EXHIBIT "2"
REVISED ASSET PURCHASE AND SALE AGREEMENT
By and Among
Universal Broadband Communications, Inc.,
a Nevada corporation,
and
Norstar Communications, Inc.,
a California corporation.
THIS REVISED ASSET PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered
into in duplicate on January 22, 2002, and shall be effective as of the 2nd day
of January, 2002, by and among Norstar Communications, Inc., a California
corporation ("Seller"), and Universal Broadband Communications, Inc., a Nevada
corporation ("Purchaser"), and provides for the Purchaser to acquire the direct
billing customer base and selected other assets of the Seller, on the terms and
subject to the conditions specified in this Agreement.
RECITALS
A. The Purchaser desires to acquire, on the terms and subject to the
conditions specified in this Agreement, the Acquired Assets (as that term is
defined later in this Agreement).
B. The Seller believes that it is in the best interests of the Seller,
and, therefore, it desires to, sell the Acquired Assets to the Purchaser, on the
terms and subject to the conditions specified in this Agreement.
(begin boldface)
NOW, THEREFORE, IN CONSIDERATION OF THE RECITALS SPECIFIED ABOVE THAT SHALL BE
DEEMED TO BE A SUBSTANTIVE PART OF THIS AGREEMENT, AND THE MUTUAL COVENANTS,
PROMISES, UNDERTAKINGS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES SPECIFIED IN
THIS AGREEMENT AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE OBLIGATED
LEGALLY AND EQUITABLY, THE PARTIES DO HEREBY COVENANT, PROMISE, AGREE, REPRESENT
AND WARRANT AS FOLLOWS:
(end boldface)
ARTICLE I
DEFINITIONS
As used in this Agreement, the capitalized terms specified in this
Agreement shall have the meanings and definitions specified and indicated by the
provisions of this Article I, unless a different and common meaning of such a
term is clearly indicated by the context, and variants and derivatives of those
terms shall have correlative meanings. To the extent that certain of the
definitions specified in this Article I suggest, indicate, or express agreements
between or among parties to this Agreement, or contain representations or
warranties or covenants of a party, the parties agree to the same, by execution
of this Agreement. Agreements, representations, warranties and covenants
specified in any part or provision of this Agreement shall, for all purposes of
this Agreement, be treated in the same manner as other such agreements,
representations, warranties and covenants specified elsewhere in this Agreement;
and the article, section or paragraph of this Agreement within which such an
agreement, representation, warranty, or covenant appears shall have no separate
meaning or effect regarding the same.
1.1 "Accumulated Funding Deficiency". An "accumulated funding deficiency"
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as defined in ERISA Section 302(a)(2) or the last two sentences of Section
412(a)(2) of the Code, or, in either case, successor provisions to such
provisions adopted by amendments to ERISA or the Code, as the case may be, and
including, in each case, other provisions of ERISA, of the Code or such other
law, modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by or is involved in
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
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1.2 "Acquired Assets". The assets of the Seller being acquired by the
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Purchaser pursuant to the provisions of this Agreement, as specified on Schedule
1.2 of this Agreement, and all other assets of the Seller, tangible or
intangible, including contractual, warranty, and other rights, the use or value
of which will come under the Control (as that term is defined in Section 1.18 of
this Agreement) by the Purchaser when the Transaction (as that term is defined
later in this Agreement) is consummated.
1.3 "Acquired Business". The business conducted by the Seller in which
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the Seller utilized the Acquired Assets, as specified in Schedule 1.2 to this
Agreement
1.4 "Balance Sheet". The most recent Balance Sheet included in the
----------------------
Audited Financial Statements of the respective party to this Agreement.
1.5 "Acquired Business Disclosure Document". The document delivered by
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the Seller to the Purchaser containing certain disclosures regarding the
Acquired Business.
1.6 "Acquired Facilities". All warehouses, stores, plants, processing
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facilities, fixtures, and improvements owned or leased by the Seller or
otherwise used by the Seller in connection with the operation of its business or
leased or subleased by the Seller to other Persons (as that term is defined
later in this Agreement), but only to the extent that those facilities consist
of Acquired Assets.
1.7 "Affiliate". When used with respect to a Person, an "Affiliate" of
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that Person is a Person Controlling, Controlled by, or subject to common Control
with that Person.
