1.5            “ Closing ” has the meaning set forth in Section 3.2.

 

1.6            “ Closing Date ” has the meaning set forth in Section 3.2.

 

1.7            “ Closing Shares ” has the meaning set forth in Section 3.1.

 

1.8            “ Code ” means the Internal Revenue Code of 1986, as amended.

 

1.9            “ Collateral Agreements ” shall mean all agreements, documents and other instruments required to be executed by the Parties in connection with the transactions contemplated by this Agreement, including, without limitation, the Selling Shareholder Employment Agreements, the Purchaser Employment Agreements, and the Lock-Up Agreements.

 

1.10          “ Common Stock ” has the meaning set forth in Section 3.1.

 

1.11          “ Contracts ” means all contracts, agreements, licenses, warranties, guaranties, indentures, bonds, options, leases of personal property, sales orders, purchase orders, commitments or binding arrangements of any nature whatsoever, express or implied, written or unwritten, and all amendments thereto, entered into by or binding upon a Person or to which any of its properties may be subject.

 

1.12          “ Excluded Liabilities ” has the meaning set forth in Section 2.4 below.

 

1.13          “ GAAP ” means U.S. generally accepted accounting principles consistently applied, as in effect from time to time.

 

1.14          “ Indemnified Party ” has the meaning set forth in Section 7.4 below.

 

1.15          “ Indemnifying Party ” has the meaning set forth in Section 7.4 below.

 

1.16          “ JV Agreement ” has the meaning set forth in the recitals above.

 

1.17          “ Knowledge ” means, with respect to any Person, the actual knowledge of such Person, the knowledge that such Person would have a reason to acquire, and the knowledge that is imputed to such Person by operation of law.

 

1.18          “ Laws ” means any statute, ordinance, law, rule, regulation, code, injunction, judgment, order, decree, ruling, or other requirement enacted, adopted or applied by any Regulatory Authority, including judicial decisions applying common law or interpreting any other Law.

 

1.19          “ Legal Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Regulatory Authority or arbitrator.

 

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1.20          “ Liabilities ” means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type, whether known or unknown, accrued, absolute, contingent, matured, unmatured, liquidated or unliquidated or otherwise.

 

1.21          “ Lock-Up Agreement ” has the meaning set forth in Section 5.7 below.

 

1.22          “ Loss ” means all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations, injunctions, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities, obligations, taxes, liens, losses, expenses, and fees, including all attorneys’ fees and court costs.

 

1.23          “ Material Adverse Effect ” or “ Material Adverse Change ” with respect to a Person means a material adverse effect on (i) the assets, liabilities, properties, business or prospects of such Person, (ii) the validity, binding effect or enforceability of this Agreement or the Collateral Agreements on such Person or (iii) the ability of such Person to perform its obligations under this Agreement or any of the Collateral Agreements.

 

1.24          “ Order ” means any writ, judgment, decree, ruling, injunction or similar order of any Regulatory Authority (in each such case whether preliminary or final).

 

1.25          “ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

 

1.26          “ Organizational Documents ” means, as applicable, (a) the articles or certificate of incorporation, all certificates of determination and designation, and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate or articles of limited partnership of a limited partnership; (d) the operating agreement, limited liability company agreement and the certificate or articles of organization or formation of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation or organization of any other Person; and (f) any amendment to any of the foregoing.

 

1.27          “ Party ” has the meaning set forth in the recitals above.

 

1.28          “ Performance Shares ” has the meaning set forth in Section 5.1.

 

1.29          “ Permits and Licenses ” means all permits, approvals, orders, authorizations, consents, licenses, certificates, franchises, examples of, or filings or registrations with, any court or governmental entity in any jurisdiction, which have been issued or granted to, or are assumed or owed by, Company in connection with the Business or use of the Purchased Assets and all pending applications therefor.

 

1.30          “ Person ” means any natural person, individual, firm, corporation, including a non-profit corporation, partnership, trust, unincorporated organization, association, limited liability company, labor union, Regulatory Authority or other entity.

 

1.31          “ Purchaser ” has the meaning set forth in the recitals above.

 

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1.32          “ Purchaser Business ” means the business of New World Brands, Inc, as presently operated.

 

1.33          “ Purchaser Employment Agreements ” has the meaning set forth in Section 5.3 below.

 

1.34          “ Purchaser Released Party(s) ” has the meaning set forth in Section 5.10 below.

 

1.35          “ Purchase Price ” has the meaning set forth in Section 3.1 below.

 

1.36          “ Purchased Assets ” shall have the meaning set forth in Section 2.1 below.

