SHARE EXCHANGE AGREEMENT

This SHARE EXCHANGE AGREEMENT (this "Agreement"), dated as of July 15, 2016, is by and among YUMMY FLIES, INC., a Colorado corporation ("YMMF"), PURA NATURALS, INC., a Delaware corporation ("PURA"), and the individuals identified on Annex A hereto.  Each of the parties to this Agreement is individually referred to herein as a "Party" and collectively, as the "Parties."  Capitalized terms used herein that are not otherwise defined herein shall have the meanings ascribed to them in Annex B hereto.

A            YMMF is a publicly traded corporation quoted on the OTC Markets (the "OTC").

B.            PURA has 15,000,000 shares of common stock (the "PURA Stock"), issued and outstanding, approximately 90% of which are held by the shareholders identified on Annex A (together referred to herein as the "Shareholders" and each a "Shareholder").  Each Shareholder is the record and beneficial owner of the number of shares of PURA Stock, or the right to receive such shares, set forth opposite such Shareholder's name on Annex A hereto.  PURA has also granted to the rights holders identified on Schedule 3.3 in connection with the issuance of options (each, a "PURA Option") the right to receive PURA Stock (together referred to herein as the "Stakeholders" and each a "Stakeholder").

C.            Each Shareholder has agreed to transfer all of his, her or its (hereinafter "its") shares of PURA Stock, or the right to receive such stock, in exchange for newly issued shares of the Common Stock, $0.001 par value, of YMMF (the "YMMF Stock").  Each of such Stakeholders has agreed herein to accept shares of YMMF Stock (as defined below) in lieu of PURA Stock upon exercise or conversion of such Stakeholder's PURA Options.

D.            The number of shares of YMMF Stock to be received by each Shareholder and Stakeholder is listed opposite each such Stakeholder's name on Annex A.  The aggregate number of shares of YMMF Stock that is reflected on Annex A is referred to herein as the "Shares." Approximately 470,000 shares of YMMF Stock will be reserved for issuance upon conversion of the PURA Options, as set forth on Annex A.  In the aggregate, the shares of YMMF Stock issuable to Shareholders will be approximately seventy-five percent (75%) of the issued and outstanding capital stock of YMMF as of and immediately after the Closing.

E.            The Board of Directors of each of YMMF and PURA has determined that it is desirable to effect this plan of reorganization and share exchange.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

1.1.            Exchange by the Shareholders.  At the Closing, each Shareholder shall sell, transfer, convey, assign and deliver to YMMF its PURA Stock free and clear of all Liens in exchange for the YMMF Stock listed on Annex A opposite such Shareholder's name.

 

 

1.2.            Exchange by the Stakeholders.     Following the Closing, each Stakeholder agrees that its PURA Option shall be convertible into, or exercisable for, as the case may be, shares of YMMF Stock set forth on Schedule 3.3 opposite such Stakeholder's name, in lieu of PURA Stock.

1.3.            Closing.  The closing (the "Closing") of the transactions contemplated hereby (the "Transactions") shall take place at the offices of Kline Law Group, PC in Irvine, CA commencing at 9:00 a.m. local time on the second business day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the Transactions (other than conditions with respect to actions that the respective parties will take at Closing) or such other date and time as the Parties may mutually determine (the "Closing Date").

1.4            Legal Fees.  The parties acknowledge and agree that Kline Law Group, PC has acted as counsel to YYMF in connection herewith, and upon consummation of the transactions contemplated hereby shall act as counsel to the combined entity.  The parties further acknowledge and agree that PURA has, as partial consideration hereof, pre-paid legal fees incurred by YMMF in the amount of $25,000.  YMMF and PURA have executed and delivered a conflict waiver prior to the date hereof.

Each of the Shareholders and Stakeholders hereby severally (and not jointly) represents and warrants to YMMF with respect to itself, as follows.

2.1.            Good Title.  The Shareholder is the record and beneficial owner, and has good title to its PURA Stock, with the right and authority to sell and deliver such PURA Stock.  Upon delivery of any certificate or certificates duly assigned, representing the same as herein contemplated and/or upon registering of YMMF as the new owner of such PURA Stock in the share register of PURA, YMMF will receive good title to such PURA Stock, free and clear of all Liens.  The Stakeholder is the record and beneficial owner of its PURA Option, and has good title to such PURA Option with the sole right and authority to convert and/or exercise such PURA Option.

