Document:

f8k0909ex10i_universalhold.htm

 

Exhibit 10.1

 

 

MEMBERSHIP UNIT PURCHASE AGREEMENT

 

This Membership Unit Purchase Agreement ("Agreement"), is made and entered into as of the 21st day of September 2009 by and among Universal Holdings, Inc., a corporation organized under the laws of the State of Nevada (“Universal”); Lanny
M. Roof and Judith Lee (the “Universal Principal Stockholders”); and Michael Hlavsa (“Hlavsa” or the “Coronado Unitholder”). Universal, the Universal Principal Stockholders and Hlavsa are
hereinafter sometimes individually referred to as a “Party” and collectively referred to as the “Parties.”

 

RECITALS:

 

	A. 	
Universal desires to purchase from Hlavsa all of the shares of capital stock of Coronado Acquisitions, LLC, a Nevada limited liability company, (“Coronado”) that are owned of record and beneficially by Hlavsa.

	 	 
	B.   	
Hlavsa is the record and beneficial owner of 21,000 membership units of Coronado (the “Subject Units”), representing 100% of the issued and outstanding membership units of Coronado (the “Coronado Outstanding Units”).

	 	 
	C.   	Hlavsa is willing to sell the Subject Units to Universal, all upon the terms and subject to the conditions hereinafter set forth.
	 	 
	D.   	
The board of directors of Universal, the Universal Principal Stockholders and Hlavsa each deem it to be in the best interests of Universal and Hlavsa to consummate the sale and purchase of the Subject Units, as a result of which Universal shall acquire 100% of all of the issued and outstanding Coronado Outstanding Units and Hlavsa shall receive the Purchase
Price (as hereinafter defined).

	 	 
	E.   	
On May 31, 2009, Coronado issued a Non-Interest Bearing Promissory Note in the principal amount of $3,250,000 (the “Coronado Note”) to Matthew Jennings as agent for Capital Asset Lending, Inc., a California corporation, Westmoore Lending, LLC, a California limited liability company, Westmoore Lending Opportunities, LLC, a California limited liability
company with an address at c/o Matthew Jennings, 1353 Old Temescal Road, Suite 108, Corona, California 92881 (the “Coronado Noteholders”).  Pursuant to the Coronado Note, Coronado may satisfy the principal amount of the Coronado Note by issuing shares of a publicly listed company at the conversion price of $1.55 per share.

	 	 
	D.	In connection with this Agreement, Universal shall issue 2,100,000 shares of its Common Stock to the Coronado Noteholders in complete and full satisfaction of the Coronado Note.

 

NOW, THEREFORE, in consideration of the mutual covenants, agreements, repre­sentations and warranties contained in this Agreement, the parties hereto agree as follows:

DEFINITIONS

 

 As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Applicable Law” means any domestic or foreign law, statute, regulation, rule, policy, guideline or ordinance applicable to the businesses of the Parties, the Share Exchange and/or the Parties.

 

 “Affiliate” means any one or more Person controlling, controlled by or under common control with any other Person or their affiliate.

 

 

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“Business Day” shall mean any day, excluding Saturday, Sunday and any other day on which national banks located in New York, New York shall be closed for business.

 

“Closing Date” shall mean the date upon which the purchase and sale of the Subject Units shall be consummated.

“Common Stock” shall mean the shares of common stock of Universal Holdings, Inc., par value $0.0001 per share.

“Coronado” shall have the meaning ascribed to it in the Recitals.

“Coronado Note” shall have the meaning ascribed to it in the Recitals.

“Coronado Noteholders” shall have the meaning ascribed to it in the Recitals.

“Coronado Outstanding Units” means the 21,000 membership units that are issued and outstanding as at the date of this Agreement and as at the Closing Date.

 

“Dollar” and “$” means lawful money of the United States of America.

 

 “Exchange Act” means the Securities Exchange Act of 1934.

 

 “Financial Statements” shall have the meaning as is defined in Section 2.4 of this Agreement.

 

“GAAP” means generally accepted accounting principles in the United States of America as promulgated by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board or any successor Institutes concerning the treatment of any accounting matter.

 

“Hlavsa” shall have the meaning ascribed to it in the preamble.

“Knowledge” means the knowledge after reasonable inquiry.

 

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset.

 

“Material Adverse Effect” with respect to any entity or group of entities means any event, change or effect that has or would have a materially adverse effect on the financial condition, business or results of operations of such entity or group of entities, taken as a consolidated whole.

 

“National Securities Exchange” means the collective reference to the New York Stock Exchange, the NYSE Alternext Exchange, the Nasdaq Stock Exchange, the FINRA OTC Bulletin Board or any other recognized national securities exchange in the United States.

 

“Person” means any individual, corporation, partnership, trust or unincorporated organization or a government or any agency or political subdivision thereof.

“Purchase Price” shall mean Thirty Two Thousand Five Hundred United States Dollars (U.S. $32,500).

 

 

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“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933.

 

“Universal Common Stock” shall mean the 100,000,000 shares of common stock of Universal, $0.0001 par value per share, that are authorized for issuance pursuant to the certificate of incorporation of Universal.

 

“Universal Preferred Stock” means the 10,000,000 shares of preferred stock of Universal, $0.0001 par value per share, that are authorized for issuance pursuant to the certificate of incorporation of Universal, and containing such rights, privileges and designations as the board of directors of Universal
may, from time to time determine.

 

 “Sale of Control”  means the sale or transfer of all or substantially all of the shares of capital stock or assets of Universal and its consolidated Subsidiaries, whether through merger, consolidation, asset sale, tender offer or like combination or consolidation, to any Person who is
not an Affiliate of Universal immediately prior to such Sale of Control.

 

“Subject Units” shall mean an aggregate of 21,000 of the Coronado Outstanding Units that are owned of record and beneficially by Hlavsa as at the date hereof and as at the Closing Date.

 

“Subsidiary” of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.

 

 “Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means:

 

	(i)	
any income, alternative or add-on minimum tax, gross receipts tax, sales tax, use tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax, withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp tax, occupation tax, property tax, environmental or windfall profit tax, custom, duty or other tax, impost, levy, governmental fee or other like assessment or charge of any kind whatsoever
together with any interest or any penalty, addition to tax or additional amount imposed with respect thereto by any governmental or Tax authority responsible for the imposition of any such tax (domestic or foreign), and

	 	 
	(ii)	
any liability for the payment of any amounts of the type described in clause (i) above as a result of being a member of an affiliated, consolidated, combined or unitary group for any Taxable period, and

	 	 
	(iii)	any liability for the payment of any amounts of the type described in clauses (i) or (ii) above as a result of any express or implied obligation to indemnify any other person.

 

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

 

 

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“Trading Days” means any day on which the New York Stock Exchange or other National Securities Exchange on which Universal Common Stock trades is open for trading.

SECTION 1. PURCHASE AND SALE OF THE SUBJECT UNITS

1.1     Sale of the Subject Units.

 

	(a) 	
On the Closing Date and subject to and upon the terms and conditions of this Agreement, Hlavsa shall sell, assign, transfer and exchange (collectively, “Transfer”) to Universal all, and not less than all, of the Subject Units, consisting of
21,000 of the Coronado Outstanding Units that are owned of record and beneficially by Hlavsa, and representing 100% of the Coronado Outstanding Units at the Closing Date.

