STOCK PURCHASE AGREEMENT
BY AND BETWEEN
THE SHAREHOLDERS OF
AMERICAN SPORTS DEVELOPMENT GROUP, INC.
(F/K/A/ NATIONAL PAINTBALL SUPPLY CO., INC.)
AND
AMERICAN INFLATABLES, INC.
DATED AS OF MAY 16, 2002
This SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into as of this
16th day of May, 2002 by and between Xxxxxxx X. Xxxxxxxxx, Red Oak Limited
Partnership and Xxxxxxx X. Xxxxx (each an "ASDG Shareholder"), the sole
shareholders of American Sports Development Group, Inc., a South Carolina
corporation formerly known as National Paintball Supply Co., Inc. ("ASDG"), and
American Inflatables, Inc., a Delaware corporation ("Inflatables").
RECITALS
A. Inflatables is a Delaware corporation headquartered in Costa Mesa,
California.
B. ASDG is a South Carolina corporation headquartered in Greenville,
South Carolina. Red Oak Limited Partnership is a South Carolina limited
partnership of which Xxxxxxx X. Xxxxxxxxx and his wife Xxxxxxx X. Xxxxxxxxx are
the general partners.
C. The parties hereto desire that Inflatables acquire ASDG through the
issuance by Inflatables of securities of Inflatables having 83% of the voting
and distribution rights of all security holders of Inflatables on a
fully-diluted basis after the issuance of such securities in exchange for all of
the issued and outstanding equity securities of ASDG. Following consummation of
such transaction, the pre-transaction shareholders of ASDG will own a
supermajority controlling interest in Inflatables.
D. ASDG and Inflatables were parties to that certain Reorganization
Agreement dated October 12, 2000, as amended by Amendments Nos. 1, 2 and 3
thereto (the "Reorganization Agreement") that contemplated the merger of a
wholly-owned subsidiary of ASDH with and into Inflatables that would result in
Inflatables becoming a wholly-owned subsidiary of ASDG. The Reorganization
Agreement has been terminated and superceded and replaced in its entirety with
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, the ASDG
Shareholders and Inflatables hereby agree as follows:
ARTICLE 1. DEFINITIONS
1.1 AGREEMENT. This Agreement, including all schedules, appendices and
exhibits attached hereto.
1.2 ASDG. American Sports Development Group, Inc., formerly known as
National Paintball Supply Co., Inc., a South Carolina corporation headquartered
in Greenville, South Carolina.
1.3 ASDG COMMON STOCK. The common stock, par value $0.001 per share, of
ASDG.
1.4 BENEFIT PLANS. All employee benefit plans within the meaning of
Section 3(3) of ERISA and any related or separate contracts, plans, trusts,
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annuities, programs, policies, arrangements, practices, customs and
understandings that provide benefits of economic value to any present or former
employee, or current or former beneficiary, dependent or assignee of any such
employee or former employee.
1.5 CERCLA. The Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, 42 U.S.C. 9601 et seq.
1.6 CLOSING; CLOSING DATE. The terms "Closing" and "Closing Date" shall
have the meanings ascribed to them in Section 2.2 hereof.
1.7 CODE. The Internal Revenue Code of 1986, as amended, including, if
the context permits, the applicable regulations promulgated pursuant thereto.
1.8 CONFIDENTIAL INFORMATION. The term "Confidential Information" shall
mean all information of any kind concerning a party hereto that is furnished by
such party or on its behalf pursuant to Section 6.1 hereof as a result of the
transactions contemplated herein, except information (i) ascertainable or
obtained from public or published information, (ii) received from a third party
not known to the recipient to be under an obligation to keep such information
confidential, (iii) which is or becomes known to the public (other than through
a breach of this Agreement), (iv) of which the recipient was in possession prior
to disclosure thereof in connection with the Share Exchange, or (v) which was
independently developed by the recipient without the benefit of Confidential
Information.
1.9 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
1.10 EXCHANGE ACT. The Securities Exchange Act of 1934, as amended.
1.11 GAAP. Generally accepted accounting principles consistently
applied.
1.12 INFLATABLES. American Inflatables, Inc., a corporation organized
and existing under the laws of the State of Delaware headquartered in Costa
Mesa, California.
1.13 INFLATABLES BENEFIT PLANS. All Benefit Plans, and all other
material fringe benefit plans or programs, sponsored or maintained by
Inflatables or under which Inflatables may be obligated.
1.14 INFLATABLES COMMON STOCK. The common stock, par value $0.001 per
share, of Inflatables.
1.15 IRS. The U.S. Internal Revenue Service.
1.16 KNOWLEDGE. When used in the phrase "to the knowledge" or a similar
phrase, shall mean the actual knowledge of the executive officers of the
referenced party or parties, as applicable, after reasonable inquiry of the
other executive officers and the directors of the parties and the Persons
responsible for the day-to-day operations of the parties or their subsidiaries
(although this definition shall not give rise to any duty of any independent
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verification or confirmation by members of senior management or the board of
directors of the entity making the representation or warranty from other
Persons).
1.17 LIEN. Any lien, claim, encumbrance, security interest, assessment,
charge, restriction (including restriction on voting rights or rights of
disposition), mortgage, deed of trust, equity of any character, third party
right of whatever nature or other similar or like charge.
1.18 MATERIAL ADVERSE EVENT; MATERIAL ADVERSE EFFECT. This shall mean
an event, effect, occurrence or circumstance which, alone or when taken with
other breaches, events, effects, occurrences or circumstances existing
concurrently therewith (including without limitation, any breach of a
representation or warranty contained herein by such party) (i) has or is
reasonably expected to have a material adverse effect on the properties,
financial condition, results of operations, or business of such party and its
subsidiaries, taken as a whole, or (ii) would materially prevent such party's,
or any affiliated party's, ability to perform its obligations under this
Agreement or the consummation of any of the transactions contemplated hereby;
provided, however, that in determining whether a Material Adverse Effect or
Material Adverse Event has occurred, there shall be excluded any effect the
cause of which is (A) any change in tax and similar laws of general
applicability or interpretations thereof by courts or governmental authorities,
(B) any change in GAAP or regulatory accounting requirements applicable to the
parties hereto, or (C) any action or omission of Inflatables or ASDG or a
subsidiary thereof taken with the prior written consent of ASDG or Inflatables,
as applicable, in contemplation of the transaction contemplated herein.
