Document:

ex10-1.htm

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (“Agreement”), entered into as of December 12, 2012 (the “Effective Date”), by and between Impax Laboratories, Inc., a Delaware corporation (the “Company”), and Bryan M. Reasons (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive possesses unique personal knowledge, experience and expertise concerning the business and operations conducted by the company;

 

WHEREAS, the Company desires to continue the employment of the Executive, and the Executive desires to continue to be employed by the Company, upon the terms and subject to the conditions set forth in this Agreement; and

 

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

 

NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

	
1.

	
EMPLOYMENT AND DUTIES

 

1.1           Term of Employment.  The Executive’s initial term of employment under this Agreement shall commence on the Effective Date and shall continue until December 31, 2013 (the “Initial Term”), unless further extended or earlier terminated as provided in this Agreement.  This Agreement will automatically be renewed for single one-year periods unless written notice of non-renewal is provided by either party at least 90 days prior to the end of the Initial Term or the successive one-year period then in effect or unless earlier terminated as provided in this Agreement.  Neither non-renewal of this Agreement for additional periods after December 31, 2013, nor expiration of this Agreement as a result of such non-renewal, shall, by itself, result in termination of Executive’s employment.  The period of time between the Effective Date and the termination of the Executive’s employment under this Agreement or the expiration of this Agreement, whichever is earlier, shall be referred to herein as the “Term.”

 

1.2           General.

 

1.2.1        During the Term, the Executive shall have the title of Senior Vice President, Finance and Chief Financial Officer of the Company and shall have the authorities, duties and responsibilities of the principal financial and/or accounting officer of the Company and such other authorities, duties and responsibilities as are prescribed by the Company’s by-laws, or as may from time to time be delegated to him by the Board of Directors of the Company (the “Board”) or the Chief Executive Officer of the Company.  The Executive shall faithfully and diligently discharge his duties hereunder and use his best efforts to implement the policies established by the Board from time to time.  During the Term, the Executive shall report to the Chief Executive Officer.

 

  

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1.2.2        The Executive shall devote all of his business time, attention, knowledge and skills faithfully, diligently and to the best of his ability, in furtherance of the business and activities of the Company; provided, however, that nothing in this Agreement shall preclude the Executive from devoting reasonable periods of time required for:

 

(i)            serving as a director or member of a committee of up to two (2) organizations or corporations that do not, in the good faith determination of the Board, compete with the Company or otherwise create, or could create, in the good faith determination of the Board, a conflict of interest with the business of the Company;

 

(ii)           delivering lectures, fulfilling speaking engagements, and any writing or publication relating to his area of expertise; provided, however, that any fees, royalties or honorariums received therefrom shall be promptly turned over to the Company;

 

(iii)           engaging in professional organization and program activities;

 

(iv)          managing his personal passive investments and affairs; and

 

(v)           participating in charitable or community affairs;

 

provided that such activities do not materially, individually or in the aggregate, interfere with the due performance of his duties and responsibilities under this Agreement or create a conflict of interest with the business of the Company, as determined in good faith by the Board.

 

1.2.3        The Executive shall obtain a comprehensive medical examination every two years during the Term, and the Company shall reimburse the Executive the cost thereof to the extent not reimbursed by health insurance.

 

1.3           Reimbursement of Expenses.  During the Term, the Company shall pay the reasonable expenses incurred by the Executive in the performance of his duties hereunder, including, without limitation, those incurred in connection with business related travel or entertainment, or, if such expenses are paid directly by the Executive, the Company shall promptly reimburse him for such payments, provided that the Executive properly accounts for such expenses in accordance with the Company’s business expense reimbursement policy.  To the extent any such reimbursements (and any other reimbursements of costs and expenses provided for herein) are includable in the Executive’s gross income for Federal income tax purposes, all such reimbursements shall be made no later than March 15 of the calendar year next following the calendar year in which the expenses to be reimbursed are incurred.

 

	
2.

	
COMPENSATION

 

2.1           Base Salary.  During the Term, the Executive shall be entitled to receive a base salary at the annual rate of $385,000.00, subject to increase or decrease, as determined by the Board or its Compensation Committee from time to time in its discretion, payable in accordance with the payroll practices of the Company (the “Base Salary”).

 

  

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2.2           Incentive Bonuses.  In addition to the Base Salary, during the Term the Executive shall participate in the Company’s management bonus program whereby the Executive will be eligible to receive an annual cash incentive bonus based upon a percentage of the Base Salary and attainment of goals established in writing by the Board or its Compensation Committee at the beginning of each year (the “Incentive Bonus”) for each completed calendar year (subject to Section 5.4 hereof) of service with the Company.  Such bonus shall be paid within 2-1/2 months following the end of the calendar year to which it relates.  The Executive’s potential bonus for 2012 is targeted at 50% of the Base Salary and potentially up to 75% of the Base Salary, and for 2013 is targeted at 60% of the Base Salary and potentially up to 90% of the Base Salary, in each case, depending upon the achievement of certain business and individual objectives and criteria for each period.

 

2.3           Options and Stock Awards.  During the Term, the Executive shall be eligible to receive such other grants of stock options and restricted stock in such amounts and subject to such terms as determined by the Compensation Committee in its sole discretion.

 

2.4           Relocation Allowance.  The Company shall pay the Executive a relocation allowance in the gross amount of $130,000.00, less all applicable taxes and other required withholdings, which may be used toward any and all expenses that the Executive may incur in moving to the Bay Area in California.  The Company shall pay such allowance as follows: (i) $65,000.00 within thirty (30) days following the Effective Date, and (ii) the remaining $65,000.00 on the first payroll date following the Executive’s relocation to the Bay Area as demonstrated by delivery to the Company of satisfactory proof of a permanent move; provided, however, that (i) if within one (1) year of the Effective Date the Executive voluntarily terminates his employment without Good Reason or the Company terminates the Executive’s employment for Cause (as such terms are defined below), then the Executive shall repay to the Company the full amount of the relocation allowance received, and (ii) if such an event as described in subparagraph (i) above occurs after the first anniversary of the Effective Date and prior to the second anniversary of the Effective Date, then the Executive shall repay to the Company the second of the relocation allowance payments received.  If either relocation allowance is required to be repaid pursuant to the proviso in the preceding sentence, the Executive shall repay the applicable relocation allowance to the Company within thirty (30) days of the Executive’s last day of employment.

 

2.5           Home-Finding Trips. The Company will reimburse the Executive for reasonable and appropriate expenses for two home-finding trips during the six (6) months following the Effective Date, upon proper accounting for such expenses. Home-finding trips will be limited to no more than a combined total of 8 days.

 

2.6           Reimbursement of Temporary Living Expenses.  Pending acquisition of a permanent residence in California’s Bay Area, the Company shall reimburse the Executive up to $3,000.00 per month for temporary living expenses for up to a period of eight (8) months following the Effective Date, upon proper accounting for such expenses.  Such reimbursements will cease once the Executive becomes eligible to receive the second relocation allowance payment as set forth in Paragraph 2.4 above, or after a period of eight (8) months, whichever occurs first.

 

  

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2.7           Additional Compensation.  During the Term, in addition to the foregoing, the Executive shall be eligible to receive such other compensation as may from time to time be awarded him by either the Board or the Compensation Committee in its sole discretion.

 

	
3.

	
PLACE OF PERFORMANCE

 

In connection with his employment by the Company, the Executive shall be based at the Company’s principal executive offices in Hayward, California.

 

	
4.

	
EMPLOYEE BENEFITS

 

During the Term, the Executive shall be entitled to paid time off generally made available to executive personnel of the Company and to participate in and have the benefit of all group life, disability, hospital, surgical and major medical insurance plans and programs and other employee benefit plans and programs as generally are made available to executive personnel of the Company, as such benefit plans or programs may be amended or terminated in the sole discretion of the Board and with the concurrence of the Compensation Committee, from time to time.

 

	
5.

	
TERMINATION OF EMPLOYMENT

 

5.1           General.  The Executive’s employment under this Agreement may be terminated without any breach of this Agreement only on the following circumstances:

 

5.1.1        Death.  The Executive’s employment under this Agreement shall terminate upon his death.

 

5.1.2        Disability.  If the Executive suffers a Disability (as defined below), the Company may terminate the Executive’s employment under this Agreement upon 30 days prior written notice; provided that the Executive has not returned to full time performance of his duties during such 30-day period.  For purposes of this Agreement, “Disability” shall mean the Executive’s inability to perform his duties and responsibilities hereunder, with or without reasonable accommodation, due to any physical or mental illness or incapacity, which condition either (i) has continued for a period of 180 days (including weekends and holidays) in any consecutive 365-day period, or (ii) is projected by the Board in good faith after consulting with a doctor selected by the Company and consented to by the Executive (or, in the event of the Executive’s incapacity, his legal representative), such consent not to be unreasonably withheld, that the condition is likely to continue for a period of at least six consecutive months from its commencement.

 

5.1.3        Good Reason.  The Executive may terminate his employment under this Agreement for Good Reason (as defined below) at any time on or prior to the 60th day after the occurrence of any of the Good Reason events set forth in the following sentence.  For purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent and which is not cured by the Company upon written notice by the Executive, such notice to have been provided by the Executive within 30 days of any such event having occurred:

 

  

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(i)            any action or inaction by the Company constituting a material breach of the Agreement by the Company;

 

(ii)           a material diminution of the authorities, duties or responsibilities of the Executive set forth in Section 1.2 above (other than temporarily while the Executive is physically or mentally incapacitated and unable to properly perform such duties, as determined by the Board in good faith);

 

(iii)          the loss of any of the titles of the Executive with the Company set forth in Section 1.2 above;

 

(iv)          a material reduction by the Company in the Base Salary or in any of the percentages of the Base Salary payable as an Incentive Bonus, but, except in the case of a reduction following a Change in Control (as defined below), not including (a) a reduction in the Base Salary or in any of the percentages of the Base Salary payable as an Incentive Bonus which is consistent with the reduction in the Base Salary or in any of the percentages of the Base Salary payable as an Incentive Bonus imposed on all senior executives of the Company or (b) a reduction in the Base Salary or in any of the percentages of the Base Salary payable as an Incentive Bonus based on the results of peer benchmark data obtained by the Board and after approval of the Board;

 

(v)           the relocation of the Executive to an office more than 50 miles from its current Hayward location;

 

(vi)          the assignment to the Executive of duties or responsibilities that are materially inconsistent with any of his duties and responsibilities set forth in Section 1.2 hereof;

 

(vii)         a material change in the reporting structure set forth in Section 1.2.1 hereof; or

 

(viii)        the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor in connection with a sale or other disposition by the Company of all or substantially all of the Company’s assets or businesses within 10 days after such sale or other disposition.

 

5.1.4        Without Good Reason.  The Executive may voluntarily terminate his employment under this Agreement without Good Reason upon written notice by the Executive to the Company at least 60 days prior to the effective date of such termination (which termination the Company may, in its sole discretion, make effective earlier than the date set forth in the Notice of Termination (as defined below)).

 

5.1.5        Cause.  The Company may terminate the Executive’s employment under this Agreement at any time for Cause (as defined below).  For purposes of this Agreement, termination for “Cause” shall mean termination of the Executive’s employment because of the occurrence of any of the following as determined in good faith by the Board:

 

  

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(i)            the willful and continued failure by the Executive to substantially perform his obligations under this Agreement (other than any such failure resulting from the Executive’s incapacity due to a Disability); provided, however, that the Company shall have provided the Executive with a Notice of Termination specifying such failure and the Executive shall have been afforded at least 15 days within which to cure same;

 

(ii)           the indictment of the Executive for, or his conviction of or plea of guilty or nolo contendere to, a felony or any other crime involving moral turpitude or dishonesty;

 

(iii)          the Executive’s willful misconduct in the performance of his duties hereunder (including theft, fraud, embezzlement, and securities law violations or violation of the Company’s Code of Conduct or other written policies); or

 

(iv)          the Executive’s willful misconduct other than in the performance of his duties for the Company (including theft, fraud, embezzlement, and securities law violations) that is actually or potentially materially injurious to the Company, monetarily or otherwise.

