EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is entered into this 17th
day of June, 2005 (the "Effective Date"), by and among USN CORPORATION (FORMERLY
KNOWN AS PREMIER CONCEPTS, INC.), a Colorado corporation (hereinafter referred
to as "Buyer") and GLOBAL SUN ENTERPRISES LTD a British Virgin Islands company
(hereinafter referred to as "Seller"), being the shareholder of ALTRON LIMITED,
a Hong Kong corporation, (hereinafter referred to as the "Company").
WHEREAS, Seller is the owner of ten thousand (10,000) shares (the
"Company Shares") of the issued and outstanding shares of common stock, HK$1 per
share paid in capital (the "Company Stock"), representing one hundred percent
(100%) of all the issued and outstanding shares of the capital stock of the
Company (the "Company Shares"); and
WHEREAS, Seller desires to sell all of the Company Shares to Buyer, and
Buyer desires to purchase the Company Shares, upon the terms and conditions set
forth herein;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
I.
SALE AND PURCHASE OF THE COMPANY SHARES
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1.1 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the Closing (as defined in paragraph 1.2 below), Seller agrees to sell, assign,
transfer and convey to Buyer, and Buyer agrees to purchase from Seller, the
Company Shares.
1.2 CLOSING. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement the purchase shall be consummated at a
closing (the "Closing") to take place at 11:00 o'clock a.m., at the offices of
Buyer on June 17, 2005 or at such other date and time as the parties shall agree
(the "Closing Date").
1.3 PURCHASE PRICE.
A. The purchase price (the "Purchase Price") for the Company Shares
shall be Eleven Million Four Hundred Sixty Five Thousand Nine Hundred Eighty
(11,465,980) shares (the "Buyer Shares") of Buyer's authorized but previously
unissued common stock, par value $0.0001 per share (the "Buyer Common Stock"),
which upon issuance at Closing shall represent [49.8%] of all issued and
outstanding shares of Buyer Common Stock. In addition Buyer shall issue options
or warrants to Seller for a number of shares of Buyer Common Stock equal to the
number of shares of Buyer Common Stock subject to currently outstanding, but
unexercised options or warrants. The Purchase Price shall be paid by Buyer at
Closing, by issuance and delivery of the Buyer Shares to Seller, free and clear
of all liens, claims, and encumbrances of every kind and nature (other than as
imposed by securities laws) against delivery by Seller of stock powers
representing the transfer of Company Shares to Buyer, duly endorsed. Buyer
believes the number of shares of all issued and outstanding shares of Buyer
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Common Stock as of the above stated date is Eleven Million Five Hundred Fifty
Eight Thousand Seventy Seven (11,558,077) shares. Should the actual number of
shares differ from the number stated herein, the number of shares issued to
Seller shall be adjusted either way accordingly to reflect the correct number of
shares so that the Seller receives [49.8%] of all issued and outstanding shares.
B. The Seller acknowledges that Buyer is issuing the Buyer Shares in a
transaction not registered under the Securities Act of 1933, as amended (the
"Securities Act"). Seller further understands that, in addition to any other
legends required by applicable state securities laws, a legend will be placed on
any certificate or certificates representing the Buyer Shares substantially to
the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THAT ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR USN
CORPORATION (THE "COMPANY") SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT
REGISTRATION OF SUCH SECURITIES UNDER THAT ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
1.4 OTHER AGREEMENTS. At the Closing, the indicated parties shall
execute and deliver the following additional agreements in substantially the
form attached hereto:
(a) Stock powers representing all of the Company Shares, duly
endorsed to Buyer transferring the Company Shares from Seller to Buyer,
copies of which are attached hereto as Exhibit "C"; and
(b) Registration Rights Agreement between the Buyer and Seller
attached hereto as Exhibit "D".
1.5 BASIC AGREEMENTS AND TRANSACTIONS DEFINED. This Agreement and other
agreements listed in paragraph 1.4, are sometimes referred to as the "Basic
Agreements". The transactions contemplated by the Basic Agreements are sometimes
referred to as the "Transactions".
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II.
REPRESENTATIONS AND WARRANTIES
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2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY. The
Seller and the Company represent and warrant to Buyer as of the Effective Date
and as of the Closing as follows:
(a) ORGANIZATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of
the Hong Kong Special Administrative District, People's Republic of
China. The Company has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business. The
Company is duly qualified and in good standing as a foreign corporation
in each jurisdiction where its ownership of property or operation of
its business requires qualification, except where the failure to be
qualified would not have a material adverse effect on the Company.
(b) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of Ten Thousand (10,000) shares of Company Stock. At
Closing, 10,000 shares of Company Stock and no shares of Preferred
Stock will be issued and outstanding. All outstanding shares of capital
stock of the Company were, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive
rights. There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote on any matters on which
stockholders of the Company may vote. Except as set forth in Exhibit
"F", there are no outstanding options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which the Company is a party or which binds or obligates the Company to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company.
(c) AUTHORITY. The Company has full power and lawful authority
to execute and deliver the Basic Agreements and to consummate and
perform the Transactions contemplated thereby. The Basic Agreements
have been validly executed and delivered by the Company. The Basic
Agreements constitute (or shall, upon execution, constitute) valid and
legally binding obligations upon the Company, enforceable in accordance
with their terms. Neither the execution and delivery of the Basic
Agreements by the Company, nor the consummation and performance of the
Transactions contemplated thereby, conflicts with, requires the
consent, waiver or approval of, results in a breach of or default
under, or gives to others any interest or right of termination,
cancellation or acceleration in or with respect to, any material
agreement by which the Company is a party or by which the Company or
any of its material properties or assets are bound or affected.