 

	  (b)  	On the Closing Date, Hlavsa shall deliver to Universal one or more membership unit certificates evidencing the Subject Units, duly endorsed in blank for transfer and with the signature of the record owner appropriately notarized or guaranteed by a member of the New York Stock Exchange, Inc. or a national bank (the “Subject Units Certificates”).

 

1.2     Payment of Purchase Price.  Within a reasonable period of time following the Closing Date, against delivery of the Subject Units Certificates, Universal shall pay to Hlavsa the $32,500 Purchase Price.  Such Purchase
Price shall be paid by wire transfer of immediately available funds to a bank account designated by Hlavsa.

1.3     Closing.

 

The closing of the sale and purchase of the Subject Units (the “Closing”) will take place immediately following the conversion of the Coronado Note to common stock of Universal under the terms of the Coronado Note, at the offices of Anslow & Jaclin, LLP, counsel to Coronado, at its office in New Jersey,
within five (5) Business Days following the delivery of satisfaction or waiver of the conditions precedent set forth in Section 4 or at such other date as Universal and the Coronado Unitholder shall agree (the “Closing Date”), but in no event shall the Closing Date occur later than October 31, 2009, unless such date shall be extended by mutual agreement of Universal and Hlavsa.

 

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SECTION 2. REPRESENTATIONS AND WARRANTIES OF HLAVSA.

Hlavsa hereby represents and warrants to Universal as follows:

2.1     Authority and Ownership of Subject Units.

 

	(a) 	
Hlavsa has approved the execution delivery and performance of this Agreement by him. Hlavsa individually has the power and authority to enter into this Agreement and to perform his obligations hereunder.  The execution and delivery of this Agreement and the consummation of the transaction contemplated hereby have been and hereby is duly authorized by Hlavsa and is hereby authorized by Hlavsa.  The
execution and performance of this Agreement will not constitute a material breach of any agreement, indenture, mortgage, license or other instrument or document to which Hlavsa is a party and will not violate any judgment, decree, order, writ, rule, statute, or regulation applicable to Hlavsa or his properties.

	 	 
	  (b)   	As at the date of this Agreement and the Closing Date, Hlavsa is the record and beneficial owner of all, and not less than all, of the Subject Units. The Subject Units are owned of record and beneficially by Hlavsa free and clear of all rights, claims, liens and encumbrances, and have not been sold, pledged, assigned or otherwise transferred except pursuant to this Agreement.

   

2.2     Capitalization.

 

As at the date of this Agreement, and as at the Closing Date, Hlavsa is the owner of 21,000 Subject Units of Coronado, representing 100% of the Coronado Outstanding Units.

2.3     Financial Statements, Books and Records.

 

	(a) 	
Schedule 2.3(a) consists of the audited consolidated financial statements (balance sheet, income statement, statements of cash flows and shareholder equity and notes thereto) of Coronado for all applicable periods (the “Coronado Annual Financial Statements”).

 

	(b)	
The Coronado Financial Statements fairly represent the financial position of Coronado as at such dates and the results of their operations for the periods then ended.  The Financial Statements were prepared in accordance with generally accepted accounting principles applied on a consistent basis with prior periods except as otherwise stated therein. The books of account and other financial records of Coronado
are in all respects complete and correct in all material respects and are maintained in accordance with good business and accounting practices.

 

	(c)	
The Coronado Annual Financial Statements were audited in accordance with generally accepted accounting principles and Regulation S-X, as promulgated under the Securities Act.

 

	(d)	In addition to the Coronado Annual Financial Statements, the auditors engaged pursuant to Section 2.3(c) above shall review, and assist Coronado in the preparation of, an unaudited consolidated balance sheet and statement of income of Coronado as may be required for the
fiscal quarter ended June 30, 2009 (collectively, the “Additional Financial Statements”).

 

2.4      Access to Records.  The corporate financial records, minute books and other documents and records of Coronado have been made available to Universal prior to the Closing hereof.

 

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2.5      No Material Adverse Changes.  Except as otherwise described on Schedule 2.5 hereto, since December 31, 2008 there has not been:

 

	
(a)
	
any material adverse change in the financial position of Coronado, except changes arising in the ordinary course of business, which changes will in no event materially and adversely affect the financial position of Coronado;

 

	(b)	
any damage, destruction or loss materially affecting the assets, prospective business, operations or condition (financial or otherwise) of Coronado whether or not covered by insurance;

 

	(c)	
any declaration, setting aside or payment of any dividend or distribution with respect to any redemption or repurchase of the Coronado Outstanding Units;

 

	(d)	
any sale of an asset (other than in the ordinary course of business) or any mortgage or pledge by Coronado of any properties or assets, other than as set forth in Section 2.12 below; or

 

	(e)	
adoption of any pension, profit sharing, retirement, stock bonus, stock option or similar plan or arrangement.

 

2.6  Taxes.  Coronado as of December 31, 2008, has filed all material tax, governmental and/or related forms and reports (or extensions thereof) due or required to
be filed and has (or will have) paid or made adequate provisions for all taxes or assessments which had become due as of December 31, 2008, and there are no deficiency notices outstanding.

2.7  Compliance with Laws.  Except as set forth on Schedule 2.8,  Coronado has complied
with all federal, state, county and local laws, ordinances, regulations, inspections, orders, judgments, injunctions, awards or decrees applicable to it or its business which, if not complied with, would materially and adversely affect the business of  Coronado.

2.8      No Breach.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not:

 

	(a)	
violate any provision of the Articles of Incorporation or By-Laws of  Coronado;

 

	(b)	
violate, conflict with or result in the breach of any of the terms of, result in a material modification of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time, or both constitute) a default under any contract or other agreement to which Coronado is a party or by or to which it or any of its assets or properties may be bound or subject;

 

	(c)	
violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, Coronado or upon the properties or business of Coronado; or

 

	(d)	violate any statute, law or regulation of any jurisdiction applicable to the transactions contemplated herein, which could have a materially adverse effect on the business or operations of Coronado.

         

2.9     Actions and Proceedings.   Coronado is not a party to any material pending litigation or, to Hlavsa’s knowledge, any governmental investigation or proceeding
not reflected in the Coronado Financial Statements, and to Hlavsa’s knowledge, no material litigation, claims, assessments or Non-governmental proceedings are threatened against Coronado except as set forth on Schedule 2.9 attached hereto and made a part hereof.

 

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2.10   Agreements.  Schedule 2.10 sets forth any material contract or arrangement to which Coronado is a party or by or to which it or its assets, properties or business are bound or subject, whether written or oral.

2.11   Brokers or Finders.  No broker's or finder's fee will be payable by Coronado in connection with the transactions contemplated by this Agreement nor will any such fee be incurred
as a result of any actions by Hlavsa.

2.12   Real Estate.  Except as set forth on Schedule 2.12, Coronado owns no real property nor is a party to any leasehold agreement.

2.13    Tangible Assets.  Except as set forth on Schedule 2.13 hereto,  Coronado has full title and interest in all machinery, equipment, furniture, leasehold improvements, fixtures,
projects, owned or leased by Coronado, any related capitalized items or other tangible property material to the business of Coronado (the "Tangible Assets").   Coronado holds all rights, title and interest in all the Tangible Assets owned by it on the Balance Sheet or acquired by it after the date on the Balance Sheet free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or any other encumbrances.  All of the Tangible Assets are in good operating condition and repair and are usable in the ordinary course of business of  Coronado and conform to all applicable laws, ordinances and government orders, rules and regulations relating to their construction and operation, except as set forth on Schedule 2.13 hereto.

