Document:

ex10-1.htm

THE SECURITIES TO WHICH THIS SHARE EXCHANGE AGREEMENT RELATES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WILL BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

AGREEMENT OF PURCHASE AND SALE

 

THIS AGREEMENT is made effective as of 25th April, 2011.

 

AMONG:

 

FRESHWATER TECHNOLOGIES INC., a Nevada corporation

 

(“Freshwater”)

 

AND:

 

Christopher Martinez, a businessman residing in New York, New York

 

(“Martinez”)

 

WHEREAS:

 

A.   The parties hereto wish to enter this Share Exchange Agreement (“Agreement”) whereby Freshwater will issue 100,000,000 shares of common stock in the capital of Freshwater and additional consideration to Martinez in exchange for the acquisition of certain assets pursuant to the terms and conditions of this Agreement.

  

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree each with the other as follows:

 

1.DEFINITIONS

 

	
1.1

	
Definitions. The following terms have the following meanings, unless the context indicates otherwise:

 

	
(a) 

	
“Acquired Assets” means all assets listed in Schedule 1 hereto

 

	
(b) 

	
“Agreement” means this Agreement, and all the exhibits, schedules and other documents attached to or referred to in this Agreement, and all amendments and supplements, if any, to this Agreement;

 

	
(c) 

	
“Applicable Securities Legislation” means all applicable securities legislation in all jurisdictions relevant to the issuance of the Freshwater Shares to Martinez;

 

  

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(d) 

	
“Closing” shall mean the completion of the Transaction, in accordance with Section 7 hereof, at which time the Closing Documents shall be exchanged by the parties, except for those documents or other items specifically required to be exchanged at a later time;

 

	
(e) 

	
“Closing Date” shall a date mutually agreed upon by the parties hereto in writing and in accordance with Section 8.1(d) of this Agreement;

 

	
(f) 

	
“Closing Documents” shall mean the papers, instruments and documents required to be executed and delivered at the Closing pursuant to this Agreement;

 

	
(g) 

	
“Liabilities” includes, any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate, liquidated or unliquidated, secured or unsecured.

 

	
(h) 

	
“Loss” shall mean any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses, but excluding any indirect, consequential or punitive damages suffered by Freshwater or Martinez including damages for lost profits or lost business opportunities.

 

	
(i) 

	
“SEC” shall mean the United States Securities and Exchange Commission;

 

	
(j)

	
“Taxes” shall include international, federal, state, provincial and local income taxes, capital gains tax, value-added taxes, franchise, personal property and real property taxes, levies, assessments, tariffs, duties (including any customs duty), business license or other fees, sales, use and any other taxes relating to the assets of the designated party or the business of the designated party for all periods up to and including the Closing Date, together with any related charge or amount, including interest, fines, penalties and additions to tax, if any, arising out of tax assessments;

 

	
(k)

	
“Transaction” shall mean the exchange of Consideration pursuant to this Agreement as described in Section 2.2;

 

	
(l)

	
“1933 Act” shall mean the United States Securities Act of 1933, as amended;

 

	
(m)

	
“1934 Act” shall mean the United States Securities Exchange Act of 1934, as amended; and,

 

	
(n)

	
Schedules. The following schedules are attached to and form part of this Agreement:

 

	
 

	
Schedule 1 - The Acquired Assets

	
 

	
Schedule 2 - Freshwater Outstanding Options and Other Convertible Securities

	
 

	
Schedule 3 - Impairments to Title of Acquired Assets

	
 

	
Schedule 4 - Payment of Accounts Payable

	
 

	
Schedule 5 - Certificate of U.S. Selling Shareholder

 

	
1.2 

	
Currency. All dollar amounts referred to in this Agreement are in United States funds, unless expressly stated otherwise.

 

  

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2.   AGREEMENT OF EXCHANGE OF SHARES AND OTHER CONSIDERATION

 

	
2.1 

	
Shares. Subject to the terms and conditions of this Agreement, Freshwater hereby covenants and agrees to sell, assign and transfer the Shares and other consideration set out in Section 2.2 below to Martinez, and Martinez hereby covenants and agrees to purchase from Freshwater the Shares and other consideration for the consideration set out in Section 2.2 below.

 

	
2.2 

	
Consideration.

 

	
(a)

	
As consideration for the sale of the Shares and other consideration by Freshwater, Martinez shall deliver the following consideration to Freshwater:

 

	
(i)      

	
ownership and possession of the Acquired Assets;

 

	
(ii)     

	
payment of the amounts owing to Freshwater’s outgoing directors as further described in Section 3.4(c).

 

	
(b)

	
As consideration for the consideration provided by Martinez, Freshwater shall pay the following consideration to Martinez:

 

	
(i)      

	
the Shares.

 

	
(c)

	
Martinez acknowledges and agrees that the Shares are being issued pursuant to a safe harbor from the prospectus and registration requirements of the 1933 Act. Martinez agrees to abide by all applicable resale restrictions and hold periods imposed by Applicable Securities Legislation. All certificates representing the Shares issued on Closing will be endorsed with restrictive legends substantially in the same form as follows pursuant to the 1933 Act, in order to reflect the fact that the Shares are restricted securities and will be issued to Martinez pursuant to a safe harbor from the registration requirements of the 1933 Act:

 

“NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND WERE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”

 

Martinez shall complete, execute and deliver Schedule 5 to this Agreement, and agrees that the representations set out in such schedule as executed by Martinez will be true and correct as of the Closing Date.

 

	
2.3 

	
Restricted Shares. Martinez acknowledges that the Shares issued pursuant to the terms and conditions set forth in this Agreement will have such hold periods as are required under applicable securities laws and as a result may not be sold, transferred or otherwise disposed of, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with all applicable securities laws. Martinez agrees that he has been given an opportunity to seek and obtain independent legal advice as to the resale restrictions applicable in their jurisdiction of residence, and under U.S. or other applicable securities laws generally. Freshwater has not undertaken, and will have no obligation, to register any of the Shares under the 1933 Act.

 

	
2.4 

	
Exemptions. Martinez acknowledge that Freshwater has advised such Martinez that Freshwater is relying on an exemption from the prospectus and registration requirements of the Applicable Securities Legislation, and, as a consequence, Martinez will not be entitled to certain protections, rights and remedies available under Applicable Securities Legislation, including statutory rights of rescission or damages, and Martinez will not receive information that would otherwise be required to be provided to Martinez pursuant to Applicable Securities Legislation.

 

  

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3.   REPRESENTATIONS AND WARRANTIES OF MARTINEZ

 

Martinez represents and warrants to Freshwater, and acknowledges that Freshwater is relying upon such representations and warranties, in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Freshwater, as follows:

 

	
3.1 

	
History of Assets. The Acquired Assets have not previously been owned by a corporation or other entity other than an individual person.

 

	
3.2 

	
Authority. Martinez has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the “Martinez Documents”) to be signed by Martinez and to perform his obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of Martinez Documents by Martinez and the consummation of the transactions contemplated hereby have been duly authorized. No other proceedings on the part of Martinez is necessary to authorize such documents or to consummate the transactions contemplated hereby. This Agreement has been, and the other Martinez Documents when executed and delivered by Martinez will be, duly executed and delivered by Martinez and this Agreement is, and the other Martinez Documents when executed and delivered by Martinez as contemplated hereby will be, valid and binding obligations of Martinez enforceable in accordance with their respective terms except:

 

	
(a)

	
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally;

 

	
(b)

	
as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and

 

	
(c)

	
as limited by public policy.

 

	
3.3 

	
Title to the Acquired Assets. Martinez possesses, and has good and marketable title of all of the Acquired Assets. All such property is used in the business of Martinez.  All Acquired Assets are owned by Martinez free and clear of all liens, security interests, charges, encumbrances, and other adverse claims, except as disclosed in Schedule 5 to this Agreement.

 

	
3.4 

	
Payment of Accounts Payable.

 

	
(a)

	
Martinez acknowledges and agrees that he shall pay all of the accounts payable and any interest accrued thereon of Freshwater that are stated in Schedule 4 hereto within 15 days of the Closing of this Agreement.

 

	
(b)

	
Martinez acknowledges and agrees that, upon the Closing of the Transaction, he shall pay all of the accounts payable of Freshwater to Bacchus Law Corporation and Bacchus Filings, as provided to him by invoice by Freshwater on the business day before the Closing Date, for the reasonable fees related to the legal, edgarizing and filing services provided to Freshwater.

 

	
(c)

	
Martinez acknowledges and agrees that, upon the Closing of the Transaction, he shall pay all of the amounts owing by Freshwater to two of its outgoing directors, as provided to him by Freshwater on the business day before the Closing Date.  The estimated amount of these amounts payable as of the date of this Agreement total $83,797 of which $65,653 is owed to Robertson and $18,144 is owed to Weissengruber .

 

	
(d)

	
Martinez acknowledges and agrees that, upon the Closing of the Transaction, the debt of Freshwater to Asher Enterprises, Inc. and any other creditors of any other convertible notes held by Freshwater pursuant to any outstanding convertible debts shall continue to be the debts of Freshwater and he undertakes as the new control person of Freshwater to negotiate and arrange for payment of those debts with Asher Enterprises and the creditors of any other convertible notes held by Freshwater.

 

	
3.5 

	
Non-Contravention. Neither the execution, delivery, performance of this Agreement nor the consummation of the Transaction, will:

 

	
(a)

	
conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the Acquired Assets under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Martinez, or any of its material property or assets; or,

 

	
(b)

	
violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to Martinez or any of the Acquired Assets.

 

	
3.6 

	
Actions and Proceedings. To the best knowledge of Martinez, there is no basis for and there is no action, suit, judgment, claim, demand or proceeding outstanding or pending, or threatened against or affecting Martinez or the Acquired Assets that involves any of the business, or the properties or assets of Martinez that, if adversely resolved or determined, would have a material adverse effect on the Acquired assets (a “Material Adverse Effect”). There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Martinez Material Adverse Effect.