1.19 XXXXXXXXXX EMPLOYMENT AGREEMENT. The Employment Agreement between
Inflatables and Xxxxx X. Xxxxxxxxxx in the form attached hereto as EXHIBIT A.
1.20 XXXXXXXXXX GUARANTY. Xxxxx X. Xxxxxxxxxx'x guaranty of the
obligations of Inflatables hereunder in the form attached hereto as EXHIBIT B.
1.21 JOINT ESCROW AGREEMENT. The Escrow Agreement in form attached
hereto as EXHIBIT C.
1.22 PAISLEY CONSULTING AGREEMENT. The Consulting Agreement between
Inflatables and Xxxx Xxxxxxx in the form attached hereto as EXHIBIT D.
1.23 PBGC. The Pension Benefit Guaranty Corporation.
1.24 PERSON. An individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a business
trust, a joint venture, an unincorporated organization, a governmental entity
(or any department, agency, or political subdivision thereof) or other entity.
1.25 REGULATIONS. The regulations issued by the IRS under the Code.
1.26 RIGHTS. Rights shall mean warrants, calls, commitments, options,
rights (whether stock appreciation rights, conversion rights, exchange rights,
profit participation rights, or otherwise), securities or obligations
convertible into or exchangeable for, or giving any Person any right to
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subscribe for or acquire, and other arrangements or commitments which obligate a
Person to issue, otherwise cause to become outstanding, sell, transfer, pledge,
or otherwise dispose of any of its capital stock or other ownership interests,
or any voting rights thereof or therein, or to pay monetary sums by reference to
the existence or market valuation of, any of its capital stock or ownership
interests therein.
1.27 SEC. The U.S. Securities and Exchange Commission.
1.28 SECURITIES ACT. The Securities Act of 1933, as amended.
1.29 SHARE EXCHANGE. The issuance by Inflatables of securities of
Inflatables having 83% of the voting and distribution rights of all security
holders of Inflatables on a fully-diluted basis after the issuance of such
securities in exchange for all of the issued and outstanding equity securities
of ASDG, all as provided herein.
1.30 SHAREHOLDER AGREEMENT. The American Inflatables, Inc. Shareholder
Agreement attached hereto as EXHIBIT E.
1.31 TOTAL PRO FORMA CLOSING DEBT. The total debt of Inflatables on the
Closing Date after giving effect to (i) the exercise of the UCI Warrant (as
defined in the Shareholders Agreement) as contemplated in the Shareholders
Agreement, (ii) the prepayment of the TNR Note and the Dylan's Note (each as
defined in the Shareholders Agreement) as contemplated in the Shareholders
Agreement, (iii) Xxxxx X. Xxxxxxxxxx'x forgiveness of all amounts owed to him by
Inflatables as a contribution to the capital of Inflatables as contemplated in
the Shareholders Agreement and (iv) the issuance to Xxxx Xxxxxxx of shares of
Inflatables Common Stock in satisfaction of all amounts owed to Xx. Xxxxxxx by
Inflatables pursuant to the Paisley Consulting Agreement.
ARTICLE 2. THE SHARE EXCHANGE
2.1 SHARE EXCHANGE. Subject to the terms and conditions of this
Agreement, on the Closing Date, the parties hereto will cause the Share Exchange
to occur as follows:
(a) In exchange for the transfer to Inflatables of all of the shares
of ASDG Common Stock owned by Xxxxxxx X. Xxxxxxxxx, Inflatables
will issue to Xxxxxxx X. Xxxxxxxxx 38,335,014 shares of
Inflatables Common Stock;
(b) In exchange for the transfer to Inflatables of all of the shares
of ASDG Common Stock owned by Red Oak Limited Partnership,
Inflatables will issue to Red Oak Limited Partnership 5,897,694
shares of Inflatables Common Stock;
(c) In exchange for the transfer to Inflatables of all of the shares
of ASDG Common Stock owned by Xxxxxxx X. Xxxxx, Inflatables will
issue to Xxxxxxx X. Xxxxx 4,914,745 shares of Inflatables Common
Stock.
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2.2 THE CLOSING. The Closing of the transactions contemplated herein
(the "Closing") shall be held on the date hereof (the "Closing Date").
2.3 ANTI-DILUTION. It is the intent of the parties hereto that upon
consummation of the Share Exchange, Xxxxxxx X. Xxxxxxxxx shall own 64.74%, Red
Oak Limited Partnership shall own 9.96% and Xxxxxxx X. Xxxxx shall own 8.30% of
the aggregate voting power and distributional rights of all Inflatables security
holders on a fully-diluted basis. After consummation of the Share Exchange, if
for any reason whatsoever, including without limitation the breach of any
representation, warranty or covenant of Inflatables herein or of any party to
the Inflatables Shareholder Agreement therein, other than a change in the
outstanding securities of Inflatables approved in advance in writing by the ASDG
Shareholders, Xx. Xxxxxxxxx owns less than 64.74%, Red Oak Limited Partnership
owns less than 9.96% or Xx. Xxxxx owns less than 8.30% of the aggregate voting
power and distributional rights of all Inflatables security holders on a
fully-diluted basis, then Inflatables shall issue to Xx. Xxxxxxxxx, Red Oak
Limited Partnership and Xx. Xxxxx such additional shares of Inflatables Common
Stock or other securities as are necessary to cause Xx. Xxxxxxxxx to own 64.7%,
Red Oak Limited Partnership to Own 9.96% and Xx. Xxxxx to own 8.30% of the
aggregate voting power and distributional rights of all Inflatables security
holders on a fully-diluted basis.
2.4 RELATED AGREEMENTS. Contemporaneously with the execution and
delivery of this Agreement, the parties to the agreements listed below are
executing and delivering the following agreements:
(a) The Xxxxxxxxxx Employment Agreement;
(b) The Xxxxxxxxxx Guaranty;
(c) The Joint Escrow Agreement;
(d) The Paisley Consulting Agreement; and
(e) The Shareholders Agreement.
This Agreement shall only become effective upon the execution and delivery of
all of these agreements by all of the parties to each such agreement. If any
such agreement shall not be fully executed and delivered, then any party to this
Agreement may declare this Agreement null and void ab initio unless such party
is one of the parties that failed to execute such other agreement.
