COMMON STOCK PURCHASE AGREEMENT Private and Confidential
Exhibit
10.2
Private
and Confidential
THIS COMMON STOCK PURCHASE AGREEMENT,
(the “Agreement”) made as of the last executed date below (the “Effective
Date”), by and among BMC Acquisitions Corp., LLC an entity with a principle
address of 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, or its affiliate (the
“Buyer”) and Belmont Partners, LLC a Virginia limited liability company with a
principal address of 000 Xxxx Xxxxxx, Xxxxxxxxxx Xxxxxxxx 00000 (“Seller”),
Yzapp International, Inc. a company organized under the laws of the state of
Nevada and traded under the symbol “YZPI” (the “Company”), and Tri-State Title
& Escrow LLC (“Escrow Agent”) (Buyer, Seller, Company and Escrow Agent each
a “Party” and collectively the “Parties”).
W I T N E
S S E T H:
WHEREAS,
the Seller owns an aggregate of 5,878,894 shares of the common stock, par value
$0.001 per share (the “Stock”), of the Company, which Stock represents a
majority of the capital stock of the Company; and
WHEREAS,
the Buyer wishes to purchase from the Seller, and the Seller wishes to sell to
the Buyer, the Stock in accordance with the terms set forth herein;
NOW, THEREFORE, in consideration of the
mutual promises, covenants, and representations contained herein, and subject to
the terms and conditions hereof, the Parties agree as follows:
1. Agreement to Purchase and
Sell. Seller will sell to Buyer and Buyer agrees to purchase
the Stock in exchange for Three Hundred Thousand U.S. dollars ($300,000.00) (the
“Purchase Price”), to be paid to Seller according to the terms and conditions
set forth in Section 3 herein;
2. Closing. The
closing of the purchase and sale of the Stock, and the payment by Buyer of the
Purchase Price (the “Closing”)
shall take place on or before August 6, 2008, at the offices of Sichenzia Xxxx
Xxxxxxxx Xxxxxxx LLP, 00 Xxxxxxxx, 00xx Xx. Xxx
Xxxx, XX 00000, electronically, or as counsel for the parties otherwise may
agree, subject to the satisfaction of the following Closing Conditions
(hereinafter defined) having been satisfied or waived:
a) Buyer
shall deliver to Seller a copy of this Agreement executed by Buyer (this
delivery, together with the other deliveries required from Buyer by the
provisions of this paragraph (the “Buyer Deliverables”);
b) Seller
shall deliver a fully executed copy of this Agreement to Buyer (this delivery,
together with the other deliveries required from Seller by the provisions of
this paragraph (the “Seller Deliverables”);
c) The
Escrowed Funds (defined in Section 3(a) herein) shall be released to
Seller;
d) Seller
shall cause the board of directors of the Company to execute a resolution
approving the terms of this Agreement and providing that, effective as of the
Closing Date, or such later date as agreed to between the Company and its
current officers, (i) the Company’s officers and directors shall resign and be
duly replaced by the Buyer’s Chief Executive Officer designee, who is Xxxxxx X.
Xxxxx; (ii) the Company will cause the Buyer’s director designee to be duly
appointed, who is Xxxxxx X. Xxxxx; and
e) Seller
will use its reasonable best efforts to ensure that two of the Company’s current
directors will remain directors of the Company until the expiration of the
10-day period beginning on the date of the filing of the Information Statement
relating to a change in majority of directors of the Company with the Commission
pursuant to Rule 14f-1 promulgated under the Exchange Act (“Information
Statement”), and the Buyer agrees to file with the Securities and Exchange
Commission promptly after the Closing Date a report on Form 14f disclosing the
change in control of the Company.
f) Following
the Closing and the satisfaction of the conditions set forth in Sections 2(d)
and 2(e) above, Buyer shall deliver to Seller:
(i) a
resolution of the board of directors of the Company and Irrevocable Transfer
Agent Instructions to effectuate performance of Section 3(c) of this Agreement
(the “Board Resolution”); and(ii)a resolution of the majority shareholders of
the Company to effectuate performance of Section 3(c) of this Agreement (the
“Shareholder Resolution”);
g) Seller
shall deliver to Buyer:
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(i) to the
extent reasonably available to Seller, and after the full performance of Section
3(a), true and correct copies of the Company’s business, financial and corporate
records including but not limited to: correspondence files, bank statements,
checkbooks, minutes of shareholder and directors meetings, financial statements,
shareholder listings, stock transfer records, agreements and contracts;
and,
(ii) upon
delivery by Buyer of the Buyer deliverables, and delivery to the Escrow Agent of
the balance of the Purchase Price as required by the provisions of paragraph
3(b) below, Seller shall deliver (or cause the transfer agent to issue) to Buyer
stock certificate(s) evidencing the Stock, free and clear of all liens, charges,
or encumbrances of whatsoever nature.
.
h) For
purposes hereof, the term “Closing Conditions” shall mean:
(i) that the
Seller shall have delivered to Buyer the Seller Deliverables;
(ii) that the
representations of the Seller and the Company contained in this Agreement shall
be true and complete in all respects; and
(iii) that no
material adverse change in the business or financial condition of the Company
shall have occurred or be threatened since the date of this Agreement, and no
action, suit or proceedings shall be threatened or pending before any court of
governmental agency or authority or regulatory body seeking to restraint,
prohibition or the obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated by this Agreement
or that, if adversely decided, has or may have a material adverse effect upon
the Company or the Stock.