 

  

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3.7 

	
Absence of Changes. Except as otherwise stated in this Agreement, from the date of this Agreement to the Closing of this Transaction, Martinez shall not:

 

	
(a)

	
fail to pay or discharge when due any liabilities of which the failure to pay or discharge would cause any material damage or risk of material loss to any of the Acquired Assets;

 

	
(b)

	
sell, encumber, assign or transfer any of the Acquired Assets;

 

	
(c)

	
create, incur, assume or guarantee any indebtedness for money borrowed, or mortgage, pledge or subject any of the Acquired Assets to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever;

 

	
3.8 

	
Completeness of Disclosure. No representation or warranty by Martinez in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Freshwater pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.

 

 4.   REPRESENTATIONS AND WARRANTIES OF FRESHWATER

 

Freshwater represents and warrants to Martinez and acknowledges that Martinez is relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Martinez as follows:

 

	
4.1 

	
Organization and Good Standing. Freshwater is duly incorporated, organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite corporate power and authority to own, lease and to carry on its business as now being conducted.

 

	
4.2 

	
Authority. Freshwater has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the “Freshwater Documents”) to be signed by Freshwater and to perform its obligations hereunder and to consummate the Transaction contemplated hereby. The execution and delivery of each of the Freshwater Documents by Freshwater and the consummation by Freshwater of the Transaction contemplated hereby have been duly authorized by its board of directors and no other corporate or shareholder proceedings on the part of Freshwater is necessary to authorize such documents or to consummate the Transaction contemplated hereby. This Agreement has been, and the other Freshwater Documents when executed and delivered by Freshwater as contemplated by this Agreement will be, duly executed and delivered by Freshwater and this Agreement is, and the other Freshwater Documents when executed and delivered by Freshwater, as contemplated hereby will be, valid and binding obligations of Freshwater enforceable in accordance with their respective terms, except:

 

	
(a)

	
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally;

 

	
(b)

	
as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and

 

	
(c)

	
as limited by public policy.

 

  

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4.3 

	
Capitalization of Freshwater. Immediately prior to the Closing of this Agreement, the entire authorized capital stock and other equity securities of Freshwater shall consist of 400,000,000 shares of common stock with a par value of $0.001 (the “Freshwater Common Stock”) and there shall be no more than 254,989 shares of Freshwater Common Stock issued and outstanding. All of the issued and outstanding shares of Freshwater Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. Other than the as stated in Schedule “2” hereto and the share issuances contemplated by this Agreement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Freshwater to issue any additional shares of Freshwater Common Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Freshwater any shares of Freshwater Common Stock as of the date of this Agreement. There are no agreements purporting to restrict the transfer of the Freshwater Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Freshwater Common Stock other than those shares held by affiliates of Freshwater.

 

	
4.4 

	
Corporate Records of Freshwater. The corporate records of Freshwater, as required to be maintained by it pursuant to the Nevada Corporations Code, are accurate, complete and current in all material respects, and the minute book of Freshwater is, in all material respects, correct and contains all material records required by the laws of the State of Nevada in regards to all proceedings, consents, actions and meetings of the shareholders and the board of directors of Freshwater.

 

	
4.5 

	
Non-Contravention. Neither the execution, delivery, performance of this Agreement nor the consummation of this Transaction will:

 

	
(a)

	
Subject to Section 3.4(d) and 5.1(d), conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of Freshwater under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Freshwater or any of its material property or assets;

 

	
(b)

	
violate any provision of the applicable incorporation or charter documents of Freshwater; or

 

	
(c)

	
violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to Freshwater or any of its material property or assets.

 

	
4.6 

	
Validity of Freshwater Shares. The Freshwater Shares to be issued to Martinez upon consummation of the Transaction in accordance with this Agreement will, upon issuance, have been duly and validly authorized and, when so issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable.

 

	
4.7 

	
Actions and Proceedings. To the best knowledge of Freshwater, there is no claim, charge, arbitration, grievance, action, suit, investigation or proceeding by or before any court, arbiter, administrative agency or other governmental authority now pending or, to the best knowledge of Freshwater, threatened against Freshwater which involves any of the business, or the properties or assets of Freshwater that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects or conditions of Freshwater taken as a whole (an “Freshwater Material Adverse Effect”). There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Freshwater Material Adverse Effect.

 

	
4.9

	
Compliance.

 

	
(a)

	
To the best knowledge of Freshwater, Freshwater is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation to the business or operations of Freshwater;

 

	
(b)

	
To the best knowledge of Freshwater, Freshwater is not subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would constitute an Freshwater Material Adverse Effect;

 

	
(c)

	
Freshwater has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement. All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of Freshwater, threatened, and none of them will be affected in a material adverse manner by the consummation of the Transaction; and

 

	

(d)

	

Freshwater has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business. Freshwater has not received any notice of any violation thereof, nor is Freshwater aware of any valid basis therefore.

 

  

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4.10 

	
Filings, Consents and Approvals. Freshwater shall conduct or obtain any filing, registration, permit or authorization from any public or governmental body or authority, shareholders or other person that is necessary for the consummation by Freshwater of the Transaction contemplated by this Agreement and to continue to conduct its business after the Closing Date in a manner which is consistent with that in which it is presently conducted.

 

	
4.11 

	
SEC Filings. Freshwater has furnished or made available to Martinez a true and complete copy of each report, schedule, registration statement and proxy statement filed by Freshwater with the SEC (collectively, and as such documents have since the time of their filing been amended, the “Freshwater SEC Documents”). As of their respective dates, the Freshwater SEC Documents complied in all material respects with the requirements of the 1933 Act or the 1934 Act, as applicable, and the rules and regulations of the SEC thereunder applicable to such Freshwater SEC Documents.

 

	
4.12 

	
Absence of Undisclosed Liabilities. Except as disclosed in this Agreement, Freshwater does not have any material liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise that could in the aggregate exceed $5,000, which have not heretofore been paid or discharged.

 

	
4.13 

	
Board of Directors. All members of the Board of Directors and all corporate officers of Buyer shall resign and a new Board of Directors of Buyer shall be appointed by Martinez simultaneously with the Closing

 

	
4.14 

	
Absence of Certain Changes or Events. Except as and to the extent disclosed in the Freshwater SEC Documents, there has not been:

 

	
(a)

	
a Freshwater Material Adverse Effect; or

 

	
(b)

	
any material change by Freshwater in its accounting methods, principles or practices.

 

	
4.15 

	
No Subsidiaries. Freshwater does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations.

 

	
4.16 

	
Personal Property. There are no material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by Freshwater, except as disclosed in the Freshwater SEC Documents.

 

	
4.17 

	
Employees and Consultants. Freshwater does not have any employees or consultants, except as disclosed in the Freshwater SEC Documents.

 

	
4.18 

	
Material Contracts and Transactions. There are no material contracts, agreements, licenses, permits, arrangements, commitments, instruments, understandings or contracts, whether written or oral, express or implied, contingent, fixed or otherwise, to which Freshwater is a party, except as disclosed in the Freshwater SEC Documents.

 

	
4.19 

	
No Brokers. Freshwater has not incurred any obligation or liability to any party for any brokerage fees, agent’s commissions, or finder’s fees in connection with the Transaction contemplated by this Agreement.

 

	
4.20 

	
Certain Transactions. Freshwater is not a guarantor or indemnitor of any indebtedness of any third party, including any person, firm or corporation.

 

	
4.21 

	
Completeness of Disclosure. No representation or warranty by Freshwater in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Martinez pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading.

 

  

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5.   CLOSING CONDITIONS

 

	
5.1 

	
Conditions Precedent to Closing by Freshwater. The obligation of Freshwater to consummate the Transaction is subject to the satisfaction or waiver of the conditions set forth below on or before the Closing Date or such earlier date as hereinafter specified. The Closing of the Transaction contemplated by this Agreement will be deemed to mean the satisfaction or waiver of all conditions to Closing. These conditions of closing are for the benefit of Freshwater and may be waived by Freshwater in its sole discretion.

 

	
(a) 

	
Freshwater shall have entered into consulting agreements with Brian Robertson, Max Weissengruber and Michael Borrelli (“Consulting Agreements”) for their consulting services to continue following the Closing Date on the terms and conditions agreed to by the parties, acting reasonably and in good faith;

 

	
(b) 

	
If required by applicable laws, Freshwater shall have obtained shareholder approval for the purchase and sale of the inventory and assets of Freshwater’s water treatment business and name to Brian Robertson and Max Weissengruber

 

	
(c) 

	
Freshwater shall have entered into an agreement of purchase and sale with Brian Robertson and Max Weissengruber for the purchase and sale of the inventory and assets of Freshwater’s water treatment business (“Agreement of Purchase and Sale”), which will be discontinued following the Closing Date of this Agreement.  The inventory and assets  of Freshwater’s water treatment business shall be sold to Brian Robertson and Max Weissengruber for an amount totaling $115,823 and subject to terms and conditions agreed to by the parties, acting reasonably and in good faith;

 

	
(d) 

	
Freshwater shall have entered into an agreement with its creditors in all outstanding convertible notes that will allow Freshwater to carry out this Transaction .  If such an agreement is not reached prior to the Closing Date, then  Martinez shall have paid all amounts owing to the creditors of the notes to have those notes satisfied in full;

 

	
(e) 

	
Representations and Warranties. The representations and warranties of Martinez set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and Martinez will have delivered to Freshwater a certificate dated as of the Closing Date, to the effect that the representations and warranties made by Martinez Canada respectively in this Agreement are true and correct.

 

	
(f) 

	
Performance. All of the covenants and obligations that Martinez are required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been performed and complied with in all material respects.

 

	
(g)

	
Transaction Documents. This Agreement, the Martinez Documents and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Freshwater, will have been executed and delivered to Freshwater.

 

	
(h)

	
Third Party Consents. Freshwater shall have received shareholder consent, as required pursuant to the applicable Nevada statutes for all corporate actions to be undertaken by it pursuant to this Agreement.

 

	
(i)

	
Third Party Consents. Freshwater will have received duly executed copies of all third party consents and approvals contemplated by this Agreement, in form and substance reasonably satisfactory to Freshwater.

 

	
(j)

	
No Material Adverse Change. No Martinez Material Adverse Effect will have occurred since the date of this Agreement.

