Document:

ex10-2.htm

 Exhibit 10.2

                

 

 

 

SECURITY AGREEMENT 

(Multiple Use)

 

1.     THE SECURITY. The undersigned Vertex Energy, Inc. (the "Pledgor") hereby assigns and grants to Bank of America, N.A. its subsidiaries and affiliates (collectively, "Bank") a security interest in the following described property now owned or hereafter acquired by the Pledgor ("Collateral"):

(a) All accounts, contract rights, chattel paper, instruments, deposit accounts, letter of credit rights, payment intangibles and general intangibles, including all amounts due to the Pledgor from a factor; rights to payment of money from the Bank under any Swap Contract (as defined in Paragraph 2 below); and all returned or repossessed goods which, on sale or lease, resulted in an account or chattel paper.

 

(b) All inventory, including all materials, work in process and finished goods.

 

(c) All machinery, furniture, fixtures and other equipment of every type now owned or hereafter acquired by the Pledgor, (including, but not limited to, the equipment described in the attached Equipment Description, if any).

 

(d) All negotiable and nonnegotiable documents of title covering any Collateral,

 

(e) All accessions, attachments and other additions to the Collateral, and all toots, parts and equipment used in connection with the Collateral.

(f) All substitutes or replacements for any Collateral, all cash or non-cash proceeds, product, rents and profits of any Collateral, all income, benefits and property receivable on account of the Collateral, all rights under warranties and insurance contracts, letters of credit, guaranties or other supporting obligations covering the Collateral, and any causes of action relating to the Collateral and all proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the Collateral and sums due from a third party which has damaged or destroyed the Collateral or from that party's insurer, whether due to judgment, settlement or other process.

(g) All books data and records pertaining to any Collateral whether in the form of a writing, photograph, microfilm or electronic media, including but not limited to any computer-readable memory and any computer hardware or software necessary to process such memory ("Books and Records").

2.     THE INDEBTEDNESS. The Collateral secures and will secure all Indebtedness of the Pledgor to the Bank. Each party obligated under any Indebtedness is referred to in this Agreement as a "Debtor." "Indebtedness" means all debts, obligations or liabilities now or hereafter existing, absolute or contingent of the Debtor or any one or more of them to the Bank, whether voluntary or involuntary, whether due or not due, or whether incurred directly or indirectly or acquired by the Bank by assignment or otherwise, indebtedness shall include, without limitation, all obligations of the Debtor arising under any Swap Contract. "Swap Contract" means any interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, securities puts, calls, collars, options or forwards or any combination of, or option with respect to, these or similar transactions now or hereafter entered into between the Debtor and the Bank.

Ref #: 1000420470 : - Vertex Energy, Inc. 

Security Agreement (Multiple Use) 

  

  

  

3. PLEDGOR'S COVENANTS. The Pledgor represents, covenants and warrants that unless compliance is waived by the Bank in writing:

(a) The Pledgor will properly preserve the Collateral; defend the Collateral against any adverse claims and demands; and keep accurate Books and Records.

(b) The Pledgor resides (if the Pledgor is an individual), or the Pledgor’s chief executive office (if the Pledgor is not an individual) is located, in the state specified on the signature page hereof. In addition, the Pledgor (if not an individual or other unregistered entity), is incorporated in or organized under the laws of the state specified on such signature page. The Pledgor shall give the Bank at least thirty (30) days notice before changing its residence or its chief executive office or state of incorporation or organization. The Pledgor will notify the Bank in writing prior to any change in the location of any Collateral, including the Books and Records.

(c) The Pledgor will notify the Bank in writing prior to any change in the Pledgor’s name, identity or business structure.

(d) Unless otherwise agreed, the Pledgor has not granted and will not grant any security interest in any of the Collateral except to the Bank, and will keep the Collateral free of all liens, claims, security interests and encumbrances of any kind or nature except the security interest of the Bank.

 

(e) The Pledgor will promptly notify the Bank in writing of any event which affects the value of the Collateral, the ability of the Pledgor or the Bank to dispose of the Collateral, or the rights and remedies of the Bank in relation thereto, including, but not limited to, the levy of any legal process against any Collateral and the adoption of any marketing order, arrangement or procedure affecting the Collateral, whether governmental or otherwise.

 

(f)     The Pledgor shall pay all costs necessary to preserve, defend, enforce and collect the Collateral, including but not limited to taxes, assessments, insurance premiums, repairs, rent, storage costs and expenses of sales, and any costs to perfect the Bank's security interest (collectively, the "Collateral Costs"). Without waiving the Pledgor’s default for failure to make any such payment, the Bank at its option may pay any such Collateral Costs, and discharge encumbrances on the Collateral, and such Collateral Costs payments shall be a part of the Indebtedness and bear interest at the rate set out in the Indebtedness. The Pledgor agrees to reimburse the Bank on demand for any Collateral Costs so incurred.

(g)      Until the Bank exercises its rights to make collection, the Pledgor will diligently collect all Collateral.

(h) If any Collateral is or becomes the subject of any registration certificate, certificate of deposit or negotiable document of title, including any warehouse receipt or bill of lading, the Pledgor shall immediately deliver such document to the Bank, together with any necessary endorsements.

(i) The Pledgor will not sell, lease, agree to sell or lease, or otherwise dispose of any Collateral except with the prior written consent of the Bank; provided, however, that the Pledgor may sell inventory in the ordinary course of business.

(j) The Pledgor will maintain and keep in force all risk insurance covering the Collateral against fire, theft, liability and extended coverages (including without limitation windstorm coverage, and hurricane coverage as applicable), to the extent that any Collateral is of a type which can be so insured. Such insurance shall be in form, amounts, coverages and basis reasonably acceptable to the Bank, shall require losses to be paid on a replacement cost basis, shall be issued by insurance companies  • acceptable to the Bank and include a loss payable endorsement in favor of the Bank in a form acceptable to the Bank. Upon the request of the Bank, the Pledgor will deliver to the Bank a copy of each insurance policy, or, if permitted by the Bank, a certificate of insurance listing all insurance in force,

 

Ref #: 1000420470 : - Vertex Energy, Lie.

Security Agreement (Multiple Use)        

                                                             

  

  

  

(k) The Pledgor will not attach any Collateral to any real property or fixture in a manner which might cause such Collateral to become a part thereof unless the Pledgor first obtains the written consent of any owner, holder of any lien on the real properly or fixture, or other person having an interest in such properly to the removal by the Bank of the Collateral from such real property or fixture. Such written consent shall be in form and substance acceptable to the Bank and shall provide that the Bank has no liability to such owner, holder of any lien, or any other person.

4.     ADDITIONAL OPTIONAL REQUIREMENTS. The Pledgor agrees that the Bank may at its option at any time, whether or not the Pledgor is in default:

(a) Require the Pledgor to deliver to the Bank (i) copies of or extracts from the Books and Records, and (ii) information on any contracts or other matters affecting the Collateral.

(b) Examine the Collateral, including the Books and Records, and make copies of or extracts from the Books and Records, and for such purposes enter at any reasonable time upon the property where any Collateral or any Books and Records are located.

 

(c) Require the Pledgor to deliver to the Bank any instruments, chattel paper or letters of credit which are part of the Collateral, and to assign to the Bank the proceeds of any such letters of credit.

(d) Notify any account debtors, any buyers of the Collateral, or any other persons of the Bank's interest in the Collateral.

5.     DEFAULTS. Any one or more of the following shall be a default hereunder:

(a) Any Indebtedness is not paid when due, or any default occurs under any agreement relating to the indebtedness, after giving effect to any applicable grace or cure periods.

 

(b) The Pledgor breaches any term, provision, warranty or representation under this Agreement, or under any other obligation of the Pledgor to the Bank, and such breach remains uncured after any applicable cure period.

 

(c) The Bank fails to have an enforceable first lien (except for any prior liens to which the Bank has consented in writing) on or security interest in the Collateral.

