EXHIBIT 10.1
ACQUISITION AGREEMENT
Agreement dated as of 2/14/98 between Frozen Assets, Inc., a Nevada corporation
("Buyer") on behalf of its shareholders, and Growth Industries, Inc., a Nevada
corporation ("Seller") on behalf of its shareholders.
The parties wish to provide for Seller's sale of the Shares to buyer and Buyer's
purchase of the Shares from Seller on the terms and conditions of this
Agreement.
The parties agree as follows:
1. The Acquisition.
1.1 Purchase and Sale subject to the terms and conditions of this Agreement, at
the Closing to be held as provided in Section 2, Seller shall sell the
Shares to Buyer, and Buyer shall purchase the Shares from Seller, free and
clear of all Encumbrances.
1.2 Purchase Price. Buyer will cancel 2,500,000 shares of its restricted common
stock and exchange 1,200,000 shares of 10 to 1 convertible preferred stock
with 10 to 1 voting rights for all of the outstanding capital stock of
Growth. The authorized common stock of the corporation consists of
50,000,000 shares of common and 10,000,000 shares of preferred.
2. The Closing.
2.1 Place and Time. The closing of the sale and purchase of the Shares (the
"Closing") shall take place at the office of Xxxxx Xxxxxxx, Esq. 0000 X.
Xxxxxx Xxx Xx. #000, Xxx Xxxxx, XX 00000 no later than the close of
business (Las Vegas time) on 2/14/98, or at such other place, date and time
as the parties may agree in writing.
2.2 Deliveries by Seller. Seller shall deliver the following to Buyer:
(A) Within 3 months following the closing Seller shall deliver
Certificates representing the Shares, duly endorsed for transfer to
Buyer and accompanied by any applicable stock transfer tax stamps.
(B) At closing, the Seller shall deliver, the documents contemplated
by Section 3.
(C) At Closing, the Seller shall deliver, all other documents,
instruments and writings required by this Agreement to be delivered by
Seller at the Closing and any other documents or records relating to
growth's business reasonably requested by Buyer in connection with
this Agreement.
2.3 Deliveries by Buyer. At the Closing, Buyer shall deliver the following to
Seller:
(A) The shares as contemplated by section 11.
(B) The documents contemplated by Section 4.
(C) All other documents, instruments and writings required by this
Agreement to be delivered by Buyer at Closing.
3. Conditions to Buyer's Obligations.
The obligations of Buyer to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by Buyer:
3.1 Representations, Warranties and Agreements.
(a) The representations and warranties of Seller set forth in this
Agreement shall be true and complete in all material respects as of
the Closing Date as though made at such time, (b) Seller shall have
performed and complied in all material respects with the agreements
contained in this Agreement required to be performed and complied with
by it at or prior to the Closing and (c) Seller shall have received a
certificate to that effect signed by an officer of Buyer.
3.2 Resignations of Director. Resignations have hereby been requested of all
directors of Frozen Assetts, Inc. and its Subsidiaries and such directors
shall have submitted their resignations or been removed effective as of the
Closing Date.
3.3 The new board will be appointed on closing, and shall consist of such Board
members as are appointed by Seller.
4. Conditions to Seller's Obligations.
The obligations of Seller to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by Seller:
4.1 Representations, Warranties and Agreements.
(a) The representations and warranties of buyer set forth in this
Agreement shall be true and complete in all material respects as of
the Closing Date as though made at such time, (b) Buyer shall have
performed and complied in all material respects with the agreements
contained in this Agreement required to be performed and complied with
but it prior to or at the Closing and (c) Seller shall have received a
certificate to that effective signed by an officer of Buyer
5. Representations and Warranties of Seller.
Seller represents and warrants to Buyer that, to the Knowledge of Seller
(which limitation shall not apply to Section 5.3), and except as set forth
in the Disclosure Letter:
5.1 Organization of Seller; Authorization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Nevada
with full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery
and performance of this Agreement have been duly authorized by all
necessary corporate action of Seller and this Agreement constitutes a valid
and binding obligation of Seller, enforceable against it in accordance with
its terms.
5.2 No Conflict as to Seller. Neither the execution and delivery of this
Agreement nor the consummation of the sale of the Shares to buyer will (a)
violate any provision of the certificate of incorporation or by-laws of
Seller or (b) violate, be in conflict with, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a
default) under any agreement to which Seller is a party or (c) violate any
statute or law or any judgment, decree, order, regulation or rule of any
court or other Governmental Body applicable to Seller.
