STOCKPURCHASE AGREEMENT

1.1.1

“Action” has the meaning set forth in Section 3.7.

1.1.2

“Affiliate” means with respect to any Person, any other Person which is controlling, controlled by, or under common control with, directly or indirectly, the Person referred to, and, if the Person referred to is a natural Person, any member of such Person’s immediate family.  The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”) as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

1.1.3

“Agreement” means this Agreement as executed on the date hereof and as amended or supplemented in accordance with the terms hereof, including all Schedules and Exhibits attached hereto, as well as other documents to be furnished by the Parties as provided herein, which other documents shall be collectively referred to as the “Related Documents.”

1.1.4

“Business” means any and all business activities in which the Company is engaged, as such business is conducted by the Company on the date hereof and as of the Effective Time.

1.1.5

“Buyer” has the meaning set forth in the Preamble to this Agreement.

1.1.6

“Buyer’s Counsel Legal Opinion” means the legal opinion letter of counsel to Buyer, David Altshuler, Esq., in favor of the Company in such form as the Company shall reasonably require.

1.1.7

“Buyer’s Shares” means 100% of the issued and outstanding shares of Buyer’s common stock, par value $0.0001 per share, to be delivered to the Company by Buyer hereunder.

1.1.8

“Closing” means the consummation of the transactions contemplated by this Agreement, as provided for in Section 2.3.

1.1.9

“Closing Date” means the date on which the Closing occurs in accordance with this Agreement.

1.1.10

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

1.1.11

“Company” has the meaning set forth in the Recitals to this Agreement.

1.1.12

“Company’s Counsel Legal Opinion” means the legal opinion letter of counsel to the Company, Gersten Savage LLP, in favor of Buyer and its counsel in such form as Buyer may reasonably require.

1.1.13

“Company Shares” means the shares of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share, with supermajority voting rights and such other rights and preferences as are specified in the Certificate of Designation, a form of which is attached hereto as Exhibit A, to be sold by the Company to Buyer hereunder.

1.1.14

“Confidential Information” has the meaning set forth in Section 5.1(b).

1.1.15

“Contract” means any written or oral contract, agreement, arrangement, understanding, lease, indenture, mortgage, deed of trust, evidence of indebtedness, commitment or instrument, open purchase order or offer, to which the Company is a party or by which it or any of its assets is bound.

1.1.16

“Effective Time” means the effective time of the Closing, which shall be deemed to be as of 12:01 a.m. Eastern Time on the Closing Date.

1.1.17

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

1.1.18

“Escrow Agent” means Gersten Savage LLP.

1.1.19

“Financial Statements” means (a) the unaudited balance sheets of the Company as of October 31, 2008 and (b) the related unaudited quarterly statements of earnings, stockholders’ equity, changes in financial position and cash flows for the respective periods then ended, together, as to all the foregoing, with any notes or schedules thereto.

1.1.20

“GAAP” means the accounting principles generally accepted in the United States, including as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, applied consistently throughout the periods involved.

1.1.21

“Government” means the United States of America, any other nation or state, any federal, bilateral or multilateral governmental authority, state, any possession, territory, local, county, district, city or other governmental unit or subdivision, and any branch, entity, agency, or judicial body of any of the foregoing.

1.1.22

“Income Taxes” means any Tax imposed upon or measured by net income or gross income (excluding any Tax based solely on gross receipts) including any interest, penalty, or additions thereto, whether disputed or not.

1.1.23

“Indemnified Person” means a person entitled to indemnification pursuant to Article 8 of this Agreement.

1.1.24

“Indemnifying Party” means the party required to indemnify and hold harmless such Indemnified Person.

1.1.25

“IRS” means the United States Internal Revenue Service.

1.1.26

“Knowledge” means, with respect to any Person, such Person’s actual knowledge of facts or other information, after having made (a) due inquiry of any other Person who is primarily responsible for, and/or the primary custodian of records pertaining to, the subject matter as to which such Person’s knowledge is being asserted, and  (b) due investigation of all files and records in the possession or control of such Person and pertaining to the subject matter as to which such Knowledge is being asserted.  The words “know,” “knowing” and “known” shall be construed accordingly.

1.1.27

“Law” means any statute, law, ordinance, decree, order, injunction, rule, directive, or regulation of any Government or quasi-governmental authority, and includes rules and regulations of any regulatory or self-regulatory authority compliance with which is required by any such statute, law, ordinance, decree, order, injunction, rule, directive, or regulation.

