REDEMPTION, STOCK SALE AND RELEASE AGREEMENT
EXHIBIT
10.1
This
Redemption, Stock Sale And Release Agreement (the “Agreement”)
is
dated as of the 2nd
day of
January, 2007, and is by and between Hydrogen Power, Inc. (f/k/a Equitex, Inc.),
a Delaware corporation (“HPI”),
and
FastFunds Financial Corporation (f/k/a Seven Ventures, Inc.), a Nevada
corporation (the ”FastFunds”).
INTRODUCTION
A. On
March
8, 2004, HPI (then known as Equitex, Inc.) entered into that certain Purchase
Agreement (the “Initial Purchase
Agreement”)
with
Pandora Select Partners, L.P. (“Pandora”)
and
Whitebox Hedged High Yield Partners, L.P. (“Whitebox”
together with Pandora, the “Secured
Parties”)
by
which the Secured Parties loaned HPI the aggregate sum of $5,000,000, which
amount was then loaned by HPI on a secured basis to Chex Services, Inc.
(“Chex”)
for
use in Chex’s business (the “Chex
Loan”).
In
connection with the Initial Purchase Agreement, HPI, among other things, entered
into a security agreement with the Secured Parties, pursuant to which it pledged
2,170,000 shares of Chex common stock to the Secured Parties.
B. On
June
7, 2004, HPI and Chex entered into an Agreement and Plan of Merger (the
“Chex
Merger”)
with
FastFunds (then known as Seven Ventures, Inc.) whereby Chex merged with a
wholly-owned subsidiary of FastFunds, with Chex as the surviving corporation,
and FastFunds became the beneficial owner of all of the capital stock of Chex.
As a condition to the Secured Parties consenting to the Chex Merger and
delivering the 2,170,000 shares of Chex common stock to FastFunds, FastFunds
entered into a security agreement with the Secured Parties, pursuant to which
it
granted the Secured Parties a security interest in all of its assets.
C. On
September 15, 2005, HPI and the Secured Parties entered into a Purchase
Agreement (the “Second
Purchase Agreement”),
pursuant to which the Secured Parties purchased two promissory notes in the
aggregate sum of $1,500,000 and warrants to purchase shares of common stock
of
HPI in consideration for a $1,500,000 loan by the Secured Parties to HPI. In
connection with the Second Purchase Agreement, HPI pledged all of its assets
to
the Secured Parties, including 7,700,000 shares of FastFunds common stock (the
“HPI
Security Interest”).
Such
indebtedness was guaranteed by ▇▇▇▇▇ ▇▇▇▇ pursuant to a guaranty dated September
15, 2005.
D. On
January 31, 2006, substantially all of the assets of Chex were sold to Game
Financial Corporation pursuant to that certain Asset Purchase Agreement by
and
among FastFunds, Chex and Game Financial Corporation, dated December 22, 2005
(the “Chex
Asset Sale”).
The
Secured Parties consented to the Chex Asset Sale and released their security
interests in the applicable Chex assets. The Secured Parties, however, retained
a security interest in the capital stock of Chex.
E. In
connection with the Chex Asset Sale, FastFunds issued to HPI 4,717,344 shares
of
FastFunds common stock in exchange for the conversion of the outstanding note
issued by Chex to HPI in connection with the Chex Loan. As a result, HPI’s
ownership in FastFunds increased from 7,700,000 shares to 12,417,344
shares.
F. On
March
14, 2006, FastFunds loaned $5,000,000 to HPI pursuant to a secured promissory
note (the “FastFunds
Note”;
together with any and all other amounts owing to FastFunds by HPI, including
without limitation any profit participation rights granted by HPI to FastFunds,
the “FastFunds
Debt Payable”)
to
satisfy the payment obligation of HPI under the Equitex Merger (as defined
below). The FastFunds Note is due and payable on March 14, 2007. On the same
date thereof, HPI, pursuant to an Agreement and Plan of Merger and
Reorganization by and among HPI (then known as Equitex,
Inc.),
EI
Acquisition Corp. and Hydrogen Power, Inc. (then a privately-held Delaware
corporation) through which Hydrogen Power, Inc. merged with and into EI
Acquisition Corp., with EI Acquisition Corp. surviving the merger and remaining
a wholly-owned subsidiary of HPI (the “Equitex
Merger”).
G. HPI
desires to transfer to FastFunds, and FastFunds desires to accept from HPI,
shares of common stock of FastFunds,
Denaris Corporation (“Denaris”),
Key
Financial Systems, Inc. (“Key
Financial”)
and
Nova Financial Systems,
Inc.
