Document:

EX-10.1

 Exhibit 10.1 

SEPARATION AGREEMENT AND GENERAL RELEASE 

I, James Miller (referenced herein as “I” or “me”), intending to be legally bound, agree to
this Separation Agreement and General Release (the “Agreement”), which is being entered into between me and Landmark Apartment Trust, Inc. (formerly known as Landmark Apartment Trust of America, Inc., the
“Employer”). For and in consideration of the mutual promises contained herein, and for other good and sufficient consideration, receipt of which is hereby acknowledged, the Employer and I (collectively, the
“Parties”), intending to be legally bound, agree as follows: 
 1. Separation and Payment. 

(a) I shall resign from any and all positions with the Employer or any subsidiary or joint venture thereof, effective December 11, 2014
(the “Separation Date”). The Employer will pay me all wages, salary, business reimbursement expenses, and other payments due as of the Separation Date, including accrued leave benefits due in accordance with Employer policy.
As of the Separation Date, the accrued leave benefits due to me from Employer amounts to $47,115.00. All amounts due under this subsection shall be paid within 72 hours of the execution of this Agreement, less tax withholding as determined by the
Employer. Notwithstanding the foregoing, I acknowledge that I am not due a 2014 bonus payment or any other bonus or incentive payments. I further acknowledge and agree that no outstanding equity interests held by me which have not heretofore vested
will vest, including, without limitation, LTIPs. 
 (b) In consideration of my agreeing to and complying with the terms of this Agreement,
the Employer shall, subject to Section 1(c) and Section 5 hereof: (i) pay me an aggregate sum of up to $300,000, in equal monthly installments over a twelve (12) month period, less tax withholding as determined by the Employer;
(ii) provide me with the health continuation coverage benefits set forth in Exhibit A; and (iii) provide me with a limited release from the terms of my Covenant Against Competition, as specified below in Section 3
(collectively, the “Severance Benefits”). For the avoidance of doubt, in the event Employer determines to stop providing my Severance Benefits in accordance with Section 1(c) hereof, I may retain all amounts received by
me until the date of such determination of cessation of payments of further Severance Benefits. 
 (c) The Severance Benefits set forth in
Section 1(b) shall not be provided unless and until the Employer receives this signed Agreement from me and the revocation period (described below) expires without the Agreement being revoked (the date on which the latter of these two
events occurs shall be referred to as the “Effective Date”). Additionally, the installment payments contemplated by Section 1(b)(i) shall be made beginning sixty (60) days following the Separation Date.
Notwithstanding anything herein to the contrary, it is understood and agreed that the Audit Committee of the Board of Directors of the Employer (the “Committee”) may cause the Employer to discontinue the provision of the
Severance Benefits if the Committee determines, at any time, in its sole and absolute discretion, that I have breached this Agreement or otherwise failed to comply with my obligations hereunder in a manner satisfactory to the Committee, including,
without limitation, a failure to comply with Section 5 of this Agreement, which determination shall be made by the Audit Committee in its sole and absolute discretion. 

 (d) As of the Separation Date or (only for those plans which provide that participation ends on
the last day of the month in which the separation occurs) as of the last day of the month in which the separation occurred, I shall not be eligible and am not eligible to participate in any Employer bonus, incentive, benefit, insurance, or similar
plans, including without limitation medical and dental insurance, life insurance, accidental death and dismemberment insurance, legal services plan, any retirement and 401(k) plan, vacation leave, sick leave, disability insurance, and stock purchase
plan. Nothing in this Section shall prevent me from participating (to the extent that I am eligible to participate) in any applicable insurance continuation coverage program as set forth in Exhibit “A”. 

(e) Subject to and regardless of any revocation or cessation of the payment of Severance Benefits contemplated by Section 1(c) hereof,
once all of the payments to which I am determined to be entitled to by the Audit Committee referred to in this Section 1 have been made, I acknowledge and agree that I shall have been paid all compensation due and owing to me under this
Agreement, under any employment or other contract, whether written or oral, I have or may have had with the Employer or any subsidiary thereof, including, without limitation, the Existing Agreement (as defined in Section 8 hereof) under any
separation or severance policy, or from any other source of entitlement, including all salary, bonuses, paid leave, severance pay or other benefits. I further acknowledge and agree that the Severance Benefits are consideration for my promises in
this Agreement, and that such consideration is above and beyond any wages, salary, bonuses, severance, or other sums or benefits to which I am entitled from the Employer under the terms of employment or under any policy, contract, or law. 

2. General Release of Claims; Covenant Not to Sue. In consideration for the benefits provided in Section 1 of this
Agreement, I agree to the following: Except as otherwise set forth in this Agreement, to the maximum extent permitted by law, I hereby release, acquit and forever discharge the Employer, its parents and subsidiaries, and its and their officers,
directors, agents, partners, members, managers, servants, employees, shareholders, successors, assigns and affiliates (each, a “Releasee” and collectively, the “Releasees”), of and from any and all
claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Employer), arising out of or in any way related to agreements, events, acts or conduct at any time
prior to the date I execute this Agreement, including, but not limited to: the Existing Agreement (as defined in Section 8 hereof), all claims and demands directly or indirectly arising out of or in any way connected with my employment with the
Employer or the termination of that employment, including without limitation claims of intentional and negligent infliction of emotional distress, claims or demands related to salary, bonuses, incentives, commissions, stock, stock options, or any
other ownership interests in the Employer, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation, claims pursuant to any federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, the federal Age Discrimination in Employment Act of 1967 (“ADEA”), the Older Workers Benefit Protection Act, the federal Employee Retirement Income Security Act of 1974,

  
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the federal Americans with Disabilities Act of 1990, the Family and Medical Leave Act, tort law, contract (including my Employment Agreement of January 1, 2014, and which I acknowledge is
superseded by this Agreement except where expressly provided in this Agreement), wrongful discharge, discrimination, fraud, defamation, emotional distress, and breach of the implied covenant of good faith and fair dealing; provided, however, that
nothing in this paragraph shall be construed in any way to (1) release any claims that may not be waived as a matter of law; (2) release the Employer from its obligation to indemnify me pursuant to the Employer’s indemnification
obligation pursuant to written agreement or applicable law; (3) release any claim by me against the Employer relating to the validity or enforceability of this Agreement under the ADEA or otherwise; or (4) prohibit me from exercising any
non-waivable right to file a charge with the United States Equal Employment Opportunity Commission, the National Labor Relations Board, or any other government agency (provided, however, that I shall not be entitled to recover any monetary damages
or to obtain non-monetary relief if the agency were to pursue any claims relating to my employment with the Employer). 
 I represent and
agree that I have not, by myself or on my behalf, instituted, prosecuted, filed, or processed any litigation, claims or proceedings against the Company or any Releasees. I agree, to the maximum extent permitted by law, not to make or file any
lawsuits, complaints, or other proceedings against the Employer or any Releasee or to join in any such lawsuits, complaints, or other proceedings against the Employer or Releasees concerning any matter relating to my employment with the Employer or
that arose on or prior to the date of this Agreement. The Parties agree that to the extent, if any, I may have a non-waivable right to file or participate in a claim or charge against the Employer or Releasees, this Agreement shall not be intended
to waive such a right to file or participate. I further agree, to the maximum extent permitted by law, that I shall not obtain, and hereby waives any right or entitlement to obtain, any relief or damages (whether legal, monetary, equitable, or
other) from such a non-waivable claim or charge, whether the same is filed by me or on my behalf. 
 3. Reaffirmation of Restrictive
Covenants. I acknowledge and confirm my continued obligations under Section 6 of my Existing Agreement (as defined in Section 8 hereof), except that the Employer agrees to permit me to work for Elco Landmark Residential Holdings,
LLC, including, but not limited to, its parent entity, subsidiaries, assets, investments, clients and/or corporate affiliates, as part of the Severance Benefits provided to me under this Agreement. For the avoidance of doubt, notwithstanding
Section 8 hereof, it is understood and agreed that subject to the specific exclusion set forth in the immediately preceding sentence, Section 6 of the Existing Agreement shall, for all purposes, be incorporated by reference in this
Agreement as if set forth herein. For purposes of Section 6 of the Existing Agreement, the “termination” date shall be the Separation Date as used in this Agreement. If it is determined by a court of competent jurisdiction that any
restriction in this Section is excessive in duration or scope or is unreasonable or unenforceable, it is the intention of the Parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent
permitted by law. 