3. Payment
Terms.
a) Buyer has
previously placed a deposit of One Hundred Thousand U.S. Dollars ($100,000.00)
into an escrow account (the “Deposit”) with Tri-State Title & Escrow, LLC
(the “Escrow Agent”), which Deposit shall be applied towards the satisfaction
and payment of the Purchase Price as provided for and accordance with the terms
of this Agreement. At Closing, Buyer shall deposit an additional Two
Hundred Thousand U.S. Dollars ($200,000.00) (the “Balance”) with the Escrow
Agent(the Deposit and the Balance collectively the “Escrowed
Funds”). Upon satisfaction of all Closing Conditions, the Escrowed
Funds shall be released according to Section 3(b) herein.
b) Wire
transfer of the Balance shall be made by wire transfer of immediately available
funds, into the Escrow Account, and the Escrowed Funds shall be released to
Seller at Closing with no further instruction or direction from Buyer to the
Escrow Agent. Escrow Account wire transfer instructions are as
follows:
Bank Name: | Cardinal Bank | ||
Account Name: | Tri-State Title & Escrow, LLC | ||
0000 Xxxxxxxxxx Xx., Xxxxx 000 | |||
XxXxxx, XX 00000 | |||
Account Number: | 5060024931 | ||
Routing Number: | 000000000 | ||
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c) Stock
Position.
(i) In
consideration of the benefits provided to the Company hereby, Company shall
issue and deliver to Seller, such fully paid, non-assessable restricted shares
of the Company’s common stock as necessary for Seller to attain at least a one
and one tenth percent (1.1%) post Transaction (hereinafter defined) ownership
interest in the Company (the “Position”). The Position shall be based
on the capital structure of the Company post Transaction (taking into account
any and all shares issued in connection with the Transaction, any reverse stock
split (if any) completed in connection with or as a condition to such
Transaction, and after any other initial issuance of stock (including issuance
to the Company’s directors and/or officers) completed prior to, in connection
with, or as a condition to such Transaction. Buyer shall take all
steps necessary to fully effectuate the provisions of this Section 3 and, to
that end, promptly after the Closing endeavor to identify an appropriate
operating business that would be suitable for acquisition by the
Company. For purposes hereof, “Transaction” shall mean the
acquisition by the Company of an operating business by merger, acquisition of
shares or asset acquisition.
(ii) Certificate(s)
evidencing the Position shall be issued and delivered to the Seller immediately
following the actions anticipated by Section 3(c)(i) herein (the “Actions”), but
in no case later than eleven (11) months following the Closing Date
hereof. In the event that all Actions have not been completed by the
eleventh month anniversary of the Closing Date, Seller shall transfer to Buyer
shares comprising the Position on that date and shall issue additional shares as
necessary following completion of the Actions.
(iii) The
Shareholder Resolution whereby the majority of the shareholders of the Company
agree to the issuance of the Position.
(iv) The
effective date of all Shares transferred pursuant to this Section 3 shall be the
Closing Date and shall be memorialized on the face of the certificates
evidencing such shares.
d) The
Parties acknowledge and agree that the Position shall be newly issued,
restricted common shares of the Company. Buyer agrees for himself and
on behalf of the Company to accept any reasonable legal opinion of Seller’s
counsel regarding the removal of restrictions from the Position. In
the event that, within 13 months from the date of a Transaction, a registration
statement to register the shares representing the Position shall not have not
been filed and the shares representing the Position otherwise cannot be sold in
accordance with Rule 144 of the Securities Act of 1933, as amended, the Company
and the Buyer, jointly and severally, shall pay to Seller liquidated damages in
the amount of 2% per month until such shares may be sold, not to exceed 24% in
the aggregate based upon the price per share as of the one year anniversary of
this Agreement, multiplied by the number of shares representing the
Position. The Parties agree that the liquidated damages hereunder are
not a penalty. Notwithstanding the foregoing, the Buyer agrees that,
if a registration statement is filed to register shares of the Company that have
been sold in connection with a Transaction or an initial financing or are
underlying securities sold in a financing transaction (the “Registrable Shares”)
that is undertaken in connection with or as a result of the Transaction during
the period commencing on the date hereof and ending on the date that is 12
months from the date of a Transaction, that Seller shall be permitted to have
the shares representing the Position included in such registration statement.
Notwithstanding anything to the contrary set forth
in this Section 3(d), in the event the Commission does not permit the Company to
register all of the Registrable Shares (and the shares representing the
Position) because of the Commission’s application
of Rule 415, the Company shall be permitted to remove the shares representing
the Position from such Registration Statement prior to any of the Registrable
Securities being removed.
e) In
consideration of the benefits provided to the Company hereby, Company hereby
agrees to be liable for all amounts due hereunder and all other obligations of
this Agreement.
f)
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Representations and
Warranties of Seller. Seller hereby represents and
warrants to Buyer that the statements in the following paragraphs of this
Section 4 are all true and complete as of the date
hereof:
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a.
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Title
to Stock. Seller is the record and beneficial owner and has
sole managerial and dispositive authority with respect to the Stock and
has not granted any person a proxy that has not expired or been validly
withdrawn. The sale and delivery of the Stock to Buyer pursuant
to this Agreement will vest in Buyer the legal and valid title to the
Stock, free and clear of all liens, security interests, adverse claims or
other encumbrances of any character whatsoever (“Encumbrances”) (other
than Encumbrances created by Buyer and restrictions on resales of the
Stock under applicable securities
laws).
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b.
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Liabilities
of the Company. The liabilities referenced in Exhibit 1 herein represent,
to the best of Seller’s knowledge, the total outstanding liabilities of
the Company. The Seller shall take all necessary and prudent
actions to effectively meet the obligations of the Company in regards to
the liabilities referenced in Exhibit 1 (the “Obligations”). The Seller
shall have sixty (60) days from the Effective Date to effectively payoff,
satisfy or discharge all of the Obligations, and shall indemnify and hold
harmless the Company and the Buyer from and against all losses, claims,
liabilities, claims and expenses (including attorneys’ fees and expenses)
in connection with, by reason of or related to Seller’s failure to perform
fully its obligations under this paragraph. To secure Seller’s
indemnification obligations, Seller agrees to deposit with the Escrow
Agent at the Closing, the sum of $20,000 which, 65 days after the Closing
Date, Escrow Agent either (i) shall pay to Seller, if Seller shall have
paid or satisfies or discharged all of the Obligations so that none of the
Obligations are liabilities of the Company on that date or thereafter, or
(ii) shall pay to Buyer, if Seller shall not have paid or satisfies or
discharged all of the Obligations so that none of the Obligations are
liabilities of the Company on that date or
thereafter. Furthermore, if Buyer retains counsel or incurs any
other reasonable expense, whether or not any action is commenced, in order
to enforce Seller’s indemnification obligations under this paragraph, then
Seller also shall pay to Buyer all of Seller’s attorneys’ fees and
expenses incurred in connection with Buyer’s enforcement of such
indemnification obligations of
Seller.
