Document:

MTOO Exhibit 10.1

  Exhibit 10.1 
 Form of Stock Purchase Agreement
 

 

 STOCK PURCHASE AGREEMENT
 

 BY AND AMONG
 Euro-Asia Investment & Finance Corp. Limited
 AND
 all other Buyers listed in Schedule A attached hereto 
 AND
 Shulamit Lazar
 AND
 all other Sellers listed in Schedule B attached hereto
 AND
 Metu Brands, Inc.
 

 Dated as of December 18, 2015
 

 STOCK PURCHASE AGREEMENT
 THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of December 18, 2015, is made and entered into by and among Euro-Asia Investment & Finance Corp. Limited, a company incorporated under the laws of Hong Kong Special Administrative Region of China (“Euro-Asia” or “Buyers’ Representative”), all other Buyers listed in Schedule A attached hereto (together with Euro-Asia, collectively, “Buyers”), Shulamit Lazar (“Lazar” or “Sellers’ Representative”), all other Sellers listed in Schedule B attached hereto (together with Lazar, collectively, “Sellers”, each, a “Seller”), and Metu Brands, Inc., a Nevada corporation (“MTOO” or the “Company”).  
 WHEREAS, Lazar is the record and beneficial owner of 60,000,000 shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”) which represent approximately 91.70% of the Company’s outstanding Common Stock based on a total of 65,431,144 shares of Common Stock as of the date of this Agreement; 
 WHEREAS, other Sellers (excluding Lazar) are the record and beneficial owners of 5,420,000 shares of Common Stock, which represent approximately 8.28% of the Company’s outstanding Common Stock as of the date of this Agreement; 
 WHEREAS, the Parties previously entered into that certain Letter of Intent dated as of October 22, 2015 (the “Letter of Intent”) pursuant to which they agreed to enter into this definitive agreement to finalize the terms and conditions of the contemplated sale and related transactions; 
 WHEREAS, the Parties previously entered into that certain Escrow Agreement dated as of October 22, 2015 (the “Escrow Agreement”) with J.M. Walker & Associates as escrow agent (“Escrow Agent”). Pursuant to the Escrow Agreement, the parties agreed to place the Purchase Price (as hereinafter defined) into a non-interest bearing account held by the Escrow Agent (the “Escrow Account”), and the Escrow Agent shall hold and distribute such Purchase Price in accordance with the terms of the Escrow Agreement and this Agreement; 
 WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, the Sellers are willing to sell to the Buyers and the Buyers are willing to buy from the Sellers the Subject Shares, as defined below; and
 NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows:
 

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 ARTICLE I
 DEFINITIONS
 1.1
 Definitions.  The following terms shall have the following meanings for the purposes of this Agreement.
 “Affiliate” means, with respect to any specified Person, a Person that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.
 “Agreement” means this Stock Purchase Agreement, as it may be amended from time to time.
 “Business Day” shall mean each day of the week, other than Saturday, Sunday or other national holiday on which banks in New York State are not open for business.
 “Buyers” shall mean the Persons listed under Schedule A.
 “Closing” has the meaning set forth in Section 2.2 below.
 “Closing Date” has the meaning set forth in Section 2.2 below.
 “Code” means the Internal Revenue Code of 1986, as amended.
 “Common Stock” means the common stock, without par value, of the Company.
 “Company” or “MTOO” means Metu Brands, Inc., a Nevada corporation.
  “Contract” means any contract, lease, commitment, understanding, sales order, purchase order, agreement, indenture, mortgage, note, bond, right, warrant, instrument, plan, permit or license, whether written or oral, which is intended or purports to be binding and enforceable.
 “Dollars” or “$” means United States dollars.
 “Fully-Diluted Equity” shall mean, with respect to any Person on any given date, the number or percentage of the outstanding common stock or other equity securities of such Person on such date, after giving effect to (i) the exercise of all outstanding options, warrant or other securities or purchase rights entitling the holder to acquire shares of common stock or other equity securities of such Person, and the (ii) conversion into common stock or other equity securities of such Person of all outstanding notes, debentures, preferred stock or other securities convertible into such common stock or equity securities. 
 

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  “Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium).
  “Liability” means any liability or obligation, including all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, obligations, Taxes, Liens, losses, expenses, and fees (including court costs and reasonable and documented attorneys’ fees and expenses), but excluding incidental, consequential (including business interruption or lost profits), special, indirect and punitive damages and other similar items.  Liabilities shall not be calculated using a “multiplier” of any similar method having a similar effect.
 “Lien” means any mortgage, lien (except for any lien for Taxes not yet due and payable), charge, restriction, pledge, security interest, option, lease or sublease, claim, covenant, easement, encroachment or encumbrance.
 “Material Adverse Effect” means any event or condition which would have a material adverse effect upon the assets, Liabilities, financial condition or business of the Company, other than any circumstances, developments or matters related to (i) any change in economic conditions generally or capital and financial markets generally, including changes in interest or exchange rates, (ii) any change in the industry in which the Company’s business operates or in which products of the Company’s business are used or distributed, provided that such change does not have a disproportionate impact on the Company, or (iii) certain conditions in jurisdictions in which the Company’s business operates, such as hostilities, acts of war, sabotage, terrorism or military actions, or any escalation or worsening of any of the foregoing.
 “Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
 

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  “Parties” shall mean the collective reference to each of the Company, the Buyers and the Sellers.
 “Person” means and includes any individual, corporation, limited liability company, partnership, limited partnership, joint stock company, trust, unincorporated organization, joint venture, governmental agency or other entity of whatever nature.
 “Sellers” shall mean the Persons listed under Schedule B, and their respective heirs, executors, successors and assigns.
 “Subject Shares” means that 60,000,000 shares of Common Stock owned by Lazar and 5,420,000 shares of Common Stock owned by other Sellers (excluding Lazar) listed under Schedule B, for a collective amount of 65,420,000 shares of Common Stock.  
  “Subsidiary”  means any corporation or other Person more than fifty percent of the capital stock or other equity of which is owned by the Company.
 “Taxes” means all taxes, charges, fees, duties, levies or other assessments in the nature of taxes, including, without limitation, income, gross receipts, net proceeds, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, franchise, excise, value added, license, payroll, unemployment, environmental, customs duties, capital stock, disability, stamp, leasing, lease, user, transfer, fuel, excess profits, occupational and interest equalization, windfall profits, severance and employees’ income withholding and Social Security taxes imposed by the United States or any foreign country or by any Governmental Authority, including all applicable penalties and interest, and such term shall include any interest, penalties or additions to tax attributable to such taxes.
 “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
 “Transaction Documents” means the collective reference to this Agreement, and any and all other agreements, certificates, instruments and related documents delivered by the Parties on the Closing Date.
 

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 ARTICLE II
 PURCHASE AND SALE OF SUBJECT SHARES
 2.1
              Purchase Price.  In consideration for the Subject Shares, the Buyers shall pay to the Sellers, the total sum of Three Hundred and Ninety Five Thousand Dollars ($395,000), of which Three Hundred and Sixty Two Thousand Two Hundred and Seventy Five Dollars ($362,275) shall be remitted to Lazar and the remaining shall be remitted to other Sellers (excluding Lazar) as set forth under Schedule B (the “Purchase Price”). The parties acknowledge and agree that Euro-Asia previously submitted $25,000 (the “Deposit”) into the Escrow Account pursuant to the Escrow Agreement, and the parties further agree that upon the Closing (as hereinafter defined), the Deposit shall be applied to the Purchase Price; provided however that the Deposit shall be returned to Euro-Asia pursuant to the terms of the Escrow Agreement if the transactions contemplated herein do not occur.  The remaining Purchase Price shall be payable on the Closing Date to each of the Sellers.  Such Purchase Price shall be payable by wire transfers to separate bank accounts designated by each of the Sellers.
 2.2
              The Closing.    Upon the Buyers’ receipt of the Subject Shares and the Sale Documents (as hereinafter defined) and the Purchase Price in the Escrow Account, as well as the satisfaction of the covenants and conditions set forth in Article 5, the closing shall occur (the “Closing”), provided however that the Closing shall take place no later than December 21, 2015, unless otherwise mutually agreed upon by the Parties (the “Closing Date”). The Closing shall take place at the offices of Hunter Taubman Fischer LLC, 1450 Broadway, 26th Floor, New York, NY 10018.  
 2.3
 Escrow of Purchase Price. Buyers shall deposit their respective portion of the Purchase Price, as listed in Schedule A hereunder, in accordance with the terms of the Escrow Agreement.  
 2.4
 Delivery of the Subject Share Certificates. At the Closing, the Sellers shall deliver the original certificates representing the Subject Shares, along with the proper Stock Powers with Signature Guarantees and any other necessary documents acceptable to the Company’s Transfer Agent, as set forth on Schedule 2.4, to proceed with the transfer of the Subject Shares to the Buyers’ Representative (together with the original certificate of the Subject Shares, sometimes referred to herein as the “Sale Documents”) to the Buyers’ Representative.
                  