  
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 4. Non-Disparagement. To the maximum extent permitted by applicable law, I agree
that, now and in the future, I will not make, publish, or communicate to any person or entity any defamatory or disparaging statements regarding the Employer, its parents, subsidiaries or affiliates or any other Releasee, or their respective
products, services, officers, directors, agents, partners, members, managers, servants, employees, shareholders, successors, and assigns, jointly or severally. The foregoing shall not be violated by truthful statements in response to legal process,
required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings). I understand that by agreeing to the provisions of this Section 4, I am
waiving rights guaranteed by the First Amendment of the United States Constitution and any State counterparts. In the event I am requested or required by court or government agency order or request, or through subpoena or discovery request, to
disclose information that may be deemed covered or implicated by this provision, I agree to give the Employer, verbally and in writing, as much advanced notice as possible of such pending disclosure so that the Employer may contest the disclosure or
seek a protective order. I also agree to limit any disclosure to the minimum amount that is legally required to be disclosed. 
 5.
Further Assistance. I agree to make myself reasonably available to the Employer relating to my prior services as an employee of the Employer including, but not limited to, assisting the Employer and acting as a witness in connection with
any pending or threatened litigation or other legal proceeding with respect to which the Employer reasonably determines my participation to be necessary, and responding to questions and inquiries from the Audit Committee and/or the Employer’s
management, officers, directors or other committees of Employer’s Board of Directors, with respect to all aspects of my prior services including, but not limited to, providing full and accurate information relating to the financial affairs and
financial record-keeping of the Employer and/or any of its subsidiaries or the business thereof, including, without limitation, the property management business of LATPM, LLC (formerly known as ATA Property Management, LLC). Such assistance shall be
without additional compensation to me and I acknowledge and agree that continued payment of my Severance Benefits are expressly conditioned upon the satisfactory fulfillment of my obligations under this Agreement, including, without limitation, this
Section 5, and subject in every manner to the terms and conditions set forth in Section 1(c) hereof; however, I shall be reimbursed for any reasonable out-of-pocket expenses (excluding attorney’s fees), I incur in providing such
assistance. I agree that I shall notify the Employer within forty-eight (48) hours by contacting Stanley J. Olander, Jr., the Employer’s Chief Executive Officer in response to any order, subpoena, notice (including but not limited to a
deposition notice), discovery request or any other request issued by or through a state or federal court or governmental agency or any other authority having the power to issue such an order, subpoena, notice, or request. 

6. Employment Verification. I shall direct all prospective employers seeking a reference to Stanley J. Olander, the
Employer’s Chief Executive Officer, who will confirm only my dates of employment, title, and salary. 
 7. No Admission.
The Parties agree that nothing contained in this Agreement shall constitute or be treated as an admission of liability or wrongdoing by either of them. 

  
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 8. Entire Agreement. This Agreement contains the entire agreement between the
Parties with respect to the subject matter hereof and except where expressly provided herein, supersedes all prior agreements, written or oral, between me and the Employer or its subsidiaries (or any predecessor of either), including without
limitation my Employment Agreement effective as of January 1, 2014 (the “Existing Agreement”). 
 9.
Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement. This Agreement may be
executed and delivered by facsimile transmission of signed counterparts or in .pdf or similar format by electronic mail transmission, and in any number of counterparts, each of which shall be deemed an original, with the same effect as if the
signatures thereto and hereto were upon the same instruments. 
 10. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under applicable law, such invalidity, illegality
or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid, illegal or unenforceable provisions had never been contained herein. The language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either of the Parties. 
 11.
Waiver. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Parties or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any
such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other such right, power or privilege. 

12. Assignment. This Agreement and my rights and obligations under this Agreement may not be assigned by me without the prior
written consent of the Employer. The Employer may assign, with or without my consent, this Agreement and its rights and obligations under this Agreement to any entity affiliated with it or to any successor entity. 

13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED EXCLUSIVELY IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Subject to the Parties’ obligations under Section 14, the Employer and I each hereby expressly consents to the exclusive venue and jurisdiction of the state and federal courts
located in Baltimore, Maryland, for any lawsuit arising from or relating to this Agreement. 
 14. Arbitration. Except with
respect to any claims or disputes arising from or relating to the Restrictive Covenants, any disputes arising under or in connection with this Agreement shall be resolved by binding arbitration, to be held in Baltimore, Maryland in accordance with
the Commercial Arbitration Rules, as amended from time to time, of the American Arbitration Association (the “AAA”). The Employer and I will each select an arbitrator, and a third arbitrator will be selected jointly by the
arbitrators selected by the Employer and me within 15 days after demand for arbitration is made by a party. If the 

  
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arbitrators selected by the Employer and me are unable to agree on a third arbitrator within that period, then either the Employer or me may request that the AAA select the third arbitrator. The
arbitrators will possess substantive legal experience in the principal issues in dispute and will be independent of the Employer and me. To the extent permitted by applicable law and not prohibited by the Employer’s certificate of incorporation
and bylaws, the Employer will pay all expenses (including my reasonable expenses, including my reasonable legal fees, if I am the prevailing party in such arbitration) incurred in connection with arbitration and the fees and expenses of the
arbitrators and will advance such expenses from time to time as required. Except as may otherwise be agreed in writing by the Parties or as ordered by the arbitrators upon substantial justification shown, the hearing for the dispute will be held
within 60 days of submission of the dispute to arbitration. The arbitrators will render their final award within 30 days following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrators. The
arbitrators will state the factual and legal basis for the award. The decision of the arbitrators will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent
jurisdiction, but entry of such judgment will not be required to make such award effective. 
 15. Waiver of Jury Trial. THE
PARTIES HEREBY WAIVE TRIAL BY JURY AS TO ANY AND ALL FUTURE LITIGATION BETWEEN THEM, INCLUDING ANY CLAIMS AND/OR DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT. 

16. Notices. Any notice, consent or other communication required or permitted hereunder shall be in writing and shall be
delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice, consent or other communication shall be deemed given when so delivered personally,
delivered by overnight courier, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the United States mails as follows: 

If to the Employer, to: 
 Landmark
Apartment Trust, Inc. 
 3505 E. Frontage Road 

Suite 150 
 Tampa, Florida 33607

 Attention: Board of Directors c/o Secretary 

Fax: (561) 745-8745 

Email: aszydlowski@latapts.com 

with a copy, in the case of notice, to: 

Hogan Lovells US LLP 
 Columbia
Square 
 555 Thirteenth Street, NW 

Washington, DC 20004 
 Attention:
Stuart A. Barr, Esq. 
 Fax: (202) 637-5910 

Email: stuart.barr@hoganlovells.com 

  
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 If to me, to: 

James Miller 
 192 Caylon Ave.

 Tampa, FL 33606 
 with a
copy in the case of notice to: 
 The Josephs Law Firm 

Attn: Adam C. Josephs, Esq. 
 255
Alhambra Circle, Suite 700 
 Coral Gables, FL 33134 

Any such person may by notice given in accordance with this Section to the other Party hereto designate another address or person for receipt by such person
of notices hereunder. 
 17. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, permitted assigns, heirs, executors and legal representatives. 
 18. Headings. The headings in
this Agreement are for reference only and shall not affect the interpretation of this Agreement. 
 19. Application of
Section 409A. This Agreement and the amounts payable and other benefits hereunder are intended to comply with, or otherwise be exempt from, Section 409A of the Tax Code. This Agreement shall be administered, interpreted and
construed in a manner consistent with Section 409A. If any provision of this Agreement is found not to comply with, or otherwise not to be exempt from, the provisions of Section 409A, it shall be modified and given effect, in the sole
discretion of the Employer’s Board or Compensation Committee and without requiring my consent, in such manner as the Board or Compensation Committee determines to be necessary or appropriate to comply with, or to effectuate an exemption from,
Section 409A. Each payment under this Agreement shall be treated as a separate identified payment for purposes of Section 409A. The preceding provisions shall not be construed as a guarantee by the Employer of any particular tax effect to
me of the payments and other benefits under this Agreement. 
 (a) With respect to any reimbursement of expenses of or any provision of
in-kind benefits to me, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (a) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year
shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in
Section 105(b) of the Tax Code; (b) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (c) the right to reimbursement or in-kind benefits
shall not be subject to liquidation or exchange for another benefit. 

  
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 (b) If a payment obligation under this Agreement is subject to Section 409A, the payment
shall be paid only in connection with my “separation from service” (as defined in Treas. Reg. Section 1.409A-1(h)). If a payment obligation under this Agreement arises on account of my “separation from service” (as defined
under Treas. Reg. Section 1.409A-1(h)) while I am a “specified employee” (as defined under Treas. Reg. Section 1.409A-1(h)), any payment of “deferred compensation” (as defined under Treasury Regulation
Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six months after such separation from service shall accrue without interest and
shall be paid on the first day of the seventh month beginning after the date of my separation from service or, if earlier, within 15 days after the appointment of the personal representative or executor of my estate following my death. 

20. Acknowledgment. I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the
ADEA. I also acknowledge that the consideration given under the Agreement for the waiver and release is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by
the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Agreement; (B) I have the right to consult with an attorney prior to executing this Agreement; (C) I
have twenty-one (21) days to consider this Agreement (although I may choose to voluntarily execute this Agreement earlier); (D) I have seven (7) days following my execution of this Agreement to revoke the Agreement by providing a
written notice of revocation to Stanley J. Olander, the Employer’s Chief Executive Officer; and (E) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8th) day
after I execute this Agreement (provided that I do not revoke it). Notwithstanding the foregoing, the Parties agree that any revisions or modifications to this Agreement, whether material or immaterial, will not and did not restart the time periods
contemplated by this Section 20. 
 21. Expenses. Each of the parties shall bear its own costs and expenses, including,
without limitation, attorneys’ fees relating to or arising from the negotiation and execution of this Agreement. 
 22.
Confidentiality. The parties acknowledge and agree that this Agreement will be filed by Employer with the United States Securities and Exchange Commission. 