2.2.            Organization.  Each Shareholder or Stakeholder that is an entity is duly organized and validly existing in its jurisdiction of organization.

2.3.            Power and Authority.  The Shareholder or Stakeholder has the legal power, capacity and authority to execute and deliver this Agreement and each Transaction Document to be delivered by it hereunder and to perform its obligations hereunder and thereunder, and to consummate the Transactions.  All acts required to be taken by the Shareholder or Stakeholder to enter into this Agreement, to deliver each Transaction Document to which it is a party and to carry out the Transactions have been properly taken.  This Agreement constitutes a legal, valid and binding obligation of the Shareholder or Stakeholder, enforceable against the Shareholder or Stakeholder in accordance with the terms hereof, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally.

 

 

2.4.            No Conflicts.  The execution and delivery of this Agreement by the Shareholder or Stakeholder and the performance by the Shareholder or Stakeholder of its obligations hereunder in accordance with the terms hereof: (a) will not require the consent of any third party or Governmental Entity under any Laws; (b) will not violate any Laws applicable to the Shareholder or Stakeholder; and (c) will not violate or breach any contractual obligation to which the Shareholder or Stakeholder is a party.

2.5.            Litigation.  There is no pending proceeding against the Shareholder or Stakeholder that involves the Shares or PURA Options or that challenges, or may have the effect of preventing, delaying or making illegal, or otherwise interfering with, any of the Transactions and, to the knowledge of the Shareholder or Stakeholder, no such proceeding has been threatened, and no event or circumstance exists that is reasonably likely to give rise to or serve as a basis for the commencement of any such proceeding.

2.6.            No Finder's Fee.  The Shareholder or Stakeholder has not created any obligation for any finder's, investment banker's or broker's fee in connection with the Transactions.

2.7.            Purchase Entirely for Own Account.  The YMMF Stock proposed to be acquired by the Shareholder or Stakeholder hereunder will be acquired for investment for its own account, and not with a view to the resale or distribution of any part thereof, and the Shareholder or Stakeholder has no present intention of selling or otherwise distributing the YMMF Stock, except in compliance with applicable securities laws.

2.8.            Available Information.  The Shareholder or Stakeholder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in YMMF.

2.9.            Non-Registration.  The Shareholder or Stakeholder understands that the YMMF Stock has not been registered under the Securities Act and, if issued in accordance with the provisions of this Agreement, will be issued by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Shareholder's or Stakeholder's representations as expressed herein.  The non-registration shall have no prejudice with respect to any rights, interests, benefits and entitlements attached to the YMMF Stock in accordance with YMMF's charter documents or the laws of its jurisdiction of incorporation.

2.10.            Restricted Securities.  The Shareholder or Stakeholder understands that the Shares are characterized as "restricted securities" under the Securities Act inasmuch as this Agreement contemplates that, if acquired by the Shareholder or Stakeholder pursuant hereto, the Shares would be acquired in a transaction not involving a public offering. The issuance of the Shares hereunder have not been registered under the Securities Act or the securities laws of any state of the U.S. and that the issuance of the YMMF Stock is being effected in reliance upon an exemption from registration afforded under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering. The Shareholder further acknowledges that if the Shares are issued to the Shareholder or Stakeholder in accordance with the provisions of this Agreement and the Intruments, such Shares may not be resold without registration under the Securities Act or the existence of an exemption therefrom.  The Shareholder or Stakeholder represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

 

2.11.             Accredited Investor.  The Shareholder or Stakeholder is an "Accredited Investor" within the meaning of Rule 501 under the Securities Act and the Shareholder was not organized for the specific purpose of acquiring the Shares.

2.12.            Legends.   The Shareholder or Stakeholder hereby agrees with YMMF that the YMMF Stock will bear the following legend or one that is substantially similar to the following legend:

2.13.            Additional Legend; Consent. Additionally, the YMMF Stock will bear any legend required by the "blue sky" laws of any state to the extent such laws are applicable to the securities represented by the certificate so legended. The Shareholder or Stakeholder consents to YMMF making a notation on its records or giving instructions to any transfer agent of YMMF Stock in order to implement the restrictions on transfer of the Shares.