2.14   Liabilities.   Coronado did not have any direct or indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or responsibility, known or unknown, fixed or
unfixed, liquidated or unliquidated, secured or unsecured, accrued or absolute, contingent or otherwise, including, without limitation, any liability on account of taxes, any governmental charge or lawsuit (all of the foregoing collectively defined to as "Liabilities"), which are not fully, fairly and adequately reflected on the Financial Statements except for a specific Liabilities set forth in the Unaudited Financial Statements or on Schedule
2.14 attached hereto and made a part hereof.  As of the date of Closing, Coronado will not have any Liabilities, other than Liabilities fully and adequately reflected on the Financial Statements except for Liabilities incurred in the ordinary course of business and as set forth in Schedule 2.14.  There is no circumstance, condition, event or arrangement
which may hereafter give rise to any Liabilities not in the ordinary course of business.

2.15   Operations of  Coronado.  From December 31, 2008 through the Closing Date, Coronado
has not and will not have:

 

	(a)	
declared or paid any dividend or declared or made any distribution of any kind to any unitholder, or made any direct or indirect redemption, retirement, purchase or other acquisition of any of its units;

 

	(b)	
except in the ordinary course of business, incurred or assumed any indebtedness or liability (whether or not currently due and payable);

 

	(c)	
disposed of any assets of  Coronado except in the ordinary course of business, except as described in Schedule 2.15;

 

	(d)	
materially increased the annual level of compensation of any executive employee of Coronado;

 

	(e)	
increased, terminated, amended or otherwise modified any plan for the benefit of employees of Coronado; or

 

	(f)	issued any equity securities or rights to acquire such equity securities.

 

 

 

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2.16   Full Disclosure.  No representation or warranty by Hlavsa in this Agreement or in any document or schedule to be delivered by him pursuant hereto, and no written statement, certificate
or instrument furnished or to be furnished by Hlavsa pursuant hereto or in connection with the negotiation, execution or performance of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state any fact necessary to make any statement herein or therein not materially misleading or necessary to a complete and correct presentation of all material aspects of Coronado.

SECTION 3.  REPRESENTATIONS AND WARRANTIES OF UNIVERSAL HOLDINGS, INC. AND THE UNIVERSAL PRINCIPAL STOCKHOLDERS

 

Universal and the Universal Principal Stockholders each hereby represents and warrants jointly and severally to Hlavsa, as follows:

3.1     Organization and Good Standing.  Universal is a corporation duly organized, validly existing and in good standing under the laws of State of Nevada.  Universal has the corporate power to own its own property and to carry
on its business as now being conducted and is duly qualified to do business in any jurisdiction where so required except where the failure to so qualify would have no material negative impact.

3.2     Authority.  The Universal Principal Stockholders have approved the execution delivery and performance of this Agreement by Universal.  The Universal Principal Stockholders have the power and authority, and Universal has
the corporate power to enter into this Agreement and to perform its obligations hereunder, including payment of the Purchase Price.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors and stockholders of Universal as required by Nevada law.  The execution and performance of this Agreement will not constitute a material breach
of any agreement, indenture, mortgage, license or other instrument or document to which Universal is a party and will not violate any judgment, decree, order, writ, rule, statute, or regulation applicable to Universal or its properties.  The execution and performance of this Agreement will not violate or conflict with any provision of the respective Certificate of Incorporation
or by-laws of Universal.

3.3     Universal Capitalization.  As of the date of this Agreement, Universal is authorized to issue (a) 100,000,000 shares of Universal Common Stock, $0.0001 par value per share, and (b) 10,000,000 shares of Universal Preferred Stock, $0.0001
par value per share. An aggregate of 7,099,000 shares of Universal Common Stock and no shares of Universal Preferred Stock are issued and outstanding.  Except as contemplated by this Agreement and the conversion of the Coronado Note, no shares of Universal Common Stock or Universal Preferred Stock are reserved for issuance pursuant to any agreement, convertible securities, options or warrants.   The record and beneficial owners of the 7,099,000 issued and outstanding shares of Universal
Common Stock as at September 16, 2009 are set forth on Schedule 3.3 of this Agreement. All of the issued and outstanding shares of Common Stock of Universal immediately prior to the consummation of the transaction contemplated hereby are duly authorized, validly issued, fully paid and non-assessable, have been issued in compliance with all applicable U.S. federal and state securities laws and state corporate laws, and have been issued free of preemptive
rights of any security holder.  

 

 

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Universal is not a party to, and neither it nor either Universal Controlling Stockholder has any knowledge of, any agreement restricting the transfer of any shares of the capital stock of Universal.  The issuance of all of the shares of Universal described in this Agreement have been, or will be, as applicable, in compliance with
U.S. federal and state securities laws and state corporate laws and no stockholder of Universal has any right to rescind or bring any other claim against Universal for failure to comply with the Securities Act, or state securities laws.

3.4      Universal 2008 Balance Sheet; Assets and Liabilities.

 

	 (a)  	
The Form 10-K of Universal for the fiscal year ended April 30, 2009 includes the audited balance sheet, statement of operations and statement of cash flows of Universal as at April 30, 2009 and for the fiscal year then ended (the “Universal 2008 Audited Financial Statements”).  The Forms 10-Q of Universal for the quarters ended July 31, 2009,
January 31, 2009 and October 31, 2008, include the unaudited balance sheet, statement of operations and statement of cash flows of Universal as at their respective dates and for the respective three, six and nine months then ended (the “Universal Unaudited Financial Statements”).  Except as set forth on the Universal Balance Sheet as at July 31, 2009 or otherwise disclosed on Schedule
3.4, as at July 31, 2009 and for all periods subsequent thereto, Universal has no other assets and has incurred no other liabilities, debts or obligations, whether fixed, contingent or otherwise required to be set forth on a balance sheet prepared in accordance with GAAP.  The books of account and other financial records of Universal are in all respects complete and correct in all material respects and are maintained in accordance
with good business and accounting practices.

 

	(b)	Universal has no operating assets or liabilities, and has not conducted any trade or business activities whatsoever, other than as set forth on Schedule 3.4 annexed hereto.

            

3.5     No Material Adverse Changes.  Since July 31, 2009:

 

	(a)	
there has not been any material adverse changes in the financial position of Universal except changes arising in the ordinary course of business, which changes will in no event materially and adversely affect the financial position of Universal, and will be consistent with the representations made
by Universal hereunder.

 

	(b)	
there has not been any damage, destruction or loss materially affecting the assets, prospective business, operations or condition (financial or otherwise) of Universal whether or not covered by insurance;

 

	(c)	
there has not been any declaration setting aside or payment of any dividend or distribution with respect to any redemption or repurchase of Universal capital stock;

 

	(d)	
there has not been any sale of an asset (other than in the ordinary course of business) or any mortgage pledge by Universal of any properties or assets; or

 

	(e)	
there has not been adoption or modification of any pension, profit sharing, retirement, stock bonus, stock option or similar plan or arrangement.