 

For purposes of this Section 5.1.5, no act or failure to act on the part of the Executive shall be considered “willful,” unless done, or omitted to be done, without reasonable belief that his action or omission was in, or not opposed to, the best interest of the Company (including its reputation).  Prior to any termination for Cause, the Company shall provide the Executive with a Notice of Termination specifying the event constituting Cause and shall give the Executive the opportunity to appear before the Board to present his views on the Cause event.  If, after such hearing, the majority of the full Board (excluding the Executive) does not support such termination, the Notice of Termination shall be rescinded.  After providing the notice in the foregoing sentence, the Board may suspend the Executive with full pay and benefits until a final determination pursuant to this Section has been made.

 

5.1.6        Without Cause.  The Company may terminate the Executive’s employment under this Agreement without Cause immediately upon written notice by the Company to the Executive, other than for death or Disability.

 

5.2           Notice of Termination.  Any termination of the Executive’s employment by the Company or by the Executive (other than termination by reason of the Executive’s death) shall be communicated by written Notice of Termination to the other party of this Agreement.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide the basis for such termination.

 

5.3           Date of Termination.   The “Date of Termination” shall mean (a) if the termination is the result of the Executive’s death, the date of his death, (b) if the termination is pursuant to Section 5.1.2 hereof, 30 days after the Notice of Termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such 30-day period), (c) if the termination is pursuant to Section 5.1.5 or Section 5.1.3 hereof, the date specified in the Notice of Termination after the expiration of any applicable cure period, (d) if the termination is pursuant to Section 5.1.4 hereof, the date specified in the Notice of Termination which shall be at least 60 days after the Notice of Termination is given, or such earlier date as the Company shall determine in its sole discretion, and (e) if the termination is pursuant to Section 5.1.6 hereof, the date on which the Notice of Termination is given.

 

  

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5.4           Compensation Upon Termination.

 

5.4.1        Termination for Cause or without Good Reason.  If the Executive’s employment shall be terminated by the Company for Cause or by the Executive without Good Reason, then the Executive shall receive from the Company: (a) any earned but unpaid portion of the Base Salary through the Date of Termination, paid in accordance with the Company’s standard payroll practices; (b) any Incentive Bonus earned but unpaid for a prior fiscal year, paid in accordance with Section 2.2; (c) reimbursement for any unreimbursed expenses properly incurred and paid in accordance with Section 1.3 and Sections 2.5 and  2.6 through the Date of Termination; (d) payment for any accrued but unused vacation time in accordance with Company policy; (e) all stock options and restricted stock previously granted to the Executive that have vested in accordance with the terms of such grants; and (f) such vested accrued benefits, and other payments, if any, as to which the Executive (and his eligible dependents) may be entitled under, and in accordance with the terms and conditions of, the employee benefit arrangements, plans and programs of the Company as of the Date of Termination, other than any severance pay plan (such amounts and benefits set forth in clauses (a) though (f) being referred to hereinafter as the “Amounts and Benefits”), and the Company shall have no further obligation with respect to this Agreement other than as provided in Sections 7.4, 8 and 9 hereof.  Any stock options and restricted stock previously granted to the Executive that have not vested in accordance with the terms of their grants as of the Date of Termination shall be forfeited as of the Date of Termination.

 

5.4.2        Termination without Cause or For Good Reason.  If, prior to the expiration of the Term, the Executive resigns from his employment hereunder for Good Reason or the Company terminates the Executive’s employment hereunder without Cause (other than a termination by reason of death or Disability), and Section 5.4.3 does not apply, then the Company shall pay or provide the Executive the Amounts and Benefits and, subject to Section 5.4.8:

 

(i)            Subject to Section 9.9.2, an amount equal to the sum of (x) the balance of the Base Salary due under this Agreement or one and one half times the Base Salary as then in effect (without taking into account any reduction therein that constitutes a basis for Good Reason), whichever is the greater, plus (y) an amount equal to one and one half times the average of the Incentive Bonus the Executive received from the Company for all fiscal years completed during the Term, with the aggregate amount due paid in equal installments on the Company’s normal payroll dates for a period of 12 months from the Date of Termination in accordance with the normal payroll practices of the Company, with each such payment deemed to be a separate payment for the purposes of Code Section 409A (as defined below);

 

(ii)           in the event such resignation or termination occurs following the Company’s first fiscal quarter of any year, a pro rata portion of the Executive’s Incentive Bonus for the fiscal year in which the Executive’s termination occurs based on actual results for such year (determined by multiplying the amount of such Incentive Bonus which would be due for the full fiscal year, as determined in good faith by the Board, by a fraction, the numerator of which is the number of days during the fiscal year of termination that the Executive is employed by the Company and the denominator of which is 365), paid in accordance with, and at the times specified in, Section 2.2 (“Pro Rata Bonus”); and

 

  

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(iii)          the continuation of all benefits for 24 months from the Date of Termination.

 

In addition, subject to Section 5.4.8, the vesting of all unvested stock options and restricted stock previously granted to the Executive shall be accelerated by 12 months, and any such stock options, notwithstanding any provision to the contrary in the option or the plan pursuant to which the option was granted, shall remain exercisable for a period of 12 months following the Date of Termination.

 

5.4.3        Termination Following Change in Control.  Anything contained herein to the contrary notwithstanding, if the Executive resigns from his employment hereunder for Good Reason, the Company terminates the Executive’s employment hereunder without Cause (other than a termination by reason of death or Disability) within 60 days preceding or 12 months following a Change in Control (as defined below), or the Term expires or is not renewed due to the Company’s delivery of a notice of nonrenewal and the Executive’s employment is then terminated without Cause within 12 months following a Change in Control, then the Company shall pay or provide the Executive the Amounts and Benefits and, subject to Section 5.4.8, a change-in-control payment as follows:

 

(i)            subject to Section 9.9.2, an amount equal to the sum of (x) the balance of the Base Salary due under this Agreement or two and one quarter times the Base Salary as then in effect (without taking into account any reduction therein that constitutes a basis for Good Reason), whichever is the greater, plus (y) an amount equal to two and one quarter times the average of the Incentive Bonus the Executive received from the Company for all fiscal years completed during the Term, with the aggregate amount due paid in equal installments on the Company’s normal payroll dates for a period of 12 months from the Date of Termination in accordance with the normal payroll practices of the Company, with each such payment deemed to be a separate payment for the purposes of Code Section 409A (as defined below);

 

(ii)           in the event such resignation or termination occurs following the Company’s first fiscal quarter of any year, a Pro Rata Bonus; and

 

(iii)          the continuation of all benefits for 24 months from the Date of Termination.

 

In addition, subject to Section 5.4.8, the vesting of all unvested stock options and restricted stock previously granted to the Executive shall be accelerated to the Date of Termination, and any such stock options, notwithstanding any provision to the contrary in the option or the plan pursuant to which the option was granted, shall remain exercisable for a period of 12 months following the Date of Termination.

 

  

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5.4.4        For purposes of this Agreement, a “Change in Control” shall be deemed to occur upon any of the following events, provided that such an event is a Change in Control Event within the meaning of Code Section 409A (as defined below): (a) any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the common stock), becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities; (b) during any period of 12 consecutive months, the individuals who, at the beginning of such period, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the 12-month period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; (c) a merger or consolidation of the Company with any other corporation or other entity, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto (and held by persons that are not affiliates of the acquirer) continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (other than those covered by the exceptions in clause (a) of this Section 5.4.4) acquires more than 50% of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control; or (d) the consummation of a sale or other disposition by the Company of all or substantially all of the Company’s assets, including a liquidation, other than the sale or other disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding voting securities of the Company immediately prior to the time of the sale or other disposition.

 

5.4.5        Termination upon Death.  In the event of the Executive’s death, the Company shall pay or provide to the Executive’s estate: (i) the Amounts and Benefits and (ii) a Pro Rata Bonus.  In addition, (A) all of the then remaining unvested restricted stock previously granted to the Executive shall immediately become vested on the Date of Termination and shall be distributed to the Executive’s estate within 60 days of the Date of Termination and (B) the portion of the unvested stock options previously granted to the Executive that are scheduled to vest in the calendar year of the Executive’s death shall immediately become vested on the certification of the Compensation Committee based on the achievement of the performance goals for such year, calculated through the Date of Termination, and shall be distributed to the Executive’s estate 60 days after the Date of Termination.  After giving effect to the foregoing, any portion of the stock options that remain unvested on the certification following the Executive’s death shall be forfeited.

 

5.4.6        Termination upon Disability.  In the event the Company terminates the Executive’s employment hereunder for reason of Disability, the Company shall pay or provide to the Executive: (i) the Amounts and Benefits, (ii) a Pro Rata Bonus and (iii) medical benefits for six months.  In addition, subject to Section 5.4.8, (A) 50% of the unvested restricted stock previously granted to the Executive shall immediately become vested on the Date of Termination and shall be distributed to the Executive as provided in, and subject to, Sections 5.4.8 and 9.9.2 and (B) the portion of the unvested stock options previously granted to the Executive that are scheduled to vest in the calendar year the Date of Termination occurs shall immediately become vested on the certification of the Compensation Committee based on the achievement of the performance goals for such year, calculated through the Date of Termination, and shall be distributed to the Executive as provided in, and subject to, Sections 5.4.8 and 9.9.2.  After giving effect to the foregoing, any portion of the restricted shares and stock options that remain unvested on the certification following the Date of Termination shall be forfeited as of the Date of Termination.

 

  

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5.4.7        No Mitigation or Offset.  The Executive shall not be required to mitigate the amount of any payment provided for in this Section 5.4 by seeking other employment or otherwise, nor shall the amount of any payment provided for in this Section 5.4 be reduced by any compensation earned by the Executive as the result of employment by another employer or business or by profits earned by the Executive from any other source at any time before and after the Date of Termination.

 

5.4.8        Release.  Notwithstanding any provision to the contrary in this Agreement, the Company’s obligation to pay or provide the Executive with the payments and benefits under Sections 5.4.2 and 5.4.3 (other than the Amounts and Benefits), and any distributions with respect to the restricted stock and stock options under Sections 5.4.2, 5.4.3 and 5.4.6, shall be conditioned on the Executive’s execution and failure to revoke a waiver and general release in a form consistent with Exhibit A hereto (subject to such changes as may be necessary at the time of execution in order to make such release enforceable) (the “Release”).  The Company shall provide the Release to the Executive within seven days following the applicable Date of Termination.  In order to receive the payments and benefits under Sections 5.4.2 and 5.4.3 (other than the Amounts and Benefits) and the distributions with respect to the restricted stock and stock options under Sections 5.4.2, 5.4.3 and 5.4.6, the Executive will be required to execute and deliver the Release within 21 days after the date it is provided to him and not to revoke it within seven days following such execution and delivery. Notwithstanding anything to the contrary contained herein, (i) all payments delayed pursuant to this Section, except to the extent delayed pursuant to Section 9.9.2, shall be paid to the Executive in a lump sum on the first Company payroll date on or following the 60th day after the Date of Termination, and any remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein, with each such payment deemed to be a separate payment for the purposes of Code Section 409A (as defined below) and (ii) all distributions with respect to the restricted stock and stock options delayed pursuant to this Section, except to the extent delayed pursuant to Section 9.9.2, shall be distributed to the Executive on the 60th day after the Date of Termination.

 

	
6.

	
INSURABILITY; RIGHT TO INSURE

 

The Company shall have the right to maintain key man life insurance in its own name covering the Executive’s life in an amount of up to $50,000,000.00.  The Executive shall fully cooperate in the procuring of such insurance, including submitting to any required medical examination and by completing, executing and delivering such applications and other instrument in writing as may be reasonably required by any insurance company to which application for insurance may be made by the Company.

 

  

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7.