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c.
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Full Power and
Authority. Seller represents that it has full power and authority
to enter into this Agreement.
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d.
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No
Conflict. Neither the execution or delivery by the
Seller of this Agreement, nor the consummation or performance by the
Seller of the transactions contemplated hereby or thereby will, directly
or indirectly, (a) contravene, conflict with, constitute a default (or an
event or condition which, with notice or lapse of time or both, would
constitute a default) under, any agreement or instrument to which the
Seller is a party or to which the Stock are subject; or (b) contravene,
conflict with, or result in a violation of, any law to which the Seller
may be subject.
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e.
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Litigation. There
is no pending action, claim or proceeding against the Seller that involves
the Stock or that challenges, or may have the effect of preventing,
delaying or making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement and, to the knowledge of the
Seller, no such action, claim or proceeding has been threatened, and no
event or circumstance exists that is reasonably likely to give rise to or
serve as a basis for the commencement of any such action, claim or
proceeding.
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f.
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Representations of the
Company. The representations and warranties of the
Company in Section 6 below, are true and
complete.
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5. Representations and
Warranties of Buyer. Buyer hereby represents and warrants to
Seller that the statements in the following paragraphs of this Section 5 are all
true and complete as of the date hereof:
a.
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Affidavit
of Source of Funds. Prior to each transfer to Seller
or each deposit
into escrow, Buyer shall execute an Affidavit of Source of Funds, to the
reasonable satisfaction of Seller, which attests that the funds to be
transferred are not the proceeds of nor are intended for or being
transferred in the furtherance of any illegal activity or activity
prohibited by federal or state laws. Such activity may include, but is not
limited to: tax evasion; financial misconduct; environmental crimes;
activity involving drugs and other controlled substances; counterfeiting;
espionage; kidnapping; smuggling; copyright infringement; entry of goods
into the United States by means of false statements; terrorism; terrorist
financing or other material support of terrorists or terrorism; arms
dealing; bank fraud; wire fraud; mail fraud; concealment of assets or any
effort by conspiracy or otherwise to defeat, defraud or otherwise evade,
any party or the Court in a bankruptcy proceeding, a receiver, a
custodian, a trustee, a marshal, or any other officer of the Court or
government or regulatory official; bribery or any violation of the Foreign
Corrupt Practices Act; trading with enemies of the United States; forgery;
or fraud of any kind. Buyer further warrants that all transfers of monies
will be in accordance with the Money Laundering Control Act of 1986 as
amended.
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b.
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Exempt
Transaction. Buyer understands that the offering and sale of
the Stock is intended to be exempt from registration under the Securities
Act of 1933, as amended (the “Act”) and exempt from registration or
qualification under any state law.
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i.
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Full
Power and Authority. Buyer represents that it has full power
and authority to enter into this
Agreement.
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ii.
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Stock. The
Stock to be purchased by Buyer hereunder will be acquired for investment
for Buyer’s own account, not as a nominee or agent, and not with a view to
the public resale or distribution thereof, and Buyer has no present
intention of selling, granting any participation in, or otherwise
distributing the same, unless and except and to the extent that such Stock
is to be sold, pledged or transferred in connection with a Transaction or
an initial financing of the
Company.
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iii.
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Information
Concerning the Company. Buyer is solely responsible for
conducting its own due diligence with respect to the Company and its
liabilities and for gathering enough information upon which to base an
investment decision in the Stock. Buyer acknowledges that
Seller has made no representations with respect to the Company or its
status except as explicitly stated in this
Agreement.
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iv.
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Investment
Experience. The Buyer understands that purchase of the Stock
involves substantial risk. The
Buyer:
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has
experience as a purchaser in securities of companies in the development stage
and acknowledges that he can bear the economic risk of Buyer’s investment in the
Stock; and,
has such
knowledge and experience in financial, tax, and business matters so as to enable
Buyer to evaluate the merits and risks of an investment in the Stock, to protect
Buyer’s own interests in connection with the investment and to make an informed
investment decision with respect thereto.
v.
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No
Oral Representations. No oral or written representations have
been made other than or in addition to those stated in this Agreement.
Buyer is not relying on any oral statements made by Seller, Seller's
representatives, employee’s or affiliates in purchasing the
Stock.
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vi.
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Restricted
Securities. Buyer understands that the Stock is characterized as
“restricted securities” under the Act inasmuch as they were acquired from
the Company in a transaction not involving a public
offering.
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vii.
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Opinion
Necessary. Buyer acknowledges that if any transfer
of the Stock is proposed to be made in reliance upon an exemption under
the Act, the Company may require an opinion of counsel satisfactory to the
Company that such transfer may be made pursuant to an applicable exemption
under the Act. Buyer acknowledges that a restrictive legend
appears on the Stock and must remain on the Stock until such time as it
may be removed under the Act.
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viii.
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Compliance. Buyer
shall comply with all applicable securities laws, rules and regulations
regarding this Agreement, the Transaction and all related transactions,
including but not limited to filing any forms required by the U.S.
Securities and Exchange Commission.
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6. Representations and
Warranties of the Company. The Company hereby represents, warrants,
covenants and agrees, as of the date hereof and as of the Closing Date, as
follows:
a.Organization and
Authority.
i.
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The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of
Nevada.
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ii.