PURA represents and warrants as follows to YMMF.

 

 

3.1.            Organization, Standing and Power.  PURA and each of its subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on PURA, a material adverse effect on the ability of PURA to perform its obligations under this Agreement or on the ability of PURA to consummate the Transactions (a "PURA Material Adverse Effect").  PURA and each of its subsidiaries is duly qualified to do business in each jurisdiction where the nature of its business or its ownership or leasing of its properties make such qualification necessary except where the failure to so qualify would not reasonably be expected to have a PURA Material Adverse Effect.  PURA has delivered to YMMF true and complete copies of the PURA Charter, the PURA Bylaws, and the comparable charter, organizational documents and other constituent PURA Options of each of its subsidiaries, in each case as amended through the date of this Agreement.

3.2.            Subsidiaries; Equity Interests.  All the outstanding shares of capital stock or equity investments of each subsidiary have been validly issued and are fully paid and nonassessable and are as of the date of this Agreement owned by PURA, by another subsidiary of PURA or by PURA and another subsidiary of PURA, free and clear of all Liens.  Except for its interests in its subsidiaries, PURA does not as of the date of this Agreement own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person.

3.3.            Capital Structure.  The authorized capital stock of PURA consists of 100,000,000 shares of common stock and 25,000,000 shares of preferred stock.  As of the date hereof, 15,000,000 shares of common stock, and no shares of Preferred Stock are issued and outstanding.  Except as set forth on Annex A attached hereto, no shares of capital stock or other voting securities of PURA are issued, reserved for issuance or outstanding.  PURA is the sole record and beneficial owner of all of the issued and outstanding capital stock of each of its subsidiaries.  All outstanding shares of the capital stock of PURA and each of its subsidiaries are duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusapreemptive right, subscription right or any similar right under any provision of the law of Delaware, the PURA Charter, the PURA Bylaws or any Contract to which PURA is a party or otherwise bound.  Except as set forth on Annex A, there are not any bonds, debentures, notes or other indebtedness of PURA or any of its subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of PURA's capital stock or the capital stock of any of its subsidiaries may vote ("Voting PURA Debt").  Except as set forth on Annex A, as of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, "phantom" stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which PURA or any of its subsidiaries is a party or by which any of them is bound (a) obligating PURA or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, PURA or any of its subsidiaries or any Voting PURA Debt, (b) obligating PURA or any of its subsidiaries to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of PURA or of any of its subsidiaries.  As of the date of this Agreement, there are not any outstanding contractual obligations of PURA to repurchase, redeem or otherwise acquire any shares of capital stock of PURA.

 

 

3..4            Authority; Execution and Delivery; Enforceability.  PURA has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the Transactions.  The execution and delivery by PURA of this Agreement and the consummation by PURA of the Transactions have been duly authorized and approved by the Board of Directors of PURA and no other corporate proceedings on the part of PURA are necessary to authorize this Agreement and the Transactions.  When executed and delivered, this Agreement will be enforceable against PURA in accordance with its terms. , except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally.

3.5.            No Conflicts; Consents.  The execution and delivery by PURA of this Agreement does not, and the consummation of the Transactions and compliance with the terms hereof will not, conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of PURA or any of its subsidiaries under, any provision of (i) the PURA Charter, the PURA Bylaws or the comparable charter or organizational documents of any of its subsidiaries, (ii) any material Contract to which PURA or any of its subsidiaries is a party or by which any of their respective properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 3.5(b), any material judgment, order or decree or material Law applicable to PURA or any of its subsidiaries or their respective properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a PURA Material Adverse Effect.

3.6.            Except for any required filings under applicable "Blue Sky" or state securities commissions, no Consent of, or registration, declaration or filing with, or permit from, any Governmental Entity is required to be obtained or made by or with respect to PURA or any of its subsidiaries in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions.