 2.5
 Transfer of Shares.  The Sellers have the responsibility for providing the Sale Documents to the Buyers’ Representative at Closing. The Buyers’ Representative will have the responsibility of sending the certificates, along with stock powers to the Company’s Transfer Agent to have the certificates changed into each of the Buyers’ respective names and denominations and the Sellers shall be responsible for all costs involved in such changes and in mailing new certificates to all shareholders.
 

 

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 2.6
 Additional Closing Deliverables.  The Company and each of the Sellers and Buyers shall deliver the other items set forth in Article 5 deliverable at the Closing.  
 ARTICLE III
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
 The Company and the Sellers hereby, severally and not jointly, represent and warrant to the Buyer that the statements contained in this Article III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III), except as set forth in the Schedules hereto.  An item disclosed in any Schedule shall be deemed disclosed for purposes of all Schedules.
 3.1           Organization, Qualification and Corporate Power.  MTOO is a corporation duly organized, validly existing, and in good standing under the Laws of the State of Nevada.  The Company has full corporate power and authority and all licenses, permits, and authorizations necessary to carry on the Company’s business in which it is engaged and to own and use the properties owned and used by it.
 3.2          Authorization of Transaction.  Each of MTOO and the Sellers has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder and under the other Transaction Documents. This Agreement and the other Transaction Documents to which it or they are a party constitutes the valid and legally binding obligation of each of MTOO and the Sellers, enforceable in accordance with its terms and conditions except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and by laws related to the availability of specific performance, injunctive relief or other equitable remedies.
 3.3           Noncontravention.  Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any material law or other material restriction of any governmental authority to which MTOO or the Seller are subject or any provision of the organizational documents of MTOO, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any third party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any material Contract or other material arrangement to which MTOO is a party or by which it is bound or to which any of its assets are subject, or  (c) result in the imposition of any Lien upon any of its assets.
 

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 3.4           Subject Shares.  The Sellers hold of record and own beneficially all of the Subject Shares, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act of 1933, as amended (the “Securities Act”) and state securities Laws), Taxes, Liens, options, warrants, purchase rights, Contracts, commitments, equities, claims, and demands.  Neither MTOO nor a Seller is a party to any option, warrant, purchase right, or other Contract or commitment that could require the sale, transfer, or other disposition of any Subject Shares (other than this Agreement).  Neither MTOO nor a Seller is a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any Subject Shares.
 3.5        Capitalization
 a)
 The entire authorized capital stock of the Company consists of 90,000,000 shares of Common Stock, of which 60,011,144 shares of Common Stock are issued and outstanding, and 10,000,000 shares of Preferred Stock, of which 271 shares of Preferred Stock are issued and outstanding.  No shares are held in treasury.  All of the Subject Shares are duly authorized, validly issued, fully paid, and nonassessable, and are held of record by the Sellers.  There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other Contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of the Common Stock.  There are no outstanding or authorized share appreciation, phantom share, profit participation, or similar rights with respect to the Common Stock. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the Common Stock.
 b)
 The assignments and other instruments of transfer delivered by the Sellers to Buyers at the Closing will be sufficient to transfer the Sellers’ entire interest, legal and beneficial, in the Subject Shares and, upon payment in full of the Purchase Price, the Buyers shall acquire all right, title and interest in and to the Subject Shares.
 3.6
           Debt, Obligation or Liability.  The Company has no debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to the Company and the Sellers) arising out of any transaction entered into at or prior to the Closing Date or any act or omission at or prior to the Closing Date, except to the extent set forth on or reserved against on the Company’s Balance Sheet filed with the Securities and Exchange Commission (the “Commission”) or set forth under Schedule 3.6 herein.  The Company and the Sellers, severally and not jointly, represent and warrant to the Buyers: 1) Schedule 3.6 contains a list of all debts, obligations or liabilities of the Company as of the Closing Date; and 2) any debts, obligations or liabilities of the Company incurred before the Closing Date but 
 

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 not listed under Schedule 3.6 shall be the responsibilities of the Sellers, and the Sellers, severally and not jointly, hereby agree to indemnify/reimburse the Buyers from and against any debts, obligations or liabilities of the Company incurred prior to the Closing Date which have not been disclosed herein and have been discovered after the Closing Date. The Company has not incurred any liabilities or obligations under agreements entered into, in the usual and ordinary course of business.
 3.7
              Subsidiaries.  The Company has no Subsidiaries, either wholly or partially owned, and the Company holds no any direct or indirect economic, voting or management interest in any Person or owns any securities issued by any Person.
 3.8
             Legal Compliance.  Except where non-compliance would not have a Material Adverse Affect, MTOO has complied with all applicable laws and, to the knowledge of the Sellers and the Company, no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against the Company or is contemplated by any legal or regulatory agency of the United States or any state government.
 3.9
              Tax Matters.  Except where non-compliance with any of the following would not have a Material Adverse Effect:
 a)
 MTOO has duly and timely filed all Tax Returns that it have been required to file for all periods through and including the Closing Date.  All such Tax Returns were correct and complete in all material respects. All material Taxes owed by MTOO have been timely paid.  To the knowledge of the Sellers, there are no material Liens on any of the assets of MTOO that arose in connection with any failure (or alleged failure) to pay any Tax.
 b)
 During the preceding seven years, none of such Tax Returns has been audited or investigated by the Internal Revenue Service for any taxable year for which the applicable statute of limitations has not expired.  To the knowledge of the Sellers, no issues have been raised in any examination by the Internal Revenue Service Authority with respect to the Business of the Company which, by application of similar principles, reasonably could be expected to result in a proposed adjustment to the Liability for Taxes for any other period not so examined.
 c)
 The Company and the Sellers have delivered or made available to the Buyers correct and complete copies of all material federal, state, local and foreign income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by MTOO for taxable periods for which the applicable statute of limitations has not expired.
 

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 d)
 MTOO has withheld and paid all material Taxes required to have been withheld and paid, including without limitation, sales and use taxes, and all Taxes in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.
 3.10
 Intellectual Property. 
 Except where non-compliance with any of the following would not have a Material Adverse Effect:
 a)
 MTOO does not own any Intellectual Property.
 b)
 MTOO has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any material Intellectual Property rights of third Parties, and MTOO has not received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation.  No third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of MTOO.
 3.11
 Litigation.  Except as disclosed in Schedule 3.11, neither MTOO nor the Sellers is subject to any outstanding litigation, injunction, judgment, order, decree, ruling, or charge or is a party or, to the Knowledge of the Sellers or the Company, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any governmental agency or before any arbitrator.
 3.12
 Indemnity.  The Sellers and the Company shall severally and jointly, indemnify, defend and hold harmless the Buyers and its directors, officers, employees, Affiliates, attorneys, consultants, agents and assigns (each, a “Indemnified Party”) from and against any losses, liabilities, damages, costs, or expenses (including interest, penalties and reasonable attorneys’ fees and disbursements) (collectively, “Losses”) sustained or incurred by such Indemnified Party relating to, caused by or resulting from: (a) any breach of any representation or warranty of the Sellers contained in this Agreement or in any certificate or schedule delivered by the Sellers pursuant to this Agreement; (b) any breach of, or failure to satisfy, any covenant or obligation of the Sellers in this Agreement or in any other certificate or document delivered by the Sellers pursuant to this Agreement. 
 3.13
 Rental Expenses.  The Company is currently under no lease for its office space and is not subject to a monthly rent payment. 
 3.14
 No Brokers or Finders. No person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Buyers for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and after the Closing, the Sellers will indemnify and hold the Buyers harmless against any liability or expense arising out of, or in connection with, any such claim.
 