5.3 Ownership of Shares. The delivery of certificates to buyer and the payment
to Seller will result in Buyer's immediate acquisition of record and
beneficial ownership of the Shares, free and clear of all Encumbrances.
There are no outstanding options, rights, conversion rights, agreements or
commitments of any kind relating to the issuance, sale or transfer of any
Equity Securities or other securities of Growth Industries, Inc.
5.4 Financial Statements. Seller will deliver to buyer: (a) consolidated
balance sheets of Growth and its Subsidiaries as of 12/31/97 and statements
of profit and loss ended 12/31/97. Such financial statements and notes
fairly present the consolidated financial condition and results of
operations of Growth, Inc., and its Subsidiaries as at the respective dates
thereof and for the periods therein referred to, all in accordance with
generally accepted United States accounting principals consistently applied
throughout the periods involved, except as set forth in the notes thereto,
except, in the case of the Balance Sheet and the accompanying statements,
for audit adjustments and the absence of footnotes. Audited statements
shall be provided f to purchase within 45 days of the signing of this
agreement.
5.5 Title to Properties. Either Growth Industries, Inc., or on of its
Subsidiaries owns all the material properties and assets that they purport
to own (real, personal and mixed, tangible and intangible), including,
without limitation, all the material properties and assets reflected in the
Balance Sheet (except for property sold since the date of the Balance Sheet
in the ordinary course of business or leased under capitalized leases), and
all the material properties and assets purchased or otherwise acquired by
Growth, Inc., or any of its Subsidiaries since the date of the Balance
Sheet.
5.6 Buildings, Plants and Equipment. The buildings, plants, structures and
material items of equipment and other personal property owned or leased by
Growth, Inc., or its Subsidiaries are, in all respects material to the
business or financial condition of Growth Industries, Inc., and its
Subsidiaries, taken as a whole, in good operating condition and repair
(ordinary wear and tear excepted) and are adequate in all such respects for
the purposes for which they are being used.
5.7 Litigation. There is no action, suit, inquiry, proceeding or investigation
by or before any court or Governmental Body pending or threatened in
writing against or involving Growth Industries, Inc., or any of its
Subsidiaries which is likely to have a material adverse effect on the
business or financial condition of Frozen Assets, Inc., and its
Subsidiaries, taken as whole, or which would require a payment by Frozen
Assetts, Inc., or its subsidiaries in excess of $2000 in the aggregate or
which questions or challenges the validity of this Agreement. Neither
Growth Industries, Inc., nor any or its Subsidiaries is subject to any
judgment, order or decree that is likely to have a material adverse effect
on the business or financial condition of Frozen Assetts, Inc., and its
Subsidiaries, taken as a whole, or which would require a payment by Frozen
Assetts, Inc. or its subsidiaries in excess of $2000 in the aggregate.
5.8 Absence of Certain Changes. Since the date of the Balance Sheet, neither
Growth Industries, Inc., nor any of its Subsidiaries has:
A. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to
the business or financial condition of Growth Industries, Inc., and
its Subsidiaries, taken as a whole, or made any disposition of any of
its material properties or assets other than in the ordinary course of
business;
B. made any change or amendment in its certificate of incorporation or
by- laws, or other governing instruments;
C. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity
Securities, reclassified, split-up or otherwise changed any such
Equity Security, or granted or entered into any options, warrants,
calls or commitments of any kind with respect thereto;
D. borrowed any funds (other than from Seller or Frozen Assetts, Inc., or
one of its Subsidiaries) or incurred, or assumed or become subject to,
whether directly or by way of guarantee or otherwise, any obligation
or liability with respect to any such indebtedness for borrowed money;
E. paid, discharged or satisfied any material claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than in
the ordinary course of business;
F. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
G. cancelled any material debts or waived any material claims or rights,
except in the ordinary course of business;
H. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw
materials and supplies) at a cost in excess of $2000 in the aggregate;
I. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2000;
J. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected
on a balance sheet and material to the business or financial condition
of Grown Industries, Inc., and its subsidiaries taken as a whole.
5.9 No Material Adverse Change. Since the date of the Balance Sheet, there has
not been any material adverse change in the business or financial condition
of Growth Industries, Inc., and its Subsidiaries taken as a whole, other
than changes resulting from economic conditions prevailing in the United
States.