3.7.            Taxes.  Each of PURA and each of its subsidiaries has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate, except to the extent any failure to timely file or any inaccuracies in any filed Tax Returns, individually or in the aggregate, have not had and would not reasonably be expected to have a PURA Material Adverse Effect.  All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, except to the extent that any failure to timely pay or pay, individually or in the aggregate, has not had and would not reasonably be expected to have a PURA Material Adverse Effect.  There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of PURA know of no basis for any such claim.

3.8.            The PURA Financial Statements reflect an adequate reserve for all Taxes payable by PURA and its subsidiaries (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all Taxable periods and portions thereof through the date of such financial statements.  To the knowledge of PURA no deficiency with respect to any Taxes has been proposed, asserted or assessed against PURA or any of its subsidiaries, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a PURA Material Adverse Effect.

 

 

3.9.            Benefit Plans.  PURA does not have or maintain any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding) providing benefits to any current or former employee, officer or director of PURA or any of its subsidiaries (collectively, "PURA Benefit Plans").  As of the date of this Agreement there are not any severance or termination agreements or arrangements between PURA or any of its subsidiaries and any current or former employee, officer or director of PURA or any of its subsidiaries, nor does PURA or any of its subsidiaries have any general severance plan or policy.

3.10.            Litigation. There is no Action against or affecting PURA or any of its subsidiaries or any of their respective properties which (a) adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the Shares or (b) could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a PURA Material Adverse Effect.  Neither PURA nor any of its subsidiaries, nor to the knowledge of any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim or violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

3.11.            Compliance with Applicable Laws.  PURA and each of its subsidiaries have conducted their business and operations in compliance with all applicable Laws, including those relating to occupational health and safety and the environment, except for instances of noncompliance that, individually and in the aggregate, have not had and would not reasonably be expected to have a PURA Material Adverse Effect.  PURA has not received any written communication during the past two years from a Governmental Entity that alleges that PURA is not in compliance in any material respect with any applicable Law.  This Section 3.9 does not relate to matters with respect to Taxes, which are the subject of Section 3.6.

3.12.            Brokers.  Except as set forth in the PURA Disclosure Letter, no broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of PURA or any of its subsidiaries.

3.13.            Contracts.  There are no Contracts that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of PURA and its subsidiaries taken as a whole.  Neither PURA nor any of its subsidiaries is in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a PURA Material Adverse Effect.

3.14.            Title to Properties.  Neither PURA nor any of its subsidiaries own any real property.  PURA and each of its subsidiaries has sufficient title to, or valid leasehold interests in, all of its properties and assets used in the conduct of its businesses, except to the extent the failure of having such sufficient title or valid leasehold interest, would not reasonably be expected to have a Material Adverse Effect..  All such assets and properties, other than assets and properties in which PURA or any of its subsidiaries has leasehold interests, are free and clear of all Liens other than those set forth in the PURA Disclosure Letter and except for Liens that, in the aggregate, do not and will not materially interfere with the ability of PURA and its subsidiaries to conduct business as currently conducted.

 

 

3.15.            Intellectual Property.  PURA and each of its subsidiaries own, or are validly licensed or otherwise have the right to use, all Intellectual Property Rights which are material to the conduct of the business of PURA and its subsidiaries taken as a whole.  There are no claims pending or, to the knowledge of PURA, threatened that PURA or any of its subsidiaries is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right.  To the knowledge of PURA, no person is infringing the rights of PURA or any of its subsidiaries with respect to any Intellectual Property Right.

3.16.            Financial Statements.  PURA has delivered to YMMF its unaudited consolidated financial statements for the years ended December 31, 2016 and 2015 (the "PURA Financial Statements").  The PURA Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period indicated.  The PURA Financial Statements fairly present in all material respects the financial condition and operating results of PURA, as of the dates, and for the periods, indicated therein.  PURA does not have any material liabilities or obligations, contingent or otherwise, other than (a) liabilities incurred in the ordinary course of business subsequent to December 31, 2016, and (b) obligations under contracts and commitments incurred in the ordinary course of business and not required under GAAP to be reflected in the PURA Financial Statements, which, in both cases, individually and in the aggregate, would not be reasonably expected to result in a PURA Material Adverse Effect.

3.17.            Transactions with Affiliates and Employees.  None of the officers or directors of PURA and, to the knowledge of PURA, none of the employees of PURA is presently a party to any transaction with PURA or any of its subsidiaries (other than for services as employees, officers and directors), including any Contract or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of PURA, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

3.18.            Solvency.  Based on the financial condition of PURA as of the Closing Date (and assuming that the Closing shall have occurred), (a) PURA's fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of PURA's existing debts and other liabilities (including known contingent liabilities) as they mature, (b) PURA's assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by PURA, and projected capital requirements and capital availability thereof, and (c) the current cash flow of PURA, together with the proceeds PURA would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid.  PURA does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

3.19.            Investment Company.  PURA is not, and is not an affiliate of, and immediately following the Closing will not have become, an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

 

 

3.20.            Foreign Corrupt Practices.  Neither PURA, nor any of its subsidiaries, nor, to PURA's knowledge, any director, officer, agent, employee or other person acting on behalf of PURA or any of its subsidiaries has, in the course of its actions for, or on behalf of, PURA (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; ; or (d) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

3.21.            Absence of Certain Changes or Events.  From December 31, 2015 to the date of this Agreement, PURA has conducted its business only in the ordinary course, and during such period there has not been:

3.22.            Disclosure.  All disclosure provided to YMMF regarding PURA, its business and the Transactions, furnished by or on behalf of PURA (including PURA's representations and warranties set forth in this Agreement) is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

3.23.            No Undisclosed Events, Liabilities, Developments or Circumstances.  No event, liability, development or circumstance has occurred or exists, to the knowledge of PURA, or is contemplated to occur with respect to PURA or any of its subsidiaries, or their respective businesses, properties, prospects, operations or financial condition, that would be required to be disclosed by PURA under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by PURA of its PURA Stock and which has not been publicly announced.

3.25.            No Additional Agreements.  PURA does not have any agreement or understanding with the Shareholders with respect to the Transactions other than as specified in this Agreement.

 

 

YMMF represents and warrants as follows to the Shareholders and PURA.

4.1.            Organization, Standing and Power.  YMMF is duly organized, validly existing and in good standing under the laws of the State of Wyoming and has full corporate power and authority and possesses all governmental franchises, licenses, permits, authorizations and approvals necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct its businesses as presently conducted, other than such franchises, licenses, permits, authorizations and approvals the lack of which, individually or in the aggregate, has not had and would not reasonably be expected to have a material adverse effect on YMMF, a material adverse effect on the ability of YMMF to perform its obligations under this Agreement or on the ability of YMMF to consummate the Transactions (a "YMMF Material Adverse Effect").  YMMF is duly qualified to do business in each jurisdiction where the nature of its business or its ownership or leasing of its properties makes such qualification necessary and where the failure to so qualify would reasonably be expected to have a YMMF Material Adverse Effect.  YMMF has delivered to PURA true and complete copies of the YMMF Charter and the YMMF Bylaws, as amended through date of this Agreement..

4.2.            Subsidiaries; Equity Interests.  YMMF does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person.

4.3.            Capital Structure.  The authorized capital stock of YMMF consists of 100,000,000 shares of common stock, $.001 par value and no shares of Preferred Stock.  As of the date hereof approximately 10,278,000 shares of YMMF's common stock and no shares of preferred stock are issued and outstanding.  At the Closing, 8,289,000 shares of Common Stock will be cancelled by the holder thereof.  Except as set forth on Annex A, no shares of capital stock or other voting securities of YMMF are issued, reserved for issuance or outstanding.  All outstanding shares of the capital stock of YMMF are, and all such shares that may be issued prior to the date hereof will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of Wyoming law, the YMMF Charter, the YMMF Bylaws or any Contract to which YMMF is a party or otherwise bound.  There are not any bonds, debentures, notes or other indebtedness of YMMF having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of YMMF's common stock may vote ("Voting YMMF Debt").  As of the date of this Agreement, there are not any options, warrants, rights, convertible or exchangeable securities, "phantom" stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which YMMF is a party or by which it is bound (a) obligating YMMF to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, YMMF or any Voting YMMF Debt, (b) obligating YMMF to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking or (c) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of the capital stock of YMMF.  As of the date of this Agreement, there are not any outstanding contractual obligations of YMMF to repurchase, redeem or otherwise acquire any shares of capital stock of YMMF.   The stockholder list provided to PURA is a current stockholder and such list accurately reflects all of the issued and outstanding shares of the YMMF's common stock.

 

 

4.4.            Authority; Execution and Delivery; Enforceability.  The execution and delivery by YMMF of this Agreement and the consummation by YMMF of the Transactions have been duly authorized and approved by the Board of Directors of YMMF and the holders of a majority of its capital stock and no other corporate proceedings on the part of YMMF are necessary to authorize this Agreement and the Transactions.  This Agreement constitutes a legal, valid and binding obligation of YMMF, enforceable against YMMF in accordance with the terms hereof.

4.5.            No Conflicts; Consents.  The execution and delivery by YMMF of this Agreement does not, and the consummation of Transactions and compliance with the terms hereof will not, contravene, conflict with or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of YMMF under, any provision of (i) the YMMF Charter or YMMF Bylaws, (ii) any material Contract to which YMMF is a party or by which any of its properties or assets is bound or (iii) subject to the filings and other matters referred to in Section 4.6(b), any material Order or material Law applicable to YMMF or its properties or assets, other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and would not reasonably be expected to have a YMMF Material Adverse Effect.

4.6.            No Consent of, or registration, declaration or filing with, or permit from, any Governmental Entity is required to be obtained or made by or with respect to YMMF in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions, other than filings under state "blue sky" laws, as may be required in connection with this Agreement and the Transactions.

4.7.            Taxes.  YMMF has timely filed, or has caused to be timely filed on its behalf, all Tax Returns required to be filed by it, and all such Tax Returns are true, complete and accurate, except to the extent any failure to file, any delinquency in filing or any inaccuracies in any filed Tax Returns, individually or in the aggregate, have not had and would not reasonably be expected to have a YMMF Material Adverse Effect.  All Taxes shown to be due on such Tax Returns, or otherwise owed, have been timely paid, except to the extent that any failure to pay, individually or in the aggregate, has not had and would not reasonably be expected to have a YMMF Material Adverse Effect.

4.8.            The YMMF Financial Statements reflect an adequate reserve for all Taxes payable by YMMF (in addition to any reserve for deferred Taxes to reflect timing differences between book and Tax items) for all Taxable periods and portions thereof through the date of such financial statements.  No deficiency with respect to any Taxes has been proposed, asserted or assessed against YMMF, and no requests for waivers of the time to assess any such Taxes are pending, except to the extent any such deficiency or request for waiver, individually or in the aggregate, has not had and would not reasonably be expected to have a YMMF Material Adverse Effect.

4.9.            There are no Liens for Taxes (other than for current Taxes not yet due and payable) on the assets of YMMF.  YMMF is not bound by any agreement with respect to Taxes.

 

 

4.10.            Benefit Plans.  YMMF does not, and since its inception never has, maintained or contributed to any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding (whether or not legally binding) providing benefits to any current or former employee, officer or director of YMMF.  As of the date of this Agreement, there are not any employment, consulting, indemnification, severance or termination agreements or arrangements between YMMF and any current or former employee, officer or director of YMMF, nor does YMMF have any general severance plan or policy.

4.11.            Litigation.  There is no Action against or affecting YMMF or any subsidiary or any of their respective properties which (a) adversely affects or challenges the legality, validity or enforceability of either of this Agreement or the Shares or (b) could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a YMMF Material Adverse Effect.  Neither YMMF nor any subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim or violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.

4.12.            Compliance with Applicable Laws.  YMMF is in compliance with all applicable Laws, including those relating to occupational health and safety, the environment, export controls, trade sanctions and embargoes, except for instances of noncompliance that, individually and in the aggregate, have not had and would not reasonably be expected to have a YMMF Material Adverse Effect.  YMMF has not received any written communication during the past two years from a Governmental Entity that alleges that YMMF is not in compliance in any material respect with any applicable Law.  This Section 4.9 does not relate to matters with respect to Taxes, which are the subject of Section 4.7.