	
CONFIDENTIALITY; NON-SOLICITATION; NON-DISPARAGEMENT; COOPERATION

 

7.1           Confidential Information.  The Company and the Executive acknowledge that the services to be performed by the Executive under this Agreement are unique and extraordinary and, as a result of such employment, the Executive shall be in possession of Confidential Information (as defined below) relating to the business practices of the Company and its subsidiaries and affiliates (collectively, the “Company Group”).  The term “Confidential Information” shall mean any and all information (oral and written) relating to the Company Group, or any of their respective activities, or of the clients, customers or business practices of the Company Group, other than such information which (i) is generally available to the public or within the relevant trade or industry, other than as the result of breach of the provisions of this Section 7.1, or (ii) the Executive is required to disclose under any applicable laws, regulations or directives of any government agency, tribunal or authority having jurisdiction in the matter or under subpoena or other process of law.  Confidential Information includes, but it not limited to, information that the Executive creates, develops, derives, obtains, makes known, or learns about which has commercial value in the business in which the Company Group is involved and which is treated by the Company Group as confidential, such as trade secrets, ideas, processes, formulas, compounds, compositions, research and clinical data, know-how, discoveries, developments, designs, innovations, plans, strategies, forecasts and customer and supplier lists.  The Executive shall not, during the Term or at any time thereafter, except as may be required in the course of the performance of his duties hereunder (including pursuant to Section 7.5 below) and except with respect to any litigation or arbitration involving this Agreement, including the enforcement hereof, directly or indirectly, use, communicate, disclose or disseminate to any person, firm or corporation any Confidential Information acquired by the Executive during, or as a result of, his employment with the Company, without the prior written consent of the Company.  Without limiting the foregoing, the Executive understands that the Executive shall be prohibited from misappropriating any trade secret of the Company Group or of the clients or customers of the Company Group acquired by the Executive during, or as a result of, his employment with the Company, at any time during or after the Term.

 

7.2           Return of Property.  Upon the termination of the Executive’s employment for any reason, all Company Group property that is in the possession of the Executive, including all documents, records, drug formulations, notebooks, equipment, price lists, specifications, programs, customer and prospective customer lists and other materials that contain Confidential Information that are in the possession of the Executive, including all copies thereof, shall be promptly returned to the Company.  Anything to the contrary herein notwithstanding, the Executive shall be entitled to retain (i) papers and other materials of a personal nature, including photographs, correspondence, personal diaries, calendars and rolodexes, personal files and phone books, (ii) information showing his compensation or relating to reimbursement of expenses, (iii) information that he reasonably believes may be needed for tax purposes and (iv) copies of plans, programs and agreements relating to his employment, or termination thereof, with the Company.

 

  

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7.3           Prohibition on Use of Confidential Information to Solicit Customers and Prospects.  During the Executive’s employment, the Executive shall not engage in any other employment or activity that might materially interfere with or be in direct competition with the interests of the Company Group.  Furthermore, the Executive shall not, except in the furtherance of the Executive’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (i) during the Term (except in the good faith performance of his duties) and for a period of 24 months thereafter, solicit, aid or induce any employee, representative or agent of the Company to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, (ii) during the Term (except in the good faith performance of his duties) and for a period of 12 months thereafter, use any Confidential Information or trade secrets of the Company Group to solicit, aid, or induce (or attempt to do any of the foregoing), directly or indirectly, any customer or prospective customer of the Company with whom the Executive in any way dealt at any time during the last two years of his employment to purchase goods or services then sold by the Company from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer or (iii) during the Term (except in the good faith performance of his duties) and for a period of 24 months thereafter, use any Confidential Information or trade secrets to interfere in any manner with the relationship of the Company and any of its vendors.  An employee, representative or agent shall be deemed covered by this Section while so employed or retained by the Company and for six months thereafter.  Anything to the contrary herein notwithstanding, the following shall not be deemed a violation of this Section 7.3:  (a) the Executive’s responding to an unsolicited request for an employment reference regarding any former employee of the Company from such  former employee, or from a third party, by providing a reference setting forth his personal views about such  former employee; or (b) if an entity with which the Executive is associated hires or engages any employee of the Company, if the Executive was not, directly or indirectly, involved in hiring or identifying such person as a potential recruit or assisting in the recruitment of such employee.  For purposes hereof, the Executive shall be deemed to have been involved “indirectly” in soliciting, hiring or identifying an employee only if the Executive (x) directs a third party to solicit or hire the Employee, (y) identifies an employee to a third party as a potential recruit or (z) aids, assists or participates with a third party in soliciting or hiring an employee.

 

7.4           Non-Disparagement.  At no time during or within five years after the Term shall the Executive, directly or indirectly, disparage the Company Group or any of the Company Group’s past or present employees, directors, products or services.  The Company shall advise its senior officers and the members of the Board (while serving in such capacities) not to disparage the Executive during the period.  Notwithstanding the foregoing, nothing in this Section 7.4 shall prevent any person from making any truthful statement to the extent (i) necessary to rebut any untrue public statements made about him or her; (ii) necessary with respect to any litigation, arbitration or mediation involving this Agreement and the enforcement thereof; (iii) required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with jurisdiction over such person; or (iv) made as good faith competitive statements in the ordinary course of business.

 

  

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7.5           Cooperation.  Upon the receipt of reasonable notice from the Company (including the Company’s outside counsel), the Executive shall, while employed by the Company and thereafter, respond and provide information with regard to matters of which the Executive has knowledge as a result of the Executive’s employment with the Company and will provide reasonable assistance to the Company Group and its representatives in defense of any claims that may be made against the Company Group (or any member thereof), and will provide reasonable assistance to the Company Group in the prosecution of any claims that may be made by the Company Group (or any member thereof), to the extent that such claims may relate to matters related to the Executive’s period of employment with the Company (or any predecessors).  Any request for such cooperation shall take into account the Executive’s personal and business commitments.  The Executive shall promptly inform the Company (to the extent the Executive is legally permitted to do so) if the Executive is asked to assist in any investigation of the Company Group (or any member thereof) or their actions, regardless of whether a lawsuit or other proceeding has then been filed with respect to such investigation.  If the Executive is required to provide any services pursuant to this Section 7.5 following the Term, upon presentation of appropriate documentation, the Company shall promptly reimburse the Executive for reasonable out-of-pocket travel, lodging, communication and duplication expenses incurred in connection with the performance of such services and in accordance with the Company’s expense policy for its senior officers, and for reasonable legal fees to the extent the Board in good faith believes that separate legal representation is reasonably required.  The Executive’s entitlement to reimbursement of such costs and expenses, including legal fees, pursuant to this Section 7.5, shall in no way affect the Executive’s rights, if any, to be indemnified and/or advanced expenses in accordance with the Company’s (or any of its subsidiaries’) corporate or other organizational documents, any applicable insurance policy, and/or in accordance with this Agreement.

 

7.6           Remedies and Reformation.  Without intending to limit the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants contained in this Section 7 may result in material and irreparable injury to the Company, or its affiliates or subsidiaries, for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach or threat the Company shall be entitled to a temporary restraining order and/or a preliminary or permanent injunction restraining the Executive from engaging in activities prohibited by this Section 7 or such other relief as may be required specifically to enforce any of the covenants in this Section 7.  If for any reason it is held that the restrictions under this Section 7 are not reasonable or that consideration therefor is inadequate, such restrictions shall be interpreted or modified to include as much of the duration and scope identified in this Section as will render such restrictions valid and enforceable.

 

7.7           Violations.  In the event of any violation of the provisions of this Section 7, the Executive acknowledges and agrees that: (a) the post-termination restrictions contained in this Section 7 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation; (b) any severance payable which remains unpaid or other benefits yet to be received under Section 5.4.2 or 5.4.3 shall be forfeited by the Executive; and (c) any vested options not exercised as of the date of any violation of the provisions of this Section 7 shall be forfeited.

 

  

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8.

	
INDEMNIFICATION; DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE

 

During the Term and thereafter, the Company shall indemnify and hold harmless the Executive and his heirs and representatives as, and to the extent, provided in the Company’s by-laws.  During the Term and thereafter, the Company shall also cover Executive under the Company’s directors’ and officers’ liability insurance on the same basis as it covers other senior executive officers and directors of the Company.

 

	
9.

	
MISCELLANEOUS

 

9.1           Notices.  All notices or communications hereunder shall be in writing, addressed as follows (or to such other address as either party may have furnished to the other in writing by like notice):

	 	
To the Company: 

	
Impax Laboratories, Inc.

31047 Genstar Rd.

Hayward, CA 94544

Attn: Chairman, Compensation Committee

	
  

	
To the Executive, at the last address for the Executive on the books of the Company.

 

All such notices shall be conclusively deemed to be received and shall be effective (i) if sent by hand delivery, upon receipt, (ii) if sent by telecopy or facsimile transmission, upon confirmation of receipt by the sender of such transmission, (iii) if sent by overnight courier, one business day after being sent by overnight courier, or (iv) if sent by registered or certified mail, postage prepaid, return receipt requested, on the fifth day after the day on which such notice is mailed.

 

9.2           Severability.  Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

9.3           Binding Effect; Benefits.  Executive may not delegate his duties or assign his rights hereunder.  No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company other than pursuant to a merger or consolidation in which the Company is not the continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the assets or businesses of the Company and assumes the liabilities, obligations and duties of the Company under this Agreement, either contractually or by operation of law.  The Company further agrees that, in the event of any disposition of its business and assets described in the preceding sentence, it shall use its best efforts to cause such assignee or transferee expressly to assume the liabilities, obligations and duties of the Company hereunder.  For the purposes of this Agreement, the term “Company” shall include the Company and, subject to the foregoing, any of its successors and assigns.  This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.

 

  

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9.4           Modification of Termination Benefits.  In the event that RiskMetrics Group or a proxy advisory firm of similar stature recommends that stockholders do not vote in favor of the election of any of the Company’s Directors because of any provision of Sections 5 or 7 of this Agreement, the Executive shall, upon request of the Company, enter into an amendment of this Agreement modifying or eliminating such provision to the extent necessary to cause withdrawal of such recommendation.

 

9.5           Entire Agreement.  This Agreement, including the Exhibits hereto, represent the entire agreement of the parties with respect to the subject matter hereof and shall supersede any and all previous contracts, arrangements, proposed terms, or understandings between the Company and the Executive.  This Agreement (including any of the Exhibits hereto) may be amended at any time by mutual written agreement of the parties hereto.  In the case of any conflict between any express term of this Agreement and any statement contained in any plan, program, arrangement, employment manual, memorandum or rule of general applicability of the Company, this Agreement shall control.

 

9.6           Withholding.  The payment of any amount pursuant to this Agreement shall be subject to applicable withholding and payroll taxes, and such other deductions as may be required by applicable law.

 

9.7           Governing Law.  This Agreement and the performance of the parties hereunder shall be governed by the internal laws (and not the law of conflicts) of the State of Delaware.

 

9.8           Arbitration.  Any dispute or controversy, including but not limited to statutory discrimination claims and claims involving a class, arising under or in connection with this Agreement or the Executive’s employment with the Company, other than injunctive relief under Section 7.7 hereof, shall be settled exclusively by arbitration, conducted before a single arbitrator in San Francisco, California (applying Delaware law) in accordance with the Commercial Arbitration Rules and Procedures of the American Arbitration Association then in effect.  The decision of the arbitrator will be final and binding upon the parties hereto.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  The parties acknowledge and agree that in connection with any such arbitration and regardless of outcome (a) each party shall pay all its own costs and expenses, including without limitation its own legal fees and expenses, and (b) joint expenses shall be borne equally among the parties.  EACH PARTY WAIVES RIGHT TO TRIAL BY JURY.

 

9.9           Section 409A of the Code.

 

9.9.1        It is intended that the provisions of this Agreement comply with Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A.  If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A, the Company shall, upon the specific request of the Executive, use its reasonable business efforts to in good faith reform such provision to comply with Code Section 409A; provided, that to the maximum extent practicable, the original intent and economic benefit to the Executive and the Company of the applicable provision shall be maintained, but the Company shall have no obligation to make any changes that could create any additional economic cost or loss of benefit to the Company.  The Company shall timely use its reasonable business efforts to amend any plan or program in which the Executive participates to bring it in compliance with Code Section 409A.  Notwithstanding the foregoing, the Company shall have no liability with regard to any failure to comply with Code Section 409A so long as it has acted in good faith with regard to compliance therewith.