23. Capacity. I am of legal age and mental competence to enter into this Agreement. 

24. Representation. The parties affirm that they have carefully read the terms of this Agreement, that they know and
understand the contents and meaning of this Agreement and that they sign this Agreement as a matter of their own free acts and after consultation with their own legal counsel. The parties further agree that this Agreement shall be deemed the joint
work product of the parties hereto and their respective counsel, including legal counsel, and each of the parties shall be considered the drafters of this Agreement. Any rule of construction to the effect that any ambiguities are to be construed
against the drafting party shall not be applicable in any interpretation of this Agreement. 
 [REST OF PAGE INTENTIONALLY LEFT BLANK]

  
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 IN WITNESS HEREOF, THE PARTIES HAVE AFFIXED THEIR SIGNATURES BELOW: 

 

							
	James Miller	 		 	Landmark Apartment Trust, Inc.
				
	/s/ James Miller	 		 	By:	 	/s/ Stanley J. Olander, Jr.
	Date: December 15, 2014	 		 	Stanley J. Olander, Jr.
		 		 	Chief Executive Officer
		 		 	Date: December 11, 2014

 EXHIBIT A 

Health Continuation Coverage 

Provided that I am eligible and have made the necessary elections for continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), under a health, dental or vision plan sponsored by the Employer, the Employer shall pay for the applicable premiums (inclusive of premiums for my dependents for such health,
dental or vision plan coverage as in effect immediately prior to the Separation Date) for such continued health, dental or vision plan coverage following the Separation Date for twelve (12) months (but in no event after such time as I am
eligible for coverage under a health, dental or vision insurance plan maintained and offered by a subsequent employer or as my dependents and I are no longer eligible for COBRA coverage); provided that it is expressly understood and agreed that
nothing in this Exhibit A shall restrict the ability of the Employer to generally amend or terminate such plans and programs from time to time in its sole discretion; provided further that if continued payment by the Employer to me of the applicable
premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Internal Revenue Code of 1986, as amended, or any statute or regulation of similar effect (including, without limitation, the 2010 Patient
Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing such continued payment, the Employer will instead pay me on the first day of each month a fully taxable cash payment
equal to the applicable premiums for that month, subject to applicable tax withholdings, for the remainder of the twelve (12) month period. Such coverage shall be counted as coverage pursuant to COBRA. The Employer shall have no obligation in
respect of any premium payments (or any other payments in respect of health, dental or vision coverage from the Employer) following the effective date of my coverage by a health, dental or vision insurance plan of a subsequent employer. I shall be
required to notify the Employer immediately if I become eligible to be covered by a health, dental or vision insurance plan of a subsequent employer. If my dependents and I continue coverage pursuant to COBRA following the conclusion of the twelve
(12) month period, I will be responsible for the entire payment of such premiums required under COBRA for the duration of the COBRA period. 

For purposes of this Exhibit A, (i) references to COBRA shall be deemed to refer also to analogous provisions of state law, and
(ii) any applicable insurance premiums that are paid by the Employer shall not include any amounts payable by me under a Code Section 125 health care reimbursement plan, which amounts, if any, are my sole responsibility. I acknowledge that
for purposes of the continuation coverage requirements of group health plans under the COBRA, and the group health provisions of the Maryland Annotated Code, a “qualifying event” and “applicable change in status” occurs on the
Separation Date.EXHIBIT 10.1

 

DEFINITIVE SHARE EXCHANGE AGREEMENT

 

This three party Definitive Share Exchange Agreement (“Agreement”), dated as of December 16, 2014, is between TruXmart Ltd. (“TruXmart”), an Ontario, Canadian corporation located at 1895 Clements Road—Suite 155, Pickering, Ontario CANADA L1W 3R8, Steven Rossi (“Rossi”), the sole shareholder of TruXmart, and Franchise Holdings International, Inc. (“FNHI”), located at 1895 Clements Road—Suite 155, Pickering, Ontario CANADA L1W 3R8 (formerly at 5910 South University Boulevard, C-18, Unit 165, Littleton, Colorado 80121-2800). Collectively, Rossi, TruXmart and FNHI are the “Parties.”

 

The parties hereby enter into this Agreement, following which,

 

	
1.

	
FNHI will own 4,791 common shares of TruXmart, representing all of its issued and outstanding shares;

	
 

	 
	
2.

	
Rossi will own 40,000,000 shares of FNHI common shares, and shares of FNHI representing 92.9925914% of FNHI’s outstanding shares (the “Share Exchange”), calculated post-issuance;

	
 

	 
	
3.

	
TruXmart will relinquish its 2,300,000 common shares of FNHI, to Rossi, in becoming the wholly-owned subsidiary of FNHI.

 

As a result of this Agreement, FNHI will be filing a Form 8-K reflecting this change of control (sometimes called a “Super 8-K”). As a result of this acquisition, FNHI has adopted the fiscal year end of TruXmart, namely December 31. The first consolidated post-acquisition report will be the Form 10-K for the fiscal year ended December 31, 2014.

 

RECITALS

 

WHEREAS, Rossi currently holds all 4,791 Class A common shares, with a stated capital of $4,791 (all figures in Canadian dollars) issued and outstanding shares of TruXmart and is desirous of relinquishing all of his TruXmart shares so that he would own 40,000,000 shares of FNHI common stock and that 40,540,864 shares of FNHI common stock would be outstanding; his ownership would represent 92.9925914% of FNHI’s outstanding shares; and that TruXmart would be a wholly-owned subsidiary of FNHI.

 

WHEREAS, TruXmart currently owns 2,300,000 common shares of FNHI, representing an 80.961285% ownership, and is desirous of becoming a wholly-owned subsidiary of FNHI, a fully reporting public company, relinquishing its 2,300,000 shares of FNHI in the process.

 

WHEREAS, FNHI and TruXmart are desirous of FNHI acquiring 100% of the outstanding shares of TruXmart, issuing 37,700,000 shares of FNHI common stock in the process, making TruXmart a wholly-owned subsidiary of FNHI.

 

WHEREAS, the board of directors and shareholders of FNHI and TruXmart, respectively, have each agreed to exchange and issue shares, as necessary to cause the forgoing results (the “Share Exchange”), upon the terms, and subject to the conditions, set forth in this Agreement, including increasing the authorized shares of FNHI common stock to 100,000,000.

 

	 
	
1

	

 

WHEREAS, it is intended that, for federal income tax purposes, the Share Exchange shall qualify as a reorganization under the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations promulgated thereunder, and be tax-free pursuant to Section 351(a) of the Code.

 

WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

 

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

 

INCORPORATION OF RECITALS BY REFERENCE. The Recitals are hereby incorporated herein by this reference, as if fully restated herein.

 

ARTICLE I
DEFINITIONS

 

I.1 Certain Definitions. The following terms shall, when used in this Agreement, have the following meanings:

 

“Acquisition” means the acquisition of any businesses, assets or property other than in the ordinary course, whether by way of the purchase of assets or stock, by FNHI acquiring all of the outstanding shares of TruXmart pursuant to this Share Exchange Agreement and TruXmart relinquishing and exchanging its shares of FNHI to Rossi.

 

“Affiliate” means, with respect to any Person: (i) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of such other Person (other than passive or institutional investors); (ii) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; and (iv) any officer, director or partner of such other Person. “Control” for the foregoing purposes shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or voting interests, by contract or otherwise.

 

“Business Day” means any day other than Saturday, Sunday or a day on which banking institutions in Los Angeles, California, are required or authorized to be closed.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Collateral Documents” mean the Exhibits and any other documents, instruments and certificates to be executed and delivered by the Parties hereunder or there under.

 

“Commission” means the Securities and Exchange Commission or any Regulatory Authority that succeeds to its functions.

 

“Effective Time” means, the moment in time when the shares of the FNHI are exchanged for the shares of FNHI.

 

	 
	
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“Encumbrance” means any material mortgage, pledge, lien, encumbrance, charge, security interest, security agreement, conditional sale or other title retention agreement, limitation, option, assessment, restrictive agreement, restriction, adverse interest, restriction on transfer or exception to or material defect in title or other ownership interest (including restrictive covenants, leases and licenses).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations there under.

 

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

 

“Legal Requirement” means any statute, ordinance, law, rule, regulation, code, injunction, judgment, order, decree, ruling, or other requirement enacted, adopted or applied by any Regulatory Authority, including judicial decisions applying common law or interpreting any other Legal Requirement.

 

“Losses” shall mean all damages, awards, judgments, assessments, fines, sanctions, penalties, charges, costs, expenses, payments, diminutions in value and other losses, however suffered or characterized, all interest thereon, all costs and expenses of investigating any claim, lawsuit or arbitration and any appeal there from, all actual attorneys’, accountants’ investment bankers’ and expert witness’ fees incurred in connection therewith, whether or not such claim, lawsuit or arbitration is ultimately defeated and, subject to Section 9.4, all amounts paid incident to any compromise or settlement of any such claim, lawsuit or arbitration.

 

“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

 

“Material Adverse Effect” means a material adverse effect on (i) the assets, Liabilities, properties or business of the Parties, (ii) the validity, binding effect or enforceability of this Agreement or the Collateral Documents or (iii) the ability of any Party to perform its obligations under this Agreement and the Collateral Documents; provided, however, that none of the following shall constitute a Material Adverse Effect on FNHI: (i) the filing, initiation and subsequent prosecution, by or on behalf of shareholders of any Party, of litigation that challenges or otherwise seeks damages with respect to the Share Exchange, this Agreement and/or transactions contemplated thereby or hereby, (ii) occurrences due to a disruption of a Party’s business as a result of the announcement of the execution of this Agreement or changes caused by the taking of action required by this Agreement, (iii) general economic conditions, or (iv) any changes generally affecting the industries in which a Party operates.