5.10 Brokers or Finders. Seller has not employed any broker or finder or
incurred 5 any liability for any brokerage or finder's fees or commissions
or similar payments in connection with the sale of the Shares to Buyer.
5.11 Transactions with Directors and Officers. Growth Industries, Inc., and its
Subsidiaries do not engage in business with any Person (other than Seller)
in which any of Growth's directors or officer has a material equity
interest. No director or officer of Growth owns any property, asset or
right which is material to the business of Growth and its Subsidiaries,
taken as a whole.
5.12 Borrowing and Guarantees. Except for advances from Buyer, Growth
Industries, Inc., and its Subsidiaries (a) do not have any indebtedness for
borrowed money, (b) are not lending or committed to lend any money (except
for advances to employees in the ordinary course of business), and (c) are
not guarantors or sureties with respect to the obligations of any Person.
6. Representations and Warranties of Buyer.
Buyer represents and warrants to Seller as follows:
6.1 Organization of Buyer; Authorization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Nevada,
with full corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery
and performance of this Agreement have been duly authorized by all
necessary corporate action of Buyer and this Agreement constitutes a valid
and binding obligation of Buyer, enforceable against it in accordance with
its terms.
6.2 Conflict as to Buyer. Neither the execution and delivery of this Agreement
nor the performance of Buyer's obligations hereunder will (a) violate any
provision of the certificate of incorporation or by-laws of Buyer, (b)
violate, be in conflict with, or constitute a default (or an event which,
with notice of lapse of time or both, would constitute a default) under any
agreement or commitment to which Buyer is party or (c) violate any statute
or law or any judgment, decree, order, regulation or rule of any court or
other Governmental Body applicable to Buyer.
6.3 Brokers or Finders. Buyer has not employed any broker or finder or incurred
any liability for any brokerage or finder's fees or commissions or similar
payments in connection with any of the transactions contemplated hereby.
6.4 Purchase for Investment. Buyer is purchasing the shares solely for its own
account for the purpose of investment and not with a view to, or for sale
in connection with, any distribution of any portion thereof in violation of
any applicable securities law.
6.5 Assets and Liabilities. Buyer hereby represents that is has no assets nor
any liabilities.
7. Access and Reporting; Filings With Governmental Authorities.
7.1 Access. Between the date of this Agreement and the Closing Date, Seller
shall, and shall cause Growth Industries, Inc., to, (a) give Buyer and its
authorized representatives reasonable access to all plants, offices,
warehouse and other facilities and properties of Growth Industries, Inc.,
and its Subsidiaries and to the books and records of Growth Industries,
Inc., and its Subsidiaries, (b) permit Buyer to make inspections thereof,
and(c) cause its officers and its advisors to furnish Buyer with such
financial and operating data and other information with respect to the
business and properties of Growth Industries, Inc., and its Subsidiaries
and to discuss with Buyer and its authorized representatives the affairs of
Growth Industries, Inc., and its Subsidiaries, all as Buyer may from time
to time reasonably request.
7.2 Exclusivity. From the date hereof until the earlier of the Closing or the
termination of this Agreement, Seller shall not solicit or negotiate or
enter into any agreement with any other Person with respect to or in
furtherance of any proposal for a merger or business combination involving,
or acquisition of any interest in, or (except in the ordinary course of
business) sale of assets by,. Phoenix, except for the acquisition of the
Shares by Buyer.
7.3 Publicity. Between the date of this Agreement and the Closing Date, Seller
and Buyer shall, and Seller and Buyer shall cause Frozen Assetts, Inc., to,
discuss and coordinate with respect to any public filing or announcement or
any internal or private announcement (including any general announcement to
employees) concerning the contemplated transaction.
7.4 Confidentiality. Prior to the Closing Date (or at any time if the Closing
does not occur) Buyer shall keep confidential and not disclose to any
Person (other than its employees, attorneys, accountants and advisors) or
use (except in connection with the transactions contemplated hereby)
all non-public information obtained by Buyer pursuant to Section 7.1.