 

	(f)	
there has not been any loan or advance to any shareholder, officer, director, employee, consultant, agent or other representative or made any other loan or advance otherwise than in the ordinary course of business;

 

	(g)	
there has not been any increase in the annual level of compensation of any executive employee of Universal;

 

	(h)	
except in the ordinary course of business, Universal has not entered into or modified any contract, agreement or transaction; and

 

	(i)	Universal has not issued any equity securities or rights to acquire equity securities.

 

 

 

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3.6      Taxes.  Universal has timely filed all material tax, governmental and/or related forms and reports (or extensions thereof) due or required to be filed and has paid or made adequate provisions for all taxes or assessments which
have become due as of the Closing Date, and there are no deficiencies outstanding.

3.7     Compliance with Laws.  Universal has complied with all federal, state, county and local laws, ordinances, regulations, inspections, orders, judgments, injunctions, awards
or decrees applicable to it or its business, which, if not complied with, would materially and adversely affect the business of Universal or the trading market for the Common Stock specifically, and Universal has complied with provisions for registration under the Securities Act and all applicable blue sky laws in connection with its public stock offering and there are no outstanding,
pending or threatened stop orders or other actions or investigations relating thereto.

3.8     Actions and Proceedings.  Universal is not a party to any material pending litigation or governmental proceedings or, to its knowledge or the knowledge of either
Universal Principal Stockholder, is any material pending litigation or are governmental proceedings threatened against Universal.

3.9     Periodic Reports.  Universal has timely made all filings with the SEC that it has been required to make under the Securities Act and the Exchange Act (the “Public Reports”).  Each
of the Public Reports has complied in all material respects with the applicable provisions of the Securities Act, the Exchange Act, and the Sarbanes/Oxley Act of 2002 (the “Sarbanes/Oxley Act”) and/or regulations promulgated thereunder.  None of the Public Reports, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading.  There
is no event, fact or circumstance that would cause any certification signed by any officer of Universal in connection with any Public Report pursuant to the Sarbanes/Oxley Act to be untrue, inaccurate or incorrect in any respect.  There is no revocation order, suspension order, injunction or other proceeding or law affecting the trading of Universal’s Common Stock.

3.10   Disclosure.  Universal and each of the Universal Principal Stockholders have (and at the Closing they will have) disclosed in writing to Hlavsa all events, conditions and facts materially
affecting the business, financial conditions or results of operation of Universal all of which have been set forth herein.  Neither Universal nor either of the Universal Principal Stockholders has now nor will have, at the Closing, withheld disclosure of any such events, conditions, and facts which they have knowledge of or have reasonable grounds to know may exist.

3.11   Access to Records.  Any corporate financial records, minute books, and other documents and records that Universal has have been made available to Hlavsa prior
to the Closing hereof.

3.12   No Breach.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not:

 

 

10

 

 

	(a)	
violate any provision of the Articles of Incorporation or By-Laws of Universal;

 

	(b)	
violate, conflict with or result in the breach of any of the terms of, result in a material modification of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract or other agreement to which Universal is a party or by or to which it or any of its assets
or properties may be bound or subject;

 

	(c)	
violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, Universal or upon the securities, properties or business to Universal; or

 

	(d)	violate any statute, law or regulation of any jurisdiction applicable to the transactions contemplated herein.

 

3.14   Brokers or Finders.  No broker's or finder's fee will be payable by Universal in connection with the transactions contemplated by this Agreement, nor will any such fee be incurred
as a result of any actions of Universal and/or the Universal Principal Stockholders.

3.15   Notice of Conversion of Coronado Note. As of the date hereof, Universal has issued shares of its Common Stock to the Coronado Noteholders pursuant to the terms of the automatic conversion feature of the Coronado Note.

3.16    Authority to Execute and Perform Agreements.  Universal has the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement
and to perform fully its obligations hereunder.  This Agreement has been duly executed and delivered and is the valid and binding obligation of Universal enforceable in accordance with its terms, except as may be limited by bankruptcy, moratorium, insolvency or other similar laws generally affecting the enforcement of creditors' rights.  The execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby and the performance by Universal of this Agreement, in accordance with its respective terms and conditions will not:

 

	(a)	
require the approval or consent of any governmental or regulatory body or the approval or consent of any other person;

 

	(b)	
conflict with or result in any breach or violation of any of the terms and conditions of, or constitute (or with any notice or lapse of time or both would constitute) a default under, any order, judgment or decree applicable to Universal, or any instrument, contract or other agreement to which Universal is
a party or by or to which Universal is bound or subject; or

 

	(c)	result in the creation of any lien or other encumbrance on the assets or properties of Universal.

 

3.17    Full Disclosure.  No representation or warranty by Universal or either of the Universal Principal Stockholders in this Agreement or in any document or schedule to be delivered by them pursuant hereto, and no written statement, certificate
or instrument furnished or to be furnished by Universal or either of the Universal Principal Stockholders pursuant hereto or in connection with the negotiation, execution or performance of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state any fact necessary to make any statement herein or therein not materially misleading or necessary to complete and correct presentation of all material
aspects of the business of Universal.

 

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3.18    Subsidiaries and Equity Investments. Universal does not directly or indirectly own any capital stock or other securities of, or any beneficial ownership interest in, or hold any equity or similar interest, or have any investment in any corporation,
limited liability company, partnership, limited partnership, joint venture or other company, person or other entity.

3.19    Agreements.  Universal is not a party to or bound by any contracts, including, but not limited to, any:

 

	a.	
employment, advisory or consulting contract;

 

	b.	
plan providing for employee benefits of any nature, including any severance payments;

 

	c.	
lease with respect to any property or equipment;

 

	d.	
contract, agreement, understanding or commitment for any future expenditure;

 

	e.	
contract or commitment pursuant to which it has assumed, guaranteed, endorsed, or otherwise become liable for any obligation of any other person, entity or organization; or

 

	f.	agreement with any person relating to the dividend, purchase or sale of securities, that has not been settled by the delivery or payment of securities when due, and which remains unsettled upon the date of this Agreement, except as provided herein.

 

3.20    Books, Financial Records and Internal Controls.  All the accounts, books, registers, ledgers, Universal Board minutes and financial and other records of whatsoever kind of Universal have been fully, properly and accurately kept and completed;
there are no material inaccuracies or discrepancies of any kind contained or reflected therein; and they give and reflect a true and fair view of the financial, contractual and legal position of Universal.  Universal maintains a system of internal accounting controls sufficient, in the judgment of Universal and the Universal Principal Stockholders, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with U.S. GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions are taken with respect to any differences.

3.21    No Debt Obligations.  Upon the Closing Date, Universal will have no debt, obligations or liabilities of any kind whatsoever other than with respect to the transactions contemplated hereby.  Universal is not a guarantor of any
indebtedness of any other person, entity or corporation.

3.22    No Disagreements with Accountants and Lawyers. There are no disagreements of any kind currently existing, or anticipated by Universal to arise, between Universal and any accountants and/or lawyers formerly or currently engaged by Universal.  Universal
is current with respect to fees owed to its accountants and lawyers.

3.23    No Repayment Requirements.  There are no outstanding contractual obligations (contingent or otherwise) of Universal to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests
in, Universal or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other person.

 

12

 

 

 

3.24    Employees.

 

	a.	
Universal has no employees other than Lenny M. Roof and Judith Lee.