(d) Any custodian, receiver or trustee is appointed to take possession, custody or control of all or a substantial portion of the property of the Pledgor or of any guarantor or other party obligated under any Indebtedness.

(e) The Pledgor or any guarantor or other party obligated under any Indebtedness becomes insolvent, or is generally not paying or admits in writing its inability to pay its debts as they become due, fails in business, makes a general assignment for the benefit of creditors, dies, or commences any case, proceeding or other action under any bankruptcy or other law for the relief of, or relating to, debtors.

(f) Any case, proceeding or other action is commenced against the Pledgor or any guarantor or other party obligated under any Indebtedness under any bankruptcy or other law for the relief of, or relating to, debtors.

(g) Any involuntary lien of any kind or character attaches to any Collateral, except for liens for taxes not yet due.

 

Rcf #: 1000420470 : - Vertex Energy, Inc. 

Security Agreement (Multiple Use)

 

  

  

  

(h) The Pledgor has given the Bank any false or misleading information or representations.

6. BANK'S REMEDIES AFTER DEFAULT. In the event of any default, the Bank may do any one or more of the following, to the extent permitted by law:

 

(a) Declare any Indebtedness immediately due and payable, without notice or demand.

(b) Enforce the security interest given hereunder pursuant to the Uniform Commercial Code and any other applicable law.

(c) Enforce the security interest of the Bank in any deposit account of the Pledgor maintained with the Bank by applying such account to the Indebtedness.

(d) Require the Pledgor to obtain the Bank's prior written consent to any sale, lease, agreement to sell or lease, or other disposition of any Collateral consisting of inventory.

(e) Require the Pledgor to segregate all collections and proceeds of the Collateral so that they are capable of identification and deliver daily such collections and proceeds to the Bank in kind.

(f) Require the Pledgor to direct al! account debtors to forward all payments and proceeds of the Collateral to a post office box under the Bank's exclusive control.

(g) Require the Pledgor to assemble the Collateral, including the Books and Records, and make them available to the Bank at a place designated by the Bank.

(h) Enter upon the properly where any Collateral, including any Books and Records, are located and take possession of such Collateral and such Books and Records, and use such property (including any buildings and facilities) and any of the Pledgor’s equipment, if the Bank deems such use necessary or advisable in order to take possession of, hold, preserve, process, assemble, prepare for sale or lease, market for sale or lease, sell or lease, or otherwise dispose of, any Collateral.

(i) Demand and collect any payments on and proceeds of the Collateral. In connection therewith the Pledgor irrevocably authorizes the Bank to endorse or sign the Pledgor’s name on all checks, drafts, collections, receipts and other documents, and to take possession of and open the mail addressed to the Pledgor and remove therefrom any payments and proceeds of the Collateral.

(j) Grant extensions and compromise or settle claims with respect to the Collateral for less than face value, all without prior notice to the Pledgor.

(k) Use or transfer any of the Pledgor’s rights and interests in any Intellectual Property now owned or hereafter acquired by the Pledgor, if the Bank deems such use or transfer necessary or advisable in order to take possession of, hold, preserve, process, assemble, prepare for sale or lease, market for sale or lease, sell or lease, or otherwise dispose of, any Collateral. The Pledgor agrees that any such use or transfer shall be without any additional consideration to the Pledgor. As used in this paragraph, "Intellectual Properly" includes, but is not limited to, all trade secrets, computer software, service marks, trademarks, trade names, trade styles, copyrights, patents, applications for any of the foregoing, customer lists, working drawings, instructional manuals, and rights in processes for technical manufacturing, packaging and labeling, in which the Pledgor has any right or interest, whether by ownership, license, contract or otherwise.

(I) Have a receiver appointed by any court of competent jurisdiction to take possession of the Collateral. The Pledgor hereby consents to the appointment of such a receiver and agrees not to oppose any such appointment.

 

Ref#: 1000420470 : - Vertex Energy, Lie. 

Security Agreement (Multiple Use)

 

  

  

  

(m) Take such measures as the Bank may deem necessary or advisable to take possession of, hold, preserve, process, assemble, insure, prepare for sale or lease, market for sale or lease, sell or lease, or otherwise dispose of, any Collateral, and the Pledgor hereby irrevocably constitutes and appoints the Bank as the Pledgor’s attorney-in-fact to perform alt acts and execute all documents in connection therewith.

(n) Without notice or demand to the Pledgor, set off and apply against any and all of the Indebtedness any and all deposits {genera! or special, time or demand, provisional or final) and any other indebtedness, at any time held or owing by the Bank or any of the Bank's agents or affiliates to or for the credit of the account of the Pledgor or any guarantor or endorser of the Pledgor’s Indebtedness.

(o)      Exercise any other remedies available to the Bank at law or in equity.

 

7. MISCELLANEOUS.

(a) Any waiver, express or implied, of any provision hereunder and any delay or failure by the Bank to enforce any provision shall not preclude the Bank from enforcing any such provision thereafter.

(b) The Pledgor shall, at the request of the Bank, execute such other agreements, documents, instruments, or financing statements in connection with this Agreement as the Bank may reasonably deem necessary.

(c) All notes, security agreements, subordination agreements and other documents executed by the Pledgor or furnished to the Bank in connection with this Agreement must be in form and substance satisfactory to the Bank.

(d) This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. To the extent that the Bank has greater rights or remedies under federal law, whether as a national bank or otherwise, this paragraph shall not be deemed to deprive the Bank of such rights and remedies as may be available under federal law. Jurisdiction and venue for any action or proceeding to enforce this Agreement shall be the forum appropriate for such action or proceeding against the Debtor, to which jurisdiction the Pledgor irrevocably submits and to which venue the Pledgor waives to the fullest extent permitted by law any defense asserting an inconvenient forum in connection therewith.

(e) All rights and remedies herein provided are cumulative and not exclusive of any rights or remedies otherwise provided by law. Any single or partial exercise of any right or remedy shall not preclude the further exercise thereof or the exercise of any other right or remedy.

 

(f) All terms not defined herein are used as set forth in the Uniform Commercial Code.

 

(g)      In the event of any action by the Bank to enforce this Agreement or to protect the security interest of the Bank in the Collateral, or to take possession of, hold, preserve, process, assemble, insure, prepare for sale or lease, market for sale or lease, sell or lease, or otherwise dispose of, any Collateral, the Pledgor agrees to pay immediately the costs and expenses thereof, together with reasonable attorneys' fees and allocated costs for in-house legai services to the extent permitted by law.

(h) In the event the Bank seeks to take possession of any or all of the Collateral by judicial process, the Pledgor hereby irrevocably waives any bonds and any surely or security relating thereto that may be required by applicable law as an incident to such possession, and waives any demand for possession prior to the commencement of any such suit or action.

(1) This Agreement shall constitute a continuing agreement, applying to all future as well as existing transactions, whether or not of the character contemplated at the date of this Agreement, and if all transactions between the Bank and the Pledgor shall be closed at anytime, shall be equally applicable to any new transactions thereafter.

 

Ref #: 1000420470 : • Vertex Energy, Inc.

Security Agreement (Multiple Use)                                                                          

 

  

  

  

(j) The Bank's rights hereunder shall inure to the benefit of its successors and assigns. In the event of any assignment or transfer by the Bank of any of the Indebtedness or the Collateral, the Bank thereafter shall be fully discharged from any responsibility with respect to the Collateral so assigned or transferred, but the Bank shall retain all rights and powers hereby given with respect to any of the Indebtedness or the Collateral not so assigned or transferred. All representations, warranties and agreements of the Pledgor if more than one are joint and several and all shall be binding upon the personal representatives, heirs, successors and assigns of the Pledgor.

8. FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT; (A) THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET, OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D) THIS DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

9. Notice of Final Agreement. THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

Date: September 16, 2010

 

	  	
Bank of America

	  	  
	  	
By: /s/ Joel Collins

Joel Collins, Officer

	  	
Authorized signer

	  	  
	  	
Address for Notices:

	  	
Doc Retention – GCF

	  	
MO1-800-08-11

	  	
800 Market Street, 8th Floor

	  	
St. Luis, MO 63101-2510

	  	  
	  	
Vertex Energy, Inc.