4.13.            Contracts.  There are no Contracts that are material to the business, properties, assets, condition (financial or otherwise), results of operations or prospects of YMMF taken as a whole.  YMMF is not in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a YMMF Material Adverse Effect.

4.14.            Title to Properties.  YMMF has good title to, or valid leasehold interests in, all of its properties and assets used in the conduct of its businesses.  All such assets and properties, other than assets and properties in which YMMF has leasehold interests, are free and clear of all Liens, except for Liens that, in the aggregate, do not and will not materially interfere with the ability of YMMF to conduct business as currently conducted.  YMMF has complied in all material respects with the terms of all material leases to which it is a party and under which it is in occupancy, and all such leases are in full force and effect.  YMMF enjoys peaceful and undisturbed possession under all such material leases.

4.14.            Intellectual Property.  YMMF does not own, nor is validly licensed nor otherwise has the right to use, any Intellectual Property Rights.  No claims are pending or, to the knowledge of YMMF, threatened that YMMF is infringing or otherwise adversely affecting the rights of any person with regard to any Intellectual Property Right.

 

 

4.15.            SEC Documents. YMMF has filed all reports, schedules, forms, statements and other documents as required by the U.S. Securities and Exchange Commission (the "SEC") and YMMF has delivered or made available to Cardinal all reports, schedules, forms, statements and other documents filed with the SEC (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the "YMMF SEC Documents"). The YMMF SEC Documents complied in all material respects with the requirements of the Securities Act of 19933, as amended (the "Securities Act") or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such YMMF SEC documents, and none of the YMMF SEC Documents (including any and all consolidated financial statements included therein) as of such date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent revised or superseded by a subsequent filing with the SEC (a copy of which has been provided to Cardinal prior to the date of this Agreement), none of the YMMF SEC Documents contains any untrue statement of a material fact or omits to state any material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of YMMF included in such YMMF SEC Documents (the "YMMF Financial Statements") comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of YMMF and its consolidated subsidiaries as of the dates thereof and the consolidated results of operations and changes in cash flows for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments as determined by YMMF's independent accountants). Except as set forth in the YMMF SEC Documents, at the date of the most recent audited financial statements of YMMF included in the YMMF SEC Documents, neither YMMF nor any of its subsidiaries had, and since such date neither YMMF nor any of such subsidiaries has incurred, any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to YMMF.

4.16.            Undisclosed Liabilities.  Neither of the YMMF nor any of its subsidiaries has any liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the balance sheet contained in the most recent Form 10-Q filed with the SEC, (b) liabilities which have arisen since the date of the balance sheet contained in the most recent Form 10-Q filed with the SEC in the ordinary course of business which do not exceed $1,000.00 in the aggregate and (c) contractual and other liabilities incurred in the ordinary course of business which are not required by GAAP to be reflected on a balance sheet.

4.18.            Solvency.  Based on the financial condition of YMMF as of the Closing Date (and assuming that the Closing shall have occurred), (a) YMMF's fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of YMMF's existing debts and other liabilities (including known contingent liabilities) as they mature, (b) YMMF's assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted, including its capital needs, taking into account the particular capital requirements of the business conducted by YMMF, and projected capital requirements and capital availability thereof, and (c) the current cash flow of YMMF, together with the proceeds YMMF would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid.  YMMF does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

4.19.            Investment Company.  YMMF is not, and is not an affiliate of, and immediately following the Closing will not have become, an "investment company" within the meaning of the Investment Company Act of 1940, as amended.

4.20.            Foreign Corrupt Practices.  Neither YMMF, nor to YMMF's knowledge, any director, officer, agent, employee or other person acting on behalf of YMMF has, in the course of its actions for, or on behalf of, YMMF (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (d) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

4.21.            Absence of Certain Changes or Events.  From the date of the YMMF Financial Statements to the date of this Agreement, YMMF has conducted its business only in the ordinary course, and during such period there has not been:

4.24.            Disclosure.  All disclosure provided to the Shareholders regarding YMMF, its business and the Transactions, furnished by or on behalf of YMMF (including YMMF's representations and warranties set forth in this Agreement) is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.