Following the Closing, Seller shall keep confidential and not disclose to
any Person (other than its employees, attorneys, accountants and advisors)
or use (except in connection with preparing Tax Returns and conducting
proceeds relating to Taxes) any nonpublic information relating to Frozen
Assetts, Inc., and its Subsidiaries. This Section 7.7 shall not be violated
by disclosure pursuant to court order or as otherwise required by law, on
condition that notice of the requirement for such disclosure is given the
other party prior to making any disclosure and the party subject to such
requirement cooperates as the other may reasonably request in resisting it.
If the Closing does not occur, Buyer shall return to Seller, or destroy,
all information it shall have received from Seller or Growth Industries,
Inc., in connection with this Agreement and the transactions contemplated
hereby, together with any copies or summari3es thereof or extracts
therefrom. Seller and Buyer shall use their best efforts to cause their
respective representatives, employees, attorneys, accountants and advisors
to whom information is disclosed pursuant to Sections 7.1 and 7.6 to comply
with the provisions of this Section 7.7
8. Conduct of Growth's Business Prior to Closing.
8.1 Operation in Ordinary Course. Between the date of this Agreement and the
Closing Date, Seller shall cause Growth Industries, Inc., and its
Subsidiaries to conduct their businesses in all material respects in the
ordinary course.
8.2 Business Organization. Between the date of this Agreement and the Closing
Date, Seller shall use its reasonable efforts, and shall cause Growth
Industries, Inc., and each of its Subsidiaries to use its respective
reasonable efforts, to (a) preserve substantially intact the business
organizations of Growth Industries, Inc., and each of its Subsidiaries and
keep available the services of the present officers and employees of Growth
Industries, Inc., and each of its Subsidiaries, and (b) preserve in all
material respects the present business relationships and good will of
Growth Industries, Inc., and each of its Subsidiaries.
8.3 Corporate Organization. Between the date of this Agreement and the Closing
Date, Seller shall not cause or permit any amendment of the certificate of
incorporation or by-laws (or other governing instrument) of Growth
Industries, Inc., or any of its Subsidiaries, and shall cause Growth
Industries, Inc., and each of its Subsidiaries not to:
A. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion
rights or other agreements or commitments of any kind relating to the
issuance, sale or disposition of any of its Equity Securities.;
B. sell or otherwise dispose of any Equity Securities of Growth
Industries, Inc., or any of its Subsidiaries, or create or suffer to
be created any Encumbrance thereon, or create, sell or otherwise
dispose of any options, rights, conversion rights or other agreements
or commitments of any kind relating to the sale or disposition of any
Equity Securities of Growth Industries, Inc., or any of its
Subsidiaries;
C. reclassify, split up or otherwise change any of its Equity Securities;
D. be party to any merger, consolidation or other business combination;
E. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents
and registered trademarks and copyrights or other proprietary rights),
in an amount which is material to the business or financial condition
of Growth Industries, Inc., and its Subsidiaries, taken as a whole,
except in the ordinary course of business.
8.4 Other Restrictions. Between the date of this Agreement and the Closing
Date, Seller shall cause Growth Industries, Inc., and each of its
Subsidiaries not to:
A. borrow any funds or otherwise become subject to, whether directly or
by way of guarantee or otherwise, any indebtedness for borrowed money
other than borrowings from Seller, Frozen Assetts, Inc., or another of
its Subsidiaries;
B. create any material Encumbrance on any of its material properties or
assets;
C. except in the ordinary course of business, increase in any manner the
compensation of any director or officer or increase in any manner the
compensation of any class or employees;
D. make any capital expenditure or acquire any property or assets (other
than raw materials and supplies) for a cost in excess of $2000 in any
one case or $5000 in the aggregate;
E. enter into any agreement that materially restricts Growth Industries,
Inc., or any of its Subsidiaries form carrying on its business;
F. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment,
discharge or satisfaction in the ordinary course of business of
liabilities or obligations reflected in the Balance Sheet or incurred
in the ordinary course of business and consistent with past practice
since the date of the Balance Sheet; or
G. cancel any material debts or waive any material claims or rights.
9. Survival of Representations and Warranties; Indemnification.
9.1 Survival. No representation or warranty contained in this Agreement or in
any certificate or document delivered pursuant hereto shall survive the
Closing, except for those contained in Sections 5.1, 5.2, 5.3(only as to
Seller), 5.10, 6.1, 6.2, 6.3, 6.4, 6.5 (the "Surviving Representations and
Warranties").