1.8 "Agreement". This Revised Asset Purchase and Sale Agreement,
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including all of its schedules and exhibits and all other documents specifically
referred to in this Agreement that have been or are to be delivered by a party
to this Agreement to the other party to this Agreement in connection with the
Transaction or this Agreement, and including any and all duly adopted
amendments, modifications, and supplements to or of this Agreement and such
schedules, exhibits and other documents., including all of its schedules and
exhibits and all other documents specifically referred to in this Agreement that
have been or are to be delivered by a party to this Agreement to the other party
to this Agreement in connection with the Transaction or this Agreement, and
including any and all duly adopted amendments, modifications, and supplements to
or of this Agreement and such schedules, exhibits and other documents.
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1.9 "Audited Financial Statements". The balance sheet, income statement,
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statement of stockholders' equity and statement of cash flows or, in each
instance, equivalent statements as commonly provided to shareholders of a
respective party to this Agreement for the period ending December 31, 2000, and
for the three fiscal years then ended, in each instance, as recorded by the
Auditors.
1.10 "Auditors". With respect to the Seller and the Acquired Business,
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Xxxxxxx & White, and with respect to the Purchaser, Merdinger, Fruchter, Xxxxx &
Corso, P.C., in each instance the independent certified public accountants
currently retained for the purpose of auditing financial statements of the
respective party. With respect to any report hereafter issued by the Auditors,
the term shall mean that firm of independent certified public accountants.
1.11 "Business Day". Any day that is not a Saturday, Sunday or day on
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which banks Los Angeles, California are authorized to close.
1.12 "Closing". The completion of the Transaction, to occur as
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contemplated in Article II of this Agreement.
1.13 "Closing Date". January 2, 2002, or the date on which the Closing
----------------------
actually occurs, which shall be the date that all of the conditions specified by
the provisions of Article VII of this Agreement have been satisfied or waived.
1.14 "Closing Time". The time at which the Closing actually occurs. All
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events that are to occur at the Closing Time shall, for all purposes, be deemed
to occur simultaneously, except to the extent, if at all, that a specific order
of occurrence is otherwise described.
1.15 "Code". The Internal Revenue Code of 1986, as amended and in effect
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on the date the parties sign this Agreement.
1.16 "Complete Withdrawal". A "complete withdrawal" from a Multiemployer
----------------------------
Plan as defined in Section 4203 of ERISA or successor provisions to such
provisions adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of such
provision, either in general or as applied to the nature or circumstances of a
particular Entity that is a party to, or is affected by or is involved in the
Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
1.17 "Consideration". One million seven hundred eleven thousand nine
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hundred thirty-three (1,711,933) shares of $.001 par value common stock of the
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Purchaser to be issued by the Purchaser to the Seller at the Closing for the
Acquired Assets, which shares may also be referred to in this Agreement as the
"Subject Shares".
1.18 "Control". Generally, the power to direct the management or affairs
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of an Entity.
1.19 "Encumbrance". Any lien, pledge, option, adverse claim, charge,
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easement security interest, right-of-way or encumbrance.
1.20 "Entity". A corporation, partnership, sole proprietorship, joint
---------------
venture, or other form of organization formed for the conduct of a business,
whether active or passive.
1.21 "ERISA". The Employee Retirement Income Security Act of 1974, as
--------------
amended and in effect at the time of execution of this Agreement.
1.22 "Exchange Act". The Securities and Exchange Act of 1934, as amended
----------------------
from time to time.
1.23 "GAAP". Generally Accepted Accounting Principles, as in effect on
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the date of any statement, report or determination that purports to be, or is
required to be, prepared or made in accordance with GAAP. All references in this
Agreement to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied during the periods to which reference
is made.
1.24 "Governmental Entity". Any governmental or political subdivision or
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department thereof, any governmental or regulatory agency, commission, board,
bureau, agency or instrumentality, or any court or arbitrator or alternative
dispute resolution agency, in each event whether domestic or foreign, federal,
state or local.
1.25 "HSR Act". The Xxxx-Xxxxx-Xxxxxx Antitrust improvements Act of 1976,
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as amended.
1.26 "Inventory". Any stock of raw materials, work-in-process and finished
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goods, including, but not limited to, finished goods purchased for resale, held
by a party for manufacturing, assembly, processing, finishing, sale, or resale
to others from time to time in the ordinary course of the business of that
party, in the form in which such inventories then are held or after
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manufacturing, assembling, finishing, processing, incorporating with other goods
or items, refining, or similar processes.
1.27 "IRS". The Internal Revenue Service.
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1.28 "Knowledge". A Person will be deemed to have "Knowledge" of a
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particular fact or other matter if such Person is actually aware of such fact or
other matter, but such Person shall not and does not have an obligation to
conduct an inquiry or investigation to become aware of any such fact or matter.