 

	b.	Universal does not have any officers or directors other than Lenny M. Roof and Judith Lee. No director or officer of Universal is a party to, or is otherwise bound by, any contract (including any confidentiality, non-competition or proprietary rights agreement) with any other person that in any way adversely affects or will materially affect (i) the performance of his/her duties as a director or officer of
Universal or (ii) the ability of Universal to conduct its business.

 

3.25   Interested Party Transactions.  No officer, director or principal stockholder of Universal or any affiliate or “associate” (as such term is defined in Rule 405 as promulgated by the SEC under the Securities Act) of any such person, has or has had, either directly or indirectly, (1) an interest
in any person which (a) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by Universal, or (b) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish Universal any goods or services; or (2) a beneficial interest in any contract or agreement to which Universal is a party or by which it may be bound or affected.

3.26   Intellectual Property.  Universal does not own, use or license any Intellectual Property in its activities as currently conducted.

3.27    No Undisclosed Events or Circumstances.  No event or circumstance has occurred or exists with respect to Universal or its businesses, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement by Universal but which has not been so publicly announced or disclosed.  Universal has not provided to Hlavsa, any material non-public information or other information which, according to applicable law, rule or regulation, was required to have been disclosed publicly by Universal but which has not been so disclosed, other than with respect to the transactions contemplated by this Agreement.

3.28    Contributions and Payments.  Neither Universal, nor, to the knowledge of Universal or the Universal Principal Stockholders, any of Universal’s employees, officers, directors or agents, at any time during the last five years: (i)
made any unlawful contribution to any candidate for foreign office or failed to disclose fully any contribution in violation of law, or (ii) made any payment to any federal or state governmental officer or official, or other person charged with similar public or quasi-public duties,  other than  payments  required or  permitted  by the laws of the United States or any jurisdiction thereof.

SECTION 4.  CONDITIONS PRECEDENT

4.1      Conditions Precedent to the Obligations of Hlavsa.   All obligations of Hlavsa under
this Agreement are subject to the fulfillment, prior to or as of the Closing Date, as indicated below, of each of the following conditions; any one of which may be waived at Closing by the Hlavsa:

 

 

13

 

 

	(a)	
The representations and warranties by or on behalf of Universal and the Universal Principal Stockholders contained in this Agreement or in any certificate or document delivered pursuant to the provisions hereof shall be true in all material respects at and as of Closing Date as though such representations
and warranties were made at and as of such time.

 

	(b)	
Universal and the Universal Principal Stockholders shall have performed and complied in all material respects, with all covenants, agreements, and conditions set forth in, and shall have executed and delivered all documents required by this Agreement to be performed or complied with or executed and delivered by them prior to or at the Closing.

 

	(c)	
On the Closing Date, an executive officer of Universal shall have delivered to Hlavsa a certificate, duly executed by such Person and certifying, that to the best of such Person’s knowledge and belief, the representations and warranties of Universal set forth in this Agreement are true and correct in all material respects.

 

	(d)	
On or before the Closing, the transactions contemplated by the conversion of the Coronado Note shall have been consummated and the shares of Universal issued to the Coronado Noteholders.

 

	(e)	
At the Closing, all instruments and documents delivered to Hlavsa pursuant to provisions hereof shall be reasonably satisfactory to legal counsel for Hlavsa.

 

	(f)	Universal shall have paid in full the Purchase Price for the Subject Units.

 

4.2     Conditions Precedent to the Obligations of Universal.  All obligations of Universal under this Agreement are subject to the fulfillment, prior to or at Closing, of each of the following conditions (anyone of which
may be waived at Closing by Universal):

 

	(a)	
The representations and warranties by Hlavsa contained in this Agreement or in any certificate or document delivered pursuant to the provisions hereof shall be true in all material respects at and as of the Closing as though such representations and warranties were made at and as of such time;

	(b) 	
Hlavsa shall have performed and complied with, in all material respects, with all covenants, agreements, and conditions set forth in, and shall have executed and delivered all documents required by this Agreement to be performed or complied or executed and delivered by him prior to or at the Closing;

	(c) 	
On the Closing Date, Hlavsa shall have delivered to Universal a certificate certifying that to the best of his knowledge and belief, the representations and warranties set forth by him in this Agreement are true and correct in all material respects;

	(e)	
The Coronado Note shall have been converted into common stock of Universal pursuant to the terms of the Coronado Note and notice provided to the Coronado Noteholders; and

	(f)	Hlavsa shall have delivered to Universal good and marketable title to the Subject Units in accordance with the provisions of this Agreement.

 

SECTION 5.  COVENANTS

5.1      Corporate Examinations and Investigations.  Prior to the Closing Date, the parties acknowledge that they have been entitled, through their employees and representatives, to make such investigation of the assets, properties,
business and operations, books, records and financial condition of the other as they each may reasonably require.  No investigations, by a party hereto shall, however, diminish or waive any of the representations, warranties, covenants or agreements of the party under this Agreement.

 

14

 

 

5.2      Further Assurances.  The parties shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby.  Each
such party shall use its best efforts to fulfill or obtain the fulfillment of the conditions to the Closing, including, without limitation, the execution and delivery of any documents or other papers, the execution and delivery of which are necessary or appropriate to the Closing.

5.3      Confidentiality.  In the event the transactions contemplated by this Agreement are not consummated, Hlavsa, Universal and the Universal Principal Stockholders agree to keep confidential any information disclosed to each other
in connection therewith for a period of three (3) years from the date hereof; provided, however, such obligation shall not apply to information which:

 

	
(i)
	
at the time of the disclosure was public knowledge;

 

	(ii)	
is required to be disclosed publicly pursuant to any applicable federal or state securities laws;

 

	(iii)	
after the time of disclosure becomes public knowledge (except due to the action of the receiving party);

 

	(iv)	
the receiving party had within its possession at the time of disclosure; or

 

	(v)	is ordered disclosed by a Court of proper jurisdiction.

5.4     Unit Certificates.  At the Closing, Hlavsa shall have delivered the Subject Units Certificates duly endorsed in accordance with Section 1.1 hereof so as to make Universal the
sole owner thereof.  At such Closing, Universal shall issue to Hlavsa the Purchase Price.

5.5      Expenses. It is understood and agreed that following the execution of this Agreement, any and all expenses with respect to any filings, documentation and related matters with respect to the consummation of the transactions contemplated
hereby shall be the sole responsibility of Hlavsa, and Universal shall not be responsible for any such expenses or fees associated with such filings; provided, however, that Universal shall fully cooperate and execute all required documents as indicated.

5.6      Specific Performance.

 

	(a)	Each of the Parties hereto do hereby acknowledge and agree that, absent only a material breach by the other Party or Parties of his or their representations and warrants or the failure on the part of a Party to perform any of its material covenants and agreements contained herein, if Hlavsa, on one hand, or Universal and the Universal Principal Stockholders, on the other hand, shall fail or refuse to fully
and timely perform any of their covenants and agreements contained herein (including those set forth this in Section 5) that would make it impossible or impracticable to consummate by October 31, 2009 the transactions contemplated hereby, then the non-breaching Party or Parties would have no adequate remedy at law.  Accordingly, each of the Parties hereto do hereby agree that, in addition to any other remedies available to it or them at law or in equity, the non-breaching or non-defaulting Party or
Parties or their legal representative may seek and obtain from any federal or state court of competent jurisdiction in New York, New York, specific performance of this Agreement.