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Complete
and correct copies of the Company’s certificate of incorporation and
by-laws are available for review on the XXXXX system maintained by the
U.S. Securities and Exchange Commission (the “Commission”).
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iii.
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The
Company has full power and authority to carry out the transactions
provided for in this Agreement, and this Agreement constitutes the legal,
valid and binding obligations of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency and other laws of general application affecting the enforcement
of creditor’s rights and except that any remedies in the nature of
equitable relief are in the discretion of the court. All
necessary action required to be taken by the Company for the consummation
of the transactions contemplated by this Agreement has been
taken.
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iv.
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The
execution and performance of this Agreement will not constitute a breach
of any material agreement or indenture to which the Company is a party,
and will not violate any judgment, decree, order, writ, rule, statute, or
regulation applicable to the Company. The execution and
performance of this Agreement will not violate or conflict with any
provision of the certificate of incorporation or by-laws of the
Company.
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v.
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The
Stock is duly and validly authorized and issued, fully paid and
non-assessable.
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vi.
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The
authorized Common Stock consists of 50,000,000 shares of common stock, par
value $0.001 per share, of which 11,746,041 shares are issued and
outstanding, and 1,000,000 million shares of blank check preferred stock,
par value $0.001 per share, of which none have been designated or
issued. The Company has no outstanding or authorized warrants,
options, other rights to purchase or otherwise acquire capital stock or
any other securities of the Company, preemptive rights, rights of first
refusal, registration rights or related commitments of any
nature. All issued and outstanding Common Stock was either (i)
registered under the Securities Act, or (ii) issued pursuant to valid
exemptions from registration
thereunder.
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vii.
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No
consent, approval or agreement of any person, party, court, governmental
authority, or entity is required to be obtained by the Company in
connection with the execution and performance by the Company of this
Agreement or the execution and performance by the Company of any
agreements, instruments or other obligations entered into in connection
with this Agreement.
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viii.
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The
Stock is free and clear of all liens, claims and
encumbrances.
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b.SEC
Documents.
i.
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The
Company is current with its reporting obligations under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”). To the Company’s knowledge, none of the Company’s
filings made pursuant to the Exchange Act (collectively, the “Company
SEC Documents”) contains any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company SEC
Documents, as of their respective dates, complied in all material respects
with the requirements of the Exchange Act, and the rules and regulations
of the Commission thereunder, and are available on the Commission’s XXXXX
system.
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ii.
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The
Company SEC Documents include the Company’s audited consolidated financial
statements for the fiscal years ended July 31, 2007 and 2006
(collectively, the “Financial
Statements”), including, in each case, a balance sheet and the
related statements of income, stockholders’ equity and cash flows for the
period then ended, together with the related notes, and for the quarterly
periods ended October 31, 2007, January 31, 2008 and April 30,
2008. The Financial Statements present fairly the financial
position of the Company at the respective balance sheet dates, and fairly
present the results of the Company’s operations, changes in stockholders’
equity and cash flows for the periods
covered.
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iii.
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At
the close of business on July 31, 2008, the Company did not have any
material liabilities, absolute or contingent, of the type required to be
reflected on balance sheets prepared in accordance with GAAP which are not
fully reflected, reserved against or disclosed on the balance sheet for
the quarterly period ended April 30, 2008. The Company has not
guaranteed or assumed or incurred any obligation with respect to any debt
or obligations of any person or entity, except endorsements made in the
ordinary course of business in connection with the deposit of items for
collection. The Company does not have any debts, contracts,
guaranty, standby, indemnity or hold harmless commitments, liabilities or
obligations of any kind, character or description, whether accrued,
absolute, contingent or otherwise, or due or to become due, and not
heretofore paid or discharged. As of the Closing Date, the
Company shall have no trade payables, indebtedness or other liabilities
that can be settled by the payment of a sum of
money.
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c.
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Absence of
Changes. Since July 31, 2007, except as set forth in the
Company SEC Documents, there have not
been:
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i.
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any
changes in the consolidated assets, liabilities, or financial condition of
the Company, except changes in the ordinary course of business which do
not and will not have a material adverse effect on the
Company;
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ii.
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any
changes or amendments to a material contract, charter document or
arrangement not in the ordinary course of business to which the Company is
a party other than contracts which are to be terminated at or prior to the
Closing;
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iii.
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any
loans made by the Company to any of affiliate of the Company or any of the
Company’s employees, officers, directors, shareholders or any of its
affiliates;
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iv.
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any
declarations or payments of any dividend or other distribution or any
redemption of any capital stock of the
Company;
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v.
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any
other events or conditions of any character which might have a material
adverse effect on the Company; or
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vi.
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any
agreements or commitments by the Company to do any of the things described
in this Section 6.
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d. Contracts and
Commitments. Except as contemplated under this Agreement or
set forth in the Company SEC Documents, the Company is not a party to any
material contract or agreement.
e.
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No
Defaults. The Company is not in violation of its
certificate of incorporation or by-laws or any judgment, decree or order,
applicable to it.
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f.
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Litigation. There
are no material (i.e., claims which, if adversely determined based on the
amounts claimed, would exceed ten thousand dollars ($10,000) in the
aggregate) claims, actions, suits, proceedings, inquiries, labor disputes
or investigations (whether or not purportedly on behalf of the Company)
pending or, to Company’s knowledge, threatened against the Company or any
of its assets, at law or in equity or by or before any governmental entity
or in arbitration or mediation.
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g.
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Compliance with
Laws. The Company, to its knowledge, is in full
compliance with all laws applicable to it (including, without limitation,
with respect to zoning, building, wages, hours, hiring, firing, promotion,
equal opportunity, pension and other benefit, immigration,
nondiscrimination, warranties, advertising or sale of products, trade
regulations, anti-trust or control and foreign exchange or, to the
Company’s knowledge, environmental, health and safety
requirements).
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h.
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Intellectual
Property. The Company has no intellectual property
rights.
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i.
