations, warranties, covenants and agreements of the Company contained in this Agreement.  Each representation, warranty, covenant and agreement of the Company contained herein shall survive the execution and delivery of this Agreement and the Closing and shall thereafter terminate and expire on the first anniversary of the Closing Date unless, prior to such date, the Seller has delivered to the Company Shareholders a written notice of a claim with respect to such representation, warranty, covenant or agreement. 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and year first above written.

Dated:

July 31, 2014

Goldstar North American Mining, Inc.

By:_______________________

Name:  Craig Parkinson

Title: Chief Executive Officer

XFormity Technologies, Inc.

By:_______________________

Name: Sheldon Drobny

Title:  Chief Executive Officer

The Seller Parties: 

 

 

By:_______________________                                By:_______________________

Name: John Hansel Esq.                                             Name: Joseph Bonocore

 

 

By:_______________________                                By:_______________________       

Name: Richard Ziminski                                             Name: Owen Meals

 

 

By:_______________________                                By:_______________________       

Name: Matthew Hay                                                  Name: Craig Parkinson

 

 

By:_______________________                                By:_______________________       

Name: Mike Jones                                                      Name: Mike Showers

 

 

By:_______________________                                By:_______________________       

Name: Gold Miner's Ventures, Inc.,                           Name: Spencer Showers

by:  John Hansel Esq., President

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