2.5 TAX TREATMENT. The parties hereto intend that the Share Exchange
shall qualify as a tax-free reorganization under Section 368(a) of the Code.
Inflatables and the ASDG Shareholders shall each take such actions within their
power as may be reasonably necessary to cause the Share Exchange to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, except to the
extent such performance would be prohibited by law or regulation.
2.6 EXPENSES. Except to the extent expressly provided otherwise herein,
the parties shall pay their own fees and expenses (including legal and
accounting fees) incurred in connection with the Share Exchange.
2.7 OPINION OF COUNSEL FOR INFLATABLES. Contemporaneously with the
execution of this Agreement, Inflatables is furnishing the ASDG Shareholders
with an opinion of its counsel, dated as of the date hereof, and in form and
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substance reasonably satisfactory to the ASDG Shareholders and their counsel, to
the effect that, except as disclosed herein:
(i) Inflatables is duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(ii) the consummation of the transactions contemplated by this
Agreement and the other agreements contemplated herein to
which Inflatables is a party will not:
(A) violate any provision of Inflatables' Certificate of
Incorporation or Bylaws, as applicable,
(B) violate any provision of, result in the termination
of, or result in the acceleration of any obligation
under, any agreement listed on SCHEDULE 3.18 or any
order, arbitration award, judgment or decree known to
counsel to which Inflatables is a party, or by which
it is bound, except as such would not, in the
aggregate, have a Material Adverse Effect, except as
disclosed on schedules to the Agreement, or
(C) violate or conflict with any other restriction of any
kind or character of which such counsel has knowledge
and to which Inflatables is subject;
(iii) all of the shares of Inflatables Common Stock to be issued
hereunder are validly authorized and issued, fully paid and
non-assessable, and no holder of Inflatables securities has
preemptive rights with respect thereto;
(iv) Inflatables has the legal right and power, and all
authorizations and approvals required by law, to enter into
this Agreement and the other agreements contemplated herein to
which it is a party, and to consummate the transactions
contemplated herein and therein and all applicable regulatory
waiting periods have passed;
(v) all filings and registrations with, and notifications to, all
Federal and state authorities required on the part of
Inflatables for the consummation of the Share Exchange have
been made;
(vi) Inflatables has full corporate power and authority to enter
into this Agreement and the other agreements contemplated
herein to which it is a party, and this Agreement and the
other agreements contemplated herein to which it is a party
have been duly authorized, executed and delivered by
Inflatables and constitute valid and legally binding
obligations of Inflatables enforceable against Inflatables in
accordance with their terms, except as such enforceability may
be limited by (x) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect or the relief of debtors generally,
(y) general principles of equity and (z) the discretion of any
court or tribunal of competent jurisdiction before which a
dispute is brought;
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(vii) to the best knowledge of such counsel, no material suit or
proceeding is pending or threatened against Inflatables or
other parties which would have a Material Adverse Effect on
Inflatables' business or properties or its ability to make the
representations and warranties and perform the obligations set
forth herein; and
(viii) the Share Exchange and the other transactions contemplated in
this Agreement shall constitute a "tax free" "reorganization"
within the meaning of Section 368(a) of the Code and none of
Inflatables, ASDG and the ASDG Shareholders will recognize
income, gain or loss for U.S. federal income tax purposes in
connection therewith.
If the foregoing opinion is not delivered on the date hereof, this Agreement
shall be of no force and effect and shall be void ab initio.
2.8 TERMINATION OF REORGANIZATION AGREEMENT; MUTUAL RELEASE.
(a) Inflatables and the ASDG Shareholders hereby consent to
the termination of the Reorganization Agreement as of the date hereof and
replacement of the Reorganization Agreement with this Agreement and waive any
rights they may have to declare a breach, violation or default under the terms
of the Reorganization Agreement arising in any way in connection with such
termination. The ASDG Shareholders, constituting all of the directors and
shareholders of ASDG, hereby take action by unanimous written consent as
evidenced by their signatures below, to cause ASDG to consent to the termination
of the Reorganization Agreement and the replacement thereof with this Agreement
and to waive any rights its may have to declare a breach, violation or default
under the terms of the Reorganization Agreement arising in any way in connection
with such termination.
(b) Inflatables hereby for itself and its successors and
assigns, does hereby completely release, acquit and forever discharge ASDG and
its owners, stockholders (including without limitation the ASDG Shareholders),
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, attorneys, subsidiaries, and affiliates (collectively, "ASDG
Releasees") from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, damages, actions, causes of action, suits,
rights, demands, costs, losses, debts, and expenses (including attorney's fees
and costs actually incurred), of any nature whatsoever, known or unknown, which
Inflatables now has, has ever had, or may in the future have ("Claim" or
"Claims") relating to the Reorganization Agreement or the termination thereof.
Inflatables hereby represents and warrants that it has not sold, assigned,
transferred, conveyed or otherwise disposed of any such Claims.
(c) The ASDG Shareholders, constituting all of the directors
and shareholders of ASDG, hereby take action by unanimous written consent as
evidenced by their signatures below, to cause ASDG for itself and its successors
and assigns, to hereby completely release, acquit and forever discharge
Inflatables and its owners, stockholders, predecessors, successors, assigns,
agents, directors, officers, employees, representatives, attorneys,
subsidiaries, and affiliates (collectively, "Inflatables Releasees") from any
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and all Claims relating to the Reorganization Agreement or the termination
thereof and to represent and warrant that it has not sold, assigned,
transferred, conveyed or otherwise disposed of any such Claims.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
OF INFLATABLES
Inflatables hereby represents and warrants to the ASDG Shareholders the
following matters on and as of the date of this Agreement and at the Closing
Date; provided, however, that before any breach of or inaccuracy in any of the
representations or warranties given in this Section 3 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Agreement by the ASDG Shareholders, such breach or inaccuracy must
have had a Material Adverse Effect.
3.1 ORGANIZATION, GOOD STANDING AND CONDUCT OF BUSINESS. Inflatables is
a corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has full power and authority and all
governmental and regulatory authorizations ("Authorizations") necessary to own
all of its properties and assets and to carry on its business as it is presently
being conducted, and is properly licensed, qualified and in good standing as a
foreign corporation in all jurisdictions wherein the character of the properties
or the nature of the business transacted by Inflatables makes such licensing or
qualification necessary.