1.1.28

“Liabilities” or “Liability” means all debts, adverse claims, liabilities and/or obligations, direct, indirect, absolute or contingent, liquidated or unliquidated, whether accrued, vested or otherwise, and whether or not reflected or required to be reflected on the financial statements of a Person.

1.1.29

“Lien” means any lien, security interest, mortgage, indenture, deed of trust, pledge, charge, adverse claim, easement, restriction or other encumbrance, including, without limitation, any liens arising in respect of any Tax.

1.1.30

“Losses” means any damages, losses, charges, liabilities, claims, demands, actions, suits, proceedings, payments, judgments, settlements, assessments, deficiencies, taxes, interest, penalties, and costs and expenses, including removal costs, remediation costs, closure costs, fines, penalties and expenses of investigation, reasonable attorneys’ fees and costs, and reasonable out-of-pocket disbursements.

1.1.31

“Material Adverse Effect” means any material adverse effect on (a) the Business, properties, assets, liabilities, profits, operations, results of operations or condition (financial or otherwise) of the Company, or (b) the validity or enforceability of this Agreement and/or any or all of the Related Documents, or the authority or ability of the Company to perform its obligations pursuant to this Agreement, but shall not be deemed to include (i) any adverse changes resulting from general economic, regulatory or political conditions, (ii) circumstances that affect the industries in which the Company operates generally unless expressly directed at or disproportionately affecting the Company, or (iii) any other event or occurrence which would customarily be considered to be force majeure in contracts of this type.

1.1.32

“Material Adverse Event” means the occurrence of any event, fact or circumstance that, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect on the Company

1.1.33

“Material Contracts” has the meaning set forth in Section 3.10(a).

1.1.34

“Order” means an order, writ, injunction, or decree of any court or Government.

1.1.35

“Ordinary Course” means, with respect to the Business of the Company, only the ordinary course of commercial operations customarily engaged in by the Company consistent with industry norms and the Company’s prior practices, and specifically does not include (a) any activity (i) involving the purchase or sale of the Company or of any product line or business unit of the Company, (ii) involving modification or adoption of any Plan, or (iii) which requires approval by the board of directors or shareholders of the Company, or (b) the incurrence of any material Liability for any tort or any breach or violation of or default under any Contract or Law.

1.1.36

“Party” or “Parties” means any one or more of the parties to this Agreement, as the context may require.

1.1.37

“Permitted Liens” means, collectively, (a) Liens for Taxes, fees, levies, duties or other governmental charges of any kind which are not yet delinquent or are being contested in good faith by appropriate proceedings, (b) Liens for landlords, common carriers, warehousemen, mechanics, materialmen, laborers, employees, suppliers, vendors in the ordinary course of business or similar liens arising by operation of law for amounts which are owed, but not yet delinquent, (c) purchase money security interests relating to the acquisition of goods in the Ordinary Course equal to, or less than, Five Thousand Dollars ($5,000) per individual acquisition, (d) in the case of real property, any matters, restrictions, covenants, conditions, limitations, rights, rights of way, encumbrances, encroachments, reservations, easements, agreements and other matters of record, such state of facts of which an accurate survey of the property would reveal, and (e) Liens arising from or related to immaterial indebtedness or capital leases of the Company or its Subsidiaries equal to, or less than, Five Thousand Dollars ($5,000) in each case.

1.1.38

“Person” shall be construed broadly and shall include an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a Government entity (or any department, agency or political subdivision thereof).

1.1.39

“Plan” means any agreement, arrangement, plan, or policy, whether or not written, that involves (a) any pension, retirement, profit sharing, savings, deferred compensation, bonus, stock option, stock purchase, phantom stock, health, welfare, or incentive plan; or (b) welfare or “fringe” benefits, including without limitation vacation, holiday, severance, disability, medical, hospitalization, dental, life and other insurance, tuition, company car, club dues, sick leave, maternity, paternity or family leave, or other benefits; or (c) any employment, consulting, engagement, or retainer agreement.

1.1.40

“Sponsor” means any employer who is participating (or who has participated) in any Plan.