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No
Broker. Neither the Company nor any of its agents or
employees has employed or engaged any broker or finder or incurred any
liability for any brokerage fees, commissions or finders’ fees in
connection with the transactions contemplated by this
Agreement. The Company shall indemnify and hold the Buyer
harmless against any loss, damage, liability or expense, including
reasonable fees and expenses of counsel, as a result of any brokerage
fees, commissions or finders’ fees which are due as a result of the
consummation of the transaction contemplated by this
Agreement.
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7.
Indemnification.
a. Buyer
shall indemnify and hold harmless the Seller from and against any and all
losses, damages, expenses and liabilities (collectively “Liabilities”) or
actions, investigations, inquiries, arbitrations, claims or other proceedings in
respect thereof, including enforcement of this Agreement that arise by reason of
Buyer’s representations in this Agreement being untrue in any material respect
(collectively “Actions”) (Liabilities and Actions are herein collectively
referred to as “Losses”). Losses include, but are not limited
to all reasonable legal fees, court costs and other expenses incurred in
connection with investigating, preparing, defending, paying, settling or
compromising any suit in law or equity arising out of this Agreement or for any
breach of this Agreement notwithstanding the absence of a final determination as
to a Buyer’s obligation to reimburse Seller for such Losses and the possibility
that such payments might later be held to have been improper.
b. Seller
agrees to indemnify Buyer, and hold Buyer harmless from and in respect of any
Liabilities or actions, investigations, inquiries, arbitrations, claims or other
proceedings in respect thereof, including enforcement of this Agreement that
arise by reason of Seller’s representations in this Agreement being untrue in
any material respect (collectively “Actions”) (Liabilities and Actions are
herein collectively referred to as “Losses”). Losses include,
but are not limited to all reasonable legal fees, court costs and other expenses
incurred in connection with investigating, preparing, defending, paying,
settling or compromising any suit in law or equity arising out of this Agreement
or for any breach of this Agreement notwithstanding the absence of a final
determination as to a Seller’s obligation to reimburse Buyer for such Losses and
the possibility that such payments might later be held to have been
improper.
c. If any
claim, action or proceeding is brought against a Party arising out of a claim
that is the subject of indemnification under this Agreement, the Party seeking
indemnification shall provide the other Party prompt written notice of the same,
together with the basis for such Party seeking indemnification (the
“Indemnification Notice”). Upon receipt of an Indemnification Notice by a
Party, such Party shall inform the other Party (delivering the Indemnification
Notice), within five (5) business days after receipt of the Indemnification
Notice, whether the Party accepts or rejects responsibility for resisting and
defending such claim, action or proceeding. If responsibility is accepted,
the indemnifying party shall have the right to select attorneys reasonably
acceptable to the other Party. If responsibility is not accepted, then the
Party delivering the Indemnification Notice shall be free to select attorneys to
assist in the defense of the claim, action or proceeding without approval of the
other Party. Unless the Party receiving the Indemnification Notice has provided
the other Party with written acceptance of responsibility for defense and
indemnification of the subject claim, action or proceeding, the indemnifying
party shall not settle any such claim without the prior consent of such Party
delivering the Indemnification Notice, which consent shall not be unreasonably
withheld, conditioned or delayed.
8. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the Nevada, without giving effect to any other
choice or conflict of law provision that would cause the application of the laws
of any other jurisdiction other than the Commonwealth of Virginia.
9. Company’s Form
10-K. The parties to this Agreement acknowledge that, by
reason of the Company’s fiscal year ending July 31, 2008, that the Company is
responsible for filing an annual report on Form 10-K of Form 10-KSB no later
than October 29, 2008. Seller and the Company agree to cooperate
fully with Buyer and to cause their representatives to cooperate fully with
Buyer in connection with the preparation of the financial statements and other
disclosures and materials and, generally, the entire report, so that the same is
filed timely with the SEC, and that, if requested by Buyer, the Company’s
current Principal Executive Officer and Principal Financial Officer shall
provide the Section 302 and Section 906 Certifications required in connection
therewith.
10. Term /
Survival. The terms of this Agreement shall be effective as of
the Effective Date, and continue until such time as the payment of the Purchase
Price and all other amounts due hereunder are fully satisfied, however; the
terms, conditions, and obligations of Sections 3(c), 7, 9 and 20
hereof shall survive the termination of this Agreement.
11. Successors and
Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties, except that Buyer may not assign or transfer any of its
rights or obligations under this Agreement.
12.
Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement. A
telefaxed copy of this Agreement shall be deemed an original.
13. Headings. The
headings used in this Agreement are for convenience of reference only and shall
not be deemed to limit, characterize or in any way affect the interpretation of
any provision of this Agreement.
8
14. Costs, Expenses.
Each party hereto shall bear its own costs in connection with the preparation,
execution and delivery of this Agreement.
15. Modifications and
Waivers. No change, modification or waiver of any provision of
this Agreement shall be valid or binding unless it is in writing, dated
subsequent to the Effective Date of this Agreement, and signed by both the Buyer
and Seller. No waiver of any breach, term, condition or remedy of this Agreement
by any party shall constitute a subsequent waiver of the same or any other
breach, term, condition or remedy. All remedies, either under this
agreement, by law, or otherwise afforded the Buyer shall be cumulative and not
alternative.
16.
Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
17. Entire
Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings duties or obligations between the parties with
respect to the subject matter hereof.
18. Further
Assurances. From and after the date of this Agreement, upon
the request of the Buyer or Seller, Buyer and Seller shall execute and deliver
such instruments, documents or other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
19. Notices. All
notices or other communications required or permitted by this Agreement shall be
in writing and shall be deemed to have been duly received:
a) if given
by telecopier, when transmitted and the appropriate telephonic confirmation
received if transmitted on a business day and during normal business hours of
the recipient, and otherwise on the next business day following
transmission,
b) if given
by certified or registered mail, return receipt requested, postage prepaid,
three business days after being deposited in the U.S. mails, and
c) if given
by courier or other means, when received or personally delivered, and, in any
such case, addressed notices given in the manner provided above shall be
effective upon delivery to a party or upon a party’s refusal of delivery at the
party’s address as indicated herein for the delivery of notices, or to such
other addresses as may be specified by any such Person/Party to the other
Person/Parties pursuant to notice given by such Person/Party or its counsel in
accordance with the provisions of this Section 19.