(“Nova
Financial”
together with Denaris and Key Financial, the “Other
Subsidiaries”)
held
by HPI in consideration of FastFunds’ forgiveness and cancellation of the
FastFunds Debt Payable and its payment of the Closing Payment, as defined below
(the “Redemption”).
H. In
order
to effectuate the Redemption and the purchase of capital stock of the Other
Subsidiaries by FastFunds, the parties desire to enter into this Agreement
to
set forth their respective rights, obligations, duties and remedies pertaining
to the Redemption and as to other matters relating to their prior
relationship.
AGREEMENT
Now,
Therefore,
in
consideration of the foregoing facts, the mutual covenants set forth herein
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Redemption
of FastFunds’ Common Stock.
At
Closing (as defined herein), FastFunds agrees to redeem an aggregate of
8,917,344 shares of its common stock held by HPI (the “Redeemed
Shares”).
At
Closing, HPI agrees to sell, assign and transfer to FastFunds all of its rights,
title to and interest in the Redeemed Shares free and clear of any and all
liens, pledges, security interests, restrictions of transfer or encumbrances
of
any kind or nature.
2. Transfer
of Other Subsidiaries’ Common Stock.
At
Closing, HPI agrees to sell, assign and transfer to FastFunds, and FastFunds
agrees to purchase from HPI, all of HPI’s rights, title to and interest in an
aggregate of (i) 5,000,000 shares of Denaris common stock, (ii) 1,000 shares
of
Nova Financial common stock, and (iii) 2,000 shares of Key Financial common
stock held by HPI (collectively, the “Other
Subsidiaries’ Shares”),
free
and clear of any and all liens, pledges, security interests, restrictions of
transfer or encumbrances of any kind or nature.
3. Consideration
for Redeemed Shares and Other Subsidiaries’ Shares.
In
consideration of the Redemption and its receipt of the Redeemed Shares and
the
Other Subsidiaries’ Shares as set forth in Sections 1
and
2,
FastFunds shall cancel at Closing the FastFunds Debt Payable and release HPI
from any and all payment and related obligations with respect to the FastFunds
Debt Payable.
4. Closing.
All
transactions contemplated by the Agreement, including the assignment of the
Redeemed Shares and the Other Subsidiaries’ Shares and the Closing Payment,
shall take place on and be effective as of January 2, 2007 or such other time
as
agreed by the parties (the “Closing”).
The
time and date on which the Closing occurs shall be referred to herein as the
“Closing
Date.”
At
the
Closing, FastFunds will pay the Closing Payment to HPI pursuant Section
3,
and HPI
will deliver executed assignments separate from certificate, with respect to
the
Redeemed Shares and the Other
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Subsidiaries’
Shares, in the forms attached hereto as Exhibits
A, B, C and
D,
respectively. Promptly following the closing, HPI shall use its best efforts
to
deliver to FastFunds all of its stock certificates representing the Redeemed
Shares and the Other Subsidiaries’ Shares, duly endorsed in blank for transfer
on the books of FastFunds, Denaris, Key Financial and Nova Financial, and/or
an
affidavit of loss with respect to one or more certificates in form acceptable
to
FastFunds, in its sole discretion.
5. Representations
and Warranties of HPI.
HPI
hereby represents and warrants to FastFunds, as of the date hereof and as of
the
Closing Date, that:
(a) HPI
is
duly incorporated, validly existing and in good standing under the laws of
the
State of Delaware.
(b) HPI
is
the record and beneficial owner of the Redeemed Shares and the Other
Subsidiaries’ Shares free and clear of any and all encumbrances, except for the
HPI Security Interest. Subject to the receipt of the executed Consent and
Release of the Secured Parties (as required by Section 7(c))
and the
assignment of the Redeemed Shares and the Other Subsidiaries’ Shares pursuant
hereto, FastFunds will receive good and marketable title to the Redeemed Shares
and the Other Subsidiaries’ Shares free and clear of all
encumbrances.
(c) Neither
the execution and delivery of this Agreement nor the transactions contemplated
hereby will constitute a violation or default under any term or provision of
any
contract, commitment, indenture or other agreement or restriction of any kind
or
character to which HPI is bound.
(d) HPI
has
obtained the approval of its Board of Directors to enter into this Agreement
and
the transactions contemplated hereby, and has the full legal power and authority
to transfer the Redeemed Shares and the Other Subsidiaries’ Shares without
obtaining the consent or approval of any other person, entity or governmental
authority, except for the Secured Parties.