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(d) COMPANY FINANCIAL STATEMENTS. The Company's Financial
Statements as of April 30, 2005 as previously delivered to Buyer (the
"Financial Statement") are complete, were prepared in accordance with
generally accepted accounting principles applied on a basis consistent
with prior periods and fairly present, in all material respects, the
financial position of the Company as of and for the period ending April
30, 2005. Buyer has examined these Financial Statements and have found
them acceptable and satisfactory.
(e) NO UNDISCLOSED LIABILITIES. Except as set forth in the
Company's Financial Statements previously delivered to Buyer and as set
forth on Exhibit "G" attached hereto, the Company and the Seller are
not aware of any material liabilities for which the Company is liable
or will become liable in the future.
(f) TAXES. The Company has filed all federal, state, local tax
and other returns and reports which were required to be filed with
respect to all taxes, levies, imposts, duties, licenses and
registration fees, charges or withholdings of every nature whatsoever
("Taxes"), and there exists a substantial basis in law and fact for all
positions taken in such reports. No waivers of periods of limitation
are in effect with respect to any taxes arising from and attributable
to the ownership of properties or operations of the business of the
Company.
(g) PROPERTIES. The Company has good and marketable title to
all its material personal property, equipment, processes, patents,
copyrights, trademarks, franchises, licenses and other material
properties and assets (except for items leased or licensed to the
Company), including all property reflected in the Company's Financial
Statements (except for assets reflected therein which have been sold in
the normal course of its business where the proceeds from such sale or
other disposition have been properly accounted for in the Financial
Statements of the Company), in each case free and clear of all material
liens, claims and encumbrances of every kind and character. The assets
and properties owned, operated or leased by the Company and used in its
business are in good operating condition, reasonable wear and tear
excepted, and suitable for the uses for which intended.
(h) BOOKS AND RECORDS. The books and records of the Company
are complete and correct in all material respects, have been maintained
in accordance with good business practices and accurately reflect in
all material respects the business, financial condition and results of
operations of the Company as set forth in the Company's Financial
Statements.
(i) TRANSACTIONS WITH CERTAIN PERSONS. Except as disclosed in
Exhibit "H", the Company has no outstanding material agreement,
understanding, contract, lease, commitment, loan or other material
arrangement with any officer, director or shareholder of the Company or
any relative of any such person, or any corporation or other entity in
which such person owns a beneficial interest.
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(j) MATERIAL CONTRACTS. The Company has no purchase, sale,
commitment, or other contract, the breach or termination of which would
have a materially adverse effect on the business, financial condition,
results of operations, assets, liabilities, or prospects of the
Company.
(k) AUTHORIZATIONS. The Company has no licenses, permits,
approvals and other authorizations from any governmental agencies and
any other entities that are materially necessary for the conduct of its
business.
(l) NO POWERS OF ATTORNEY. The Company has no powers of
attorney or similar authorizations outstanding.
(m) COMPLIANCE WITH LAWS. To the Company's knowledge, the
Company is not in violation of any federal, state, local or other law,
ordinance, rule or regulation applicable to its business, and has not
received any actual or threatened complaint, citation or notice of
violation or investigation from any governmental authority, in each
case where such violation would have a material adverse effect on the
Company.
(n) NO LITIGATION. To the Company's knowledge, there are no
actions, suits, claims, complaints or proceedings pending or threatened
against the Company, at law or in equity, or before or by any
governmental department, commission, court, board, bureau, agency or
instrumentality; and to the Company's knowledge, there are no facts
which would provide a valid basis for any such action, suit or
proceeding, which, if determined adversely to the Company, would have a
material adverse effect on the Company. There are no orders, judgments
or decrees of any governmental authority outstanding which specifically
apply to the Company or any of its assets.
(o) VALIDITY. All material contracts, agreements, leases and
licenses to which the Company is a party or by which it or any of its
material properties or assets are bound or affected, are valid and in
full force and effect; and to Company's knowledge, no breach or default
exists, or upon the giving of notice or lapse of time, or both, would
exist, on the part of the Company or by any other party thereto.
(p) NO ADVERSE CHANGES. Since April 30, 2005, there has been
no actual or threatened development of a nature that is materially
adverse to or involves any materially adverse effect upon the business,
financial condition, results of operations, assets, liabilities, or
prospects of the Company.
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(q) FEES. All negotiations relating to the Basic Agreements
and the Transactions have been conducted by the Company and the Seller
in such a manner as not to give rise to any valid claim for any
finder's fees, brokerage commission, financial advisory fee or related
expense or other like payment for which the Company or Buyer are or may
be liable.
[(r) SUBSIDIARIES. At Closing the Company shall own One
Hundred Percent (100%) of all issued and outstanding stock of Gem
Manufacturing, Inc., a Nevada Corporation, and Diamond Channel, Inc., a
Nevada Corporation. (collectively referred to as "Subsidiaries"). The
Subsidiaries have no outstanding options, warrants, calls, rights or
commitments, agreements, arrangements or undertakings of any kind,
which the Company is a party or by which is bound or obligated ]
(s) FULL DISCLOSURE. All statements of the Seller and the
Company contained in the Basic Agreements and in any other written
documents delivered by or on behalf of the Company or Seller to Buyer
are true and correct in all material respects and do not omit any
material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which they were made.
