AGREEMENTAND PLAN OF MERGER BYAND AMONG OMNIRELIANTHOLDINGS, INC., OMNIRELIANTACQUISITION SUB, INC., ABAZIAS.COM,INC., ABAZIAS,INC., a Delaware corporation AND ABAZIAS,INC., a Nevada corporation DatedApril 29, 2009 TABLE OFCONTENTS

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (hereinafter referred to as the “Agreement”) is dated as of April 29, 2009  by and among OMNIRELIANT HOLDINGS, INC., a corporation existing under the laws of Nevada (the “Parent”) OMNIRELIANT ACQUISITION SUB, INC., a corporation existing under the laws of Nevada and a wholly owned subsidiary of Parent (“Merger Sub”),   ABAZIAS, INC. a corporation existing under the laws of Delaware (“Abazias-DE”),  ABAZIAS, INC., a Nevada corporation and a wholly owned subsidiary of Abazias-DE (Abazias-NV), ABAZIAS.COM, INC., a corporation existing under the laws of Nevada and a wholly owned subsidiary of Abazias-NV (“Abazias.com”, together with Abazias-DE, and Abazias-NV shall be collectively referred to herein as the “Target”).

WITNESSETH:

 

WHEREAS, pursuant to the Stock Purchase Agreement by and among Parent, Abazias-NV and Abazias.com, dated December 3, 2008 (the “Stock Purchase Agreement”) and the Amended Stock Purchase Agreement by and among Parent, Merger Sub, Abazias-DE, Abazias-NV, and Abazias.com, Inc., dated February 5, 2009, (the “Amended Stock Purchase Agreement”)(collectively the Stock Purchase Agreement and the Amended Stock Purchase Agreement shall be referred to herein as the “Purchase Agreements”), Parent, Merger Sub and Abazias-DE unanimously approved and declared advisable the acquisition of the Target by Parent  by means of the merger of Abazias-DE upon the terms and subject to the conditions set forth therein;

WHEREAS, the parties hereto desire to enter into this Agreement to supersede the Purchase Agreements, as more particularly set forth below;

                       WHEREAS, the board of directors of each of Parent, Merger Sub and Abazias-DE has unanimously approved and declared advisable the acquisition of the Target by Parent  by means of the merger of Abazias-DE with and into Merger Sub upon the terms and subject to the conditions set forth herein and have approved and declared advisable this Amendment;

        WHEREAS, for federal income tax purposes, it is intended that the merger shall qualify as a reorganization under the provisions of Section 368 of the Internal Revenue Code of 1986, as amended, and any successor statute (the "Code").

        NOW, THEREFORE, in consideration of the above premises, the mutual covenants and agreements stated herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows, to be effective as of the date hereof:

ARTICLE I

THE MERGER

 

1.1           The Merger

                (a)         Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Abazias-DE and Merger Sub shall consummate a merger (the "Merger") pursuant to which (i) Abazias-DE shall be merged with and into Merger Sub and the separate corporate existence of Abazias-DE shall thereupon cease, (ii) Merger Sub shall be the successor or surviving corporation in the Merger and shall continue to be governed by the Laws of the State of Nevada, and (iii) the separate corporate existence of Merger Sub with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger.  The corporation surviving the Merger is sometimes hereinafter referred to as the "Surviving Corporation."  The Merger shall have the effects set forth under the Laws of the State of Nevada.

 

(b)         The Certificate of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, until thereafter amended as provided by Law and such Certificate of Incorporation.

 

(c)         The Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation, until thereafter amended as provided by Law, the Certificate of Incorporation of the Surviving Corporation and such Bylaws.

 

1.2           Effective Time.  Subject to the provisions of this Agreement, on the Closing Date, the parties shall (i) file the appropriate Certificate of Merger in such form as is required by and executed in accordance with the relevant provisions of the Nevada Revised Statutes (“NRS”) and the Delaware General Corporation Law (“DGCL”) and (ii) make all other filings or recordings required under the NRS and DGCL.  The Merger will become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Nevada and Delaware, or at such subsequent date or time as and Merger Sub agree and specify in the Certificate of Merger (such time hereinafter referred to as the "Effective Time").

 

1.3           Directors and Officers of the Surviving Corporation.  The directors of Abazias-DE immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, and the officers of Abazias-DE immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and Bylaws.

 

1.4           Subsequent Actions.  If at any time after the Effective Time the Surviving Corporation shall determine, in its reasonable discretion, that any actions are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to, or under any of the rights, properties or assets of either of Abazias-DE or Merger Sub acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized take all such actions as may be necessary or desirable to vest all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

 

ARTICLE II

CONVERSION OF SECURITIES AND MERGER CONSIDERATION

 

2.1           Conversion of Abazias-DE Common Stock.  As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any shares of common stock of Abazias-DE (“Abazias-DE Common Stock”), or of Merger Sub :

 

(a)         Each outstanding share of Merger Sub common stock shall remain outstanding and shall constitute the only issued and outstanding shares of common stock of the Surviving Corporation.  At all times, both before and after the Merger, One Hundred Percent (100%) of Merger Sub’s common stock will be owned by Parent.

 

(b)         All shares of Abazias-DE Common Stock (the “Abazias-DE Shares”) that are owned by Abazias-DE as treasury stock shall be cancelled and retired, and no consideration shall be delivered in exchange therefor.

 

(c)         Each outstanding Abazias-DE Share, (other than Abazias-DE Shares to be cancelled in accordance with Section 2.1(b) and other than Dissenting Shares) shall be converted into the right to receive, and shall be exchangeable for the merger consideration identified in Section 2.2 hereafter.   At the Effective Time, all Abazias-DE Shares converted into the right to receive the Merger Consideration pursuant to this Section 2.1(c) shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate (or, in the case of uncertificated Abazias-DE Shares, evidence of such Abazias-DE Shares in book-entry form) which immediately prior to the Effective Time represented any such Abazias-DE Shares (each, a "Certificate") shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration.  Notwithstanding the foregoing, if between the date of this Agreement and the Effective Time, the shares of outstanding Abazias-DE Common Stock shall have been changed into a different number of shares or a different class, by reason of the occurrence or record date of any stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange of shares or similar transaction, then the Merger Consideration shall be appropriately adjusted to reflect such action.

 

(d)         Dissenting Shares.

 

(i)           Abazias-DE Shares that are issued and outstanding immediately prior to the Effective Time and which are held by holders who have not voted in favor of or consented to the Merger and who are entitled to demand and have properly demanded their rights to be paid the fair value of such Shares in accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be cancelled and converted into the right to receive the Merger Consideration, and the holders thereof shall be entitled to only such rights as are granted by Section 262 of the DGCL; provided, however, that if any such stockholder of shall fail to perfect or shall effectively waive, withdraw or lose such stockholder's rights under Section 262 of the DGCL, such stockholder's Dissenting Shares in respect of which the stockholder would otherwise be entitled to receive fair value under Section 262 of the DGCL shall thereupon be deemed to have been cancelled, at the Effective Time, and the holder thereof shall be entitled to receive the Merger Consideration (payable without any interest thereon) as compensation for such cancellation.

 

(ii)           Abazias-DE shall give Parent (A) prompt notice of any notice received by Abazias-DE of intent to demand the fair value of any Shares, withdrawals of such notices and any other instruments or notices served pursuant to Section 262 of the DGCL and (B) the opportunity to direct all negotiations and proceedings with respect to the exercise of appraisal rights under Section 262 of the DGCL.  Abazias-DE shall not, except with the prior written consent of Parent or as otherwise required by an order of a governmental body of competent jurisdiction, (x) make any payment or other commitment with respect to any such exercise of appraisal rights, (y) offer to settle or settle any such rights or (z) waive any failure to timely deliver a written demand for appraisal or timely take any other action to perfect appraisal rights in accordance with the DGCL.

 

2.2           Merger Consideration.

 (a)           The Merger Consideration, consisting of the total purchase price payable to the shareholders of Abazias-DE in connection with the acquisition by merger of Abazias-DE, shall be delivered and shall consist exclusively of 13,001,000 newly issued shares of Series E Zero Coupon Convertible Preferred Stock, of Parent (the "Preferred Stock").  The Preferred Stock shall be convertible into shares of common stock of Parent in accordance with the terms of, and the Preferred Stock shall have those rights, preferences and designations set forth in, that certain Certificate of Designation, Preferences and Rights of Preferred Stock (the "Certificate Of Designation"), a true and correct copy of which is attached hereto and made a part hereof as Exhibit A.

(b)           The Merger Consideration shall be allocated among Abazias-DE’s stockholders in the proportion of their share ownership of the outstanding shares of Abazias-DE immediately prior to the Closing Date. It is intended that the delivery of the Merger Consideration shall qualify as a tax-free exchange under the Code.

(c)           The Preferred Stock to be delivered at the Closing shall be fully paid and non-assessable and shall be free and clear of all liens, levies and encumbrances.

   

2.3          Exchange of Certificates.

(a)           Merger Consideration may be made to a person other than the person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other Taxes required by reason of the transfer or establish to the reasonable satisfaction of Parent that such Taxes have been paid or are not applicable. Until surrendered, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration.

(b)            The Merger Consideration in accordance with the terms of this Article shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares formerly represented by such Certificates.  At the close of business on the day on which the Effective Time occurs, the share transfer books of Abazias-DE shall be closed, and there shall be no further registration of transfers on the share transfer books of the Surviving Corporation of Abazias-DE Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificate is presented to the Surviving Corporation for transfer, it shall be cancelled against delivery of and exchanged as provided in this Article.

(c)             No fraction of a share of Preferred Stock will be issued by virtue of the Agreement, but in lieu thereof each holder of shares of Abazias-DE Common Stock who would otherwise be entitled to receive a fraction of a share of Preferred Stock (after aggregating all fractional shares of Preferred Stock that otherwise would be received by such holder) shall receive from Parent one additional share of Preferred Stock.

ARTICLE III

CLOSING AND TERMINATION

 

3.1           Closing Date.

 

Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof, the closing of the Merger and the other transactions contemplated by this Agreement shall take place on such date as the Target and the Parent may designate (the “Closing Date”).

3.2           Termination of Agreement.

 

 This Agreement may be terminated prior to the Closing as follows:

 

(a)           At the election of Target or the Parent on or after June 30, 2009 if the Closing shall not have occurred by the close of business on such date, provided that the terminating party is not in default of any of its obligations hereunder;

 

(b)           by mutual written consent of the Target and the Parent; or

 

(c)           by Target or Parent if there shall be in effect a final non-appealable order of a governmental body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; it being agreed that the parties hereto shall promptly appeal any adverse determination which is not non-appealable (and pursue such appeal with reasonable diligence).