1.1.41

“Tax” or “Taxes” means all taxes, charges, fees, levies, or other like assessments, including without limitation, all federal, possession, state, city, county and foreign (or governmental unit, agency, or political subdivision of any of the foregoing) income, profits, employment (including Social Security, unemployment insurance and employee income tax withholding), franchise, gross receipts, sales, use, transfer, stamp, occupation, property, capital, severance, premium, windfall profits, customs, duties, ad valorem, value added and excise taxes; pension guaranty and other similar premiums; and any other Government charges of the same or similar nature; including any interest, penalty or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax Liability of any other Person.  Any one of the foregoing Taxes shall be referred to sometimes as a “Tax.”

1.1.42

“Tax Returns” means all reports, estimates, declarations, claims for refund, information statements and returns relating to or required by Law to be filed by the Company in connection with any Taxes, and all information returns (e.g., Form W-2, Form 1099) and reports relating to Taxes and Taxes payable by, pursuant to, or in connection with, any Plans, including any amendment or supplement thereof.  Any one of the foregoing Tax Returns shall be referred to sometimes as a “Tax Return.”

Interpretation and Accounting Terms.

1.2.1 

Interpretation.

 

(a)

Whenever in this Agreement the terms “include,” “includes,” “including,” and derivative or similar words, are used, they shall be construed to be followed by the phrase “without limitation.”

 

(b)

Whenever in this Agreement the term “agreement” is used, it shall be deemed to refer to binding agreements, commitments, leases, contracts, contract rights, licenses and sublicense agreements, quotations, purchase orders, customer orders, work orders and other executory rights.

 

(c)

Wherever in this Agreement a statute or other piece of legislation is referenced, such reference shall be deemed to include any and all amendments thereto, as well as any successor legislation which may be adopted subsequent to the date of this Agreement, and covering the same subject matter or the referenced statute or legislation.

 

(d)

Whenever in this Agreement the term “party to” is used in regard to an agreement, it shall be construed as meaning “party to or bound by.”

 

(e)

Wherever in this Agreement reference is made to a Schedule “hereof” or “attached hereto” the contents of such Schedule shall be deemed to be incorporated into this Agreement by reference, as an integral part of this Agreement.

 

(f)

The headings of the Articles, Sections and paragraphs of this Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

 

(g)

Each reference in this Agreement to an Article, Paragraph, Section, Schedule or Exhibit, unless otherwise indicated, shall mean an Article, Paragraph or Section of this Agreement or a Schedule or Exhibit attached to this Agreement, respectively.

 

(h)

Whenever in this Agreement the terms “hereof,” “herein,” “hereby,” or derivative or similar words are used, such terms refer to this entire Agreement.

 

(i)

All references herein to “days” in this Agreement are to consecutive calendar days unless Business Days are specified.

 

(j)

The language in all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning, strictly neither for nor against any Party hereto, and without implying a presumption that the terms thereof shall be more strictly construed against one Party by reason of the rule of construction that a document is to be construed more strictly against the Person who itself or through its counsel prepared the same, it being agreed that representatives of both Parties have participated in the preparation hereof.

 

(k)

Whenever in this Agreement the singular is used, it shall include the plural if the context so requires, and whenever the masculine gender is used in this Agreement, it shall be construed as if the masculine, feminine or neuter gender, respectively, has been used where the context so dictates, with the rest of the sentence being construed as if the grammatical and terminological changes thereby rendered necessary have been made.

3.1 

 

(a)

The Company is a corporation validly existing and in good standing under the laws of the State of Delaware.  The Company has made available to Buyer true, complete and correct copies of its Articles of Incorporation and Bylaws, as currently in effect.

 

(b)

The Company has all requisite corporate power and authority to own, lease and use its assets and to transact the Business, and holds all authorizations, franchises, licenses and permits required therefor and all such authorizations, franchises, licenses and permits are valid and subsisting.  The Company is in good standing in each of the jurisdiction(s) where it is duly licensed or qualified to do business as a foreign corporation and in any other jurisdiction where such license or qualification is required, and is in good standing in each such jurisdiction, except for jurisdictions where the failure to be so licensed or qualified would not, individually or in the aggregate, have a Material Adverse Effect.

 

(c)

The Company has the corporate power, authority and capacity to execute and deliver this Agreement, to perform the Company’s obligations hereunder and in each Exhibit hereto, as applicable, and to consummate the transactions contemplated hereby and thereby.