1.29 "Liabilities". At any time ("Determination Time"), the obligations
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of a person or Entity, whether known or unknown, contingent or absolute,
recorded on its books or not, resulting in any way from facts, events,
agreements, obligations or occurrences that existed, occurred or transpired at a
prior point in time, or resulted from the passage of time to the Determination
Time, but not including obligations accruing or payable after the Determination
Time to the extent (but only to the extent) that such obligations (a) result
from previously existing agreements for services, benefits, or other
considerations, and (b) accrue or become payable with respect to services,
benefits, or other considerations received by the person or Entity after the
Determination Time.
1.30 "Multiemployer Plan". A "multiemployer plan," as defined in Section
----------------------------
3(37) of ERISA or Section 414(f) of the Code, or, in either event, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each event, other provisions of ERISA, of the
Code, or of other law, and regulations adopted pursuant to ERISA, or the Code,
or such other law, modifying, amending, interpreting, or otherwise affecting the
application of such provisions, either in general or as applied to the nature or
circumstances of a particular Entity that is a party to, or is affected by, or
is involved in, the Transaction and with respect to which Entity the use of the
term in this Agreement, or in the particular provision in this Agreement, is
relevant.
1.31 "Partial Withdrawal". A "partial withdrawal" from a Multiemployer
----------------------------
Plan, as defined in Section 4205 of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of such
provision, either in general or as applied to the nature or circumstances of a
particular Entity that is a party to, or is affected by or is involved in the
Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
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1.32 "Payables". Any Liabilities of a party resulting from the borrowing
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of money or the incurring of obligations for merchandise or goods purchased.
1.33 "PBGC". The Pension Benefit Guaranty Corporation.
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1.34 "Pension Plan". A "pension plan" or "employee pension benefit plan,"
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as defined in Section 3(2) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and including other provisions of ERISA, or of
other law, and regulations adopted pursuant to ERISA or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by, or is involved in,
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular provision in this Agreement, is relevant.
1.35 "Person". Any individual, company, sole proprietorship, corporation,
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joint venture, association, joint stock company, fraternal order, cooperative,
league, club, society, organization, trust, estate, governmental agency,
political subdivision or authority, firm, municipality, congregation,
partnership, or other form of Entity.
1.36 "Plan Termination". A termination of a Pension Plan, whether partial
-------------------------
or complete, within the meaning of Title IV of ERISA.
1.37 "Prohibited Transaction". A "prohibited transaction," as defined in
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ERISA Section 4975 (c) of the Code, or, in either case, successor provisions to
such provisions adopted by amendments to ERISA or the Code, as the case may be,
and including, in each case, other provisions of ERISA, of the Code or of other
law, and regulations adopted under ERISA or the Code or such other law,
modifying, amending, interpreting, or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular Entity that is a party to, or is affected by or is involved in
the Transaction and with respect to which Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
1.38 "Proprietary Rights". Any trade secrets, copyrights, patents,
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trademarks, service marks, customer lists, and all similar types of intangible
property developed, created or owned by the Seller, or used by the Seller in
connection with its business, whether or not those rights are entitled to legal
protection.
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1.39 "Purchaser". Universal Broadband Communications, Inc., (formerly
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Beech Corp.), a Nevada corporation, which, pursuant to the provisions of this
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Agreement, is purchasing the Acquired Assets.
1.40 "Receivables". Any accounts receivable, notes receivable, and other
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obligations presented as assets on the books, records and financial statements
of a person or an Entity, in accordance with GAAP, indicating moneys owed, due
and payable to such person or Entity on whose financial statements such
Receivables are presented.
1.41 "Registration". Registration pursuant to the Securities Act.
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1.42 "Registration Rights Agreement". The Agreement, in the form of
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Schedule 1.41 to this Agreement, providing for the Registration, on the terms
and subject to the conditions as specified therein, of the Subject Shares.
1.43 "Reportable Event". A "reportable event", as defined in Section
--------------------------
4043(b) of ERISA or successor provisions to such provision adopted by amendments
to ERISA and including other provisions of ERISA or of other law, and
regulations adopted under ERISA or such other law, modifying, amending,
interpreting, or otherwise affecting the application of such provision, either
in general or as applied to the nature or circumstances of a particular Entity
that is a party to, or is affected by or is involved in the Transaction and with
respect to which Entity the use of the term in this Agreement, or in the
particular location in this Agreement, is relevant.
1.44 "SEC". The Securities and Exchange Commission.
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1.45 "Securities Act". The Securities Act of 1933, as amended from time
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to time.