 

3.3           Procedure Upon Termination.

 

In the event of termination and abandonment by Parent or the Target, or both, pursuant to Section 3.2 hereof, written notice thereof shall forthwith be given to the other party or parties, and this Agreement shall terminate, and the purchase of the Shares hereunder shall be abandoned, without further action by the Parent or the Target.  If this Agreement is terminated as provided herein, each party shall redeliver all documents, work papers and other material of any other party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same.

 

3.4           Effect of Termination.

 

With the exception of those items listed in Section 6.6, in the event that this Agreement is validly terminated as provided herein, then each of the parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to the Parent or Target; provided, further, however, that nothing in this Section 3.4 shall relieve the Parent or Target of any liability for a breach of this Agreement and/or the confidentiality provisions of the Confidentiality Agreement executed by the parties as of the date of this Agreement (the “Confidentiality Agreement”), which confidentiality provisions shall remain in full force and effect.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE TARGET

For purposes of this Agreement, any statement made to the knowledge of Abazias-DE shall mean the knowledge of Target.  Target shall be deemed to have “knowledge” of a particular fact or other matter if Target is actually aware of such fact or other matter, or should, by reason of his or her position as an owner, director or executive officer of Abazias-DE, reasonably be expected to be aware of such fact or other matter.  Additionally, all representations made by Target in the Note Purchase Agreement dated August 12, 2008 and attached hereto as Exhibit C shall have full force and effect shall be incorporated herein.

 

The Target hereby represents and warrants to the Parent that:

4.1.          Organization and Good Standing of Abazias-DE.  Abazias-DE is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation as set forth above. Except as otherwise provided herein, Abazias-DE is not required to be qualified to transact business in any other jurisdiction where the failure to so qualify would have a material adverse effect on the business or operations of Abazias-DE (“Material Adverse Affect”).

4.2.          Authority.

(a)           Abazias-DE has full power and authority (corporate and otherwise) to carry on its business and has all permits and licenses that are necessary to the conduct of its business or to the ownership, lease or operation of its properties and assets, except where the failure to have such permits and licenses would not have a Material Adverse Effect.

(b)           The execution of this Agreement and the delivery hereof to the Parent and the sale contemplated herein have been, or will be prior to Closing, duly authorized by Abazias-DE’s Board of Directors and by Abazias-DE’s stockholders having full power and authority to authorize such actions.

 

(c)           Subject to any consents required under Section 4.7 below, Abazias-DE has the full legal right, power and authority to execute, deliver and carry out the terms and provisions of this Agreement; and this Agreement has been duly and validly executed and delivered on behalf of Target and Abazias-DE and constitutes a valid and binding obligation of each Target and Abazias-DE enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting generally the enforcement of creditor’s rights.

(d)           The execution and delivery of this Agreement, the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement will violate, conflict with, result in a breach of, or constitute a default under any statute, regulation, indenture, mortgage, loan agreement, or other agreement or instrument to which Abazias-DE or Target is a party or by which it or any of them is bound, any charter, regulation, or bylaw provision of Abazias-DE, or any decree, order, or rule of any court or governmental authority or arbitrator that is binding on Abazias-DE or Target in any way, except where such would not have a Material Adverse Effect.

4.3.           Capital Stock.

(a)           Abazias-DE’s authorized capital stock consists of 150,000,000 shares of Common Stock, $0.001 par value per share, of which 3,165,522 shares are issued and outstanding and 1,000,000 shares of Preferred  Stock, $0.001 par value per share, of which no shares are issued and outstanding.  All of the shares are duly authorized, validly issued, fully paid and non-assessable.

(b)           Abazias-NV is the lawful record and beneficial owners of all the Abazias.com Shares, free and clear of any liens, pledges, encumbrances, charges, claims or restrictions of any kind, except as set forth in Schedule 4.3, and has, or will have on the Closing Date, the absolute, unilateral right, power, authority and capacity to enter into and perform this Agreement without any other or further authorization, action or proceeding, except as specified herein.

(c)           Abazias-DE is the lawful record and beneficial owner of all of the issued and outstanding capital stock of Abazias-NV, free and clear of any liens, pledges, encumbrances, charges, claims or restrictions of any kind, except as set forth in Schedule 4.3, and has, or will have on the Closing Date, the absolute, unilateral right, power, authority and capacity to enter into and perform this Agreement without any other or further authorization, action or proceeding, except as specified herein.

(d)           There are no authorized or outstanding subscriptions, options, warrants, calls, contracts, demands, commitments, convertible securities or other agreements or arrangements of any character or nature whatever under which Abazias-DE, Abazias-NV or Abazias.com are or may become obligated to issue, assign or transfer any shares of capital stock of Abazias-DE, Abazias-NV or Abazias.com, except as set forth in Schedule 4.3.  Those outstanding subscriptions, options, warrants, calls, contracts, demands, commitments, convertible securities or other agreements are being provided for disclosure purposes and will not be acquired by Parent and will be cancelled by Abazias-DE.

 

4.4.           Basic Corporate Records.  The copies of the Articles of Incorporation of Abazias-DE (certified by the Secretary of State or other authorized official of the jurisdiction of incorporation), and the Bylaws of Abazias-DE, as the case may be (certified as of the date of this Agreement as true, correct and complete by Abazias-DE’s secretary or assistant secretary), all of which have been delivered to the Parent, are true, correct and complete as of the date of this Agreement.

4.5.           Minute Books.  The minute books of Abazias-DE, which shall be exhibited to the Parent between the date hereof and the Closing Date, each contain true, correct and complete minutes and records of all meetings, proceedings and other actions of the shareholders, Boards of Directors and committees of such Boards of Directors of Abazias-DE, if any, except where such would not have a Material Adverse Effect and, on the Closing Date, will, to the best of Target’s knowledge, contain true, correct and complete minutes and records of any meetings, proceedings and other actions of the shareholders and the Board of Directors and committees of such Board of Directors of Abazias-DE.

4.6.           Subsidiaries and Affiliates.  Any and all businesses, entities, enterprises and organizations in which Abazias-DE has any ownership, voting or profit and loss sharing percentage interest (the “Subsidiaries”) as well as any and all businesses, entities, enterprises and organizations which has any ownership, voting or profit and loss sharing percentage interest in Abazias-DE, are identified in Schedule 4.6 hereto, together with the interest therein.  Unless the context requires otherwise or specifically designated to the contrary on Schedule 4.6 hereto, “Abazias-DE” as used in this Agreement shall include all such Subsidiaries and Affiliates.  Except as set forth in Schedule 4.6, Abazias-DE has made no advances to, or investments in, nor owns beneficially or of record, any securities of or other interest in, any business, entity, enterprise or organization, Each entity shown on Schedule 4.6 is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has full corporate power to own all of its property and to carry on its business as it is now being conducted.  Also set forth on Schedule 4.6 is a list of jurisdictions in which each Subsidiary is qualified as a foreign corporation.  Such jurisdictions are the only jurisdictions in which the ownership or leasing of property by each Subsidiary or the conduct of its business requires it to be so qualified.  All of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable, and, except as set forth on Schedule 4.6, are owned, of record and beneficially, by Abazias-DE, and on the Closing Date will be owned by Abazias-DE , free and clear of all liens, encumbrances, equities, options or claims whatsoever.  No Subsidiary has outstanding any other equity securities or securities options, warrants or rights of any kind that are convertible into equity securities of Abazias-DE, except as set forth on Schedule 4.6.  Notwithstanding the above, those equity securities or securities options, warrants or rights of any kind that are convertible into equity securities listed on Schedule 4.6,  shall not be acquired by Parent in the Merger.  After the Closing of the Merger, all  equity securities or securities options, warrants or rights of any kind that are convertible into equity securities listed on Schedule 4.6 shall be cancelled.

 

4.7.           Consents.  No consent, approval, order or authorization of, or registration, declaration or filing with any court, administrative agency or commission or other governmental authority or instrumentality (“Governmental Entity”) is required by or with respect to

 

Abazias-DE in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for (i) the filing of a Form S-4 Registration Statement (the “S-4”) with the Securities and Exchange Commission (“SEC”) in accordance with the Securities Act of 1933, as amended (the “Securities Act”), (ii) the filing of the Joint Proxy Statement/Prospectus (as defined in Section 4.8) with the SEC in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal and state securities laws, and (v) such other consents, authorizations, filings, approvals and registrations which, if not obtained or made, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

 

4.8           SEC Documents; Financial Statements.  Except as disclosed in Schedule 4.8:

 

(a)  Abazias-DE has filed all forms, reports and documents required to be filed with the SEC since its October 3, 2003 merger with Hunno Technologies, Inc. All such required forms, reports and documents (including those that Abazias-DE may file subsequent to the date hereof) are referred to herein as the “Abazias-DE SEC Reports.” As of their respective dates, Abazias-DE SEC Reports (i) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Abazias-DE SEC Reports, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(b)          Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in Abazias-DE SEC Reports (the “Abazias-DE Financials”), including any Abazias-DE SEC Reports filed after the date hereof until the Closing, as of their respective dates, (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) was prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited interim financial statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated financial position of Abazias-DE and its Subsidiaries at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not, or are not expected to be, material in amount.  The balance sheet of Abazias-DE as of December 31, 2008, is hereinafter referred to as the “Abazias-DE Balance Sheet Date.”  Except as disclosed in Abazias-DE Financials, neither Abazias-DE nor any of its Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of a nature required to be disclosed on a balance sheet or in the related notes to the consolidated financial statements prepared in accordance with GAAP which are, individually or in the aggregate, material to the business, results of operations or financial condition of Abazias-DE and its Subsidiaries taken as a whole, except liabilities (i) provided for in Abazias-DE Balance Sheet, or (ii) incurred since the date of Abazias-DE Balance Sheet in the ordinary course of business consistent with past practices and which would not reasonably be expected to have a Abazias-DE Material Adverse Effect.