2.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Buyer, with respect to the Company Shares owned by
Seller as of the Effective Date and as of the Closing, as follows:
(a) AUTHORITY. Seller has full power and lawful authority to
execute and deliver the Basic Agreements and to consummate and perform
the Transactions contemplated hereby. The Basic Agreements have been
validly executed and delivered by the Seller. The Basic Agreements
constitute (or shall, upon execution, constitute) valid and legally
binding obligations upon Seller, enforceable in accordance with their
terms. Neither the execution and delivery of the Basic Agreements by
Seller, nor the consummation and performance of the Transactions
contemplated thereby, conflicts with, requires the consent, waiver or
approval of, results in a breach of, or default under, or gives to
others any interest or right of termination, cancellation or
acceleration in or with respect to, any material agreement by which
Seller is a party or by which a Seller or any of its material
properties, or assets are bound or affected.
(b) TITLE TO THE COMPANY SHARES. Immediately prior to the
Closing, Seller shall own of record and beneficially the Company
Shares, free and clear of all liens, encumbrances, pledges, claims,
options, charges and assessments of any nature whatsoever, with full
right and lawful authority to transfer the Company Shares to Buyer. No
person has any preemptive rights or rights of first refusal with
respect to any of the Company Shares There exists no voting agreement,
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voting trust, or outstanding proxy with respect to any of the Company
Shares. There are no outstanding rights, options, warrants, calls,
commitments, or any other agreements of any character, whether oral or
written, with respect to the Company Shares.
(c) ACCESS TO INFORMATION. Seller has been provided an
opportunity to ask questions of, and Seller has received answers
thereto satisfactory to Seller from, Buyer and its representatives
regarding matters pertaining to this investment, and Seller has
obtained all additional information requested by Seller from Buyer and
its representatives.
(d) ABILITY TO BEAR ECONOMIC RISKS. Seller has such knowledge
and experience in financial affairs that Seller is capable of
evaluating the merits and risks of an investment in the Buyer Shares.
Seller has not relied in connection with this investment upon the
identity of or advice from Buyer or any other investor in Buyer or upon
any representations, warranties or agreements other than those set
forth in this Agreement. Seller's financial situation is such that
Seller can afford to bear the economic risk of holding the Buyer Shares
for an indefinite period of time, and Seller can afford to suffer the
complete loss of Seller's investment in the Buyer Shares.
(e) INVESTMENT INTENT. Seller is subscribing for the Buyer
Shares pursuant to this Agreement for Seller's own account and not with
a view to or for sale in connection with any distribution of all or any
part of the Buyer Shares or Seller's interest in any of the Buyer
Shares. Except as set forth on Exhibit "I" hereto, Seller hereby agrees
that Seller will not, directly or indirectly, transfer, offer, sell,
pledge, hypothecate or otherwise dispose of all or any part of the
Buyer Shares or Seller's interest in any of the Buyer Shares (or
solicit any offers to buy, purchase or otherwise acquire or take a
pledge of all or any part thereof) except in a manner that does not
violate the registration or any other applicable provisions of the
Securities Act (or any other applicable federal securities laws) or any
applicable state securities laws. Seller understands that Seller must
bear the economic risk of an investment in the Buyer Shares for an
indefinite period of time because, among other reasons, the offering
and sale of the Buyer Shares have not been registered under the
Securities Act, and therefore, the Buyer Shares cannot be sold unless
they are subsequently registered under the Securities Act or an
exemption from such registration is available.
(f) ACCREDITATION. Seller qualifies as an "accredited
investor" (as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act).
2.3 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as of the Effective Date and as of the Closing as follows:
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(a) ORGANIZATION. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
Colorado. Buyer has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business. Buyer is
duly qualified and in good standing as a foreign corporation in each
jurisdiction where its ownership of property or operation of its
business requires qualification, except where the failure to be
qualified would not have a material adverse effect on the Buyer.
(b) AUTHORIZED CAPITALIZATION. The authorized capitalization
of Buyer consists of One Hundred Ninety-Five Million (195,000,000)
shares of Buyer Common Stock and Five Million Fifty-Thousand
(5,050,000) shares of $.0001 par value Preferred Stock, of which Eleven
Million Four Hundred Sixty Five Thousand Nine Hundred Eighty
(11,465,980) shares of Buyer Common Stock will be issued and
outstanding prior to Closing. Buyer represents that no Preferred Shares
are outstanding. The Buyer Shares have been duly authorized, validly
issued, are fully paid and nonassessable. The Buyer Shares when issued
will be offered, issued, sold and delivered by Buyer in compliance with
all applicable state and federal securities laws and will be free and
clear of all liens, claims and encumbrances of every kind and nature,
other than as imposed by securities laws. Buyer is not a party to and
is not bound by any agreement, contract, arrangement or understanding,
whether oral or written, giving any person or entity any interest in,
or any right to share, participate in or receive any portion of,
Buyer's income, profits or assets, or obligating Buyer to distribute
any portion of its income, profits or assets, except for ordinary
course commercial contracts. Except as set forth in Exhibit "J", there
are no bonds, debentures, notes or other indebtedness of Buyer having
the right to vote on any matters on which stockholders of Buyer may
vote. Except as set forth in Exhibit "J", there are no outstanding
options, warrants, calls, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Buyer is a party or which
binds or obligates the Buyer to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other
voting securities of the Buyer.
(c) AUTHORITY. Buyer has full power and lawful authority to
execute and deliver the Basic Agreements and to consummate and perform
the Transactions contemplated thereby. The Basic Agreements have been
validly executed and delivered by the Buyer. The Basic Agreements
constitute (or shall, upon execution, constitute) valid and legally
binding obligations upon Buyer, enforceable in accordance with their
terms. Neither the execution and delivery of the Basic Agreements by
Buyer, nor the consummation and performance of the Transactions
contemplated thereby, conflicts with, requires the consent, waiver or
approval of, results in a breach of or default under, or gives to
others any interest or right of termination, cancellation or
acceleration in or with respect to, any material agreement by which
Buyer is a party or by which Buyer or any of its material properties or
assets are bound or affected.