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 3.15
 Compliance with Laws.  The Subject Shares are being sold in a private transaction between the Sellers and the Buyers. The Subject Shares can be sold and transferred without contravening, conflicting with, or resulting in a violation of the law. The Buyers are aware of the restrictions of transferability of the Subject Shares and further understands the certificates shall bear the legend set forth herein below in Section 4.5.
 3.16
 Binding Obligations.  Assuming this Agreement has been duly and validly authorized, executed and delivered by the parties hereto other than MTOO, this Agreement to which MTOO is a party is duly authorized, executed and delivered by MTOO and constitutes the legal, valid and binding obligations of MTOO, enforceable against MTOO in accordance with its terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.
 3.17
 Financial Statements.  MTOO is a reporting company under the Securities Exchange Act or 1934, as amended and applicable Commission rules and audited financial statements can be found on the EDGAR system.  MTOO’s financial statements contained in its filings (the “SEC Documents”) on EDGAR (the “Financial Statements”) have been prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods indicated and with each other, except that the unaudited Financial Statements do not contain footnotes required by U.S. GAAP.  The Financial Statements fairly present the financial condition and operating results of MTOO as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments.  Except as set forth in the Financial Statements and the schedules attached to this Agreement, MTOO has no material liabilities (contingent or otherwise).  Except as included on the schedules attached to this Agreement, MTOO is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.  
 ARTICLE IV
 REPRESENTATIONS AND WARRANTIES OF THE BUYERS
 The Buyers, each and collectively, represent and warrant to MTOO and the Sellers that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV).
 4.1
 Organization of the Buyer.  The Buyer, if it is a corporation, is duly organized, validly existing, and in good standing under the laws of its place of incorporation.  
 

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 4.2
 Authorization of Transaction.  Each Buyer has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder and under the other Transaction Documents.  This Agreement and the other Transaction Documents to which it or they are a party constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and by laws related to the availability of specific performance, injunctive relief or other equitable remedies.  The Buyers need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any governmental authority in order to consummate the transactions contemplated by this Agreement.
 4.3
 Noncontravention.  Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby or under the other Transaction Documents will (a) violate any law or other material restriction of any governmental authority to which each Buyer is subject or any provision of the Buyer’s organizational documents, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any material Contract or other material arrangement to which a Buyer is a party or by which it is bound or to which any of its assets are subject (or result in the imposition of any Lien upon any of its assets).
 4.4
 Legal Compliance.  Each Buyer has complied in all material respects with all applicable laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or to the knowledge of the Buyer, commenced against it alleging any failure so to comply.
 4.5
 Restrictions on Transfer.  
 a.
 Transfer Restrictions.  The Buyers (and/or assigns) agrees that the Subject Shares being acquired pursuant to this Agreement may be sold, pledged, assigned, hypothecated or otherwise transferred, with or without consideration (“Transfer”) only pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from registration under the Securities Act.  
 b.
 Investment Intent.  The Buyers are acquiring the Subject Shares for their own account for investment, and not with a view toward distribution thereof.
 c.
 No Advertisement.  The Buyers acknowledges that Subject Shares have been offered to them in direct communication between them and Sellers, and not through any advertisement of any kind. 
 

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 d.
 Knowledge and Experience.   The Buyers acknowledge that they have been encouraged to seek their own legal and financial counsel to assist them in evaluating this purchase. The Buyers acknowledge that Sellers have given them and all of their counsels access to all information relating to MTOO’s business that they or any one of them have requested. The Buyers acknowledge that they have sufficient business and financial experience, and knowledge concerning the affairs and conditions of MTOO so that they can make a reasoned decision as to this purchase of the Subject Shares and are capable of evaluating the merits and risks of this purchase. 
 e.
 Restrictions on Transferability.  The Buyers are aware of the restrictions of transferability of the Subject Shares and further understands the certificates shall bear the following legend.
 i.
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION PROVIDED IN SECTIONS 4(1) AND 4(2) AND REGULATION D UNDER THE SECURITIES ACT. AS SUCH, THE PURCHASE OF THIS SECURITY WAS MADE WITH THE INTENT OF INVESTMENT AND NOT WITH A VIEW FOR DISTRIBUTION. THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. 
 

 ii.
 The Buyers understand that the Subject Shares may only be disposed of pursuant to either (i) an effective registration statement under the Securities Act, or (ii) an exemption from the registration requirements of the Securities Act. 
 

 f.
 MTOO and/or Sellers have neither filed such a registration statement with the Commission or any state authorities nor agreed to do so, nor contemplates doing so in the future for the shares being purchased, and in the absence of such a registration statement or exemption, the Buyers may have to hold the Subject Shares indefinitely and may be unable to liquidate them in case of an emergency.
 

 

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 g.
 The Buyers understand that prior to the Closing and until the Company files the required Form 10 information with the Commission, the Company will be deemed a “shell company” as defined in Rule 12b-2 under the Exchange Act. As a result and pursuant to Rule 144(i) of the Exchange Act, the Subject shares, although otherwise meeting the holding period and other requirements of Rule 144, cannot be sold in reliance on Rule 144 until twelve (12) months after the Company (a) is no longer a shell company; and (b) has filed current “Form 10 information” (as defined in Rule 144(i)) with the Commission reflecting that it is no longer a shell company, and provided that at the time of a proposed sale pursuant to Rule 144, the Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve (12) months (or for such shorter period that the Company was required to file such reports and materials), other than Form 8-K reports.  As a result, the Buyers understand that the restrictive legends on certificates for the Subject Shares cannot be removed (a) except in connection with an actual sale meeting the foregoing requirements or (b) pursuant to an effective registration statement.
 

 ARTICLE V
 COVENANTS
 5.1
 OTC Market Listing.  The Company’s Common Stock is currently listed on the OTC Market Group’s OTCQB marketplace.  Before the execution of this Agreement, the Company paid the OTC Market Group $10,000 annual listing fee for listing on the OTCQB marketplace and the parties under this Agreement agreed that the annual listing fee paid shall not be responsible by the Buyers.  
 5.2
 DTC Eligibility.  The Company shall maintain DTC eligibility of its securities.
 5.3
 SEC Documents. From and after the Closing Date, in the event the Commission notifies MTOO of its intent to review any SEC Document filed prior to the Closing Date or MTOO receives any oral or written comments from the Commission with respect to any SEC Document filed prior to the Closing Date or any disclosure regarding MTOO’s business or operations, as in existence through the date hereof in any SEC Document or registration statement filed after the Closing Date, the Buyers Representative shall promptly notify the Sellers and the Sellers shall fully cooperate with the Buyers in connection with such review and response.
 

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 5.4
 Public Announcements.  MTOO shall file with the Commission a Current Report on Form 8-K describing the material terms of the transactions contemplated hereby as soon as practicable following the Closing Date but in no event more than four (4) business days following the Closing Date. Prior to the Closing Date, the Buyers and MTOO shall consult with each other in issuing the Form 8-K, the press release and any other press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby and none of the parties shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which case the disclosing party shall provide the other parties with prior notice of no less than three (3) calendar days, of such public statement, filing or other communication and shall incorporate into such public statement, filing or other communication the reasonable comments of the other parties.
 5.5
 Corporate Examinations and Investigations.  Prior to the Closing, the Buyers shall be entitled, through its employees and representatives, to make such investigations and examinations of the books, records and financial condition of MTOO (and any Subsidiary) as the Buyers may reasonably request.  In order that the Buyers may have the full opportunity to do so, MTOO and the Sellers shall furnish the Buyers and their representatives during such period with all such information concerning the affairs of MTOO or any subsidiary as each party or its representatives may reasonably request and cause MTOO and its respective officers, employees, consultants, agents, accountants and attorneys to cooperate fully with each party’s representatives in connection with such review and examination and to make full disclosure of all information and documents requested by the Buyers and/or their representatives.  Any such investigations and examinations shall be conducted at reasonable times, under reasonable circumstances and in a timely manner. 
 5.6
 Cooperation; Consents.  Prior to the Closing, each party shall cooperate with the other parties and shall (i) in a timely manner make all necessary filings with, and conduct negotiations with, all authorities and other persons the consent or approval of which, or the license or permit from which is required for the consummation of the transactions contemplated hereby, and (ii) provide to each other party such information as the other party may reasonably request in order to enable it to prepare such filings and to conduct such negotiations.
 