3.2 

 

(a)

This Agreement has been duly executed and delivered by the Company, and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.  All action on the part of the Company and its officers , directors and shareholders, necessary for the authorization, execution, delivery and performance of this Agreement, the Related Documents and the transactions contemplated hereby and thereby has been taken.

 

(b)

The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not require any independent corporate action on the part of the Company.

 

(c)

Except as may be disclosed on Schedule 3.2(c), the Company is not a party to, subject to or bound by any Contract, Law or Order which does or would (i) conflict with or be breached or violated or its obligations thereunder accelerated or increased (whether or not with notice or lapse of time or both) by the execution, delivery or performance by the Company of this Agreement, (ii) prevent the carrying out of the transactions contemplated hereby.  Except as described in Article 7 hereof, no permit, consent, waiver, approval or authorization of, or declaration to or filing or registration with, any Government or third party is required in connection with the execution, delivery or performance of this Agreement by the Company, or the consummation the Company of the transactions contemplated hereby, except for any such permits, consents, waivers, approvals, authorizations, declarations, filings or registrations the failure of which to obtain would not have a Material Adverse Effect.  Except as disclosed on Schedule 3.2(c), the transactions contemplated hereby will not result in the creation of any Lien against the Company or any of its properties or assets, nor in the cancellation or modification of any license, agreement or arrangement to which the Company is a party, except for any such cancellations or modifications which would not, individually or in the aggregate, produce a Material Adverse Effect.

3.3 

 

(a)

The authorized capital stock of the Company, and the names, addresses and holdings of the record holders thereof are set forth in Schedule 3.3(a) attached hereto. All of the Company Shares were duly authorized and validly issued, and are fully paid and non-assessable without restriction on the right of transfer thereof (other than restrictions on transfer solely pursuant to applicable state and federal securities laws).  Except for Buyer’s rights pursuant to this Agreement, or as otherwise set forth on Schedule 3.3(a), (i) there are no authorized or outstanding (A) securities of the Company other than the Company Shares, or (B) warrants, preemptive rights, other rights, or options with respect to any securities of the Company, and (ii) the Company is not subject to any obligation to issue, sell, deliver, redeem, exchange, convert, repurchase, substitute or otherwise transfer, acquire or retire the Company Shares or any other securities of the Company.

 

(b)

The Company does not have any subsidiaries.  Except as may be set forth on Schedule 3.3(b), the Company does not directly or indirectly own or have any capital stock or other equity interest in any other Person (including, without limitation, any contractual, joint venture, profit sharing or other similar quasi-equity arrangement), and there are no Contracts to effect any of the foregoing to which the Company is a party.

 

(a)

Material Adverse Event or change in the business or condition (financial or otherwise), operations or results of operations of the Company, or to the Company’s Knowledge, current prospects, other than changes in the Ordinary Course (which changes have not, individually or in the aggregate, had a Material Adverse Effect);

 

(b)

damage, destruction or loss, whether covered by insurance or not, affecting the tangible assets of the Company which individually exceeds $2,500 or in the aggregate exceeds $10,000;

 

(c)

declaration, setting aside, or payment of any dividend or any distribution (in cash or in kind) with respect to any securities of the Company;

 

(d)

sale or direct or indirect redemption, purchase or other acquisition of securities of the Company;

 

(e)

increase in or commitment to increase compensation, benefits, or other remuneration to or for the benefit of any employee, shareholder, director, officer, or agent of the Company, or any benefits granted under any Plan with or for the benefit of any such employee, director, officer, or agent, except for increases in salary, wages or benefits in the Ordinary Course which individually exceeds $2,500 or in the aggregate exceeds $10,000;

 

(f)

accrual or arrangement, whether direct or indirect, for, or payment of, bonuses or special compensation of any kind, or any severance or termination pay, to any present or former officer, director, or employee of the Company, other than in the Ordinary Course and provided that any such accrual or arrangement does not individually exceed $2,500 or in the aggregate exceed $10,000;

 

(g)

material transaction entered into or carried out by the Company in connection with the Business other than in the Ordinary Course;

 

(h)

borrowing or incurrence of any indebtedness (including letters of credit and foreign exchange contracts), contingent or otherwise, by or on behalf of the Company or any endorsement, assumption, or guarantee of payment or performance of any such indebtedness or any Liabilities of any other Person by or on behalf of the Company other than in the Ordinary Course and provided that any such borrowing or incurrence of indebtedness does not individually exceed $2,500 or in the aggregate exceed $10,000;