 

1.37          “ Regulatory Authority ” means: any (i) federal, state, local, municipal or foreign government; (ii) governmental or quasi-governmental authority of any nature (including without limitation any governmental agency, branch, department, official, instrumentality or entity and any court or other tribunal; (iii) multi-national organization or body; or (iv) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulation or taxing authority or power of any nature.

 

1.38          “ Retail Division ” means New World Brands, Inc.’s definition of retail division as defined by NWB’s general ledger.

 

1.39          “ SEC ” means the United States Securities and Exchange Commission.

 

1.40          “ Security Interest ” means any mortgage, pledge, security interest, encumbrance, charge, or other lien.

 

1.41          “ Securities Act ” means the Securities Act of 1933, as amended.

 

1.42          “ Seller ” shall have the meaning set forth in the preface above.

 

1.43          “ Seller Business ” means all of Seller’s right, title and interest in and to the JV Agreement, as specifically set forth in this Agreement, as presently operated.

 

1.44          “ Seller Disclosure Schedules ” has the meaning set forth in Section 4.1 below.

 

1.45          “ Seller Related Person(s) ” has the meaning set forth in Section 5.10 below.

 

1.46          “ Seller Related Person Claims ” has the meaning set forth in Section 5.10 below.

 

1.47          “ Selling Shareholders ” shall have the meaning set forth in the preface above.

 

1.48          “ Selling Shareholder Employment Agreements ” has the meaning set forth in Section 5.2 below.

 

1.49          “ Shares ” means, collectively, the Closing Shares and the Performance Shares.

 

1.50          “ Taxes ” means any U.S. or non U.S. federal, state, provincial, local or foreign (i) income, corporation gross income, gross receipts, license, payroll, employment, excise,

 

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severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, intangible property, recording, occupancy, sales, use, transfer, registration, value added minimum, ad valorem or excise tax, estimated or other tax of any kind whatsoever, including any interest, additions to tax, penalties, fees, deficiencies, assessments, additions or other charges of any nature with respect thereto, whether disputed or not; and (ii) any liability for the payment of any amount of the type described in (i) above.

 

1.51          “ Tax Returns ” means all federal, state, local, provincial and foreign tax returns, declarations, reports, claims, schedules and forms for refund or credit or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

Article II
Purchase and Sale of Assets

 

2.1            Sale and Purchase of Assets .  Upon the terms and subject to the conditions set forth in this Agreement, and in reliance upon the representations, warranties, covenants and agreements contained herein, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase, acquire, assume, accept and take possession of, all of Sellers’ right, title and interest in and to the following (collectively, the “ Purchased Assets ”):

 

(a)            All of Seller’s right, title and interest in and to the JV Agreement; and

 

(b)            $100,000 in cash.

 

2.2            Assignment of JV Agreement .  In connection with the transactions contemplated by this Agreement, and upon the terms and subject to the conditions set forth in this Agreement, and in reliance upon the representations, warranties, covenants and agreements contained herein, at the Closing, Seller shall assign to Purchaser, and Purchaser shall accept, all rights and obligations of Seller under the JV Agreement which assignment shall be made and accepted subject to all of the terms and conditions of the JV Agreement as provided herein.

 

2.3            Assumed Liabilities .   In connection with the sale, transfer, conveyance, assignment and delivery of the Assumed Contract pursuant to this Agreement, at the Closing, Purchaser shall assume and become liable for only those Liabilities arising out of the Assumed Contract, but not including any obligation or liability for any breach by Seller (or the Selling Shareholders) thereof arising or occurring prior to the Closing Date (collectively “ Assumed Liabilities ”).

 

2.4            Excluded Liabilities .  Except for the Assumed Liabilities expressly assumed by the Purchaser pursuant to Section 2.2 of this Agreement, Purchaser shall not assume by virtue of this Agreement or the transactions contemplated hereby, and shall have no liability for, any debts, Liabilities or obligations of Seller, the Selling Shareholders or the Seller Business of any kind, character or description whatsoever, contingent or otherwise, and regardless of whether any such debt, Liability or obligation is disclosed in this Agreement (the “ Excluded Liabilities ”).