 

SECTION 6.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES

 

15

 

 

Notwithstanding any right of either party to investigate the affairs of the other party and its shareholders, each party has the right to rely fully upon representations, warranties, covenants and agreements of the other party and its shareholders contained in this Agreement or in any document delivered to one by the other or any of their
representatives, in connection with the transactions contemplated by this Agreement.  All such representations, warranties, covenants and agreements shall survive the execution and delivery hereof and the closing hereunder for eighteen (18) months following the Closing.

SECTION 7. INDEMNIFICATION; DISPUTE RESOLUTION; NON-COMPETITION.

7.1      Indemnification by Hlavsa.

 

	(a) 	
From and after the Closing, Hlavsa shall indemnify and hold harmless Universal, the Universal Principal Stockholders and their Affiliates, directors, officers and employees (collectively, the “Universal Parties”) from and against any and all direct Damages finally awarded arising out of, resulting from or in any way related to:

 

	 	(i)	
a breach by Hlavsa of his representations and warranties contained herein, or

 

	 	(ii)	the failure to perform or satisfy, when due, any of the covenants and agreements made by Hlavsa in this Agreement or in any other document or certificate delivered by Hlavsa at the Closing pursuant hereto.
	 	 	 

	(b)	
Notwithstanding the foregoing, the indemnification obligations of Hlavsa under Section 7.1(a) above shall (i) only arise if a claim for Damages shall be made in writing by Universal to Hlavsa by December 31, 2009, (ii) only be applicable to Damages incurred by Universal Parties in excess of $150,000 (the “Indemnity Floor”), and (iii) not be applicable
to Damages incurred by the Universal Parties which shall be in excess of $5.0 million (the “Indemnity Cap”).

 

	(c)	In the event that any claim for Damages shall be asserted against any of Universal Parties for which Hlavsa is liable to indemnify against pursuant to this Section 7.1, Hlavsa shall have the sole right to conduct, at his expense, the defense of any and all such claims with counsel of his choosing, and shall have the sole right to effect any financial settlement of any such claims for Damages; provided,
however, that if any such settlement would result in any injunction or restrictions on the Business or any other activities of any of Universal Parties, or otherwise require any of Universal Parties to pay any ongoing royalties or other payments to any Person, no such settlement may be effected by Hlavsa without the prior written consent of the affected Universal Party or Parties.

    

7.2     Indemnification by the Universal Parties.

 

From and after the Closing, the Universal Parties shall indemnify and hold harmless Hlavsa and any Affiliates directors, officers and employees (collectively, the “Hlavsa Parties”) from and against any and all direct Damages finally awarded arising out of, resulting from or in any way related to:

 

	(a)	
a breach by the Universal Parties of their representations and warranties contained herein, or

 

	(b)	the failure to perform or satisfy, when due, any of the covenants and agreements made by the Universal Parties in this Agreement or in any other document or certificate delivered by them at the Closing pursuant hereto

 

 

16

 

 

	(c)	In the event that any claim for Damages shall be asserted against any of the Hlavsa Parties for which the Universal Parties are liable to indemnify against pursuant to this Section 7.2, the Universal Parties shall have the sole right to conduct, at its or their expense, the defense of any and all such claims with counsel of their choosing, and shall have the sole right to effect any financial settlement of
any such claims for Damages; provided, however, that if any such settlement would result in any injunction or restrictions on the Hlavsa Parties, or otherwise require any of the Hlavsa Parties to pay any ongoing royalties or other payments to any Person, no such settlement may be effected by the Universal Parties without the prior written consent of Hlavsa.

 

7.3     Resolution of Disputes. Except as otherwise provided in Section 5.6 above, any dispute arising under this Agreement which cannot be resolved among the Parties shall be submitted to final and binding arbitration in accordance with the then prevailing rules and regulations of the American Arbitration Association
(the “AAA”), located in New York, New York.  There shall be three arbitrators, one selected by the claimant, one selected by the respondent and the third arbitrator selected by the AAA.  The decision and award of the arbitrators shall be final and binding upon all Parties and may be enforced in any federal or state court of competent jurisdiction.   Service
of process on any one or more Parties in connection with any such arbitration may be made by registered or certified mail, return receipt requested or by email or facsimile transmission.

SECTION 8.  MISCELLANEOUS

8.1     Waivers.  The waiver of a breach of this Agreement or the failure of any party hereto to exercise any right under this Agreement shall in no way constitute waiver as to future breach whether similar or dissimilar in nature or as to
the exercise of any further right under this Agreement.

8.2     Amendment.  This Agreement may be amended or modified only by an instrument of equal formality signed by the parties or the duly authorized representatives of the respective parties.

8.3     Assignment.  This Agreement is not assignable except by operation of law.

8.4      Notice.  Until otherwise specified in writing, the mailing addresses and fax numbers of the parties of this Agreement shall be as follows:

To: Universal Holdings, inc.:

Universal Holdings, Inc.

P.O. Box 8851

Rocky Mount, North Carolina

Attn: Lanny M. Roof, President

By fax only to:

Fax: (919) 933-2730

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

Anslow & Jaclin LLP

195 Route 9 South, Suite 204

Manalapan, NY 07726

Attn: Eric M. Stein, Esq.

Fax:  (732) 577-1188

Email:  estein@anslowlaw.com

 

17

 

 

 

To: Hlavsa:

Michael Hlavsa

2161 SW 35th Avenue

Fort Lauderdale, Florida 33312

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

Anslow & Jaclin LLP

195 Route 9 South, Suite 204

Manalapan, NY 07726

Attn: Eric M. Stein, Esq.

Fax:  (732) 577-1188

Email:  estein@anslowlaw.com

Any notice or statement given under this Agreement shall be deemed to have been given if sent by registered mail addressed to the other party at the address indicated above or at such other address which shall have been furnished in writing to the addressor.

8.5      Governing Law.  This Agreement shall be construed, and the legal relations between the parties determined, in accordance with the laws of the State of New York, thereby precluding any choice of law rules which may direct
the application of the laws of any other jurisdiction.

8.6      Publicity.  No publicity release or announcement concerning this Agreement or the transactions contemplated hereby shall be issued by either party hereto at any time from the signing hereof without advance approval in writing
of the form and substance by the other party.

8.7     Entire Agreement.  This Agreement (including the Schedules to be attached hereto) and the collateral agreements executed in connection with the consummation of the transactions contemplated herein contain the entire agreement
among the parties with respect to the transactions contemplated hereby, and supersedes all prior agreements, written or oral, with respect hereof.

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

8.9      Severability of Provisions.  The invalidity or unenforceability of any term, phrase, clause, paragraph, restriction, covenant, agreement or provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.

8.10   Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed, shall constitute an original copy hereof, but all of which together shall consider but one and the same document.

8.11   Binding Effect.  This Agreement shall be binding upon the parties hereto and inure to the benefit of the parties, their respective heirs, administrators, executors,

successors and assigns.

8.12    Press Releases.  The parties will mutually agree as to the wording and timing of any informational releases concerning this transaction prior to and through Closing.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

18

 

[SIGNATURE PAGE TO CORONADO UNIT PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

 

 

	ATTEST:	 	
Universal Holdings, Inc.