3.2 NO SUBSIDIARIES. Inflatables neither owns nor controls five percent
(5%) or more of the outstanding equity securities, either directly or
indirectly, of any Person.
3.3 CORPORATE AUTHORITY. The execution, delivery and performance of
this Agreement have been duly authorized by the Board of Directors of
Inflatables. No further corporate acts or proceedings on the part of Inflatables
are required or necessary to authorize this Agreement, the Share Exchange or any
other transactions contemplated in this Agreement. Attached hereto on SCHEDULE
3.3 are true, complete and correct copies of Inflatables' Certificate of
Organization and Bylaws and all amendments thereto, which Certificate of
Organization, as amended, and Bylaws, as amended, remain in full force and
effect as of the date hereof. Also attached hereto on SCHEDULE 3.3 is a true,
complete and correct copy of resolutions of Inflatables board of directors
authorizing Inflatables entry into this Agreement and the other agreements
contemplated herein to which Inflatables is a party, which resolutions remain in
full force and effect, unamended, as of the date hereof.
3.4 BINDING EFFECT. When executed, all provisions of this Agreement
will constitute valid and legally binding obligations of Inflatables,
enforceable against Inflatables in accordance with their terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect or the relief of debtors generally, (ii) general
principles of equity and (iii) the discretion of any court or tribunal of
competent jurisdiction before which a dispute may be brought. Each document and
instrument contemplated by this Agreement, when executed and delivered by
Inflatables in accordance with the provisions hereof, shall be duly authorized,
executed and delivered by Inflatables and enforceable against Inflatables in
accordance with its terms, subject to the exceptions in the previous sentence.
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3.5 CAPITALIZATION OF INFLATABLES. The authorized capital stock of
Inflatables consists solely of (i) 100,000,000 authorized shares of common stock
($0.001 par value per share), of which 8,746,346 shares are issued and
outstanding as of the date hereof, excluding the 1,320,000 shares receivable
upon exercise of the UCI Warrant (as defined in the Shareholder Agreement), and
(ii) 100,000 authorized shares of "blank check" preferred stock ($0.001 par
value per share), none of which have been designated or issued. All of the
issued and outstanding shares of Inflatables are validly issued and fully paid
and nonassessable. Except as disclosed on SCHEDULE 3.5, there are no outstanding
Rights to purchase shares of any class of capital stock of Inflatables, or
outstanding agreements pursuant to which Inflatables is or may become obligated
to issue any shares of its capital stock. None of the shares of the Inflatables
Common Stock is subject to any restrictions as to the transfer thereof, except
as set forth in Inflatables' Certificate of Incorporation or Bylaws and except
for restrictions on account of applicable Federal or state securities laws. No
holders of Inflatables securities have preemptive rights with respect to the
securities to be issued to the ASDG Shareholders pursuant to this Agreement.
3.6 COMPLIANCE WITH LAWS; ABSENCE OF DEFAULTS.
(a) Inflatables is not in default under, or in violation of,
any provision of its Certificate of Incorporation or Bylaws. Inflatables is not
in default under, or in violation of, any material agreement to which
Inflatables is a party.
(b) Except as disclosed on SCHEDULE 3.6, Inflatables is not in
violation of any applicable law, rule or regulation. Inflatables has not
received any notification or communication from, or consented to or entered into
any memorandum, agreement or order with, any regulatory authority (i) asserting
that Inflatables is not in compliance with any statute, regulation, rule or
ordinance, or the internal policies and procedures of Inflatables, as
applicable, (ii) threatening to revoke any Authorization, (iii) requiring or
threatening to require Inflatables, or indicating that Inflatables may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or purporting to
restrict or limit in any manner the operations of Inflatables, or (iv)
directing, restricting or limiting, or threatening to direct, restrict or limit
in any manner the operations of Inflatables (any such notification,
communication, memorandum, agreement or order described in this sentence herein
referred to as a "Regulatory Agreement").
3.7 NON-CONTRAVENTION AND DEFAULTS; NO LIENS. Neither the execution or
delivery of this Agreement, nor the fulfillment of, or compliance with, the
terms and provisions hereof, will (i) result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, termination of or acceleration of the performance provided by the
terms of, any material agreement to which Inflatables is a party or by which it
may be bound, (ii) violate any provision of any law, rule or regulation, (iii)
result in the creation or imposition of any Lien on any asset of Inflatables, or
(iv) violate any provisions of Inflatables' Certificate of Incorporation or
Bylaws. To the best of Inflatables' knowledge, no other party to any material
agreement to which Inflatables is a party is in default thereunder or in breach
of any provision thereof. To the best of Inflatables' knowledge, there exists no
condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such agreement.
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3.8 NECESSARY APPROVALS. Inflatables has obtained all certificates of
authority, licenses, permits, franchises, registrations of foreign ownership or
other regulatory approvals in every jurisdiction necessary for the continuing
conduct of its business and ownership of its assets. Except for those which may
be renewed or extended in the ordinary course of business, no such certificate,
license, permit, franchise, registration or other approval is about to expire or
lapse, has been threatened to be revoked or has otherwise become restricted by
its terms which would, upon such expiration, lapse, revocation or restriction,
have a Material Adverse Effect. Further, there is no reasonable basis for any
such expiration, lapse, revocation, threat of revocation or restriction. No
consent, approval, Authorization, registration, or filing with or by any
governmental authority, foreign or domestic, is required on the part of
Inflatables in connection with the execution and delivery of this Agreement or
the consummation by Inflatables of the transactions contemplated hereby.
Inflatables is not required to procure the approval of any Person in order to
prevent the termination of any right, privilege, license or contract of
Inflatables as a result of this Agreement.
3.9 FINANCIAL STATEMENTS. The audited financial statements of
Inflatables to be filed with Inflatables Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 (the "Inflatables Financial Statements"),
all of which have been provided to ASDG, are true, correct and complete in all
material respects and present fairly, in conformity with GAAP, the financial
position of Inflatables at the dates indicated and the results of its operations
for each of the periods indicated. The books and records of Inflatables have
been kept, and will be kept to the Closing Date, in reasonable detail, and will
fairly and accurately reflect in all material respects to the Closing Date, the
transactions of Inflatables.