	  	  
	  	
By: /s/ Benjamin P. Cowart

	  	
Benjamin P. Cowart, Chief Executive Officer

	  	  
	  	
By: /s/ Chris Carlson

	  	
Chris Carlson, Vice President

 

 

Ref #: 1000420470 : - Vertex Energy, Inc. 

Security Agreement (Multiple Use)

 

  

  

  

Pledgor's Location (principal residence, 

if the Pledgor is an individual; 

chief executive office, if 

the Pledgor is not an individual):

1331 Gemini Street Ste 103 

Houston, Texas 77058-2729

Pledgor’s state of incorporation

or organization (if Pledgor is a corporation, partnership,

limited liability company or other registered entity): Nevada

 

Mailing Address (if different 

from above):

 

 

 

 

 

 

 

 

 

 

Ref #: 1000420470 : - Vertex Energy, Inc. 

Security Agreement (Multiple Use)ex10-1.htm

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT, dated as of August 30, 2010 (the “Agreement”), among SEBRING SOFTWARE LLC, a Florida limited liability company with offices located at 1400 Cattlemen Road, Suite D, Sarasota, Florida 34232  (the “Buyer”); THE INDIVIDUALS NAMED IN SCHEDULE A HERETO (collectively, the “Sellers” and each a “Seller”); and SUMOTEXT INCORPORATED, a Nevada corporation with offices located at 2100 Riverdale, Suite 200, Little Rock, Arkansas, 72202 (the “Company”).

 

INTRODUCTION

 

           The Sellers own beneficially and of record an aggregate of 6,306,950 restricted shares (the “Shares”) of common stock, par value $0.0001 per share (the “Common Stock”) of the Company representing at the date hereof approximately 81.1% of the outstanding shares of Common Stock.  The Buyer desires to acquire from the Sellers, and the Sellers desire to sell to the Buyer, the Shares in accordance with, and subject to, the terms hereof, allocated among the Sellers as set forth in Schedule A hereto.

NOW, THEREFORE, in consideration of the premises and mutual representations, warranties and covenants herein contained, the parties hereby agree as follows:

 

ARTICLE I

CERTAIN DEFINITIONS

“Business Day” shall mean any day which is not a Saturday or Sunday and is not a day on which banking institutions are generally authorized or obligated to close in the City of New York, New York.

“Buyer” shall have the definition assigned thereto in the introductory paragraph hereto.

“Closing” shall mean the closing of the purchase by Buyer from the Sellers of the Shares.

           “Closing Date” shall have the definition assigned thereto in Section 2.02(a) hereof.

           “Common Stock” shall have the definition assigned thereto in to introduction hereto.

           “Company” shall have the definition assigned thereto in the introductory paragraph hereto.

           “Dispose Of” shall mean to pledge, hypothecate, give away, sell, grant an option (other than pursuant hereto) with respect to, or otherwise transfer.

“Environmental Laws” shall have the definition assigned thereto in Section 3.01(q).

  

  

  

           “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” shall have the definition assigned thereto in Section 3.01(a)(i).

“Exchange” means the share exchange or similar transaction entered into between the Buyer and the Company, subsequent to the Closing, pursuant to which Buyer will become a wholly-owned subsidiary of the Company.

“Existing Director” shall have the definition assigned thereto in Section 4.04.

           “Investment Company Act” shall have the definition assigned thereto in Section 3.01(n).

“Last Company Financial Statement Date” shall mean May 31, 2010.

           “Last Company Financial Statements” shall mean the balance sheet, statement of income, and statement of cash flows, and the notes thereto, of the Company as of the Last Company Financial Statement Date.

“New Director” shall have the definition assigned thereto in Section 4.04.

“Purchase Price” shall have the definition assigned thereto in Section 2.01 hereof.

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

“SEC Documents” shall have the definition assigned thereto in Section 3.01(a)(i).

           “Securities Act” shall mean the Securities Act of 1933, as amended.

           “Seller” and “Sellers” shall have the definition assigned thereto in the introductory paragraph hereto.

           “Shares” shall have the definition assigned thereto in the introduction hereto.

“Spin-Off” shall mean the transfer of the operations, assets and liabilities of the Company to a separate, private company, owned by the Spin-Off Owners, pursuant to a Spin-Off Agreement, which shall be affected concurrently with and/or immediately subsequent to the Exchange, as described in greater detail herein and set forth in the Spin-Off Agreement.

“Spin-Off Agreement” means an agreement by and between the Company, SumoText Corporation and Buyer, setting forth the terms and conditions of the Spin-Off.

“Spin-Off Owners” means Timothy Miller, Jim Stevenson, and Steve Bova.

“Split” shall mean the 11-for-one split of the outstanding Common Stock to be effective subsequent to the Closing.

           “Taxes” shall have the definitions assigned thereto in Section 3.01(j).

  

  

  

ARTICLE II

ACQUISITION AND EXCHANGE OF SHARES

Section 2.01  The Agreement.  At the Closing, the Buyer shall acquire from the Sellers, and the Sellers shall sell to the Buyer, the Shares in accordance with Schedule A hereto in exchange for an aggregate purchase price of US$350,000 in cash (including the $25,000 non-refundable deposit (the “Deposit”) heretofore delivered by the Buyer to the escrow account maintained by The Loev Law Firm, PC), less (i) the amount of any liabilities of the Company which will remain following the consummation of the Spin-Off and (ii) the aggregate amounts paid for shares of Common Stock in the Third Party Common Stock Acquisitions (as hereinafter defined) (the “Purchase Price”), allocated among the Sellers as determined among themselves.

Section 2.02 Closing; Exchanges.

(a) The Closing shall take place on the date hereof (the “Closing Date”) at the offices of The Loev Law Firm, PC, 6300 West Loop South, Suite 280, Bellaire, Texas 77401, or by electronic means, as determined by the Buyer in its sole discretion.

(i) On the Closing Date, the Sellers shall deliver or cause to be delivered to Buyer, stock certificates evidencing the Shares along with blank stock powers with medallion signature guaranties.

(ii)  At or before the Closing Date, the Buyer shall:

(A) deliver to the escrow account maintained by The Loev Law Firm, PC, the Purchase Price less the Deposit by certified or official bank check or by electronic wire transfer in accordance with instructions theretofore provided by The Loev Law Firm, PC to the Buyer;

            (B) have entered into the Spin-Off Agreement and agreed to effect the Spin-Off in exchange for the Spin-Off Owners’ agreement to: (i) forgive any related party debt owed by the Company to any of the Spin-Off Owners; and (ii) indemnify the Company against any liability relating to the business of the Company prior to the Spin-Off;

(iii)           At or before the Closing Date, the Spin-Off Owners will have entered into the Spin-Off Agreement and agreed to effect the Spin-Off and to (A) forgive any related party debt owed by the Company to the Spin-Off Owners; and (B) indemnify the Company against any liability relating to the business of the Company prior to the Spin-Off;

  

  

  

(iv)           At or before the Closing Date, the Company will deliver to the Buyer an Officer’s Certificate in the form of Exhibit 2.02(a)(iii) hereto, dated the Closing Date, certifying, among other things, that all representations, warranties, covenants, and conditions set forth herein by the Company are true and correct as of, or have been fully performed and complied with by, the Closing Date;

(v)           At or before the Closing Date, each Seller will deliver to the Buyer and the Company a certificate in the form of Exhibit 2.02(a)(iv) hereto, dated the Closing Date, certifying that all representations, warranties, covenants, and conditions set forth herein by such Seller and the Company are true and correct as of, or have been fully performed and complied with by, the Closing Date;

(vi)           At or before the Closing Date, the Buyer will have entered into the Spin-Off Agreement and agreed to the terms and conditions thereof;

(vii)          At or before the Closing Date, the Buyer, or a duly appointed agent thereof, will deliver to the Sellers one or more Certificates in the form of Exhibit 2.02(a)(v) hereto, dated the Closing Date, certifying that all representations, warranties, covenants and conditions set forth herein by the Buyer are true and correct as of, or have been fully performed and complied with by, the Closing Date; and

(viii)           At or before the Closing Date, the Sellers and the Buyer shall execute a cross-receipt in the form of Exhibit 2.02(a)(vi) hereto.