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 5.7
 Litigation. From the date hereof through the Closing, each party hereto shall promptly notify the representative of the other parties of any known proceeding which after the date hereof are threatened or commenced against such party or any of its affiliates or any officer, director, employee, consultant, agent or shareholder thereof, in their capacities as such, which, if decided adversely, could reasonably be expected to have a Material Adverse Effect upon the condition (financial or otherwise), assets, liabilities, business, operations or prospects of such party or any of its subsidiaries.
 5.8
 Notice of Default.  From the date hereof through the Closing, each party hereto shall give to the representative of the other parties prompt written notice of the occurrence or existence of any event, condition or circumstance occurring which would constitute a violation or breach of this Agreement by such party or which would render inaccurate in any material respect any of such party’s representations or warranties herein.
 5.9
 Assistance with Post-Closing SEC Reports and Inquiries.  
 a.
 Upon the reasonable request of the Buyer Representative, after the Closing Date, the Sellers shall use reasonable best efforts to provide such information available to them, including information, filings, reports, financial statements or other circumstances of MTOO occurring, reported or filed prior to the Closing, as may be necessary or required by MTOO for the preparation of the post-Closing Date reports that MTOO is required to file with the Commission to remain in compliance and current with its reporting requirements under the Exchange Act, or filings required to address and resolve matters as may relate to the period prior to the Closing and any Commission comments relating thereto or any Commission inquiry thereof.
 b.
 The Company is current with its SEC filings and its next periodic filing due is an Annual Report on Form 10-K for the fiscal year ended September 30, 2015 (the “Annual Report”), which is due on December 30, 2015.  In addition to the covenants and agreements set forth in Section 5.9(a) above and without modifying the former, the pre-Closing Company and its current management, including Lazar, specifically agree that they shall be responsible for the expenses required to file the Annual Report, including the fees and expenses to auditors, legal counsel, edgar agent and consultants (if any), even though the filing of the Annual Report will take place after the Closing. The pre-Closing Company and its current management, including Lazar, agree to cooperate fully and diligently to ensure that the Annual Report is filed timely.
 5.10
 Transfers.  Prior to the Closing, the Sellers will not sell, transfer, assign, hypothecate, lien, or otherwise dispose or encumber the Subject Shares owned by them.
 5.11
 Representations.  All representations shall be true as of the Closing and all such representations shall survive the Closing for a period of one year.
 

 

 16
 

 

 ARTICLE VI
 CLOSING CONDITIONS
 6.1
 Conditions to Obligations of the Buyers.  The Buyers’ obligations to complete the transactions contemplated herein are subject to fulfillment on or before the Closing of each of the following conditions, unless waived in writing by the Buyers:
 a.
 The representations and warranties of the Company and each of the Sellers respectively set forth herein will be true and correct at the Closing as though made at and as of that date, except as affected by the transactions contemplated hereby.
 b.
 The Sellers will have performed all covenants required by this Agreement to be performed by them on or before the Closing.
 c.
 The Company shall have cancelled all and any debt, liabilities and obligations incurred prior to the Closing, including those disclosed hereunder and in the Annual Report on Form 10-K for fiscal year ended September 30, 2015 filed with the Commission on November 27, 2015,  before the Closing. 
 d.
 Lazar shall deliver her resignation from all positions – officer and directorships – held in the Company (the “Resignation”) and the Company’s board of directors shall appoint (the “Appointment”) Eugene Jiang as the Company’s sole director, Chairman, Chief Executive Officer and Chief Financial Officer (the “New Management”). 
 e.
 This Agreement, the Resignation and the Appointment will have been approved by the Company’s Board of Directors.
 f.
 A letter to the Company’s transfer agent notifying them of the change in the Company’s management, as well as any other documents the transfer agent requires to accept instructions from and communicate with the New Management (collectively, the “Transfer Agent Letter”).
 g.
 The Company will have delivered to the Buyers the documents set forth below in form and substance reasonably satisfactory to counsel for the Buyers, to the effect that:
 (i)
 MTOO is a corporation duly organized, validly existing, and in good standing by providing a certificate of good standing from Nevada's Secretary of State dated within five (5) business days of the Closing;
 

 

 17
 

 

 
 (ii)
 MTOO’s authorized capital stock is as set forth herein;
 

 (iii)
 Certified copies of the resolutions of the board of directors of MTOO authorizing the execution of this Agreement and the consummation hereof, as well as the Resignation and Appointment (the “Board Consent”); 
 

 (iv)
 Any further document as may be reasonably requested by counsel to the Buyers in order to substantiate any of the representations or warranties of the Company and/or the Buyers set forth herein;
 

 (v)
 A certificate executed by an officer of MTOO, certifying the satisfaction of the conditions specified in Sections 5(a), (b) and (e) relating to MTOO;
 

 (vi)
 a Secretary’s Certificate, dated the Closing Date certifying attached copies of (A) the Company’s current Articles of Incorporation, as amended, and Bylaws; (B) the Board Consent; and (C) the Transfer Agent Letter; and, 
 (vii)
 each of this Agreement and any related agreement to which the Company or the Buyers are parties, duly executed.
 

 h.
 There will have occurred no material adverse change in the business, operations or prospects of MTOO.
 

 i.
 There must not have been or threatened by any Person, other than the Buyers, any claim asserting that such Person (a) is the holder of, or has the right to acquire or to obtain beneficial ownership of, the Subject Shares or any other stock, voting, equity or ownership interest in, MTOO, or (b) is entitled to all or any portion of the Subject Shares.
 

 6.2
 Conditions to Obligations of the Company and the Sellers.  The Company and each of the Sellers’ obligation to complete the transactions contemplated herein will be subject to fulfillment on or before the Closing of each of the following conditions, unless waived in writing by the Company or the Sellers, as appropriate:
 

 a.
 The representations and warranties of each of the Buyers set forth herein will be true and correct at the Closing as though made at and as of that date, except as affected by the transactions contemplated hereby.
 b.
 The Buyers will have performed all covenants required by this Agreement to be performed by them on or before the Closing.
 c.
 Each of this Agreement and any related agreement to which the Company and each Shareholder is a party, duly executed; and, 
 

 18
 

 

 
 d.
 The Purchase Price shall be in the Escrow Account.  
 

 ARITICLE VII
 MISCELLANEOUS
 7.1
 Expenses.  Each party shall pay its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.
 7.2
 No Third-Party Beneficiaries.  Except as expressly provided in Section 5.4, this Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective heirs, executors, successors and permitted assigns.
 7.3
 Entire Agreement.  This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof.
 7.4
 Succession and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective heirs, executors, successors and permitted assigns.  Except as set forth herein, no Party may assign either this Agreement, any of the other Transaction Documents, or any of his or its rights, interests, or obligations hereunder without the prior written approval of all of the other Parties or their respective heirs, executors, successors and permitted assigns.  
 7.5
 Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.
 7.6
 Headings  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
 7.7
 Notices.  All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two Business Days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below:
 

 19
 

 

 If to the Buyers, addressed as follows:
 Euro-Asia Investment & Finance Corp. Limited
 Block A, Unit 604G
 Po Lung Centre, Kowloon Bay
 Kowloon, Hong Kong
 Attention: Kwok Keung Shum
 Telephone:
 Facsimile: 
 Email: 
 

 With a copy to:
 

 Hunter Taubman Fischer LLC
 1450 Broadway, 26th Floor
 New York, NY 10018
 Attn: Louis E. Taubman
 Tel: 
 Fax: 
 Email: 
 

 If to the Company and/or Sellers, addressed as follows:
 Metu Brands, Inc.
 8605 Santa Monica Boulevard
 Los Angeles, CA 90069
 Attn: Shulamit Lazar
 Tel:
 Fax:
 Email: 
 

 With a copy to:
 

 Jody M. Walker
 J.M. Walker & Associates
 7841 South Garfield Way
 Centennial, CO 80122
 Tel: 
 Fax:  
 Email: 
 

 

 20
 

 

 Any party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, ordinary mail, overnight mail or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.
 7.8
 Governing Law.  This Agreement shall be governed by and construed in accordance with the domestic Laws of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of New York.
 7.9
 Amendments and Waivers.  No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the party against whom the enforcement of such amendment is sought. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
 7.10
 Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
 7.11
 Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.  Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation.
 

 21
 

 

 
 7.12
 Submission to Jurisdiction.  Each of the Parties submits to the jurisdiction of any state or federal court sitting in New York in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court.  Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto.  Any party may make service on any other party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 8.7 above. Nothing in this Section 8.12, however, shall affect the right of any Party to serve legal process in any other manner permitted by law or at equity. Each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity.
 7.13
 Further Assurances.  The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other parties may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.
 7.14
 Entire Agreement and Modification.  This Agreement supersedes all prior agreements by and among the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement by and among the parties with respect to its subject matter.  
 7.15
 Assignments, Successors, and No Third-Party Rights.  No party may assign any of its rights under this Agreement without the prior consent of the other parties.  Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of and be enforceable by the respective successors, heirs, executors and permitted assigns of the parties.  Nothing expressed or referred to in this Agreement will be construed to give any person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.  This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.
 7.16
 Mutual Cooperation.  The parties hereto shall cooperate with each other to achieve the purpose of this Agreement, and shall execute such other and further documents and take such other and further actions as may be necessary or convenient to effect the transaction described herein.
 