3.10 TAX RETURNS. Inflatables files its income tax returns and
maintains its tax books and records on the basis of a taxable year ending
December 31. Inflatables has duly filed all tax reports and returns required to
be filed by any Federal, state or local taxing authorities (including, without
limitation, those due in respect of its properties, income, franchises,
licenses, sales, payrolls, and trusts established by Inflatables) through the
date hereof, and Inflatables has duly paid all taxes with respect to the periods
covered thereby and has established adequate reserves in accordance with GAAP
for the payment of all income, franchises, property, sales, employment or other
taxes anticipated to be payable after the date hereof. Inflatables is not
delinquent in the payment of any taxes, assessments or governmental charges and
no deficiencies have been asserted or assessed, which have not been paid or for
which adequate reserves have not been established and which are not being
contested in good faith. Inflatables does not have in effect any waiver relating
to any statute of limitations for assessment of taxes with respect to any
Federal, state or local income, property, franchise, sales, license or payroll
tax. Inflatables does not know of, or have reason to know of, any questions
which have been raised or which may be raised by any taxing authority relating
to taxes or assessments of Inflatables which, if determined adversely, would
result in the assertion of any deficiency. All tax information reported by
Inflatables to Federal and state authorities and other Persons has been
accurately and timely reported, except such as will not have a Material Adverse
Effect. Any exceptions to the foregoing is set forth on SCHEDULE 3.10.
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3.11 UNDISCLOSED LIABILITIES. Except for the liabilities which are
disclosed in the Inflatables Financial Statements or as set forth on SCHEDULE
3.11, Inflatables has no material liabilities or material obligations of any
nature, whether absolute, accrued, contingent or otherwise, and whether due or
to become due. Since December 31, 2001, there has been no (i) Material Adverse
Event with respect to Inflatables, or (ii) any incurrence by or subjection of
Inflatables to any obligation or liability (whether fixed, accrued or
contingent) or commitment material to Inflatables not referred to in this
Agreement, except such obligations or liabilities as were or may be incurred in
the ordinary course of business and which are reflected on the Inflatables
Financial Statements.
3.12 PROPERTIES, ENCUMBRANCES. Inflatables has good and marketable
title to all of the real property and depreciable tangible personal property
owned by it, free and clear of any Lien, except for any Lien for (i) current
taxes not yet due and payable, (ii) such imperfections of title, easements and
other encumbrances, if any, as are not material in character, amount or extent,
or (iii) such items as are set forth on SCHEDULE 3.12. Set forth on SCHEDULE
3.12 are all business locations of Inflatables, including whether such locations
are owned or leased and a statement of when such locations were first occupied
by Inflatables. All buildings and all fixtures, equipment, and other property
and assets which are material to its business are held by Inflatables under
valid leases or subleases enforceable in accordance with their respective terms.
3.13 LITIGATION. Except as disclosed on SCHEDULE 3.13, there are no
claims, actions, suits or proceedings pending or threatened against Inflatables,
or to its knowledge affecting Inflatables, at law or in equity, before or by any
Federal, state, municipal, administrative or other court, governmental
department, commission, board, or agency, an adverse determination of which
could have a Material Adverse Effect, and Inflatables knows of no basis for any
of the foregoing. There is no order, writ, memorandum, agreement, injunction, or
decree of any court, domestic or foreign, or any Federal or state agency
affecting Inflatables specifically or to which Inflatables is subject. SCHEDULE
3.13 also sets forth each pending claim against Inflatables related to the
Occupational Safety and Health Act, each claim related to Inflatables pending
before the Wage/Hour Division of the Department of Labor, each claim against
Inflatables relating to conciliation agreements or complaints by the Office of
Federal Contract Compliance Programs, charges filed with the Equal Employment
Opportunity Commission with respect to Inflatables and charges filed with the
Department of Labor alleging violations of the Family Medical Leave Act by
Inflatables, regardless of whether such matters are expected to have a Material
Adverse Effect.
3.14 REPORTS. Inflatables has duly made all reports and filings
required to be made pursuant to applicable law.
3.15 BROKERS. Inflatables has not incurred any liability for any
commission or fee in the nature of a finder's, originator's or broker's fee in
connection with the transactions contemplated herein.
3.16 EXPENDITURES. SCHEDULE 3.16 sets forth any single expenditure of
$25,000 or more proposed to be made by Inflatables after the date hereof and a
summary of the terms and conditions pertaining thereto. At least 10 business
11
days prior to the Closing Date, Inflatables will advise ASDG of any changes to
SCHEDULE 3.16 reflecting additions or deletions thereto since the date hereof.
3.17 INSURANCE. Attached hereto as SCHEDULE 3.17 is a list of the
policies of fire, liability, life and other types of insurance held by
Inflatables, setting forth with respect to each such policy, the policy number,
name of the insured party, type of insurance, insurance company, annual premium,
expiration date, deductible amount, if any, and amount of coverage. Inflatables
management believes that each such policy is in an amount reasonably sufficient
for the protection of the assets and business covered thereby, and, in the
aggregate, all such policies are reasonably adequate for the protection of all
the assets and business of Inflatables taking into account the availability and
cost of such coverage. To the extent permissible pursuant to such policies, all
such policies shall remain in full force and effect for a period of at least 90
days following the Closing Date. There is no reason known to Inflatables that
any such policy would not be renewable on terms and conditions as favorable as
those set forth in such policy.