(b)           The Shares shall be authorized, issued, and outstanding shares of Common Stock.  All Shares shall be deemed “restricted securities” as defined in paragraph (a) of Rule 144 under the Securities Act.  The acquisition by the Buyer of the Shares shall be subject to an exemption from the registration requirements of the Securities Act, under Section 4(1) and/or Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder.  Certificates representing the Shares shall bear a restrictive legend in substantially the following form:

The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be offered for sale, sold, or otherwise disposed of, except in compliance with the registration provisions of such Act or pursuant to an exemption from such registration provisions, the availability of which is to be established to the satisfaction of the Company.

 

Section 2.03   Approval.  In anticipation of this Agreement, the Board of Directors of the Company has taken all necessary and requisite corporate and other action in order to approve this Agreement and all transactions contemplated hereby.

 

  

  

  

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.01   Representations and Warranties of Sellers and the Company.  Each of the Sellers and the Company, jointly and severally, represent and warrant to, and agree with, the Buyers as follows:

(i)       The Common Stock has been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Company is subject to the periodic reporting requirements of Section 13 of the Exchange Act.  The Company has made available to the Buyer true, complete, and correct copies of all forms, reports, schedules, statements, and other documents required to be filed by it under the Exchange Act, as such documents have been amended since the time of the filing thereof (collectively, including all forms, reports, schedules, statements, exhibits, and other documents filed by the Company therewith, the “SEC Documents”). The SEC Documents, including, without limitation, any financial statements and schedules included therein, at the time filed or, if subsequently amended, as so amended, (i) did not contain any untrue statement of a material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) complied in all respects with the applicable requirements of the Exchange Act and the applicable rules and regulations thereunder.

(ii)         The Company maintains disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures were ineffective in the opinion of management as of August 31, 2009; however, in the opinion of the Company’s management, such controls and procedures are effective to ensure that:

(A)          all material information concerning the Company is made known on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents;

(B)           transactions are executed in accordance with management’s general or specific authorizations;

(C)           transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and to maintain asset accountability;

(D)           access to assets is permitted only in accordance with management’s general or specific authorization; and

(E)            the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

  

  

  

The Company has made available to the Buyer copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures.  The books, records and accounts of the Company accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company all to the extent required by generally accepted accounting principles.

(iii)           The Chief Executive Officer and the Chief Financial Officer of the Company has signed, and the Company has furnished to the SEC, all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither the Company nor any of its officers has received notice from any governmental entity questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.

(iv)           The Company has heretofore made available to the Buyer complete and correct copies of all certifications filed with the SEC pursuant to Sections 302 and 906 of Sarbanes-Oxley Act of 2002 and hereby reaffirms, represents and warrants to the Buyer the matters and statements made in such certificates.

(b)  At the date hereof and at the Closing Date:

           (i)            the Common Stock is eligible to trade and be quoted on, and is quoted on,  the over-the-counter Bulletin Board market maintained by The Nasdaq Stock Market (the “OTCBB”) and has received no notice or other communication indicating that such eligibility is subject to challenge or review by the any applicable regulatory agency, electronic market administrator, or exchange;

           (ii)           the Company has and shall have performed or satisfied all of its undertakings to, and of its obligations and requirements with, the SEC;

           (iii)           the Company has not, and shall not have taken any action that would preclude, or otherwise jeopardize, the inclusion of the Common Stock for quotation on the OTCBB;

 

                           (iv)          The Common Stock is eligible for participation in The Depository Trust Company book entry system; and

(i) The Company has no “strikes” with FINRA (e.g., no late 10-K or 10-Q filings).

 

(c)           Other than as disclosed in the SEC Documents, the Company has no subsidiaries or affiliated corporation or any interest in any other enterprise (whether or not such enterprise is a corporation).  The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Nevada with full power and authority (corporate and other) to own, lease and operate its respective properties and conduct its respective business as described in the SEC Documents; except as otherwise disclosed in the SEC Documents, the Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing would not have a material adverse effect on its business, prospects, condition (financial or otherwise), and results of operations of the Company; no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification; the Company is in possession of, and operating in compliance with, all authorizations, licenses, certificates, consents, orders and permits from state, federal, foreign and other regulatory authorities that are material to the conduct of its business, all of which are valid and in full force and effect; the Company is not in violation of its charter or bylaws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any material bond, debenture, note or other evidence of indebtedness, or in any material lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which it is a party or by which it or its properties or assets may be bound, which violation or default would have a material adverse effect on the business, prospects, financial condition or results of operations of the Company; and the Company is not in violation of any law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over its properties or assets, which violation would have a material adverse effect on the business, prospects, financial condition or results of operations of the Company taken as a whole.  The SEC Documents accurately describe any corporation, association or other entity owned or controlled, directly or indirectly, by the Company.

 

  

  

  

(d) The Company has all requisite power and authority to execute, deliver, and perform this Agreement.  All necessary proceedings of the Company have been duly taken to authorize the execution, delivery, and performance of this Agreement thereby. This Agreement has been duly authorized, executed, and delivered by the Company, constitutes the legal, valid, and binding obligation of the Company, and is enforceable as to the Company in accordance with its terms.  Except as otherwise set forth in this Agreement, no consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any federal, state, local, or other governmental authority or any court or other tribunal is required by the Company for the execution, delivery, or performance of this Agreement thereby.  No consent, approval, authorization or order of, or qualification with, any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over its properties or assets is required for the execution and delivery of this Agreement and the consummation by the Company of the transactions herein and therein contemplated, except such as may be required under the Securities Act or under state or other securities or blue sky laws, all of which requirements have been, or in accordance therewith will be, satisfied in all material respects.  No consent of any party to any material contract, agreement, instrument, lease, license, arrangement, or understanding to which the Company is a party, or to which its or any of its respective businesses, properties, or assets are subject, is required for the execution, delivery, or performance of this Agreement; and the execution, delivery, and performance of this Agreement will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under, entitle any party to receive rights or privileges that such party was not entitled to receive immediately before this Agreement was executed under, or create any obligation on the part of the Company to which it was not subject immediately before this Agreement was executed under, any term of any such material contract, agreement, instrument, lease, license, arrangement, or understanding, or violate or result in a breach of any term of the certificate of incorporation or by-laws of the Company or (if the provisions of this Agreement are satisfied) violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment, decree, injunction, or writ of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over its properties or assets.

 (e) There is not any pending or, to the best of each Seller’s and the Company's knowledge, threatened, action, suit, claim or proceeding against the Company, or any of the Company’s officers or any of the respective properties, assets or rights of the Company, before any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or over the Company’s officers or the properties of the Company, or otherwise that (i) is reasonably likely to result in any material adverse change in the respective business, prospects, financial condition or results of operations of the Company or might materially and adversely affect its properties, assets or rights taken as a whole, (ii) might prevent consummation of the transactions contemplated by this Agreement, or (iii) allege a violation of any Federal or state securities laws.