 22
 

 

 
 7.17
 Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
 

 [Remainder of page intentionally left blank; signature page follows]
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 23
 

 

 [Signature Page of Metu Brands, Inc.]
 

 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.
 THE COMPANY:
 METU BRANDS, INC.
 

 

 By:______________________________________
       Name:  Shulamit Lazar
       Title: Chief Executive Officer
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 24
 

 

 [Signature Page of Sellers’ Representative]
 

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

 SELLERS REPRESENTATIVE:
 

 ______________________________________
 Shulamit Lazar
 

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 25
 

 

 [Signature Page of Innovation Consulting International LLC]
 

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

 SELLER:
 INNOVATION CONSULTING INTERNATIONAL LLC
 

 

 By:______________________________________
       Name:  
    Title: 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 26
 

 

 [Signature Page of Seller]
 

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

 SELLER:
 

 

 

 By:______________________________________
       Name:  
    Title: 
 

 

 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 27
 

 

 [Signature Page of Euro-Asia Investment & Finance Co. Ltd]
 

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

 BUYER REPRESENTATIVE:
 Euro-Asia Investment & Finance Corp. Limited
 By:______________________________________
       Name: Kwok Keung Shum
       Title:
 

  
  
  
  
  
  
  
  
  
  
  
  
 28
 

 

 [Signature Page of Buyer]
 

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

 BUYER: ________________________________
 

 By:______________________________________
       Name: 
       Title:
 

  
  
  
  
  
  
  
  
  
  
  
  
  
  
 

 
 29
 

 

 Schedules
 To
 Stock Purchase Agreement
 

 Schedule 2.4 
 Transfer Agent
 

 Olde Monmouth Stock Transfer Co., Inc.
 200 Memorial Parkway
 Atlantic Highlands, NJ  07716
 Phone (732) 872-2727
 Fax (732) 872-2728
  
 Schedule 3.6    Debt, Obligation or Liability
 

 None. 
 

 Schedule 3.11  Litigation
 

 None.
  
  
  
  
  
  
  
  
  
  
  
 

 
 30
 

 

 Schedule A
 

 List of Buyers
 

 	 	 	 	 	 	
	 No.
	 Name of Buyer
	 To Purchase No. of Shares of Common Stock
	 Percentage (Based on 65,431,144 Total Issued Shares)
	 Purchase Price
 (US $)
	 Legend (Yes/No)

	 1
	 Euro-Asia Investment & Finance Corp. Limited
	 52,336,000 
	 79.9864%
	 316,000.00
	 Yes

	 2
	 Rgene Corporation
	 2,967,181
	 4.5348%
	 17,915.57
	 Yes

	 3
	 BioHopeKing Corporation
	 472,775
	 0.7226%
	 2,854.57
	 Yes

	 4
	 Buffett Investment Corporation
	 2,895,548
	 4.4253%
	 17,483.06
	 Yes

	 5
	 LionGene Corporation
	 3,074,789
	 4.6993%
	 18,565.3
	 Yes

	 6
	 AsiaGene Corporation
	 3,021,055
	 4.6172%
	 18,240.85
	 Yes

	 7
	 Chun An Liu
	 175,102
	 0.2676%
	 1,057.25
	 Yes

	 8
	 Chih Chun Teng
	 477,550
	 0.7299%
	 2,883.40
	 Yes

	  
	  
	  
	  
	  
	  

	  
	 Total:
	 65,420,000 
	 99.983%
	 395,000
	  

  

 

 
 
  
  
  
  
  
  
  
  
 
 
 31
 

 

 Schedule B
 

 List of Sellers
 

 	 	 	 	 	 	
	 No.
	 Name of Seller
	 To Sell No. of Shares of Common Stock
	 Purchase Price
 (US $)
	 Certificate No.
	 Legend (Yes/No)

	 1
	 Shulamit Lazar
	 60,000,000
	 362,275
	 1731 & 1732
	 Yes

	 2
	 Barry Sytner
	 500,000
	 3,019
	 1733
	 No

	 3
	 Betty Sytner
	 500,000
	 3,019
	 1734
	 No

	 4
	 David Nowosiolski
	 500,000
	 3,019
	 1735
	 No

	 5
	 Sandra Nowosiolski 
	 500,000
	 3,019
	 1736
	 No

	 6
	 Adam Schwartz
	 500,000
	 3,019
	 1737
	 No

	 7
	 Karen Schwartz
	 500,000
	 3,019
	 1738
	 No

	 8
	 Paul Eisenberger
	 500,000
	 3,019
	 1739
	 No

	 9
	 Charlotte Eisenberger 
	 500,000
	 3,019
	 1740
	 No

	 10
	 Jonathan Nowosiolski 
	 500,000
	 3,019
	 1741
	 No

	 11
	 Tri-Star Gold Inc.
	 500,000
	 3,019
	 1742
	 No

	 12
	 Innovation Consulting International LLC
	 420,000
	 2,535
	 1743
	 No

	  
	  
	  
	  
	  
	  

	  
	 Total:
	 65,420,000 
	 395,000
	  
	  

  

 
 
  
  
  
  
  
  
  
 
 
 32exh10-1_17887.htm

EXHIBIT 10.1

 

 

 

 

LIFEWAY FOODS, INC.

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”) dated as of July 20, 2015, between Lifeway Foods, Inc., an Illinois corporation (the “Company”), and John Waldron (“Executive”).

W I T N E S S E T H

WHEREAS, the Company desires to employ Executive as the Vice President, Finance of the Company; and

WHEREAS, the Company and Executive desire to enter into this Agreement as to the terms of Executive’s employment with the Company.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.       POSITION AND DUTIES.

 

(a)  During the Employment Term (as defined in Section 2 hereof), Executive shall serve as the Vice President, Finance of the Company.  Executive will report to the Chief Executive Officer, Chief Financial Officer and/or Chief Operating Officer of the Company. Executive’s principal place of employment with the Company shall be at the Company’s principal executive offices, provided that Executive understands and agrees that Executive may be required to travel from time to time for business purposes.

 

(b)      During the Employment Term, Executive shall devote all of Executive’s business time, energy, business judgment, knowledge and skill and Executive’s best efforts to the performance of Executive’s duties with the Company; provided that the foregoing shall not prevent Executive from (i) with prior written notice to the Chief Executive Officer, serving on the boards of directors of non-profit organizations, (ii) participating in charitable, civic, educational, professional, community or industry affairs, and (iii) managing Executive’s passive personal investments so long as such activities, individually or in the aggregate, do not interfere or conflict with Executive’s duties hereunder or create a potential business or fiduciary conflict.

 

2.   EMPLOYMENT TERM.  The Company agrees to employ Executive pursuant to the terms of this Agreement, and Executive agrees to be so employed for a term commencing as of July 20, 2015 (the “Effective Date”) and continuing until Executive’s employment is terminated in accordance with Section 8 hereof, subject to Section 9 hereof.  The period of time between the Effective Date and the termination of Executive’s employment hereunder shall be referred to herein as the “Employment Term.”

 

3.   BASE SALARY.  The Company agrees to pay Executive a base salary at an annual rate of $325,000, payable in accordance with the regular payroll practices of the Company.  Executive’s Base Salary shall be subject to annual review by the Company’s Board of Directors (the “Board”) (or a committee thereof), and may be adjusted from time to time by the Board (or a committee thereof). The base salary as determined herein and adjusted from time to time shall constitute “Base Salary” for purposes of this Agreement.

 

4.   ANNUAL BONUS.  During the Employment Term, Executive shall be eligible to receive an annual incentive payment under the Company’s annual bonus plan as may be in effect from time to time (the “Annual Bonus”) based on a target bonus opportunity of ten percent (10%) of Executive’s Base Salary (the “Target Bonus”) upon the attainment of one or more pre-established performance goals established by the Board (or a committee thereof) in its sole discretion.  Notwithstanding the foregoing, Executive acknowledges and agrees that the Annual Bonus shall be subject to the terms and conditions set forth in the Company’s annual bonus plan, including, without limitation, if applicable, any terms and conditions relating to United States Internal Revenue Code (“Code”) Section 162(m).  The Annual Bonus, if any, shall be paid to Executive in the year following the year to which such bonus relates, subject to Executive’s continued employment with the Company on the last day of the year to which the bonus relates, subject to Section 9(b).