3.18 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 3.18 attached hereto sets forth each contract or
other commitment of Inflatables which requires an aggregate payment by
Inflatables after the date hereof of more than $25,000, and any other contract
or commitment that in the opinion of Inflatables management Materially Adversely
Effects the business of Inflatables. Except for the contracts and commitments
described in this Agreement or as set forth on SCHEDULE 3.18, Inflatables is not
party to or subject to:
1. Any contracts or commitments which are material to its business,
operations or financial condition;
2. Any employment contract or arrangement, whether oral or written,
with any officer, consultant, director or employee which is not
terminable on 30 days' notice without penalty or liability to make
any payment thereunder for more than 30 days after such
termination;
3. Any plan or contract or other arrangement, oral or written,
providing for insurance for any officer or employee or members of
their families;
4. Any plan or contract or other arrangement, oral or written,
providing for bonuses, pensions, options, deferred compensation,
retirement payments, profit-sharing or other benefits for
employees;
5. Any contract or agreement with any labor union;
6. Any contract or agreement with customers for the sale of products
or the furnishing of services, or any sales agency, broker,
distribution or similar contract, except contracts made in the
ordinary course of business;
7. Any instrument or arrangement evidencing or related to
indebtedness for money borrowed or to be borrowed, whether
directly or indirectly, by way of purchase money obligation,
guaranty, conditional sale, lease-purchase, or otherwise;
8. Any joint venture contract or arrangement or any other agreement
involving a sharing of profits;
9. Any license agreement in which Inflatables is the licensor or
licensee; and
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10. Any material contract or agreement, not of the type covered by
any of the other items of this Section 3.18, which by its terms is
either (i) not to be performed prior to 30 days from the date
hereof, or (ii) does not terminate, or is not terminable without
penalty to Inflatables, or any successors or assigns prior to 30
days from the date hereof.
3.19 EMPLOYEE BENEFIT PLANS AND CONTRACTS.
(a) SCHEDULE 3.19 contains a complete list of all Inflatables
Benefit Plans. Inflatables has delivered to the ASDG Shareholders (i) accurate
and complete copies of all Inflatables Benefit Plan documents and all other
material documents relating thereto, including all summary plan descriptions,
summary annual reports and insurance contracts, (ii) accurate and complete
detailed summaries of all unwritten Inflatables Benefit Plans, (iii) accurate
and complete copies of the most recent financial statements and actuarial
reports with respect to all Inflatables Benefit Plans for which financial
statements or actuarial reports are required or have been prepared, (iv)
accurate and complete copies of all annual reports for all Inflatables Benefit
Plans (for which annual reports are required) prepared within the last two
years, and (v) accurate and complete copies of determination letters from the
IRS for any Inflatables Benefit Plan maintained or intended to be maintained
under Section 401(a) of the Code. Any Inflatables Benefit Plan providing
benefits that are funded through a policy of insurance is indicated by the word
"insured" placed by the listing of the Inflatables Benefit Plan on SCHEDULE
3.19.
(b) All Inflatables Benefit Plans conform in all material
respects to, and are being administered and operated in material compliance
with, all applicable requirements of ERISA and the Code. All returns, reports
and disclosure statements required to be filed or delivered under ERISA and the
Code with respect to all Inflatables Benefit Plans have been filed or delivered.
There have not been any "prohibited transactions," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, involving any of the
Inflatables Benefit Plans that could subject Inflatables to any material penalty
or tax imposed under the Code or ERISA.
(c) Except as set forth on SCHEDULE 3.19, any Inflatables
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
and exempt from tax under Section 501(a) of the Code has been determined by the
IRS to be so qualified, and such determination is current, remains in effect and
has not been revoked. Nothing has occurred since the date of any such
determination that is reasonably likely to affect adversely such qualification
or exemption, or result in the imposition of excise taxes or income taxes on
unrelated business income under the Code or ERISA with respect to any
Inflatables Benefit Plan.
(d) Inflatables adequately reserved for all liabilities
accrued prior to the Effective Time under Inflatables' nonqualified retirement
or deferred compensation plans.
(e) Except as set forth on SCHEDULE 3.19, Inflatables has no
current or contingent obligation to contribute to any multi-employer plan (as
defined in Section 3(37) of ERISA). Inflatables has no liability with respect to
any employee benefit plan (as defined in Section 3(3) of ERISA) other than with
respect to the Inflatables Benefit Plans.
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(f) There are no pending or threatened claims by or on behalf
of any Inflatables Benefit Plan, or by or on behalf of any individual
participants or beneficiaries of any Inflatables Benefit Plan, alleging any
breach of fiduciary duty on the part of Inflatables or any of its officers,
directors or employees under ERISA, the Code or any applicable regulations, or
claiming benefit payments other than those made in the ordinary operation of
such plans. The Inflatables Benefit Plans are not the subject of any
investigation, audit or action by the IRS, the Department of Labor or the PBGC.
Inflatables has made all required contributions under the Inflatables Benefit
Plans, including the payment of any premiums payable to the PBGC and other
insurance premiums. There is no underfunding liability for any Inflatables
Benefit Plan that is subject to the funding requirements of Section 412 of the
Code.
(g) Inflatables does not maintain any defined benefit plan,
and neither has incurred, nor has any reason to expect that it will incur, any
liability to the PBGC or otherwise under Title IV or ERISA (including early
withdrawal liability) or under the Code with respect to any such plan. No
Inflatables Benefit Plan has been subject to a reportable event for which notice
would be required to be filed with the PBGC, and no proceeding by the PBGC to
terminate any Inflatables Benefit Plan has been instituted or threatened.
(h) With respect to any Inflatables Benefit Plan that is an
employee welfare benefit plan (within the meaning of Section 3(1) of ERISA) (in
this subsection, a "Welfare Plan"), (i) each such Welfare Plan for which
contributions are claimed as deductions under any provision of the Code is in
material compliance with all applicable requirements pertaining to such
deduction, (ii) with respect to any welfare benefit fund (within the meaning of
Section 419 of the Code) related to such a Welfare Plan, there is no
disqualified benefit (within the meaning of Section 4976(b) of the Code) that
would result in the imposition of a tax under Section 4976(a) of the Code, (iii)
any Inflatables Benefit Plan that is a group health plan (within the meaning of
Section 4980B(g)(2) of the Code) complies, and in each and every case has
complied, with all of the material requirements of Section 4980B of the Code,
ERISA, Title XXII of the Public Health Service Act and the applicable provisions
of the Social Security Act, (iv) such Welfare Plan may be amended or terminated
at any time on or after the Closing Date, and (v) there are no benefits to be
provided to retirees under a group health plan that are subject to disclosure
under Financial Accounting Standards Board No. 106.
(i) Except as set forth on SCHEDULE 3.19, as of the Closing
Date, there will be no contract, agreement, plan or arrangement covering any
person that provides for the payment of an amount that would not be deductible
to Inflatables by reason of Section 280G or any other provision of the Code.