(a Nevada corporation)

 

 

____________________________________                                          By:  /s/  Lanny M. Roof               

Secretary                                                                                                                   
Lanny M. Roof, President

 

 

ATTEST:                                                                                                                
MIHAEL HLAVSA                                                                                      
 
_______________________________________                                    By:   /s/  Michael Hlavsa                                       
Secretary                                                                                                                   
Michael Hlavsa
                                        

UNIVERSAL PRINCIPAL STOCKHOLDERS 

 

/s/  Lanny M. Roof                      

Lanny M. Roof

 

 

/s/  Judith Lee                         

Judith Lee

 

 

 

 

 19f8k0909ex10ii_universalhold.htm

Exhibit 10.2

 

CORONADO ACQUISITIONS, LLC 

NON INTEREST BEARING PROMISSORY NOTE 

DUE DECEMBER 31, 2012

 

	$3,250,000.00      	 May 31,  2009

                                  

THIS NOTE IS ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933 (THE "ACT") AND QUALIFICATION PROVISIONS OF APPLICABLE STATE SECURITIES LAWS. IT CAN NOT BE SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE UNITED STATES UNLESS REGISTERED PURSUANT TO THE ACT AND QUALD7MED UNDER APPLICABLE STATE LAW OR, TN
THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO MAKER, AN EXEMPTION THEREFROM IS AVAILABLE.

FOR VALUE RECEIVED, the undersigned, Coronado Acquisitions, LLC, with an address at 499 N. Canon Dr suite 202 Beverly Hills, CA 90210, ("Maker"), promises to pay to Matthew Jennings as agent for Capital Asset Lending, lac, a California corporation, Westmoore Lending, LLC, a California limited liability company, Westmoore Lending Opportunities,
LLC, a California limited liability company with an address at c/o Matthew Jennings 1353 Old Temescal Rd, Suite 108 Corona CA 92881 ("Payee"), on December 31 2012, or sooner as otherwise provided herein (the "Maturity Date"), the principal amount of Three Million Two Hundred and Fifty Thousand ($3,250,000.00) Dollars in lawful money of the United Slates of America (the "Principal"). This Note bears no interest (the "Interest").

1. Method of Payment.

 

Maker will pay Principal in money of the United States that at the time of payment is legal tender for the payment of public and private debts. AH payments shall be sent to Payee at its address 6rst set forth above or such other address as Payee shall notify Maker pursuant to the provisions of Paragraph
10 (h) below. Anything to the contrary notwithstanding, Maker, at its option, may pay Principal in shares of a publicly listed company (mergee) at the rate of one dollar and fifty cents ($1.55) per share provided mergee is in current status with its SEC filing requirements and at the time
of tender is quoted on the OTCBB. Shares issued to Sellers shall be duly and validly issued and shall be fully paid and non-assessable.

 

3.  Covenants.

Maker covenants and agrees that from and after the date hereof and until the date of repayment in full of the Obligations it shall comply with the following conditions:

(i) Maintenance of Existence and Conduct of Business. Maker shall, and shall cause each of its subsidiaries, if any, to (A) do or cause to be done all things necessary
to preserve and keep in full force and effect its corporate existence and rights; and (B) continue to conduct its business so that the business carried on in connection therewith may be properly and advantageously conducted at all times. 

 

 

1

 

 

(ii) Books and Records. Maker shall, and shall cause each of its subsidiaries, if any, to keep adequate books and records of account with respect to its business activities.

(iii) Insurance. Maker shall, and shall cause each of its subsidiaries, if any, to maintain insurance policies insuring such risks as are customarily insured against by
companies engaged in businesses similar to those operated by Maker or such subsidiaries, if any, as the case may be. All. such policies are to be carried with reputable insurance carriers and shall be in such amounts as are customarily insured against by companies
with similar assets and properties engaged in a similar business.

(iv) Compliance with Law. Maker shall, and shall cause each of its subsidiaries, if any, to comply in all material respects with all federal, state and local laws and
regulations applicable to it or such subsidiaries, as the case may be, which, if breached, would have a material, adverse effect on Maker's or such subsidiaries', as the case may be, business or financial condition.

(v) Compliance with Material Agreements and Financial Obligations. All of the terms of Maker's and/or its subsidiaries', if any, and affiliates', material agreements
and financial obligations shall be complied with, and each of them shall be kept in full force and effect in accordance with their respective terms

 

4. Reorganization of Maker.

 

If Maker is party to a merger, consolidation or a transaction in which it is not the surviving or continuing entity or transfers or leases all or substantially all of its assets, the person who is the surviving or continuing entity or is the transferee or lessee of such assets shall assume the terms of this Note and the Obligations.

 

5. Representations, Warranties, Covenants and Acknowledgements of Maker.

Maker represents and warrants that: (i) it, and, each of its subsidiaries, if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power to carry on its business as now conducted and to own its properties and assets it now owns; (ii) it,
and each of its subsidiaries, if any, is duly qualified or licensed to do business as a foreign corporation in good standing in the jurisdictions in which ownership of property or the conduct of its business requires such qualification except jurisdictions in which the failure to qualify to do business will have no material adverse effect on its business, prospects, operations, properties, assets or condition (financial or otherwise); (Hi) it, and each of its subsidiaries, if any, and/or affiliates thereof, holds
all material licenses and otherwise complies with all material laws, rules and regulations required to permit it to own its property and conduct its business in the jurisdictions in which it owns its property and conducts its business; (iv) it has full power and authority to execute and deliver this Note, and that the execution and delivery of this Note will not result in the breach of or default under, with or without the giving of notice and/or the passage of time, any other agreement, financial instrument,
arrangement or indenture to which it is a party or by which, it may be bound, or the violation of any law, statute, rale, decree, judgment or regulation binding upon it; (v) it, and each of its subsidiaries, if any, is in material compliance with all of its financial obligations and all of its material agreements; (vi) there is no material action., suit, proceeding, or investigation pending or currently threatened against it or any of its subsidiaries, if any; and (vii) it has taken and will take all acts required,
including but not limited to authorizing the signatory hereof on its behalf to execute this Note, so that upon the execution and delivery of this Note, it shall constitute the valid and legally binding obligation of Maker enforceable against Maker in accordance with the terms thereof.

 

2

 

6.  Defaults and Remedies.

 

(a) Events of Default. The occurrence or existence of any one or more of the following events or conditions (regardless of the reasons therefor) shall constitute an "Event of Default" hereunder:

 

(i)  Maker shall fail to make any payment of Principal when due and payable or declared due and payable pursuant to the terms hereof;

 

(ii) Maker shall fail to perform any other obligation and/or covenant as required by this Note in accordance with the terms hereof and such failure to perform shall
not have been cured within five (5) business days after Maker's receipt of notice of such failure to perform;

 

(iii) Any representation or warranty made in this Note by Maker shall be untrue or incorrect in any material respect as of the date when made or deemed made;

 

(iv) Any money judgment, writ or warrant of attachment, or similar process not covered by insurance in excess of Fifty Thousand ($50,000) Dollars in the aggregate shall
be entered or filed against Maker or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of ten (10) days;

(v)  Maker shall, make an assignment for the benefit of creditors or shall be unable to pay its debts as they become due;

(vi) Maker shall have received a written notice of default related to any material agreement to which it is a party and such act of default shall remain uncured after
any applicable cure period;