 

  

  

  

5.       EQUITY AWARDS.  Executive shall be considered to receive equity and other long-term incentive awards under any applicable plan adopted by the Company during the Employment Term for which employees are generally eligible.  The level of Executive’s participation in any such plan, if any, shall be determined in the sole discretion of the Board (or a committee thereof) from time to time.

 

6.       EMPLOYEE BENEFITS.

 

(a)  BENEFIT PLANS.  During the Employment Term, Executive shall be entitled to participate in the employee benefit plans that the Company has adopted or may adopt, maintain or contribute to or for the benefit of its employees, subject to satisfying the applicable eligibility requirements, except to the extent such plans are duplicative of the benefits otherwise provided hereunder.  Executive’s participation will be subject to the terms of the applicable plan documents and generally applicable Company policies.  Notwithstanding the foregoing, the Company may modify or terminate any employee benefit plan at any time.

 

(b)  VACATIONS.  During the Employment Term, Executive shall be entitled to twenty (20) days of paid vacation per calendar year (as prorated for partial years) in accordance with the Company’s policy on accrual and use applicable to employees as in effect from time to time.

 

(c)  BUSINESS EXPENSES.  Upon presentation of reasonable substantiation and documentation as the Company may specify from time to time, Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy, for all documented ordinary and reasonable out-of-pocket business expenses incurred and paid by Executive during the Employment Term and in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s policies with regard thereto.

 

(d)  LEGAL FEES.  Upon presentation of appropriate documentation, the Company shall pay Executive’s reasonable counsel fees incurred in connection with the negotiation and documentation of this Agreement, up to a maximum of $7,500, which shall be paid within sixty (60) days following the Effective Date.

 

7.        INDEMNIFICATION.  The Company hereby agrees to indemnify Executive and hold Executive harmless to the extent provided under the By-Laws and other organizational documents of the Company against and in respect of any and all actions, claims, and damages resulting from Executive’s good faith performance of Executive’s duties and obligations with the Company, including advancement of expenses incurred in connection therewith to the extent provided under the By-Laws and other organizational documents of the Company.

 

8.   TERMINATION.  Executive’s employment and the Employment Term shall terminate on the first of the following to occur:

 

(a)  DISABILITY.  Upon ten (10) days’ prior written notice by the Company to Executive of termination due to Disability.  For purposes of this Agreement, “Disability” shall mean the inability of Executive to have performed Executive’s material duties hereunder due to a physical or mental injury, infirmity or incapacity for one hundred twenty (120) days (including weekends and holidays) in any 365-day period, as determined by the Board or an executive to which Executive reports.  Executive shall cooperate in all respects with the Company if a question arises as to whether Executive has become disabled (including, without limitation, submitting to reasonable examinations by one or more medical doctors and other health care specialists selected by the Company and authorizing such medical doctors and other health care specialists to discuss Executive’s condition with the Company).

 

 

 

 

  

2

  

(b)  DEATH.  Automatically upon the date of death of Executive.

 

(c)  CAUSE.  Immediately upon written notice by the Company to Executive of a termination for Cause.  “Cause” shall mean: (i) Executive’s misconduct in the performance of Executive’s duties; (ii) Executive’s willful failure to follow the lawful directives of the Board or any executive to which Executive reports; (iii) Executive’s indictment for, conviction of, or pleading of guilty or nolo contendere to, a felony or any crime involving moral turpitude; (iv) Executive’s failure to reasonably cooperate in any audit or investigation of the business or financial practices of the Company or any of its subsidiaries; (v) Executive’s performance of any act of theft, embezzlement, fraud, dishonesty or misappropriation with respect to the Company or its affiliates; or (vi) Executive’s material breach of this Agreement or any other material agreement with the Company or its affiliates, or Executive’s material violation of the Company’s code of conduct or other written policy, which is not cured (if susceptible to cure) by Executive within thirty (30) days of written notice thereof from the Company.

 

(d)  WITHOUT CAUSE.  Immediately upon written notice by the Company to Executive of an involuntary termination without Cause (other than for death or Disability).

 

(e)  GOOD REASON.  Upon written notice by Executive to the Company of a termination for Good Reason.  “Good Reason” shall mean the occurrence of any of the following events, without the express written consent of Executive, unless such events are corrected in all material respects by the Company within thirty (30) days following written notification by Executive to the Company of the occurrence of one of the following: (i) a material diminution in Executive’s Base Salary or Target Bonus percentage, other than pursuant to across-the-board reductions affecting similarly situated employees of the Company; (ii) a material diminution in Executive’s duties, authorities or responsibilities contemplated hereunder (other than temporarily while physically or mentally incapacitated or as required by applicable law); (iii) the permanent relocation of Executive’s primary work location by more than fifty (50) miles from its then current location; or (iv) the Company materially breaches the terms of this Agreement or any other material agreement with Executive.

 

Executive shall provide the Company with a written notice detailing the specific circumstances alleged to constitute Good Reason within thirty (30) days after the first occurrence of such circumstances, and actually terminate employment within thirty (30) days following the expiration of the Company’s thirty (30)-day cure period described above.  Otherwise, any claim of such circumstances as “Good Reason” shall be deemed irrevocably waived by Executive.

 

(f)  WITHOUT GOOD REASON.  Upon ninety (90) days’ prior written notice by Executive to the Company of Executive’s voluntary termination of employment for any reason (which the Company may, in its sole discre­tion, make effective earlier than any notice date).

 

9.   CONSEQUENCES OF TERMINATION.

 

(a)  DEATH OR DISABILITY.  In the event that Executive’s employment and the Employment Term ends on account of Executive’s death or Disability, Executive or Executive’s estate, as the case may be, shall be entitled to the following (with the amounts due under Sections 9(a)(i) through 9(a)(iv) hereof to be paid within sixty (60) days following termination of employment, or such earlier date as may be required by applicable law):

 

(i) any earned and unpaid Base Salary through the date of termination;

 

  

3

  

(ii) any Annual Bonus earned but unpaid with respect to the fiscal year ending on or preceding the date of termination;

 

(iii) reimbursement for any unreimbursed business expenses incurred through the date of termination in accordance with Section 6(c) hereof;

 

(iv) any accrued but unused vacation time in accordance with Company policy; and

 

(v) all other accrued and vested payments and benefits to which Executive shall be entitled under the terms of any applicable compensation arrangement or benefit program, in each case, in accordance with their terms (collectively, Sections 9(a)(i) through 9(a)(v) hereof shall be hereafter referred to as the “Accrued Benefits”).

 

(b)     TERMINATION FOR CAUSE OR WITHOUT GOOD REASON.  If Executive’s employment is terminated (x) by the Company for Cause, or (y) by Executive without Good Reason, the Company shall pay to Executive the Accrued Benefits, other than the benefit described in Section 9(a)(ii) hereof.

 

(c)  TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.  If Executive’s employment by the Company is terminated (x) by the Company other than for Cause, death or Disability, or (y) by Executive with Good Reason, the Company shall pay or provide Executive with the following, subject to the provisions of Section 22 hereof:

 

(i) the Accrued Benefits; and

 

(ii) subject to Executive’s continued compliance with the obligations in Sections 10, 11 and 12 hereof, an aggregate amount equal to one half (1/2) of Executive’s annual Base Salary in effect on the date of termination (but not as an employee), paid monthly for a period of six (6) months following such termination; provided that to the extent that the payment of any amount constitutes “nonqualified deferred compensation” for purposes of Code Section 409A (as defined in Section 22 hereof), any such payment scheduled to occur during the first sixty (60) days following the termination of employment shall not be paid until the first regularly scheduled pay period following the sixtieth (60th) day following such termination and shall include payment of any amount that was otherwise scheduled to be paid prior thereto.

 

Payments and benefits provided in this Section 9(c) shall be in lieu of any termination or severance payments or benefits for which Executive may be eligible under any of the plans, policies or programs of the Company or under the Worker Adjustment Retraining Notification Act of 1988 or any similar state statute or regulation.

 

(d)  OTHER OBLIGATIONS.  Upon any termination of Executive’s employment with the Company, Executive shall immediately resign, and shall be deemed to have resigned, from any position as an officer, director or fiduciary of any Company-related entity.