3.20 ENVIRONMENTAL MATTERS. Inflatables is in material compliance with
all local, state and Federal environmental statutes, laws, rules, regulations
and permits, including but not limited to CERCLA and the Toxic Substances
Control Act, 15 U.S.C. 2601 et seq. Inflatables has not, nor to the best of
Inflatables' knowledge have other parties, used, stored, disposed of or
permitted any "hazardous substance" (as defined in CERCLA), petroleum
hydrocarbon, polychlorinated biphenyl, asbestos or radioactive material
(collectively, "Hazardous Substances") to remain at, on, in or under any of the
real property owned or leased by Inflatables (including, without limitation, the
buildings or structures thereon) (the "Real Property"). Inflatables has not, nor
to the best of Inflatables' knowledge have other parties, installed, used, or
disposed of any asbestos or asbestos-containing material on, in or under any of
the Real Property. Inflatables has not, nor to the best of Inflatables'
14
knowledge have other parties, installed or used underground storage tanks in or
under any of the Real Property. Inflatables has provided ASDG with copies of all
complaints, citations, orders, reports, written data, notices or other
communications sent or received by it with respect to any local, state or
Federal environmental law, ordinance, rule or regulation as any of them relate
to Inflatables.
3.21 INFLATABLES INFORMATION. The written information with respect to
Inflatables and its officers, directors, and affiliates which shall have been
supplied by Inflatables (or any of its accountants, counsel or other authorized
representatives) to the ASDG Shareholders, does not contain any untrue statement
of a material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.22 SECURITIES REPORTS. Except as set forth on SCHEDULE 3.22, during
the last two years, Inflatables has filed on a timely basis all
securities-related reports, registrations, and statements, together with any
amendments, required by applicable regulatory authorities, all of which, as of
their respective dates, were in compliance in all material respects with the
applicable rules and regulations.
3.23 INFLATABLES DEBT OUTSTANDING. As of the date of this Agreement,
the Total Pro Forma Closing Debt of Inflatables is less than or equal to
$400,000. Were the Closing Date March 31, 2002, the Total Pro Forma Closing Debt
on such date would have been approximately $384,000, based on Inflatables'
balance sheet as of March 31, 2002 included in Inflatables' Quarterly Report on
Form 10-QSB for the quarter ended March 31, 2002 filed with the Securities and
Exchange Commission. Inflatables has not incurred debt greater than $16,000
since March 31, 2002.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
BY ASDG SHAREHOLDERS
4.1 JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES. The ASDG
Shareholders hereby jointly and severally represent and warrant to Inflatables
the following matters on and as of the date of this Agreement and at the Closing
Date; provided, however, that before any breach of or inaccuracy in any of the
representations or warranties given in this Section 4 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Agreement by Inflatables, such breach or inaccuracy must have had
a Material Adverse Effect.
(A) ORGANIZATION, GOOD STANDING AND CONDUCT OF BUSINESS.
ASDG is a corporation, duly organized, validly existing and in good standing
under the laws of South Carolina.
15
(B) SUBSIDIARIES. ASDG neither owns nor controls five percent
(5%) or more of the outstanding equity securities, either directly or
indirectly, of any Person other than Paintball Incorporated, a South Carolina
corporation and a wholly-owned subsidiary of ASDG.
(C) CORPORATE AUTHORITY. No corporate acts or proceedings on
the part of ASDG are required or necessary to authorize this Agreement or the
Share Exchange which have not been taken.
(D) CAPITALIZATION OF ASDG. The authorized capital stock of
ASDG consists solely of (i) 50,000,000 authorized shares of common stock ($0.001
par value per share), of which 5,948,295 shares are issued and outstanding as of
the date hereof and (ii) 20,000,000 shares of "blank check" preferred stock,
none of which is designated or outstanding. All of the issued and outstanding
shares of ASDG are validly issued and fully paid and nonassessable. Xxxxxxx X.
Xxxxxxxxx is the record holder of 4,639,670 shares of ASDG Common Stock, Red Oak
Limited Partnership is the record holder of 713,795 shares of ASDG Common Stock
and Xxxxxxx X. Xxxxx is the record holder of 594,830 shares of ASDG Common
Stock. Except as otherwise set forth on SCHEDULE 4.5, there are no outstanding
Rights or any outstanding securities or other instruments convertible into
shares of any class of capital stock of ASDG, or pursuant to which ASDG is or
may become obligated to issue any shares of its capital stock.
4.2. INDIVIDUAL REPRESENTATIONS AND WARRANTIES. Each ASDG Shareholder
hereby represents and warrants with respect to himself only to Inflatables the
following matters on and as of the date of this Agreement and at the Closing
Date; provided, however, that before any breach of or inaccuracy in any of the
representations or warranties given in this Section 4.2 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Agreement by Inflatables, such breach or inaccuracy must have had
a Material Adverse Effect.
(A) BINDING EFFECT. When executed, this Agreement will
constitute the valid and legally binding obligation of the ASDG Shareholder,
enforceable against him in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect or the relief of debtors generally, (ii) general principles
of equity and (iii) the discretion of any court or tribunal of competent
jurisdiction before which a dispute may be brought.
(B) PURCHASE FOR INVESTMENT. The ASDG Shareholder is acquiring
Inflatables Common Stock pursuant to this Agreement for his own account for
investment purposes only and not with a view to or intention of distribution or
resale, and the ASDG Shareholder will not dispose of any of the shares of such
Inflatables Common Stock in contravention of the Securities Act or any
applicable state securities laws.
(C) SALE AND PURCHASE NOT REGISTERED. The ASDG Shareholder is
aware that he is acquiring shares of Inflatables Common Stock from Inflatables
in a transaction that has not been registered under the Securities Act or
pursuant to the securities laws and regulations of any State, and that as a
consequence, such Shares are "restricted securities" as defined in Rule 144
promulgated under the Securities Act and may not be resold except pursuant to
16
transactions that are registered under the Securities Act and applicable state
securities laws and regulations or transactions that are exempt from such
registration.