 

(i)

change made by the Company with respect to its Tax or financial accounting, or the making of any Tax election;

 

(j)

grant of any Lien (other than a Permitted Liens) with respect to the assets, properties or rights of the Company;

 

(k)

issuance by the Company of any security, including without limitation any option, warrant or right to receive any security;

 

(l)

change in the authorized capital or outstanding securities of the Company;

 

(m)

payment of any obligation or liability (absolute or contingent) by the Company, other than current liabilities reflected in or shown on the Financial Statements and current liabilities incurred in the Ordinary Course;

 

(n)

change in any accounting methods or practices by the Company (including, without limitation, any change in depreciation or amortization methods, policies, or rates);

 

(o)

entry into, or amendment, modification, or termination of, any Material Contracts;

 

(p)

waiver or release of any right or claim of the Company or cancellation of any debts or claims, except in the Ordinary Course and provided that any such waiver or release does not individually exceed $2,500 or in the aggregate exceed $10,000;

 

(q)

capital expenditure by the Company individually exceeding $2,500 or in the aggregate exceeding $10,000; and

 

(r)

any agreement by, or Board resolution authorizing, the Company to do any of the foregoing items.

3.5 

 

(a)

To the Company’s Knowledge, it does not have any Liabilities, except:

 

(i)

those Liabilities identified on the Financial Statements and as may be reflected on Schedule 3.5(a) attached hereto; or

 

(ii)

as incurred in the Ordinary Course since the date of the most recent Financial Statements (none of which has had or may reasonably be expected to have a Material Adverse Effect on the Company).

 

(b)

To the Company’s Knowledge, except as disclosed herein, there is no currently existing condition or circumstance which would reasonably be expected to result in such a Liability which would have a Material Adverse Effect.

 

(a)

Except as maybe set forth in Schedule 3.7, there is no suit, claim, litigation, proceeding (administrative, regulatory, judicial, or in arbitration, mediation or alternative dispute resolution), Government or grand jury investigation, or other action (any of the foregoing, an “Action”), pending or, to the Company’s Knowledge, threatened, anticipated or contemplated, against the Company, involving the Business, or involving any of the Company’s properties, assets, rights or capital stock, or any of its directors, officers, agents, or other personnel in their capacity as such, including without limitation any Action challenging, enjoining, or preventing this Agreement, or the consummation of the transactions contemplated hereby.

 

(b)

The Company is not currently and, to the Company’s Knowledge, has not been, subject to any Order other than Orders of general applicability.

 

(a)

There are no interests in real property owned by the Company.

 

(b)

The Company does not lease any real property.

 

(a)

True, correct and complete copies of the books of account, stock record books, minute books, bank accounts, and other corporate records solely relating to the Company (where necessary, redacted to exclude information not solely related to the Company) have been made available, and during the course of Buyer’s due diligence, will be made available to Buyer and such books and records have been maintained in accordance with good business practices consistently applied.  The minute book of the Company contains accurate and complete records of all meetings held of, and corporate action taken by, the stockholders, the Board of Directors, and any special committees of the Board of Directors of the Company, and no meeting of any such stockholders, Board of Directors, or special committee has been held for which minutes have not been prepared and are not contained in such minute books.  At the Closing, all of those books and records will be in the possession of the Company.

 

(b)

The Company uses commercially reasonable efforts to establish proper and adequate internal accounting controls which provide reasonable assurance that (i) transactions are executed with management’s authorization; (ii) transactions are recorded as necessary to permit preparation of the financial statements of the Company and to maintain accountability for the Company’s assets; (iii) access to the Company’s assets is permitted only in accordance with management’s authorization; (iv) the reporting of the Company’s assets is compared with existing assets at regular intervals; and (v) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

 

(a)

Buyer is a corporation, validly existing and in good standing under the laws of the State of Delaware.

 

(b)

Buyer has all requisite corporate power and authority to own and use its assets and to transact the business in which it is engaged, and holds all franchises, licenses and permits required therefor.  Buyer is duly licensed or qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such license or qualification is required except for jurisdictions where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

 

(c)

Buyer has the corporate power, authority and capacity to enter into this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby, and Buyer further represents and warrants that it has the authority to execute this Agreement on behalf of its shareholders, which authority shall be evidenced by a shareholder’s resolution which shall be executed by all of Buyer’s shareholders and delivered to the Company at Closing.