 

(e)  EXCLUSIVE REMEDY.  The amounts payable to Executive following termination of employment and the Employment Term hereunder pursuant to Section 9 hereof shall be in full and complete satisfaction of Executive’s rights under this Agreement that Executive may have in respect of Executive’s employment with the Company or any of its affiliates.

 

10.    RELEASE.  Any and all amounts payable and benefits or additional rights provided pursuant to this Agreement beyond the Accrued Benefits shall only be payable if Executive delivers to the Company and does not revoke a general release of claims in favor of the Company and its affiliates in a form satisfactory to the Company.  Such release shall be executed and delivered (and no longer subject to revocation, if applicable) within sixty (60) days following termination.

 

 

 

 

 

  

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11.     RESTRICTIVE COVENANTS.

 

(a)     CONFIDENTIALITY.  During the course of Executive’s employment with the Company, Executive will have access to Confidential Information.  For purposes of this Agreement, “Confidential Information” means all clients, subscribers, packaging, data, information, ideas, concepts, discoveries, trade secrets, recipes, inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, technology, developments, techniques, methods, processes, treatments, drawings, sketches, specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary information or trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter existing, relating to or arising from the past, current or potential business, activities and/or operations of the Company or any of its affiliates (or any of their respective predecessors, successors or permitted assigns), including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel, customers, suppliers, vendors, partners and/or competitors.  Executive agrees that Executive shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of Executive’s assigned duties and for the benefit of the Company, either during the period of Executive’s employment or service or at any time thereafter, any Confidential Information or other confidential or proprietary information received from third parties subject to a duty on the Company’s and its subsidiaries’ and affiliates’ part to maintain the confidentiality of such information, and to use such information only for certain limited purposes.  Notwithstanding the foregoing, Confidential Information shall not include any information that (i) was lawfully in Executive’s possession prior to commencing employment with the Company or any of its predecessors, successors or affiliates and not obtained in connection with Executive’s commencement of such employment, or (ii) constitutes industry knowledge or is available, or is made available, to the public other than as a result of a direct or indirect disclosure by Executive.

 

(b)     NONCOMPETITION.  Executive acknowledges that (i) Executive performs services of a unique nature for the Company that are irreplaceable, and that Executive’s performance of such services to a competing business will result in irreparable harm to the Company, (ii) Executive has had and will continue to have access to Confidential Information, which, if disclosed, would unfairly and inappropriately assist in competition against the Company, (iii) the Company has substantial relationships with its customers and Executive has had and will continue to have access to these customers, (iv) Executive has received and will receive specialized training from the Company, and (v) Executive has generated and will continue to generate goodwill for the Company in the course of Executive’s employment and service.  Accordingly, in consideration of Executive’s employment with the Company, the severance benefits to which Executive may be entitled to hereunder, and any equity-based incentive award(s) granted to Executive, respectively, Executive hereby acknowledges and agrees that during Executive’s employment and service with the Company and for the twelve (12) month period thereafter, Executive will not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form, engaged in a Competitive Business in the Restricted Area.  “Competitive Business” shall mean any business (i) engaged in competition with the Company, (ii) engaged in any material line of business in which the Company is engaged on the date of Executive’s termination of employment or service, or (iii) engaged in any line of business in which the Company has planned during the Employment Term to be engaged in on or after the date of Executive’s termination of employment or service.  “Restricted Area” shall mean (i) any county, state, or country in which the Company conducts business and (ii) without limiting the foregoing, within fifty (50) miles of any location in which the Company conducts business on the date of Executive’s termination of employment or service.  Notwithstanding the foregoing, nothing herein shall prohibit Executive from being a passive owner of not more than two percent (2%) of the equity securities of a publicly traded corporation engaged in a business that is in competition with the Company, so long as Executive has no active participation in the business of such corporation.  For purposes of this Section 11(b), the “Company” shall mean, collectively, the Company together with its parent companies and its and their direct and indirect subsidiaries.

 

 

 

 

 

 

 

 

  

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(c)      NONSOLICITATION; NONINTERFERENCE.

 

(i) During Executive’s employment and service with the Company and for a period of twelve (12) months thereafter, Executive agrees that Executive shall not, except in the furtherance of Executive’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce any individual or entity that is, or was during the twelve (12)-month period immediately prior to the termination of Executive’s employment or service for any reason, a customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other person or entity in identifying or soliciting any such customer.

 

(ii) During Executive’s employment and service with the Company and for a period of twelve (12) months thereafter, Executive agrees that Executive shall not, except in the furtherance of Executive’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any advisor, consultant, employee, representative or agent of the Company or any of its subsidiaries or affiliates to leave such employment or retention or solicit, aid or induce any employee of the Company or any of its subsidiaries or affiliates to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company or any of its subsidiaries or affiliates and any of their respective vendors, joint venturers or licensors.  Any person described in this Section 11(c)(ii) shall be deemed covered by this Section while so employed or retained and for a period of twelve (12) months thereafter.

 

(d)  NONDISPARAGEMENT.  Except in connection with the performance of his duties hereunder, Executive agrees not to make negative comments or otherwise disparage the Company or any of its subsidiaries and affiliates or any of their respective partners, members, officers, directors, employees, shareholders, agents or products.  The Company agrees that the executive officers of the Company as of the date of Executive’s termination of employment and the members of the Board as of the date of termination will not, while employed by the Company or serving as a director of the Company, as the case may be, make negative comments or otherwise disparage Executive.  The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) , and the foregoing limitation on the Company’s executives and directors shall not be violated by statements that are necessary or appropriate to make in connection with performing their duties and obligations to the Company.

 

(e)  INVENTIONS.  (i)  Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, recipes, work products, developments or works of authorship (“Inventions”), whether patentable or unpatentable, (A) that relate to Executive’s work with the Company, made or conceived by Executive, solely or jointly with others, during the Employment Term, or (B) suggested by any work that Executive performs in connection with the Company, either while performing Executive’s duties with the Company or on Executive’s own time, shall belong exclusively to the Company (or its designee), whether or not patent applications are filed thereon. Executive hereby irrevocably conveys, transfers and assigns to the Company the Inventions and all patents that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the right to file, in Executive’s name or in the name of the Company (or its designee), applications for patents and equivalent rights (the “Applications”).  Executive will, at any time during and subsequent to the Employment Term, and at the Company’s expense, make such applications, sign such papers, take all rightful oaths, and perform all acts as may be reasonably requested from time to time by the Company with respect to the Inventions.  Executive will also execute assignments to the Company (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company’s benefit, all without additional compensation to Executive from the Company, but entirely at the Company’s expense.  If the Company is unable for any other reason to secure Executive’s signature on any document for this purpose, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and in Executive’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

 

 

 

 

  

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(ii) In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of the Company and Executive agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to Executive.  If the Inventions, or any portion thereof, are deemed not to be Work for Hire or the rights in such Inventions do not otherwise automatically vest in the Company, Executive hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of Executive’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom.  In addition, Executive hereby waives any so-called “moral rights” with respect to the Inventions.  To the extent that Executive has any rights in the results and proceeds of Executive’s service to the Company that cannot be assigned in the manner described herein, Executive agrees to unconditionally waive the enforcement of such rights.  Executive hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations for intellectual property that may issue thereon, including, without limitation, any rights that would otherwise accrue to Executive’s benefit by virtue of Executive being an employee of or other service provider to the Company.

 

(iii) Executive shall comply with all relevant agreements, policies and guidelines of the Company regarding the protection of confidential information and intellectual property and potential conflicts of interest. Executive acknowledges that the Company may amend any such policies and guidelines from time to time, and that Executive remains at all times bound by their most current version.

 

(iv) The provisions of this Section 11(e) shall not apply to an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on Executive’s own time, unless (A) the invention relates (I) to the business of the Company, or (II) to the Company’s actual or demonstrably anticipated research or development, or (B) the invention results from any work performed by Executive for the Company.

 

(f)  RETURN OF COMPANY PROPERTY.  On the date of Executive’s termination of employment or service with the Company for any reason (or at any time prior thereto at the Company’s request), Executive shall return all Confidential Information or other property belonging to the Company or any of its affiliates (including, but not limited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other equipment, or documents and property belonging to the Company).