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(d) INVESTMENT INTENT. Buyer is acquiring the Company Shares
for its own account, for investment purposes only, and not with a view
to the sale or distribution of any part thereof, and Buyer has no
present intention of selling, granting participation in, or otherwise
distributing the same. Buyer understands the specific risks related to
an investment in the Company Shares, especially as it relates to the
financial performance of the Company.
(e) BUYER'S FINANCIAL STATEMENTS. Buyer's Financial Statements
as of April 30, 2005 as previously delivered to Seller are complete,
were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods and fairly
present, in all material respects, the financial position of Buyer as
of and for the period ending April 30, 2005. Seller has examined
Buyer's Financial Statements and have found them acceptable and
satisfactory.
(f) NO UNDISCLOSED LIABILITIES. Except as set forth in Buyer's
Financial Statements previously delivered to the Company, Buyer is not
aware of any material liabilities for which it is liable or will become
liable in the future.
(g) MATERIAL CONTRACTS. Buyer has no purchase, sale,
commitment, or other contract, the breach or termination of which would
have a materially adverse effect on the business, financial condition,
results of operations, assets, liabilities, or prospects of Buyer.
(h) PROPERTIES. The Buyer has good and marketable title to all
its material personal property, equipment, processes, patents,
copyrights, trademarks, franchises, licenses and other material
properties and assets (except for items leased or licensed to the
Buyer), including all property reflected in the Buyer's Financial
Statements (except for assets reflected therein which have been sold in
the normal course of its business where the proceeds from such sale or
other disposition have been properly accounted for in the Financial
Statements of the Buyer), in each case free and clear of all material
liens, claims and encumbrances of every kind and character. The assets
and properties owned, operated or leased by the Buyer and used in its
business are in good operating condition, reasonable wear and tear
excepted, and suitable for the uses for which intended.
(i) BOOKS AND RECORDS. The books and records of the Buyer are
complete and correct in all material respects, have been maintained in
accordance with good business practices and accurately reflect in all
material respects the business, financial condition and results of
operations of the Buyer as set forth in the Buyer's Financial
Statements.
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(j) TRANSACTIONS WITH CERTAIN PERSONS. Except as disclosed in
Exhibit "K", the Buyer has no outstanding material agreement,
understanding, contract, lease, commitment, loan or other material
arrangement with any officer, director or shareholder of the Buyer or
any relative of any such person, or any corporation or other entity in
which such person owns a beneficial interest.
(k) NO LITIGATION. Except as set forth on Exhibit "L", there
are no actions, suits, claims, complaints or proceedings pending or
threatened against Buyer, at law or in equity, or before or by any
governmental department, commission, court, board, bureau, agency or
instrumentality; and there are no facts which would provide a valid
basis for any such action, suit or proceeding, which, if determined
adversely to the Buyer, would have a material adverse effect on the
Buyer. There are no orders, judgments or decrees of any governmental
authority outstanding which specifically apply to the Buyer or any of
its assets.
(l) TAXES. Except as set forth on Exhibit "M", the Buyer has
filed all federal, state, local tax and other returns and reports which
were required to be filed with respect to all taxes, levies, imposts,
duties, licenses and registration fees, charges or withholdings of
every nature whatsoever ("Taxes"), and there exists a substantial basis
in law and fact for all positions taken in such reports. No waivers of
periods of limitation are in effect with respect to any taxes arising
from and attributable to the ownership of properties or operations of
the business of the Buyer.
(m) COMPLIANCE WITH LAWS. To the best of the Buyer's
knowledge, the Buyer is not in violation of any federal, state, local
or other law, ordinance, rule or regulation applicable to its business,
and has not received any actual or threatened complaint, citation or
notice of violation or investigation from any governmental authority,
in each case where such violation would have a material adverse effect
on the Buyer.
(n) USN SUBSIDIARY. Buyer owns 100% of all the issued and
outstanding shares of USN Television Group, Inc. ("Buyer's Subsidiary")
and its officers, directors and former shareholders have disclosed to
the best of their knowledge to Buyer's Auditors all assets, liabilities
and contingencies including but not limited to consulting and licensing
Agreements that could have a material impact on Buyer's Subsidiary, and
are reflected accurately in the Buyer's 8-K/A filed on April 26, 2005.
All of the representations and warranties made by Buyer are deemed to
be made by Buyer's Subsidiary MUTATIS MUTANDIS, as if made by Buyer's
Subsidiary.
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(o) AUTHORIZATIONS. Buyer has no licenses, permits, approvals
and other authorizations from any governmental agencies and any other
entities that are materially necessary for the conduct of its business.
(p) NO POWERS OF ATTORNEY. Buyer has no powers of attorney of
similar authorizations outstanding.
(q) VALIDITY. All material contracts, agreements, leases and
licenses to which Buyer is a party or by which it or any of its
material properties or assets are bound or affected, are valid and in
full force and effect; and to the best knowledge of Buyer, no breach or
default exists, or upon the giving of notice or lapse of time, or both,
would exist, on the part of Buyer or by any other party thereto.
(r) NO ADVERSE CHANGES. Since April 30, 2005, there has been
no actual or threatened development of a nature that is materially
adverse to or involves any materially adverse effect upon the business,
financial condition, results of operations, assets, liabilities, or
prospects of Buyer.
(s) FEES. All negotiations relating to the Basic Agreements
and the Transactions have been conducted by Buyer in such a manner as
not to give rise to any valid claim for any finder's fees, brokerage
commission, financial advisory fee or related expense or other like
payment for which the Company or Buyer are or may be liable.