(vii) A case or proceeding shall have been commenced against Maker or any of its subsidiaries, if any, (each a "Proceeding Company") in a court having competent jurisdiction
seeking a decree or order in respect of a Proceeding Company (A) under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy or other similar law; (B) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of a Proceeding Company, or any of its properties; or (C) ordering the winding-up or liquidation of the affairs of a Proceeding Company, and such case or proceeding shall remain unstayed or undismissed
for a period of ten (10) consecutive days or such court shall enter amdecree or order granting the relief sought in such case or proceeding; or

(viii) A Proceeding Company shall (A) file a petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law; or (B) consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or the taking of possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of such Proceeding Company, or any of its properties. (b) Remedies. Upon the occurrence of an Event of Default specified in Paragraph 6(a) above, all Obligations then remaining unpaid hereunder shall immediately become due and payable
in full, plus interest on the unpaid portion of the Obligations at the highest rate permitted, by applicable law, without notice to Maker and without presentment, demand, protest or notice of protest, all of which are hereby waived by Maker together with all reasonable costs and expenses of the collection and enforcement of this Note, including reasonable attorney's fees and expenses, all of which shall be added to the amount due under this Note. The rights, powers, privileges and remedies of Payee pursuant to
the terms hereof are cumulative and not exclusive of any other rights, powers, privileges and remedies which Payee may have under this Note or any other instrument or agreement

 

 

3

 

 

7.  Acknowledgment of Payee's Investment Representations.

 

By accepting this Note. Payee acknowledges that this Note has been or will be registered under the Act or qualified under any state securities laws and that the transferability thereof is restricted by the registration provisions of the Act as well as such state laws. Based upon the representations and agreements being made by it herein, this Note is being issued to it
pursuant to an exemption from such registration provided by Section 4(2) of the Act, and applicable state securities law qualification exemptions. Payee represents that it (i) is an "Accredited Investor" as that term is defined in Rule 501 (a) of Regulation D promulgated under the Act, and (ii) is acquiring this Note for its own account, for investment purposes only and not with a view to resale or other distribution thereof, nor with the intention of selling, transferring or otherwise disposing of all or any
part of these securities for any particular event or circumstance, except selling, transferring or disposing of them only upon full compliance with all applicable provisions of the Act, the Securities Exchange Act of 1934, the Rules and Regulations promulgated by the Commission thereunder, and any applicable state securities laws. In addition, Payee understands and acknowledges that any routine sales of these securities made in reliance upon Rule 144 promulgated by the Commission under the Act can be effected
only in the amounts set forth in and pursuant to the other terms and conditions, including applicable holding periods, of that Rule. Payee further understands and agrees that no transfer of this Note shall be valid unless made in. compliance with the restrictions set forth on the front of this Note, effected on. Maker's books by the registered holder hereof, in person or by an attorney duly authorized in writing, and similarly noted hereon as provided in Paragraph
9fk) below.

 

8.  Maker's Right to Prepay the Note.

 

Maker may prepay this Note without penalty.

 

9.  Miscellaneous.

 

(a) Effect of Forbearance. No forbearance, indulgence, delay or failure to exercise any right or remedy by Payee with respect to this Note shall operate as a waiver or as an acquiescence
in any default.

 

(b) Effect of Single or Partial Exercise of Right. No single or partial exercise of any right or remedy by Payee shall preclude any other or further exercise thereof or any exercise of
any other right or remedy by Payee.

 

(c) Gender. The use herein of the masculine pronouns or similar terms shall be deemed to include the feminine and neuter genders as well and the use of the singular pronouns shall be deemed
to include the plural as well.

 

(d) Governing Law; Waiver of Right to Jury Trial; Venue. Maker hereby agrees that this Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed
by, the internal laws of the State of California applicable to contracts made and to be performed entirely within such jurisdiction. Maker hereby waives all right to trial by jury in any action, suit or proceeding brought to enforce or defend any rights or remedies under this Note, and agrees that any lawsuit brought to enforce or interpret the provisions of this Note shall be instituted in. the federal courts in the Central District
of California, and Maker further agrees to submit to the personal jurisdiction of such court and waives any objection which it may have, based on improper venue, forum non conveniens or sufficiency of contact with the forum state, to the conduct of any proceeding in any such court and waives personal service of any and all process upon it, and consents that all such service of process be made by mail or messenger directed to it at the address set forth in Paragraph
10th") below and that service so made shall be deemed to be completed upon the earlier of actual receipt or three (3) days after the same shall, have been posted to its address. Nothing contained in this Paragraph lOfd) affects the right of Payee to serve legal process in any other manner permitted by law, select the internal laws of a jurisdiction other than, the State of California pursuant to which this Note shall be construed and enforced
or bring any action or proceeding against Maker or its property in the courts of any other jurisdiction and Maker agrees to submit to the personal jurisdiction of such courts as aforesaid.

 

 

4

 

 

(e) Headings. The headings and captions of the various paragraphs herein are for convenience of reference only and shall in no way modify any of the terms or provisions of this Note.

 

(f) Loss, Theft, Destruction or Mutilation. Upon receipt by Maker of evidence reasonably satisfactory to it of loss, theft, destruction or mutilation of this Note, Maker shall make and deliver or caused to be made and delivered to Payee a new Note of like
tenor in lieu of this Note. Communications under this Note shall be in writine and. excent as otherwise provided.

 

(g) Modification, of Note or Waiver of Terms Thereof Relating to Payee. No modification or waiver of any of the provisions of this Note shall be effective unless inwriting
and signed, by Payee and then only to the extent set forth in such writing, or shall any such modification or waiver be applicable except in the specific instance for which it is given. This Note may not be discharged orally but only in. writing duly executed by Payee.

(h) Notice. All offers, acceptances, notices, requests, demands and other communications under this Note shall be in writing and, except as otherwise provided herein,
shall be deemed to have been given only when delivered in person, via facsimile transmission if receipt thereof is confirmed by the recipient or. if mailed, when mailed by certified or registered mail prepaid, to the parties at their respective addresses first set forth
above, or at such other address as may be given in writing in future by either party to the other.

 

(i.) Successors and Assigns. This Note shall be binding upon Maker, its successors, assigns and transferees, and shall inure to the benefit of and be enforceable by Payee and his successors and assigns.

(j) Severability. If one or more of the provisions or portions of this Note shall be deemed by any court or quasi-judicial authority to be invalid, illegal or unenforceable in any respect, the invalidity, illegality or unenforceability of the remaining provisions, or portions of provisions contained herein shall not in any way be affected
or impaired thereby.

 

(k) Transfer. This Note shall be transferable only on the books of Maker upon delivery thereof duly endorsed by Payee or by its duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment, or authority to transfer. In all cases of transfer by an attorney, executor, administrator, guardian, or
other legal representative, duly authenticated evidence of his authority shall be produced. Upon any registration of transfer, Maker shall deliver a new Note or Notes to the person entitled thereto. Notwithstanding the foregoing, Maker shall have no obligation to cause Notes to be transferred on its books to any person if, in the opinion of counsel to Maker, such transfer does not comply with the provisions of the Act and the rules and regulations thereunder.

 

(signature page to follow)

 

 

5

 

 

IN WITNESS WHEREOF, Maker has caused this Note to be executed on its behalf by an officer thereunto duly authorized as of the date first set forth above.

 

Coronado Acquisitions, LLC

a Nevada limited liability company

 

 

By:  _________________________________

Interim President and Chief Executive Officer

 

 

 

 

6

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