20. Xxxxxxx
Xxxxxxx. Seller and Buyer hereby certify that they have not
themselves, nor through any third parties, purchased nor caused to be purchased
in the public marketplace any publicly traded shares of the
Company. Seller and Buyer further certify they have not communicated
the nature of the transactions contemplated by the Agreement, are not aware of
any disclosure of non public information concerning said transactions, and are
not a party to any xxxxxxx xxxxxxx of Company shares.
9
21. Binding
Arbitration. In the event of any dispute, claim, question, or
disagreement arising from or relating to this agreement or the breach thereof,
the Parties hereto shall use their best efforts to settle the dispute, claim
question, or disagreement. To this effect, they shall consult and negotiate with
each other in good faith and, recognizing their mutual interests, attempt to
reach a just and equitable solution satisfactory to both parties. If they do not
reach such a solution within a period of sixty (60) days, then, upon notice by
either party to the other, all disputes, claims, questions, or disagreements
shall be settled by arbitration administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules including the
Optional Rules for Emergency Measures of Protection, and judgment on any award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.
In Witness
Whereof, the Parties hereto have executed this Agreement as of the last
date written below.
SELLER | BUYER | |||
BELMONT PARTNERS, LLC | BMC ACQUISITION CORP., LLC | |||
/s/Xxxxxx
Xxxxx
|
/s/
Xxxxxxx X.
XxXxxxxxx
|
|||
By: Xxxxxx Xxxxx,
Managing Member
|
By: Xxxxxxx X. XxXxxxxxx,
Managing Member
|
|||
Date:
____________________
|
Date:
________________________
|
COMPANY | ESCROW AGENT | |||
YZAPP INTERNATIONAL, INC. | TRI-STATE TITLE & ESCROW, LLC | |||
/s/
Xxxxxx
Xxxxx
|
/s/
|
|||
By: Xxxxxx Xxxxx,
Director
|
By:
|
|||
Date:
______________________
|
Date:
_______________________
|
10
EXHIBIT
1
Type
|
Date
|
Num
|
Account
|
Amount
|
Balance
|
|||||||
Automated
Filing Services Inc.
|
0.00
|
|||||||||||
Xxxx
|
11/26/2007
|
inv.711146
|
Accounts
Payable
|
538.48
|
538.48
|
|||||||
Xxxx
|
12/18/2007
|
inv.712089
|
Accounts
Payable
|
284.08
|
822.56
|
|||||||
Xxxx
Pmt -Cheque
|
03/14/2008
|
141
|
Accounts
Payable
|
-822.56
|
0.00
|
|||||||
Total
Automated Filing Services Inc.
|
0.00
|
0.00
|
||||||||||
Xxxxx
Xxxxxx
|
0.00
|
|||||||||||
Xxxx
|
11/01/2007
|
inv.0000000
|
Accounts
Payable
|
494.91
|
494.91
|
|||||||
General
Journal
|
11/01/2007
|
Accounts
Payable
|
-494.91
|
0.00
|
||||||||
Xxxx
|
01/01/2008
|
inv.0000000
|
Accounts
Payable
|
6,237.63
|
6,237.63
|
|||||||
General
Journal
|
01/01/2008
|
Accounts
Payable
|
-2,005.09
|
4,232.54
|
||||||||
Total
Xxxxx Xxxxxx
|
4,232.54
|
4,232.54
|
||||||||||
Xxxxxx
Xxxxxxxxx (USD)
|
1,260.00
|
|||||||||||
Xxxx
|
11/06/2007
|
inv.2007-1633
|
Accounts
Payable
|
100.00
|
1,360.00
|
|||||||
Total
Xxxxxx Xxxxxxxxx (USD)
|
100.00
|
1,360.00
|
||||||||||
Xxxxx
Tech & Bus Serv (USD)
|
-382.00
|
|||||||||||
Total
Xxxxx Tech & Bus Serv (USD)
|
-382.00
|
|||||||||||
Xxxxxxx
Xxxxxxx LLP
|
0.00
|
|||||||||||
Xxxx
|
01/31/2008
|
inv.169037
|
Accounts
Payable
|
12,163.50
|
12,163.50
|
|||||||
Total
Xxxxxxx Xxxxxxx LLP
|
12,163.50
|
12,163.50
|
||||||||||
Nevada
Corp HdQ (USD)
|
385.00
|
|||||||||||
Total
Nevada Corp HdQ (USD)
|
385.00
|
|||||||||||
NI
Cameron Inc (CAD)
|
0.00
|
|||||||||||
Xxxx
|
12/18/2007
|
Accounts
Payable
|
371.00
|
371.00
|
||||||||
Total
NI Cameron Inc (CAD)
|
371.00
|
371.00
|
||||||||||
Pacific
Stock Transf Comp (USD)
|
0.00
|
|||||||||||
Xxxx
|
01/31/2008
|
inv.1031/00000000
|
Accounts
Payable
|
70.00
|
70.00
|
|||||||
Total
Pacific Stock Transf Comp (USD)
|
70.00
|
70.00
|
||||||||||
Q4
Financial Group (USD)
|
21,055.00
|
|||||||||||
Xxxx
Pmt -Cheque
|
10/01/2007
|
136
|
Accounts
Payable
|
-5,000.00
|
16,055.00
|
|||||||
Xxxx
Pmt -Cheque
|
10/01/2007
|
Debit
|
Accounts
Payable
|
-40.00
|
16,015.00
|
|||||||
Xxxx
|
10/31/2007
|
Accounts
Payable
|
2,620.00
|
18,635.00
|
||||||||
Xxxx
|
10/31/2007
|
inv.Q4
08-35
|
Accounts
Payable
|
2,500.00
|
21,135.00
|
|||||||
Xxxx
|
01/31/2008
|
Accounts
Payable
|
2,500.00
|
23,635.00
|
||||||||
Xxxx
|
01/31/2008
|
Accounts
Payable
|
1,500.00
|
25,135.00
|
||||||||
Xxxx
|
01/31/2008
|
inv.Q4
08-36
|
Accounts
Payable
|
2,500.00
|
27,635.00
|
|||||||
Xxxx
|
02/01/2008
|
Accounts
Payable
|
525.00
|
28,160.00
|
||||||||
Xxxx
|
03/01/2008
|
Q4
|
Accounts
Payable
|
525.00
|
28,685.00
|
|||||||
Xxxx
Pmt -Cheque
|
03/13/2008
|
140
|
Accounts
Payable
|
-1,050.00
|
27,635.00
|
|||||||
Cheque
|
03/24/2008
|
142
|
Accounts
Payable
|
-525.00
|
27,110.00
|
|||||||
Xxxx
|
04/01/2008
|
inv.Q4
08-39
|
Accounts
Payable