 

  

  

  

           (f) The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, of which 7,779,806 shares of Common Stock are outstanding prior to the 11:1 forward stock split, and 10,000,000 shares of “blank check” preferred stock, par value $0.0001 per share, no shares of which are outstanding.  Each of such outstanding shares of Common Stock is duly and validly authorized, validly issued, fully paid, and nonassessable, has not been issued and is not owned or held in violation of any preemptive or similar right of stockholders. There is no commitment, plan, or arrangement to issue, and no outstanding option, warrant, or other right calling for the issuance of, any share of capital stock of, or any security or other instrument convertible into, exercisable for, or exchangeable for capital stock of, the Company.  There is outstanding no security or other instrument convertible into or exchangeable for capital stock of the Company.  When delivered by the Sellers against payment therefor in accordance with the terms of this Agreement, the Shares will be duly and validly issued and fully paid and nonassessable, and will be sold free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest of any kind; and no preemptive or similar right, co-sale right, registration right, right of first refusal or other similar right of stockholders exists with respect to any of the Shares or the issuance and sale thereof other than those that have been expressly waived prior to the date hereof and those that will automatically expire upon the execution hereof.  No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale or transfer of the Shares, except as may be required under the Securities Act, the rules and regulations promulgated thereunder or under state or other securities or blue sky laws.  The Company has no stock option, stock bonus and other stock plans or arrangements which the holders of have not otherwise agreed in writing to convert to or assign as options, stock bonuses, or convertible securities of SumoText Company (the entity which will receive the ownership of the Spin-Off assets).

 

           (g)  M&K CPAS, PLLC (“M&K”) examined the financial statements of the Company, together with the related schedules and notes, for the year ended August 31, 2009 and Malone & Bailey, PC (“Malone & Bailey”) examined the financial statements of the Company, together with the related schedules and notes, for the year ended August 31, 2008 (collectively, the “Auditors”), filed with the SEC as a part of the SEC Documents.  M&K and Malone & Bailey are independent accountants within the meaning of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder.  The audited financial statements of the Company, together with the related schedules and notes, and the unaudited financial information, forming part of the SEC Documents, fairly present and will fairly present the financial position and the results of operations of the Company at the respective dates and for the respective periods to which they apply.  All audited financial statements of the Company, together with the related schedules and notes, and the unaudited financial information, filed with the SEC as part of the SEC Documents, (i) complied and will comply as to form in all material respects with applicable accounting requirements and with the rules and regulations of the SEC with respect hereto when filed, (ii) have been and will be prepared in accordance with U.S. generally accepted accounting principles consistently applied throughout the periods involved except as may be otherwise stated therein (except as may be indicated in the notes thereto or as permitted by the rules and regulations of the SEC) and (iii) fairly present and will fairly present, subject in the case of the unaudited financial statements, to customary year end audit adjustments, the financial position of the Company as at the dates thereof and the results of its operations and cash flows. The procedures pursuant to which the aforementioned financial statements have been audited are compliant with generally accepted auditing standards as applied in the United States. The selected and summary financial and statistical data included in the SEC Documents present and will present fairly the information shown therein and have been compiled on a basis consistent with the audited financial statements presented therein.  No other financial statements or schedules are required to be included in the SEC Documents.   The financial statements referred to in this Section 3.01(g) contain all certifications and statements required under the SEC’s Order, dated June 27, 2002, pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), Rule 13a-14 or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350 (Sections 302 and 906 of the Sarbanes-Oxley Act of 2002) with respect to the report relating thereto.  Since the Last Company Financial Statement Date:

(i)  There has at no time been a material adverse change in the financial condition, results of operations, businesses, properties, assets, liabilities, or future prospects of the Company.

  

  

  

(ii)  The Company has not authorized, declared, paid, or effected any dividend or liquidating or other distribution in respect of its capital stock or any direct or indirect redemption, purchase, or other acquisition of any stock of the Company, other than the Split.

(iii)  Except as set forth in the SEC Documents, the operations and businesses of the Company have been conducted in all respects only in the ordinary course.

Other than a “going concern” qualification in the report of the Auditors with respect to the financial statements of the Company, there is no fact known to Sellers or the Company which materially adversely affects or in the future (as far as the Company can reasonably foresee) may materially adversely affect the financial condition, results of operations, businesses, properties, assets, liabilities, or future prospects of the Company; provided, however, that neither Sellers nor the Company expresses any opinion as to political or economic matters of general applicability.  The Company has made known, or caused to be made known, to the accountants or auditors who have prepared, reviewed, or audited the aforementioned consolidated financial statements all material facts and circumstances which could affect the preparation, presentation, accuracy, or completeness thereof.

(h)           Subsequent to the respective dates as of which information is given in the SEC Documents, there has not been (i) any material adverse change in the business, prospects, financial condition or results of operations of the Company, (ii) any transaction committed to or consummated that is material to the Company, (iii) any obligation, direct or contingent, that is material to the Company incurred by the Company, except such obligations as have been incurred in the ordinary course of business, (iv) any change in the capital stock or outstanding indebtedness of the Company that is material to the Company, (v) any dividend or distribution of any kind declared, paid, or made on the capital stock of the Company (except for the Split), or (vi) any loss or damage (whether or not insured) to the property of the Company which has a material adverse effect on the business, prospects, condition (financial or otherwise), or results of operations thereof.

(i)           At the Closing, and after giving effect to the Spin-Off (without taking into account the Exchange), the Company shall have no properties or assets and the Company shall be free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest. At the Closing, and after giving effect to the Spin-Off (without taking into account the Exchange) the Company shall be party to no agreements except for this Agreement, which shall be a legal, valid and binding agreement, enforceable against the Company in accordance with its terms.

  

  

  

(j)           Giving effect to the Spin-Off, the Company hall have no liability of any nature, accrued or contingent, including, without limitation, liabilities for federal, state, local, or foreign taxes and penalties, interest, and additions to tax (“Taxes”), and liabilities to customers or suppliers.  Without limiting the generality of the foregoing, the amounts set up as provisions for Taxes, if any, in the Last Company Financial Statements are sufficient for all accrued and unpaid Taxes of the Company, whether or not due and payable and whether or not disputed, under tax laws, as in effect on the Last Company Financial Statement Date or now in effect, for the period ended on such date and for all fiscal periods prior thereto.  The execution, delivery, and performance of this Agreement by the Company will not cause any Taxes to be payable (other than those that may possibly be payable by a Seller as a result of the sale of the Shares) or cause any lien, charge, or encumbrance to secure any Taxes to be created either immediately or upon the nonpayment of any Taxes other than on the properties or assets of the Sellers.  The Internal Revenue Service has audited and settled or the statute of limitations has run upon all federal income tax returns of the Company and Sellers for all taxable years up to and including the taxable year ended August 31, 2003.  The Company has filed all federal, state, local, and foreign tax returns required to be filed by it; has made provided to the Buyer a true and correct copy of each such return which was filed in the past six years (or such shorter number of years that the Company has been in existence); has paid (or has established on the last balance sheet included in the last Company Financial Statement a reserve for) all Taxes, assessments, and other governmental charges payable or remittable by it or levied upon it or its properties, assets, income, or franchises which are due and payable; and has delivered to the Buyer a true and correct copy of any report as to adjustments received by it from any taxing authority during the past six years (or such shorter number of years that the Company has been in existence) and a statement as to any litigation, governmental or other proceeding (formal or informal), or investigation pending, threatened, or in prospect with respect to any such report or the subject matter of such report.  Sellers have paid all taxes payable thereby due on or prior to the date hereof.

(k)          Except as disclosed in the SEC Documents, the Company does not have any insurance; the Company has at no time been refused any insurance coverage sought or applied for.

  

  

  

(l)           No labor disturbance by the employees of the Company exists or, to the best of the Company’s knowledge, is imminent.  The Company is not aware of any existing or imminent labor disturbance by the employees of any principal suppliers or customers of the Company that might be expected to result in any material adverse change in the business, prospects, financial condition, or results of operations of the Company.  No collective bargaining agreement exists with any of the Company’s employees and, to the best of Sellers’ and the Company's knowledge, no such agreement is imminent.

(ii)           The Company does not have, or contribute to, and has never maintained or contributed to, any pension, profit-sharing, option, other incentive plan, or any other type of Employee Benefit Plan (as defined in Section 3(3) of ERISA) or Pension Plan (as defined in ERISA) and the Company does not have any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, sick pay, sick leave, insurance, service award, relocation, disability, tuition refund, or other benefits, whether oral or written.

 

(m)           Following the Spin-Off, the Company will not have any rights to use, patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names, logos, or copyrights. The Company has not received any notice of, or has knowledge of, any infringement of or conflict with asserted rights of the Company by others with respect to any patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names, logos, or copyrights; and the Company has not received any notice of, or has no knowledge of, any infringement of, or conflict with, asserted rights of others with respect to any patents, patent rights, inventions, trade secrets, know-how, trademarks, service marks, trade names, logos, or copyrights described or referred to in the SEC Documents as owned by or used by it or which, individually or in the aggregate, in the event of an unfavorable decision, ruling or finding, would have a material adverse effect on the business, prospects, financial condition or results of operations of the Company.

(n)           The Company has been advised concerning the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the rules and regulations thereunder, and has in the past conducted, and intends in the future, to conduct its affairs in such a manner as to ensure that it is not and will not become an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act and such rules and regulations.

(o)           The Company has not, and no person or entity acting on behalf or at the request of the Company has, 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 other applicable jurisdiction.

  

  

  

(ii)       Neither the Company, nor, to the best knowledge of each Seller and the Company, any director, officer, agent, employee, or other person associated with, or acting on behalf of, the Company, has, directly or indirectly: used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment.  The Company's internal accounting controls and procedures are sufficient to cause the Company to comply in all respects with the Foreign Corrupt Practices Act of 1977, as amended.

                (ii)         None of the Sellers or the Company, or any officer, director or “affiliate” (as such term is defined in the Securities Act) of the Company, has been, within the ten years ending on the Closing Date, a party to any bankruptcy petition against such person or against any business of which such person was affiliated; convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business, securities or banking activities; or found by a court of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

(p)           The Company has not, and no person acting on behalf thereof, has taken or will take, directly or indirectly, any action designed to, or that might reasonably be expected to cause or result in, stabilization in violation of law, or manipulation, of the price of the Common Stock to facilitate the sale or resale of the Shares.

(q)           Except as set forth in the SEC Documents, (i) the Company is in compliance in all material respects with all rules, laws and regulations relating to the use, treatment, storage and disposal of toxic substances and protection of health or the environment (“Environmental Laws”) that are applicable to its business, (ii) the Company has not received notice from any governmental authority or third party of an asserted claim under Environmental Laws, (iii) to the best knowledge of the Company, the Company is not likely to be required to make future material capital expenditures to comply with Environmental Laws (iv) no property which is owned, leased or occupied by the Company has been designated as a Superfund site pursuant to the Comprehensive Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601, et seq.), or otherwise designated as a contaminated site under applicable state or local law, and (v) the Company is not in violation of any federal or state law or regulation relating to occupational safety or health.

  

  

  

(r)           There are no outstanding loans, advances or guarantees of indebtedness by the Company to, or for the benefit of, any of the officers, directors, or director-nominees of the Company or any of the members of the families of any of them, except as disclosed in the SEC Documents.

(s)           The Company has not incurred any liability, direct or indirect, for finders' or similar fees on behalf of or payable by the Company or the Buyer in connection with the transactions contemplated hereby or any other transaction involving the Company and the Buyers, except for fees payable to Abraxis Financial, David M. Loev and Jacob Cohen, all of which shall be paid at or prior to the Closing.

           (t)             No stockholder of the Company has any right to request or require the Company to register the sale of any shares owned by such stockholder under the Securities Act on any registration statement.

           (u)           The Company is in compliance with, and is not in violation of, applicable federal, state, local or foreign statutes, laws and regulations (including without limitation, any applicable building, zoning or other law, ordinance or regulation) affecting its properties or the operation of its business, including, without limitation, Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated pursuant thereto or thereunder except where such failure would not have a material adverse effect on its business, prospects, condition (financial or otherwise), and results of operations of the Company.  The Company is not subject to any order, decree, judgment or other sanction of any court, administrative agency or other tribunal.

(v)           Following the consummation of the Spin-Off Agreement, and notwithstanding the Exchange or any agreements the Company is subject to in connection therewith, the Company shall not be party to any contract, agreement or arrangement other than this Agreement.

Section 3.02  Representations and Warranties of the Sellers. Each Seller, severally, but not jointly, hereby represents and warrants to, and agrees with, the Buyer:

(a)           Such Seller has all requisite power and authority to execute, deliver, and perform this Agreement.  All necessary proceedings of such Seller have been duly taken to authorize the execution, delivery, and performance of this Agreement. This Agreement has been duly authorized, executed, and delivered by such Seller, constitutes the legal, valid, and binding obligation of such Seller, and is enforceable as to such Seller in accordance with its terms.  Except as otherwise set forth in this Agreement, no consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any federal, state, local, or other governmental authority or any court or other tribunal is required by the such Seller for the execution, delivery, or performance of this Agreement thereby.  No consent, approval, authorization or order of, or qualification with, any court, government or governmental agency or body, domestic or foreign, having jurisdiction over such Seller or over its respective properties or assets is required for the execution and delivery of this Agreement and the consummation by such Seller of the transactions herein and therein contemplated, except such as may be required under the Securities Act or under state or other securities or blue sky laws, all of which requirements have been, or in accordance therewith will be, satisfied in all material respects.  No consent of any party to any material contract, agreement, instrument, lease, license, arrangement, or understanding to which such Seller is a party, or to which its or any of its respective businesses, properties, or assets are subject, is required for the execution, delivery, or performance of this Agreement; and the execution, delivery, and performance of this Agreement will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under, entitle any party to receive rights or privileges that such party was not entitled to receive immediately before this Agreement was executed under, or create any obligation on the part of such Seller to which it was not subject immediately before this Agreement was executed under, any term of any such material contract, agreement, instrument, lease, license, arrangement, or understanding, or violate or result in a breach of any term of the certificate of incorporation or by-laws or analogous governing document of such Seller (if applicable) or (if the provisions of this Agreement are satisfied) violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment, decree, injunction, or writ of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over such Seller or over its respective properties or assets.

  

  

  

(ii)           If such Seller is an individual, such Seller has reached the age majority in his or her state of residence.

(iii)           If such Seller is not an individual, such Seller has been duly organized and is validly existing as a corporation or limited liability company in good standing under the laws of its respective jurisdiction of formation with full power and authority (corporate and other) to own, lease and operate its respective properties and conduct its respective business; such Seller is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or be in good standing would not have a material adverse effect on its respective business, prospects, condition (financial or otherwise), and results of operations; no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification; such Seller is in possession of, and operating in compliance with, all authorizations, licenses, certificates, consents, orders and permits from state, federal, foreign and other regulatory authorities that are material to the conduct of its business, all of which are valid and in full force and effect; such Seller is not in violation of its charter or bylaws or analogous governing documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any material bond, debenture, note or other evidence of indebtedness, or in any material lease, contract, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument to which it is a party or by which it or its properties or assets may be bound, which violation or default would have a material adverse effect on its respective business, prospects, financial condition or results of operations; and such Seller is not in violation of any law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over such Seller or over its properties or assets, which violation would have a material adverse effect on its respective business, prospects, financial condition or results of operations taken as a whole.

 

(b)           There is not any pending or, to the best of such Seller’s knowledge, threatened, action, suit, claim or proceeding against such Seller, or any of its officers or any of its respective properties, assets or rights, before any court, government or governmental agency or body, domestic or foreign, having jurisdiction over such Seller or over its officers or the properties, or otherwise that (i) is reasonably likely to result in any material adverse change in the respective business, prospects, financial condition or results of operations of such Seller or might materially and adversely affect their properties, assets or rights taken as a whole, (ii) might prevent consummation of the transactions contemplated by this Agreement, or (iii) allege a violation of any Federal or state securities laws.

 

  

  

  

(c)           When delivered by such Seller against payment therefor in accordance with the terms of this Agreement, the Shares delivered thereby will be duly and validly issued and fully paid and nonassessable, and will be sold free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest of any kind (other than under the Securities Act); and no preemptive or similar right, co-sale right, registration right, right of first refusal or other similar right of stockholders exists with respect to any of the Shares to be delivered thereby hereunder or the issuance and sale thereof other than those that have been expressly waived prior to the date hereof and will automatically expire upon the execution hereof.  No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale or transfer of the Shares, except as may be required under the Securities Act, the rules and regulations promulgated thereunder or under state or other securities or blue sky laws.

 

(d)           The Seller is the sole record and beneficial owner of the Shares set forth opposite its respective name in Schedule A hereto, free and clear of any security interest, pledge, mortgage, lien (including, without limitation, environmental and tax liens), charge, encumbrance, adverse claim, preferential arrangement or restriction of any kind, including, without limitation, any restriction on the use, voting, transfer (except as otherwise provided herein), receipt of income or other exercise of any attributes of ownership.  The Shares to be delivered by such Seller hereunder are not subject to any options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to interests therein.  There are no voting trusts, member agreements, proxies, or other agreements or understandings in effect with respect to the voting or transfer of any of such Shares.  Except as referenced in Schedule A, other than the Shares, such Seller owns beneficially or of record, no shares of capital stock or other securities of the Company, and does not own beneficially or of record, any securities exercisable for, or convertible into or exchangeable for, securities of the Company.

           (ii)           Such Sellers acquired the Shares owned beneficially and of record thereby from the Company in private transactions not involving a public offering and, on the dates of such acquisitions, such Seller paid the full purchase price therefor.    The Shares are “restricted securities” as defined in Rule 144(a) under the Securities Act.

           (iii)           Neither such Seller nor any affiliate thereof knows of any material adverse information regarding the current or prospective operations of the Company which has not been publicly disclosed.

Section 3.03Representations and Warranties of the Buyer.  Except as disclosed in the Buyer’s Disclosure Schedule attached hereto as Exhibit 3.03, the Buyer hereby represents and warrants to, and agrees with, the Sellers:

  

  

  

           (a)           The Buyer has all requisite power and authority to execute, deliver, and perform this Agreement.  All necessary proceedings of the Buyer have been duly taken to authorize the execution, delivery, and performance of this Agreement thereby. This Agreement has been duly authorized, executed, and delivered by such Buyer, constitutes the legal, valid, and binding obligation of the Buyer, and is enforceable as to the Buyer in accordance with its respective terms. Except as otherwise set forth in this Agreement, no consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any federal, state, local, or other governmental authority or any court or other tribunal is required by such Buyer for the execution, delivery, or performance of this Agreement thereby.  No consent, approval, authorization or order of, or qualification with, any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Buyer or over its properties or assets is required for the execution and delivery of this Agreement and the consummation by such Buyer of the transactions herein contemplated, except such as may be required under the Securities Act or under state or other securities or blue sky laws, all of which requirements have been, or in accordance therewith will be, satisfied in all material respects.  No consent of any party to any material contract, agreement, instrument, lease, license, arrangement, or understanding to which the Buyer is a party, or to which its or any of its businesses, properties, or assets are subject, is required for the execution, delivery, or performance of this Agreement; and the execution, delivery, and performance of this Agreement will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under, entitle any party to receive rights or privileges that such party was not entitled to receive immediately before this Agreement was executed under, or create any obligation on the part of the Buyer to which it was not subject immediately before this Agreement was executed under, any term of any such material contract, agreement, instrument, lease, license, arrangement, or understanding, or violate or result in a breach of any term of the operating agreement of the Buyer or (if the provisions of this Agreement are satisfied) violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment, decree, injunction, or writ of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Buyer or over its properties or assets.

           (b)           The Buyer is an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act.  The Buyer is acquiring the Shares for its own account (and not for the account of others) for investment and not with a view to the distribution or resale thereof in violation of the Securities Act. The Buyer understands that it may not sell or otherwise Dispose Of such Shares in the absence of either an effective registration statement under the Securities Act or an exemption from the registration provisions of the Securities Act.  The Buyer acknowledges being informed that the shares of Common Stock acquired thereby shall be unregistered, shall be “restricted securities” as defined in Rule 144(a) under the Securities Act, and must be held indefinitely unless (i) they are subsequently registered under the Securities Act, or (ii) an exemption from such registration is available.  The Buyer further acknowledges that the Company does not have an obligation to currently register such securities for the account of the Buyer.

(c)           The Buyer has read and reviewed the Company’s latest periodic and current report filings on the Securities and Exchange Commission’s EDGAR webpage at www.sec.gov, including the audited and unaudited financial statements, description of business operations, risk factors and other disclosures set forth therein.

(d)           By virtue of the Buyer’s position, it has access to the same kind of information which would be available in a registration statement filed under the Securities Act. The Buyer acknowledges that it has been afforded access to all material information which it has requested relevant to its decision to acquire the Shares and to ask questions of the Company’s management and that, except as set forth herein, none of the Sellers or the Company or anyone acting on behalf of any Seller or the Company, has made any representations or warranties to the Buyer which have induced, persuaded, or stimulated the Buyer to acquire such Shares.

(e)            Either alone, or together with their investment advisor(s), the Buyer has the knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment in the Shares to be acquired thereby, and the Buyer is and will be able to bear the economic risk of the investment in such Shares.

  

  

  

ARTICLE IV

ADDITIONAL COVENANTS

Section 4.01 Indemnity.

(a) The Spin-Off Owners, jointly and severally, agree to indemnify and hold harmless the Buyer and its officers, directors, employees, counsel, agents, and stockholders, in each case past, present, or as they may exist at any time after the date of this Agreement, and each person, if any, who controls, controlled, or will control any of them within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934, as amended, against any and all losses, liabilities, damages, and expenses whatsoever (which shall include, for all purposes of this Article IV, but not be limited to, counsel fees and any and all expenses whatsoever incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with (a) any material breach of any representation, warranty, covenant, or agreement of any Seller or the Company contained in this Agreement, (b) if the Closing takes place, any act or alleged omission occurring at or prior to the Closing (including without limitation any which arise out of, are based upon, or are in connection with any of the transactions contemplated hereby) which subjects the Buyer to damages related to such act or omission, and (c) the products and operations of the Company, if any, prior to Closing.  The foregoing agreement to indemnify shall be in addition to any liability the Sellers or the Company may otherwise have, including liabilities arising under this Agreement.

(b)           Buyer agrees to indemnify and hold harmless the Sellers, the Seller’s counsel and agents, in each case past, present, or as they may exist at any time after the date of this Agreement, and each person, if any, who controls, controlled, or will control any of them within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934, as amended, against any and all losses, liabilities, damages, and expenses whatsoever (which shall include, for all purposes of this Article IV, but not be limited to, counsel fees and any and all expenses whatsoever incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with (a) any material breach of any representation, warranty, covenant, or agreement of the Buyer contained in this Agreement, (b) if the Closing takes place, any act or alleged omission of Buyer occurring at or subsequent to the Closing (including without limitation any which arise out of, are based upon, or are in connection with any of the transactions contemplated hereby) which subjects the Seller to damages related to such act or omission, and (c) the products and operations of the Company, if any, subsequent to Closing and not related to the business and operations which are the subject of the Spin-Off.  The foregoing agreement to indemnify shall be in addition to any liability the Buyers may otherwise have, including liabilities arising under this Agreement.

Section 4.02   Stockholders; Other Securities.  Each of the Spin-Off Owners and the Company hereby agrees that immediately prior to the Closing, the Company will have at least 35 stockholders.  Prior to the date of this Agreement, all of the Company’s outstanding convertible debt, options, warrants and all other indebtedness of the Company shall have been cancelled.

           Section 4.03   Assets and Liabilities. Each of the Spin-Off Owners and the Company hereby agrees that, following the Spin-Off, and not taking into account any assets or liabilities assumed in connection with the Exchange, the Company shall have no assets and no liabilities.