9.2 Indemnification by Seller. Seller shall indemnify and hold harmless Buyer
and Frozen Assetts, Inc., and shall reimburse Buyer and Frozen Assetts,
Inc., for, any loss, liability, damage or expense (including reasonable
attorneys fees) (collectively, "Damages") arising from or in connection
with (a) any inaccuracy in any of the Surviving Representations and
Warranties of Seller in this Agreement or (b) any failure by Seller to
perform or comply with any agreement in this Agreement.
9.3 Indemnification by Buyer. Buyer shall indemnify and hold harmless Seller,
and shall reimburse Seller for, any Damages arising from or in connection
with (a) any inaccuracy in any of the Surviving Representations and
Warranties of Buyer in this Agreement, (b) any failure by Buyer to perform
or comply with any agreement in this Agreement, except that after the
Closing no claim shall be made with respect to the failure to perform or
comply with any agreement required to have been performed or complied with
prior to the Closing Date, (c) any claims arising from the conduct of the
business of Growth Industries, Inc., and the Subsidiaries after the Closing
and (d) any payments made by Seller after the Closing pursuant to any
guaranty by Seller or any obligation of Frozen Assetts, Inc., or any of its
Subsidiaries (other than as contemplated by Section 2.4). Buyer shall use
its best efforts to obtain Seller's release from any such guaranties.
10. Termination.
10.1 Termination. This Agreement may be terminated before the Closing occurs
only as follows:
A. By written agreement of Seller and Buyer at any time.
B. By Seller, by notice to Buyer at any time, if one or more of the
conditions specified in Section 4 is not satisfied at the time at
which the Closing (as it may be deferred pursuant to Section 2.1)
would otherwise occur or if satisfaction of such a condition is or
becomes impossible.
C. By Buyer, by notice to Seller at any time, if one or more of the
conditions specified in Section 3 is not satisfied at the time at
which the Closing (as it may be deferred pursuant to Section 2.1),
would otherwise occur of if satisfaction of such a condition is or
becomes impossible.
D. By Buyer or Seller, by notice to the other at any time after 4/30/98.
10.2 Effect of Termination. If this Agreement is terminated pursuant to Section
12.2, this Agreement shall terminate without any liability or further
obligation of any party to another.,
11. Notices.
All notices, consents, assignments and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when
(a) delivered by hand, (b) sent by telex or telecopies (with receipt confirmed),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) received by the delivery service (receipt requested), in each case to the
appropriate addresses, telex numbers and telecopier numbers set forth below (or
to such other addresses, telex numbers and telecopier numbers as a party may
designate as to itself by notice to the other parties).
(a)If to Buyer (b)If to Seller:
c/o Xxxxx X. Xxxxxxx, Esq. Xxxxxx X. Xxxxxxxx
0000 X. Xxxxxx Xxx Xx. #000 0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000 Xxxxx, XX 00000
Telephone: 000-000-0000 Telephone: 000-000-0000
Attention: Xxxxx X. Xxxxxxx Attention: Xxxxxx X. Xxxxxxxx
12. Miscellaneous.
12.1 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
12.2 Captions. The captions in this Agreement are for convenience of reference
only and shall not be given any effect in the interpretation of this
agreement.
12.3 No Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considere3d a waiver or
deprive that party of the right thereafter to insist upon strict adherence
to that term or any other term of this Agreement. Any waiver must be in
writing.
12.4 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter, and is
intended (with the documents referred to herein) as a complete and
exclusive statement of the terms of the agreement among the parties with
respect thereto and cannot be changed or terminated orally.
12.5 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be considered an original, but all of which together
shall constitute the same instrument.
12.6 Governing Law. This Agreement and (unless otherwise provided) all
amendments hereof and waiver and consents hereunder shall be governed by
the internal law of the State of Nevada, without regard to the conflicts of
law principles thereof.
12.7 Binding Effect. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the
consent of the other except that Buyer may assign its rights (but not its
obligations) under this Agreement to its wholly-owned Subsidiary without
the consent of Seller, provided that, after the Closing, no consent of
Seller shall be needed in connection with any merger or consolidation of
Buyer with or into another entity.
Frozen Assets, Inc.
/s/Xxxxxxx Xxxxxx
-----------------------
By Xxxxxxx Xxxxxx-Secretary
Growth Industries, Inc.
-----------------------
/s/Xxxxxx Xxxxxxxxxx
By Xxxxxx Xxxxxxxxxx-President