|
525.00
|
27,635.00
|
|||||||
Total
Q4 Financial Group (USD)
|
6,580.00
|
27,635.00
|
||||||||||
XL
(USD)
|
4,000.00
|
|||||||||||
Total
XL (USD)
|
4,000.00
|
|||||||||||
TOTAL:
|
23,517.04
|
49,835.04
|
11
EXHIBIT
2
UNANIMOUS
WRITTEN CONSENT
OF
THE BOARD OF DIRECTORS
IN
LIEU OF A SPECIAL MEETING
In lieu
of a Special Meeting of the Board of Directors of Yzapp International, Inc. (the
"Company"), the undersigned, being all of the Directors of the Company, take the
following actions by unanimous written consent; said actions to have the same
force and effect as if adopted at a meeting of the Board of Directors duly
called and held:
WHEREAS, the Company has
determined that it is in the best interests of the Company to enter into an
agreement with Belmont Partners, LLC (“Belmont”) dated __________, 2008 (the
“Agreement”) requiring the Company to provide Belmont at least a one and one
tenth percent (1.1%) common stock position in the Company (the
“Position”). The Position shall be based on the capital structure of
the Company after post Transaction (taking into account any and all shares
issued in connection with the Transaction, any reverse stock split (if any), and
after any other initial issuance of stock (including issuance to the Company’s
directors and/or officers). Buyer shall take all steps necessary to
fully effectuate the provisions of this Section 3 and, to that end, promptly
after the Closing endeavor to identify an appropriate operating business that
would be suitable for acquisition by the Company. For purposes
hereof, “Transaction” shall mean the acquisition by the Company of an operating
business by merger, acquisition of shares or asset acquisition.;
WHEREAS, the Company has
entered into the Agreement with Belmont;
WHEREAS, the Company has
received full and adequate consideration from Belmont for the
Position;
WHEREAS, it is in the best
interests of the Company to issue such shares of the Company’s common stock (the
“Shares”) to Belmont necessary to provide Belmont the Position according to the
terms of the Agreement; and
WHEREAS, all Shares
transferred to Belmont hereby shall be deemed to have a valuation of par
value.
NOW,
THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS:
(a)
|
it
is in the best interests of the Company to undertake the transactions
contemplated hereby; and
|
(b)
|
the
transactions are hereby approved, ratified and confirmed;
and
|
(c)
|
any
transfer agent acting for or on behalf of the Company or a Surviving
Company (a “Transfer Agent”) shall be entitled to rely upon these
resolutions to execute the issuance of the Shares as aforesaid;
and
|
(d)
|
certificate(s)
evidencing the Position shall be issued and delivered to Belmont Partners,
LLC immediately following the Transaction, but in no case later than one
year from this resolution. In the event that a Transaction have
not been completed within one year from this resolution Belmont Partners,
LLC shall be issued shares comprising the Position on that date and shall
be issued additional shares as necessary following any reverse stock
split, share issuances relating to the Transaction and initial contracts,
initial acquisition of any assets, initial financing, and after any other
initial issuance of stock; and
|
(e)
|
the
effective date of all Shares transferred pursuant to this Board Resolution
shall be ________________, 2008 and shall be memorialized on the face of
the certificates evidencing such shares. Company shall accept
as valid any legal opinion of Belmont Partners, LLC’s counsel regarding
the removal of restrictions from all shares hereby issued, and any
transfer agent acting on behalf of the Company shall be entitled to rely
upon these resolutions to remove such restrictions from such shares;
and
|
(f)
|
the
Company agrees to indemnify and hold harmless the Transfer Agent from and
against any and all claims, liabilities, losses, damages and expenses,
including fees and expenses of counsel, accountants and other advisors
(collectively, “Losses”), related thereto or arising out of or in
connection therewith the issuance of Shares;
and
|
(g)
|
the
Company gives the Transfer Agent authorization to deliver said shares as
specified herein to Belmont Partners, LLC at 000 Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 via Federal Express or Hand Delivery;
and
|
(h)
|
the
value of all shares hereby transferred shall be par
value.
|
Each
Director, by signing this Unanimous Written Consent of the Board of Directors in
Lieu of a Special Meeting, waives notice of the time, place and purpose of a
special Board of Directors’ meeting and agrees to the transaction of the
business set forth in this unanimous written consent in lieu of such
meeting.