 

“Exchange Shares” means the 4,791 Class A issued and outstanding common shares of TruXmart (the “TruXmart Shares”), exchanged by Rossi to FNHI, for 37,700,000 newly issued shares of FNHI (the “FNHI Shares”), to be issued to Rossi and the 2,300,000 FNHI shares presently held by TruXmart, to be transferred to Rossi.

 

“FNHI Business” means the business conducted by FNHI.

 

“FNHI Common Stock” means the common shares of FNHI.

 

	 
	
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“FNHI Securities Filings” means FNHI’s Annual Report on Form 10-K and its quarterly reports on Form 10-Q, and all other reports filed and to be filed with the Commission prior to the Effective Time.

 

“Permit” means any license, permit, consent, approval, registration, authorization, qualification or similar right granted by a Regulatory Authority.

 

“Permitted Liens” means (i) liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings; (ii) rights reserved to any Regulatory Authority to regulate the affected property; (iii) statutory liens of banks and rights of set off; (iv) as to leased assets, interests of the lessors and sub-lessors thereof and liens affecting the interests of the lessors and sub-lessors thereof; (v) inchoate material men’s, mechanics’, workmen’s, repairmen’s or other like liens arising in the ordinary course of business; (vi) liens incurred or deposits made in the ordinary course in connection with workers’ compensation and other types of social security; (vii) licenses of trademarks or other intellectual property rights granted by FNHI, in the ordinary course and not interfering in any material respect with the ordinary course of the business of FNHI; and (viii) as to real property, any encumbrance, adverse interest, constructive or other trust, claim, attachment, exception to or defect in title or other ownership interest (including, but not limited to, reservations, rights of entry, rights of first refusal, possibilities of reversion, encroachments, easement, rights of way, restrictive covenants, leases, and licenses) of any kind, which otherwise constitutes an interest in or claim against property, whether arising pursuant to any Legal Requirement, under any contract or otherwise, that do not, individually or in the aggregate, materially and adversely affect or impair the value or use thereof as it is currently being used in the ordinary course.

 

“Person” means any natural person, corporation, partnership, trust, unincorporated organization, association, Limited Liability Company, Regulatory Authority or other entity.

 

“Proposed Acquisition” means any of the following transactions (other than the transactions contemplated by this Agreement): (i) a merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving FNHI pursuant to which the shareholders of FNHI immediately preceding such transaction hold less than fifty percent (50%) of the aggregate equity interests in the surviving or resulting entity of such transaction, (ii) a sale or other disposition by FNHI of assets representing in excess of fifty percent (50%) of the aggregate fair market value of FNHI Business immediately prior to such sale or (iii) the acquisition by any person or group (including by way of a tender offer or an exchange offer or issuance by FNHI), directly or indirectly, of beneficial ownership or a right to acquire beneficial ownership of shares representing in excess of fifty percent (50%) of the voting power of the then outstanding shares of capital stock of FNHI.

 

“Regulatory Authority” means: (i) the United States of America; (ii) any state, commonwealth, territory or possession of the United States of America and any political subdivision thereof (including counties, municipalities and the like); (iii) Canada and any other foreign (as to the United States of America) sovereign entity and any political subdivision thereof; or (iv) any agency, authority or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission or board.

 

“Representative” means any director, officer, employee, agent, consultant, advisor or other representative of a Person, including legal counsel, accountants and financial advisors.

 

	 
	
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“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations there under.

 

“Subsidiary” of a specified Person means (a) any Person if securities having ordinary voting power (at the time in question and without regard to the happening of any contingency) to elect a majority of the directors, trustees, managers or other governing body of such Person are held or controlled by the specified Person or a Subsidiary of the specified Person; (b) any Person in which the specified Person and its subsidiaries collectively hold a fifty percent (50%) or greater equity interest; (c) any partnership or similar organization in which the specified Person or subsidiary of the specified Person is a general partner; or (d) any Person the management of which is directly or indirectly controlled by the specified Person and its Subsidiaries through the exercise of voting power, by contract or otherwise.

 

“Tax” means any U.S. or non U.S. federal, state, provincial, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible property, recording, occupancy, sales, use, transfer, registration, value added minimum, estimated or other tax of any kind whatsoever, including any interest, additions to tax, penalties, fees, deficiencies, assessments, additions or other charges of any nature with respect thereto, whether disputed or not.

 

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

 

“Treasury Regulations” means regulations promulgated by the U.S. Treasury Department under the Code.

 

ARTICLE II
THE SHARE EXCHANGE

 

II.1 Share Exchange. In accordance with and subject to the provisions of this Agreement and the Nevada Corporations, Partnerships and Associations Law Annotated (the “Code”), at the Effective Time, TruXmart shall become a wholly-owned subsidiary of FNHI, and FNHI shall be its only shareholder and shall continue in its existence with one owner, FNHI, until a merger, if any. Pursuant to the Share Exchange, Rossi is relinquishing all of his 4,791Class A TruXmart common shares, constituting all issued and outstanding shares of TruXmart (the “TruXmart Shares”), and is acquiring 40,000,000 shares of FNHI (the “FNHI Shares”), representing 92.9925914% of the outstanding shares of FNHI; FNHI is issuing 37,700,000 of its shares, and is acquiring the 4,791TruXmart Shares; TruXmart is transferring to Rossi, its 2,300,000 shares of FNHI and becoming the wholly-owned subsidiary of FNHI.

 

II.2 Stock Transfer Books. Effective immediately, the stock transfer books of FNHI shall be closed, and there shall be no further issuance or registration of transfers of shares hereafter on the records of FNHI.

 

	 
	
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II.3 Restriction on Transfer. The Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Share Exchange Shares or any available exemption from registration under the Act, the Share Exchange Shares must be held indefinitely. The Parties are aware that the Share Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 may be the availability of current information to the public about the Surviving Company.

 

II.4 Restrictive Legend. All certificates representing the Exchange Shares shall contain an appropriate restrictive legend.

 

II.5 Closing. The closing of the transactions contemplated by this Agreement and the Collateral Documents (the “Closing”) shall take place via conference call at the offices of Carl N. Duncan, Esq., Securities Counselors, Inc., 5718 Tanglewood Drive, Bethesda, Maryland 20817, or at such other location as the parties may agree at 10:00 AM, EST Time on the agreed date, which, shall be concurrent with the signing hereof (the “Closing Date”).

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FNHI

 

FNHI represents and warrants to Rossi that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement and, except as provided in Section 7.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE III, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by this Agreement).

 

III.1 Organization and Qualification. FNHI is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization. FNHI has all requisite power and authority to own, lease and use its assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. FNHI is duly qualified or licensed to do business in and is in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it make such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed would not have a Material Adverse Effect on FNHI or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of FNHI to perform its obligations under this Agreement or any of the Collateral Documents.

 

III.2 Capitalization.

 

(a) The authorized capital stock and other ownership interests of FNHI, a Nevada corporation, consists of 20,000,000 common shares of Common Stock, of which 2,840,864 were issued and outstanding as of November 30, 2014. FNHI has no shares of Preferred Stock authorized. All of the outstanding FNHI Common have been duly authorized and are validly issued, fully paid and non-assessable.

 

(b) Other than what has been described herein or in FNHI’s SEC Documents, there are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require FNHI to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests (collectively “Options”).

 

	 
	
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(c) All of the issued and outstanding shares of FNHI Common Stock have been duly authorized and are validly issued and outstanding, fully paid and non-assessable and have been issued in compliance with applicable securities laws and other applicable Legal Requirements or transfer restrictions under applicable securities laws.

 

III.3 Authority and Validity. FNHI has all requisite corporate power to execute and deliver, to perform its obligations under, and to consummate the transactions contemplated by, this Agreement (subject to the approval of FNHI Shareholders as contemplated herein and subject to the receipt of any necessary consents, approvals, authorizations or other matters referred to herein). The execution and delivery by FNHI of, the performance by FNHI of its obligations under, and the consummation by FNHI of the transactions contemplated by, this Agreement have been duly authorized by all requisite action of FNHI (subject to the approval of FNHI Shareholders as contemplated herein). This Agreement has been duly executed and delivered by FNHI and (assuming due execution and delivery by Rossi and approval by FNHI Shareholders) is the legal, valid and binding obligation of FNHI, enforceable against it in accordance with its terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles. Upon the execution and delivery of the Collateral Documents by each Person (other than by Rossi) that is required by this Agreement to execute, or that does execute, this Agreement or any of the Collateral Documents, and assuming due execution and delivery thereof by Rossi, the Collateral Documents will be the legal, valid and binding obligations of FNHI, enforceable against FNHI in accordance with their respective terms, except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.