 

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2.5            Extinguishment of Indebtedness .  In connection with the transactions contemplated under this Agreement, and in consideration of the Purchase Price and other good and valuable consideration provided herein, Seller hereby agrees to extinguish any unpaid but due profits from Purchaser to Seller with respect to the JV Agreement and any debt associated with capital purchases under said JV Agreement (“ Purchaser Indebtedness ”)  Seller agrees and acknowledges that Purchaser shall have no obligation to repay the Purchaser Indebtedness to Seller, and Seller shall have no right to demand Purchaser’s repayment of such indebtedness. Seller, on behalf of Seller and Seller’s Affiliates, heirs, successors and assigns, hereby releases and discharges Purchaser from any and all claims, demands, rights, causes of action, proceedings, orders, remedies, obligations, damages and liabilities of whatsoever kind or character arising in connection with, or out of, the Purchaser Indebtedness.

 

Article III
Purchase Price and Closing

 

3.1            Purchase Price .  The purchase price for the Purchased Assets shall consist of the following (collectively, the “ Purchase Price ”):

 

(a)            47,658,374 shares of common stock of Purchaser, par value $0.01 per share (“ Common Stock ”), valued at $0.006333 per share (the “ Closing Shares ”), which such Closing Shares shall be issuable to Seller as follows:

 

(i)             at the Closing:  38,836,584 shares ,

 

(ii)            and on January 15, 2010: 8,821,791 shares

 

(b)            Performance Shares may be issuable to the Selling Shareholders subject to and in accordance with the terms and conditions of Article V hereof.  The Closing Shares and the Performance Shares are collectively referred to herein as the “ Shares .

 

3.2            Closing .  Subject to the provisions of Article VIII hereof as to termination of this Agreement, the consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall occur on the day that all the conditions to the obligations of the Parties to consummate the transactions contemplated hereby are satisfied (or waived in writing) (the “ Closing Date ”).

 

3.3            Transfer Taxes .  Seller shall be responsible for any documentary and transfer Taxes and any sales, use or other Taxes imposed by reason of the transfers of the Purchased Assets provided under this Agreement and any deficiency, interest or penalty asserted with respect thereto.

 

3.4            Passage of Title at Closing .  At the Closing, as contemplated in this Agreement, title to the Purchased Assets shall pass to Purchaser.  At the Closing, Seller and Selling Shareholders will put Purchaser in full, complete and quiet possession and enjoyment of all of the Purchased Assets.

 

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Article IV
Representations and Warranties

 

4.1            Representations and Warranties of Seller and Selling Shareholders .  Seller and the Selling Shareholders, jointly and severally, represent and warrant to Purchaser that the statements contained in this Section 4.1 are true, accurate and complete as of the date of this Agreement and will be true, accurate and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4.1), except as set forth in the disclosure schedules accompanying this Agreement (the “ Seller Disclosure Schedules ”).  The Seller Disclosure Schedules are arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Agreement, including Article IV hereof.

 

(a)            Organization, Qualification, and Corporate Power .  Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or organization.  Seller is duly authorized to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification.  Seller has full corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.

 

(b)            Capitalization .  All of the issued and outstanding shares of capital stock of Seller are owned by the Selling Shareholders.  There are no other shares of capital stock of Seller issued or outstanding.  Seller’s outstanding common stock has been duly and validly issued and is fully paid and nonassessable.  There are not outstanding any warrants, options or other rights to acquire any of Seller’s capital stock that would affect the transactions contemplated by this Agreement.

 

(c)            Authorization .    The execution and delivery by Seller of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by all necessary action of Seller (and Selling Shareholders, as applicable). Seller and the Selling Shareholders have full power and authority (corporate or otherwise) to execute, deliver and perform this Agreement, the Collateral Agreements and any other agreements and instruments to be executed and delivered by them in connection with the transactions contemplated hereby and to perform the obligations thereunder.  This Agreement, the Collateral Agreements and any other agreement in connection with this Agreement, constitute the valid and legally binding obligation of Seller and the Selling Shareholders, enforceable in accordance with their respective terms and conditions.

 

(d)            Consents and Approvals .  No consent, approval, authorization or order of, registration or filing with, or notice to, any Regulatory Authority or any other Person is necessary to be obtained, made or given by any of Seller and the Selling Shareholders in connection with the execution, delivery and performance by them of this Agreement or any applicable Collateral Agreement, or for the consummation by Seller and the Selling Shareholders of the transactions contemplated by this Agreement.

 

(e)            Noncontravention .  Neither the execution and the delivery of this Agreement, the Collateral Agreements, nor the consummation of the transactions contemplated hereby or thereby, will (i) violate any statute, regulation, rule, judgment, order, decree, stipulation, injunction, charge, or other restriction of any Regulatory Authority, governmental

 

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agency, or court to which any of Seller and the Selling Shareholders are subject or any provision of the charter or bylaws o