(t) ACCESS TO INFORMATION. Buyer has been provided an
opportunity to ask questions of, and Buyer has received answers thereto
satisfactory to Buyer from, Seller and Company and their respective
representatives regarding matters pertaining to this investment, and
Buyer has obtained all additional information requested by Buyer from
Seller and Company and their respective representatives.
(u) FULL DISCLOSURE. All statements of Buyer contained in the
Basic Agreements and in any other written documents delivered by or on
behalf of Buyer to Company or Seller are true and correct in all
material respects and do not omit any material fact necessary to make
the statements contained therein no misleading in light of the
circumstances under which they were made.
III.
COVENANTS
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3.1 COVENANTS OF THE COMPANY. The Company covenants and agrees that
from the date hereof to the Closing, it will perform the following acts:
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(a) ORDINARY COURSE OF BUSINESS. The Company will operate its
business only in the ordinary course of business and will use its best
efforts to preserve the Company's business, organization, goodwill and
relationships with persons having business dealings with the Company.
(b) MAINTAIN PROPERTIES. The Company will maintain all of its
properties in good working order, repair and condition (reasonable wear
and use excepted) and will take all steps reasonably necessary to
maintain in full force and effect its patents, trademarks, service
marks, trade names, brand names, copyrights and other intangible
assets.
(c) COMPENSATION. The Company will not (1) enter into or alter
any employment agreements; (2) grant any increase in compensation other
than normal merit increases consistent with the Company's general
prevailing practices to any officer or employee; or (3) enter into or
alter any labor or collective bargaining agreement or any bonus or
other employee fringe benefit.
(d) NO INDEBTEDNESS. The Company will not create, incur,
assume, guarantee or otherwise become liable with respect to any
obligation for borrowed money, indebtedness, capitalized lease or
similar obligation, except in the ordinary course of business
consistent with past practices, where the entire net proceeds thereof
are deposited with and used by and in connection with the business of
the Company.
(e) MAINTAIN BOOKS. The Company will maintain its books,
accounts and records in the usual, regular ordinary and sound business
manner and in accordance with generally accepted accounting principles
applied on a basis consistent with past practices.
(f) NO AMENDMENTS. The Company will not amend its corporate
charter or bylaws (or similar documents) without prior the consent of
Buyer and the Company will maintain its corporate existence, licenses,
permits, powers and rights in full force and effect.
(g) TAXES AND ACCOUNTING MATTERS. The Company will file when
due all federal, state and local tax returns and reports which shall be
accurate and complete, including but not limited to income, franchise,
excise, ad valorem, and other taxes with respect to its business and
properties, and to pay as they become due all taxes or assessments,
except for taxes for which adequate reserves are established and which
are being contested in good faith by appropriate proceedings. The
Company will not change its accounting methods or practices or any
depreciation, amortization or inventory valuation policies or
practices.
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(h) NO DISPOSITION OR ENCUMBRANCE. Except in the ordinary
course of business consistent with past practices, the Company will not
(1) dispose of or encumber any of its properties and assets, (2)
discharge or satisfy any lien or encumbrance or pay any obligation or
liability (fixed or contingent) except for previously scheduled
repayment of debt, (3) cancel or compromise any debt or claim, (4)
transfer or grant any rights under any concessions, leases, licenses,
agreements, patents, inventions, proprietary technology or process,
trademarks, service marks or copyrights, or with respect to any
know-how, or (5) enter into or modify in any material respect or
terminate any existing license, lease, or contract.
(i) NO SECURITIES ISSUANCES. The Company will not issue any
shares of any class of capital stock, or enter into any contract,
option, warrant or right calling for the issuance of any such shares of
capital stock, or create or issue any securities convertible into any
securities of the Company.
(j) NO DIVIDENDS. The Company will not declare, set aside or
pay any dividends or other distributions of any nature whatsoever.
(k) NO BREACH. The Company will not do any act or omit to do
any act which would cause a breach of any of its material contracts,
commitments or obligations.
(l) DUE COMPLIANCE. The Company will comply with all laws,
regulations, rules and ordinances applicable to it and to the conduct
of its business, the violation of which would have a material adverse
effect on the Company.
(m) NO WAIVERS OF RIGHTS. The Company will not amend,
terminate or waive any material right whether or not in the ordinary
course of business.
(n) NO RELATED PARTY TRANSACTIONS. The Company will not make
any loans to, or enter into any transaction, agreement, arrangement or
understanding of any material nature with any of its officers,
directors or employees.
(o) NOTICE OF CHANGE. The Company will promptly advise Buyer
in writing of any material adverse change, or the occurrence of any
event which involves any substantial possibility of a material adverse
change, in its business, financial condition, results of operations,
assets, liabilities or prospects.
(p) CONSENTS. The Company will use its best good faith efforts
to obtain the consent or approval of each person or entity whose
consent or approval is required for the consummation of the
Transactions contemplated hereby and to do all things necessary to
consummate the Transactions contemplated by the Basic Agreements.
13
3.2 COVENANTS OF BUYER. Buyer covenants and agrees that from the date
hereof to the Closing, it will perform the following acts:
(a) ORDINARY COURSE OF BUSINESS. Buyer will operate its
business only in the ordinary course of business and will use its best
efforts to preserve Buyer's business, organization, goodwill and
relationships with persons having business dealings with Buyer.
(b) MAINTAIN PROPERTIES. Buyer will maintain all of its
properties in good working order, repair and condition (reasonable wear
and use excepted) and will take all steps reasonably necessary to
maintain in full force and effect its patents, trademarks, service
marks, trade names, brand names, copyrights and other intangible
assets.