IN WITNESS WHEREOF, we have
each signed this Unanimous Written Consent of the Board of Directors in Lieu of
a Special Meeting, which may be signed in one or more counterparts, each of
which, when taken together, shall constitute one and the same instrument,
effective as of the day of
_____________, 2008.
______________________
______________________,
Director
12
EXHIBIT
3
IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS
DATE:
______________ __, 2008
TO: | |||
Re: | |||
Ladies
and Gentlemen:
Reference
is made to that certain Common Stock Purchase Agreement between Yzapp
International, Inc. (the “Company”), Belmont Partners, LLC (“Belmont”) and among
Xxxxx Xxxxxx, Carret & CO, LLC (the “Buyer”), dated _________ __, 2008
pursuant to which the Company shall issue to Belmont a number of shares of the
common stock of the Company equal to one and five tenths percent (1.5%) of the
total capital stock of the Company (the “Stock Position”). This
letter shall serve as the Company’s irrevocable authorization and direction to
Pacific Stock Transfer Co., and to any subsequent Transfer Agent of the Company
, (collectively the “Transfer Agent”) to issue shares of the common stock of the
Company to Belmont as set forth below, and no subsequent direction, order,
resolution or other order or request of the Company shall be effective to
rescind, modify, nullify, or otherwise cancel these instructions, the attached
resolutions, or the shares issued hereby.
Specifically,
the Transfer Agent is hereby instructed to issue one and one tenth percent
(1.1%) of the total capital stock of the Company to Belmont based on the capital
structure of the Company post Transaction (taking into account any and all
shares issued in connection with the Transaction, any reverse stock split (if
any), and after any other initial issuance of stock (including issuance to the
Company’s directors and/or officers). For purposes hereof,
“Transaction” shall mean the acquisition by the Company of an operating business
by merger, acquisition of shares or asset acquisition.
The
Transfer Agent shall deliver certificate(s) evidencing the shares in the Stock
Position to Belmont Partners, LLC, at the address indicated below immediately
following the Actions, but in no case later than one year from this
Instruction. In the event that all Actions have not been completed
within one year from this Instruction, the Transfer Agent shall transfer to
Belmont certificate(s) evidencing the shares comprising the Stock Position on
______________________,
2009, and shall further issue additional shares to Belmont as necessary
following completion of the Actions.
The
shares comprising the Stock Position shall be newly issued restricted common
shares of the Company, and the Effective date of all shares in the Stock
Position shall be ____________ __, 2008 regardless of the date on which the
certificate(s) evidencing such shares are issued, and such effective date shall
be evidenced on the face of such certificate(s).
The
Company hereby confirms to the Transfer Agent and Belmont that the shares
comprising the Position shall not be subject to any stop-transfer restrictions
and shall otherwise be freely transferable on the books and records of the
Company, and that if the shares comprising the Position are not registered for
sale under the Securities Act of 1933, as amended, then the certificates
evidencing such shares shall bear the requisite restrictive
legend. The Transfer Agent is hereby instructed to accept as valid
any opinion of Belmont’s counsel regarding removal of any restriction from the
shares comprising the Position, and upon receipt of such opinion of counsel the
Transfer Agent shall promptly remove such legend.
The
Company hereby represents, acknowledges and agrees that: (i) Belmont has relied
upon the representations and covenants made by the Company hereunder as a
material inducement to Belmont entering into the Common Stock Purchase
Agreement; (ii) that without such representations and covenants Belmont would
not enter into the Common Stock Purchase Agreement; (iii) in the event of any
breach or threatened breach of any provision hereof, Belmont would be
irreparably damaged and damages at law would be an inadequate remedy if these
Irrevocable Transfer Agent Instructions were not specifically
enforced. Therefore, in the event of a breach or threatened breach of
the representations and covenants hereunder, or a breach or threatened breach of
the Transfer Agent’s duties and obligations herein defined, Belmont shall be
entitled in addition to all other rights and remedies, to an injunction
restraining such breach, without being required to show any actual damages or to
post any bond or other security, and/or to a decree of specific performance of
the provisions of these Irrevocable Transfer Agent Instructions.
Delivery
of the certificate(s) evidencing the Position shall be delivered to Belmont by
Federal Express toBelmont Partners, LLC, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, or to such other address as specified in writing by Belmont.
IN WITNESS WHEREOF, the
Parties have caused this agreement and letter of Irrevocable Transfer Agent
Instructions to be duly executed and delivered as of the date first written
above.
YZAPP INTERNATIONAL, INC | BELMONT PARTNERS, LLC | |||
/s/
|
/s/
|
|||
|
Xxxxxx
Xxxxx, Managing Member
|
|||
Director
|
|
.
13
EXHIBIT
4
WRITTEN
SHAREHOLDERS CONSENT
IN
LIEU OF A SPECIAL MEETING
In lieu
of a Special Meeting of the Shareholders of Yzapp International, Inc. a Nevada
corporation (the "Company"), the
undersigned, being the majority shareholder(s) of the Company, take the
following actions by unanimous written consent; said actions to have the same
force and effect as if adopted at a meeting of the majority shareholders duly
called and held:
WHEREAS, the Shareholder(s)
wish to increase the appoint __________________ as the sole Director and
President of the Company; and
WHEREAS, the Shareholder(s)
wish to terminate Xxxxxx Xxxxx as Director and/or officers of the
Company.
NOW,
THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS:
(i)
|
the
Company appoints ________________ as the sole Director of the
Company;
|
(j)
|
the
Company terminates Xxxxxx Xxxxx as Director and/or officer of the
Company;
|
(k)
|
the
Company terminates Xxxxxx Xxxxx as Director and/or officer of the
Company;
|
(l)
|
transactions
are hereby approved, ratified and confirmed;
and
|
Each
Shareholder, by signing this Written Consent of the Shareholders in Lieu of a
Special Meeting, waives notice of the time, place and purpose of a special
Majority Shareholders meeting and agrees to the transaction of the business set
forth in this unanimous written consent in lieu of such meeting.
IN WITNESS WHEREOF, we have
each signed this Written Consent of the Shareholders in Lieu of a Special
Meeting, which may be signed in one or more counterparts, each of which, when
taken together, shall constitute one and the same instrument, effective as of
the ___ day of March, 2008.
|
By:
|
/s/ | |
Xxxxxx Xxxxx, | |||
Managing Member of Belmont Partners, Majority Shareholder | |||
14