           Section 4.04  Corporate Governance.    At the Closing, (a) the Board of Directors of the Company shall consist of one current director  (the “Existing Director”), who shall resign immediately thereafter, and one director appointed by Buyer (the “New Director”), and (b) all officers of the Company shall resign and the Board of Directors shall appoint the designees of the Buyer as the sole officers thereof.

 

  

  

  

Section 4.05  Further SEC Filings.  Each of the officers and directors of the Company shall take all such further acts as shall be required to permit the Company to file any SEC Documents to be filed at or following the Closing which reflect the business and operations of the Company prior to the Closing, and shall execute and deliver all certifications required to be filed by the Company with respect to financial statements of the Company reflecting in whole or in part the business and operations of the Company prior to the Closing.

 

Section 4.06   Split.  The Company covenants that the Split shall become effective subsequent to the Closing.  At the Closing, Sebring shall reimburse the Company up to $1,000 for costs and expenses associated with the Split.

 

Section 4.07  Other Stock Purchases.  Simultaneously with the Closing, persons designated by Buyer shall acquire (the “Third Party Common Stock Acquisitions”) from certain non-“affiliated” (as such term is defined in the Securities Act) stockholders of the Company an aggregate of 660,218 unrestricted shares of Common Stock (representing approximately 8.5% of the outstanding Common Stock) and 746,638 restricted shares of Common Stock (representing approximately 9.6% of the outstanding shares of Common Stock).

 

ARTICLE V

MISCELLANEOUS

 

Section 5.01Expenses.  Whether or not the transactions contemplated in this Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, will be paid by the party incurring such expense or as otherwise agreed to herein.

Section 5.02Necessary Actions.  Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement.  In the event at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement, the Sellers, the proper executive officers and/or directors of the Company, or the Buyer, as the case may be, will take all such necessary action.

 

Section 5.03Notices.  Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be mailed by certified mail, return receipt requested or by the most nearly comparable method if mailed from or to a location outside of the United States or by Federal Express, Express Mail, or similar overnight delivery or courier service or delivered (in person or by telecopy, telex, or similar telecommunications equipment) against receipt to the party to which it is to be given at the address of such party set forth in the introductory paragraph to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 5.03.)  Any notice to the Company shall be addressed to the attention of the Corporate Secretary. Any notice or other communication given by certified mail (or by such comparable method) shall be deemed given at the time of certification thereof (or comparable act), except for a notice changing a party's address which will be deemed given at the time of receipt thereof.  Any notice given by other means permitted by this Section 5.03 shall be deemed given at the time of receipt thereof.

  

  

  

Section 5.04   Parties in Interest.  Except as expressly provided in Section 4.01 hereof, this Agreement will inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns.  Nothing in this Agreement is intended to confer, expressly or by implication, upon any other person any rights or remedies under or by reason of this Agreement.

Section 5.05  Entire Agreement; Modification.  Except as otherwise expressly provided herein, this Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements among them concerning such subject matter, and may be modified only by a written instrument duly executed by each party hereto.

Section 5.06Availability of Equitable Remedies.  Since a breach of the provisions of this Agreement could not adequately be compensated by money damages, any party shall be entitled, in addition to any other right or remedy available to it, to an injunction restraining such breach or threatened breach and to specific performance of any such provision of this Agreement, and no bond or other security shall be required in connection therewith, and the parties hereby consent to the issuance of such an injunction and to the ordering of specific performance.

Section 5.07  Survival.  Each of the covenants, agreements, representations, and warranties contained in this Agreement shall survive the Closing Date until the date 18 months thereafter.  The statements contained in any document executed by either any Seller or the Company relating hereto or delivered to the Buyer in connection with the transactions contemplated hereby or thereby, or in any statement, certificate, or other instrument delivered by, or on behalf of, either any Seller or the Company pursuant hereto or thereto or delivered to the Buyer in connection with the transactions contemplated hereby or thereby shall be deemed representations and warranties, covenants and agreements, or conditions, as the case may be, of such Seller or the Company, respectively, hereunder for all purposes of this Agreement (including all statements, certificates, or other instruments delivered pursuant hereto or thereto or delivered in connection with this Agreement, or any of the other transactions contemplated hereby).  The statements contained in any document executed by the Buyer relating hereto or delivered to either any Seller or the Company in connection with the transactions contemplated hereby or thereby, or in any statement, certificate, or other instrument delivered by, or on behalf of, the Buyer pursuant hereto or thereto or delivered to either any Seller or the Company in connection with the transactions contemplated hereby or thereby shall be deemed representations and warranties, covenants and agreements, or conditions, as the case may be, of the Buyer hereunder for all purposes of this Agreement (including all statements, certificates, or other instruments delivered pursuant hereto or thereto or delivered in connection with this Agreement, or any of the other transactions contemplated hereby).

Section 5.08Binding Effect.  The provisions of this Agreement shall be binding upon and inure to the benefit of each of the Sellers, the Company, and the Buyer, and their respective successors and assigns; provided, however, that no party hereto shall have the right to assign its rights and obligations hereunder without the prior written consent of the other parties hereto.

  

  

  

Section 5.09  Counterpart.  This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all together will constitute one document.  The delivery by facsimile of an executed counterpart of this Agreement will be deemed to be an original and will have the full force and effect of an original executed copy.

Section 5.10  Severability.  The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision hereof will not affect the validity or enforceability of any of the other provisions hereof.  If any provisions of this Agreement, or the application thereof to any person or any circumstance, is illegal, invalid or unenforceable, (a) a suitable and equitable provision will be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision, and (b) the remainder of this Agreement and the application of such provision to other persons or circumstances will not be affected by such invalidity or unenforceability, nor will such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 5.11  Headings.  The Article and Section headings are provided herein for convenience of reference only and do not constitute a part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

Section 5.12Governing Law.   This Agreement will be deemed to be made in and in all respects will be interpreted, construed and governed by and in accordance with the law of the State of Nevada, without regard to the conflict of law principles thereof.

Section 5.13Extended Meanings. In this Agreement words importing the singular number include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders. The word “person” includes an individual, body corporate, partnership, trustee or trust or unincorporated association, executor, administrator or legal representative.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

 

 

 

 

 

  

  

  

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement in a manner legally binding upon them as of the date first above written.

SELLERS

	
/s/ Tim Miller

Name: Tim Miller

	  	
/s/ Jim Stevenson

Name: Jim Stevenson

	
 

 

/s/ Joe Miller

Name: Joe Miller

 

/s/ Eric Woods

Name: Eric Woods

 

	  	
 

 

/s/ Doug Cooper

Name: Doug Cooper

	
SEBRING SOFTWARE LLC

 

 

By: /s/ Leif Andersen

      Name: Leif Andersen

      Title: President

	  	
SUMOTEXT INCORPORATED

 

 

By: /s/ Tim Miller

Name: Tim Miller

Title: President

 

 

 

 

 

 

 

  

  

  

 

Schedule A

Sellers

	  	  	  	  	  	  	  	  
	  	
NAME

	
ADDRESS

	  	  	
SHARES

	
PRICE

	
TOTAL

	  	
Tim Miller

	
38 Pamela Drive

	
Little Rock, AR

	
72227

	
1,757,700

	
$0.04537

	
$79,746.85

	  	
Jim Stevenson

	
3028 Steeplegate Dr

	
Germantown, TN

	
38138

	
1,562,722

	
$0.04537

	
$70,900.70

	  	
Joe Miller

	
260 S. Osceola Ave. #1107

	
Orlando, FL

	
32801

	
1,255,500

	
$0.04537

	
$56,962.04

	  	
Doug Cooper

	
PO Box 37    CR 1030

	
Henderson, AR

	
72544

	
1,197,477

	
$0.04537

	
$54,329.53

	  	
Eric Woods

	
7454 East Whistling Wind Way

	
Scottsdale, AZ

	
85255

	
533,551

	
$0.04537

	
$24,207.21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]