 

(d)

Buyer is not a party to, subject to or bound by any Contract, Law or Order which would (i) be breached or violated or its obligations thereunder accelerated or increased (whether or not with notice or lapse of time or both) by the execution or delivery by Buyer of this Agreement or the performance by Buyer of the transactions contemplated by this Agreement, or (ii) prevent the carrying out of the transactions contemplated hereby.  Except as otherwise provided for herein, no waiver or consent of any third Person is required for the execution of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby.

 

(a)

Each party acknowledges that, during the course of due diligence, such party has and will become aware of confidential information and documents of the other party, and that its use of such confidential information and documents, or communication of such information to third parties, could be detrimental to the other party.  Each party covenants that prior to Closing all information and documents concerning the other party reviewed by it or its representatives in connection with this Agreement or the transactions contemplated hereby shall be maintained in confidence and shall not be disclosed or used by it or its representatives without the other party’s prior written consent, unless the party can demonstrate that such information is (a) otherwise publicly available, (b) in the party’s possession through disclosure by a third party not in violation of any confidentiality or other agreement or applicable Law, (c) required to be disclosed pursuant to judicial order, regulation or law, or (d) required to be disclosed by the rules of a securities exchange on which the party may from time to time be listed.  In the event that the party or any of its representatives becomes legally compelled to disclose any such information or documents as referred to in this Section, the party shall, to the extent reasonably practicable, provide the other party with prompt written notice before such disclosure, in order that the other party may either seek a protective order, at the other party’s expense, or seek another appropriate remedy preventing or prohibiting such disclosure or to waive compliance with the provisions of this Section 6.1 or both.  With respect to information and documents related to the other party, at the other party’s request, in the event that the Closing shall not occur, or as soon as practicable following termination of this Agreement, (a) the party shall, and shall cause its representatives to, promptly destroy all information and documents concerning the other party (including any copies thereof or extracts therefrom); (b) an officer of the party shall certify to the other party such destruction; and (c) the party shall and shall cause its representatives to keep confidential and not use any such information or documents unless required to disclose such information or documents pursuant to judicial order, regulation or law.

 

(b)

For purposes of this Agreement, the term “Confidential Information” shall mean any information or data which is disclosed by any party pursuant to or in furtherance of this Agreement and/or the consummation of the several transactions contemplated hereby, and which, if in tangible form or other media that can be converted into readable form, is clearly marked proprietary, confidential or private when disclosed or, if disclosed orally, is identified as proprietary, confidential or private at disclosure.  For orally transmitted information to be deemed Confidential Information, the disclosing party must furnish a written description in such detail as is necessary to identify such information to the recipient, and clearly marked as CONFIDENTIAL, within ten (10) business days of such oral disclosure by the disclosing party.  Confidential Information shall expressly not include any information which (i) becomes available to the general public through no breach of this Agreement; (ii) was previously known by the Recipient without any obligation to hold it in confidence; (iii) is received from a third party free to disclose such information without restriction; (iv) is approved for release by written authorization of the Company; or (v) is required by law to be disclosed, but only to the extent and for the purpose of such legal.

 

(a)

Approval by the majority of the holders of the Company’s issued and outstanding shares of common stock of (A) an amendment to the Company’s Certificate of Incorporation to authorize 20,000,000 shares of blank-check preferred stock; (B) an increase in the Company’s authorized shares of common stock to 750,000,000 shares; (C) a change of the Company’s name to “Thwapr, Inc.” to more accurately reflect the new focus of the Company; and (D) an amendment to the Company’s Certificate of Incorporation to allow for supermajority preferred voting rights;

 

(b)

The filing with the SEC of a Preliminary 14C Information Statement notifying non-consenting shareholders of the approval by the majority of the holders of the Company’s issued and outstanding shares of common stock of the actions described in Section 6.2(a);

 

(c)

The filing with the SEC of a Definitive 14C Information Statement;

 

(d)

The filing with the Delaware Secretary of State of an amended Certificate of Incorporation of the Company designating blank check preferred stock, increasing the Company’s authorized shares of common stock; changing the Company’s name and allowing for supermajority preferred voting rights; and

 

(e)

The filing with the Delaware Secretary of State of a Certificate of Designation for a class of Series A convertible preferred stock with supermajority preferred voting rights.