 

III.4 No Breach or Violation. Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by FNHI of this Agreement and the Collateral Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of FNHI under, or result in the creation or imposition of any Encumbrance upon FNHI, FNHI Assets, FNHI Business or FNHI Common Stock by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of FNHI or any Subsidiary of FNHI, (ii) any material contract, agreement, lease, indenture or other instrument to which FNHI is a party or by or to which FNHI, or the Assets may be bound or subject and a violation of which would result in a Material Adverse Effect on FNHI, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to FNHI or (iv) any Permit of FNHI, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on FNHI or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of FNHI to perform its obligations under this Agreement or any of the Collateral Documents.

 

	 
	
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III.5 Consents and Approvals. Except for requirements described in Schedule 3.5, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by FNHI in connection with the execution, delivery and performance by FNHI of this Agreement or any Collateral Document or for the consummation by FNHI of the transactions contemplated hereby or thereby, except to the extent the failure to obtain any such consent, approval, authorization or order or to make any such registration or filing would not have a Material Adverse Effect on FNHI or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of FNHI to perform its obligations under this Agreement or any of the Collateral Documents.

 

III.6 Intellectual Property. FNHI warrants that it has good title to or the right to use all material company intellectual property rights and all material inventions, processes, designs, formulae, trade secrets and know how necessary for the operation of FNHI Business without the payment of any royalty or similar payment.

 

III.7 Compliance with Legal Requirements. FNHI has operated its business in compliance with all Legal Requirements applicable to FNHI except to the extent the failure to operate in compliance with all material Legal Requirements would not have a Material Adverse Effect on FNHI or Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.

 

III.8 Litigation. There are no outstanding judgments or orders against or otherwise affecting or related to FNHI, FNHI Business or FNHI Assets and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to FNHI’s knowledge, threatened that, if adversely determined, would have a Material Adverse Effect on FNHI or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents, except as noted in the audited Company Financial Statements or documented by FNHI to Rossi.

 

III.9 Taxes. FNHI has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Regulatory Authority, and has paid all taxes required to be paid in respect thereof except where such failure would not have a Material Adverse Effect on FNHI, except where, if not filed or paid, the exception(s) have been documented by FNHI to Rossi.

 

III.10 Books and Records. The books and records of FNHI accurately and fairly represent FNHI Business and its results of operations in all material respects.

 

III.11 Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by FNHI and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither FNHI, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.

 

III.12 Disclosure. No representation or warranty of FNHI in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by FNHI pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

 

	 
	
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III.13 No Undisclosed Liabilities. FNHI is not subject to any material liability (including unasserted claims), absolute or contingent, which is not shown or which is in excess of amounts shown or reserved for in the balance sheet as of December 15, 2014 other than liabilities of the same nature as those set forth in FNHI Financial Statements and reasonably incurred in the ordinary course of its business after November 30, 2014.

 

III.14 Absence of Certain Changes. Since November 30, 2014, FNHI has not: (a) suffered any material adverse change in its financial condition, assets, liabilities or business; (b) contracted for or paid any capital expenditures; (c) incurred any indebtedness or borrowed money, issued or sold any debt or equity securities, declared any dividends or discharged or incurred any liabilities or obligations except in the ordinary course of business as heretofore conducted; (d) mortgaged, pledged or subjected to any lien, lease, security interest or other charge or encumbrance any of its properties or assets; (e) paid any material amount on any indebtedness prior to the due date, forgiven or cancelled any material amount on any indebtedness prior to the due date, forgiven or cancelled any material debts or claims or released or waived any material rights or claims; (f) suffered any damage or destruction to or loss of any assets (whether or not covered by insurance); (g) acquired or disposed of any assets or incurred any liabilities or obligations; (h) made any payments to its affiliates or associates or loaned any money to any person or entity; (i) formed or acquired or disposed of any interest in any corporation, partnership, limited liability company, joint venture or other entity; (j) entered into any employment, compensation, consulting or collective bargaining agreement or any other agreement of any kind or nature with any person. Or group, or modified or amended in any respect the terms of any such existing agreement; (k) entered into any other commitment or transaction or experience any other event that relates to or affect in any way this Agreement or to the transactions contemplated hereby, or that has affected, or may adversely affect FNHI Business, operations, assets, liabilities or financial condition; or (1) amended its Articles of Incorporation or By-laws, except as otherwise contemplated herein.

 

III.15 Contracts. A true and complete list of all contracts, agreements, leases, commitments or other understandings or arrangements, written or oral, express or implied, to which FNHI is a party or by which it or any of its property is bound or affected requiring payments to or from, or incurring of liabilities by, FNHI in excess of $100,000 (the “Contracts”). The Company has complied with and performed, in all material respects, all of its obligations required to be performed under and is not in default with respect to any of the Contracts, as of the date hereof, nor has any event occurred which has not been cured which, with or without the giving of notice, lapse of time, or both, would constitute a default in any respect there under. To the best knowledge of FNHI, no other party has failed to comply with or perform, in all material respects, any of its obligations required to be performed under or is in material default with respect to any such Contracts, as of the date hereof, nor has any event occurred which, with or without the giving of notice, lapse of time or both, would constitute a material default in any respect by such party there under. FNHI knows of and has no reason to believe that there are any facts or circumstances which would make a material default by any party to any contract or obligation likely to occur subsequent to the date hereof.

 

III.16 Permits and Licenses. FNHI has all certificates of occupancy, rights, permits, certificates, licenses, franchises, approvals and other authorizations as are reasonably necessary to conduct its business and to own, lease, use, operate and occupy its assets, at the places and in the manner now conducted and operated, except those the absence of which would not materially adversely affect its business. FNHI has not received any written or oral notice or claim pertaining to the failure to obtain any material permit, certificate, license, approval or other authorization required by any federal, state or local agency or other regulatory body, the failure of which to obtain would materially and adversely affect its business.

 

	 
	
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III.17 Assets Necessary to Business. FNHI owns or leases all properties and assets, real, personal, and mixed, tangible and intangible, and is a party to all licenses, permits and other agreements necessary to permit it to carry on its business as presently conducted.

 

III.18 Labor Agreements and Labor Relations. FNHI has no collective bargaining or union contracts or agreements. FNHI is in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practices; there are no charges of discrimination or unfair labor practice charges” or complaints against FNHI pending or threatened before any governmental or regulatory agency or authority; and, there is no labor strike, dispute, slowdown or stoppage actually pending or threatened against or affecting FNHI.

 

III.19 Employment Arrangements. FNHI has no employment or consulting agreements or arrangements, written or oral, which are not terminable at the will of FNHI, or any pension, profit-sharing, option, other incentive plan, or any other type of employment benefit plan as defined in ERISA or otherwise, or any obligation to or customary arrangement with employees for bonuses, incentive compensation, vacations, severance pay, insurance or other benefits. No employee of FNHI is in violation of any employment agreement or restrictive covenant.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ROSSI

 

Rossi represents and warrants to FNHI that the statements contained in this ARTICLE IV are correct and complete as of the date of this Agreement and, except as provided in Section 8.1, will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this ARTICLE IV, except in the case of representations and warranties stated to be made as of the date of this Agreement or as of another date and except for changes contemplated or permitted by the Agreement).

 

IV.1 Organization and Qualification. Rossi has all requisite power and authority to own, lease and use TruXmart’s assets as they are currently owned, leased and used and to conduct its business as it is currently conducted. Rossi is duly qualified or licensed to do business in and are each in good standing in each jurisdiction in which the character of the properties owned, leased or used by it or the nature of the activities conducted by it makes such qualification necessary, except any such jurisdiction where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Effect on the Rossi or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of FNHI or Rossi to perform his or its obligations under this Agreement or any of the Collateral Documents.

 

	 
	
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IV.2 Capitalization.

 

(a) The authorized capital stock of TruXmart is unlimited. All outstanding shares of TruXmart Common Stock are owned by Steven Rossi, TruXmart’s President, consisting of 4,791 shares. TruXmart has no shares of Preferred Stock authorized. All 4,791 Shares of Common Stock are duly issued and outstanding, and have been duly authorized, validly issued and outstanding and fully paid and non-assessable, which shares are exchanged hereby, as above provided.

 

(b) There are no outstanding or authorized options, warrants, purchase rights, preemptive rights or other contracts or commitments that could require TruXmart or any of its Subsidiaries to issue, sell, or otherwise cause to become outstanding any of its capital stock or other ownership interests.

 

(c) All of the issued and outstanding shares of the TruXmart Capital Stock have been duly authorized and are validly issued and outstanding, fully paid and non-assessable (with respect to Subsidiaries that are corporations) and have been issued in compliance with applicable securities laws and other applicable Legal Requirements.

 

IV.3 Authority and Validity. Rossi has all requisite power to execute and deliver to perform his obligations under, and to consummate the transactions contemplated by, this Agreement and the Collateral Documents. The execution and delivery by Rossi and the performance by Rossi of his obligations under, and the consummation by Rossi of the transactions contemplated by, this Agreement and the Collateral Documents have been duly authorized by all requisite action of Rossi. This Agreement has been duly executed and delivered (assuming due execution and delivery by Rossi) is the legal, valid and binding obligation of Rossi, enforceable in accordance with its terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles. Upon the execution and delivery by Rossi of the Collateral Documents to which he is a party, and assuming due execution and delivery thereof by the other parties thereto, the Collateral Documents will be the legal, valid and binding obligations, enforceable in accordance with their respective terms except that such enforcement may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally and (ii) general equitable principles.