 

	
(k)

	
No Action. No suit, action, or proceeding will be pending or threatened which would:

 

	
(i)      

	
preventthe consummation of any of the transactions contemplated by this Agreement, or

 

	
(ii)      

	
cause the Transaction to be rescinded following consummation.

 

	
(l)

	
Due Diligence. Freshwater and its solicitors will be reasonably satisfied with their due diligence investigation of Martinez that is reasonable and customary in a transaction of a similar nature to that contemplated by the Transaction, including:

 

	
(i)      

	
materials, documents and information in the possession and control of Martinez that are reasonably germane to the Transaction; and,

 

	
(ii)      

	
title to the Acquired Assets held by Martinez.

 

  

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5.2 

	
Conditions Precedent to Closing by Martinez. The obligation of Martinez to consummate the Transaction is subject to the satisfaction or waiver of the conditions set forth below on or before the Closing Date or such earlier date as hereinafter specified. The Closing of the Transaction will be deemed to mean the satisfaction or waiver of all conditions to Closing. These conditions precedent are for the benefit of Martinez and may be waived by Martinez in their discretion.

 

	
(a) 

	
Reverse. Split. Buyer shall have effectuated a 1000 to 1 reverse split of its common stock;

 

	
(b) 

	
Name. Buyer shall have obtained shareholder approval to rename the company “Agent155 Media Corp.”;

 

	
(c) 

	
Representations and Warranties. The representations and warranties of Freshwater set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and Freshwater will have delivered to Martinez a certificate dated the Closing Date, to the effect that the representations and warranties made by Freshwater in this Agreement are true and correct.

	
(d) 

	
Performance. All of the covenants and obligations that Freshwater is required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been performed and complied with in all material respects. Freshwater shall have delivered each of the documents required to be delivered by it pursuant to this Agreement.

 

	
(e) 

	
Compliance. Upon the closing of this Agreement, Freshwater shall be in compliance with its reporting requirements under the 1934 Act.

	
(f) 

	
Transaction Documents. This Agreement, the Freshwater Documents and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Martinez, shall have been executed and delivered by Freshwater.

 

	
(g) 

	
Secretary’s Certificate - Freshwater. Martinez shall have received a certificate from the Secretary of Freshwater attaching:

 

	
(i)      

	
a copy of Freshwater’s articles, bylaws and all other incorporation documents, as amended through the Closing Date, and

 

	
(ii)      

	
copies of resolutions duly adopted by the board of directors of Freshwater approving the execution and delivery of this Agreement and the consummation of the transactions contemplated herein.

 

	
(h)

	
No Material Adverse Change. No Freshwater Material Adverse Effect shall have occurred since the date of this Agreement.

	
(i)

	
No Action. No suit, action, or proceeding shall be pending or threatened before any governmental or regulatory authority wherein an unfavorable judgment, order, decree, stipulation, injunction or charge would:

 

	
(i)      

	
prevent the consummation of any of the transactions contemplated by this Agreement, or,

 

	
(ii)      

	
cause the Transaction to be rescinded following consummation.

 

	
(j)

	
Outstanding Shares. Freshwater shall have issued and outstanding no more than 254,989 shares of Freshwater Common Stock immediately prior to the issuance of the Freshwater Shares as contemplated by this Agreement.

 

	
(k)

	
Due Diligence Review of Financial Statements. Martinez and its accountants shall be reasonably satisfied with their due diligence investigation and review of the Freshwater SEC Documents, and the contents thereof, prepared in accordance with the United States generally accepted accounting principles applied in a manner consistent with prior periods.

 

  

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6.   ADDITIONAL COVENANTS OF THE PARTIES

 

	
6.1 

	
Access and Investigation. Between the date of this Agreement and the Closing Date, Martinez, on the one hand, and Freshwater, on the other hand, shall, and shall cause each of their respective representatives to:

 

	
(a)

	
afford the other and its representatives full and free access to its personnel, properties, assets, contracts, books and records, and other documents and data;

 

	
(b)

	
furnish the other and its representatives with copies of all such contracts, books and records, and other existing documents and data as required by this Agreement and as the other may otherwise reasonably request; and,

 

	
(c)

	
furnish the other and its representatives with such additional financial, operating, and other data and information as the other may reasonably request.

 

All of such access, investigation and communication by a party and its representatives shall be conducted during normal business hours and in a manner designed not to interfere unduly with the normal business operations of the other party. Each party shall instruct its auditors to co-operate with the other party and its representatives in connection with such investigations.

 

	
6.2 

	
Notification. Between the date of this Agreement and the Closing Date, each of the parties to this Agreement shall promptly notify the other parties in writing if it becomes aware of any fact or condition that causes or constitutes a material breach of any of its representations and warranties as of the date of this Agreement, if it becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a material breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the Schedules relating to such party, such party shall promptly deliver to the other parties a supplement to the Schedules specifying such change. During the same period, each party shall promptly notify the other parties of the occurrence of any material breach of any of its covenant in this Agreement or of the occurrence of any event that may make the satisfaction of such conditions impossible or unlikely.

 

	
6.3 

	
Exclusivity. Until such time, if any, as this Agreement is terminated pursuant to this Agreement, Martinez and Freshwater shall not, directly or indirectly solicit, initiate, entertain or accept any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from, any person or entity relating to any transaction involving the sale of the Acquired Assets or any of the capital stock of Freshwater or any merger, consolidation, business combination, or similar transaction other than as contemplated by this Agreement.

 

	
6.4 

	
Conduct of Martinez and Freshwater Business Prior to Closing. Except as expressly contemplated by this Agreement or for purposes in furtherance of this Agreement, from the date of this Agreement to the Closing Date, and except to the extent that Martinez otherwise consents in writing, Freshwater shall operate its business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use its best efforts to preserve intact its good reputation and present business organization and to preserve its relationships with persons having business dealings with it.

 

	
6.5 

	
Full Disclosure Requirement. Martinez acknowledges that Freshwater is required to file with the SEC upon Closing a disclosure document which includes discussion of many aspects of its future business, financial affairs, risks and management. Martinez shall cooperate fully in providing Freshwater with all information and documentation reasonably requested.

	
6.6

	
Certain Acts Prohibited - Freshwater. Between the date of this Agreement and the Closing Date, Freshwater shall not, without the prior written consent of Martinez:

 

	
(a)

	
incur any liability or obligation or encumber or permit the encumbrance of any properties or assets of Freshwater except in the ordinary course of business consistent with past practice;

 

	
(b)

	
dispose of or contract to dispose of any Freshwater property or assets except in the ordinary course of business consistent with past practice; or,

 

	
(c)

	
materially increase benefits or compensation expenses of Freshwater, increase the cash compensation of any director, executive officer or other key employee or pay any benefit or amount to any such person.

 

	
6.7 

	
Public Announcements. Until the Closing Date, Freshwater and Martinez each agree that they shall not release or issue any reports or statements or make any public announcements relating to this Agreement or the Transaction contemplated herein without the prior written consent of the other party, except as may be required upon written advice of counsel to comply with applicable laws or regulatory requirements after consulting with the other party hereto and seeking their reasonable consent to such announcement. Martinez acknowledges that Freshwater must comply with securities laws requiring full disclosure of material facts and agreements in which it is involved, and shall co-operate to assist Freshwater in meeting its obligations.

 

  

10

  

 

7.   CLOSING

 

	
7.1 

	
Closing. The Closing shall take place on the Closing Date at the offices of the lawyers for Freshwater or at such other location as agreed to by the parties. Notwithstanding the location of the Closing, each party agrees that the Closing may be completed by the exchange of undertakings between the respective legal counsel for Martinez and Freshwater, provided such undertakings are satisfactory to each party’s respective legal counsel.

 

	
7.2 

	
Closing Deliveries of Martinez. At Closing, Martinez shall deliver or cause to be delivered the following, fully executed and in the form and substance reasonably satisfactory to Freshwater:

 

	
(a)

	
Proof of the conveyance of ownership of the Acquired Assets from Martinez to Freshwater;

 

	
(b) 

	
Payment in the form of certified checks, money orders or wire to Bacchus Law Corp and Bacchus Filings in the amounts set out in the invoice described in Section 3.4(b);

 

	
(c) 

	
Payment in the form of certified check, money order or wire to the outgoing directors of Freshwater in the amounts set out described in Section 3.4(c);

 

	
(d) 

	
Delivery of the executed Consulting Agreements and Agreement of Purchase and Sale as set out in Section 5.1 (a) and (c);

 

	
(e) 

	
all certificates and other documents required by Section 5.1 of this Agreement;

 

	
(f)

	
a certificate of an officer of Martinez, dated as of Closing, certifying that:

 

	
(i)      

	
each respective covenant and obligation of Martinez has been complied with, and

	
(ii)      

	
each respective representation, warranty and covenant of Martinez is true and correct at the Closing as if made on and as of the Closing; and

	
(g)

	
The Martinez Documents and any other necessary documents, each duly executed by Martinez, as required to give effect to the Transaction.

	
7.3

	
Closing Deliveries of Freshwater. At Closing, Freshwater shall deliver or cause to be delivered the following, fully executed and in the form and substance reasonably satisfactory to Martinez:

 

	
(a)

	
copies of all resolutions, resignations and/or consent actions adopted by or on behalf of the board of directors of Freshwater evidencing approval of this Agreement, the resignation and appointment of Directors, the Name Change and the Transaction;

 

	
(b)

	
share certificates representing the Shares registered in the name of Martinez or his designates, as applicable;

 

	
(c)

	
all certificates and other documents required by Section 5.2 of this Agreement;

 

	
(d)

	
a certificate of an officer of Freshwater, dated as of Closing, certifying that:

 

	
(i)      

	
each covenant and obligation of Freshwater has been complied with, and

	
(ii)      

	
each representation, warranty and covenant of Freshwater is true and correct at the Closing as if made on and as of the Closing; and

	
(e)

	
theFreshwater Documents and any other necessary documents, each duly executed by Freshwater, as required to give effect to the Transaction.