(e) At
Closing, HPI will deliver an executed assignment separate from certificate,
with
respect to the Redeemed Shares and the Other Subsidiaries’ Shares, in the form
attached hereto as Exhibits
A, B, C and
D.
(f) HPI
has
been represented in the preparation and negotiation of this Agreement and the
transactions contemplated hereby by legal counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Brand, LLP, that is independent and separate from the legal counsel used by
FastFunds for such purposes.
6. Representations,
Warranties and Covenants of FastFunds.
FastFunds hereby represents, warrants and covenants to HPI, as of the date
hereof and as of the Closing Date, that:
(a) FastFunds
is duly incorporated, validly existing and in good standing under the laws
of
the State of Nevada.
(b) Neither
the execution and delivery of this Agreement nor the transactions contemplated
hereby will constitute a violation or default under any term or provision of
any
contract, commitment, indenture or other agreement or restriction of any kind
or
character to which FastFunds is bound.
(c) FastFunds
has full legal power and authority to redeem the Redeemed Shares and acquire
the
Other Subsidiaries’ Shares without obtaining the consent or approval of any
person, entity or governmental authority, except for the authorization of its
board of directors.
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(d) FastFunds
has obtained the requisite approval and authorization from its board of
directors to enter into this Agreement and to consummate the Redemption and
the
other transactions contemplated hereby.
(e) FastFunds
has been represented in the preparation and negotiation of this Agreement and
the transactions contemplated hereby by legal counsel, ▇▇▇▇▇ ▇▇▇▇▇▇▇, that
is
independent and separate from the legal counsel used by HPI for such
purposes.
(f) From
the
date hereof to and including the Closing Date, FastFunds will not effect any
changes in its capital structure without prior written consent of HPI, such
prohibition to include, without limitation, except as expressly set forth
herein, any action by FastFunds to, directly or indirectly (i) issue any shares
of capital stock or securities exercisable or convertible into capital stock,
(ii) purchase, redeem, retire or otherwise acquire for value any of its capital
stock or other securities now or hereafter outstanding, return any capital
to
its stockholders, or distribute any of its assets to its stockholders or (ii)
make any payment or declare any dividend on any of its capital stock or other
securities.
7. Conditions
to the Obligations of Each Party.
The
respective obligations of HPI and FastFunds to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions as of the Closing Date, unless waived in writing by all
parties:
(a) No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction preventing the consummation of
the
transactions contemplated by this Agreement shall be in effect.
(b) No
suit,
investigation, action or other proceeding brought by a governmental entity
shall
be pending against HPI or FastFunds which, in the reasonable opinion of counsel
for HPI or FastFunds, would be likely to restrain or prohibit any such party
from consummating the transactions contemplated hereby or result in damages
or
other relief being obtained from such party, except where such suit,
investigation, action or other proceeding is not likely to result in a material
adverse effect to either HPI or FastFunds.
(c) The
parties shall have received the written consent and release of the Secured
Parties substantially in the form attached hereto as Exhibit
E.
8. Conditions
to the Obligations of HPI.
The
obligations of HPI to consummate the transactions contemplated by this Agreement
are further subject to the satisfaction of the following conditions as of the
Closing Date:
(a) The
representations, warranties and covenants set forth in Section 6
shall be
true and correct in all material respects as of the Closing Date.
(b) FastFunds
shall have performed and complied with all of its covenants hereunder in all
material respects through the Closing.
HPI
may
waive any condition specified in this Section 8
if it
executes a writing so stating at or prior to Closing.
9. Conditions
to the Obligations of FastFunds.
The
obligations of FastFunds to consummate the transactions contemplated by this
Agreement are further subject to the satisfaction of the following conditions
as
of the Closing Date:
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(a) The
representations and warranties set forth in Section 5
shall be
true and correct in all material respects as of the Closing Date.
(b) HPI
shall
have performed and complied with all of its covenants hereunder in all material
respects through the Closing.
(c) All
actions to be taken by HPI in connection with consummation of the transactions
contemplated hereby and all certificates and other documents required to effect
the transactions contemplated hereby will be reasonably satisfactory in form
and
substance to FastFunds.
FastFunds
may waive any condition specified in this Section 9
if it
executes a writing so stating at or prior to the closing.
10. Voting
Agreement.