 

IV.4 No Breach or Violation. Subject to obtaining the consents, approvals, authorizations, and orders of and making the registrations or filings with or giving notices to Regulatory Authorities and Persons identified herein, the execution, delivery and performance by Rossi of this Agreement and the Collateral Documents to which he is a party and the consummation of the transactions contemplated hereby and thereby in accordance with the terms and conditions hereof and thereof, do not and will not conflict with, constitute a violation or breach of, constitute a default or give rise to any right of termination or acceleration of any right or obligation of Rossi under, or result in the creation or imposition of any Encumbrance upon the property of Rossi by reason of the terms of (i) the articles of incorporation, by laws or other charter or organizational document of TruXmart , (ii) any contract, agreement, lease, indenture or other instrument to which any the Rossi or TruXmart is a party or by or to which Rossi or TruXmart or its property may be bound or subject and a violation of which would result in a Material Adverse Effect on Rossi or TruXmart taken as a whole, (iii) any order, judgment, injunction, award or decree of any arbitrator or Regulatory Authority or any statute, law, rule or regulation applicable to Rossi or TruXmart or (iv) any Permit of TruXmart or subsidiary, which in the case of (ii), (iii) or (iv) above would have a Material Adverse Effect on TruXmart or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of Rossi or TruXmart to perform its obligations hereunder or there under.

 

	 
	
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IV.5 Consents and Approvals. Except for requirements under applicable United States or state securities laws, no consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by Rossi in connection with the execution, delivery and performance by them of this Agreement or any Collateral Documents or for the consummation by them of the transactions contemplated hereby or thereby, except to the extent the failure to obtain such consent, approval, authorization or order or to make such registration or filings or to give such notice would not have a Material Adverse Effect on Rossi or a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents or the ability of Rossi to perform his obligations under this Agreement or any of the Collateral Documents.

 

IV.6 Compliance with Legal Requirements. TruXmart’s Business has operated in compliance with all material Legal Requirements including, without limitation, the Exchange Act and the Securities Act applicable to TruXmart, except to the extent the failure to operate in compliance with all material Legal Requirements, would not have a Material Adverse Effect on TruXmart or a Material Adverse Effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.

 

IV.7 Litigation. There are no outstanding judgments or orders against or otherwise affecting or related to TruXmart, or the business or assets; and there is no action, suit, complaint, proceeding or investigation, judicial, administrative or otherwise, that is pending or, to the best knowledge of the Rossi, threatened that, that has not been disclosed and if adversely determined, would have a material adverse effect on the validity, binding effect or enforceability of this Agreement or the Collateral Documents.

 

IV.8 Ordinary Course. Since the date of its most recent balance sheet, there has not been any occurrence, event, incident, action, failure to act or transaction involving TruXmart, which is reasonably likely, individually or in the aggregate, to have a Material Adverse Effect on TruXmart.

 

IV.9 Assets and Liabilities. As of the date of this Agreement, neither TruXmart nor any of its Subsidiaries has any Assets or Liability, except for the (i) Liabilities disclosed in the balance sheet disclosed to FNHI through the date hereof and (ii) described in the “Executive Summary: TruXmart Ltd.” attached hereto as Exhibit B.

 

IV.10 Taxes. TruXmart, and any Subsidiaries, has duly and timely filed in proper form all Tax Returns for all Taxes required to be filed with the appropriate Governmental Authority, except where such failure to file would not have a Material Adverse Effect on TruXmart.

 

IV.11 Books and Records. The books and records of TruXmart and any Subsidiaries accurately and fairly represent the TruXmart Business and its results of operations in all material respects. All accounts receivable and inventory of the TruXmart Business are reflected properly on such books and records in all material respects.

 

	 
	
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IV.12 Financial and Other Information.

 

(a) Two years of audited historical financial statements of TruXmart and any Subsidiaries will be prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and present fairly the financial condition of TruXmart and its results of operations as of the dates and for the periods indicated, subject in the case of the unaudited financial statements only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.

 

(b) To the knowledge of current management, TruXmart’s financials do not contain (directly or by incorporation by reference) any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (or incorporated therein by reference), in light of the circumstances under which they were or will be made, not misleading.

 

IV.13 Brokers or Finders. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by TruXmart and/or its Affiliates/Representatives in connection with the transactions contemplated by this Agreement, neither TruXmart, nor any of its Affiliates/Representatives have incurred any obligation to pay any brokerage or finder’s fee or other commission in connection with the transaction contemplated by this Agreement.

 

IV.14 Disclosure. No representation or warranty of Rossi in this Agreement or in the Collateral Documents and no statement in any certificate furnished or to be furnished by Rossi pursuant to this Agreement contained, contains or will contain on the date such agreement or certificate was or is delivered, or on the Closing Date, any untrue statement of a material fact, or omitted, omits or will omit on such date to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

 

IV.15 Filings. Neither TruXmart nor Rossi is subject to filings required by the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended. Once TruXmart acquires control of FNHI, TruXmart and Rossi will make filings required to be made under such statutes and no such filing will contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, not misleading.

 

IV.16 Conduct of Business. Prior to the Closing Date, TruXmart shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of FNHI, except in the regular course of business. Except as otherwise provided herein, TruXmart shall not amend its Articles of Incorporation or By-Laws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount or enter into any other transaction other than in the regular course of business.

 

	 
	
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ARTICLE V
COVENANTS OF FNHI

 

Between the date of this Agreement and the Closing Date:

 

V.1 Additional Information. FNHI shall provide to Rossi and his Representatives such financial, operating and other documents, data and information relating to FNHI, FNHI Business and FNHI Assets and Liabilities, as Rossi or his Representatives may reasonably request. In addition, FNHI shall take all action necessary to enable Rossi and his Representatives to review, inspect and review FNHI Assets, FNHI Business and Liabilities of FNHI and discuss them with FNHI’s officers, employees, independent accountants, customers, licensees, and counsel. Not-withstanding any investigation that Rossi may conduct of FNHI, FNHI Business, FNHI Assets and the Liabilities of FNHI, Rossi may fully rely on FNHI’s warranties, covenants and indemnities set forth in this Agreement.

 

V.2 Consents and Approvals. As soon as practicable after execution of this Agreement, FNHI shall use commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give any notice to, any Regulatory Authority or Person as is required to be obtained, made or given by FNHI to consummate the transactions contemplated by this Agreement and the Collateral Documents.

 

V.3 Non-circumvention. It is understood that in connection with the transactions contemplated hereby, Rossi has been and will be seeking to find investors willing to provide loans and/or capital investments to finance business plans. In connection therewith, FNHI will not, and it will cause its directors, officers, employees, agents and representatives not to attempt, directly or indirectly, (i) to contact any party introduced to it by Rossi, or (ii) deal with, or otherwise become involved in any transaction with any party which has been introduced to it by Rossi, without the express written permission of the introducing party and without having entered into a commission agreement with the introducing party. Any violation of the covenant shall be deemed an attempt to circumvent Rossi, and the party so violating this covenant shall be liable for damages in favor of the circumvented party.

 

V.4 No Solicitations. From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, FNHI will not nor will it authorize or permit any of its officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, (i) solicit or initiate the making, submission or announcement of any other acquisition proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to any other acquisition proposal, (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal.

 

V.5 Notification of Adverse Change. The Company shall promptly notify Rossi of any material adverse change in the condition (financial or otherwise) of FNHI.

 

V.6 Notification of Certain Matters. The Company shall promptly notify Rossi of any fact, event, circumstance or action known to it that is reasonably likely to cause FNHI to be unable to perform any of its covenants contained herein or any condition precedent in ARTICLE VII not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to Rossi pursuant to this Agreement or the existence or occurrence of which would cause any of FNHI’s representations or warranties under this Agreement not to be correct and/or complete. The Company shall give prompt written notice to Rossi of any adverse development causing a breach of any of the representations and warranties in ARTICLE III as of the date made.

 

	 
	
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V.7 The Company Disclosure Schedule. For purposes of determining the satisfaction of any of the conditions to the obligations of Rossi in ARTICLE VII, FNHI disclosures shall be deemed to include only (a) the information contained therein on the date of this Agreement and (b) information provided by written supplements delivered prior to Closing by FNHI that (i) are accepted in writing by Rossi, or (ii) reflect actions taken or events occurring after the date hereof prior to Closing.

 

V.8 State Statutes. The Company and its Board of Directors shall, if any state takeover statute or similar law is or becomes applicable to the Share Exchange, this Agreement or any of the transactions contemplated by this Agreement, use all reasonable efforts to ensure that the Share Exchange and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Share Exchange, this Agreement and the transactions contemplated hereby.

 

V.9 Conduct of Business. Prior to the Closing Date, FNHI shall conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of Rossi, except in the regular course of business. Except as otherwise provided herein, FNHI shall not amend its Articles of Incorporation or Bylaws, declare dividends, redeem or sell stock or other securities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any material balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount, or enter into any other transaction other than in the regular course of business.

 

V.10 Securities Filings. Until closing, FNHI will timely file all reports and other documents relating to the operation of FNHI required to be filed with the Securities and Exchange Commission, which reports and other documents do not and will not contain any misstatement of a material fact, and do not and will not omit any material fact necessary to make the statements therein not misleading.

 

V.11 Election to FNHI’s Board of Directors. At the Effective Time of the Share Exchange, FNHI shall take all steps necessary so that there will be at least one (1) continuing director.