 

  

11

  

8.   TERMINATION

 

	
8.1 

	
Termination. This Agreement may be terminated at any time prior to the Closing Date contemplated hereby by:

 

	
(a)

	
mutual agreement of Freshwater and Martinez;

 

	
(b)

	
Freshwater, if there has been a material breach by Martinez or any of Martinez of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Martinez that is not cured, to the reasonable satisfaction of Freshwater, within ten business days after notice of such breach is given by Freshwater (except that no cure period shall be provided for a breach by Martinez that by its nature cannot be cured);

 

	
(c)

	
Martinez, if there has been a material breach by Freshwater of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Freshwater that is not cured, to the reasonable satisfaction of Martinez, within ten business days after notice of such breach is given by Martinez (except that no cure period shall be provided for a breach by Freshwater that by its nature cannot be cured);

 

	
(d)

	
Freshwater or Martinez, if the Transaction contemplated by this Agreement has not been consummated prior to June 30, 2011 unless Freshwater and Martinez agree to extend such date in writing; or,

 

	
(e)

	
Freshwater or Martinez, if any injunction or other order of a governmental entity of competent authority prevents the consummation of the Transaction contemplated by this Agreement.

 

	
8.2 

	
Effect of Termination. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement shall be of no further force or effect, provided, however, that no termination of this Agreement shall relieve any party of liability for any breaches of this Agreement that are based on a wrongful refusal or failure to perform any obligations.

 

9.   INDEMNIFICATION, REMEDIES, SURVIVAL

 

	
9.1 

	
Certain Definitions. For the purposes of this Section 9, the terms “Loss” and “Losses” mean any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses of an amount not less than $5,000, but excluding any indirect, consequential or punitive damages suffered by Freshwater or Martinez including damages for lost profits or lost business opportunities.

 

	
9.2 

	
Martinez Indemnity. Martinez shall and does hereby indemnify, defend, and hold harmless Freshwater and its shareholders from, against, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Freshwater and its shareholders by reason of, resulting from, based upon or arising out of:

 

	
(a)

	
any breach by Martinez of this Agreement; or

 

	
(b)

	
any misstatement, misrepresentation or breach of the representations and warranties made by Martinez contained in or made pursuant to this Agreement , any Martinez Document or any certificate or other instrument delivered pursuant to this Agreement.

 

	
9.3 

	
Freshwater Indemnity. Freshwater shall and does hereby indemnify, defend, and hold harmless Martinez from, against, for, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Martinez by reason of, resulting from, based upon or arising out of:

 

	
(a)

	
any breach by Freshwater of this Agreement; or

 

	
(b)

	
any misrepresentation, misstatement or breach of warranty of Freshwater contained in or made pursuant to this Agreement, any Freshwater Document or any certificate or other instrument delivered pursuant to this Agreement.

 

  

12

  

 

10.   GENERAL

 

	
10.1

	
Effectiveness of Representations; Survival. Each party is entitled to rely on the representations, warranties, indemnifications and agreements of each of the other parties and all such representation, warranties and agreement shall be effective regardless of any investigation that any party has undertaken or failed to undertake. The representations, warranties and agreements shall survive the Closing Date and continue in full force and effect until one (1) year after the Closing Date.

 

	
10.2 

	
Further Assurances and Provision of Information. Each of the parties hereto shall co-operate with the others and execute and deliver to the other parties hereto such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other party hereto as necessary to carry out, evidence, and confirm the intended purposes of this Agreement. Martinez agrees to provide such information as requested by Freshwater in a timely manner prior to Closing Date.

 

	
10.3 

	
Amendment. This Agreement may not be amended except by an instrument in writing signed by each of the parties.

 

	
10.4 

	
Expenses. Except as otherwise stated in this Agreement, Martinez shall pay and be responsible for the expenses incurred by both parties in connection with the preparation, execution, and performance of this Agreement and the Transaction contemplated hereby, including all fees and expenses of agents, representatives, counsel, and accountants.

 

	
10.5 

	
Entire Agreement. This Agreement, the schedules attached hereto and the other documents in connection with this transaction contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior arrangements and understandings, both written and oral, expressed or implied, with respect thereto. Any preceding correspondence or offers are expressly superseded and terminated by this Agreement.

 

	
10.6 

	
Notices. All notices and other communications required or permitted under to this Agreement shall be sent to the addresses exchanged by the parties hereto for this purpose, as may from time to time be updated by one party to the other, must be in writing and shall be deemed given if sent by personal delivery, faxed with electronic confirmation of delivery, internationally-recognized express courier or registered or certified mail (return receipt requested), postage prepaid, to the parties at the addresses specified by a party to the others from time to time for notice purposes. All such notices and other communications shall be deemed to have been received:

 

	
(a)

	
in the case of personal delivery, on the date of such delivery;

 

	
(b)

	
in the case of a fax, when the party sending such fax has received electronic confirmation of its delivery;

 

	
(c)

	
in the case of delivery by internationally-recognized express courier, on the business day following dispatch; and,

 

	
(d)

	
in the case of mailing, on the fifth business day following mailing.

 

	
10.7 

	
Headings. The headings contained in this Agreement are for convenience purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

	
10.8 

	
Benefits. This Agreement is and shall only be construed as for the benefit of or enforceable by those persons party to this Agreement.

 

	
10.9 

	
Assignment. This Agreement may not be assigned (except by operation of law) by any party without the consent of the other parties.

 

	
10.10 

	
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada and the Federal laws applicable to the subject matter in the State of Nevada.

 

	
10.11 

	
Gender. All references to any party shall be read with such changes in number and gender as the context or reference requires.

 

	
10.12 

	
Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

 

  

13

  

 

	
10.13 

	
Fax Execution. This Agreement may be executed by delivery of executed signature pages by fax and such fax execution shall be effective for all purposes.

 

	
10.14 

	
Independent Legal Advice. Martinez confirms that he has been given an opportunity to seek and obtain independent legal advice prior to execution of this Agreement and cannot and does not rely on the representations of Freshwater or its advisors respecting the legal effects of this Agreement.

 

	
10.15 

	
Schedules and Exhibits. The schedules and exhibits that are attached to this Agreement are incorporated herein.

 

	
10.16 

	
References. Unless otherwise explicitly stated, all references to a “Section” “Schedule” or Exhibit” herein refer to a section, schedule or exhibit in and to this Agreement.

 

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

 

FRESHWATER TECHNOLOGIES INC. (a Nevada corporation)

 

 

Per:  /s/ Max Weissengruber 

        Max Weissengruber

        President, CEO and Director

    

 

	
Signed and Delivered by Christopher Martinez in the presence of:

	)	  
	 	)	 
	
/s/ Shawn Unger

	)	

/s/ Christopher Martinez

	
Witness (Signature)

	)	
Christopher Martinez

	 	) 	 
	
Shawn Unger

	)	  
	
Name (please print)

	)	  

 

  

14

  

SCHEDULE 1

 

TO THE AGREEMENT DATED BETWEEN FRESHWATER AND MARTINEZ

 

The Acquired Assets

The following sets out the Acquired Assets to be exchange for the Shares and other consideration pursuant to the Agreement:

 

	 	 	
Estimated Value

 

	
1. PHP CODE

	
- Hypertext Preprocessor – essential system to support web pages

- requires thousands of hours to create overall website for Agent155

 

	
$1,400,000

	
2. HTML Code

	
- Hertext  Markup  Language-the language  or code used to actually create web  pages for Agent155

	
$   50,000

 

	
3. Linux Code

	
- Unix - like computer operating system  -helps create Agent155 data base

	
$  10,000

 

	
4. Servers

	
- computers  linking other computers together  via  the internet

	
$ 150,000

 

	
5. MYSQL Code

	
- system to provide relational database management to allow Agent155

Website to link information from different pages on website

 

	
$  10,000

	
6. Flash Code

	
- creates the multi media platform allowing for animation, video, pictures to be displayed on Agent155 website

	
$ 25,000

 

	
7. Multi-Media Content

	
- systems-to display video, graphics, music via MP3-MP4 These particular media represent significant revenue opportunities for Agent115

 

	
$100,000

	
8. Goodwill

	
- Based on 9,088 member s from 2004-2006, Agent155 Domain name (2004)

	
 $200,000

 

	
Total Estimated Value of Acquired Assets

	  	
$1,945,000

                                                                                                                                                                     

  

15

  

 

SCHEDULE 2

 

TO THE AGREEMENT DATED BETWEEN FRESHWATER AND MARTINEZ

 

Freshwater Outstanding Options and Other Convertible Securities

The following table lists the material details of all outstanding Convertible Securities of Freshwater:

 

	 Asher  nterprises 8% Convertible Note dated May 3, 2010 	$11,000
	 Asher Enterprises 8% Convertible Note dated May 18, 2010	$35,000
	 Asher Enterprises 8% Convertible Note dated July 14, 2010	$30,000
	 Asher Enterprises 8% Convertible Note dated Sept. 7, 2010	$25,000

 

These notes are convertible into shares of Freshwater’s Class A common stock at a 40% to 45% discount of the average of the lowest 3 trading prices (the closing bid price on the Over-the-Counter Bulletin Board or applicable trading market) for Freshwater’s common stock during the ten trading day period ending one trading day prior to the date the conversion notice is sent by the noteholder to Freshwater. 

  

16

  

 

SCHEDULE 3

 

TO THE AGREEMENT BETWEEN FRESHWATER and MARTINEZ

Impairments to Title of Acquired Assets 

None

 

  

17

  

 

SCHEDULE 4

 

TO THE AGREEMENT BETWEEN FRESHWATER AND MARTINEZ

 

Payment of Accounts Payable

Martinez shall pay the following accounts payable of Freshwater within 15 days of the Closing of the Agreement:

 

	 Clark, Wilson	$ 4,139.77
	 Business Wire	1,176.50
	 Manning Elliott	13,974.25
	 Market Wire	4,320.75
	 Sue Ruggero 	300.00
	 Signature Trust 	602.17
	 Viqua Corporation 	-
	 Newsfile Corp.	-
	 Sea Air 	-
	 Luis Buitrago	1,000.00
	 Ancizar Rendon	1,000.00
	 Claudio Sgarbi 	22,883.00 (13,130 EUROS)
	 TOTAL 	$62,846.14

 

  

18

  

 

SCHEDULE 5

  

TO THE AGREEMENT BETWEEN FRESHWATER AND MARTINEZ

 

Certificate of U.S. Selling Shareholder

 

In connection with the issuance of common stock (“Freshwater Common Stock”) of Freshwater Technologies Inc. (“Freshwater”) pursuant to the Agreement between Freshwater and Christopher Martinez (“Martinez”) as set out in the Agreement, the undersigned hereby agrees, represents and warrants that:

 

	
1. 