 

 

4.9            Statements; Joint Proxy Statement/Prospectus.

 

None of the information supplied or to be supplied by Abazias-DE for inclusion or incorporation by reference in (i) the S-4 will at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) the proxy statement/prospectus to be sent to the stockholders of Abazias-DE in connection with the meetings of Abazias-DE’s stockholders and Abazias-DE's stockholders to consider the adoption of this Agreement (collectively the “Abazias-DE Stockholders' Meeting”) (such joint proxy statement/prospectus as amended or supplemented is referred to herein as the “Joint Proxy Statement/Prospectus”) shall not, on the date the Joint Proxy Statement/Prospectus is first mailed to Abazias-DE's stockholders, at the time of Abazias-DE Stockholders' Meeting and at the Closing Date, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for Abazias-DE Stockholders' Meeting which has become false or misleading. The Joint Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder. If at any time prior to the Closing Date, any event relating to Abazias-DE or any of its affiliates, officers or directors should be discovered by Abazias-DE which should be set forth in an amendment to the S-4 or a supplement to the Joint Proxy Statement/Prospectus, Abazias-DE shall promptly inform Parent.

4.10           Records and Books of Account.  The records and books of account of Abazias-DE reflect all material items of income and expense and all material assets, liabilities and accruals, have been, and to the Closing Date will be, regularly kept and maintained in conformity with GAAP applied on a consistent basis with preceding years.

4.11           Absence of Undisclosed Liabilities.  Except as and to the extent  disclosed in Schedule 4.11, there are no liabilities or obligations of Abazias-DE of any kind whatsoever exceeding $5,000,  individually or in the aggregate, whether accrued, fixed, absolute, contingent, determined or determinable, and including without limitation (i) liabilities to former, retired or active employees of Abazias-DE under any pension, health and welfare benefit plan, vacation plan or other plan of Abazias-DE, (ii) liabilities to a parent company or subsidiary, (iii) contingent liabilities in the nature of an endorsement, guarantee, indemnity or warranty, and there is no condition, situation or circumstance existing or which has existed that could reasonably be expected to result in any liability of Abazias-DE which is of a nature that would be required to be disclosed on its Financial Statements in accordance with GAAP, other than liabilities and contingent liabilities incurred in the ordinary course of business, none of which is materially adverse to Abazias-DE.

 

4.12         Taxes.

(a)           For purposes of this Agreement, “Tax” or “Taxes” refers to:  (i) any and all federal, state, local and foreign taxes, assessments and other governmental charges, duties, impositions and liabilities relating to taxes, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes and escheatment payments, together with all interest, penalties and additions imposed with respect to such amounts and any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity; (ii) any liability for the payment of any amounts of the type described in clause (i) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including, without limitation, any liability under Treas. Reg. Section 1.1502-6 or any comparable provision of foreign, state or local law); and (iii) any liability for the payment of any amounts of the type described in clause (i) or (ii) as a result of any express or implied obligation to indemnify any other person or as a result of any obligations under any agreements or arrangements with any other person with respect to such amounts and including any liability for taxes of a predecessor entity.

(b)           (i)           Abazias-DE has timely filed all federal, state, local and foreign returns, estimates, information statements and reports (“Tax Returns”) relating to Taxes required to be filed by Abazias-DE with any Tax authority effective through the Closing Date.  All such Returns are true, correct and complete in all respects, except for immaterial amounts where such would not have a Material Adverse Effect.  Abazias-DE has paid all Taxes shown to be due on such Returns.  Except as listed on Schedule 4.12 hereto, Abazias-DE is not currently the beneficiary of any extensions of time within which to file any Returns. Abazias-DE and Abazias-DE have furnished and made available to the Parent complete and accurate copies of all income and other Tax Returns and any amendments thereto filed by Abazias-DE in the last three (3) years.

(ii)           Abazias-DE, as of the Closing Date, will have withheld and accrued or paid to the proper authority all Taxes required to have been withheld and accrued or paid, except for immaterial amounts where such would not have a Material Adverse Effect.

(iii)          Abazias-DE has not been delinquent in the payment of any Tax nor is there any Tax deficiency outstanding or assessed against Abazias-DE.  Abazias-DE has not executed any unexpired waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

(iv)         There is no dispute, claim, or proposed adjustment concerning any Tax liability of Abazias-DE either (A) claimed or raised by any Tax authority in writing or (B)  based upon personal contact with any agent of such Tax authority, and there is no claim for assessment, deficiency, or collection of Taxes, or proposed assessment, deficiency or collection from the Internal Revenue Service or any other governmental authority against Abazias-DE which has not been satisfied.  Abazias-DE is not a party to nor has it been notified in writing that it is the subject of any pending, proposed, or threatened action, investigation, proceeding, audit, claim or assessment by or before the Internal Revenue Service or any other governmental authority, nor does Abazias-DE have any reason to believe that any such notice will be received in the future. Except as set forth on Schedule 4.12, neither the Internal Revenue Service nor any state or local taxation authority has ever audited any income tax return of Abazias-DE.  Abazias-DE has not filed any requests for rulings with the Internal Revenue Service.  Except as provided to Abazias-DE’s accountants, no power of attorney has been granted by Abazias-DE or its affiliates with respect to any matter relating to Taxes of Abazias-DE.  There are no Tax liens of any kind upon any property or assets of Abazias-DE, except for inchoate liens for Taxes not yet due and payable.

(v)          Except for immaterial amounts which would not have a Material Adverse Effect, Abazias-DE has no liability for any unpaid Taxes which has not been paid or accrued for or reserved on the Financial Statements in accordance with GAAP, whether asserted or unasserted, contingent or otherwise.

(vi)         There is no contract, agreement, plan or arrangement to which Abazias-DE is a party as of the date of this Agreement, including but not limited to the provisions of this Agreement, covering any employee or former employee of Abazias-DE that, individually or collectively, would reasonably be expected to give rise to the payment of any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). There is no contract, agreement, plan or arrangement to which Abazias-DE is a party or by which it is bound to compensate any individual for excise taxes paid pursuant to Section 4999 of the Code.

(vii)        Abazias-DE has not filed any consent agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by Abazias-DE.

(viii)       Abazias-DE is not a party to, nor has any obligation under, any tax-sharing, tax indemnity or tax allocation agreement or arrangement.

(ix)          None of Abazias-DE’s assets are tax exempt use property within the meaning of Section 168(h) of the Code.

4.13           Accounts Receivable.  The accounts receivable are, and will be, actual bona fide receivables from transactions in the ordinary course of business representing valid and binding obligations of others for the total dollar amount shown thereon, and as of the date of the Agreement are not subject to any recoupments, set-offs, or counterclaims. To the best of Abazias-DE’s knowledge, except as set forth on Schedule 4.13, all such accounts receivable are, and will be, collectible in amounts not less than the amounts (net of reserves) carried on the books of Abazias-DE and will be paid in accordance with their terms.  Except as listed on Schedule 4.13 hereto, all such accounts receivable are and will be actual bona fide receivables from transactions in the ordinary course of business.

4.14     Inventory.  The inventories of Abazias-DE are listed on Schedule 4.14 attached hereto.  Abazias-DE will maintain the inventory in the normal and ordinary course of business from the date hereof through the Closing Date.

4.15.    Machinery and Equipment.  Except for items disposed of in the ordinary course of business, all machinery, tools, furniture, fixtures, equipment, vehicles, leasehold improvements and all other tangible personal property (hereinafter “Fixed Assets”) of Abazias-DE currently being used in the conduct of its business, together with any machinery or equipment that is leased or operated by Abazias-DE, are in fully serviceable working condition and repair.  Said Fixed Assets shall be maintained in such condition from the date hereof through the Closing Date.  Except as described on Schedule 4.15 hereto, all Fixed Assets owned, used or held by Abazias-DE are situated at its business premises and are currently used in its Business.  Schedule 4.15 describes all Fixed Assets owned by or an interest in which is claimed by any other person (whether a customer, supplier or other person) for which Abazias-DE is responsible (copies of all agreements relating thereto being attached to said Schedule 4.15), and all such property is in Abazias-DE’s actual possession and is in such condition that upon the return of such property in its present condition to its owner, Abazias-DE will not be liable in any amount to such owner.  There are no outstanding requirements or recommendations by any insurance Abazias-DE that has issued a policy covering either (i) such Fixed Assets or (ii) any liabilities of Abazias-DE relating to operation of the Business, or by any board of fire underwriters or other body exercising similar functions, requiring or recommending any repairs or work to be done on any Fixed Assets or any changes in the operations of the Business, any equipment or machinery used therein, or any procedures relating to such operations, equipment or machinery.  All material Fixed Assets of Abazias-DE are set forth on Schedule 4.15 hereto.

4.16     Real Property Matters.  The real property owned by Abazias-DE is listed on Schedule 4.16.  Other than those items listed on Schedule 4.16 Abazias-DE does not own any real property as of the date hereof and has not owned any real property during the three years preceding the date hereof.

4.17     Leases.  All leases of real and personal property of Abazias-DE are described in Schedule 4.17, are in full force and effect and, to Abazias-DE’s knowledge, constitute legal, valid and binding obligations of the respective parties thereto enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting generally the enforcement of creditor’s rights, and have not been assigned or encumbered by Abazias-DE or Target.  Abazias-DE has performed in all material respects the obligations required to be performed by it under all such leases to date and it is not in default in any material respect under any of said leases, except as set forth in Schedule 4.17, nor has it made any leasehold improvements required to be removed at the termination of any lease, except signs.  To Target’s knowledge, no other party to any such lease is in material default thereunder.  Except as noted on Schedule 4.17, none of the leases listed thereon require the consent of a third party in connection with the Merger.

4.18     Patents, Software, Trademarks, Etc.  Abazias-DE owns, or possesses adequate licenses or other rights to use, all patents, software, trademarks, service marks, trade names and copyrights and trade secrets, if any, necessary to conduct its business as now operated by it.  The patents, software, trademarks, service marks, copyrights, trade names and trade secrets, if any, registered in the name of or owned or used by or licensed to Abazias-DE and applications for any thereof (hereinafter the “Intangibles”) are described or referenced in Schedule 4.18.  Abazias-DE hereby specifically acknowledge that all right, title and interest in and to all patents and software listed on Schedule 4.18 as patents owned by Abazias-DE are owned by Abazias-DE or Abazias-DE has a right to use same and that the ownership of such patents and software will be transferred as part of Abazias-DE to Parent as part of the transaction contemplated hereby.  No officer, director, shareholder or employee of Abazias-DE or Abazias-DE or any relative or spouse of any such person owns any patents or patent applications or any inventions, software, secret formulae or processes, trade secrets or other similar rights, nor is any of them a party to any license agreement, used by or useful to Abazias-DE or related to its business except as listed in Schedule 4.18.  All of said Intangibles are valid and in good standing to the best of Abazias-DE’s knowledge, and are free and clear of all liens, security interests, charges, restrictions and encumbrances of any kind whatsoever, and have not been licensed to any third party except as described in Schedule 4.18.  Abazias-DE has not been charged with, nor to Abazias-DE’s knowledge has it infringed or is it threatened to be charged with infringement of, any patent, proprietary rights or trade secrets of others in the conduct of its business, and, to the date hereof, neither Abazias-DE nor Abazias-DE has received any notice of conflict with or violation of the asserted rights in intangibles or trade secrets of others.  Abazias-DE is not now manufacturing any goods under a present permit, franchise or license, except as set forth in said Schedule 4.18.  The consummation of the transactions contemplated hereby will not alter or impair any rights of Abazias-DE in any such Intangibles or in any such permit, franchise or license, except as described in Schedule 4.18.  The Intangibles and Abazias-DE’s tooling, manufacturing and engineering drawings, process sheets, specifications, bills of material and other like information and data are in such form and of such quality and will be maintained in such a manner that Abazias-DE can, following the Closing, design, produce, manufacture, assemble and sell the products and provide the services heretofore provided by it so that such products and services meet applicable specifications and conform with the standards of quality and cost of production standards heretofore met by it.  To Abazias-DE’s knowledge, Abazias-DE has the sole and exclusive right to use its corporate and trade names in the jurisdictions where it transacts business.