 

ARTICLE VI
COVENANTS OF ROSSI

 

Between the date of this Agreement and the Closing Date,

 

VI.1 Additional Information. Rossi shall provide to FNHI and its Representatives such financial, operating and other documents, data and information relating to TruXmart, the TruXmart Business and the TruXmart Assets and the Liabilities of the TruXmart and its Subsidiaries, as FNHI or its Representatives may reasonably request. In addition, Rossi shall take all action necessary to enable FNHI and its Representatives to review and inspect the TruXmart Assets, the TruXmart Business and the Liabilities of TruXmart and discuss them with FNHI’s officers, employees, independent accountants and counsel. Notwithstanding any investigation that FNHI may conduct of TruXmart, the TruXmart Business, the TruXmart Assets and the Liabilities of the TruXmart, FNHI may fully rely on the Rossi’s warranties, covenants and indemnities set forth in this Agreement.

 

	 
	
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VI.2 No Solicitations. From and after the date of this Agreement until the Effective Time or termination of this Agreement pursuant to ARTICLE X, Rossi will not nor will it authorize or permit any of TruXmart’s officers, directors, affiliates or employees or any investment banker, attorney or other advisor or representative retained by it, directly or indirectly, (i) solicit or initiate the making, submission or announcement of any other acquisition proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to any other acquisition proposal, (iii) engage in discussions with any Person with respect to any other acquisition proposal, except as to the existence of these provisions, (iv) approve, endorse or recommend any other acquisition proposal or (v) enter into any letter of intent or similar document or any contract agreement or commitment contemplating or otherwise relating to any other acquisition proposal.

 

VI.3 Notification of Adverse Change. Rossi shall promptly notify FNHI of any material adverse change in the condition (financial or otherwise) of TruXmart.

 

VI.4 Consents and Approvals. As soon as practicable after execution of this Agreement, Rossi shall use his commercially reasonable efforts to obtain any necessary consent, approval, authorization or order of, make any registration or filing with or give notice to, any Regulatory Authority or Person as is required to be obtained, made or given by Rossi to consummate the transactions contemplated by this Agreement and the Collateral Documents.

 

VI.5 Notification of Certain Matters. Rossi shall promptly notify FNHI of any fact, event, circumstance or action known to it that is reasonably likely to cause TruXmart to be unable to perform any of its covenants contained herein or any condition precedent if not to be satisfied, or that, if known on the date of this Agreement, would have been required to be disclosed to FNHI pursuant to this Agreement or the existence or occurrence of which would cause Rossi’s representations or warranties under this Agreement not to be correct and/or complete. Rossi shall give prompt written notice to FNHI of any adverse development causing a breach of any of the representations and warranties in ARTICLE IV.

 

VI.6 The TruXmart Executive Summary. Rossi shall, from time to time prior to Closing, supplement the TruXmart Disclosure Statement with additional information that, if existing or known to it on the date of this Agreement, would have been required to be included therein. For purposes of determining the satisfaction of any of the conditions to the obligations of FNHI in the Rossi Disclosure Statement shall be deemed to include only (a) the information contained therein on the date of delivery to FNHI and (b) information added to the Rossi Disclosure Statement by written supplements delivered prior to Closing by the Rossi that (i) are accepted in writing by FNHI or (ii) reflect actions taken or events occurring after the date hereof and prior to Closing.

 

VI.7 Audited Financial Statements. Prior to Closing, Rossi shall provide FNHI with audited historical financial statements of TruXmart and any Subsidiaries, for its last two calendar years, of prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated in the notes thereto), and presenting fairly the financial condition of TruXmart and its results of operations as of the dates and for the periods indicated, subject only to normal year-end adjustments (none of which will be material in amount) and the omission of footnotes.

 

	 
	
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ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARTIES

 

All obligations of the Parties under this Agreement shall be subject to the fulfillment at or prior to Closing of each of the following conditions, it being understood that the Parties may, in their sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.

 

VII.1 Accuracy of Representations. All representations and warranties of FNHI contained in this Agreement, the Collateral Documents and any certificate delivered by any of FNHI at or prior to Closing shall be, if specifically qualified by materiality, true in all respects and, if not so qualified, shall be true in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement. The Company shall have delivered to Rossi a certificate dated the Closing Date to the foregoing effect.

 

VII.2 Covenants. FNHI shall, in all material respects, have performed and complied with each of the covenants, obligations and agreements contained in this Agreement and the Collateral Documents that are to be performed or complied with by them at or prior to Closing. FNHI shall have delivered to Rossi a certificate dated the Closing Date to the foregoing effect.

 

VII.3 Consents and Approvals. All consents, approvals, permits, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.

 

VII.4 Delivery of Documents. FNHI shall have delivered, or caused to be delivered, to Rossi the following documents:

 

(i) Copies of FNHI articles of incorporation and bylaws and certified resolutions of the board of directors of FNHI authorizing the execution of this Agreement and the Collateral Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby.

 

(ii) Such other documents and instruments as Rossi may reasonably request: (A) to evidence the accuracy of FNHI’s representations and warranties under this Agreement, the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by FNHI of, or the compliance by FNHI with, any covenant, obligation, condition and agreement to be performed or complied with by FNHI under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents.

 

(iii) Letters of resignation from FNHI’s current officers and directors to be effective upon the Closing.

 

(iv) Board resolutions from FNHI’s current directors appointing Steven Rossi as the sole member of FNHI’s board of directors.

 

VII.5 No Material Adverse Change. Since the date hereof, there shall have been no material adverse change in FNHI Assets, FNHI Business or the financial condition or operations of FNHI, taken as a whole.

 

	 
	
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF ROSSI AND FNHI

 

All obligations of Rossi under this Agreement shall be subject to the fulfillment at or prior to Closing of the following conditions, it being understood that FNHI may, in its sole discretion, to the extent permitted by applicable Legal Requirements, waive any or all of such conditions in whole or in part.

 

VIII.1 Accuracy of Representations. All representations and warranties of Rossi contained in this Agreement and the Collateral Documents and any other document, instrument or certificate delivered by Rossi at or prior to the Closing shall be, if specifically qualified by materiality, true and correct in all respects and, if not so qualified, shall be true and correct in all material respects, in each case on and as of the Closing Date with the same effect as if made on and as of the Closing Date, except for representations and warranties expressly stated to be made as of the date of this Agreement or as of another date other than the Closing Date and except for changes contemplated or permitted by this Agreement. Rossi shall have delivered to FNHI a certificate dated the Closing Date to the foregoing effect.

 

VIII.2 Covenants. Rossi shall, in all material respects, have performed and complied with each obligation, agreement, covenant and condition contained in this Agreement and the Collateral Documents and required by this Agreement and the Collateral Documents to be performed or com-plied with by Rossi at or prior to Closing. Rossi shall have delivered to FNHI a certificate dated the Closing Date to the foregoing effect.

 

VIII.3 Consents and Approvals. All consents, approvals, authorizations and orders required to be obtained from, and all registrations, filings and notices required to be made with or given to, any Regulatory Authority or Person as provided herein.

 

VIII.4 Delivery of Documents. Rossi shall have executed and delivered, or caused to be executed and delivered, to FNHI the following documents:

 

Documents and instruments as FNHI may reasonably request: (A) to evidence the accuracy of the representations and warranties of Rossi under this Agreement and the Collateral Documents and any documents, instruments or certificates required to be delivered hereunder; (B) to evidence the performance by Rossi of, or the compliance by Rossi with, any covenant, obligation, condition and agreement to be performed or complied with by Rossi under this Agreement and the Collateral Documents; or (C) to otherwise facilitate the consummation or performance of any of the transactions contemplated by this Agreement and the Collateral Documents.

 

VIII.5 No Material Adverse Change. There shall have been no material adverse change in the business, financial condition or operations of TruXmart and its Subsidiaries taken as a whole.

 

	 
	
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VIII.6 No Litigation. No action, suit or proceeding shall be pending or threatened by or before any Regulatory Authority and no Legal Requirement shall have been enacted, promulgated or issued or deemed applicable to any of the transactions contemplated by this Agreement and the Collateral Documents that would: (i) prevent consummation of any of the transactions contemplated by this Agreement and the Collateral Documents; (ii) cause any of the transactions contemplated by this Agreement and the Collateral Documents to be rescinded following consummation; or (iii) have a Material Adverse Effect on TruXmart.

 

ARTICLE IX
INDEMNIFICATION

 

IX.1 Indemnification by FNHI. FNHI shall indemnify, defend and hold harmless (i) Rossi, (ii) any Rossi’s assigns and successors in interest to FNHI Shares, and (iii) each of their respective shareholders, members, partners, directors, officers, managers, employees, agents, attorneys and representatives, from and against any and all Losses which may be incurred or suffered by any such party and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of FNHI contained in this Agreement. All claims to be assorted hereunder must be made for the first anniversary of the Closing.

 

IX.2 Indemnification by Rossi. Rossi shall indemnify, defend and hold harmless FNHI from and against any and all Losses which may be incurred or suffered by any such party hereto and which may arise out of or result from any breach of any material representation, warranty, covenant or agreement of Rossi contained in this Agreement. All claims to be assorted hereunder must be made for the first anniversary of the Closing.

 

IX.3 Notice to Indemnifying Party. If any party (the “Indemnified Party”) receives notice of any claim or other commencement of any action or proceeding with respect to which any other party (or parties) (the “Indemnifying Party”) is obligated to provide indemnification pursuant to Sections 9.1 or 9.2, the Indemnified Party shall promptly give the Indemnifying Party written notice thereof, which notice shall specify in reasonable detail, if known, the amount or an estimate of the amount of the liability arising here from and the basis of the claim. Such notice shall be a condition precedent to any liability of the Indemnifying Party for indemnification hereunder, but the failure of the Indemnified Party to give prompt notice of a claim shall not adversely affect the Indemnified Party’s right to indemnification hereunder unless the defense of that claim is materially prejudiced by such failure. The Indemnified Party shall not settle or compromise any claim by a third party for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party (which shall not be unreasonably withheld or delayed) unless suit shall have been instituted against it and the Indemnifying Party shall not have taken control of such suit after notification thereof as provided in Section 9.4.

 

	 
	
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IX.4 Defense by Indemnifying Party. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the Indemnifying Party at its sole cost and expense may, upon written notice to the Indemnified Party, assume the defense of any such claim or legal proceeding (i) if it acknowledges to the Indemnified Party in writing its obligations to indemnify the Indemnified Party with respect to all elements of such claim (subject to any limitations on such liability contained in this Agreement) and (ii) if it provides assurances, reasonably satisfactory to the Indemnified Party, that it will be financially able to satisfy such claims in full if the same are decided adversely. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, it may use counsel of its choice to prosecute such defense, subject to the approval of such counsel by the Indemnified Party, which approval shall not be unreasonably withheld or delayed. The Indemnified Party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if the Indemnified Party, in its sole discretion, determines that there exists a conflict of interest between the Indemnifying Party (or any constituent party thereof) and the Indemnified Party, the Indemnified Party (or any constituent party thereof) shall have the right to engage separate counsel, the reasonable costs and expenses of which shall be paid by the Indemnified Party. If the Indemnifying Party assumes the defense of any such claim or legal proceeding, the Indemnifying Party shall take all steps necessary to pursue the resolution thereof in a prompt and diligent manner. The Indemnifying Party shall be entitled to consent to a settlement of, or the stipulation of any judgment arising from, any such claim or legal proceeding, with the consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that no such consent shall be required from the Indemnified Party if (i) the Indemnifying Party pays or causes to be paid all Losses arising out of such settlement or judgment concurrently with the effectiveness thereof (as well as all other Losses theretofore incurred by the Indemnified Party which then remain unpaid or unreimbursed), (ii) in the case of a settlement, the settlement is conditioned upon a complete release by the claimant of the Indemnified Party and (iii) such settlement or judgment does not require the encumbrance of any asset of the Indemnified Party or impose any restriction upon its conduct of business.

 

ARTICLE X
TERMINATION

 

X.1 Termination. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to it being fully executed, or thereafter:

 

(a) by mutual written agreement of Rossi and FNHI hereto duly authorized by action taken by or on behalf of the respective Boards of Directors; or

 

(b) by either FNHI or Rossi upon notification to the non-terminating party by the terminating party:

 

(i) if the terminating party is not in material breach of its obligations under this Agreement and there has been a material breach of any representation, warranty, covenant or agreement on the part of the non-terminating party set forth in this Agreement such that the conditions will not be satisfied; provided, however, that if such breach is curable by the non-terminating party and such cure is reasonably likely to be completed prior to the date specified in Section 10.1(b)(i), then, for so long as the non-terminating party continues to use commercially reasonable efforts to effect and cure, the terminating party may not terminate pursuant to this Section 10.1(b)(i); or

 

(ii) if any court of competent jurisdiction or other competent Governmental or Regulatory Authority shall have issued an order making illegal or otherwise permanently restricting, preventing or otherwise prohibiting the Share Exchange and such order shall have become final.

 

(c) Effect of Termination. If this Agreement is validly terminated by either FNHI or Rossi pursuant to Section 10.1, this Agreement will forthwith become null and void and there will be no liability or obligation on the part of the parties hereto, except that nothing contained herein shall relieve any party hereto from liability for willful breach of its representations, warranties, covenants or agreements contained in this Agreement.

 

	 
	
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ARTICLE XI
MISCELLANEOUS

 

XI.1 Parties Obligated and Benefited. This Agreement shall be binding upon the Parties and their respective successors by operation of law and shall inure solely to the benefit of the Parties and their respective successors by operation of law, and no other Person shall be entitled to any of the benefits conferred by this Agreement. Without the prior written consent of the other Party, no Party may assign this Agreement or the Collateral Documents or any of its rights or interests or delegate any of its duties under this Agreement or the Collateral Documents.

 

XI.2 Publicity. The initial press release and/or Form 8-K shall be a joint press release and thereafter FNHI and Rossi each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Share Exchange and the other transactions contemplated by this Agreement and prior to making any filings with any third party and/or any Regulatory Authorities (including any national securities inter dealer quotation service) with respect thereto, except as may be required by law or by obligations pursuant to any listing agreement with or rules of any national securities inter dealer quotation service.

 

XI.3 Notices. Any notices and other communications required or permitted hereunder shall be in writing and shall be effective upon delivery by hand or upon receipt if sent by certified or registered mail (postage prepaid and return receipt requested) or by a nationally recognized overnight courier service (appropriately marked for overnight delivery) or upon transmission if sent by telex or facsimile (with request for immediate confirmation of receipt in a manner customary for communications of such respective type and with physical delivery of the communication being made by one or the other means specified in this Section as promptly as practicable thereafter). Notices shall be addressed as follows:

 

	
 

	
If to Rossi:

	
Steven Rossi

	
 

	
 

	
17 Antwerp Street, St Catharines,

	
 

	
 

	
Ontario, Canada L2S-1J7

	
 

	
 

	
 

	
 

	
If to FNHI:

	
Matthew McMurdo, Esq.

	
 

	
 

	
Attorney-At-Law

	
 

	
 

	
28 West 44th Street

	
 

	
 

	
16th Floor

	
 

	
 

	
New York, New York 10036

	
 

	
 

	
(w) 917-318-2865

	
 

	
 

	
(f) 866-606-8914

 

XI.4 Any Party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section.

 

	 
	
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XI.5 Attorneys’ Fees. In the event of any action or suit based upon or arising out of any alleged breach by any Party of any representation, warranty, covenant or agreement contained in this Agreement or the Collateral Documents, the prevailing Party shall be entitled to recover reasonable attorneys’ fees and other costs of such action or suit from the other Party.

 

XI.6 Headings. The Article and Section headings of this Agreement are for convenience only and shall not constitute a part of this Agreement or in any way affect the meaning or interpretation thereof.

 

XI.7 Choice of Law. This Agreement and the rights of the Parties under it shall be governed by and construed in all respects in accordance with the laws of the State of Nevada, without giving effect to any choice of law provision or rule (whether of Ontario, Canada or any other jurisdiction).

 

XI.8 Rights Cumulative. All rights and remedies of each of the Parties under this Agreement shall be cumulative, and the exercise of one or more rights or remedies shall not preclude the exercise of any other right or remedy available under this Agreement or applicable law.

 

XI.9 Further Actions. The Parties shall execute and deliver to each other, from time to time at or after Closing, for no additional consideration and at no additional cost to the requesting party, such further assignments, certificates, instruments, records, or other documents, assurances or things as may be reasonably necessary to give full effect to this Agreement and to allow each party fully to enjoy and exercise the rights accorded and acquired by it under this Agreement.

 

XI.10 Time of the Essence. Time is of the essence under this Agreement. If the last day permitted for the giving of any notice or the performance of any act required or permitted under this Agreement falls on a day which is not a Business Day, the time for the giving of such notice or the performance of such act shall be extended to the next succeeding Business Day.

 

XI.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

XI.12 Entire Agreement. This Agreement (including the Exhibits, disclosures made as to FNHI, the TruXmart Executive Summary and any other documents, instruments and certificates referred to herein, which are incorporated in and constitute a part of this Agreement) contains the entire agreement of the Parties.

 

XI.13 Survival of Representations and Covenants. Notwithstanding any right of Rossi to fully investigate the affairs of FNHI and notwithstanding any knowledge of facts determined or determinable by Rossi pursuant to such investigation or right of investigation, Rossi shall have the right to rely fully upon the representations, warranties, covenants and agreements of FNHI contained in this Agreement. Each representation, warranty, covenant and agreement of FNHI contained herein shall survive the execution and delivery of this Agreement and the Closing and shall thereafter terminate and expire on the first anniversary of the Closing Date unless, prior to such date, Rossi has delivered to FNHI Shareholders a written notice of a claim with respect to such representation, warranty, covenant or agreement.

 

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

 

Dated: December 16, 2014

 

	Franchise Holdings International, Inc.	 
	 	 	 
	By:	/s/ Steven Rossi	 
	Name:	Steven Rossi	 
	Title:	Chief Executive Officer	 
	 	 	 
	TruXmart Ltd. 	
	 	
	By:	/s/ Steven Rossi	
	Name:	Steven Rossi	
	Title:	Chief Executive Officer	
			
		/s/ Steven Rossi 	
		Steven Rossi	

 

 

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