(c) COMPENSATION. Buyer will not (1) enter into or alter any
employment agreements; (2) grant any increase in compensation other
than normal merit increases consistent with Buyer's general prevailing
practices to any officer or employee; or (3) enter into or alter any
labor or collective bargaining agreement or any bonus or other employee
fringe benefit.
(d) NO INDEBTEDNESS. Buyer will not create, incur, assume,
guarantee or otherwise become liable with respect to any obligation for
borrowed money, indebtedness, capitalized lease or similar obligation,
except in the ordinary course of business consistent with past
practices, where the entire net proceeds thereof are deposited with and
used by and in connection with the business of Buyer.
(e) MAINTAIN BOOKS. Buyer will maintain its books, accounts
and records in the usual, regular ordinary and sound business manner
and in accordance with generally accepted accounting principles applied
on a basis consistent with past practices.
(f) NO AMENDMENTS. Buyer will not amend its corporate charter
or bylaws (or similar documents) without the prior consent of the
Company (except as described above in Section 1.4(a) and Buyer will
maintain its corporate existence, licenses, permits, powers and rights
in full force and effect.
(g) TAXES AND ACCOUNTING MATTERS. Except with the prior
written consent of Company, Buyer will file when due all federal, state
and local tax returns and reports which shall be accurate and complete,
including but not limited to income, franchise, excise, ad valorem, and
other taxes with respect to its business and properties, and to pay as
they become due all taxes or assessments, except for taxes for which
adequate reserves are established and which are being contested in good
faith by appropriate proceedings. Buyer will not change its accounting
methods or practices or any depreciation, amortization or inventory
valuation policies or practices.
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(h) NO DISPOSITION OR ENCUMBRANCE. Except in the ordinary
course of business consistent with past practices, Buyer will not (1)
dispose of or encumber any of its properties and assets, (2) discharge
or satisfy any lien or encumbrance or pay any obligation or liability
(fixed or contingent) except for previously scheduled repayment of
debt, (3) cancel or compromise any debt or claim, (4) transfer or grant
any rights under any concessions, leases, licenses, agreements,
patents, inventions, proprietary technology or process, trademarks,
service marks or copyrights, or with respect to any know-how, or (5)
enter into or modify in any material respect or terminate any existing
license, lease, or contract.
(i) NO SECURITIES ISSUANCES. Other than as contemplated by
that certain Asset Purchase Agreement, dated as of June __, 2005, by
and among Buyer and LSG Holdings, Inc., Buyer will not issue any shares
of any class of capital stock, or enter into any contract, option,
warrant or right calling for the issuance of any such shares of capital
stock, or create or issue any securities convertible into any
securities of Buyer.
(j) NO DIVIDENDS. Buyer will not declare, set aside or pay any
dividends or other distributions of any nature whatsoever.
(k) NO BREACH. Buyer will not do any act or omit to do any act
which would cause a breach of any of its material contracts,
commitments or obligations.
(l) DUE COMPLIANCE. Buyer will comply with all laws,
regulations, rules and ordinances applicable to it and to the conduct
of its business, the violation of which would have a material adverse
effect on Buyer.
(m) NO WAIVERS OF RIGHTS. Buyer will not amend, terminate or
waive any material right whether or not in the ordinary course of
business.
(n) NO RELATED PARTY TRANSACTIONS. Buyer will not make any
loans to, or enter into any transaction, agreement, arrangement or
understanding of any material nature with any of its officers,
directors or employees.
(o) NOTICE OF CHANGE. Buyer will promptly advise Company in
writing of any material adverse change, or the occurrence of any event
which involves any substantial possibility of a material adverse
change, in its business, financial condition, results of operations,
assets, liabilities or prospects.
15
(p) CONSENTS. Buyer will use its best good faith efforts to
obtain the consent or approval of each person or entity whose consent
or approval is required for the consummation of the Transactions
contemplated hereby and to do all things necessary to consummate the
Transactions contemplated by the Basic Agreements.
IV.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
The obligation of Buyer to close the Transactions contemplated hereby
is subject to the fulfillment by the Company and Seller prior to Closing of each
of the following conditions, which may be waived in whole or in part by Buyer:
4.1 COMPLIANCE WITH REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the Company and Seller contained in this
Agreement shall have been true and correct when made and shall be true and
correct as of the Closing with the same force and effect as if made at the
Closing. The Company and Seller shall have performed all agreements, covenants
and conditions required to be performed by the Company and Seller prior to the
Closing.
4.2 NO ADVERSE CHANGE. Subsequent to the date hereof and prior to the
Closing, there shall have been no event which has had or may have a material
adverse effect upon the business, financial condition, results of operation,
assets, liabilities or prospects of the Company.
4.3 NO LEGAL PROCEEDINGS. No suit, action or other legal or
administrative proceeding before any court or other governmental agency shall be
pending or threatened seeking to enjoin the consummation of the Transactions
contemplated hereby.
4.4 DOCUMENTS TO BE DELIVERED BY THE COMPANY AND SELLER. The Company
and Seller shall have delivered the following documents:
(a) Stock powers representing all of the Company Shares, duly
endorsed to Buyer, copies of which are attached as Exhibit "C".
(b) A copy of (i) the Articles of Incorporation of the
Company; and (ii) the Bylaws of the Company; and (iii) a certificate
from the Hong Kong Registrar of Companies, to the effect that the
Company is in good standing and has paid all fees and levies;
(c) All agreements referred to in paragraph 1.4 above,
executed by all parties thereto other than Buyer.
16
(d) All corporate and other records of or applicable to the
Company including but not limited to, current and up-to-date minute
books, stock transfer books and registers, books of accounts, leases
and material contracts.