 

(a)

originally-executed copies of this Agreement, signed by the President of the Company and attested to by the Secretary of the Company;

 

(b)

certificates (or a duly signed and notarized Affidavit of Lost Stock Certificate) representing all of the Company Shares, free and clear of all Liens (other than restrictions solely evidencing the restricted nature of such Shares pursuant to applicable state and federal securities laws);

 

(c)

the written resignation of each member of the Board of Directors and each executive officer, effective as of the Effective Time;

 

(d)

originally executed copies of an Agreement between the Company, Hammond Management Corporation (“HMC”) and Scientific Biofuels Solutions, Ltd. (“SBS”), pursuant to which HMC and SBS agree to cancel their stock and to forgive all loans due to HMC and SBS by the Company at Closing and HMC and the Company agree to terminate the Hammond Management Agreement, effective as of the Closing Date, in accordance with the undertakings attached hereto as Exhibit B.

 

(e)

a Certificate, signed by the Secretary of the Company, attaching thereto, and certifying as true and correct, (i) copies of resolutions duly passed by the Board of Directors of the Company approving the entry of Company into this Agreement, and authorizing the Company to perform all of its obligations thereunder; (ii) the Articles of Incorporation of the Company, including all amendments thereto, and (iii) the Bylaws of the Company, including all amendments thereto;

 

(f)

a long-form certificate of good standing of the Company, dated within five (5) Business Days of the Closing Date, from the Delaware Secretary of State (and of the Secretary of State of each State in which the Company is qualified or licensed as a foreign corporation);

 

(g)

all share transfer books, minute books and other corporate records of the Company;

 

(h)

the certificate required of the Company’s President, pursuant to Section 6.1 above;

 

(i)

the Company’s Counsel Legal Opinion; and

 

(j)

such other customary documents, instruments or certificates as shall be reasonably requested by Buyer and as shall be consistent with the terms of this Agreement.

 

(a)

originally-executed copies of this Agreement, signed by the President of Buyer and attested to by the Secretary of Buyer;

 

(b)

all required consents and approvals from Governments and third parties under Material Contracts;

 

(c)

a Certificate, signed by the Secretary of Buyer, attaching thereto, and certifying as true and correct, (i) copies of resolutions duly passed by the Board of Directors of Buyer approving the entry of Buyer into this Agreement, and authorizing Buyer to perform all of its obligations thereunder; (ii) the Articles of Incorporation of Buyer, including all amendments thereto, and (iii) the Bylaws of Buyer, including all amendments thereto;

 

(d)

a certificate of good standing of Buyer, dated within five (5) Business Days of the Closing Date, from the Delaware Secretary of State;

 

(e)

the certificate required of the Buyer’s President, pursuant to Section 7.1 above;

 

(f)

the opinion of Buyer’s legal counsel described in Section 1.1.7 hereof;

 

(g)

A resolution signed by 90% of Buyer’s shareholders authorizing Buyer to enter into this Agreement on such shareholders’ behalf; and

 

(h)

such other customary documents, instruments or certificates as shall be reasonably requested by Buyer and as shall be consistent with the terms of this Agreement.

 

(a)

The Indemnifying Party shall be entitled, to the extent permitted by applicable Law, to assume and control the defense of such Third Party Claim with counsel approved by the Indemnified Person (which approval may not unreasonably be withheld, delayed or conditioned).  If the Indemnifying Party elects to assume and control such defense, it shall be conclusively established that the Indemnifying Party is obligated (subject to the other provisions of this Article 8) to indemnify and reimburse the Indemnified Person in respect of the matters described in the Claim Notice.  Notwithstanding the foregoing, if (i) the Indemnified Person shall have reasonably concluded that there is a reasonable probability that the Third Party Claim may materially and adversely affect it or its Affiliates other than as a result of monetary damages for which the Indemnified Person would be entitled to indemnification or reimbursement under this Article 8, or (ii) the actual or potential defendants in, or targets of, such Third Party Claim include both the Indemnifying Party and the Indemnified Person, and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to those available to the Indemnifying Party, then, in either such case, the Indemnifying Party shall not have the right to assume or control such defense.