From
the date hereof until such time that HPI and its affiliates beneficially hold
less than ten percent (10%) of the outstanding equity or voting interest in
FastFunds, with respect to any vote of the stockholders of FastFunds (except
a
vote directly relating to this Redemption Agreement, provided that, with respect
to such a vote, HPI and its affiliates will not vote in favor of or otherwise
support any attempt to undermine or avoid the consummation of the transaction
contemplated herein or any of the terms and conditions set forth in this
Agreement), HPI and its affiliates hereby agree to vote the Redeemed Shares
(and
any additional shares of capital stock of FastFunds held by HPI and its
affiliates at such time) in the same manner and proportion as other stockholders
of FastFunds vote their shares. HPI and its affiliates further agree to take
any
such further actions as are reasonably requested by FastFunds in order to
effectuate the terms of this provision, including, if necessary, the execution
and delivery of a proxy to vote such shares in the manner required. Successors
and assigns of the Redeemed Shares (and any additional shares of capital stock
of FastFunds held by HPI), including any assignee by foreclosure or other
transfer, are not intended to be subject to the terms of this provision.
11. Indemnification.
HPI
agrees to indemnify and hold harmless FastFunds from and against any and all
loss, damage or liability (including, but not limited to, reasonable legal
fees
and costs) that FastFunds may incur or suffer by reason of, or which results,
arises out of or is based upon (i) any breach of HPI’s representations,
warranties or covenants contained in this Agreement, or (ii) the Initial
Purchase Agreement, the Second Purchase Agreement or any other related agreement
or debt instrument entered into by and between HPI and the Secured Parties
prior
to the date hereof. FastFunds agrees to indemnify and hold HPI harmless from
and
against any and all loss, damage or liability (including, but not limited to,
reasonable legal fees and costs) that HPI may incur or suffer by reason of,
or
which results, arises out of or is based upon any breach of FastFunds’
representations, warranties or covenants contained in this
Agreement.
12. Mutual
Release of Claims.
In
consideration of the benefits of this Agreement, and except as otherwise
provided in this Agreement, FastFunds, on behalf of itself and its predecessors,
successors and assigns, and HPI, on behalf of itself and its predecessors,
successors and assigns (collectively, the “Releasing
Parties”)
do
hereby absolutely and unconditionally release, waive and otherwise relinquish
any and all claims, demands, actions, causes of action, suits, debts, dues,
damages, judgments, obligations, liabilities, controversies, costs, expenses,
attorneys’ fees, and executions whatsoever, whether known or unknown, asserted
or unasserted, actual or potential, individual or joint, direct or indirect,
fixed or contingent, in law, admiralty or equity, of every kind and nature
whatsoever, which the Releasing Parties ever had, now have, or hereafter can,
shall, or may have, or claim to have, against the other party, for, upon, or
by
reason of any matter, cause of action, or thing, whatsoever from the beginning
of the world to the Closing Date, including without limitation, pursuant to
the
Initial Purchase Agreement, the Chex Merger, the Second Purchase Agreement,
the
Chex Asset Sale, the
5
FastFunds
Note, the FastFunds Debt Payable and the Equitex Merger (collectively, the
“Released
Claims”).
The
Released Claims include, without limitation, any claims for breach of express
or
implied contract, breach of implied misrepresentation, negligence, negligent
misrepresentation, breach of fiduciary duty, actual or constructive fraud,
including, without limitation, common law fraud or fraud or manipulation
asserted under any statutory theory under any federal or state law and
including, without limitation, under any theory of primary, secondary or control
person liability, estoppel, defamation, conspiracy, business or economic
interference, violation of any federal or state securities law, rule or
administrative regulation, violation of public policy and including for
attorneys’ or other professional fees.
Except
as
expressly waived in this Agreement by Whitebox and Pandora, the terms of Section
11 and this Section 12 of this Agreement shall not be interpreted, and shall
not
be deemed, to affect any rights of Whitebox and Pandora with respect to HPI,
FastFunds and their respective subsidiaries and assets, including their rights
pursuant to the following agreements of Whitebox and Pandora: (i) the Initial
Purchase Agreement; (ii) the Registration Rights Agreement dated March 8, 2004
with HPI; (iii) the Guaranty Agreement dated March 8, 2004 with FastFunds;
(iv)
the Assignment Agreement dated March 8, 2004 with HPI and FastFunds; (v) the
Security Agreement dated June 4, 2004 with FastFunds; (vi) the Convertible
Promissory Note dated March 8, 2004 in the face amount of $3,000,000 and payable
to Pandora (issued as a replacement of a like note originally issued in March
2004); and (vii) the Convertible Promissory Note dated March 8, 2004 in the
face
amount of $2,000,000 and payable to Whitebox (issued as a replacement of a
like
note originally issued in March 2004). Accordingly, Section 11 shall not be
interpreted to impose any indemnification obligation upon either HPI or
FastFunds, and Section 12 shall not be interpreted to release any claims as
between HPI and FastFunds, to the extent that it would adversely affect the
rights of Pandora or Whitebox (either before or after any foreclosure upon
HPI
or FastFunds assets) as against either HPI or FastFunds existing prior to the
execution of this Agreement.
13. HPI
Resale Registration.
HPI
shall use its best efforts to file with the Securities and Exchange Commission
(the “SEC”)
a
registration statement covering the resale of the 1,200,000 shares of HPI common
stock currently held by FastFunds (the “HPI
Resale Shares”)
within
180 days after Closing and use its best efforts to cause such registration
statement to be declared effective after the filing the registration statement.
HPI will keep such registration statement effective for one year following
the
date initially declared effective by the SEC. HPI shall bear all expenses
incurred in connection with the filing and obtaining effectiveness of the
registration statement. HPI may require persons who sell HPI Resale Shares
to
furnish to HPI such information regarding such person and the distribution
proposed by such person as HPI may reasonably request in writing or as shall
be
required in connection with the registration. HPI may require persons who sell
HPI Resale Shares pursuant to the registration statement to suspend such sales
for such reasonable periods of time as HPI may require, acting in a reasonable
manner, using best efforts to effect any required amendment to such registration
statement or supplement to the prospectus included in the registration
statement.
14. FastFunds
Resale Registration.
FastFunds shall use its best efforts to file with the SEC a registration
statement covering the covering the resale of the 3,500,000 shares of FastFunds
common stock held by HPI immediately following the closing (the “FastFunds
Resale Shares”)
within
180 days after Closing and use its best efforts to cause such registration
statement to be declared effective after the filing the registration statement.
FastFunds will keep such registration statement effective for one year following
the date initially declared effective by the SEC. FastFunds shall bear all
expenses incurred in connection with the filing and obtaining effectiveness
of
the registration statement. FastFunds may require persons who sell FastFunds
Resale Shares to furnish to FastFunds such information regarding such person
and
the distribution proposed by such person as FastFunds may reasonably request
in
writing or as shall be required in connection with the registration. FastFunds
may require persons who sell FastFunds Resale Shares pursuant to the
registration statement to suspend such sales for such reasonable periods of
time
as FastFunds may require, acting in a reasonable manner, using
6
best
efforts to effect any required amendment to such registration statement or
supplement to the prospectus included in the registration
statement.
15. Tax
Covenants.
(a) Expected
Tax Effects.
The
parties, for themselves and on behalf of their current and future wholly-owned
subsidiaries, agree to the terms of this Section 15
and
further acknowledge and intend that:
(i) As
of the
close of business on the Closing Date, HPI will cease to be a member of the
Pre-Closing Affiliated Group that has been filing consolidated federal income
Tax Returns.
(ii) For
2006
and Taxable Years ending after the Closing Date, FastFunds will continue to
be
entitled to the Tax benefit of its use of the 2006 federal consolidated net
operating loss of the Pre-Closing Affiliated Group, to offset its substantial
net income realized during 2006, to the extent that such Tax benefit is allowed
under Sections 172 and 1502 of the Code.
(iii) Except
as
otherwise provided in the preceding paragraph, HPI will be entitled to any
remaining portion of the pre-Closing federal consolidated net operating loss
of
the Pre-Closing Affiliated Group that is attributable to Pre-Closing Taxable
Years of HPI pursuant to the Treasury Regulations issued under Code Section
1502.
(iv) FastFunds
and the Other Subsidiaries will become the Post-Closing Affiliated Group
entitled to any remaining portion of the pre-Closing federal consolidated net
operating loss of the Pre-Closing Affiliated Group that is attributable to
their
respective Pre-Closing Taxable Years.
(b) Tax-Related
Definitions.
For
purposes of this Agreement, the following terms shall be defined as
follows:
“Affiliated
Group”
means
an affiliated group of corporations within the meaning of Code Section 1504(a)
(and without regard to the exclusions contained in Code Section 1504(b)) for
the
Taxable Period or, for purposes of any state, foreign or local Income Tax
matters, any consolidated, combined or unitary group of corporations within
the
meaning of the corresponding provisions of tax law for the jurisdiction in
question.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
“Post-Closing
Affiliated Group”
means
FastFunds, the Other Subsidiaries, any other corporations that become members
of
that Affiliated Group after the Closing, and any of their respective successors
that retain their respective Tax attributes.
“Post-Closing
Taxable Year”
means
a
Taxable Year that begins after the Closing Date.
“Pre-Closing
Affiliated Group”
means
HPI, FastFunds and each of the Other Subsidiaries, to the extent that such
corporation was a member of HPI’s Affiliated Group during any Pre-Closing
Taxable Year; and any of their respective successors that retain their Taxable
attributes. To the extent applicable to any state income Tax matters, the
“Pre-Closing Affiliated Group” shall also include all corporations joining, or
whose income is reported, in the filing of a consolidated, combined or unitary
income Tax Return for the state in question.
7
“Pre-Closing
Taxable Year”
means
a
Taxable Year that ends on or before the Closing Date.
“Straddle
Year”
means
any Taxable Year (of any member or members of the Pre-Closing Affiliated Group)
that begins before the Closing Date and ends after the Closing
Date.
“Tax”
(and
with the corresponding meaning “Taxes” and “Taxable”) shall include (i) any net
income, gross income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profit tax, custom duty or other
tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest and any penalty, addition to tax or additional amount
imposed by any Taxing authority (domestic or foreign); and (ii) any liability
for the payment of any amount of the type described in clause (i) of this
paragraph as a result of being a member of a consolidated, affiliated, combined
or unitary group.
“Tax
Returns”
(and
with the corresponding meaning “Tax Return”) shall include all Tax Returns,
declarations, elections, reports and information Tax Returns and statements
required to be filed or sent by or relating to any member or members of the
Pre-Closing Affiliated Group and relating to any Taxes with respect to any
income, payroll, properties or operations of any of those members.
“Taxable
Year”
means
a
Taxable year (which may be shorter than a full calendar or fiscal year), year
of
assessment or similar period with respect to which any Tax may be
imposed.
(c) Separate
Tax Returns to be Filed by Each Corporation.
Each
member of the Pre-Closing Affiliated Group shall be responsible for preparing
and filing all Tax Returns that are required to be filed by that member before
or after the Closing Date and are not filed on a consolidated, combined or
unitary basis; and that member shall make (or cause to be made) any required
Tax
payments due with respect to such Tax Returns. Any of those Tax Returns filed
for a Pre-Closing Taxable Year or Straddle Year must report the operations
of
that member in a manner consistent with its past practice. Any Tax Refund
received by any such member with respect to its own separate Tax liability,
as
determined with respect to a Tax Return filed under this paragraph, shall be
retained by that member and, if another member of the Pre-Closing Affiliated
Group actually receives such Tax refund, such other member shall remit the
amount of the Tax Refund to the member entitled to retain it.
(d) Group
Tax Returns to be Filed by HPI.
HPI
shall be responsible for preparing and filing all Tax Returns required to be
filed before or after the Closing Date for members of the Pre-Closing Affiliated
Group, to the extent those Tax Returns (i) are filed on a consolidated, combined
or unitary basis that includes HPI and at least one other such member, and
(ii)
relate to a Pre-Closing Taxable Year or Straddle Year; and HPI and each other
such member included in each of those Tax Returns shall make (or cause to be
made) its allocable share of any required Tax payments due with respect to
such
Tax Returns. Such Tax Returns will report the income and operations of the
Pre-Closing Affiliated Group in a manner consistent with past practice. HPI
shall be entitled to any refunds of Taxes received with respect to any Tax
Return filed under this paragraph; provided, however, that any portion of such
Tax refund that is allocable or attributable to any other member of the
Pre-Closing Affiliated Group, because it was included in the Tax Return on
which
the Tax refund is based, shall belong to such other member, but if any amount
of
any such Tax refund belonging to any member of the Pre-Closing Affiliated Group
is later determined to be repayable to the appropriate Tax authority, the member
that ultimately received such amount shall repay it to the Tax authority (with
any required interest) or, if applicable, reimburse HPI for any such repayment
and any required interest.
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(e) Group
Tax Returns to be Filed by FastFunds.
FastFunds shall be responsible for preparing and filing all Tax Returns required
to be filed before or after the Closing Date for members of the Pre-Closing
Affiliated Group, to the extent those Tax Returns are (i) filed on a
consolidated, combined or unitary basis including FastFunds and at least one
other corporation other than HPI; and (ii) relate to a Pre-Closing Taxable
Year,
Straddle Year or Post-Closing Taxable Year; and FastFunds and each other
corporation included in each of those Tax Returns shall make (or cause to be
made) its allocable share of any required Tax payments due with respect to
such
Tax Returns. FastFunds or, if applicable, one or more of the Other Subsidiaries
shall be entitled to any refunds of Taxes received with respect to any Tax
Return filed under this paragraph; provided, however, that any portion of such
Tax refund that is allocable or attributable to HPI, because it was included
in
the Tax Return on which the Tax refund is based, shall belong to HPI, but if
any
amount of any Tax refund belonging to any member of the Pre-Closing Affiliated
Group is later determined to be repayable to the appropriate Tax authority,
the
member that ultimately received such amount shall repay it to the Tax authority
(with any required interest) or, if applicable, reimburse FastFunds for any
such
repayment and any required interest.
(f) Allocations
of Tax Liability.
Whenever it is necessary, for purposes of this Agreement, to determine the
Tax
liability of a corporation, or its entitlement to a Tax refund, for a Taxable
period consisting of a portion of a Straddle Year before or after the Closing,
or a shortened Taxable Year of HPI ending on the Closing Date or beginning
on
the following date (a “Partial Taxable Year”), the determination shall be made
(i) in the case of Taxes that are not based on income or gross receipts (e.g.,
property taxes), by apportioning such Taxes on a per diem basis; and (ii) in
the
case of Taxes based on income, payroll or on gross receipts, by apportioning
the
total Tax liability for such Partial Taxable Year on the assumption that it
ended as of the close of business on the Closing Date, with income (or other
applicable measure) apportioned as provided in Treasury Regulations Section
1.1502-76(b); provided, however, that any deferred gain or loss on deferred
intercompany transactions that must be restored to income by any member of
the
Pre-Closing Affiliated Group by reason of the transactions contemplated by
this
Agreement (or any analogous state, local or foreign Tax effects) shall be
allocated entirely to the period ending with the Closing Date. The principles
of
that section of the Treasury Regulations shall also be used to determine the
allocable share of a corporation’s Tax liability or any Tax refund based on a
Tax Return filed on a consolidated, combined or unitary basis.
(g) Carry
Back of Losses and Similar Items.
In the
event that there is (i) a carry back of losses, credits or similar items
(including, without limitation, net operating losses, capital losses and unused
business, foreign and other Tax credits) that is attributable to a Post-Closing
Taxable Year of HPI or any member of the Post-Closing Affiliated Group; (ii)
such carry back is to a consolidated, combined or unitary Tax Return of any
members of the Pre-Closing Affiliated Group for a Pre-Closing Taxable Year
or
Straddle Year; and (iii) as a result of such carry back, any member of the
Pre-Closing Affiliated Group becomes entitled to and receives a refund of any
Taxes that another such member paid for a Pre-Closing Taxable Year or Straddle
Year, or any member of the Pre-Closing Affiliated Group benefits from a credit
of Taxes for such a period (through the reduction of either Taxes previously
paid by another member of the Pre-Closing Affiliated Group or its then-current
Tax liability), then the member receiving such Tax refund or credit shall
promptly pay, to the other member that paid the original Tax or benefited from
the original Tax credit, the amount of such Tax refund or credit together with
any interest thereon received by the member that received the Tax refund or
credit. At the request of any other member of the Pre-Closing Affiliated Group,
HPI (as the common parent of the Pre-Closing Affiliated Group) agrees to prepare
and file on their behalf any
9
claims
for refund of federal income Taxes allocable or attributable to them (and HPI,
if applicable) with respect to any Pre-Closing Taxable Year, pursuant to HPI’s
authority under Treasury Regulations Section 1.1502-77; and each member of
the
Pre-Closing Affiliated Group shall provide the information necessary for HPI
to
prepare and file a tentative carry back adjustment under Treasury Regulations
Sections 1.1502-78(a) (and to take similar action as to any states in which
HPI
was filing consolidated, combined or unitary Tax Returns for Pre-Closing Taxable
Year or Straddle Year), and the requesting party shall reimburse HPI for any
reasonable out-of-pocket costs arising therefrom.
(h) Examination
of Tax Returns.
Each
member of the Pre-Closing Affiliated Group that is or was responsible under
this
Section for filing a Tax Return for any Taxable Year (a “Filing Member”) shall
also be responsible for handling all Tax matters related to that Tax Return,
including but not limited to dealing with and resolving issues raised in an
audit or other examination; provided, however, that (i) the Filing Member shall
notify in writing any other member of Pre-Closing Affiliated Group, whose Tax
liability for any Pre-Closing Taxable Year or Straddle Year is reasonably likely
to be affected by a change in any such Tax Return (an “Affected Member”), within
thirty (30) days after the commencement of any audit or other examination by,
or
dispute with, any Tax authority with respect to such Tax Return, whether it
relates to a Pre-Closing Taxable Year, Straddle Year or Post-Closing Taxable
Year; (ii) each Affected Member’s authorized representative(s) shall be allowed
to participate therein; (iii) and the Filing Member shall not settle any such
dispute without the written consent of each Affected Member, which shall not
be
unreasonably withheld or delayed, unless the Filing Member then agrees in
writing to indemnify each such Affected Member for any increase in Tax liability
(whether such increase in Tax liability occurs prior to, contemporaneously
with
or in a year after the year in which the relevant activities occur) that results
from the Filing Member’s activities under this paragraph; and (iv) the Filing
Member shall remit to each Affected Member its allocable share of any Tax refund
or other Tax benefit realized by the Filing Member from its activities under
this paragraph, but only at the time and to the extent such Tax refund is
actually received or any such Tax benefit is actually realized.
(i) Cooperation.
HPI and
FastFunds shall, and each shall, as applicable, cause its subsidiaries and
affiliates to, use its best efforts to provide each other with such assistance
as may reasonably be requested by any of them in connection with Tax matters,
including providing information with respect to the preparation of any Tax
Return or other document required to be filed with any Tax authority, any audit
or other examination by any Tax authority, any judicial or administrative
proceeding or dispute relating to liability for Taxes arising under this Section
15;
and
each shall retain and provide to the other reasonable access to such records
and
other information as may be relevant to such Tax Return, audit, examination,
proceeding or determination; provided, however, that a party shall be entitled
to be reimbursed by the other party for its out-of- pocket costs in complying
with the provisions of this paragraph with respect to Taxable Years for which
the Tax Returns are to be filed, unless both parties (including their
subsidiaries) are liable for the related Taxes or would benefit from a Tax
refund or other reduction in Tax liability, in which case the parties’
reasonable out-of-pocket costs will be shared in proportion to their Tax
liability or Tax benefit, as the case may be.
(j) Survival.
Notwithstanding any other provision herein, the provisions of this Section
15
shall
survive the Closing until the expiration of each applicable Tax statute of
limitations, including extensions thereof.
(k) Exclusive
Agreement.
The
parties hereby agree to terminate any existing Tax sharing agreement between
or
among members of the Pre-Closing Affiliated Group. This Section 15
sets
forth the exclusive and entire agreement of the parties relating to (i) sharing
liabilities for Taxes, (ii) division of refunds of Taxes, (iii) control of
proceedings relating to Taxes and (iv) filing of Tax Returns.
10
16. General
Provisions.
This
Agreement sets forth the parties’ final and entire agreement with respect to its
subject matter and supersedes any and all prior understandings and agreements.
This Agreement shall be governed by and construed in accordance with the laws
of
the State of Delaware (without regard to conflicts-of-law principles thereof)
applicable to contracts made and to be performed within such State. If any
provision of this Agreement shall be held by any court of competent jurisdiction
to be illegal, invalid or unenforceable, such provision shall be construed
and
enforced as if it had been more narrowly drawn so as not to be illegal, invalid
or unenforceable, and such illegality, invalidity or unenforceability shall
have
no effect upon and shall not impair the enforceability of any other provision
of
this Agreement.
This
Agreement may be modified or amended only by an instrument in writing signed
by
the parties hereto. No delay or failure on the part of any party to exercise
any
right, power or privilege hereunder shall operate as a waiver thereof; nor
shall
any waiver on the part of any party of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; however,
it may
not be assigned without the prior express written consent of the other party.
For the convenience of the parties and to facilitate the execution of this
Agreement, this Agreement may be executed in counterparts and each such executed
counterpart shall be deemed an original instrument. This Agreement may be
executed and delivered by one or more of the parties by facsimile or
electronically transmitted signature and the parties agree that the reproduction
of signatures by way of facsimile or a computer device will be treated as though
such reproductions were executed originals.
Signature
Page Follows
11
In
Witness Whereof,
the
parties have executed this Redemption and Release Agreement to be effective
as
of the date first written above.
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FastFunds
Financial Corporation
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By
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Its
Chief
Executive Officer
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Hydrogen
Power, Inc.
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By
/s/
▇▇▇▇▇ ▇▇▇▇
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Its
Chief
Executive Officer
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Signature
Page - Redemption and Release Agreement