	
Freshwater is entitled to rely on the acknowledgements, agreements, representations and warranties and the statements and answers of the undersigned contained in the Agreement and this Certificate, and the undersigned will hold harmless Freshwater from any loss or damage either one may suffer as a result of any such acknowledgements, agreements, representations and/or warranties made by the undersigned not being true and correct;

 

	
2.

	
the undersigned has been advised to consult their own respective legal, tax and other advisors with respect to the merits and risks of an investment in the Freshwater Common Stock and, with respect to applicable resale restrictions, is solely responsible (and Freshwater is not in any way responsible) for compliance with applicable resale restrictions;

 

	
3.

	
none of the Freshwater Common Stock is listed on any stock exchange or automated dealer quotation system and no representation has been made to the undersigned that any of the Freshwater Common Stock will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the common shares of Freshwater on the OTC Bulletin Board;

 

	
4.

	
neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Freshwater Common Stock;

 

	
5.

	
the address of the undersigned included herein is the sole address of the undersigned as of the date of this certificate.

 

	
6.

	
No person has made to the undersigned any written or oral representations: (i) that any person will resell or repurchase any of the Freshwater Common Stock; (ii) that any person will refund the purchase price of any of the Freshwater Common Stock; (iii) as to the future price or value of any of the Freshwater Common Stock; or (iv) that any of the Freshwater Common Stock will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Freshwater Common Stock on any stock exchange or automated dealer quotation system, except the OTCBB.

 

	
 

	
The shareholder acknowledges and agrees that the shareholder may be required by Freshwater to provide such additional documentation as may be reasonably required by Freshwater and its legal counsel in determining the shareholder’s eligibility to acquire the Freshwater Shares under the Applicable Securities Legislation.

 

	
 7.

	
The following Questionnaire is for use by each Selling Shareholder who is a U.S. person (as that term is defined Regulation S of the United States Securities Act of 1933 (the “1933 Act”)) is acquiring shares of Freshwater Technologies Inc. (the “Company”). The purpose of this Questionnaire is to assure the Company that each Selling Shareholder will meet the standards imposed by the 1933 Act and the appropriate exemptions of applicable state securities laws. The Company will rely on the information contained in this Questionnaire for the purposes of such determination. The Freshwater Common Stock will not be registered under the 1933 Act in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(2) and Regulation D of the 1933 Act. This Questionnaire is not an offer of the Freshwater Common Stock or any other securities of the Company in any state other than those specifically authorized by the Company.

 

	
 

	
All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, each Selling Shareholder agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the 1933 Act or applicable state securities law, of exemption from registration in connection with the sale of the Shares hereunder.

 

	
 

	
The undersigned covenants, represents and warrants to the Company that it satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the 1933 Act, as indicated below: (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the undersigned satisfies)

 

  

19

  

	
                Category 1

	
An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of US $5,000,000;

	
                Category 2

	
A natural person whose individual net worth, or joint net worth with that person's spouse, on the date of purchase exceeds US $1,000,000;

	
                Category 3

	
A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person's spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

	 	 
	
                Category 4

	
A "bank" as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors;

	
                Category 5

	
A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);

	
                Category 6

	
A director or executive officer of the Company;

	
                Category 7

	
A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act;

	
                Category 8

	
An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories;

 

	
 

	
Note: the undersigned may be required to supply the Company with a balance sheet, prior years' federal income tax returns or other appropriate documentation to verify and substantiate the undersigned's status as an Accredited Investor.

 

If the undersigned is an entity which initialed Category 8 in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:

 

________________________________________________________________________

 

The undersigned hereby certifies that the information contained in this Questionnaire is complete and accurate and the undersigned will notify the Company promptly of any change in any such information. If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the undersigned represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.

 

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the ______day of ________________, 2011.

 

	
If a Corporation, Partnership or Other Entity:

	  	
If an Individual:

	 	 	 
	_______________________________________________ 	 	______________________________________________ 
	
Print or Type Name of Entity

	  	
Signature

	 	 	 
	_______________________________________________ 	 	______________________________________________ 
	
Signature of Authorized Signatory

	  	
Print or Type Name

	 	 	 
	
Type of Entity

	  	
Social Security/Tax I.D. Number

 

20exhibit10-1.htm

 

Exhibit 10.1

EXECUTION COPY

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this 1st day of April, 2011 by and between OMNICARE, INC., a Delaware corporation (the “Company”) and Alexander M. Kayne (“Executive”).

 

WHEREAS, the Company desires to employ the Executive as Senior Vice President, General Counsel & Secretary of the Company; and

 

WHEREAS, the Company and the Executive desire to enter into the Agreement to set forth the terms of the Executive’s employment by the Company.

 

THEREFORE, in consideration of these recitals and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

 

SECTION 1 EMPLOYMENT

 

1.1 Commencing April 1, 2011 (“Effective Date”), the Company shall employ Executive as Senior Vice President, General Counsel & Secretary, reporting directly to the Chief Executive Officer.  Executive shall be assigned such duties with regard to the business of the Company as are generally performed by an executive of the Company serving in such position, and such other duties as may from time to time be assigned to Executive by the Chief Executive Officer consistent with such position.

 

1.2 Executive agrees to devote his exclusive and full professional time and attention to his duties as an employee of the Company.  In addition, Executive agrees that he shall not render to others any service of any kind for compensation or engage in any other business activity including without limitation any involvement in any business in which Executive has any administrative or operating responsibility.  Subject to Section 4 hereof, Executive shall not be precluded from devoting reasonable periods of time required to manage his personal investments and participate in professional, educational, philanthropic, or community activities; provided that such activities do not interfere with Executive’s discharge of his duties to the Company.

 

1.3 Executive’s primary work location will be at the Company’s headquarters, which is currently in Covington, Kentucky (the metropolitan Cincinnati area).  However, it is expected that the Executive will be required to travel to other locations on a frequent basis in connection with his responsibilities under this Agreement.

 

SECTION 2 COMPENSATION, BENEFITS AND EXPENSES

 

2.1 BASE SALARY. During the Term, the Company shall pay to Executive a salary (“Base Salary”) at an annual rate of $400,000, payable in accordance with the regular payroll practices of the Company but not less frequently than monthly. Executive’s Base Salary may be reviewed annually by the Compensation and Incentive Committee of the Board (the “Compensation Committee”), and may be increased at the Compensation Committee’s discretion taking into consideration Executive’s performance, Company performance and general economic conditions.  Notwithstanding the foregoing, Executive’s Base Salary may be decreased only in accordance with a uniform reduction in base salaries applicable to all senior executives of the Company; provided that any such decrease is restored in the same manner as such decreases are restored to other senior executives of the Company.  The Base Salary as determined herein from time to time shall constitute Executive’s “Base Salary” for purposes of this Agreement.

 

2.2 INCENTIVE COMPENSATION. During the Term, Executive shall be eligible to participate in the Company’s Annual Incentive Plan for Senior Executive Officers (or successor plan; “AIP”) and such other bonus and annual incentive compensation plans as may be maintained by the Company for its executives.  Executive shall have the opportunity to earn an annual target bonus of at least 75% of Executive’s Base Salary.  Executive’s annual bonus (which may be greater or, except for the 2011 fiscal year, less than the target bonus percentage established above) to the extent earned and payable, shall be paid at such time or times as is provided under and otherwise in accordance with the terms of the AIP.  For the avoidance of doubt, for 2011, the bonus shall be no less than $300,000.

 

2.3 LONG TERM INCENTIVE COMPENSATION.  During the Term, Executive shall be eligible for annual long term incentive awards under the Company’s 2004 Stock and Incentive Plan or successor plans (“2004 Plan”) as determined by the Compensation, Nominating & Governance Committee consistent with its regular process in existence from time to time for determining awards for other senior executives of the Company that report directly to the Chief Executive Officer, which process may include, but is not limited to, varying awards based on individual performance.

 

2.4 SIGN-ON BONUS.  To partially compensate Executive for forfeitures he will incur upon termination of his current employment, and to offset additional expenses related to relocation, the Company will pay a one-time cash bonus of $150,000 to the Executive.  This bonus will be paid within the first month of employment.  In the event the Executive’s employment with the Company terminates as a result of a termination by the Company for Cause (as defined in Section 3.2) or by the Executive at any time prior to the 6-month anniversary of the Effective Date, the Executive shall be required to return a portion of the Sign-On Bonus equal to the Sign-On Bonus multiplied by the difference of one minus a fraction, the numerator of which is the number of completed months since the Effective Date and the denominator of which is 6.  Such amount shall be returned to the Company no later than 30 days following such termination date.

 

2.5 SIGN-ON STOCK AWARD.  On the Effective Date the Company shall grant to Executive, pursuant to the 2004 Plan, an award of 30,000 shares of restricted stock.  Such award will vest in four equal installments on the first four anniversaries of the Effective Date, provided that Executive is employed on each anniversary for such installment to so vest.  The award will provide that if Executive is terminated by the Company other than a Termination for Cause (notwithstanding the earlier expiration of the Term under Section 3.1 below) the Sign-On Stock Award shall become vested and unrestricted in full, and otherwise will have the same terms and conditions as apply to annual restricted stock awards most recently granted to senior executives.

 

2.6 REIMBURSEMENT OF BUSINESS EXPENSES. During the Term, the Company shall reimburse Executive for all authorized, ordinary and necessary business expenses incurred and substantiated by him in accordance with applicable Company policy.  In all events, any reimbursement made to Executive pursuant to this Section 2.6 shall be made not later than the end of the calendar year following the calendar year in which the related expense was incurred.

 

2.7 EXECUTIVE BENEFITS.  During the Term, Executive shall be entitled to participate in all employee benefit plans of the Company including thrift, profit sharing, executive severance, change in control, medical coverage, education, or other welfare benefits that the Company has adopted or may adopt, maintain or contribute to for the benefit of its senior executives in accordance with the terms of such plans and programs; provided that no such benefits shall duplicate any benefits provided directly under this Agreement, and nothing herein shall preclude the Company’s authority to amend or terminate any such plans at any time and from time to time.  To the extent changes are made to plans during the Term that reduce compensation or benefits specifically addressed in this Agreement, the terms of this Agreement will control for the remainder of the Term.  Executive shall be entitled to twenty-six (26) days of paid time off each calendar year, pro rated for 2011.

 

2.8 RELOCATION EXPENSES.

 

(a) Executive shall be entitled to reasonable temporary living expenses and all travel expenses incurred during transition for up to 6 months following the Effective Date (which may be extended at the sole discretion of the Company), and, without limiting the foregoing, in accordance with the Company’s policies and procedures governing relocation of executives.  Executive shall be entitled to reimbursement of all reasonable and customary out-of-pocket expenses associated with relocating Executive’s family from New York to the Cincinnati, Ohio area, including all closing costs associated with the sale of the residence in New York (including, but not limited to, real estate commission, survey, title insurance, attorney’s fees); all closing costs associated with the purchase of a residence in the Cincinnati area (including, but not limited to, inspections, attorney’s fees, survey, title insurance, and mortgage-related fees and expenses (including up to 1 point), processing fees, underwriting fees, application and appraisal fees); the packing and movement of household goods and vehicles; transportation and hotel and food expenses for Executive and his spouse associated with house-hunting trips to Cincinnati.  To the extent that any reimbursements under this Section 2.8 result in taxable income to Executive, then Executive shall be fully grossed-up for applicable federal, state and local taxes upon such reimbursements; provided, however, that the tax gross-up for travel expenses shall be limited to 12 round trips between New York and Cincinnati.

 

(b) The Company shall reimburse Executive for the difference, if any, between the average value of two appraisals on his current residence and the sale price on that residence.

 

SECTION 3 TERM; TERMINATION OF EMPLOYMENT

 

3.1 TERM.  The term of employment of Executive pursuant to this Agreement shall commence on the Effective Date and shall end on the earlier of the third anniversary of the Effective Date or the date the Agreement is terminated by either the Company or the Executive as set forth pursuant to Sections 3.2 through 3.6 hereof; provided, however, that if a Change in Control (as defined in Section 3.5 below) occurs prior to the third anniversary of the Effective Date, the Term will not end until the earlier of the third anniversary of such Change in Control or the date the Agreement is terminated pursuant to Sections 3.2 through 3.6 hereof.  Effective beginning with the third anniversary of the Effective Date (provided the Term has not been extended as described in the preceding sentence), Executive will be covered under any executive severance plan and/or executive change in control plan that applies generally to executive officers of the Company.  To the extent one or both plans are not effective as of the third anniversary of the Effective Date, the applicable provisions of Sections 3.2 through 3.6 shall continue to apply until the applicable executive severance and/or change in control plan has become effective.  Except as provided above, if Executive remains employed with the Company following the end of the Term, such employment shall continue on an “at will” basis.

 

3.2 TERMINATION FOR CAUSE.  The Company shall have the right to terminate this Agreement and Executive’s employment, by written notice to Executive, for any of the following causes (a  “Termination for Cause”):

 

(a) fraud or willful or intentional misrepresentation in connection with the Executive’s performance of his duties hereunder;

 

(b) the willful failure by the Executive to substantially perform his duties hereunder;

 

(c) the failure by the Executive to follow the lawful directives of the Chief Executive Officer and the Board;

 

(d) willful or intentional conduct by the Executive that is detrimental to the Company’s reputation, goodwill or business operations in any material respect;

 

(e) breach or threatened breach by the Executive of the restrictive covenants incorporated in Section 4 hereof;

 

(f) the Executive’s conviction for, or plea of nolo contendere to a felony or a violation of federal or state securities laws; or

 

(g) a material breach of the representations in Section 6.2 hereof.

 

In no event shall the Executive be considered to have been terminated for “Cause” unless the Company delivers a written notice of termination to the Executive identifying in reasonable detail the acts or omissions constituting “Cause” and the provision of this Agreement relied upon.  In the case where such acts or omissions are not capable of cure, the Executive’s termination will take effect upon his receipt of such notice.  In the case where such acts or omissions are capable of cure, the notice shall state the corrective action that the Executive must take to cure.  Executive’s termination will take effect 15 days following his receipt of such notice if such acts or omissions are not cured by Executive by such date, provided that if said cure reasonably requires more than fifteen (15) days to cure, Executive shall be granted a reasonable extension to effectuate said cure.  The Company may suspend the Executive’s employment or place him on leave of absence pending such cure, provided, however, such action shall not disempower Executive from taking the steps necessary to effectuate said cure.  For the avoidance of doubt, mere failure of the Company to achieve earnings goals shall not constitute “Cause.”

Upon any Termination for Cause, all payments, contributions and other benefits to Executive under Section 2 of this Agreement shall cease immediately, with the exception of reimbursement of authorized, ordinary and necessary business expenses already incurred, and any compensation and benefits already earned or vested as of that date.

 

3.3 DISABILITY, ILLNESS OR DEATH. If Executive is unable to perform his duties under this Agreement by reason of illness or other physical or mental disability, and such physical or mental disability has continued for 90 days or would be reasonably expected to continue for at least 90 days, then this Agreement and Executive’s employment shall be deemed terminated (“Termination for Disability”). Upon Termination for Disability, Executive shall continue to receive the compensation described in Section 3 hereof for a period of three (3) months after the date of termination reduced by any disability payment to which Executive may be entitled in lieu of such compensation but not by any disability payment for which Executive has privately contracted and paid the premiums.  If Executive should die before the termination of this Agreement, all payments, contributions and benefits to Executive under Section 2 of this Agreement shall terminate upon the date of his death, with the exception of reimbursement of authorized, ordinary and necessary business expenses already incurred, and any compensation and benefits already earned or vested as of that date.  The benefits provided in this Section 3.3 pursuant to a Termination for Disability shall constitute “disability pay” within the meaning of Treasury Regulation Section 31.3121(v)(2) -1(b)(4)(iv)(C).

 

3.4 TERMINATION FOR REASONS OTHER THAN WITH CAUSE. The Company shall have the right to terminate this Agreement and Executive’s employment, other than a Termination for Cause, upon ten (10) days’ written notice to Executive.  If the Company terminates this Agreement and Executive’s employment other than a Termination for Cause (and other than a Termination for Disability), subject to Section 3.8:

 

(a) Executive shall receive as severance pay continued payment of his Base Salary for twelve (12) months, such payment to be made in accordance with the Company’s standard payroll practices;

 

(b) Executive shall receive a pro rata portion of the Executive’s annual AIP bonus under Section 2.2 for the fiscal year in which the Executive’s termination occurs, payable at the time that annual bonuses are paid to other senior executives, determined by multiplying (i) the amount Executive would have received based upon actual performance of the Company had employment continued through the end of the fiscal year by (ii) the fraction, the numerator of which is the number of days that Executive was employed by the Company during the fiscal year in which Executive’s termination occurred and the denominator of which is 365 (“Pro Rata Bonus”);

 

(c) Executive shall receive any unpaid annual bonus earned in accordance with the terms of the AIP with respect to any fiscal year ending on or preceding the date of termination, payable when annual bonuses are paid to senior executives for such year;

 

(d) To the extent not fully vested, on the date of termination, the remaining installment(s) of the Sign-On Stock Award shall become vested and unrestricted in full;

 

(e) To the extent not issued or paid, the guaranteed 2011 bonus shall be paid when 2011 bonuses are paid to senior executives of the Company; and

 

(f) Executive shall be entitled to continued participation for twelve (12) months in the Company’s medical, dental and vision welfare benefit plans which cover Executive (and his eligible dependents) upon the same terms and conditions in effect for active employees of the Company subject to Executive’s continued co-payment of premiums for such coverage, to the extent that the terms of such plans permit Executive’s continued participation during such period; provided, in the event Executive obtains other employment that offers substantially similar or more favorable benefits, determined on a benefit-by-benefit and coverage-by-coverage basis, such continuation of benefits by the Company shall immediately cease.  The continuation of medical, dental and vision benefits under this Section 3.4 shall be conterminous with, and reduce the period of coverage and count against, Executive’s right to healthcare continuation benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

 

In the event of a termination of Executive by the Company other than a Termination for Cause under this Section 3.4, Executive acknowledges that the Company shall have no obligations or liability to him whatsoever other than the obligations set forth in this Section 3.4.  Subject to Section 3.8 and Section 6.14, the first such severance payment under Section 3.4(a) shall be made not later than thirty (30) days after Executive’s Separation from Service occurs. Executive’s right to receive such severance payments under this Section 3.4 or Section 3.5, as may apply, shall be treated as a right to receive a series of separate payments under Treasury Regulation Section 1.409A-2(b)(2)(iii). As used under this Agreement, a “Separation from Service” occurs when Executive dies, retires, or otherwise has a termination of employment with the Company that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.

 

Except as provided in Section 3.5 below, this Section 3.4 shall govern the payment of severance for any termination by the Company other than for Cause (and other than a Termination for Disability) that occurs prior to a Change in Control or after the twenty-four (24) month period following the occurrence of a Change in Control.

 

3.5 TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.

 

(a) The Company shall have the right to terminate this Agreement and Executive’s employment in the event of or following a Change in Control (as defined in the 2004 Plan as in effect on the date such Change in Control event occurs) of the Company.  If the Company terminates this Agreement and Executive’s employment other than a Termination for Cause (and other than a Termination for Disability) at any time upon or during the twenty-four (24) month period following the occurrence of a Change in Control, subject to Section 3.8:

 

(i) Executive shall receive as severance pay a cash lump equal to one and one-half (1.5) times the Executive’s Base Salary.  Anything in the foregoing to the contrary notwithstanding, if the Change in Control is not also a “change in control event” (as defined in Treasury Regulation §1.409A-3(i)(5)), the severance pay described in this subsection (i) will be paid in accordance with the Company’s standard payroll practices in the same manner as under Section 3.4(a);

 

(ii) Executive shall receive a Pro Rata Bonus;

 

(iii) Executive shall receive any unpaid annual bonus earned in accordance with the terms of the AIP with respect to any fiscal year ending on or preceding the date of termination, payable when annual bonuses are paid to senior executives for such year;

 

(iv) To the extent not fully vested, on the date of termination, the remaining installment(s) of the Sign-On Stock Award shall become vested and unrestricted in full;

 

(v) To the extent not issued or paid, the guaranteed 2011 bonus shall be paid when 2011 bonuses are paid to senior executives of the Company; and

 

(vi) Executive shall be entitled to continued participation for eighteen (18) months in the Company’s medical, dental and vision welfare benefit plans which cover Executive (and his eligible dependents) upon the same terms and conditions in effect for active employees of the Company subject to Executive’s continued co-payment of premiums for such coverage, to the extent that the terms of such plans permit Executive’s continued participation during such period; provided, in the event Executive obtains other employment that offers substantially similar or more favorable benefits, determined on a benefit-by-benefit and coverage-by-coverage basis, such continuation of benefits by the Company shall immediately cease.  The continuation of medical, dental and vision benefits under this Section 3.5 shall be conterminous with, and reduce the period of coverage and count against, Executive’s right to healthcare continuation benefits under COBRA.  If the Company cannot provide such coverage to Executive, it shall pay him the applicable COBRA premium each month (without any tax gross-up) as if coverage were being provided for such period of time when the coverage cannot be so provided.

 

(vii) This Section 3.5 shall also apply to a termination by the Company other than for Cause within three (3) months before the occurrence of a Change in Control at the request of a third party (directly or indirectly) that consummates such Change in Control.

 

In the event of a termination of Executive by the Company other than a Termination for Cause upon or during the twenty-four (24) month period following the occurrence of a Change in Control, Executive acknowledges that the Company shall have no obligations or liability to him whatsoever other than the obligations set forth in this Section 3.5 or in Section 3.7. Subject to Section 3.8 and Section 6.14, the severance payment under Section 3.5(a)(i) shall be made not later than thirty (30) days after Executive’s Separation from Service occurs.

 

(b) In the event that the Company, upon or during the twenty-four (24) month period  following a Change in Control, shall commit a material breach of its obligations under this Agreement, Executive gives notice to the Company from Executive specifying the nature of such breach within thirty (30) days after the occurrence of such material breach, and the Company shall not have remedied such breach within thirty (30) days after receipt of such notice, Executive shall have the right and option to terminate this Agreement and his employment within ninety (90) days thereafter, which termination shall be treated as a termination other than a Termination for Cause (and other than a Termination for Disability) under Section 3.5(a).   For purposes of this Section 3.5(b), a “material breach of its obligations” by the Company shall mean:  (i) the assignment to Executive of any duties inconsistent with his position, authority or responsibilities as contemplated by Section 1.1 hereof, or any action by the Company that results in a diminution in such position, authority or responsibilities (excluding for these purposes an isolated and insubstantial action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by Executive); (ii) any failure by the Company to comply with the compensation and benefits provisions of Section 2 hereof; and (iii) the relocation of the Company’s principal executive offices to a location more than 30 miles from its current location in Covington, Kentucky.

 

3.6 VOLUNTARY TERMINATION. Executive may voluntarily terminate the Term and Executive’s employment hereunder (other than as provided under Section 3.5(b)) by giving the Company 60 days advance written notice of such termination.  In the event Executive voluntarily terminates his employment for any reason during the Term (other than as provided under Section 3.5(b)), all payments to Executive under Section 2 shall cease, with the exception of reimbursement of authorized, ordinary and necessary business expenses already incurred, and any compensation and benefits already earned or vested as of that date.

 

3.7 CHANGE IN CONTROL ADJUSTMENTS.  The Executive will not be entitled to any payment (including no tax gross-up) in respect of any taxes he may owe pursuant to Section 4999 of the Internal Revenue Code.  In the event that any Change in Control benefits or other benefits otherwise payable to the Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) but for this Section 3.7, would be subject to the excise tax imposed by Section 4999 of the Code, then any Change in Control benefits and other benefits hereunder shall be either (x) delivered in full, or (y) delivered as to such lesser extent which would result in no portion of such benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999 of the Code (and any equivalent  state or local excise taxes), results in the receipt by the Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.  Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 3.7 will be made in writing by independent public accountants as the Company and the Executive agree (the “Accountants”), whose determination will be conclusive and binding upon the Executive and the Company for all purposes.  For purposes of making the calculations required by this Section 3.7, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Executive agree to furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this provision.  The Company will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision.  Any reduction in payments and/or benefits required by this provision shall occur in the following order: (1) reduction of cash payments; (2) reduction of vesting acceleration of equity awards; and (3) reduction of other benefits paid or provided to the Executive.  In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant for the Executive’s equity awards.  If two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis.

 

3.8 RELEASE; COMPLIANCE WITH COVENANTS; RESIGNATIONS.  Any payments or benefits made or provided pursuant to Section 3.4 or Section 3.5 hereof are subject to Executive’s:

 

(a) Compliance with the provisions of Section 4 hereof, other than inadvertent, immaterial violations of such provisions that are cured promptly upon written notice of such violation delivered to Executive by the Company;

 

(b) Delivery to the Company of an executed general release of all claims against the Company (other than claims for indemnification, to enforce the provisions of Section 3.4, Section 3.5 or Section 6, and claims for earned vested amounts under any employee benefit plan and other claims that cannot by law be waived) within 30 days after Executive’s termination date in accordance with the Company’s usual form of release of claims then in use for executive separations; and

 

(c) Delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans.

 

Notwithstanding the due date of any post-employment payments, any amounts due following a termination under this Agreement shall not be due until after the expiration of any revocation period applicable to the general release, that Executive has not revoked, and any such amounts then due shall be paid (or commence being paid) to Executive within forty-five (45) days after the date of termination or such later date as may be required under Section 409A.  In the event that the Executive dies before all payments pursuant to Section 3.4 or Section 3.5 have been paid, all remaining payments shall be made to the beneficiary specifically designated by the Executive in writing prior to his death, or, if no such beneficiary was designated (or the Company is unable in good faith to determine the beneficiary designated), to the personal representative of his estate.

 

SECTION 4 RESTRICTIVE COVENANTS

 

4.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION.

 

(a) Executive acknowledges that during the course of Executive’s employment with the Company, Executive has had or will have access to, and knowledge of, certain information that the Company considers confidential, and the release of such information to unauthorized persons would be extremely detrimental to the Company.  As a consequence, the Executive hereby agrees and acknowledges that the Executive owes a duty to the Company not to disclose, and agrees that without the prior written consent of the Company, at any time, either during or after the Executive's employment with the Company, the Executive will not communicate, publish or disclose, to any person anywhere or use, any Confidential Information (as hereinafter defined), except as may be necessary or appropriate to conduct the Executive's duties hereunder, provided the Executive is acting in good faith and in the best interest of the Company, or as may be required by law or judicial process.  The Executive will use reasonable best efforts at all times to hold in confidence and to safeguard any Confidential Information from falling into the hands of any unauthorized person.  The Executive will return to the Company all Confidential Information in the Executive's possession or under the Executive's control whenever the Company shall so request, and in any event will promptly return all such Confidential Information if the Executive's relationship with the Company is terminated for any reason and will not retain any copies thereof except that Executive may retain copies of his own employment information relating to the terms, conditions, benefits and performance of his employment pursuant to this Employment Agreement.  For purposes hereof, the term "Confidential Information" shall mean any information used by or belonging or relating to any member of the Company that is not known generally to the industry in which the Company is or may be engaged and which the Company maintains on a confidential basis, including, without limitation, any and all trade secrets and proprietary information, information relating to the Company’s businesses and services, Executive information, customer lists and records, business processes, procedures or standards, know-how, manuals, business strategies, records, financial information, in each case whether or not reduced to writing or stored electronically, as well as any information that any member of the Company advises the Executive should be treated as confidential information.  Further, Confidential Information shall not include information which is independently obtained from a third party whose disclosure violates no duty of confidentiality to the Company or which is or becomes publicly available through no fault of Executive.

 

(b) The Executive acknowledges and agrees that all analyses, reports, proposals, software, documentation, machine code and other intellectual property owned by the Company (collectively, the “Company’s Intellectual Property”) are and shall remain the sole and exclusive property of the Company, or as otherwise may be noted, and that in no event shall the Executive have any ownership interest therein.  In that connection, the Executive hereby irrevocably assigns, transfers and conveys to the Company all of his right, title and interest, if any, in and to the Company’s Intellectual Property, including any rights the Executive may have to patent, copyright, trade secret or other proprietary rights in the Company’s Intellectual Property.  The Executive agrees to assist the Company in every proper way to obtain and from time to time enforce patents, copyrights, trade secrets and all other proprietary and intellectual property rights and interest in and to all the Company’s Intellectual Property in any and all countries, and to that end the Executive will execute and deliver all documents and other papers and materials for use in applying for, obtaining and enforcing such patents, copyrights, trademarks and other proprietary and intellectual property rights and interests, as the Company may request in writing, together with any assignments thereof to the Company or persons designated by it.  The Executive agrees that the Company is appointed as his attorney to execute all such instruments and do all such things for the purpose of assuring to the Company (or its designee) the full benefit of the provisions of this paragraph.

 

4.2 NONINTERFERENCE WITH CLIENTS OR EXECUTIVES.  The Executive agrees that, during the period of Executive's employment with the Company and for a period of twelve (12) months from the date of termination of employment for any reason, whether voluntary or involuntary (the “Restricted Period”), the Executive shall not, on the Executive's own behalf or on behalf of any other person or entity, (a) solicit or in any manner influence or encourage any current or prospective client, customer, executive or other person or entity that has a business relationship with the Company, to terminate or limit in any way their relationship with the Company, or interfere in any way with such relationship, and/or (b) solicit or in any manner influence or discourage any prospective client or customer that was contacted by the Company within the twelve-month period preceding Executive’s date of termination from entering into a business relationship with the Company.