(e) Such other documents or certificates as shall be
reasonably required by Buyer or its counsel in order to close and
consummate this Agreement.
(f) Buyer shall have been presented evidence, reasonably
satisfactory to Buyer, that (i) the Company has available net assets
and notes receivable on hand of $5,000,000 , or (ii) Seller shall
otherwise deliver to Buyer at Closing, available net assets on hand and
notes receivable of $5,000,000.
V.
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF THE COMPANY AND SELLER TO CLOSE
----------------------------------------------
The obligation of the Company and Seller to close the Transactions is
subject to the fulfillment prior to Closing of each of the following conditions,
any of which may be waived in whole or in part by the Company and Seller:
5.1 COMPLIANCE WITH REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties made by Buyer in this Agreement shall have been
true and correct when made and shall be true and correct in all material
respects at the Closing with the same force and effect as if made at the
Closing, and Buyer shall have performed all agreements, covenants and conditions
required to be performed by Buyer prior to the Closing.
5.2 NO ADVERSE CHANGE. Subsequent to the date hereof and prior to the
Closing, there shall have been no event which has had or may have a material
adverse effect upon the business, financial condition, results of operation,
assets, liabilities or prospects of the Buyer.
5.3 NO LEGAL PROCEEDINGS. No suit, action or other legal or
administrative proceedings before any court or other governmental agency shall
be pending or threatened seeking to enjoin the consummation of the Transactions
contemplated hereby.
5.4 DOCUMENTS TO BE DELIVERED BY THE BUYER. Buyer shall have delivered
the following documents:
(a) Certificates representing the Buyer Shares, duly signed by
Buyer;
17
(b) A copy of (i) the Articles of Incorporation of the Buyer;
and (ii) the Bylaws of the Company; and (iii) a certificate from the
Colorado Secretary of State, to the effect that Buyer is in good
standing and has paid all fees and levies;
(c) All agreements referred to in paragraph 1.4 above,
executed by all parties thereto other than Company and Seller;
(d) A copy of all corporate and other records of or applicable
to Buyer including but not limited to, current and up-to-date minute
books, stock transfer books and registers, books of accounts, leases
and material contracts; and
(e) Such other documents or certificates as shall be
reasonably required by Company and/or Seller or its counsel in order to
close and consummate this Agreement.
VI.
MODIFICATION, WAIVERS, TERMINATION
AND EXPENSES
------------
6.1 MODIFICATION. Buyer, the Company and Seller may amend, modify or
supplement this Agreement in any manner as they may mutually agree in writing.
6.2 WAIVERS. Buyer, the Company and Seller may in writing extend the
time for or waive compliance by the other with any of the covenants or
conditions of the other contained herein.
6.3 TERMINATION AND ABANDONMENT. This Agreement may be terminated and
the purchase of the Shares may be abandoned before the Closing:
(a) By the mutual consent of Seller, the Company and Buyer;
(b) By Buyer, if the conditions precedent set forth in Article
IV shall have not have been satisfied in all material respects;
(c) By the Company or Seller, if the conditions precedent set
forth in Article V shall not have been satisfied in all material
respects;
(d) By either party in the event of a material breach by the
other party hereto of any representation, warranty, covenant or
agreement contained herein, which is not cured within ten (10) days
after written notice of such breach is given to the party committing
such breach by the complaining party; or
(e) By either party, in the event the Closing does not occur
on or before June 30, 2005.
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Termination shall be effective on the date of receipt of written notice
specifying the reasons therefor. No termination of this Agreement hereunder for
any reason or in any manner, shall release, or be construed as to release, any
party hereto from any liability or damage to the other party hereto arising out
of, in connection with or otherwise relating to, directly or indirectly said
parties' material and bad faith breach, default or failure in performance of any
of its covenants, agreements, duties or obligations arising hereunder, or any
breaches of any representation or warranty contained herein.
VII.
MISCELLANEOUS
-------------
7.1 REPRESENTATIONS AND WARRANTIES TO SURVIVE. Unless otherwise
provided, all of the representations and warranties contained in this Agreement
and in any certificate, exhibit or other document delivered pursuant to this
Agreement shall survive the Closing for a period of two (2) years. No
investigation made by any party hereto or their representatives shall constitute
a waiver of any representation or warranty, and no such representation or
warranty shall be merged into the Closing.
7.2 BINDING EFFECT OF THE BASIC AGREEMENTS. The Basic Agreements and
the certificates and other instruments delivered by or on behalf of the parties
pursuant thereto constitute the entire agreement between the parties. The terms
and conditions of the Basic Agreements shall inure to the benefit of and be
binding upon the respective heirs, legal representatives, successor and assigns
of the parties hereto. Nothing in the Basic Agreements, expressed or implied,
confers any rights or remedies upon any party other than the parties hereto and
their respective heirs, legal representatives and assigns.
7.3 APPLICABLE LAW. The Basic Agreements are made pursuant to, and will
be construed under, the laws of the State of California.
7.4 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and will be deemed to have been duly given when
delivered or on the second business day after mailed, first class postage
prepaid:
(a) If to Seller, to:
Global Sun Enterprises Limited
ATTN: _____________________
___________________________
___________________________
19
TELEPHONE: ( )
FAX: ( )
(b) If to Buyer, to:
USN Corporation
ATTN: Chief Executie Officer
2121 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
TELEPHONE: (000) 000-0000
FAX: (000) 000-0000
These addresses may be changed from time to time by written notice to
the other parties.
7.5 HEADINGS. The headings contained in this Agreement are for
reference only and will not affect in any way the meaning or interpretation of
this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which will be deemed an original and all of which together will constitute
one instrument.
7.7 SEVERABILITY. If any one or more of the provisions of this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
under applicable law this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. The
remaining provisions of this Agreement shall be given effect to the maximum
extent then permitted by law.
7.8 FORBEARANCE; WAIVER. Failure to pursue any legal or equitable
remedy or right available to a party shall not constitute a waiver of such
right, nor shall any such forbearance, failure or actual waiver imply or
constitute waiver of subsequent default or breach.
7.9 ATTORNEYS' FEES AND EXPENSES. The prevailing party in any legal
proceeding based upon this Agreement shall be entitled to reasonable attorneys'
fees and expenses and court costs.
20
7.10 EXPENSES. Each party shall pay all fees and expenses incurred by
it incident to this Agreement and in connection with the consummation of all
transactions contemplated by this Agreement. However, should either party choose
to terminate this Agreement under Section 6.3(a), that party initiating the
termination shall be responsible for all legal fees and other expenses incurred
in connection with the preparation of this Agreement.
7.11 EXHIBITS. All of the Exhibits to this Agreement are incorporated
herein in the places referenced in this Agreement as if fully set forth herein.
7.12 INTEGRATION. This Agreement and all documents and instruments
executed pursuant hereto merge and integrate all prior agreements and
representations respecting the Transactions, whether written or oral, and
constitute the sole agreement of the parties in connection therewith. This
Agreement has been negotiated by and submitted to the scrutiny of both Seller
and Buyer and their counsel and shall be given a fair and reasonable
interpretation in accordance with the words hereof, without consideration or
weight being given to its having been drafted by either party hereto or its
counsel.
7.13 KNOWLEDGE.
(a) For purposes of this Agreement, the "Company's knowledge"
with respect to a particular fact or other matter shall mean the actual
knowledge of documents included herewith without any duty of inquiry.
(b) For purposes of this Agreement, "the knowledge of Buyer"
with respect to a particular fact or other matter shall mean the actual
knowledge of documents included herewith without any duty of inquiry.
7.14 BOARD REPRESENTATION. From and after the Closing, Buyer hereby
agrees to take such action as is reasonably necessary to cause the
Buyer's Board of Directors to nominate, for election by the Buyer's
stockholders, Two (2) directors to be appointed by Seller and to cause
meetings of the Board of Directors of Buyer to be held not less
frequently than quarterly. Buyer agrees that it wil notify Seller, in
writing, at least twenty (20) days prior to any meeting of the
Shareholders and/or Directors.
7.15 INDEMNITY.
A. Buyer hereby agrees to indemnify and hold Seller harmless in respect
of the aggregate of Indemnifyable Damages of Seller. For the purposes of this
Agreement, "Indemnifyable Damages of Seller" shall mean the aggregate of all
expenses, losses, costs, deficiencies, claims and damages (including reasonable
related counsel fees and expenses) incurred by Seller from (i) any inaccurate
representation or warranty made by Buyer in this Agreement; and (ii) any default
in the performance any of the covenants or agreements made by Buyer in this
Agreement.
21
B. Seller hereby agrees to indemnify and hold Buyer harmless in respect
of the aggregate of Indemnifyable Damages of Buyer. For the purposes of this
Agreement, "Indemnifyable Damages of Buyer" shall mean the aggregate of all
expenses, losses, costs, deficiencies, claims and damages (including reasonable
related counsel fees and expenses) incurred by Buyer from (i) any inaccurate
representation or warranty made by Seller or Company in this Agreement; and (ii)
any default in the performance any of the covenants or agreements made by Seller
in this Agreement or made by Company in this Agreement, to the extent to be
performed by Company prior to the Closing.
7.16 LINE OF CREDIT. Seller represents, covenants and agrees that the
Company's current $3.0 million vendor line of credit for the purchase of
jewelry, for resale, from the vendors providing such line of credit, will be
available to the Company and to Buyer for a period of one year from and after
the Closing, subject to the terms and conditions contained in such line of
credit. Buyer covenants and agrees to comply with and satisfy all the terms and
conditions of the line of credit as they may be changed from time to time by
lender of the line of credit.
7.17 BUYER MAJORITY SHAREHOLDERS. The parties acknowledge and agree
that the shareholders of Buyer, as a class, do not have the right to vote upon
or approve the transactions contemplated hereby. However, the Buyer has informed
Xxxxx Xxxxx and Xxxxxxx Xxxxxxxxx, collectively the holders of a majority of the
outstanding Buyer Common Stock, of the transactions contemplated hereby, and
such shareholders have approved of such transactions.
[SIGNATURE PAGES TO FOLLOW]
22
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement on the date first written above.
"BUYER"
USN CORPORATION
A COLORADO CORPORATION
BY: /S/ XXXXX XXXXXXXX
-----------------------------
XXXXX XXXXXXXX, PRESIDENT
"THE COMPANY"
ALTRON LIMITED
A HONG KONG CORPORATION
BY: /S/ CHUN XXXX XXXX
-----------------------------
CHUN XXXX XXXX, DIRECTOR
"SELLER"
GLOBAL SUN ENTERPRISES LTD
A BRITISH VIRGIN ISLANDS COMPANY
BY: /S/ XXXXXX XXXXX UPENDRA BHAI
-----------------------------
XXXXXX XXXXX UPENDRA BHAI,
DIRECTOR
23
THE FOLLOWING INDIVIDUALS HAVE EXECUTED THIS AGREEMENT SOLELY WITH RESPECT TO
SECTION 7.17.
/S/ XXXXX XXXXX
-----------------------------
XXXXX XXXXX
/S/ XXXXXXX XXXXXXXXX
-----------------------------
XXXXXXX XXXXXXXXX
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