 

 

 

 

 

 

 

 

 

  

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(g)     REASONABLENESS OF COVENANTS.  In signing this Agreement, Executive has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 11.  Executive agrees that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates and their trade secrets and confidential information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent Executive from obtaining other suitable employment during the period in which Executive is bound by the restraints.  Executive acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and its affiliates and that Executive has sufficient assets and skills to provide a livelihood while such covenants remain in force.  Executive further covenants that Executive will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 11.  It is also agreed that each of the Company’s affiliates will have the right to enforce all of Executive’s obligations to that affiliate under this Agreement and shall be third party beneficiaries hereunder, including without limitation pursuant to this Section 11.  Executive acknowledges and agrees that the restrictive covenants set forth in this Agreement are independent covenants and shall be in addition to, and shall not supersede or be deemed to be in lieu of, any restrictive covenants set forth in any other agreement between Executive and the Company or its affiliates.

 

(h)     REFORMATION.  If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 11 is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state.

 

(i)      TOLLING.  In the event of any violation of the provisions of this Section 11, Executive acknowledges and agrees that the post-termination restrictions contained in this Section 11 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.

 

(j)      SURVIVAL OF PROVISIONS.  The obligations contained in Sections 11 and 12 hereof shall survive the termination or expiration of the Employment Term and Executive’s employment with the Company and shall be fully enforceable thereafter.

 

12.    COOPERATION.  Upon the receipt of reasonable notice from the Company (including outside counsel), Executive agrees that while employed by the Company and thereafter, Executive will respond and provide information with regard to matters in which Executive has knowledge as a result of Executive’s employment with the Company, and will provide reasonable assistance to the Company, its affiliates and their respective representatives in defense of any claims that may be made against the Company or its affiliates, and will assist the Company and its affiliates in the prosecution of any claims that may be made by the Company or its affiliates, to the extent that such claims may relate to the period of Executive’s employment or service with the Company (collectively, the “Claims”).  Executive agrees to promptly inform the Board if Executive becomes aware of any lawsuits involving Claims that may be filed or threatened against the Company or its affiliates.  Executive also agrees to promptly inform the Board (to the extent that Executive is legally permitted to do so) if Executive is asked to assist in any investigation of the Company or its affiliates (or their actions) or another party attempts to obtain information or documents from Executive (other than in connection with any litigation or other proceeding in which Executive is a party-in-opposition) with respect to matters Executive believes in good faith to relate to any investigation of the Company or its affiliates, in each case, regardless of whether a lawsuit or other proceeding has then been filed against the Company or its affiliates with respect to such investigation, and shall not do so unless legally required.  During the pendency of any litigation or other proceeding involving Claims, Executive shall not communicate with anyone (other than Executive’s attorneys and tax and/or financial advisors and except to the extent that Executive determines in good faith is necessary in connection with the performance of Executive’s duties hereunder) with respect to the facts or subject matter of any pending or potential litigation or regulatory or administrative proceeding involving the Company or any of its affiliates without giving prior written notice to the Board or the Company’s counsel.

 

 

  

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13.    EQUITABLE RELIEF AND OTHER REMEDIES. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 11 or Section 12 hereof would be inadequate and, in recognition of this fact, Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available, without the necessity of showing actual monetary damages or the posting of a bond or other security.  In the event of a breach by Executive of Section 11 or Section 12 hereof (as determined by the Board in its reasonable, good faith discretion), any severance or other benefits being paid or provided to Executive pursuant to this Agreement or otherwise shall immediately cease, and any severance previously paid to Executive shall be immediately repaid to the Company.

 

14.    NO ASSIGNMENTS. This Agreement is personal to each of the parties hereto.  Except as provided in this Section 14 hereof, no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto.  The Company may assign this Agreement to any successor to all or substantially all of the business and/or assets of the Company.  As used in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets, which assumes and agrees to perform the duties and obligations of the Company under this Agreement by operation of law or otherwise.

 

15.    NOTICE.  For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery, if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile or electronic mail, (c) on the first business day following the date of deposit, if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to Executive:

At the address (or to the facsimile number) shown

on the records of the Company

If to the Company:

Lifeway Foods, Inc.

6431 West Oakton St.

Morton Grove, IL 60053

Attention:  Chief Executive Officer

With a copy (which shall not constitute notice) to:

McDonald Hopkins LLC

300 N. LaSalle Street, Suite 2100

Chicago, IL 60654

Attention:  Rick Kessler

 

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

 

 

 

 

  

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16.     SEVERABILITY.  The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

 

17.     COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. Further, this Agreement may be executed by transfer of an originally signed document by facsimile, e-mail or other electronic means, any of which will be as fully binding as an original document.

 

18.     GOVERNING LAW; JURISDICTION.  This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Illinois without regard to its choice of law provisions.  Each of the parties agrees that any dispute between the parties shall be resolved only in the courts of the State of Illinois or the United States District Court for the Northern District of Illinois and the appellate courts having jurisdiction of appeals in such courts.  In that context, and without limiting the generality of the foregoing, each of the parties hereto irrevocably and unconditionally (a) submits in any proceeding relating to this Agreement or Executive’s employment by the Company or any affiliate, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the State of Illinois, the court of the United States of America for the Northern District of Illinois, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Proceeding shall be heard and determined in such Illinois State court or, to the extent permitted by law, in such federal court, (b) consents that any such Proceeding may and shall be brought in such courts and waives any objection that Executive or the Company may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR EXECUTIVE’S EMPLOYMENT BY OR SERVICE TO THE COMPANY OR ANY AFFILIATE OF THE COMPANY, OR EXECUTIVE’S OR THE COMPANY’S PERFORMANCE UNDER, OR THE ENFORCEMENT OF, THIS AGREEMENT, (d) agrees that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at Executive’s or the Company’s address as provided in Section 15 hereof, and (e) agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of Illinois.

 

19.     MISCELLANEOUS.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer or director as may be designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes any and all prior agreements or understandings between Executive and the Company with respect to the subject matter hereof; provided that in the event that Executive becomes a party to any other agreement providing for restrictive covenants similar to Section 11, such agreement shall also apply pursuant to its terms.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.  The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.  In the event of any inconsistency between the terms of this Agreement and any form, award, plan or policy of the Company, the terms of this Agreement shall govern and control.

 

 

 

 

 

  

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20.     REPRESENTATIONS.  Executive represents and warrants to the Company that (a) Executive has the legal right to enter into this Agreement and to perform all of the obligations on Executive’s part to be performed hereunder in accordance with its terms, and (b) Executive is not a party to any agreement or understanding, written or oral, and is not subject to any restriction, which, in either case, could prevent Executive from entering into this Agreement or impede Executive from performing all of Executive’s duties and obligations hereunder.

 

21.      RECOUPMENT.  Executive’s rights with respect to any incentive compensation, including, without limitation, the Annual Bonus, shall in all events be subject to (i) any right that the Company may have under any Company recoupment policy or other agreement or arrangement applicable to Executive, or (ii) any right or obligation that the Company may have regarding the clawback of “incentive-based compensation” under Section 10D of the Securities Exchange Act of 1934, as amended, and any applicable rules and regulations promulgated thereunder from time to time by the U.S. Securities and Exchange Commission (or any applicable listing exchange).  In addition, notwithstanding anything herein to the contrary, any bonus or incentive or equity-based compensation, or other compensation, payable to Executive pursuant to this Agreement or otherwise shall be subject to repayment or recoupment (clawback) by the Company to the extent applicable under Section 304 of the Sarbanes-Oxley Act of 2002. For the avoidance of doubt, the enforcement of any of the policies, agreements or arrangements, or the taking of any other action, contemplated by this Section 21 shall not be grounds for Executive to terminate employment for Good Reason hereunder or otherwise.

 

22.     TAX MATTERS.

 

(a)  WITHHOLDING.  The Company may withhold from any and all amounts payable under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

 

(b)      SECTION 409A COMPLIANCE.

 

(i) The intent of the parties is that payments and benefits under this Agreement comply with Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  In no event whatsoever shall the Company or its affiliates be liable for any additional tax, interest or penalty that may be imposed on Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

 

(ii) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”  Notwithstanding anything to the contrary in this Agreement, if Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of Executive, and (B) the date of Executive’s death, to the extent required under Code Section 409A.  Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 22(b)(ii) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

 

 

 

  

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(iii) To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Executive, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

(iv) For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

(v) Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

 

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

	  	
 

 

 

LIFEWAY FOODS, INC.

 

 

COMPANY

 

 

 

By:           /s/ Edward Smolyansky  

 

Name:           Edward Smolyansky   

 

Title:      Chief Operating Officer     

 

 

 

 

 

	  	
EXECUTIVE

 

 

/s/ John Waldron                             

 

John Waldron

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employment Agreement Signature Page

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