 

4.3 NONCOMPETITION.  The Executive agrees that, during the Restricted Period, the Executive shall neither directly nor indirectly, engage or hold an interest in any business engaged in the Business in those geographic areas in which the Company conducts the Business, nor directly or indirectly, have any interest in, own, manage, operate, control, be connected with as a stockholder (other than as a stockholder of less than five percent (5%) of the issued and outstanding stock of a publicly held corporation), joint venturer, officer, director, partner, employee or consultant, or otherwise engage or invest or participate in the Business in those geographic areas in which the Company or its subsidiaries engage in the Business.  For purposes of this Agreement, "Business" shall mean (i) the distribution of pharmaceuticals, related pharmacy consulting, data management services and medical supplies to nursing homes and long-term care facilities, (ii) provision of comprehensive product development and research services to companies in the pharmaceutical, biotechnology, medical device and diagnostics industries and (iii) any other business in which the Company or its subsidiaries are engaged in during the Restricted Period.

 

4.4 ENFORCEMENT.  The Executive acknowledges and agrees that the provisions of this Section 4 are reasonable and necessary for the successful operation of the Company.  The Executive further acknowledges that if he breaches any provision of this Section 4, the Company will suffer irreparable injury.  It is therefore agreed that the Company shall have the right to enjoin any such breach or threatened breach, if ordered by a court of competent jurisdiction.  The existence of this right to injunctive and other equitable relief shall not limit any other rights or remedies that the Company may have at law or in equity including, without limitation, the right to monetary and compensatory damages.  In addition, the Executive further acknowledges that if he breaches any provision of this Section 4 following his termination of employment with the Company, the Executive will forfeit the right to any unpaid severance or other payments due under this Agreement, but Executive shall not forfeit payment of earned wages as defined by applicable law.  If any provision of this Section 4 is determined by a court of competent jurisdiction to be unenforceable in the manner set forth herein, the Executive and the Company agree that it is the intention of the parties that such provision should be enforceable to the maximum extent possible under applicable law.  If any provisions of this Section 4 are held to be invalid or unenforceable, such invalidation or unenforceability shall not affect the validity or enforceability of any other provision of this Section 4 (or any portion thereof).  For purposes of the restrictions of this Section 4, references to the “Company” include reference to its subsidiaries.

 

SECTION 5 INDEMNIFICATION

 

The Company shall indemnify Executive to the fullest extent permitted by the Company’s charter, by-laws and applicable law.  The Company shall cover Executive under any contract of directors and officers liability insurance both during and, while potential liability exists, after the term of this Agreement and Executive’s employment to the same extent as the Company covers its other executive officers and directors.

 

SECTION 6 MISCELLANEOUS PROVISIONS

 

6.1 ASSIGNMENT AND SUCCESSORS.  The rights and obligations of the Company under this Agreement may be freely assigned (including, but not limited to assignment to an affiliate of the Company for purposes of payroll) and shall inure to the benefit of and be binding upon the successors and assigns of the Company.  Executive’s obligation to provide services hereunder may not be assigned to or assumed by any other person or entity.

 

6.2 REPRESENTATIONS OF EXECUTIVE.  The Executive represents and warrants that his entering into this Agreement and his employment with the Company will not be in breach of any agreement with any current or former employer and that he is not subject to any other restrictions on solicitation of clients or customers or competing against another entity.  The Executive understands that the Company has relied on this representation in entering into this Agreement.

 

6.3 NOTICES. All notices, requests, demands or other communications under this Agreement shall be in writing and shall only be deemed to be duly given (a) on the date of delivery if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile, (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 the Company, to:

Omnicare, Inc.

100 East RiverCenter Boulevard

Covington, Kentucky 41011

ATT:  Senior Vice President, Human Resources

If to Executive, to his last known address shown on the payroll records of the Company

 

6.4 SEVERABILITY. Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this paragraph, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.

 

6.5 COMPLETE AGREEMENT.  This Agreement contains the entire agreement between the parties and supersedes previous verbal and written discussions, negotiations, agreements or understandings between the parties.

 

6.6 AMENDMENT AND WAIVER. This Agreement may be modified, amended or  waived only by a written instrument signed by all the parties hereto. No waiver or breach of any provision hereof shall be a waiver of any future breach,  whether similar or dissimilar in nature.

 

6.7 APPLICABLE LAW.  This Agreement has been made and its validity, performance and effect shall be determined in accordance with the laws of the State of Kentucky.

 

6.8 CLAWBACK.  In addition to any compensation recovery (clawback) which may be required by law and regulation, Executive acknowledges and agrees that any compensation paid or awarded to Executive in connection with his employment with the Company shall be subject to any clawback requirements as set forth in the Company’s corporate governance guidelines or policies and to any similar or successor provisions as may be in effect from time to time.

 

6.9 CONSENT TO JURISDICTION. The parties hereby (a) agree that any  suit, proceeding or action at law or in equity (hereinafter referred to as an “Action”) arising out of or relating to this Agreement must be instituted in state or federal court located within Kenton County, Kentucky, (b) waive any objection which he or it may have now or hereafter to the laying of the venue of any such Action, (c) irrevocably submit to the jurisdiction of any such court in any such Action, and (d) hereby waive any claim or defense of inconvenient forum. The parties irrevocably agree that service of any and all process which may be served in any such Action may be served upon him or it by registered mail to the address referred to in Section 6.2 hereof or to such other address as the parties shall designate in writing by notice duly given in accordance with Section 6.2 hereof and that such service shall be deemed effective service of process upon the parties in any such Action. The parties irrevocably agree that any such service of process shall have the same force and validity as if service were made upon him or it according to the law governing such service in the State of Kentucky, and waives all claims of error by reason of any such service.

 

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

 

6.11 INTERPRETATION. The headings contained in this Agreement are for reference purposes only and shall not affect in any ways the meaning or interpretation of this Agreement. The language in all parts of this Agreement shall in all cases be construed according to its fair meaning, and not strictly for or against any party hereto. In this Agreement, unless the context otherwise requires, the masculine, feminine and neuter genders and the singular and the plural include one another.

 

6.12 NON-WAIVER OF RIGHTS AND BREACHES. No failure or delay of any  party herein in the exercise of any right given to such party hereunder shall constitute a waiver thereof unless the time specified herein for the exercise of such right has expired, nor shall any single or partial exercise of any right preclude other or further exercise thereof or of any other right. The waiver of a party hereto of any default of any other party shall not be deemed to be a waiver of any subsequent default or other default by such party.

 

6.13 NO MITIGATION OR OFFSET.  Except as provided in Sections 3.4(f) and 3.5(a)(vi) relating to future benefit eligibility, Executive shall not be required to seek other employment or to reduce any severance benefit payable to him under Section 3 hereof, and no such severance benefit shall be reduced on account of any compensation received by Executive from the Company or any other employment. The Company’s obligations to Executive hereunder, including, without limitation, any obligation to provide severance benefits, shall not be subject to set-off or counterclaim in respect of any debts or liabilities of Executive to the Company.

 

6.14 SURVIVAL.  The provisions of Section 4 shall survive the termination the Agreement (and any concurrent or subsequent termination of Executive’s employment).  The provisions of Section 3 shall survive any termination of the Executive’s employment during the Term of the Agreement.

 

6.15 SUPERSEDING AGREEMENT.  In the event of any conflict between the terms of this Agreement and the terms of any Company plan, program or policy, the terms of this Agreement shall control to the extent such terms are more favorable to the Executive; provided that the Company shall have an appropriate opportunity to conform the terms of any such conflicting plan, program or policy to the terms of this Agreement.

 

6.16  SECTION 409A.

 

Anything in this Agreement to the contrary notwithstanding:

 

(a) It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code and all regulations, guidance and other interpretive authority issued thereunder (“Code Section 409A”) so as not to subject Executive to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Executive.

 

(b) To the extent that the reimbursement of any expenses or the provision of any in-kind benefits under this Agreement is subject to Code Section 409A, (i) the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided, during any one calendar year shall not affect the amount of such expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (ii) reimbursement of any such expense shall be made by no later than December 31 of the year following the calendar year in which such expense is incurred; and (iii) Executive’s right to receive such reimbursements or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

(c) If Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A -1(i) as of the date of Executive’s Separation from Service, then any payment or benefit pursuant to Sections 3.4(a) or 3.5(a)(i) or pursuant to any other provision of this Agreement on account of Executive’s Separation from Service, to the extent such payment (after taking into account all exclusions applicable to such payment under Code Section 409A) is properly treated as deferred compensation subject to Code Section 409A, shall not be made until the first business day after (i) the expiration of six (6) months from the date of Executive’s Separation from Service, or (ii) if earlier, the date of Executive’s death (the “Delayed Payment Date”). On (or within five business days after) the Delayed Payment Date, there shall be paid to Executive or, if Executive has died, to the representative of Executive’s estate, in a single cash lump sum, an amount equal to the aggregate amount of the payments delayed pursuant to the preceding sentence, plus interest thereon, compounded monthly, at an annual rate equal to the Delayed Payment Interest Rate (as defined below) computed from the date on which each such delayed payment otherwise would have been made to Executive until the Delayed Payment Date. For purposes of the foregoing, the “Delayed Payment Interest Rate” shall mean the highest interest rate, as of the first day of the month in which the Separation from Service occurs, payable by the Company on its outstanding publicly-traded debt (or if no such public debt is then outstanding, the rate at which the Company could then borrow from its primary bank lender) plus 100 basis points.

 

6.17 DRUG SCREEN; BACKGROUND CHECKS.  This Agreement is contingent upon the Executive’s successful completion of a pre-employment drug screen and a background check.  In the event that, for any reason, such drug screen and/or background check shall not be successfully completed, this Agreement shall be null and void and the Company and the Executive shall have no obligations hereunder.

 

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

 

	  	
OMNICARE, INC.

 

	  	
/s/ John L. Workman

	  	
By:  John L. Workman

	  	
Title:  President and Chief Financial Officer

 

 

	  	
/s/ Alexander M. Kayne

	  	
Alexander M. Kayne

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