 

  

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9.9.2        A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “Separation from Service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “termination of employment” or like terms shall mean Separation from Service.  If the Executive is deemed on the Date of Termination to be a “specified employee,” within the meaning of that term under Section (a)(2)(B) of Code Section 409A (“Code Section 409(a)(2)(B)”)and using the identification methodology selected by the Company from time to time, or if none, the default methodology, then with regard to any payment, the providing of any benefit or any distribution of equity made subject to this Section 9.9.2, to the extent required to be delayed in compliance with Code Section 409A(a)(2)(B), and any other payment, the provision of any other benefit or any other distribution of equity that is required to be delayed in compliance with Code Section 409A(a)(2)(B), such payment, benefit or distribution shall not be made or provided prior to the earlier of (i) the expiration of the six-month period measured from the date of the Executive’s Separation from Service or (ii) the date of the Executive’s death.  On the first day of the seventh month following the date of Executive’s Separation from Service or, if earlier, on the date of his death, (x) all payments delayed pursuant to this Section 9.9.2 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein and (y) all distributions of equity delayed pursuant to this Section 9.9.2 shall be made to the Executive.  In addition to the foregoing, to the extent required by Code Section 409A(a)(2)(B), prior to the occurrence of both a Disability termination as provided in Section 5.1.2 hereof and the Executive’s becoming “disabled” under Code Section 409A, the payment of any compensation to the Executive under this Agreement shall be suspended for a period of six months commencing at such time that the Executive shall be deemed to have had a Separation from Service because either (A) a sick leave ceases to be a bona fide sick leave of absence, or (B) the permitted time period for a sick leave of absence expires (an “SFS Disability”), without regard to whether such SFS Disability actually results in a Disability termination.  Promptly following the expiration of such six-month period, all compensation suspended pursuant to the foregoing sentence (whether it would have otherwise been payable in a single sum or in installments in the absence of such suspension) shall be paid or reimbursed to the Executive in a lump sum.  On any delayed payment date under this Section 9.9.2, there shall be paid to the Executive or, if the Executive has died, to his estate, in a single cash lump sum together with the payment of such delayed payment, interest on the aggregate amount of such delayed payment at the Delayed Payment Interest Rate (as defined below) computed from the date on which such delayed payment otherwise would have been made to the Executive until the date paid.  For purposes of the foregoing, the “Delayed Payment Interest Rate” shall mean the short term Applicable Federal Rate as of the business day immediately preceding the payment date for the applicable delayed payment.

 

  

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9.9.3        With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Internal Revenue Code and the regulations and guidance promulgated thereunder solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such payments shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

 

9.10         Survival.  Except as otherwise expressly set forth in this Agreement, upon the expiration of the Term, the respective rights and obligations of the parties shall survive such expiration to the extent necessary to carry out the intentions of the parties as embodied in this Agreement.  This Agreement shall continue in effect until there are no further rights or obligations of the parties outstanding hereunder and shall not be terminated by either party without the express prior written consent of both parties.

 

9.11         Counterparts.  This Agreement may be executed in counterparts (including by electronic transmission) which, when taken together, shall constitute one and the same agreement of the parties.

 

9.12         Company Representations.  The Company represents and warrants to the Executive that (i) the execution, delivery and performance of this Agreement (and the agreements referred to herein) by the Company has been fully and validly authorized by all necessary corporate action, (ii) the officer signing this Agreement on behalf of the Company is duly authorized to do so, (iii) the execution, delivery and performance of this Agreement does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document to which the Company is a party or by which it is bound and (iv) upon execution and delivery of this Agreement by the Executive and the Company, it shall be a valid and binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

 

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed and the Executive has hereunto set his hand, as of the date first set forth above.

 

 

	 	

IMPAX LABORATORIES, INC.

 

By: /s/ Larry Hsu 

Larry Hsu

President and Chief Executive Officer

 

/s/ Bryan M. Reasons 

Bryan M. Reasons

 

  

-18-

  

 

EXHIBIT A

 

Form of General Release and Waiver

 

This General Release and Waiver (this “Release”) is entered into effective as of ______________  ___, 20__, by ________(the “Executive”) in favor of Impax Laboratories, Inc. (the “Company”).

 

1.             Confirmation of Termination.  The Executive’s employment with the Company is terminated as of _________, 20__ (the “Termination Date”).  Except as set forth in the Employment Agreement (as defined below), the Executive acknowledges that the Termination Date is the termination date of his employment for purposes of participation in and coverage under all benefit plans and programs sponsored by or through the Company.  The Executive acknowledges and agrees that the Company shall not have any obligation to rehire the Executive, nor shall the Company have any obligation to consider him for employment, after the Termination Date.  The Executive agrees that he will not seek employment with the Company at any time in the future.

 

2.             Resignation.  Effective as of the Termination Date, the Executive hereby resigns as an officer and director of the Company and any of its affiliates and from any such positions held with any other entities at the direction or request of the Company or any of its affiliates.  The Executive agrees to promptly execute and deliver such other documents as the Company shall reasonably request to evidence such resignations.  In addition, the Executive hereby agrees and acknowledges that the Termination Date shall be date of his termination from all other offices, positions, trusteeships, committee memberships and fiduciary capacities held with, or on behalf of, the Company or any of its affiliates.

 

3.             Termination Benefits.  Upon the Executive’s execution and delivery of this Release and failure to revoke it within the time specified in Section 10 below, then, subject to Section 9 below, the Executive will be entitled to the payments and benefits (subject to taxes and all applicable withholding requirements) set forth under Section [5.4.2] [5.4.3] of the Employment Agreement effective as of December 12, 2012 between the Company and the Executive (the “Employment Agreement”) and the distribution with respect to the restricted stock and stock options set forth under Section [5.4.2] [5.4.3] [5.4.6] of the Employment Agreement (the “Termination Benefits”).  Notwithstanding anything herein to the contrary, the Amounts and Benefits (as defined in the Employment Agreement) shall not be subject to the Executive’s execution of this Release.  The Executive acknowledges and agrees that the Termination Benefits exceed any payment, benefit, or other thing of value to which the Executive might otherwise be entitled under any policy, plan or procedure of the Company and/or any agreement between the Executive and the Company, except as provided above.

 

  

A-1

  

 

4.             General Release and Waiver.  In consideration of the Termination Benefits, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Executive for himself and for his heirs, executors, administrators, trustees, legal representatives and assigns (collectively, the “Releasors”), hereby releases, remises, and acquits the Company and its affiliates and all of their respective past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, any of their successors and assigns, assets, employee benefit plans or funds, and any of their respective past and/or present directors, officers, fiduciaries, agents, trustees, administrators, managers, supervisors, shareholders, investors, employees, legal representatives, agents, counsel and assigns, whether acting on behalf of the Company or its affiliates or, in their individual capacities (collectively, the “Releasees” and each a “Releasee”) from any and all claims, known or unknown, which the Releasors have or may have against any Releasee arising on or prior to the date of this Release and any and all liability which any such Releasee may have to the Releasors, whether denominated claims, demands, causes of action, obligations, damages or liabilities arising from any and all bases, however denominated, including but not limited to (a) any claim under the Age Discrimination in Employment Act of 1967 including the Older Workers Benefits Protection Act, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, Section 1981 of the Civil Rights Act of 1866, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Immigration Reform and Control Act of 1986, the Employee Retirement Income Security Act of 1974, (excluding claims for accrued, vested benefits under any employee benefit or pension plan of the Company, subject to the terms and conditions of such plan and applicable law), and the Sarbanes-Oxley Act of 2002, all as amended; (b) any claim under the California Fair Employment and Housing Act and any other provision of the California Labor Law, all as amended, or any other similar state or local laws; (c) any claim under any other Federal, state, or local law and any workers’ compensation or disability claims under any such laws to the extent such claims are waivable; and (d) any claim for attorneys’ fees, costs, disbursements and/or the like.  This Release includes, without limitation, any and all claims arising from or relating to the Executive’s employment relationship with Company and his service relationship as an officer or director of the Company or any of its affiliates, or as a result of the termination of such relationships.  Notwithstanding any other provision of this Release, this Release is not intended to interfere with the Executive’s right to file a charge with the Equal Employment Opportunity Commission (“EEOC”) in connection with any claim he believes he may have against any Releasee.  However, by executing this Release, the Executive hereby waives the right to recover in any proceeding the Executive may bring before the EEOC or any state human rights commission or in any proceeding brought by the EEOC or any state human rights commission on the Executive’s behalf.  This Release is for any relief, no matter how denominated, including, but not limited to, injunctive relief, wages, back pay, front pay, compensatory damages, punitive damages, and attorneys’ fees.  This Release shall not apply to (i) the obligation of the Company to provide the Executive with the Amounts and Benefits and the Termination Benefits and any provision relating thereto under the Employment Agreement; (ii) the Executive’s rights to indemnification from the Company or rights to be covered under any applicable insurance policy with respect to any liability the Executive incurred or might incur as an employee, officer or director of the Company including, without limitation, the Executive’s rights under Section 8 of the Employment Agreement; or (iii) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against the Executive as a result of any act or failure to act for which the Executive, on the one hand, and Company or any other Releasee, on the other hand, are jointly liable.

 

The Executive waives and relinquishes all rights and benefits afforded by Section 1542 of the Civil Code of California, to the extent applicable, which provides as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

  

A-2

  

 

The Executive hereby acknowledges that the foregoing waiver is an essential and material term of this Release.

 

5.             Continuing Covenants.  The Executive acknowledges and agrees that he remains subject to the provisions of Section 7 of the Employment Agreement which shall remain in full force and effect for the periods set forth therein.

 

6.             No Admission.  This Release does not constitute an admission of liability or wrongdoing of any kind by the Company or any other Releasee.  This Release is not intended, and shall not be construed, as an admission that any Releasee has violated any federal, state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrong whatsoever against any Releasor.

 

7.             Heirs and Assigns.  The terms of this Release shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns.

 

8.             Miscellaneous.  This Release will be construed and enforced in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law.  If any provision of this Release is held by a court of competent jurisdiction to be illegal, void or unenforceable, such provision shall have no effect; however, the remaining provisions will be enforced to the maximum extent possible.  The parties acknowledge and agree that, except as otherwise set forth herein, this Release constitutes the complete understanding between the parties with regard to the matters set forth herein and, except as otherwise set forth herein, supersede any and all agreements, understandings, and discussions, whether written or oral, between the parties.  No other promises or agreements are binding unless in writing and signed by each of the parties after the Release Effective Date (as defined below).  Should any provision of this Release require interpretation or construction, it is agreed by the parties that the entity interpreting or constructing this Release shall not apply a presumption against one party by reason of the rule of construction that a document is to be construed more strictly against the party who prepared the document.

 

9.             Knowing and Voluntary Waiver.  The Executive acknowledges that he: (a) has carefully read this Release in its entirety; (b) has had an opportunity to consider it for at least 21 days; (c) is hereby advised by the Company in writing to consult with an attorney of his choosing in connection with this Release; (d) fully understands the significance of all of the terms and conditions of this Release and has discussed them with his independent legal counsel, or had a reasonable opportunity to do so; (e) has had answered to his satisfaction any questions he has asked with regard to the meaning and significance of any of the provisions of this Release and has not relied on any statements or explanations made by any Releasee or their counsel; (f) understands that he has seven days in which to revoke this Release (as described in Section 10) after signing it and (g) is signing this Release voluntarily and of his own free will and agrees to abide by all the terms and conditions contained herein.

 

  

A-3

  

 

10.           Effective Time of Release.  The Executive may accept this Release by signing it and delivering it to the Company as provided in Section 9.1 of the Employment Agreement within 21 days of his receipt hereof.  After executing this Release, the Executive will have seven days (the “Revocation Period”) to revoke this Release by indicating his desire to do so in writing delivered to the Company in accordance with Section 9.1 of the Employment Agreement by no later than 5:00 p.m. EST on the seventh day following the date on which he executes and delivers this Agreement.  The effective date of this Agreement shall be the eighth day after the Executive executes and delivers this Agreement (the “Release Effective Date”).  If the last day of the Revocation Period falls on a Saturday, Sunday or holiday, the last day of the Revocation Period will be deemed to be the next business day.  If the Executive does not execute this Release or exercises his right to revoke hereunder, he shall forfeit his right to receive any of the Termination Benefits, and to the extent such Termination Benefits have already been provided, the Executive agrees that he will immediately reimburse the Company for the amounts of such payment.

 

IN WITNESS WHEREOF, the Executive has duly executed this Release as of the date first set forth above.

 

	 	
EXECUTIVE:

	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	Name 	 

 

 

 

A-4lipn_ex101.htm

EXHIBIT 10.1

 

 11.28.2012

 

 

SHARE EXCHANGE AGREEMENT

among

Life Nutrition Products, Inc.,

ADGS Advisory Limited

and

the Shareholders of

ADGS Advisory Limited

 

Dated as of December 7, 2012

 

 

 

 

 

 

  

1

  

 

SHARE EXCHANGE AGREEMENT

 

THIS SHARE EXCHANGE AGREEMENT (hereinafter referred to as this “Agreement”) is entered into as of December 7, 2012, by and among LIFE NUTRITION PRODUCTS, INC., a Delaware corporation (“LNP”), ADGS ADVISORY LIMITED, a Hong Kong corporation (“ADGS”), and the shareholders of ADGS (the “Shareholders”).  LNP, ADGS and the Shareholders are sometimes individually referred to herein as a “Party” and collectively as the “Parties.”

 

RECITALS:

WHEREAS, LNP is a publicly traded corporation with limited operations;

WHEREAS, LNP desires to acquire 100% of the issued and outstanding shares of the capital stock of ADGS (the “ADGS Shares”) from the Shareholders in exchange for the issuance of an aggregate of 20,155,000 shares of the common stock of LNP (the “Exchange Shares”) and the Shareholders are willing to exchange their shares of ADGS in exchange for the Exchange Shares on the terms and subject to the conditions set forth herein (the “Exchange”);

WHEREAS, on the Closing Date (as defined in Section 4.02), ADGS will become a wholly-owned subsidiary of LNP; and

WHEREAS, the boards of directors of LNP and ADGS have determined, subject to the terms and conditions set forth in this Agreement, that the transaction contemplated hereby is desirable and in the best interests of their respective shareholders.

 

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

ARTICLE I

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF ADGS

As an inducement to LNP to consummate the Exchange, ADGS represents and warrants that except as set forth in the disclosure schedule delivered by ADGS to LNP (the “ADGS Disclosure Schedule”), the following statements will be true and correct as of the Closing Date (as hereinafter defined):

 

1.01           Organization.  ADGS is duly incorporated, validly existing, and in good standing under the laws of Hong Kong and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances and orders of public authorities, to carry on its business in all material respects as it is now being conducted.  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the organizational or other governing documents of ADGS.  ADGS has taken all actions required by law, its organizational and other governing documents, or otherwise to authorize the execution and delivery of this Agreement.  ADGS has full power, authority, and legal capacity and prior to the Closing Date will have taken all action required by law, its organizational and other governing documents, and otherwise to consummate the transactions herein contemplated.

 

  

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1.02           Capitalization.  The authorized capital stock of ADGS consists of 1,100,000 shares of capital stock, par value HKS $1.00 per share, of which 1,100,000 shares are issued and outstanding.  All of such issued and outstanding shares have been validly issued and are fully paid and non-assessable.  There are no outstanding warrants, options, subscriptions or other rights of any kind or nature by which any person or entity can acquire any additional shares of capital stock or other securities of any kind or nature of ADGS; no shareholder of ADGS or other person or entity is entitled to any preemptive rights, rights of first refusal or other rights of any kind or nature arising out of or relating to the transfer of the ADGS Shares to LNP under this Agreement.  The ADGS Shares are subject to no lien, claim, charge or encumbrance of any kind or nature; are not subject to any shareholders agreement, right of first refusal or preemptive rights; and constitute 100% of the issued and outstanding shares of the capital stock of ADGS.

1.03           Financial Statements.

 

(a)             At the earliest possible time prior to the Closing Date, ADGS shall deliver to LNP (a) the audited balance sheets of ADGS as of August 31, 2011 and 2012 and the related audited statements of income, statements of cash flows and changes in stockholders’ equity for the years then ended, and the notes relating thereto (the “ADGS Audited Financial Statements”), (b) the unaudited balance sheets of ADGS as at a date no more than forty-five (45) days prior to the Closing Date (the “ADGS Balance Sheet Date”), and the related unaudited statements of income and statements of cash flows for the periods then ended, and the notes relating thereto, and (c)   any other financial statements deemed necessary by LNP or its advisors in order to comply with requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (collectively, the “ADGS Financial Statements”).  All of the ADGS Financial Statements to be delivered pursuant hereto will have been prepared in accordance with United States generally accepted accounting principles applied on a basis consistent throughout all periods presented and will be complete and accurate and present fairly the financial position of ADGS and the results of its operations and changes in its financial positions as of the dates and for the periods indicated as being covered thereby.

(b)             ADGS has duly and punctually paid all governmental fees and taxes which it has become liable to pay and has duly allowed for all taxes reasonably foreseeable and is under no liability to pay any penalty or interest in connection with any claim for governmental fees or taxation and ADGS has made any and all proper declarations and returns for taxation purposes and all information contained in such declarations and returns is true and complete and full provision or reserves have been made in its financial statements for all governmental fees and taxation.

 

(c)             The books and records, financial and otherwise, of ADGS are in all material respects complete and correct and have been maintained in accordance with generally accepted accounting principles consistently applied throughout the periods involved.

(d)             ADGS will have no liabilities (whether absolute, accrued, contingent, known or unknown or otherwise), claims, obligations or other liens, except as disclosed on the balance sheets included in the ADGS Financial Statements.

 

  

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1.04           Taxes. ADGS has: (i) timely filed with the appropriate taxing authorities all tax returns required to be filed by or with respect to its business, or is properly on extension and all such duly filed tax returns are true, correct and complete in all material respects; and (ii) timely paid in full or made adequate provisions for on its balance sheet (in accordance with GAAP) all taxes shown to be due on such tax returns.  There are no liens for taxes upon the assets of ADGS except for statutory liens for current taxes not yet due and payable or which may thereafter be paid without penalty or are being contested in good faith.  ADGS has not received any notice of audit, is not undergoing any audit of its tax returns, and has not received any notice of deficiency or assessment from any taxing authority with respect to liability for taxes which has not been fully paid or finally settled.  There have been no waivers of statutes of limitations by ADGS with respect to any tax returns.  ADGS has not filed a request with any taxing authority for changes in accounting methods within the last three years which change would affect the accounting for tax purposes, directly or indirectly, of its business.  ADGS has not executed an extension or waiver of any statute of limitations on the assessment or collection of any taxes due that is currently in effect.

1.06           No Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing, or reasonably anticipated by ADGS to arise, between the accountants, and lawyers formerly or presently employed by ADGS and ADGS is current with respect to any fees owed to its accountants and lawyers.

 

1.07           Absence of Certain Changes or Events.  Prior to the Closing Date:

 

(a)             There will not have been any material adverse change in the business, operations, properties, assets, or condition (financial or otherwise) of ADGS since the date of the most recent balance sheet included in the Financial Statements;

(b)             Except as otherwise contemplated herein, subsequent to the date hereof, ADGS will not (i) amend its organizational or other governing documents; (ii) declare or make, or agree to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchase or redeem, or agree to purchase or redeem, any of its shares; (iii) make any material change in its method of management, operation or accounting, (iv) enter into any other material transaction other than sales in the ordinary course of its business; or (v) make any increase in or adoption of any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its officers, directors, or employees; and

 

(c)             ADGS will not (i) grant or agree to grant any options, warrants or other rights for its stocks, bonds or other corporate securities calling for the issuance thereof, (ii) borrow or agree to borrow any funds or incur, or become subject to, any material obligation or liability (absolute or contingent) except as disclosed herein and except liabilities incurred in the ordinary course of business; (iii) sell or transfer, or agree to sell or transfer, any of its assets, properties, or rights or cancel, or agree to cancel, any debts or claims; or (iv) issue, deliver, or agree to issue or deliver any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock) except in connection with this Agreement.

 

1.08           Litigation and Proceedings.  There are no actions, suits, proceedings, or investigations pending or, to the knowledge of ADGS after reasonable investigation, threatened by or against ADGS or affecting ADGS or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  ADGS does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.

  

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1.09           Contracts.

 

(a)             All “material” contracts, agreements, franchises, license agreements, debt instruments or other commitments to which  ADGS is a party or by which it or any of its assets, products, technology, or properties are bound other than those incurred in the ordinary course of business have been disclosed to LNP prior to the date hereof.  A “material” contract, agreement, franchise, license agreement, debt instrument or commitment is one which (i) will remain in effect for more than six (6) months after the date of this Agreement, (ii) involves aggregate obligations of at least one hundred thousand dollars ($100,000) and which cannot be terminated by ADGS on notice of no more than thirty (30) days at a cost of no more than $50,000;

  

(b)             All contracts, agreements, franchises, license agreements, and other commitments to which ADGS is a party or by which its properties are bound and which are material to the operations of ADGS taken as a whole are valid and enforceable by ADGS in all respects, except as limited by bankruptcy and insolvency laws and by other laws affecting the rights of creditors generally; and

 

(c)              Except as included or described in Item 1.09 to the ADGS Disclosure Schedule or reflected in the most recent ADGS Balance Sheet included in the Financial Statements, ADGS is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation; (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of ADGS, which, in each case cannot be terminated by ADGS on notice of no more than thirty days at a cost of no more than $50,000.

 

1.10           No Conflict With Other Instruments.  The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of any indenture, mortgage, deed of trust, or other material agreement, or instrument to which ADGS is a party or to which any of its assets, properties or operations are subject.

 

1.11           Compliance With Laws and Regulations.   To the best of its knowledge, ADGS has complied with all applicable statutes and regulations of Hong Kong and of each locality located within such territory and of each governmental entity or agency of such territory, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of ADGS or except to the extent that noncompliance would not result in the occurrence of any material liability for ADGS. 

1.12           Approval of Agreement.  The Board of Directors of ADGS has authorized the execution and delivery of this Agreement by ADGS and has approved this Agreement and the transactions contemplated hereby, and has recommend to the Shareholders that the Exchange be accepted.

 

  

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1.13           Valid Obligation.  This Agreement and all agreements and other documents executed by ADGS in connection herewith constitute the valid and binding obligation of ADGS, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.

1.14           Disclosure.  All disclosure provided to LNP regarding ADGS, its business and the transactions contemplated hereby, including ADGS Disclosure Schedule to this Agreement, furnished by or on behalf of ADGS with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  ADGS acknowledges and agrees that LNP has not made, nor is LNP making, any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth herein.  In the event that the ADGS Disclosure Schedule is not delivered contemporaneously with the execution of this Agreement, it shall be delivered as soon as practicable prior to the Closing Date.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

The Shareholders hereby represent and warrant, severally and solely, to LNP as follows:

2.01           Good Title.  Each of the Shareholders is the record and beneficial owner, and has good title to the ADGS Shares owned by such Shareholder, with the right and authority to sell and deliver such ADGS Shares, free and clear of all liens, claims, charges, encumbrances, pledges, mortgages, security interests, options, rights to acquire, proxies, voting trusts or similar agreements, restrictions on transfer or adverse claims of any nature whatsoever.  Upon delivery of any certificate or certificates duly assigned, representing the same as herein contemplated and/or upon registering of LNP as the new owner of such ADGS Shares in the share register of ADGS, LNP will receive good title to such ADGS Shares, free and clear of all liens.

 

2.02           Power and Authority. Each of the Shareholders has the legal power, capacity and authority to execute and deliver this Agreement, to consummate the transactions contemplated by this Agreement, and to perform such Shareholder’s obligations under this Agreement.  This Agreement constitutes the legal, valid and binding obligation of the Shareholders, enforceable against the Shareholders in accordance with the terms hereof.

 

2.03           No Conflicts.  The execution and delivery of this Agreement by the Shareholders and the performance by the Shareholders of their obligations hereunder in accordance with the terms hereof: (a) will not require the consent of any third party or governmental entity under any laws; (b) will not violate any laws applicable to the Shareholders and (c) will not violate or breach any contractual obligation to which the Shareholders are a party.

 

  

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2.04           Acquisition of Exchange Shares for Investment.

 

(a)             Each Shareholder is acquiring the Exchange Shares for investment for such Shareholder’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and each Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same.  Each Shareholder further represents that he, she or it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Exchange Shares.

 

(b)             Each Shareholder represents and warrants that such Shareholder (i) can bear the economic risk of such Shareholder’s respective investments, and (ii) possesses such knowledge and experience in financial and business matters that such Shareholder is capable of evaluating the merits and risks of the investment in LNP and its securities.

 

(c)             Each Shareholder who is not a “U.S. Person” as defined in Rule 902(k) of Regulation S (“Regulation S”) of the Securities Act of 1933, as amended (the “Securities Act”) (each a “Non-U.S. Shareholder”) understands that the Exchange Shares are not registered under the Securities Act and that the issuance thereof to such Shareholder is intended to be exempt from registration under the Securities Act pursuant to Regulation S.  Each Non-U.S. Shareholder has no intention of becoming a U.S. Person.  At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, each Non-U.S. Shareholder was outside of the United States.  Each certificate representing the Exchange Shares shall be endorsed with the following legend, or one substantially similar thereto, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT (i) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, (ii) PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR (iii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION AVAILABLE UNDER THE SECURITIES ACT.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

(d)             Each Shareholder who is a “U.S. Person” as defined in Rule 902(k) of Regulation S (each a “U.S. Shareholder”) understands that the Exchange Shares are not registered under the Securities Act and that the issuance thereof to such Shareholder is intended to be exempt from registration under the Securities Act pursuant to Regulation D promulgated thereunder (“Regulation D”).  Each U.S. Shareholder represents and warrants that he is an “accredited investor” as such term is defined in Rule 501 of Regulation D or, if not an accredited investor, that such Shareholder otherwise meets the suitability requirements of Regulation D and Section 4(2) of the Securities Act (“Section 4(2)”). Each U.S. Shareholder agrees to provide documentation to LNP prior to Closing as may be requested by LNP to confirm compliance with Regulation D and/or Section 4(2), including, without limitation, a letter of investment intent or similar representation letter and a completed investor questionnaire. Each certificate representing the Exchange Shares issued to such Shareholder shall be endorsed with the following legend, or one substantially similar thereto, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

  

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF THE COMPANY’S COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

(e)             Each Shareholder acknowledges that neither the Securities and Exchange Commission (“SEC”), nor the securities regulatory body of any state or other jurisdiction, has received, considered or passed upon the accuracy or adequacy of the information and representations made in this Agreement.

  

(f)              Each Shareholder acknowledges that he has carefully reviewed such information as he has deemed necessary to evaluate an investment in LNP and its securities, and with respect to each U.S. Shareholder, that all information required to be disclosed to such Shareholder under Regulation D has been furnished to such Shareholder by LNP.  To the full satisfaction of each Shareholder, he has been furnished all materials that he has requested relating to LNP and the issuance of the Exchange Shares hereunder, and each Shareholder has been afforded the opportunity to ask questions of LNP’s representatives to obtain any information necessary to verify the accuracy of any representations or information made or given to the Shareholders.  Notwithstanding the foregoing, nothing herein shall derogate from or otherwise modify the representations and warranties of LNP set forth in this Agreement, on which each of the Shareholders have relied in making an exchange of his ADGS Shares for the Exchange Shares.

 

(g)             Each Shareholder understands that the Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Exchange Shares or any available exemption from registration under the Securities Act, the Exchange Shares may have to be held indefinitely.  Each Shareholder further acknowledges that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144 are satisfied (including, without limitation, LNP’s compliance with the reporting requirements under the Exchange Act.

 

(h)             The Shareholder agrees that, notwithstanding anything contained herein to the contrary, the warranties, representations, agreements and covenants of Shareholder under this Article II shall survive the Closing for the period set forth in Section 10.01.

  

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ARTICLE III

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF LNP

As an inducement to ADGS and the Shareholders to consummate the Exchange, LNP represents and warrants that except as set forth in the disclosure schedule delivered by LNP to ADGS and the Shareholders (the “LNP Disclosure Schedule”), the following statements will be true and correct as of the Closing Date (as hereinafter defined):

 

3.01           Organization.  LNP is a corporation duly incorporated, validly existing, and in good standing under the laws of Delaware and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  LNP has made available to ADGS or there has been available on EDGAR complete and correct copies of the certificate of incorporation and bylaws of LNP as in effect on the date hereof (the “Articles”). The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of LNP’s Articles.  LNP has taken all action required by law, its Articles, or otherwise to authorize the execution and delivery of this Agreement, and LNP has full power, authority, and legal right and has taken all action required by law, its Articles, or otherwise to consummate the transactions herein contemplated.

3.02           Capitalization. 

 

(a)             The authorized capital stock of LNP consists of (i) 50,000,000 shares of Common Stock, $.0001 par value per share (the “LNP Common Stock”), of which amount 4,095,000 shares are issued and outstanding, and (ii) 2,000,000 shares of Preferred Stock, $.0001 par value per share, none of which are issued and outstanding.  All of such issued and outstanding shares have been validly issued and are fully paid and non-assessable.  There are no outstanding warrants, options, subscriptions or other rights of any kind or nature by which any person or entity can acquire any additional shares of LNP Common Stock or other securities of any kind or nature of LNP; no shareholder of LNP or other person or entity is entitled to any preemptive rights, rights of first refusal or other rights of any kind or nature arising out of or relating to the issuance of the Exchange Shares as contemplated by this Agreement.  The Exchange Shares to be issued at the Closing will be duly authorized, fully paid and non-assessable shares; subject to no lien, claim, charge or encumbrance of any kind or nature; will not be subject to any shareholders agreement, right of first refusal or preemptive rights; and will constitute approximately 80.6% of the then fully diluted issued and outstanding shares of the LNP Common Stock.

(b)             Except as contemplated by this Agreement, there are no registration rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to which LNP is a party or by which it is bound with respect to any equity security of any class of LNP, and there are no agreements to which LNP is a party, or which LNP has knowledge of, which conflict with this Agreement or the transactions contemplated herein or otherwise prohibit the consummation of the transactions contemplated hereunder.

 

3.03           Subsidiaries and Predecessor Corporations.   Except as disclosed in the LNP SEC Reports, as defined below, LNP does not have any predecessor corporation(s), no subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.

 

  

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3.04           SEC Filings; Financial Statements. 

 

(a)             LNP has made available to ADGS or there has been available on EDGAR, correct and complete copies of each report, registration statement and definitive proxy statement filed by LNP with the SEC since January 1, 2010 (the “LNP SEC Reports”), which are all the forms, reports and documents required to be filed by LNP with the SEC since January 1, 2010. As of their respective dates, the LNP SEC Reports: (i) were prepared in accordance and complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such LNP SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superseded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(b)             Included in the LNP SEC Reports are (i) the audited balance sheet of LNP as of December 31, 2011 and the related audited statements of operations, stockholders’ equity and cash flows for December 31, 2011, together with the notes to such statements and the opinion of its independent certified public accountants, with respect thereto; (ii) the audited balance sheet of LNP as of December 31, 2010 and the related audited statements of operations, stockholders’ equity and cash flows for December 31, 2010, together with the notes to such statements and the opinion of its independent certified public accountants, with respect thereto; and (iii) the unaudited balance sheets of LNP as of September 30, 2010, September 30, 2011 and September 30, 2012 and the related unaudited statements of operations and cash flows for the nine months ended September 30, 2010, September 30, 2011 and September 30, 2012, together with the notes to such statements.

 

(c)             Each set of financial statements (including, in each case, any related notes thereto) contained in the LNP SEC Reports comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and each fairly presents in all material respects the financial position of LNP at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not expected to have a  material adverse effect upon the business, prospects, management, properties, operations, condition (financial or otherwise) or results of operations of LNP, taken as a whole.  The LNP balance sheets are true and accurate and present fairly as of their respective dates the financial condition of LNP.  As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, LNP had no liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with generally accepted accounting principles, and all assets reflected therein are properly reported and present fairly the value of the assets of LNP, in accordance with generally accepted accounting principles. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by generally accepted accounting principles. All of LNP’s assets are reflected on its financial statements, and, except as set forth in the LNP Schedules or the financial statements of LNP or the notes thereto, LNP has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise;

  

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(d)             LNP has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable;   and

  

(e)             The books and records, financial and otherwise, of LNP are in all material aspects complete and correct and have been maintained in accordance with generally accepted accounting principles consistently applied throughout the periods involved.

3.05           Taxes.  LNP has: (i) timely filed with the appropriate taxing authorities all tax returns required to be filed by or with respect to its business, or are properly on extension and all such duly filed tax returns are true, correct and complete in all material respects; and (ii) timely paid in full or made adequate provisions for on its balance sheet (in accordance with GAAP) all Taxes shown to be due on such tax returns.  There are no liens for taxes upon the assets of LNP except for statutory liens for current taxes not yet due and payable or which may thereafter be paid without penalty or are being contested in good faith.  LNP has not received any notice of audit, is not undergoing any audit of its tax returns, and has not received any notice of deficiency or assessment from any taxing authority with respect to liability for taxes which has not been fully paid or finally settled.  There have been no waivers of statutes of limitations by LNP with respect to any tax returns.  LNP has not filed a request with the Internal Revenue Service for changes in accounting methods within the last three years which change would affect the accounting for tax purposes, directly or indirectly, of its business.  LNP has not executed an extension or waiver of any statute of limitations on the assessment or collection of any taxes due (excluding such statutes that relate to years currently under examination by the Internal Revenue Service or other applicable taxing authorities) that is currently in effect.

3.06           No Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing, or reasonably anticipated by LNP to arise, between the accountants, and lawyers formerly or presently employed by LNP and LNP is current with respect to any fees owed to its accountants and lawyers, except as set forth in Item 3.06 to the LNP Disclosure Schedule.  

 

3.07           Absence of Certain Changes or Events.  Since September 30, 2012 and except as set forth in Item 3.07 to the LNP Disclosure Schedule:

 

(a)             there has not been (i) any material adverse change in the business, operations, properties, assets or condition of LNP or (ii) any damage, destruction or loss to LNP (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets or condition of LNP;

 

(b)             LNP has not (i) amended its Articles except as required by this Agreement; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are outside of the ordinary course of business or material considering the business of LNP; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any transactions or agreements other than in the ordinary course of business; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or  termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its salaried employees whose monthly compensation exceed $1,000; or  (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees;

 

  

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(c)             LNP has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligations or liabilities (absolute or contingent) other than current liabilities reflected in or shown on the most recent LNP balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses in connection with the preparation of this Agreement and the consummation of the transaction contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights (except assets, properties, or rights not used or useful in its business which, in the aggregate have a value of less than $1,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value less than $1,000); (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of LNP; or (vi) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement; and

 

(d)             LNP has not become subject to any law or regulation which materially and adversely affects, or in the future, may adversely affect, the business, operations, properties, assets or condition of LNP.

 

3.08           Litigation and Proceedings.  There are no actions, suits, proceedings or investigations pending or, to the knowledge of LNP, threatened against LNP, or affecting LNP or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind except as disclosed in Item 3.08 to the LNP Disclosure Schedule.  LNP is not in default with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality.

3.09           Contracts.  Except as set forth in Item 3.09 to the LNP Disclosure Schedule:

 

(a)             LNP is not a party to, and its assets, products, technology and properties are not bound by, any contract, franchise, license agreement, agreement, debt instrument or other commitments whether such agreement is in writing or oral;

 

(b)             LNP is not a party to or bound by, and the properties of LNP are not subject to any contract, agreement, other commitment or instrument; any charter or other corporate restriction; or any judgment, order, writ, injunction, decree, or award; and

 

(c)             LNP is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation, (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of LNP.

 

  

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3.10           No Conflict With Other Instruments.   The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which LNP is a party or to which any of its assets, properties or operations are subject.

 

3.11           Compliance With Laws and Regulations.  LNP has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.

 

3.12           Approval of Agreement.  The Board of Directors of LNP has authorized the execution and delivery of this Agreement by LNP and has approved this Agreement and the transactions contemplated hereby.

 

3.13           Material Transactions or Affiliations.  Except as set forth in Item 3.13 to the LNP Disclosure Schedule and in the LNP SEC Reports, there exists no contract, agreement or arrangement between LNP and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by LNP to own beneficially, 5% or more of the issued and outstanding common shares of LNP and which is to be performed in whole or in part after the date hereof or was entered into since January 1, 2010.  Neither any officer, director, nor 5% Shareholders of LNP has, or has had since inception of LNP, any known interest, direct or indirect, in any such transaction with LNP which was material to the business of LNP.  LNP has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.

 

3.14           Bank Accounts; Power of Attorney.  Set forth in Item 3.14 to the LNP Disclosure Schedule is a true and complete list of (a) all accounts with banks, money market mutual funds or securities or other financial institutions maintained by LNP within the past twelve (12) months, the account numbers thereof, and all persons authorized to sign or act on behalf of LNP, (b) all safe deposit boxes and other similar custodial arrangements maintained by LNP within the past twelve (12) months, (c) the check ledger for the last 12 months, and (d) the names of all persons holding powers of attorney from LNP or who are otherwise authorized to act on behalf of LNP with respect to any matter, other than its officers and directors, and a summary of the terms of such powers or authorizations.

 

3.15           Valid Obligation.  This Agreement and all agreements and other documents executed by LNP in connection herewith constitute the valid and binding obligation of LNP, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.

 

  

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3.16           Exchange Act Compliance.  LNP is in compliance with, and current in, all of the reporting, filing and other requirements under the Exchange Act, the LNP common stock has been registered under Section 12(g) of the Exchange Act, and LNP is in compliance with all of the requirements under, and imposed by, Section 12(g) of the Exchange Act, except where a failure to so comply is not reasonably likely to have a Material Adverse Effect on LNP.

3.17           Disclosure.  All disclosure provided to ADGS and the Shareholders regarding LNP, its business and the transactions contemplated hereby, including the LNP Disclosure, furnished by or on behalf of LNP with respect to the representations and warranties made herein are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.  LNP acknowledges and agrees that ADGS and the Shareholders have not made, nor are ADGS and the Shareholders making, any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth herein.  In the event that the LNP Disclosure Schedule is not delivered contemporaneously with the execution of this Agreement, it shall be delivered as soon as practicable prior to the Closing Date.

 

ARTICLE IV

PLAN OF EXCHANGE

 

4.01           The Exchange. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, each of the Shareholders, shall assign, transfer and deliver, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, the number of ADGS Shares set forth on Schedule 4.01 attached hereto, constituting all of the shares of ADGS held by such Shareholder and, in the aggregate, 100% of the issued and outstanding shares of ADGS.  In exchange for the transfer of such securities by the Shareholders,  LNP shall issue to the Shareholders, their affiliates or assigns, a total of 20,155,000 shares of LNP Common Stock.  At the Closing Date, each of the Shareholders shall, on surrender of their certificate or certificates representing his ADGS Shares to LNP or its registrar or transfer agent, be entitled to receive a certificate or certificates evidencing his proportionate interest in the Exchange Shares as set forth in Schedule 4.01 hereto. The Shareholders acknowledge that the distribution of LNP’s shares among them may not be proportional to their holdings in ADGS, but may be determined by agreement among them and that those who will receive more than their proportionate share will be compensating those who will be receiving less than their proportionate share.

4.02           Closing.  The closing (the “Closing” or the “Closing Date”) of the transactions contemplated by this Agreement shall occur the later of 90 days from the execution of the Agreement or March 31, 2013. Such Closing shall take place at a mutually agreeable time and place, and be conditioned upon all of the conditions of the Exchange being met.

 

4.03           Closing Events.  At the Closing, LNP, ADGS and the Shareholders shall execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged, and delivered), any and all certificates, financial statements, schedules, agreements, resolutions, rulings or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the Parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby.

 

  

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ARTICLE V

COVENANTS OF THE PARTIES

The Parties hereby agree that:

5.01           Public Announcements.  Except as required by applicable law, LNP, ADGS and the Shareholders shall consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and will not issue any such press release or make any such public statement prior to such consultation and without the consent of the other Parties.

5.02           Notices of Certain Events.  In addition to any other notice required to be given by the terms of this Agreement, each of the Parties shall promptly notify the other Parties hereto of:

(a)             any notice or other communication from any person alleging that the consent of such person is or may be required in connection with any of the transactions contemplated by this Agreement;

(b)             any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; and

(c)             any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting such Party that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant hereto or that relate to the consummation of the transactions contemplated by this Agreement.

5.03           Access to Information.  Following the date hereof, until consummation of all transactions contemplated hereby, LNP shall give to ADGS and the Shareholders, their counsel, financial advisers, auditors and other authorized representatives reasonable access to the offices, properties, books and records, financial and other data and information of LNP as the Shareholders and their representatives may reasonably request.  Likewise, following the date hereof, until consummation of all transactions contemplated hereby, ADGS shall give to LNP, its counsel, financial advisers, auditors and other authorized representatives reasonable access to the offices, properties, books and records, financial and other data and information of ADGS as LNP and its representatives may reasonably request.

5.04           LNP’s Business and ADGS’s Business.  Except for transactions contemplated by this Agreement, neither LNP nor ADGS will, without the prior written consent of the other, (i) make any material change in the type or nature of its business, or in the nature of its operations, (ii) create or suffer to exist any debt, other than that currently in existence or undertaken to complete projects ongoing or to meet short term working capital needs, (iii) issue any capital stock or (iv) enter into any new agreements of any kind or undertake any new obligations or liabilities likely to have a material impact on its business.

5.05           Consents of Third Parties.  Each of the Parties will give any notices to third parties, and will use its reasonable best efforts to obtain any third party consents, that the other Parties reasonably may request in connection with this Agreement.  Each of the Parties will give any notices to, make any filings with, and use its reasonable best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with the matters in this Agreement.

  

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5.06           Standstill.  From and after the date of this Agreement until the later of the Closing, ninety (90) days after the date hereof or termination of this Agreement pursuant to Section 8.01, none of the Parties will, and each will cause its respective directors, officers, employees, agents and representatives not to, solicit offers or have discussions with any third parties with reference to a similar transaction as contemplated by this Agreement.

5.07           Audited Financial Statements.  The Shareholders shall cause ADGS to deliver to LNP no later than ninety (90) days following the execution of this Agreement, the Financial Statements of ADGS contemplated by Section 1.03 hereof.

 

5.08           Securities Filings.  From and after the date of this Agreement until the Closing, LNP will timely file all reports and other documents relating to the operation of LNP required to be filed with the SEC, which reports and other documents do not and will not contain any misstatement of a material fact, and do not and will not omit any material fact necessary to make the statements therein not misleading.

ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF LNP

 

The obligations of LNP under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

 

6.01           Accuracy of Representations and Performance of Covenants.  Each of the representations and warranties made by ADGS and the Shareholders shall be true and correct in all material respects as of the Closing Date as if made on such date.  ADGS and each Shareholder shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.  LNP shall be furnished with a certificate, signed by a duly authorized executive officer of ADGS and dated the Closing Date, confirming (i) the statements made in the two preceding sentences and (ii) that there has been no material adverse change in the business, affairs, prospects, operations, properties, assets or conditions of ADGS since the date of this Agreement.

 

6.02           No Governmental Prohibition.   No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.

 

6.03           Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of ADGS after the Closing Date on the basis as presently operated shall have been obtained.

6.04           Transfer of Shares.  Certain shareholders (the “Selling Shareholders”) of LNP will have sold and transferred in the aggregate at least 2,000,000 shares of LNP Common Stock pursuant to separate stock purchase agreements on terms acceptable to the parties thereto.

 

  

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6.05           Other Items. LNP shall have received such further documents, certificates or instruments relating to the transactions contemplated hereby as LNP may reasonably request.

6.06           Schedules and Other Information.  ADGS shall have delivered to LNP the Financial Statements of ADGS contemplated by Section 1.03, the ADGS Disclosure Schedule required hereunder, and other books and records reasonably requested in connection with LNP’s due diligence investigation of ADGS, and there shall have been no disclosure in any financial statements or any schedule delivered after the date of execution and delivery of this Agreement, or the documents described therein, or in any disclosure provided in connection with such due diligence investigation, which in the reasonable opinion of LNP does or may have a materially adverse effect on the value of the business of ADGS or on its assets, properties or goodwill.

 

ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF ADGS AND THE SHAREHOLDERS

The obligations of ADGS and the Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:

 

7.01           Accuracy of Representations and Performance of Covenants. Each of the representations and warranties made by LNP shall be true and correct in all material respects as of the Closing Date as if made on such date.  LNP shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.  The Shareholders shall be furnished with a certificate, signed by a duly authorized executive officer of LNP and dated the Closing Date, confirming (i) the statements made in the two preceding sentences and (ii) that there has been no material adverse change in the business, affairs, prospects, operations, properties, assets or conditions of LNP since the date of this Agreement.

 

7.02           No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.

 

7.03           Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of LNP after the Closing Date on the basis as presently operated shall have been obtained.

7.04           Board of Directors Resolutions.  The Shareholders shall have received executed resolutions of the Board of Directors of LNP approving this Agreement and the transactions contemplated herein.

7.05           Exchange of Notes Payable.  All of the notes payable as reflected in the books of LNP shall have been exchanged for no more than 750,000 shares of LNP Common Stock.

7.06           Outstanding Number of Shares.  There shall be no more than 25,000,000 shares of LNP Common Stock issued and outstanding on a fully diluted basis immediately following the Closing.

  

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7.07           Transfer of Shares.  The Selling Shareholders will have sold and transferred in the aggregate at least 2,000,000 shares of LNP Common Stock as contemplated by Section 6.04.

7.08           No Liabilities.  As of the Closing, LNP shall have no liabilities of any kind.

7.09           Officers and Directors.   The officers and directors of LNP shall have resigned from such positions effective immediately prior to Closing and ADGS’s designees for such positions shall have been duly appointed; provided, however, one or more of the current directors of LNP designated by ADGS shall remain in office until the expiration of ten (10) days after LNP files with the Commission, and mails to its stockholders of record, an Information Statement pursuant to Rule 14f-1 of the Exchange Act.

7.10           Other Items.   ADGS shall have received further documents, certificates, or instruments relating to the transactions contemplated hereby as ADGS may reasonably request.

7.11           Schedules and Other Information.  LNP shall have delivered to ADGS the LNP Disclosure Schedule required hereunder, and other books and records reasonably requested in connection with ADGS’s due diligence investigation of LNP, and there shall have been no disclosure in any schedule delivered after the date of execution and delivery of this Agreement, or the documents described therein, or in any disclosure provided in connection with such due diligence investigation, which in the reasonable opinion of ADGS does or may have a materially adverse effect on the value of the business of LNP or on its assets, properties or goodwill.

 

ARTICLE VIII

TERMINATION

8.01           Termination of Agreement.   This Agreement may be terminated at any time before the Closing,

(a)              by mutual consent of the Parties hereto;

(b)              upon ten (10) days written notice by LNP (provided it is not in breach hereunder) if there has been a material breach of any representation, warranty, covenant or agreement on the part of ADGS set forth in this Agreement such that the conditions in Section 6.01 will not be satisfied; provided, however, that if such breach is curable by ADGS and such cure is reasonably likely to be completed prior to the date specified in Section 8.01(d), then, for so long as ADGS continues to use commercially reasonable efforts to effect and cure, LNP may not terminate pursuant to this Section 8.01(b);

(c)              upon ten (10) days written notice by ADGS (provided it is not in breach hereunder) if there has been a material breach of any representation, warranty, covenant or agreement on the part of LNP set forth in this Agreement such that the conditions in Section 7.01 will not be satisfied; provided, however, that if such breach is curable by LNP and such cure is reasonably likely to be completed prior to the date specified in Section 8.01(d), then, for so long as LNP continues to use commercially reasonable efforts to effect and cure, ADGS may not terminate pursuant to this Section 8.01(c);

  

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(d)             by either LNP or ADGS upon written notification to the other if the Closing has not transpired within the period referred to in Section 4.02; or

(e)             by either LNP or ADGS upon written notification to the other  if any court of competent jurisdiction or other competent governmental or regulatory authority shall have issued an order making illegal or otherwise permanently restricting, preventing or otherwise prohibiting the Closing and such order shall have become final and nonappealable.

Unless the termination has been caused by the willful failure of LNP, on one hand, or ADGS and the Shareholders, on the other hand, as the case may be, to perform or satisfy any agreement, undertaking or condition to be performed or satisfied by it hereunder, LNP shall have no further obligation or liability to ADGS and the Shareholders under this Agreement, and ADGS and the Shareholders shall have no further obligation or liability to LNP under this Agreement, except as otherwise provided in that certain Escrow Agreement dated as of October 30, 2012, as same may be amended prior to the Closing, by and among ADGS, LNP and Yuen & Partners, as Escrow Agent (the “Escrow Agreement”).  Upon termination of this Agreement for any reason, each of the Parties shall promptly cause to be returned to the other all documents and information obtained in connection with this Agreement and the transactions contemplated by this Agreement and all documents and information obtained in connection with the investigation of the other Party’s business, operations and legal affairs, including any copies made of any such documents or information.

ARTICLE IX

INDEMNIFICATION

9.01           Indemnity of LNP.  LNP agrees to defend, indemnify and hold harmless ADGS, and its officers and directors, and the Shareholders from and against, and to reimburse any such party  with respect to, all liabilities, losses, costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements asserted against or incurred by any such party by reason of, arising out of, or in connection with any material breach of any representation or warranty contained in this Agreement and made by LNP or in any document or certificate delivered by LNP pursuant to the provisions of this Agreement or in connection with the transactions contemplated thereby.   All claims to be asserted hereunder must be made by the first anniversary of the Closing.

9.02           Indemnity of ADGS.  ADGS agrees to defend, indemnify and hold harmless LNP, and its officers and directors, from and against, and to reimburse any such party with respect to, all liabilities, losses, costs and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, asserted against or incurred by any such party by reason of, arising out of, or in connection with any material breach of any representation or warranty contained in this Agreement and made by ADGS or the Shareholders or in any document or certificate delivered by ADGS or the Shareholders pursuant to the provisions of this Agreement or in connection with the transactions contemplated thereby.  All claims to be asserted hereunder must be made by the first anniversary of the Closing.

  

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9.03           Indemnification Procedure. A party (an “Indemnified Party”) seeking indemnification shall give prompt notice to the other party (the “Indemnifying Party”) of any claim for indemnification arising under this Article 9.  The Indemnifying Party shall have the right to assume and to control the defense of any such claim with counsel reasonably acceptable to such Indemnified Party, at the Indemnifying Party’s own cost and expense, including the cost and expense of reasonable attorneys’ fees and disbursements in connection with such defense, in which event the Indemnifying Party shall not be obligated to pay the fees and disbursements of separate counsel for such in such action.  In the event, however, that such Indemnified Party’s legal counsel shall determine that defenses may be available to such Indemnified Party that are different from or in addition to those available to the Indemnifying Party, in that there could reasonably be expected to be a conflict of interest if such Indemnifying Party and the Indemnified Party have common counsel in any such proceeding, or if the Indemnified Party has not assumed the defense of the action or proceedings, then such Indemnifying Party may employ separate counsel to represent or defend such Indemnified Party, and the Indemnifying Party shall pay the reasonable fees and disbursements of counsel for such Indemnified Party.  No settlement of any such claim or payment in connection with any such settlement shall be made without the prior consent of the Indemnifying Party which consent shall not be unreasonably withheld.

 

ARTICLE X

MISCELLANEOUS

 

10.01         Survival of Representations, Warranties and Agreements.  All representations and warranties and statements made by a Party to in this Agreement or in any document or certificate delivered pursuant hereto shall survive the Closing Date for a period of one year following the Closing Date.  Each of the Parties hereto is executing and carrying out the provisions of this agreement in reliance upon the representations, warranties and covenants and agreements contained in this agreement or at the closing of the transactions herein provided for and not upon any investigation which it might have made or any representations, warranty, agreement, promise or information, written or oral, made by the other Party or any other person other than as specifically set forth herein.

 

10.02         Further Assurances.  If, at any time after the Closing, the Parties shall consider or be advised that any further deeds, assignments or assurances in law or that any other things are necessary, desirable or proper to complete the transactions contemplated hereby in accordance with the terms of this Agreement or to vest, perfect or confirm, of record or otherwise, the title to any property or rights of the Parties hereto, the Parties agree that their proper officers and directors shall execute and deliver all such proper deeds, assignments and assurances in law and do all things necessary, desirable or proper to vest, perfect or confirm title to such property or rights and otherwise to carry out the purpose of this Agreement, and that the proper officers and directors the Parties are fully authorized to take any and all such action.

10.03         Notices.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if delivered by hand, (ii) on the date of transmission, if delivered by confirmed facsimile, (iii) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (iv) 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 (or to such other address as any Party hereto may from time to time designate by notice duly given in accordance with this paragraph):

  

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If to LNP, to:

Life Nutrition Products, Inc.

20 Broad Street, 7th floor

New York, New York 10005

Attn: Chu Zhanjun, Chief Executive Officer

Telephone: (212) 797-7833

Facsimile:  (212) 797-1099

With a copy to:

______________________________

______________________________

______________________________

Attn: _________________________

Telephone : (___) ___-____

Facsimile:     (___) ___-____

 

If to ADGS, to:

ADGS ADVISORY LIMITED

Units 2611-13A, 26/F

113 Argyle Street, Mongkok

Kowloon, Hong Kong SAR

Attn: Chan Kin Hang

Telephone: (852) 2374-0002

Facsimile:  (852) 2374-0010

With a copy to:

Kaye Cooper Fiore Kay & Rosenberg, LLP

30A Vreeland Road, Suite 230

Florham Park, New Jersey 07932

Attn: David M. Kaye, Esq.

Telephone : (973) 443-0600

Facsimile:   (973) 443-0609

10.04         Amendment.  This Agreement may be amended, modified or supplemented only by an instrument in writing executed by the party against which enforcement of the amendment, modification or supplement is sought.

10.05         Parties in Interest.  This Agreement shall be binding on and inure to the benefit of and be enforceable by LNP, ADGS and the Shareholders, their respective heirs, executors, administrators, legal representatives, successors and assigns.

10.06         Assignment.  Neither this Agreement nor any right created hereby shall be assignable by any Party hereto.

  

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10.07         Jurisdiction.  Any legal action, suit or proceeding arising out of or relating to this Agreement, or the transactions contemplated hereby, shall be instituted in any state or federal court in the State of Delaware, and all Parties agree not to assert by way of motion, as a defense or otherwise, in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of such court, that the action, suit or proceeding is brought in an inconvenient forum, the venue of the action, suit or proceeding is improper to that the injured party is without a remedy under this Agreement or the subject matter hereof.  All Parties further irrevocably submit to the jurisdiction of any such court in any such action, suit or proceeding, shall be effective against any Party if served by registered or certified mail, return receipt requested, or by any other means of mail or delivery which requires a signed receipt, postage prepaid, mailed or delivered to such Party as herein provided, or by hand delivery.  If for any reason such service of process is ineffective, then all Parties shall be subject to service of process in accordance with applicable law or rule of court.  Nothing herein contained shall be deemed to limit or restrict the right of any Party to serve process in any manner permitted by law.

10.08         Entire Agreement.  This Agreement and the exhibits and schedules hereto supersede all prior agreements and understandings between the Parties relating to the subject matter hereof, except that the obligations of any Party under the Escrow Agreement or any other agreement executed pursuant to this Agreement shall not be affected by this Section.

10.09         Costs, Expenses and Legal Fees.  Whether or not the transactions contemplated hereby are consummated, each Party hereto shall bear its own costs and expenses (including attorneys’ fees) except that each Party hereto agrees to pay the costs and expenses, including reasonable attorneys’ fees, incurred by the other Parties in successfully (i) enforcing any of the terms of this Agreement against a Party alleged to be in breach, or (ii) proving that the other Parties breached any of the terms of this Agreement in any material respect.

10.10         Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance hereof.  Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and still be legal, valid and enforceable.

10.11         Governing Law.  This Agreement and the rights and obligations of the Parties hereto shall be governed, construed and enforced in accordance with the laws of the State of  Delaware.

10.12         Announcements.  LNP and ADGS will consult and cooperate with each other as to the timing and content of any announcements of the transactions contemplated hereby to LNP’s stockholders, the general public, or to employees, customers or suppliers.

 

  

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10.13         Confidentiality.  Each Party hereto agrees with the other that, unless and until the transactions contemplated by this Agreement have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except (i) to the extent such data or information is published, is a matter of public knowledge, or is required by law to be published; or (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement.  In the event of the termination of this Agreement, each Party shall return to the other Party all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each Party will continue to comply with the confidentiality provisions set forth herein.

10.14         Schedules; Knowledge.  Each Party is presumed to have full knowledge of all information set forth in the other Party’s schedules delivered pursuant to this Agreement.

10.15         Best Efforts.   Subject to the terms and conditions herein provided, each Party shall use its best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the transactions contemplated hereby shall be consummated as soon as practicable.  Each Party also agrees that it shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the transactions contemplated herein.

10.16         Captions and Gender.  The captions in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms or provisions hereof.  Whenever required by the context hereof, the singular shall include the plural and vice versa; the masculine gender shall include the feminine and neuter gender and vice versa; the word “person” shall include a natural person as well as a corporation, partnership, firm of other form of association.

10.17         Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same instrument.  The counterparts may be delivered by facsimile transmission or by electronic mail in portable document format (.pdf).

 

10.18         Waiver.  No waiver of any term or provision hereof shall be effective unless in writing, signed by the Parties to be charged.

10.19         Representation by Counsel.  Each of the Parties hereto represents, warrants and covenants that it has had ample opportunity to consider entering into this Agreement and has had an opportunity to consult with counsel regarding this Agreement prior to executing the same and has done so to the extent each has deemed necessary.  The Parties further agree that any rule that provides that an ambiguity within a document will be interpreted against the party drafting such document shall not apply.

 

 

[Signature Page Follows]

  

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

	 	LIFE NUTRITION PRODUCTS, INC.	 
	 	 	 	 
	 	
By: 

	/s/ Chu Zhanjun	 
	 	Name:	Chu Zhanjun	 
	 	Title:	CEO	 
	 	 	 	 
	 	ADGS ADVISORY LIMITED	 
	 	 	 	 
	 	By: 	/s/ K.H. Chan	 
	 	Name:	K.H. Chan	 
	 	Title:	COO	 
	 	 	 	 
	 	SHAREHOLDERS:	 
	 	 	 	 
	 	By:	/s/ K.H. Chan	 
	 	Name:	ADGS Advisory (Holding) Limited by K.H.	 
	 	 	Chan, authorized signatory	 
	 	 	 	 
	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	 	 	 
	 	Name:	 	 

 

 

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