4.19     Insurance Policies.  There is set forth in Schedule 4.19 a list and brief description of all insurance policies on the date hereof held by Abazias-DE or on which it pays premiums, including, without limitation, life insurance and title insurance policies, which description includes the premiums payable by it thereunder.  Schedule 4.19 also sets forth, in the case of any life insurance policy held by Abazias-DE, the name of the insured under such policy, the cash surrender value thereof and any loans thereunder.  All such insurance premiums in respect of such coverage have been, and to the Closing Date will be, paid in full, if due and owing.  All claims, if any, made against Abazias-DE which are covered by such policies have been, or are being, settled or defended by the insurance companies that have issued such policies.  Up to the Closing Date, such insurance coverage will be maintained in full force and effect and will not be cancelled, modified or changed without the express written consent of the Parent, except to the extent the maturity dates of any such insurance policies expire prior to the Closing Date or where such cancellation would not have a Material Adverse Effect.  No such policy has been, or to the Closing Date will be, cancelled by the issuer thereof, and, to the knowledge of Abazias-DEs and Abazias-DE, between the date hereof and the Closing Date, there shall be no increase in the premiums with respect to any such insurance policy caused by any action or omission of Abazias-DEs or of Abazias-DE, except where the foregoing would not have a Material Adverse Effect.  Upon the Closing Date, all life insurance policies maintained by Abazias-DE shall be assigned to each respective Abazias-DE.

 

4.20     Banking and Personnel Lists.  Abazias-DEs and Abazias-DE will deliver to the Parent prior to the Closing Date the following accurate lists and summary descriptions relating to Abazias-DE:

(i)           The name of each bank in which Abazias-DE has an account or safe deposit box and the names of all persons authorized to draw thereon or have access thereto.

(ii)          The names, current annual salary rates and total compensation for the preceding fiscal year of all of the present directors and officers of Abazias-DE, and any other employees whose current base accrual salary or annualized hourly rate equivalent is $20,000 or more, together with a summary of the bonuses, percentage compensation and other like benefits, if any, paid or payable to such persons for the last full fiscal year completed, together with a schedule of changes since that date, if any.

(iii)         A schedule of workers’ compensation payments of Abazias-DE over the past five full fiscal years and the fiscal year to date, a schedule of claims by employees of Abazias-DE against the workers’ compensation fund for any reason over such period, identification of all compensation and medical benefits paid to date on each such claim and the estimated amount of compensation and medical benefits to be paid in the future on each such claim.

(iv)         The name of all pensioned employees of Abazias-DE whose pensions are unfunded and are not paid or payable pursuant to any formalized pension arrangements, their agent and annual unfunded pension rates.

4.21  Lists of Contracts, Etc.  There is included in Schedule 4.21 a list of the following items (whether written or oral) relating to Abazias-DE and/or the Target, which list identifies and fairly summarizes each item (collectively, “Contracts”):

(ii)          All joint venture contracts of Abazias-DE or the Target  or affiliates relating to the business of Abazias-DE;

(iii)         All contracts of Abazias-DE relating to (a) obligations for borrowed money, (b) obligations evidenced by bonds, debentures, notes or other similar instruments, (c) obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (d) obligations under capital leases, (e) debt of others secured by a lien on any asset of Abazias-DE, and (f) debts of others guaranteed by Abazias-DE;

 

(iv)         All agreements of Abazias-DE relating to the supply of raw materials for and the distribution of the products of its business, including without limitation all sales agreements, manufacturer’s representative agreements and distribution agreements of whatever magnitude and nature, and any commitments therefore;

(v)          All contracts that individually provide for aggregate future payments to or from Abazias-DE of $5,000 or more, to the extent not included in (i) through (iii) above;

(vi)         All contracts of Abazias-DE that have a term exceeding one year and that may not be cancelled without any liability, penalty or premium, to the extent not included in (i) through (v) above;

(vii)        A complete list of all outstanding powers of attorney granted by Abazias-DE; and

(viii)       All other contracts of Abazias-DE or the Target material to the business, assets, liabilities, financial condition, results of operations or prospects of the business of Abazias-DE taken as a whole to the extent not included above.

Except as set forth in Schedule 4.21, (i) all contracts, agreements and commitments of Abazias-DE set forth in Schedule 4.21 are valid, binding and in full force and effect, and (ii) neither Abazias-DE nor, to the best of Target’s knowledge, any other party to any such contract, agreement, or commitment has materially breached any provision thereof or is in default thereunder.  True and complete copies of the contracts, leases, licenses and other documents referred to in Schedule 4.21 will be delivered to the Parent, certified by the Secretary or Assistant Secretary of Abazias-DE as true, correct and complete copies, not later than one business day before the Closing Date.

There are no pending disputes with customers or vendors of Abazias-DE regarding quality or return of goods involving amounts in dispute with any one customer or vendor, whether for related or unrelated claims, in excess of $5,000 except as described on Schedule 4.21 hereto, all of which will be resolved to the reasonable satisfaction of Parent prior to the Closing Date.  To the best knowledge of Target and Abazias-DE, there has not been any event, happening, threat or fact that would lead them to believe that any of said customers or vendors will terminate or materially alter their business relationship with Abazias-DE after completion of the transactions contemplated by this Agreement.

4.22           Compliance With the Law.  Abazias-DE is not in violation of any applicable federal, state, local or foreign law, regulation or order or any other, decree or requirement of any governmental, regulatory or administrative agency or authority or court or other tribunal (including, but not limited to, any law, regulation order or requirement relating to securities, properties, business, products, manufacturing processes, advertising, sales or employment practices, terms and conditions of employment, occupational safety, health and welfare, conditions of occupied premises, product safety and liability, civil rights, or environmental protection, including, but not limited to, those related to waste management, air pollution control, waste water treatment or noise abatement), except where such would not have a Material Adverse Effect.  Except as set forth in Schedule 4.22, Abazias-DE and/or the Target have not been and is not now charged with, or to the best knowledge of the Target or Abazias-DE under investigation with respect to, any violation of any applicable law, regulation, order or requirement relating to any of the foregoing, nor, to the best knowledge of Target or Abazias-DE after due inquiry, are there any circumstances that would or might give rise to any such violation.  Abazias-DE has filed all reports required to be filed with any governmental, regulatory or administrative agency or authority, except where the failure to file such would not have a Material Adverse Effect.

 

4.23           Litigation; Pending Labor Disputes.  Except as specifically set forth in Schedule 4.23:

(i)           There are no legal, administrative, arbitration or other proceedings or governmental investigations pending or, to the best knowledge of Target or Abazias-DE, threatened, against the Target or Abazias-DE, relating to its business or Abazias-DE or its properties (including leased property), or the transactions contemplated by this Agreement, nor is there any basis known to Abazias-DE or Target for any such action.

(ii)           There are no judgments, decrees or orders of any court, or any governmental department, commission, board, agency or instrumentality binding upon Target or Abazias-DE relating to its business or Abazias-DE the effect of which is to prohibit any business practice or the acquisition of any property or the conduct of any business by Abazias-DE or which limit or control or otherwise would have a Material Adverse Affect on its method or manner of doing business.

(iii)           No work stoppage has occurred and is continuing or, to the knowledge of Target or Abazias-DE, is threatened affecting its business, and to the best of Target’s knowledge, no question involving recognition of a collective bargaining agent exists in respect of any employees of Abazias-DE.

4.24           Absence of Certain Changes or Events.  Abazias-DE has not, since Abazias-DE Balance Sheet Date, and except in the ordinary course of business consistent with past practice:

(i)           Incurred any material obligation or liability (absolute, accrued, contingent or otherwise), except in the ordinary course of its business consistent with past practice or in connection with the performance of this Agreement, and any such obligation or liability incurred in the ordinary course is not materially adverse, except for claims, if any, that are adequately covered by insurance;

(ii)          Discharged or satisfied any lien or encumbrance, or paid or satisfied any obligations or liability (absolute, accrued, contingent or otherwise) other than (a) liabilities shown or reflected on Abazias-DE Balance Sheet, and (b) liabilities incurred since Abazias-DE Balance Sheet Date  in the ordinary course of business that were not materially adverse;

(iii)         Increased or established any reserve or accrual for taxes or other liability on its books or otherwise provided therefore, except (a) as disclosed on Abazias-DE Balance Sheet, or (b) as may have been required under GAAP due to income earned or expenses accrued since Abazias-DE Balance Sheet Date and as disclosed to the Parent in writing;

(iv)         Mortgaged, pledged or subjected to any lien, charge or other encumbrance any of its assets, tangible or intangible;

(v)          Sold or transferred any of its assets or cancelled any debts or claims or waived any rights, except in the ordinary course of business and which has not been materially adverse;

(vi)         Disposed of or permitted to lapse any patents or trademarks or any patent or trademark applications material to the operation of its business;

(vii)        Incurred any significant labor trouble or granted any general or uniform increase in salary or wages payable or to become payable by it to any director, officer, employee or agent, or by means of any bonus or pension plan, contract or other commitment increased the compensation of any director, officer, employee or agent;

(viii)       Authorized any capital expenditure for real estate or leasehold improvements, machinery, equipment or molds in excess of $5,000.00 in the aggregate;

(ix)          Except for this Agreement or as otherwise disclosed herein or in any schedule to this Agreement, entered into any material transaction;

(x)           Issued any stocks, bonds, or other corporate securities, or made any declaration or payment of any dividend or any distribution in respect of its capital stock; or

(xi)          Experienced damage, destruction or loss (whether or not covered by insurance) individually or in the aggregate having a Material Adverse Effect on any of its properties, assets or business, or experienced any other material adverse change or changes individually or in the aggregate affecting its financial condition, assets, liabilities or business (a “Material Adverse Change”).