ARTICLE 5. INDEMNIFICATION; ARBITRATION
5.1. INFORMATION FOR APPLICATION AND STATEMENTS. Inflatables represents
and warrants that all information concerning it which has been, is or will be
included in any statement and application made to any governmental agency in
connection with the transactions contemplated by the Agreement or provided or
made to any ASDG Shareholder, was when given or made, and will be when given or
made in the future, true and correct in all material respects and did and will
not omit any material fact required to be stated therein or necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading. To the maximum extent permitted by applicable law, Inflatables
will indemnify and hold harmless the ASDG Shareholders and their affiliates,
successors, assigns, employees, contractors and agents, from and against any and
all losses, claims, damages, expenses or liabilities to which any of them may
become subject under applicable laws and rules and regulations thereunder and
will reimburse them for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any actions whether or not
resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any such application or
statement or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary in
order to make the statements therein not misleading. Inflatables agrees, at any
time upon the request of an ASDG Shareholder, upon five (5) business days
written notice, to furnish to him a written letter or statement confirming the
accuracy of the information contained in any proxy statement, registration
statement, report or other application or statement, or in any draft of any such
document, and confirming that the information contained in such document or
draft was furnished expressly for use therein or, if such is not the case,
indicating the inaccuracies contained in such document or draft or indicating
the information not furnished expressly for use therein. The indemnity agreement
contained in this Section 5 shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the other party.
5.2. ARBITRATION. Any controversy or claim (including without limit
those arising under or conferred by statutes) arising under or in relation to
this Agreement, or the breach thereof, or the relations between the parties,
shall be finally settled by arbitration by a panel of three arbitrators (unless
the amount in dispute is less than $25,000 in which case there shall be only one
arbitrator) in Dallas, Texas, administered by the American Arbitration
Association, except as specified otherwise in this Agreement, under its then
applicable Commercial Arbitration Rules, and judgment on the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof;
provided however, that this Arbitration clause may not be invoked, applied or
enforced by or on behalf of any party seeking to rescind or declare void either
this Agreement or the Share Exchange effected thereby, to prevent resort by any
other party to any court of competent jurisdiction within the United States. Any
filing fee shall be paid by the party filing the claim. Each party shall be
responsible for that party's own costs and expenses for arbitration. Expenses
for witnesses for either side are to be borne by the party producing the
witnesses. All administrative fees for the arbitration and compensation expenses
of the arbitrator shall be borne equally by the parties. The arbitrator's
authority shall be limited to the resolution of the legal dispute between the
17
parties. The arbitrator shall be bound by and shall apply the applicable law,
including allocations of burdens of proof as well as substantive law. There
shall not be any limit on the remedies available in the arbitration which would
be prohibited by applicable law regarding the limitation of remedies available
in arbitration or which would render the obligation to arbitrate unenforceable.
But, to the extent permitted by applicable law and to the extent that
limitations can be established without impairing the enforceability of the
obligation to arbitrate, the parties agree to the following limitation on the
remedies that can be awarded by the arbitrators: the arbitrators shall have no
power to extend this Agreement beyond its termination date, nor to order
reinstatement or other continuation of the parties' relationship after
termination, nor to award punitive, consequential, multiple, incidental or any
other damages in excess of the economic damages actually sustained by the
claimant. In no case shall the arbitrator have the authority to enlarge
substantive rights or remedies available under existing law.
ARTICLE 6. MISCELLANEOUS
6.1 RELIANCE. Notwithstanding any investigation made by or on behalf of
the parties, whether before or after the Closing Date, the parties shall be
entitled to rely upon the representations and warranties given or made by the
other party(ies) herein.
6.2 SURVIVAL. The representations, warranties and covenants of the
parties hereto shall survive the Closing for a period of three years from the
Closing Date.
6.3 ENTIRE AGREEMENT. This Agreement, including any schedules,
exhibits, lists and other documents referred to herein which form a part hereof,
contains the entire agreement of the parties with respect to the subject matter
contained herein and there are no agreements, warranties, covenants or
undertakings other than those expressly set forth herein.
6.4 BINDING AGREEMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that the Agreement shall not be assigned by any of
the parties hereto without the prior written consent of the other parties
hereto.
6.5 NOTICES. Any notice given hereunder shall be in writing and shall
be deemed delivered and received upon reasonable proof of receipt. Unless
written designation of a different address is filed with each of the other
parties hereto, notice shall be transmitted to the following addresses:
18
For the ASDG Shareholders: Xxxxxxx X. Xxxxxxxxx & Xxxxxxx X. Xxxxx
American Sports Development Group, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
Copy to: Xxxx X. Xxxxxx, Esq.
Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
00 Xxxx Xxxxxxxxxx Xxx (29601)
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
For Inflatables: American Inflatables, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
Copy to: Xxxxxx X. Xxxxxxx, Esq.
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
6.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and each of which
may bear the signature(s) of one or more of the parties hereto, but all of which
together shall constitute one and the same instrument. Rebuttable proof of
execution of this Agreement by any party may be made by presentation of a copy
of this Agreement bearing a facsimile or photostatic copy of the signature of
the party whose execution is sought to be proved, and such copies shall be as
valid as the originals and as admissible as evidence of proof of the execution
and terms and provisions hereof as the originals.
6.7 INTERPRETATION. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretations of this Agreement. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any Person.
6.8 LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving effect
to any provision (whether of the State of South Carolina or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of South Carolina other than non-waivable provisions of
U.S. federal law, except that the Joint Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of California as provided
in the Joint Escrow Agreement.
19
6.9 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties.
6.10 WAIVER. No waiver of any provision of this Agreement, and no
consent to any departure by any party therefrom, shall be effective unless it is
in writing and signed by the party(ies) from whom such waiver is sought, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which it is given.
6.11 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
SIGNATURES ON FOLLOWING PAGE
20
IN WITNESS WHEREOF, this Share Exchange Agreement has been duly entered
into as of the date first written above as evidenced by the signatures of the
parties hereto or their duly authorized officers set forth below.
AMERICAN INFLATABLES, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx Attest: /s/ Xxxxx X. Xxxxx
------------------------------------- ---------------------
Xxxxx X. Xxxxxxxxxx, President Xxxxx X. Xxxxx, Xx., director
Attest: /s/ Xxxxxxx Xxxxxxxx
---------------------
Xxxxxxx Xxxxxxxx,
Vice President
ASDG SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxx
RED OAK LIMITED PARTNERSHIP
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxx, General Partner
/s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx
