Document:

Echo Automotive, Inc. - Exhibit 10.2 - Filed by newsfilecorp.com

Execution Version 

REGISTRATION RIGHTS AGREEMENT 

            THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and
entered into as of May 7, 2014, between ECHO AUTOMOTIVE, INC., a Nevada
corporation (the “Company”), and 31 GROUP, LLC, a New York
limited liability company (the “Investor”). 

            In
connection with the Securities Purchase Agreement, dated as of May 7, 2014,
entered into by the Company and the Investor (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Investor (i) a note of the Company (the “Note”), which will, among
other things, be convertible into shares of the Company’s common stock, $0.001
par value per share (the “Common Stock”) to the Investor (as
converted, the “Conversion Shares”) in accordance with the terms
of the Note and (ii) a Warrant of the Company (the “Warrant”),
which will, among other things, be exercisable to purchase shares of Common
Stock (the “Warrant Shares”) in accordance with the terms of the
Warrant. 

            To
induce the Investor to consummate the transactions contemplated by the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the 1933 Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws. 

           
The Company and the Investor hereby agrees as follows: 

                   Section
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Securities Purchase Agreement shall have the meanings
given such terms in the Securities Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings: 

            “Initial
Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement. 

            “Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind. 

            
“Prospectus” means the prospectus included in a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated by the SEC
pursuant to the 1933 Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus. 

            “Effectiveness
Deadline” means, (i) with respect to the Initial Registration Statement
required to be filed hereunder, the earlier of (A) the 105th calendar
day after the date of hereof in the event that
such Registration Statement is subject to a limited or full review by the SEC
and (B) the fifth Trading Day after the date the Company is notified (orally or
in writing, whichever is earlier) by the SEC that such Registration Statement
will not be reviewed or will not be subject to further review, and (ii) with
respect to any additional Registration Statements which may be required pursuant
to Section 2, the earlier of (A) the 105th calendar day following the
date on which an additional Registration Statement is required to be filed
hereunder in the event that such Registration Statement is subject to a limited
or full review by the SEC and (B) the fifth Trading Day after the date the
Company is notified (orally or in writing, whichever is earlier) by the SEC that
such Registration Statement will not be reviewed or will not be subject to
further review. 

            “Filing
Deadline” means, with respect to the Initial Registration Statement
required hereunder, the 30th calendar day after the date of hereof,
and, with respect to any additional Registration Statements which may be
required pursuant to Section 2, the earliest practical date on which the Company
is permitted to file such additional Registration Statement related to the
Registrable Securities (taking into account any Staff position with respect to
date on which the Staff will permit such additional Registration Statement to be
filed with the SEC). 

             “Registrable
Securities” means, as of any date of determination, (a) all Conversion
Shares then issuable upon conversion in full of the Note (assuming on such date
the Note are converted in full without regard to any conversion limitations
therein), (b) all Warrant Shares then issuable upon exercise in full of the
Warrant (assuming on such date the Warrant is exercised in full without regard
to any exercise limitations therein) and (c) any securities issued or then
issuable upon any stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing; provided, however, that any such
Registrable Securities shall cease to be Registrable Securities for so long as
(x) a Registration Statement with respect to the sale of such Registrable
Securities is declared effective by the SEC under the 1933 Act and such
Registrable Securities have been disposed of in accordance with such effective
Registration Statement, or (y) such Registrable Securities have been previously
sold in accordance with Rule 144. 

            “Registration
Statement” means any registration statement required to be filed
hereunder pursuant to Section 2, including (in each case) the Prospectus,
amendments and supplements to any such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
any such registration statement. 

            
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the 1933
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such rule. 

            
“Rule 415” means Rule 415 promulgated by the SEC pursuant to the
1933 Act, as such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the SEC having substantially the
same purpose and effect as such Rule. 

2

           
“SEC” means the United States Securities and Exchange Commission.

Section 2. Registration Statement
Requirements.

            (a)       
The Company shall prepare and, as soon as practicable, but in no event later
than the Filing Deadline, file with the SEC the Initial Registration Statement
on Form S-1, or such other form reasonably acceptable to the Investor, covering
the resale by the Investor of all or such portion of the Registrable Securities
(as determined on the date of such filing and the effective date of such
Registration Statement, as applicable) as permitted by the SEC (provided that
the Company shall use diligent efforts to advocate with the SEC for the
registration of all of the Registrable Securities) pursuant to Rule 415. The
Company shall use its reasonable best efforts to have such Initial Registration
Statement, and each other Registration Statement required to be filed pursuant
to the terms hereof, declared effective by the SEC as soon as practicable, but
in no event later than the applicable Effectiveness Deadline. If at any time all
Registrable Securities are not covered by the Initial Registration Statement
filed pursuant to this Section 2, the Company shall file with the SEC one or
more additional Registration Statements so as to cover all of the Registrable
Securities not covered by the Initial Registration Statement, in each case, as
soon as practicable (taking into account any Staff position with respect to date
on which the Staff will permit such additional Registration Statement(s) to be
filed with the SEC), but in no event later than the applicable Filing Deadline
for such additional Registration Statement(s). By 9:30 a.m. New York time on the
Business Day following the effective date of each Registration Statement filed
in accordance herewith, the Company shall file with the SEC in accordance with
Rule 424 under the 1933 Act the final prospectus to be used in connection with
sales pursuant to such Initial Registration Statement. 

            (b)              
If the staff of the SEC (the “Staff”) or the SEC seeks to
characterize any offering pursuant to a Registration Statement filed pursuant to
this Agreement as constituting an offering of securities that does not permit
such Registration Statement to become effective and be used for resales by the
Investor on a delayed or continuous basis under Rule 415 at then-prevailing
market prices (and not fixed prices) (or as otherwise may be reasonably
acceptable to the Investor), or if after the filing of the Initial Registration
Statement with the SEC pursuant to this Section 2, the Company is otherwise
required by the Staff or the SEC to reduce the number of Registrable Securities
included in such Initial Registration Statement, then the Company shall reduce
the number of Registrable Securities to be included in such Initial Registration
Statement (with the prior consent, not to be unreasonably withheld, of the
Investor as to the specific Registrable Securities to be removed therefrom)
until such time as the Staff and the SEC shall so permit such Registration
Statement to become effective and be used as aforesaid. Notwithstanding anything
in this Agreement to the contrary, if after giving effect to the actions
referred to in the immediately preceding sentence, the Staff or the SEC does not
permit such Registration Statement to become effective and be used for resales
by the Investor on a delayed or continuous basis under Rule 415 at
then-prevailing market prices (and not fixed prices) (or as otherwise may be
reasonably acceptable to the Investor), the Company shall not request
acceleration of the effective date of such Registration Statement, the Company
shall promptly (but in no event later than 48 hours) request the withdrawal of
such Registration Statement pursuant to Rule 477 under the 1933 Act, and the
Effectiveness Deadline shall automatically be deemed to have elapsed with respect to such Registration
Statement at such time as the Staff or the SEC has made a final and
non-appealable determination that the SEC will not permit such Registration
Statement to be so utilized (unless prior to such time the Company and the
Investor have received assurances from the Staff or the SEC reasonably
acceptable to the Investor that a new Registration Statement filed by the
Company with the SEC promptly thereafter may be so utilized). In the event of
any reduction in Registrable Securities pursuant to this paragraph, the Company
shall file additional Registration Statements as permitted by the Staff or the
SEC in accordance with this Section 2 until such time as all Registrable
Securities have been included in Registration Statements that have been declared
effective and the prospectus contained therein is available for use by the
Investor.

3

            (c)       
In addition, in the event that the Staff or the SEC requires the Investor
seeking to resell securities under a Registration Statement filed pursuant to
this Agreement to be specifically identified as an “underwriter” in order to
permit such Registration Statement to become effective, and the Investor does
not consent to being so named as an underwriter in such Registration Statement,
then, in each such case, the Company shall reduce the total number of
Registrable Securities to be registered on behalf of the Investor, until such
time as the Staff or the SEC does not require such identification or until the
Investor accepts such identification and the manner thereof. If notwithstanding
any such reduction, the Staff or the SEC still requires that the Investor be
specifically identified as an “underwriter” in order to permit such Registration
Statement to be declared effect, the Investor may, at its option, elect to have
no Registrable Securities of the Investor be included in such Registration
Statement; provided, that solely for purposes of Section 12(b) of the Note (as
defined in the Securities Purchase Agreement), such Registration Statement shall
be deemed to have been declared effective as of the date of such election by the
Investor. 

            Section
3. Registration Procedures. If and whenever the Company is required by
the provisions of Section 2 to effect the registration of any Registrable
Securities under the 1933 Act, the Company will, as expeditiously as
possible:

            (a)       
subject to the timelines provided in this Agreement, prepare and file the
Registration Statement with the SEC, with respect to such Registrable Securities
and use its reasonable best efforts to cause such Registration Statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), respond as promptly as commercially
practicable to any comments received from the SEC with respect to a Registration
Statement or any amendment thereto and file any pre-effective amendments with
respect to a Registration Statement as promptly as reasonable possible, and
promptly provide to Investors copies of all filings and SEC letters of comment
(provided that the Company shall excise any information contained therein which
would constitute material non-public information regarding the Company or any
subsidiary) and notify the Investors (by telecopier or by e-mail addresses
provided by the Investors) on or before the second business day thereafter that
the Company receives notice that (i) the SEC has no comments or no further
comments on the registration statement, and (ii) the registration statement has
been declared effective; 

            (b)       
prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and prepare and file
with the SEC such additional Registration Statements as may be required hereunder and to
keep each additional Registration Statement effective;

4

            (c)       
furnish to the Investors such number of copies of the Registration Statement and
the prospectus included therein (including each preliminary prospectus) as such
Investors reasonably may request in order to facilitate the public sale or their
disposition of the securities covered by such Registration Statement or make
them electronically available;

            (d)       
use its reasonable best efforts to register or qualify the Registrable
Securities covered by such Registration Statement under the securities or “Blue
Sky” laws of such jurisdictions as the Investors shall request in writing,
provided, however, that the Company shall not for any such purpose be required
to qualify to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to service of process in any such
jurisdiction;

            (e)       
if applicable, list the Registrable Securities covered by such Registration
Statement with the principal market or exchange on which the Common Stock is
then listed;

            (f)       
promptly notify the Investors of the Company’s becoming aware that a prospectus
relating thereto is required to be delivered under the 1933 Act, of the
happening of any event or passage of time of which the Company has knowledge as
a result of which the prospectus contained in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing or
the financial statements included therein ineligible for inclusion or which
becomes subject to a SEC, state or other governmental order suspending the
effectiveness of the Registration Statement covering any of the Registrable
Securities. Each Investor hereby covenants that it will not sell any Registrable
Securities pursuant to such prospectus during the period commencing at the time
at which the Company gives such Investor notice of the suspension of the use of
such prospectus in accordance with this Section 3(f) and ending at the time the
Company gives such Investor notice that such Investor may thereafter effect
sales pursuant to the prospectus, or until the Company delivers to such Investor
or files with the SEC an amended or supplemented prospectus. 

            (g)       
The Company shall cooperate with any broker-dealer through which an Investor
proposes to resell its Registrable Securities in effecting a filing with the
FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested
by any such Investor, and the Company shall pay the filing fee required by such
filing within two (2) business days of request therefor. 

            Section
4. Provision of Documents. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of the Investor that the
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect and
maintain the effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request. 

5

            Section
5. Expenses. All expenses incurred by the Company in complying with
Section 2, including, without limitation, all registration and filing fees,
printing expenses (if required), fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or “Blue Sky” laws, fees of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) in connection with any filing with FINRA
pursuant to FINRA Rule 5110 that may be required to be made by any broker
through which an Investor intends to make sales of Registrable Securities,
transfer taxes, and fees of transfer agents and registrars, are called
“Registration Expenses.” The Company will pay all Registration
Expenses in connection with any Registration Statement described in Section
2.

           
Section 6. Indemnification. 

            (a)       
In the event any Registrable Securities are included in any Registration
Statement under this Agreement, to the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend the Investor,
each of its directors, officers, shareholders, members, partners, employees,
agents, advisors, representatives (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding the lack of such
title or any other title) and each Person, if any, who controls the Investor
within the meaning of Section 15 of the 1933 Act or Section 20 of the Securities
Exchange Act of 1934 Act, as amended (the “1934 Act”) and each of
the directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding the lack of such title or
any other title) of such controlling Persons (each, an “Investor
Party” and collectively, the “Investor Parties”), against
any losses, obligations, claims, damages, liabilities, contingencies, judgments,
fines, penalties, charges, costs (including, without limitation, court costs,
reasonable attorneys’ fees, costs of defense and investigation), amounts paid in
settlement or expenses, joint or several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, lawsuit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an Investor Party
is or may be a party thereto (“Indemnified Damages”), to which any
of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material fact in
a Registration Statement or any post-effective amendment thereto or in any
filing made in connection with the qualification of the offering under the
securities or other “Blue Sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus (as amended or supplemented) or in any prospectus supplement or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading (the matters in the foregoing
clauses (i) and (ii) being, collectively, “Violations”). Subject
to Section 6(c), the Company shall reimburse the Investor Parties, promptly as
such expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply
to a Claim by an Investor Party arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Investor Party for such Investor Party expressly for use
in connection with the preparation of such Registration Statement, prospectus or
prospectus supplement or any such amendment thereof or supplement thereto; (ii)
shall not be available to the Investor to the extent such Claim is based on a
failure of the Investor to deliver or to cause to be delivered the prospectus
(as amended or supplemented) made available by the Company (to the extent
applicable), including, without limitation, a corrected prospectus, if such
prospectus (as amended or supplemented) or corrected prospectus was timely made
available by the Company pursuant to Section 3 and then only if, and to the
extent that, following the receipt of the corrected prospectus no grounds for
such Claim would have existed; and (iii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Investor Party and shall survive the
transfer of any of the Registrable Securities by the Investor pursuant to
Section 8(f). 

6

            (b)       
In connection with any Registration Statement in which the Investor is
participating, the Investor agrees to severally and not jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each, an
“Company Party”), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case, to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information relating to the Investor furnished to the Company by the Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c) and the below provisos in this Section 6(b), the Investor will
reimburse a Company Party any legal or other expenses reasonably incurred by
such Company Party in connection with investigating or defending any such Claim;
provided, however, the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Investor, which consent
shall not be unreasonably withheld or delayed, provided further that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim
or Indemnified Damages as does not exceed the net proceeds to the Investor as a
result of the applicable sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Company Party and
shall survive the transfer of any of the Registrable Securities by the Investor
pursuant to Section 8(f). 

7

            (c)       
Promptly after receipt by an Investor Party or Company Party (as the case may
be) under this Section 6 of notice of the commencement of any action or
proceeding (including, without limitation, any governmental action or
proceeding) involving a Claim, such Investor Party or Company Party (as the case
may be) shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Investor Party or the Company Party (as the case may
be); provided, however, an Investor Party or Company Party (as the
case may be) shall have the right to retain its own counsel with the fees and
expenses of such counsel to be paid by the indemnifying party if: (i) the
indemnifying party has agreed in writing to pay such fees and expenses; (ii) the
indemnifying party shall have failed promptly to assume the defense of such
Claim and to employ counsel reasonably satisfactory to such Investor Party or
Company Party (as the case may be) in any such Claim; or (iii) the named parties
to any such Claim (including, without limitation, any impleaded parties) include
both such Investor Party or Company Party (as the case may be) and the
indemnifying party, and such Investor Party or such Company Party (as the case
may be) shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Investor Party or such
Company Party and the indemnifying party (in which case, if such Investor Party
or such Company Party (as the case may be) notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to
assume the defense thereof on behalf of the indemnified party and such counsel
shall be at the expense of the indemnifying party, provided further that in the
case of clause (iii) above the indemnifying party shall not be responsible for
the reasonable fees and expenses of more than one (1) separate legal counsel for
all Investor Parties or Company Parties (as the case may be). The Company Party
or Investor Party (as the case may be) shall reasonably cooperate with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Company Party or Investor
Party (as the case may be) which relates to such action or Claim. The
indemnifying party shall keep the Company Party or Investor Party (as the case
may be) reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent; provided, however, the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the prior written consent of the Company Party
or Investor Party (as the case may be), consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Company Party or Investor Party (as the case may be) of a release from all
liability in respect to such Claim or litigation, and such settlement shall not
include any admission as to fault on the part of the Company Party. For the
avoidance of doubt, the immediately preceding sentence shall apply to Sections
6(a) and 6(b) hereof. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Company Party or
Investor Party (as the case may be) with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Investor Party or Company Party (as the case may
be) under this Section 6, except to the extent that the indemnifying party is
materially and adversely prejudiced in its ability to defend such action. 

            (d)       
No Person involved in the sale of Registrable Securities who is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to indemnification from any
Person involved in such sale of Registrable Securities who is not guilty of
fraudulent misrepresentation. 

8

            (e)       
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred;
provided that the Investor shall promptly reimburse the Company for all
such payments to the extent a court of competent jurisdiction determines that
any Investor Party was not entitled to such payments. 

            (f)       
The indemnity and contribution agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Company Party or Investor
Party against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law. 

            Section
7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however: (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of
Registrable Securities which Person is guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) in connection with such
sale shall be entitled to contribution from any Person involved in such sale of
Registrable Securities who was not guilty of fraudulent misrepresentation; and
(iii) contribution by any seller of Registrable Securities shall be limited in
amount to the amount of net proceeds received by such seller from the applicable
sale of such Registrable Securities pursuant to such Registration Statement.
Notwithstanding the provisions of this Section 7, the Investor shall not be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by the Investor from the applicable
sale of the Registrable Securities subject to the Claim exceeds the amount of
any damages that the Investor has otherwise been required to pay, or would
otherwise be required to pay under Section 6(b), by reason of such untrue or
alleged untrue statement or omission or alleged omission. 

9

           Section 8. Miscellaneous. 

            (a)       
Remedies. In the event of a breach by the Company or by the Investor of
any of their respective obligations under this Agreement, the Investor or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
shall be entitled to specific performance of its rights under this Agreement.
Each of the Company and the Investor agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it
shall not assert or shall waive the defense that a remedy at law would be
adequate. 

            (b)       
Compliance. The Investor covenants and agrees that it will comply with
the prospectus delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to a Registration Statement. 

            (c)       
Piggy-Back Registrations. If, at any time prior to the six month
anniversary of the date hereof, there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine to
prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the 1933 Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to the Investor a
written notice of such determination and, if within fifteen days after the date
of the delivery of such notice, the Investor shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities the Investor requests to be registered; provided,
however, that the Company shall not be required to register any Registrable
Securities pursuant to this Section 8(c) that are the subject of a then
effective Registration Statement. 

            (d)       
Amendments and Waivers. No provision of this Agreement may be (i) amended
other than by a written instrument signed by both parties hereto or (ii) waived
other than in a written instrument signed by the party against whom enforcement
of such waiver is sought. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.

            (e)       
Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Securities Purchase Agreement.

            (f)       
Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties. The
Company may not assign (except by merger) its rights or obligations hereunder
without the prior written consent of the Investor. The Investor may assign its
rights hereunder if: (i) the Investor agrees in writing with such transferee or
assignee (as the case may be) to assign all or any portion of such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such transfer or assignment (as the case may be); (ii) the Company
is, within a reasonable time after such transfer or assignment (as the case may
be), furnished with written notice of (a) the name and address of such
transferee or assignee (as the case may be), and (b) the securities with respect
to which such registration rights are being transferred or assigned (as the case
may be); (iii) immediately following such transfer or assignment (as the case
may be) the further disposition of such securities by such transferee or
assignee (as the case may be) is restricted under the 1933 Act or applicable
state securities laws if so required; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence such
transferee or assignee (as the case may be) agrees in writing with the Company
to be bound by all of the provisions contained herein; (v) such transfer or
assignment (as the case may be) shall have been made in accordance with the
applicable requirements of the Securities Purchase Agreement and the Note and/or
Warrant, as applicable; and (vi) such transfer or assignment (as the case may
be) shall have been conducted in accordance with all applicable federal and
state securities laws. The term “Investor” in this Agreement shall also include
all such transferees and assignees. 

10

            (g)       
Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof. 

            (h)       
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Securities Purchase Agreement. 

            (i)       
Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable. 

            (j)       
Headings. The headings in this Agreement are for convenience only, do not
constitute a part of the Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 

(Signature Pages Follow)

11

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

ECHO AUTOMOTIVE, INC. 

	 	By:  
      _________________________________ 
	 	         Name: 
	 	         Title:
  

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

31 GROUP, LLC 

	 	By:  
      _________________________________ 
	 	         Name: 
	 	         Title:ex10_1.htm

Exhibit 10.1

 

 

 

 

Acquisition Agreement

 

This Acquisition Agreement dated as of May 1, 2014 (this “Agreement”) is by and between Joey New York Inc. (formerly Pronto Corp., Inc.) a Nevada company (“JOEY”) located at 909 Bay Street, Suite 812, Toronto, Ontario, Canada M5S 3G2, RAR Beauty, LLC. (“RAR”) a Florida Limited Liability Company, Joey Chancis, an individual and Member of RAR (“JC”), Richard Roer, an individual and member of RAR (“RR”), Richard Chancis, an individual (“RC”) and Svetlana Goffman (“SG”), an individual residing in Toronto, Ontario, Canada .   RAR, JOEY, JC, RR, RC and SG are collectively referred to herein as the “Parties”.

WHEREAS, the respective Boards of Directors, Members and Individuals of each of JOEY, RAR and SG have approved the acquisition of 100% of the ownership interest in RAR by JOEY upon the terms, and subject to the conditions, set forth in this Agreement (the “Acquisition”); and

 

WHEREAS, SG agrees to sell all equity interest in JOEY held by SG to JC, RR and RC. The members of RAR have agreed to purchase all equity interest in JOEY held by SG; and

 

WHEREAS, RAR, Joey, JC, RR, RC and SG desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

NOW, THEREFORE, The respective Board of Director, Members and Individuals of each of JOEY, RAR and SG deem it advisable and in their best interests that the members of RAR acquire all equity interest in JOEY held by SG, and JOEY acquire 100% of the ownership interest of RAR, in accordance with the terms and conditions of this Agreement.

1.    Pre-Closing Actions of JOEY.  Either prior to or immediately upon execution of this Agreement and prior to any Closing as set forth herein, JOEY shall undertake the following actions:

(a) The Board of Directors of JOEY shall unanimously approve and deliver to a mutually agreed escrow agent ("Escrow") resolutions with respect to (a) approving the Transactions set forth herein; (b) increasing or directing the size of the Board of Directors to be four members; and (c) electing two persons designated by RAR and one person designated by SG to the Board of Directors.

(b) JOEY shall prepare and deliver to counsel for RAR for review a Form 8-K filing which reflects the transactions contemplated by this Agreement, as required to be filed with the Securities and Exchange Commission (the “Commission”) on the Closing Date (defined below)

(c) JOEY shall either complete a full dilution of all issued and outstanding notes, convertible debentures, warrants and/or options of its common stock or cancel or cause to be cancelled all those not exercised into shares of its common stock such that at Closing there shall be a total of approximately 69,000,000 shares of common stock issued and outstanding.

(e) JOEY will deliver letters of resignation of JOEY’s current officers to be effective at the Closing Date;

 

  

 

  

 

(f) JOEY shall execute a promissory note payable to SG in the amount of Fifteen Thousand Six Hundred US dollars ($15,600) with a total term not to exceed (60) days from the Closing Date bearing an interest rate of five percent (5%) per year.

(g) JOEY shall execute promissory notes payable to the members of RAR Beauty LLC totaling Three Million US dollars ($3,000,000) with a total term not to exceed two (2) years from the Closing Date bearing an interest rate of five percent (5%) per year. Two notes shall be issued in the amount $1,500,000 each. One payable to Joey Chancis and one payable to Richard Roer.

(h) JOEY acknowledges that RAR has debt exceeding six hundred thousand dollars ($600,000) due and payable to the members of RAR that shall remain due and payable the after the Closing Date. Specifically, as of March 27, 2014, $421,032 due Richard Roer and $196,395 due Joey Chancis.

(f) JOEY shall use its reasonable best efforts to prepare and complete the documents necessary to be filed with local, state and federal authorities to consummate the transactions contemplated hereby.

2. Pre-Closing Actions of RAR.  Immediately upon execution of this Agreement and prior to the Closing as set forth herein, RAR shall undertake the following actions:

(a) RAR shall cause its Members to execute and deliver resolutions approving the Transactions set forth herein.

(b) RAR shall deliver Escrow transfer of membership equity interest documentation that represents 100% of the equity ownership of RAR, for delivery to JOEY at Closing (the "Escrowed RAR Equity").

(c) RAR shall complete and deliver to JOEY a complete audit of its financial statements, including any interim or other financial statements required for inclusion in the Form 8-K filing to be completed at Closing, (the “RAR Financial Statements”).

(d) RAR shall cooperate with its reasonable best efforts to assist JOEY to prepare and complete the documents necessary to be filed with local, state and federal authorities to consummate the transactions contemplated hereby.

3. Pre-Closing Actions of JC, RR, RC and SG.  Immediately upon execution of this Agreement and prior to the Closing as set forth herein, JC, RR and SG shall undertake the following actions:

(a) JC shall deliver to Escrow a share purchase agreement and the sum of $ 1,740 for the purchase of 22,500,000 Common shares of JOEY owned by SG.

(b) RR shall deliver to Escrow a share purchase agreement and the sum of $ 1,740 for the purchase of 22,500,000 Common shares of JOEY owned by SG.

(c) RC shall deliver to Escrow a share purchase agreement and the sum of $ 520 for the purchase of 7,000,000 Common shares of JOEY owned by SG.

(d) SG shall deliver to Escrow 52,000,000 common shares of JOEY owned by SG (“Escrowed JOEY Shares”) with stock power medallion guaranteed and instructions to the transfer agent to transfer 22,500,000 common shares to JC and 22,500,000 common shares to RR and 7,000,000 common shares to RC pursuant to the terms of the stock purchase agreements. JC, RR and RC acknowledge that SG was issued the 52,000,000 common shares in 2012 for $2,600.

4. Conditions to Closing.  The parties' obligation to close the proposed Acquisition will be subject to specified conditions precedent including, but not limited to, the following:

(a) the representations and warranties of RAR as set forth in Section 7 herein shall remain accurate as of the Closing Date and no material adverse change in the business of RAR shall have occurred;

(b) the representations and warranties of JOEY as set forth in Section 8 herein shall remain accurate as of the Closing Date and no material adverse change in the business of JOEY shall have occurred;

(c) the representations and warranties of SG as set forth in Section 9 herein shall remain accurate as of the Closing Date.

(d) all the documents necessary to be filed with local, state and federal authorities are prepared and executed by the parties as required.

(e) all pre-closing requirements of the parties have been completed and confirmed by Escrow.

 

  

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(f) JOEY shall retain its good standing as a publicly company is quoted on the OTCBB under the symbol "JOEY".

5. At the Closing.

(a) At the Closing, Escrow shall release the letters of resignation and the JOEY Board Resolutions effectuating the election of three new members of the Board of Directors.

(b) At the Closing, Escrow shall deliver 52,000,000 Common shares of JOEY owned by SG to the transfer agent with instructions and all other required documentation to complete the transfer and sale to JC, RR and RC.  Escrow shall subsequently confirm the transfer agent has received all required documentation to complete the transfer and is issuing certificates to JC, RR and RC then Escrow will release the $4,000 purchase amount in escrow from JC, RR and RC.

(c) At the Closing, Escrow shall deliver the Escrowed promissory notes from JOEY to JC, RR and SG.

(d) At the Closing, the existing officers of JOEY shall resign and be replaced by officers appointed by the Board of Directors.

(e) At the Closing, Escrow shall deliver the Escrowed RAR Equity to JOEY.

(f) Immediately subsequent to the Closing as required by applicable regulations, the combined entities will file the Form 8-K required for the transactions contemplated by this Agreement.

6. Timing of Closing.  The Closing is anticipated to occur within 15 days of this Agreement, but shall occur upon the satisfaction of the conditions set forth in this Agreement and upon instructions from the parties hereto to the Escrow Agent.  The Closing Date shall occur as soon as possible after the execution of this Agreement, unless the Escrow Agent receives instructions otherwise from the parties or notice from a party that the conditions set forth herein have not occurred.  In the event the Closing does not occur on or before [May] 25, 2014, (i) the Escrow Agent shall return the Escrowed JOEY Shares to SG (ii) the Escrow Agent shall return the Escrowed Share purchase price to the RAR Members, (iii) the Escrow Agent shall return the Escrowed RAR 100% membership interest the RAR Members.

7. Representations of RAR.  RAR represents and warrants as follows:

(a) Ownership of RAR.  As of the Closing Date, JOEY will become the record and beneficial owner of the Escrowed RAR Equity.  The Escrowed RAR Equity will be free from claims, liens or other encumbrances. The Escrowed RAR Equity shall reflect 100% of the ownership equity of RAR.

(b) Fully paid and Non-assessable.  The Escrowed RAR Equity constitutes duly and validly issued ownership interests of RAR, and are fully paid and non-assessable, and RAR further represents that it has the power and the authority to execute this Agreement and to perform the obligations contemplated hereby;

(c) Organization of RAR; Authorization.  RAR is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida with full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance of this Agreement have been duly authorized by all necessary entity action and this Agreement constitutes a valid and binding obligation of RAR; enforceable against it in accordance with its terms.  RAR has no subsidiaries.

(d) Capitalization.  As of the Closing Date, RAR has only two Members JC and RR who own 100% of the equity interest in RAR.  All of the issued and outstanding equity of RAR is validly issued, fully paid and non-assessable and there is not and as of the Closing Date there will not be outstanding any securities or other agreements on the part of any RAR obligating such entity to issue any additional any ownership interest or any of its securities of any kind.

 

  

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 (e) No Conflict as to RAR.  Neither the execution and delivery of this Agreement nor the consummation of the exchange of the Escrowed RAR Shares will (a) violate any provision of the membership operating agreement or by-laws (or other governing instrument) of RAR or (b) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any Encumbrance upon any property or assets of RAR under, any material agreement or commitment to which RAR is a party or by which its property or assets is bound, or to which any of the property or assets of RAR is subject, or (c) violate any statute or law or any judgment, decree, order, regulation or rule of any court or other Governmental Body applicable to RAR except, in the case of violations, conflicts, defaults, terminations, accelerations or encumbrances described in clause (b) of this Section for such matters which are not likely to have a material adverse effect on the business or financial condition of RAR.

(f) Consents and Approvals of Governmental Authorities. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by RAR in connection with the execution, delivery and performance of this Agreement by RAR or the consummation of the sale of the Escrowed RAR Shares.

(g) Other Consents. No consent of any Person is required to be obtained by RAR to the execution, delivery and performance of this Agreement or the consummation of the sale of the Escrowed RAR Equity, including, but not limited to, consents from parties to leases or other agreements or commitments, except for any consent which the failure to obtain would not be likely to have a material adverse effect on the business and financial condition of RAR as a whole.

(h) Litigation.  There is no action, suit, inquiry, proceeding or investigation by or before any Court or Governmental body pending or threatened in writing against or involving RAR which is likely to have a material adverse effect on the business or financial condition of RAR as a whole, or which questions or challenges the validity of this Agreement.  RAR is not subject to any judgment, order or decree that is likely to have a material adverse effect on the business or financial condition of RAR as a whole.

(i) Absence of Certain Changes. Subsequent to the date of this agreement and at or prior to Closing RAR has not:

1. suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition, or made any disposition of any of its material properties or assets other than in the ordinary course of business;

2. made any change or amendment in its Certificate of Organization or Operating Agreement, or other governing instruments;

3. other than the RAR Escrowed Equity, issued or sold any Equity Securities or other securities, acquired, directly or indirectly, by redemption or otherwise, any such Equity Securities, reclassified, split-up or otherwise changed any such Equity Security, or granted or entered into any options, warrants, calls or commitments of any kind with respect thereto;

4. organized any new Subsidiary or acquired any Equity Securities of any Person or any equity or ownership interest in any business;

 

5. borrowed any funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to any such indebtedness for borrowed money;  

6. paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business;

7. prepaid any material obligation having a maturity of more than 90 days from the date such obligation was issued or incurred;

 

  

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8. cancelled any material debts or waived any material claims or rights, except in the ordinary course of business;  

9. disposed of or permitted to lapse any rights to the use of any material patent or registered trademark or copyright or other intellectual property owned or used by it;

10. sold, transferred or otherwise disposed of any material assets, including without limitation technology and intangible assets;

11. granted any general increase in the compensation of officers or employees (including any such increase pursuant to any employee benefit plan);

(j) Compliance with Law. The operations of RAR have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over them, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of RAR as a whole.  RAR has not received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations.  RAR has all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of its business, and is not in material violation of any such licenses, permits, orders and approvals.  All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened.

(k) Title to Properties.  RAR owns all the material properties and assets that it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the material properties and assets reflected in the RAR Financial Statements.  All properties and assets, including without limitation technology and intangible assets, are free and clear of all material encumbrances and are not, in the case of real property, subject to any material rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever except, with respect to all such properties and assets, (a) mortgages or security interests shown on the RAR Financial Statements as securing specified liabilities or obligations, with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (b) mortgages or security interests incurred in connection with the purchase of property or assets after the date of such financial statements (such mortgages and security interests being limited to the property or assets so acquired), with respect to which no default (or event which, with notice or lapse of time or both, would constitute a default) exists, (c) as to real property, (i) imperfections of title, if any, none of which materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of RAR as a whole and (ii) zoning laws that do not impair the present or anticipated use of the property subject thereto, and (d) liens for current taxes not yet due.  The properties and assets of RAR include all rights, properties and other assets necessary to permit RAR to conduct business in all material respects in the same manner as it is conducted on the date of this Agreement.

8. Representations of JOEY. JOEY for its respective rights and interests represents and warrants as follows:

(a) Organization; Authorization.  JOEY is a corporation duly organized, validly existing and in good standing under the laws of Nevada with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action of JOEY and this Agreement constitutes a valid and binding obligation; enforceable against in accordance with its terms.  JOEY has no subsidiaries.

(b) Capitalization.  The authorized capital stock of JOEY consists of 1,500,000,000 shares of common stock, par value $0.001 per share, authorized.  As of the date of this Agreement, JOEY has 69,000,000 shares of common stock issued and outstanding.  As of the Closing Date, JOEY shall have no more than 69,000,000 shares of common stock outstanding.  No shares have otherwise been registered under state or federal securities laws.  As of the Closing Date, all of the issued and outstanding shares of common stock of JOEY are validly issued, fully paid and non-assessable and, there is not and as of the Closing Date there will not be outstanding any warrants, options or other agreements on the part of JOEY obligating any of JOEY to issue any additional shares of common or preferred stock or any of its securities of any kind, except for such shares or securities called for in this Agreement.  The Common Stock of JOEY is presently quoted on the over-the-counter bulletin board under the symbol “JOEY”.  JOEY is current in all of its required filings with the US Securities and Exchange Commission.

(c) No Conflict as to JOEY and Subsidiaries.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein will (a) violate any provision of the articles of incorporation or organization of JOEY or any of its Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any Encumbrance upon any property or assets of any of JOEY or any of its Subsidiaries under, any material agreement or commitment to which any of JOEY, any of its Subsidiaries is a party or by which any of their respective property or assets is bound, or to which any of the property or assets of any of JOEY or any of its Subsidiaries is subject, or (c) violate any statute or law or any judgment, decree, order, regulation or rule of any court or other Governmental Body applicable to JOEY or any of its Subsidiaries except, in the case of violations, conflicts, defaults, terminations, accelerations or Encumbrances described in clause (b) of this Section for such matters which are not likely to have a material adverse effect on the business or financial condition of  JOEY and its subsidiaries, taken as a whole.

 

  

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(d) Consents and Approvals of Governmental Authorities. Except with respect to a Form 8-K filing with the US Securities and Exchange Commission, no consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by JOEY in connection with the execution, delivery and performance of this Agreement by JOEY or the consummation of the transactions contemplated herein.

(e) Other Consents. No consent of any Person is required to be obtained by JOEY to the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated herein, including, but not limited to, consents from parties to leases or other agreements or commitments, except for any consent which the failure to obtain would not be likely to have a material adverse effect on the business and financial condition of JOEY.

 (f) Litigation.  There is no action, suit, inquiry, proceeding or investigation by or before any court or Governmental Body pending or threatened in writing against or involving JOEY or any of its Subsidiaries which is likely to have a material adverse effect on the business or financial condition of JOEY and any of its Subsidiaries, taken as whole, or which would require a payment by JOEY or its subsidiaries in excess of $10,000 in the aggregate or which questions or challenges the validity of this Agreement. Neither JOEY nor any or its Subsidiaries is subject to any judgment, order or decree that is likely to have a material adverse effect on the business or financial condition of JOEY or any of its Subsidiaries, taken as a whole, or which would require a payment by JOEY or its Subsidiaries in excess of $10,000 in the aggregate.

(g) Absence of Certain Changes. Subsequent to the date of this agreement and at or prior to Closing neither JOEY nor any of its Subsidiaries has:

1. suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition of  JOEY and its Subsidiaries, taken as a whole, or made any disposition of any of its material properties or assets other than in the ordinary course of business;

2. made any change or amendment in its certificate of incorporation or by-laws, or other governing instruments;

3. paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business;  

4. prepaid any material obligation having a maturity of more than 90 days from the date such obligation was issued or incurred;  

 

  

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5. cancelled any material debts or waived any material claims or rights, except in the ordinary course of business;  

6. disposed of or permitted to lapse any rights to the use of any material patent or registered trademark or copyright or other intellectual property owned or used by it;  

7. granted any general increase in the compensation of officers or employees (including any such increase pursuant to any employee benefit plan);  

8. purchased or entered into any contract or commitment to purchase any material quantity of raw materials or supplies, or sold or entered into any contract or commitment to sell any material quantity of property or assets, except (i) normal contracts or commitments for the purchase of, and normal purchases of, raw materials or supplies, made in the ordinary course business, (ii) normal contracts or commitments for the sale of, and normal sales of, inventory in the ordinary course of business, and (iii) other contracts, commitments, purchases or sales in the ordinary course of business;  

9. written off or been required to write off any notes or accounts receivable in an aggregate amount in excess of  $2,000;  

10. written down or been required to write down any inventory in an aggregate amount in excess of  $ 2,000;  

11. entered into any collective bargaining or union contract or agreement; or  

12. other than the ordinary course of business, incurred any liability required by generally accepted accounting principles to be reflected on a balance sheet and material to the business or financial condition of JOEY and their subsidiaries taken as a whole.

 (h) Compliance with Law. The operations of JOEY and its Subsidiaries have been conducted in accordance with all applicable laws and regulations of all Governmental Bodies having jurisdiction over them, except for violations thereof which are not likely to have a material adverse effect on the business or financial condition of JOEY and its Subsidiaries, taken as a whole, or which would not require a payment by JOEY or its Subsidiaries in excess of $2,000 in the aggregate, or which have been cured. Neither JOEY nor any of its Subsidiaries has received any notification of any asserted present or past failure by it to comply with any such applicable laws or regulations.  JOEY and its Subsidiaries have all material licenses, permits, orders or approvals from the Governmental Bodies required for the conduct of their businesses, and are not in material violation of any such licenses, permits, orders and approvals. All such licenses, permits, orders and approvals are in full force and effect, and no suspension or cancellation of any thereof has been threatened.

9. Representations of SG.  SG represents and warrants as follows:

(a) Ownership of Shares.  As of the Closing Date, JC, RR and RC will become the record and beneficial owner of the Escrowed JOEY Shares.  The Escrowed JOEY Shares will be free from claims, liens or other encumbrances. The Escrowed JOEY Shares shall reflect 100% of the ownership equity of RAR held by SG.

(b) Fully paid and Nonassessable.  The Escrowed JOEY Shares are validly issued, are fully paid and non-assessable, and SG further represents that she has the power and the authority to execute this Agreement and to perform the obligations contemplated hereby;

(c) Other Consents. No consent of any Person is required to be obtained by SG to the execution, delivery and performance of this Agreement or the consummation of the sale of the Escrowed JOEY Shares.

(h) Litigation.  There is no action, suit, inquiry, proceeding or investigation by or before any Court or Governmental body pending or threatened in writing against or involving the Escrowed Joey Shares.

 

  

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10. Noncircumvention.  It is understood that in connection with the transactions contemplated hereby, RAR has been and will be seeking to find investors willing to provide loans and/or capital investments to finance business plans.  In connection therewith, JOEY 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 RAR, or (ii) deal with, or otherwise become involved in any transaction with any party which has been introduced to it by RAR, 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 RAR, and the party so violating this covenant shall be liable for damages in favor of the circumvented party.

11. No Solicitations.  From and after the date of this Agreement until the Closing Date or termination of this Agreement pursuant, neither JOEY nor RAR will 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.

12. Notices.  Any notice which any of the parties hereto may desire to serve upon any of the other parties hereto shall be in writing and shall be conclusively deemed to have been received by the party at its address, if mailed, postage prepaid, United States mail, registered, return receipt requested, to the following addresses:

If to RAR Beauty, LLC or Joey Chancis or Richard Roer or Richard Chancis:

Trump Tower 1

16001 Collins Ave. #3202

Sunny Isles Beach, Florida 33160

Telephone:  305-948-9998

If to Escrow or Escrow Agent:                                                      Lanham & Lanham, LLC

28562 Oso Parkway, Unit D

Rancho Santa Margarita, CA 92688

Telephone:  (949) 933-1964

If to Joey New York Inc. or Svetlana Gofman:

c/o Svetlana Gofman

909 Bay Street, Suite 812

Toronto, Ontario, Canada M5S 3G2

Telephone: (543) 513-7579

13. Successors.  This Agreement shall be binding upon and inure to the benefit of the heirs, personal representatives and successors and assigns of the parties.

14. Choice of Law.  This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada, and the parties submit to the exclusive jurisdiction of the courts of Nevada in respect of all disputes arising hereunder.

15. Counterparts.  This Agreement may be signed in one or more counterparts, all of which taken together shall constitute an entire agreement.

 

  

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16. Confidential Information.  Each of Parties hereby acknowledges and agrees that all information disclosed to each other whether written or oral, relating to the other’s business activities, its customer names, addresses, all operating plans, information relating to its existing services, new or envisioned products or services and the development thereof, scientific, engineering, or technical information relating to the others business, marketing or product promotional material, including brochures, product literature, plan sheets, and any and all reports generated to customers, with regard to customers, unpublished list of names, and all information relating to order processing, pricing, cost and quotations, and any and all information relating to relationships with customers, is considered confidential information, and is proprietary to, and is considered the invaluable trade secret of such party (collectively “Confidential Information”).  Any disclosure of any Confidential Information by any party hereto, its employees, or representatives shall cause immediate, substantial, and irreparable harm and loss to the other.  Each party understands that the other desires to keep such Confidential Information in the strictest confidence, and that such party’s agreement to do so is a continuing condition of the receipt and possession of Confidential Information, and a material provision of this agreement, and a condition that shall survive the termination of this Agreement.  Consequently, each party shall use Confidential Information for the sole purpose of performing its obligations as provided herein.

17. Entire Agreement.  This Agreement sets forth the entire agreement and understanding of the Parties hereto with respect to the transactions contemplated hereby, and supersedes all prior agreements, arrangements and understandings related to the subject matter hereof.  No understanding, promise, inducement, statement of intention, representation, warranty, covenant or condition, written or oral, express or implied, whether by statute or otherwise, has been made by any Party hereto which is not embodied in this Agreement or the written statements, certificates, or other documents delivered pursuant hereto or in connection with the transactions contemplated hereby, and no party hereto shall be bound by or liable for any alleged understanding, promise, inducement, statement, representation, warranty, covenant or condition not so set forth.

18. Costs and Expenses.  Except as otherwise specifically set forth herein, each party will bear its own attorneys, brokers, investment bankers, agents, and finders employed by, such party.  The parties will indemnify each other against any claims, costs, losses, expenses or liabilities arising from any claim for commissions, finder's fees or other compensation in connection with the transactions contemplated herein which may be asserted by any person based on any agreement or arrangement for payment by the other party.

19. Attorney’s Fees.  Should any action be commenced between the parties to this Agreement concerning the matters set forth in this Agreement or the right and duties of either in relation thereto, the prevailing party in such Action shall be entitled, in addition to such other relief as may be granted, to a reasonable sum as and for its Attorney’s Fees and Costs.

20. Finders.  The Parties represent and warrant that there are no finders or other parties which have represented any of the parties individually or collectively in whole or in part in connection with this transaction which may claim any compensation due related to the transactions contemplated in this agreement.

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

For and on behalf of:

Joey New York Inc.

a Nevada Corporation

By: /s/  Svetiana Gofman

Svetiana Gofman, President/CEO

For and on behalf of:

RAR Beauty, LLC

a Florida Limited Liability Company

By:  /s/  Richard Roer    5/7/2014

Richard Roer, President

By:  /s/ Joey Chancis     5-7-2014

Joey Chancis, CEO

For and on behalf of:

Joey Chancis

an individual

By:  /s/   Joey Chancis   5-7-2014

Joey Chancis, an individual

 

  

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For and on behalf of:

Richard Roer

An individual

By: /s/  Richard Roer  5/7/2014

Richard Roer, an individual

 

For and on behalf of:

Richard Chancis

An individual

By: /s/ Richard Chancis  5/7/2014

Richard Chancis, an individual

 

For and on behalf of:

Svetiana Gofman.

An individual

By: /s/  Svetiana Gofman

Svetiana Gofman, an individual

 

 

 

 

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