4.25           Product Warranties and Product Liabilities.  The product warranties and return policies of Abazias-DE in effect on the date hereof and the types of products to which they apply are described on Schedule 4.25 hereto.  Schedule 4.25 also sets forth all product liability claims involving amounts in controversy in excess of $5,000 that are currently either pending or, to the best of the Target’s and Abazias-DE’s knowledge, threatened against Abazias-DE.  The Target have no knowledge of any reason why the future cost of performing all such obligations and paying all such product liability claims with respect to goods manufactured, assembled or furnished prior to the Closing Date will not exceed the average annual cost thereof for said past three year period.

4.26           Assets.   The assets of Abazias-DE are listed on Schedule 4.26 attached hereto.  Except as described in Schedule 4.26, the assets of Abazias-DE are, and together with the additional assets to be acquired or otherwise received by Abazias-DE prior to the Closing, will at the Closing Date be, sufficient in all material respects to carry on the operations of the Business as now conducted by Abazias-DE.  Abazias-DE is the only business organization through which the business is conducted.  Except as set forth in Schedule 4.17 or Schedule 4.26, all assets used by the Target and Abazias-DE to conduct the business of Abazias-DE are, and will on the Closing Date be, owned by Abazias-DE.

4.27           Absence of Certain Commercial Practices.  Neither Abazias-DE nor Target has made any payment (directly or by secret commissions, discounts, compensation or other payments) or given any gifts to another business concern, to an agent or employee of another business concern or of any governmental entity (domestic or foreign) or to a political party or candidate for political office (domestic or foreign), to obtain or retain business for Abazias-DE or to receive favorable or preferential treatment, except for gifts and entertainment given to representatives of customers or potential customers of sufficiently limited value and in a form (other than cash) that would not be construed as a bribe or payoff.

4.28           Licenses, Permits, Consents and Approvals.  Abazias-DE has, and at the Closing Date will have, all licenses, permits or other authorizations of governmental, regulatory or administrative agencies or authorities (collectively, “Licenses”) required to conduct the business, except for any failures of such which would not have a Material Adverse Effect. All material Licenses of Abazias-DE are listed on Schedule 4.28 hereto.  At the Closing, Abazias-DE will have all such Licenses which are material to the conduct of the business and will have renewed all Licenses which would have expired in the interim.  Except as listed in Schedule 4.28, no registration, filing, application, notice, transfer, consent, approval, order, qualification, waiver or other action of any kind (collectively, a “Filing”) will be required as a result of the Merger in accordance with this Agreement (a) to avoid the loss of any License or the violation, breach or termination of, or any default under, or the creation of any lien on any asset of Abazias-DE pursuant to the terms of, any law, regulation, order or other requirement or any contract binding upon Abazias-DE or to which any such asset may be subject, or (b) to enable Parent (directly or through any designee) to continue the operation of Abazias-DE and the business substantially as conducted prior to the Closing Date.  All such Filings will be duly filed, given, obtained or taken on or prior to the Closing Date and will be in full force and effect on the Closing Date.

4.29           Environmental Matters. Except as set forth on Schedule 4.29 hereto:

 

(a) The operations of Abazias-DE and the Target, to the best knowledge of Target, are in compliance with all applicable laws promulgated by any governmental entity which prohibit, regulate or control any hazardous material or any hazardous material activity (“Environmental Laws”) and all permits issued pursuant to Environmental Laws or otherwise except for where noncompliance or the absence of such permits would not, individually or in the aggregate, have a Material Adverse Effect;

 

(b) Abazias-DE has obtained all permits required under all applicable Environmental Laws necessary to operate its business, except for any failures of such which would not have a Material Adverse Effect;

 

(c)  Abazias-DE is not the subject of any outstanding written order or Contract with any governmental authority or person respecting Environmental Laws or any violation or potential violations thereof; and

 

(d)  Abazias-DE has not received any written communication alleging either or both that Abazias-DE may be in violation of any Environmental Law, or any permit issued pursuant to Environmental Law, or may have any liability under any Environmental Law.

 

4.30           Broker.  The Target has not retained any broker in connection with any transaction contemplated by this Agreement.  Parents shall not be obligated to pay any fee or commission associated with the retention or engagement by the Target of any broker in connection with any transaction contemplated by this Agreement.

4.31           Related Party Transactions.  Except as described in Schedule 4.31, all transactions during the past five years between Abazias-DE and any current or former shareholder or any entity in which Abazias-DE or any current or former shareholder had or has a direct or indirect interest have been fair to Abazias-DE as determined by the Board of Directors.  No portion of the sales or other on-going business relationships of Abazias-DE is dependent upon the friendship or the personal relationships (other than those customary within business generally) of Target, except as described in Schedule 4.31.  During the past five years, Abazias-DE has not forgiven or cancelled, without receiving full consideration, any indebtedness owing to it by Target.

4.32  Patriot Act.  Abazias-DE and the Target certify that Abazias-DE and the Target have not been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224.  Abazias-DE and the Target hereby acknowledge that the Parent seeks to comply with all applicable laws concerning money laundering and related activities.  In furtherance of those efforts, Abazias-DE and the Target hereby represent, warrant and agree that:  (i) none of the cash or property that the Target have contributed or paid or will contribute and pay to Abazias-DE has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by Abazias-DE to the Parent, to the extent that they are within Abazias-DE’s control shall cause the Parent to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001.  The Target shall promptly notify the Parent if any of these representations ceases to be true and accurate regarding the Target or Abazias-DE.  The Target agrees to provide the Parent any additional information regarding Abazias-DE that the Parent reasonably requests to ensure compliance with all applicable laws concerning money laundering and similar activities.

4.33           Disclosure.  All statements contained in any schedule, certificate, opinion, instrument, or other document delivered by or on behalf of the Target or Abazias-DE pursuant hereto shall be deemed representations and warranties by each Target and Abazias-DE herein.  No statement, representation or warranty by the Target or Abazias-DE in this Agreement or in any schedule, certificate, opinion, instrument, or other document furnished or to be furnished to the Parent pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary to make the statements contained therein not misleading or necessary in order to provide a prospective purchaser of the business of Abazias-DE with full and fair disclosure concerning Abazias-DE, its business, and Abazias-DE’s affairs.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT

 

5.1  Organization and Good Standing.

 

The Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.

5.2  Authority.

 

(a)           The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been, or will prior to Closing be, duly and validly approved and acknowledged by all necessary corporate action on the part of the Parent.

(b)           The execution of this Agreement and the delivery hereof to the Target and the purchase contemplated herein have been, or will be prior to Closing, duly authorized by the Parent’s Board of Directors having full power and authority to authorize such actions.

5.3  Conflicts; Consents of Third Parties.

 

(a)  The execution and delivery of this Agreement, the Merger and the consummation of the transactions herein contemplated, and the compliance with the provisions and terms of this Agreement, are not prohibited by the Articles of Incorporation or Bylaws of the Parent and will not violate, conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any court order, indenture, mortgage, loan agreement, or other agreement or instrument to which the Parent is a party or by which it is bound.

 

(b)  No consent, approval, order or authorization of, or registration, declaration or filing with any court, administrative agency or commission or other Governmental Authority or instrumentality is required by or with respect to the Parent in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for (i) the filing of a S-4 with the SEC in accordance with the Securities Act, (ii) the filing of the Joint Proxy Statement/Prospectus (as defined in Section 4.9) with the SEC in accordance with the Exchange Act, (iv) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable federal and state securities laws, and (v) such other consents, authorizations, filings, approvals and registrations which, if not obtained or made, individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.

5.4          SEC Documents; Financial Statements.  Except as disclosed in Schedule 5.4:

 

(a)  The Parent has filed all forms, reports and documents required to be filed with the SEC since the initial filing date of the registration statement for the Parent's initial public offering. All such required forms, reports and documents (including those that the Parent may file subsequent to the date hereof) are referred to herein as the “Parent SEC Reports.” As of their respective dates, the Parent SEC Reports (i) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Parent SEC Reports, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. None of the Parent's Subsidiaries is subject to the periodic reporting requirements of the Exchange Act.(b)Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Parent SEC Reports (the “Parent Financials”), including any Parent SEC Reports filed after the date hereof until the Closing, as of their respective dates, (i) complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, (ii) was prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited interim financial statements, as may be permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly presented the consolidated financial position of the Parent and its Subsidiaries at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments which were not, or are not expected to be, material in amount.  The balance sheet of the Parent as of December 30, 2008 is hereinafter referred to as the “Parent Balance Sheet Date.”  Except as disclosed in the Parent Financials, neither the Parent nor any of its Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of a nature required to be disclosed on a balance sheet or in the related notes to the consolidated financial statements prepared in accordance with GAAP which are, individually or in the aggregate, material to the business, results of operations or financial condition of the Parent and its Subsidiaries taken as a whole, except liabilities (i) provided for in the Parent Balance Sheet, or (ii) incurred since the date of the Parent Balance Sheet in the ordinary course of business consistent with past practices and which would not reasonably be expected to have a Parent Material Adverse Effect.

 

5.5          Statements; Joint Proxy Statement/Prospectus. None of the information supplied or to be supplied by the Parent for inclusion or incorporation by reference in (i) the S-4 will at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (ii) the Joint Proxy Statement/Prospectus shall not, on the date the Joint Proxy Statement/Prospectus is first mailed to Abazias-DEs stockholders, at the time of Abazias-DE Stockholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for Abazias-DE Stockholders' Meeting which has become false or misleading. The Joint Proxy Statement/Prospectus will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.  If at any time prior to the Closing Date, any event relating to the Parent or any of its affiliates, officers or directors should be discovered by the Parent which should be set forth in an amendment to the S-4 or a supplement to the Joint Proxy Statement/Prospectus, the Parent shall promptly inform Abazias-DE.

 

5.6         Litigation.

 

There are no legal proceedings pending or, to the best knowledge of the Parent, threatened that are reasonably likely to prohibit or restrain the ability of the Parent to enter into this Agreement or consummate the transactions contemplated hereby.

 

5.7         Reserved.

 

        5.8         Broker.

 

The Parent has not retained any broker in connection with any transaction contemplated by this Agreement.  Target shall not be obligated to pay any fee or commission associated with the retention or engagement by the Parent of any broker in connection with any transaction contemplated by this Agreement

 

5.9         Patriot Act.  The Parent certifies that neither the Parent nor any of its subsidiaries has been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224.  The Parent hereby acknowledges that Abazias-DE and the Target seek to comply with all applicable laws concerning money laundering and related activities.  In furtherance of those efforts, the Parent hereby represents, warrants and agrees that:  (i) none of the cash or property that the Parent has contributed or paid or will contribute and pay to the Target has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the Parent or any of its subsidiaries to the Target, to the extent that they are within the Parent’s control shall cause the Target or Abazias-DE to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001.  The Parent shall promptly notify the Target if any of these representations ceases to be true and accurate regarding the Parent or any of its subsidiaries.  The Parent agrees to provide the Target any additional information regarding the Parent or any of its subsidiaries that the Target reasonably request to ensure compliance with all applicable laws concerning money laundering and similar activities.

 

5.10       Due Authorization of Preferred Stock.  The shares of the Preferred Stock, when delivered to the shareholders of Abazias-DE, shall be validly issued and outstanding as fully paid and non-assessable, free and clear of any liens, pledges, encumbrances, charges, agreements, options, claims or other arrangements or restrictions of any kind.

 

ARTICLE VI

COVENANTS

 

6.1

(a) As promptly as practicable after the execution of this Agreement, Abazias-DE and Parent shall jointly prepare and Parent shall file with the SEC the S-4, which shall include a document or documents that will constitute (i) the prospectus forming part of the registration statement on the S-4 and (ii) the Joint Proxy Statement/Prospectus.  Each of the parties hereto shall use all commercially reasonable efforts to cause the S-4 to become effective as promptly as practicable after the date hereof, and, prior to the effective date of the S-4, the parties hereto shall take all action required under any applicable laws in connection with the Merger and the issuance of the Preferred Stock. Each of Abazias-DE and Parent shall provide promptly to the other such information concerning its business and financial statements and affairs as, in the reasonable judgment of the providing party or its counsel, may be required or appropriate for inclusion in the Joint Proxy Statement/Prospectus and the S-4, or in any amendments or supplements thereto, and cause its counsel and auditors to cooperate with the other's counsel and auditors in the preparation of the Joint Proxy Statement/Prospectus and the S-4.

 

(b) As promptly as practicable after the effective date of the S-4, the Joint Proxy Statement/Prospectus shall be mailed to the stockholders of Abazias-DE. Each of the parties hereto shall cause the Joint Proxy Statement/Prospectus to comply as to form and substance with respect to such party in all material respects with the applicable requirements of (i) the Exchange Act, (ii) the Securities Act, and (iii) the rules and regulations of the OTCBB. As promptly as practicable after the date of this Agreement, the Seller will prepare and file any other filings required to be filed by it under the Exchange Act, the Securities Act or any other Federal, foreign or Blue Sky or related laws relating to the transactions contemplated by this Agreement (the “Other Filings”). Each of the Target and Parent will notify the other promptly upon the receipt of any (i) comments from the SEC or its staff or any other government officials, (ii) notice that the S-4 has become effective, (iii) the issuance of any stop order, or (iv) request by the SEC or its staff or any other government officials for amendments or supplements to the S-4, the Joint Proxy Statement/Prospectus or any Other Filing or for additional information and, except as may be prohibited by any Governmental Entity, will supply the other with copies of all correspondence between such party or any of its representatives, on the one hand, and the SEC or its staff or any other government officials, on the other hand, with respect to the S-4, the Joint Proxy Statement/Prospectus, the Agreement or any Other Filing.  Each of the Target and Parent will cause all documents that it is responsible for filing with the SEC or other regulatory authorities under this Section 6.1(b) to comply in all material respects with all applicable requirements of law and the rules and regulations promulgated thereunder.”

 

(c) Each of Target and the Parent shall promptly inform the others of any event which is required to be set forth in an amendment or supplement to the Joint Proxy Statement/Prospectus, the S-4 or any Other Filing and each of Target and the Parent shall amend or supplement the Joint Proxy Statement/Prospectus to the extent required by law to do so. No amendment or supplement to the Joint Proxy Statement/Prospectus or the S-4 shall be made without the approval of Target, which approval shall not be unreasonably withheld or delayed. Each of the parties hereto shall advise the other parties hereto, promptly after it receives notice thereof, of the time when the S-4 has become effective or any supplement or amendment has been filed, of the issuance of any stop order, or of any request by the SEC for an amendment of the Joint Proxy Statement/Prospectus or the S-4 or comments thereon and responses thereto or requests by the SEC for additional information.

 

 

(d) Each of Target, Abazias-DE and Parent shall keep the S-4 continuously effective under the Securities Act until all securities covered by the S-4 have been sold, or may be sold without restrictions pursuant to Rule 144, as determined by the counsel to Abazias-DE pursuant to a written opinion letter to such effect, addressed and acceptable to Abazias-DE’s transfer agent and the affected Holders (the “Effectiveness Period”).

(e) Each of Parent, Merger Sub and Target agree to treat the Preferred Stock as being stock other than "nonqualified preferred stock" as defined in Section 351 of the Code.

(f) Each of Parent, Merger Sub and Target agree to treat this Agreement as a plan of reorganization under the Code and applicable Treasury Regulations. 

6.2          Access to Information.

 

The Target and Abazias-DE agree that, prior to the Closing Date, the Parent shall be entitled, through its officers, employees and representatives (including, without limitation, its legal advisors and accountants), to make such investigation of the properties, businesses and operations of Abazias-DE and its Subsidiaries and such examination of the books, records and financial condition of Abazias-DE and its Subsidiaries as it reasonably requests and to make extracts and copies of such books and records.  Any such investigation and examination shall be conducted during regular business hours and under reasonable circumstances, and the Target shall cooperate, and shall cause Abazias-DE and its Subsidiaries to cooperate, fully therein.  No investigation by the Parent prior to or after the date of this Agreement shall diminish or obviate any of the representations, warranties, covenants or agreements of the Target contained in this Agreement or any other agreement referenced herein.  In order that the Parent may have full opportunity to make such physical, business, accounting and legal review, examination or investigation as it may reasonably request of the affairs of Abazias-DE and its Subsidiaries , the Target shall cause the officers, employees, consultants, agents, accountants, attorneys and other representatives of Abazias-DE and its Subsidiaries to cooperate fully with such representatives in connection with such review and examination.  It is agreed and understood that all information provided pursuant to this Section 6 is subject to the terms and conditions of the Confidentiality/Standstill Agreement.

 

6.3          Conduct of the Business Pending the Closing.

 

(a)  Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Parent, prior to the Closing the Target shall, and shall cause Abazias-DE to:

 

 

(i)           Conduct the respective businesses of Abazias-DE only in the ordinary course consistent with past practice;

 

(ii)          Use its best efforts to (A) preserve its present business operations, organization (including, without limitation, management and the sales force) and goodwill of Abazias-DE and (B) preserve its present relationship with parties having business dealings with Abazias-DE;

 

(iii)         Maintain (A) all of the assets and properties of Abazias-DE in their current condition, ordinary wear and tear excepted and except for dispositions in the ordinary course of business and (B) insurance upon all of the properties and assets of Abazias-DE in such amounts and of such kinds comparable to that in effect on the date of this Agreement;

 

(iv)         (A) maintain the books, accounts and records of Abazias-DE in the ordinary course of business consistent with past practices, (B) continue to collect accounts receivable and pay accounts payable utilizing normal procedures and without discounting or accelerating payment of such accounts, and (C) comply with all contractual and other obligations applicable to the operation of Abazias-DE; and

 

(v)          Comply in all material respects with applicable laws.

 

(b) Except as otherwise expressly contemplated by this Agreement or with the prior written consent of the Parent, prior to the Closing the Target shall not, and shall cause Abazias-DE not to:

 

(i)           Declare, set aside, make or pay any dividend or other distribution in respect of the capital stock of Abazias-DE or repurchase, redeem or otherwise acquire any outstanding shares of the capital stock or other securities of, or other ownership interests in, Abazias-DE;

 

(ii)          Transfer, issue, sell or dispose of any shares of capital stock or other securities of Abazias-DE or grant options, warrants, calls or other rights to purchase or otherwise acquire shares of the capital stock or other securities of Abazias-DE;

 

(iii)         Effect any recapitalization, reclassification, stock split or like change in the capitalization of Abazias-DE;

 

(iv)         Amend the Articles of Incorporation or Bylaws of Abazias-DE;

 

(v)          (A) materially increase the annual level of compensation of any employee of Abazias-DE, (B) increase the annual level of compensation payable or to become payable by Abazias-DE to any of its executive officers, (C) grant any unusual or extraordinary bonus, benefit or other direct or indirect compensation to any employee, director or consultant, (D) increase the coverage or benefits available under any (or create any new) severance pay, termination pay, vacation pay, Abazias-DE awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan or arrangement made to, for, or with any of the directors, officers, employees, agents or representatives of Abazias-DE or otherwise modify or amend or terminate any such plan or arrangement or (E) enter into any employment, deferred compensation, severance, consulting, non-competition or similar agreement (or amend any such agreement) to which Abazias-DE is a party or involving a director, officer or employee of Abazias-DE in his or her capacity as a director, officer or employee of Abazias-DE;

 

 

(vi)         Except for trade payables and for indebtedness for borrowed money incurred in the ordinary course of business and consistent with past practice, borrow monies for any reason or draw down on any line of credit or debt obligation, or become the guarantor, surety, endorser or otherwise liable for any debt, obligation or liability (contingent or otherwise) of any other party, or change the terms of payables or receivables;

 

(vii)        Subject to any lien (except for leases that do not materially impair the use of the property subject thereto in their respective businesses as presently conducted), any of the properties or assets (whether tangible or intangible) of Abazias-DE;

 

(viii)       Acquire any material properties or assets or sell, assign, transfer, convey, lease or otherwise dispose of any of the material properties or assets (except for fair consideration in the ordinary course of business consistent with past practice) of Abazias-DE except, with respect to the items listed on Schedule 6.3(b)(viii) hereto, as previously consented to by the Parent;

 

(ix)         Cancel or compromise any debt or claim or waive or release any material right of Abazias-DE except in the ordinary course of business consistent with past practice;

 

(x)          Enter into any commitment for capital expenditures out of the ordinary course;

 

(xi)         Permit Abazias-DE to enter into any transaction or to make or enter into any Contract which by reason of its size or otherwise is not in the ordinary course of business consistent with past practice;

 

(xii)        Permit Abazias-DE to enter into or agree to enter into any merger or consolidation with any corporation or other entity, and not engage in any new business or invest in, make a loan, advance or capital contribution to or otherwise acquire the securities of any other party;

 

(xiii)       Except for transfers of cash pursuant to normal cash management practices, permit Abazias-DE to make any investments in or loans to, or pay any fees or expenses to, or enter into or modify any Contract with, Target or any affiliate of Abazias-DE; or

 

(xiv)       Agree to do anything prohibited by this Section 6.3 or anything which would make any of the representations and warranties of the Target in this Agreement or any other agreement referenced herein untrue or incorrect in any material respect as of any time through and including the Closing.

 

 

6.4          Consents.

 

The Target shall use their best efforts, and the Parent shall cooperate with the Target, to obtain at the earliest practicable date all consents and approvals required to consummate the transactions contemplated by this Agreement, including, without limitation, the consents and approvals referred to in Section 4.7 hereof; provided, however, that neither the Target nor the Parent shall be obligated to pay any consideration therefore to any third party from whom consent or approval is requested.

 

6.5          Other Actions.

 

Each of the Target and the Parent shall use its best efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement, and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.

 

6.6          No Solicitation; Alternate Transaction.

 

(i)           The Target will not, and will not cause or permit Abazias-DE or any of Abazias-DE's directors, officers, employees, representatives or agents (collectively, the "Representatives") to, directly or indirectly, (i) discuss, negotiate, undertake, authorize, recommend, propose or enter into, either as the proposed surviving, merged, acquiring or acquired corporation, any transaction involving a merger, consolidation, change of control, business combination, purchase or disposition of any amount of the assets or capital stock or other equity interest in Abazias-DE other than the transactions contemplated by this Agreement (an "Alternate Transaction"), (ii) facilitate, encourage, solicit or initiate discussions, negotiations or submissions of proposals or offers in respect of an Alternate Transaction, (iii) furnish or cause to be furnished, to any party, any information concerning the business, operations, properties or assets of Abazias-DE in connection with an Alternate Transaction, or (iv) otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other party to do or seek any of the foregoing.  The Target will inform the Parent in writing immediately following the receipt by Target, Abazias-DE or any Representative of any proposal or inquiry in respect of any Alternate Transaction.

 

(ii)          If the Target, Abazias-DE or any of Abazias-DE's directors, officers, employees, representatives or agents enters into definitive documentation with respect to, or accepts in principal a proposal with respect to an Alternate Transaction prior to the Closing Date, then Target and Abazias-DE, jointly and severally shall  pay to Parents  an amount in cash equal to the lesser of: (a) the sum of: (i) the documented out-of-pocket third party expenses Parents have incurred in respect of the transactions contemplated by this Agreement or (ii) Fifty Thousand Dollars ($50,000) (collectively, the “Expense Reimbursement’’). The Expense Reimbursement shall he paid Parent on such date as Target and/or Abazias-DE formally enter into definitive documents, or accepts any proposal relating to an Alternate Transaction.

 

 

6.7          Publicity.

 

None of the Target nor the Parent shall issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of the other party hereto, which approval will not be unreasonably withheld or delayed, unless, in the sole judgment of the Parent or the Target, disclosure is otherwise required by applicable law, rule or regulation or by the applicable rules of any stock exchange on which the Parent lists securities, provided that, to the extent required by applicable law, the party intending to make such release shall use its best efforts consistent with such applicable law to consult with the other party with respect to the text thereof.

 

6.8          Use of Name.

 

The Target hereby agree that upon the consummation of the transactions contemplated hereby, the Parent and Abazias-DE shall have the sole right to the use of the name "ABAZIAS.COM Incorporated" and the Target shall not, and shall not cause or permit any affiliate to, use such name or any variation or simulation thereof.

 

6.9          Employment Agreements.

 

On or prior to the Closing Date, each of Oscar Rodriguez and Jesus Diaz (each “Employee and collectively, the “Employees”) shall enter into an employment agreement with  Abazias.com, substantially in the form of agreement attached hereto as Exhibit D-1 (the “Employment Agreements”).  Effective as of November 1, 2007 Strategic Capital Advisors entered into a consulting agreement for prior services rendered substantially in the form of agreement attached hereto as Exhibit D-2 (the “Consulting Agreement”).

6.10        Non-Competition.

 

For a period of two years after the later of the Closing Date or the termination of each Employee’s Employment Agreement by the Abazias.com, each Employee agrees not to engage in any of the following competitive activities: (a) engaging directly or indirectly in any business or activity substantially similar to any business or activity engaged in (or scheduled to be engaged) by Abazias-DE or the Parent in any areas where Abazias-DE or the Parent engage in business; (b) engaging directly or indirectly in any business or activity competitive with any business or activity engaged in (or scheduled to be engaged) by Abazias-DE or the Parent in any areas where Abazias-DE or the Parent engage in business; (c) soliciting or taking away any employee, agent, representative, contractor, supplier, vendor, customer, franchisee, lender or investor of Abazias-DE or the Parent, or attempting to so solicit or take away; (d) interfering with any contractual or other relationship between Abazias-DE or the Parent and any employee, agent, representative, contractor, supplier, vendor, customer, franchisee, lender or investor; or (e) using, for the benefit of any person or entity other than Abazias-DE, any confidential information of Abazias-DE or the Parent. Nothing in this Section 6.10 shall be deemed, however, to prevent Employees from owning securities of any publicly-owned corporation engaged in any such business, provided that the total amount of securities of each class owned by such individual in such publicly-owned corporation (other than Parent) does not exceed two percent (2%) of the outstanding securities of such class. In addition, no Target shall make any negative statement of any kind concerning Abazias-DE, the Parent or their affiliates, or their directors, officers or agents, except as such may be compelled by legal proceeding or governmental action or authority.

 

 

6.11        Additional Funding.

 

During the six months after the Closing Date, Parent will provide additional non-debt funding to the Abazias.com of Five Hundred Thousand Dollars ($500,000.00) to be used by the Abazias.com for general working capital or such other purposes in furtherance of the business of the Abazias.com as Abazias.com and Parent shall mutually agree.  This money will be advanced in amounts and at times during this six month period at the request of the officers of Abazias.com as determined in their sole and absolute discretion.  If any requested advance is not made by the end of a seven (7) day period, Parent shall distribute 13,001,000, or such greater number of shares if more than 13,001,000 shares of Preferred Stock are issued as consideration at closing, to the extent that the shares of Preferred Stock are convertible into more than 13 million one thousand (13,001,000) Shares, of common stock, pursuant to the adjustment provisions of section 4.3 of the Certificate of Designations, to the same shareholders of the Abazias-DE in the same amounts as the shares of Preferred Stock distributed to such Abazias-DE shareholders at Closing. The holders of a majority of such shares shall be entitled to make one demand to the Parent to register such shares on a registration statement.

ARTICLE VII

CONDITIONS TO CLOSING

 

7.1  Conditions Precedent to Obligations of Parent.

 

The obligation of the Parent to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Parent in whole or in part to the extent permitted by applicable law):

 

(a)  all representations and warranties of the Target contained herein shall be true and correct as of the date hereof;

 

(b)  all representations and warranties of the Target contained herein qualified as to materiality shall be true and correct, and the representations and warranties of the Target contained herein not qualified as to materiality shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though those representations and warranties had been made again at and as of that time;

 

(c)  the Target shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by  them on or prior to the Closing Date;

 

(d)  the Parent shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to the Parent) executed by each Target certifying as to the fulfillment of the conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;

 

 

(e)  the Parent shall have been furnished with duly authorized shareholder and Board of Director resolutions of Target and Abazias-DE authorizing the entry by Target and Abazias-DE into this Agreement;

 

(f)  Reserved;

 

(g)  The SEC shall have declared the S-4 effective.  No stop order suspending the effectiveness of the S-4 or any part thereof shall have been issued and no proceeding for that purpose, and no similar proceeding in respect of the Joint Proxy Statement/Prospectus, shall have been initiated or threatened in writing by the SEC.

 

(h)  there shall not have been or occurred any Material Adverse Change;

 

(i)  the Target shall have obtained all consents and waivers referred to in Section 4.7 hereof, in a form reasonably satisfactory to the Parent, with respect to the transactions contemplated by this Agreement;

 

(j)  no legal proceedings shall have been instituted or threatened or claim or demand made against the Target or the Parent seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby, and there shall not be in effect any order by a governmental body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

 

(k)  the Parent shall have received the written resignations of each director of Abazias-DE, 

 

7.2  Conditions Precedent to Obligations of the Target.

 

The obligations of the Target to consummate the transactions contemplated by this Agreement are subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by the Target in whole or in part to the extent permitted by applicable law):

 

(a)  all representations and warranties of the Parent contained herein shall be true and correct as of the date hereof;

 

(b)  all representations and warranties of the Parent contained herein qualified as to materiality shall be true and correct, and all representations and warranties of the Parent contained herein not qualified as to materiality shall be true and correct in all material respects, at and as of the Closing Date with the same effect as though those representations and warranties had been made again at and as of that date;

 

 

(c)  the Parent shall have performed and complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with by Parent on or prior to the Closing Date;

 

(d)  The SEC shall have declared the S-4 effective.  No stop order suspending the effectiveness of the S-4 or any part thereof shall have been issued and no proceeding for that purpose, and no similar proceeding in respect of the Joint Proxy Statement/Prospectus, shall have been initiated or threatened in writing by the SEC.

 

(e)  the Target shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to the Target) executed by the Chief Executive Officer and Chief Financial Officer of the Parent certifying as to the fulfillment of the conditions specified in Sections 7.2(a), 7.2(b) and 7.2(c); and

 

(f)  no legal proceedings shall have been instituted or threatened or claim or demand made against the Target, Abazias-DE, or the Parent seeking to restrain or prohibit or to obtain substantial damages with respect to the consummation of the transactions contemplated hereby, and there shall not be in effect any order by a governmental body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby.

ARTICLE VIII

DOCUMENTS TO BE DELIVERED

 

8.1  Documents to be Delivered by the Target.

 

At the Closing, the Target shall deliver, or cause to be delivered, to the Parent the following:

 

(a)  Reserved;

 

(b)  the certificates referred to in Section 7.1(e) hereof;

 

(c)  copies of all consents and waivers referred to in Section 7.1(i) hereof;

 

(d)  written resignations of each of the directors of Abazias-DE;

 

(e)  certificate of good standing with respect to Abazias-DE issued by the Secretary of State of the State of incorporation, and for each state, if any, in which Abazias-DE is qualified to do business as a foreign corporation;

 

(f)  such other documents as the Parent shall reasonably request.

 

8.2  Documents to be Delivered by the Parent.

 

At the Closing, the Parent shall deliver to the Target the following:

 

 

(a)  the Preferred Stock (provided that the Preferred Stock may be delivered within three (3) business days of the Closing Date; provided, however, if the Preferred Stock is not delivered at Closing, the Parent shall deliver irrevocable instructions to the Parent’s Transfer Agent to deliver the Preferred Stock as required under this Agreement);

 

(b)  the certificates referred to in Section 7.2(e) hereof;

 

(c)  Employment Agreements and Consulting Agreement, substantially in the forms of Exhibits D-1 and D-2 hereto, duly executed by Oscar Rodriguez and Jesus Diaz and Strategic Capital Advisors, respectively;

 

(d)  such other documents as the Target shall reasonably request.

ARTICLE IX

INDEMNIFICATION

 

9.1  Indemnification.

 

(a)  Subject to Sections 9.2 and 10.2 hereof, Target hereby agree to indemnify and hold the Parent, Abazias-DE, and their respective directors, officers, employees, affiliates, agents, successors and assigns (collectively, the "Parent Indemnified Parties") harmless from and against:

 

(i)           any and all liabilities of Abazias-DE of every kind, nature and description, absolute or contingent, existing as against Abazias-DE prior to and including the Closing Date or thereafter coming into being or arising by reason of any state of facts existing, or any transaction entered into, on or prior to the Closing Date, except to the extent that the same have been fully provided for in the Schedules attached hereto or were incurred in the ordinary course of business between Abazias-DE Balance Sheet Date and the Closing Date;

 

(ii)          any and all losses, liabilities, obligations, damages, costs and expenses based upon, attributable to or resulting from the failure of any representation or warranty of the Target set forth in Section 4 hereof, or any representation or warranty contained in any certificate delivered by or on behalf of the Target pursuant to this Agreement, to be true and correct in all respects as of the date made;

 

(iii)         any and all losses, liabilities, obligations, damages, costs and expenses based upon, attributable to or resulting from the breach of any covenant or other agreement on the part of the Target under this Agreement;

 

(iv)         any and all notices, actions, suits, proceedings, claims, demands, assessments, judgments, costs, penalties and expenses, including reasonable attorneys' and other professionals' fees and disbursements (collectively, "Expenses") incident to any and all losses, liabilities, obligations, damages, costs and expenses with respect to which indemnification is provided hereunder (collectively, "Losses").

 

 

(b)  Subject to Sections 9.2 and 10.2 hereof, Parent hereby agrees to indemnify and hold the Target and their respective affiliates, agents, successors and assigns (collectively, the "Target Indemnified Parties") harmless from and against:

 

(i)           any and all Losses based upon, attributable to or resulting from the failure of any representation or warranty of the Parent set forth in Section 5 hereof, or any representation or warranty contained in any certificate delivered by or on behalf of the Parent pursuant to this Agreement, to be true and correct as of the date made;

 

(ii)          any and all Losses based upon, attributable to or resulting from the breach of any covenant or other agreement on the part of the Parent under this Agreement or arising from the ownership or operation of Abazias-DE from and after the Closing Date, unless such claim is for a pre-Closing matter; and

 

(iii)         any and all Expenses incident to the foregoing.

9.2  Limitations on Indemnification for Breaches of Representations and Warranties.

 

An indemnifying party shall not have any liability under Section 9.1(a)(ii) or Section 9.1(b)(i) hereof unless the aggregate amount of Losses and Expenses to the indemnified parties exceeds $10,000 (the “Basket”) (except for Losses and Expenses based upon, attributable to or resulting from the failure of any representation or warranty to be true and correct under Section 4, for which the Basket shall not apply) and, in such event, the indemnifying party shall be required to pay the entire amount of such Losses and Expenses in excess of the Basket.  Notwithstanding anything else contained herein, the maximum liability Target shall be required to pay hereunder, in the aggregate, shall be the aggregate amount of cash and shares of the Parent (valued as of their date of issuance) paid or delivered to the Target (the “Cap”).  In addition, if any Loss or Expense of Parent is covered by insurance, Target shall not be required to indemnify Parent for the amount of such Losses or Expenses to the extent of such insurance proceeds and Target shall only pay Parent the excess of the Losses and Expenses, if any, over such insurance proceeds, subject to the Cap.  Following the Closing, other than in cases of fraud, this Article 9 shall be the sole and exclusive remedy of the parties hereto and their successors and assigns with respect to any and all claims for Losses and Expenses sustained or incurred arising out of this Agreement.

 

 

9.3  Indemnification Procedures.

 

(a)  In the event that any legal proceedings shall be instituted or that any claim or demand ("Claim") shall be asserted by any person or entity in respect of which payment may be sought under Section 9.1 hereof (regardless of the Basket referred to above), the indemnified party shall reasonably and promptly cause written notice of the assertion of any Claim of which it has knowledge which is covered by this indemnity to be forwarded to the indemnifying party.  The indemnifying party shall have the right, at its sole option and expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnified party, and to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder.  If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder, it shall within five (5) days (or sooner, if the nature of the Claim so requires) notify the indemnified party of its intent to do so.  If the indemnifying party elects not to defend against, negotiate, settle or otherwise deal with any Claim which relates to any Losses indemnified against hereunder, fails to notify the indemnified party of its election as herein provided or contests its obligation to indemnify the indemnified party for such Losses under this Agreement, the indemnified party may defend against, negotiate, settle or otherwise deal with such Claim.  If the indemnified party defends any Claim, then the indemnifying party shall reimburse the indemnified party for the Expenses of defending such Claim upon submission of periodic bills.  If the indemnifying party shall assume the defense of any Claim, the indemnified party may participate, at his or its own expense, in the defense of such Claim; provided, however, that such indemnified party shall be entitled to participate in any such defense with separate counsel at the expense of the indemnifying party if, (i) so requested by the indemnifying party to participate or (ii) in the reasonable opinion of counsel to the indemnified party, a conflict or potential conflict exists between the indemnified party and the indemnifying party that would make such separate representation advisable; and provided, further, that the indemnifying party shall not be required to pay for more than one such counsel for all indemnified parties in connection with any Claim.  The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Claim.

 

(b)  After any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the indemnified party and the indemnifying party shall have arrived at a mutually binding agreement with respect to a Claim hereunder, the indemnified party shall forward to the indemnifying party notice of any sums due and owing by the indemnifying party pursuant to this Agreement with respect to such matter and the indemnifying party shall be required to pay all of the sums so due and owing to the indemnified party by wire transfer of immediately available funds within 10 business days after the date of such notice.

 

(c)  The failure of the indemnified party to give reasonably prompt notice of any Claim shall not release, waive or otherwise affect the indemnifying party's obligations with respect thereto except to the extent that the indemnifying party can demonstrate actual loss and prejudice as a result of such failure.

 

(d)  With respect to amounts payable by Target hereunder to the Parent hereunder, it is agreed that Target shall first be obligated to pay all amounts in cash, up to the cash value of the Preferred Stock actually received by the Target pursuant to Article II of this Agreement.  Target may then deliver shares of Parent Preferred Stock to the Parent to pay any additional amounts due hereunder.  Any shares of Parent common stock so used to make payments hereunder shall be valued at the closing price of such shares on the day prior to the date of delivery to the Parent, endorsed for transfer.  Any additional amounts which Target shall be required to pay after the delivery of any shares of Parent common stock shall be made in cash.

 

ARTICLE X

MISCELLANEOUS

 

10.1        Payment of Sales, Use or Similar Taxes.

 

All sales, use, transfer, intangible, recordation, documentary stamp or similar Taxes or charges, of any nature whatsoever, applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne by the Target.

 

10.2        Survival of Representations and Warranties.

 

The parties hereto hereby agree that the representations and warranties contained in this Agreement or in any certificate, document or instrument delivered in connection herewith, shall survive the execution and delivery of this Agreement, and the Closing hereunder, regardless of any investigation made by the parties hereto; provided, however, that any claims or actions with respect thereto (other than claims for indemnifications with respect to the representation and warranties contained in Sections 4.3, 4.11, 4.28 and 5.8  which shall survive for periods coterminous with any applicable statutes of limitation) shall terminate unless within twenty four (24) months after the Closing Date written notice of such claims is given to the Target or such actions are commenced.

 

10.3        Expenses.

 

Target, Parent and Merger Sub shall each bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.

 

10.4        Further Assurances.

 

The Target and the Parent each agrees to execute and deliver such other documents or agreements and to take such other action as may be reasonably necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby.

10.5        Submission to Jurisdiction; Consent to Service of Process.

 

(a)  The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Florida over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action proceeding related thereto may be heard and determined in such courts.  The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute.  Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

 

(b)  Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by the mailing of a copy thereof in accordance with the provisions of Section 10.9.

 

(c) If any legal action or any arbitration or other proceeding is brought for the enforcement or interpretation of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with or related to this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys' fees and other costs in connection with that action or proceeding, in addition to any other relief to which it or they may be entitled.

10.6        Entire Agreement; Amendments and Waivers.

 

This Agreement (including the schedules and exhibits hereto )represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement, including without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

 

10.7        Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without giving effect to principles regarding conflict of laws.

 

10.8        Table of Contents and Headings.

 

The table of contents and section headings of this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement.

 

10.9        Notices.

 

All notices and other communications under this Agreement shall be in writing and shall be deemed given when delivered personally, mailed by certified mail, return receipt requested, or via recognized overnight courier service with all charges prepaid or billed to the account of the sender to the parties (and shall also be transmitted by facsimile to the parties receiving copies thereof) at the following addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision):

 

 

(a)

Parent:

OmniReliant Holdings, Inc.

Clearwater, FL 33760

Attention Paul Morrison

Copy to:

Darrin Ocasio, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Phone:   ###-###-####

Facsimile: (212) 930-9725

(b)

Target and Abazias-DE:

Abazias, Inc.

5214 SW 91st Terrace Suite A

Gainesville, FL 32608

Attention: Oscar Rodriguez

10.10      Severability.

 

If any provision of this Agreement is invalid or unenforceable, the balance of this Agreement shall remain in effect.

10.11      Binding Effect; Assignment.

 

This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.  Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement except as provided below.  No assignment of this Agreement or of any rights or obligations hereunder may be made by either the Target or the Parent (by operation of law or otherwise) without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void.

 

 

IN WITNESS WHEREOF, the parties hereto have executed or caused to be duly executed this Agreement and Plan of Merger as of the date first set forth above.