 

(b)

After the Indemnifying Party duly assumes the defense of such Third Party Claim:

 

(i)

The Indemnified Person shall have the right to, but shall not be obligated to, employ separate counsel and to participate in the defense of such Third Party Claim.  The Indemnifying Party shall reimburse the Indemnified Person for the reasonable fees and disbursements of such separate counsel as incurred, if:  (A) the actual or potential defendants in, or targets of, such Third Party Claim include both the Indemnifying Party and the Indemnified Person, and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to those available to the Indemnifying Party, (B) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after electing to assume the defense of the Third Party Claim, or (C) the Indemnifying Party shall authorize the Indemnified Person to employ separate counsel at the Indemnifying Party's expense.

 

(ii)

The Indemnified Person shall cooperate in all reasonable respects with the Indemnifying Party in connection with such defense and all costs and expenses incurred by the Indemnified Person in connection therewith shall be a liability of, and shall be paid by, the Indemnifying Party as incurred.

 

(iii)

The Indemnifying Party shall not settle, compromise, admit liability or consent to the entry of judgment in connection with such Third Party Claim, nor shall it offer to do so, in any such case without the Indemnified Person’s written consent, unless (A) no finding or admission of any violation of Law or any violation of the rights of any Party can be made as the result of such action and such action will have no effect on other claims that have been made or are reasonably likely to be made against the Indemnified Person, and (B) the sole relief (if any) provided is monetary damages that are reimbursed in full by the Indemnifying Party.

 

(iv)

The Indemnifying Party shall have no liability with respect to any compromise, settlement or discharge of the Third Party Claim effected without its written consent (which consent may not unreasonably be withheld, delayed or conditioned).

 

(c)

If the Indemnifying Party has not provided written notice to the Indemnified Person of its election to assume and control the defense of such Third Party Claim within 15 days following its receipt of the Claim Notice, then (i) the Indemnifying Party shall be bound by any action taken, or any compromise or settlement effected by the Indemnified Person prior to the assumption of such defense by the Indemnifying Party, and (ii) to the extent that such Third Party Claim is subject to indemnification or reimbursement under this Article 8, all costs and expenses incurred by the Indemnified Person in defending the Third Party Claim (including but not limited to legal, accounting and other professional fees and disbursements, removal costs, remediation costs, closure costs and expenses of investigation, preparation, defense and ongoing monitoring) shall be a liability of, and shall be paid by, the Indemnifying Party as incurred.  If the Indemnifying Party has not provided such notice within 60 days following its receipt of the Claim Notice, the Indemnifying Party shall thereafter have no right to assume or control such defense.

 

(d)

The Indemnified Person and the Indemnifying Party shall keep each other fully informed concerning the status of such Third Party Claim and any related proceedings at all stages thereof, and shall render to each other such assistance as they may reasonably require of each other and shall cooperate with each other in good faith in order to ensure the proper and adequate defense of such Third Party Claim.

 

(e)

The Indemnified Person and the Indemnifying Party shall use reasonable best efforts to avoid production of confidential information (consistent with applicable Law and rules of procedure), and to cause all communications among employees, counsel and other representatives of the Indemnified Person and the Indemnifying Party to be made so as to preserve any applicable attorney-client or work-product privileges.

 

(f)

Each Party hereby consents to the non-exclusive jurisdiction of any court in which a Third Party Claim is brought for purposes of any claim for indemnification or reimbursement with respect to such Third Party Claim or the matters alleged therein, and agrees that process may be served on such Party with respect to any such claim anywhere in the world.

If to Buyer: 

Mobile Video Development, Inc.

Attn: 

Bruce Goldstein

 not constitute notice) to:

David Altshuler, Esq.

If to the Company:   

Pax Clean Energy

Attn: 

Paul Leslie Hammond

Attn: 

David E. Danovitch, Esq.

 

(a)

This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to the performance and enforcement of contracts made within such state, without giving effect to the law of conflicts of laws applied thereby.  In the event that any dispute shall occur between the parties arising out of or resulting from the construction, interpretation, enforcement or any other aspect of this Agreement, the Parties may bring an action in any federal court of competent jurisdiction.  In the event either Party shall be forced to bring any legal action to protect or defend its rights hereunder, then the prevailing party in such proceeding shall be entitled to reimbursement from the non-prevailing party of all fees, costs and other expenses (including, without limitation, the reasonable expenses of its attorneys) in bringing or defending against such action.

 

(b)

EACH AND EVERY PARTY HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION 9.10(b).