1.46 "Seller". Norstar Communications, Inc., a California corporation,
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which, pursuant to the provisions of this Agreement, is selling the Acquired
Assets.
1.47 "Subsidiary". With respect to any Entity, another Entity of which
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fifty percent (50%) or more of the effective voting power, or the effective
power to elect a majority of the board of directors or similar governing body,
or fifty percent (50%) or more of the true equity interest, is owned by such
first Entity, directly or indirectly.
1.48 "Taxes". All taxes, charges, levies or other assessments, including,
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without limitation, income, gross receipts, excise, real and personal property,
8
sales, use, transfer, capital gains, transfer gains, license, payroll,
privilege, and franchise taxes, imposed by any Governmental Entity and shall
include any interest, penalties or additions to tax attributable to any of the
foregoing.
1.49 "Transaction". The sale of the Acquired Assets, for the Consideration,
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and on the terms and subject to the conditions of this Agreement.
1.50 "Unaudited Financial Statements". The balance sheet, income
-------------------------------------------
statement, statement of stockholders equity and statement of cash flows, or, in
each instance, equivalent statements as commonly provided to shareholders by
each respective party to this Agreement for the period ending June 30, 2001, and
as appropriate, for each month after June 30, 2001, with comparable statements
for the similar periods of the prior fiscal year.
1.51 "Welfare Plan". A "welfare plan" or an "employee welfare benefit
----------------------
plan," as defined in Section 3(1) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA, or of other law, and regulations adopted pursuant to ERISA, or such other
law, modifying, amending, interpreting, or otherwise affecting the application
of such provision, either in general or as applied to the nature or
circumstances of a particular Entity that is a party to, or is affected by, or
is involved in, the Transaction and with respect to which Entity the use of the
term in this Agreement, or in the particular provision in this Agreement, is
relevant.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, on,
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and in all instances subject to, each of the terms, conditions, provisions and
limitations specified in this Agreement, the Seller shall sell, transfer,
convey, assign, deliver and set over to the Purchaser, by instruments
satisfactory in form and substance to the Purchaser and counsel for the
Purchaser, and the Purchaser shall acquire from the Seller, all of the Seller's
right, title and interest in and to the Acquired Assets, in exchange for the
Consideration, free and clear of any and all Encumbrances. Neither the Purchaser
nor any of its Affiliates shall assume, become liable for, agree to pay or
discharge or in any manner become in any way responsible for, any of the
Liabilities of the Seller.
2.2 Delivery of Consideration. The certificates evidencing and
-----------------------------------
representing the Subject Shares shall be issued and delivered by the Purchaser
to the Seller on the Closing Date for distribution to the Seller's shareholders.
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2.3 Acquired Assets. The Acquired Assets shall consist of those assets
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specified on Schedule 1.2 to this Agreement.
2.4 Closing. The Closing of the Transaction shall occur at the offices
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of Xxxxx Law Group, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx, at
10:00 A.M. on the Closing Date or that date that all of those conditions to
Closing specified in Article VII of this Agreement have been satisfied or waived
with respect to the Transaction, or at such other place as the Purchaser and the
Seller may agree, on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.1 Organization and Qualification. The Purchaser is a corporation duly
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organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Purchaser is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned
or leased by it, or the nature of its activities, is such that qualification as
a foreign corporation in that jurisdiction is required by law.
3.2 Authority Relative to This Agreement. The Purchaser has the requisite
------------------------------------------
corporate power and authority to perform its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of the Purchaser, and no other corporate
actions on the part of the Purchaser are necessary to approve and adopt this
Agreement or to approve the consummation of the Transaction, including the
issuance and delivery of the Consideration. The Purchaser has, and any officer,
director or representative executing this Agreement for and on behalf of the
Purchaser has, the legal capacity and authority to enter into and deliver this
Agreement. This Agreement is a valid and legally binding obligation of the
Purchaser and is enforceable completely against the Purchaser in accordance with
its terms, except as such enforceability may be limited by general principles of
equity, bankruptcy, insolvency, moratorium and similar laws relating to
creditors' rights generally, and subject to approval of any and all governmental
regulatory agencies and authorities having jurisdiction of the parties to this
Agreement or the Transaction.
3.3 Absence of Breach; No Consents. The execution, delivery and
------------------------------------------
performance of this Agreement, and the performance by the Purchaser of its
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obligations specified by the provisions of this Agreement (except for compliance
with any regulatory or licensing laws applicable to the business of the
Purchaser, all of which, and to the extent applicable to and within control of
the Purchaser (and to the extent within its Control), will be satisfied in all
material respects prior to the Closing) do not (a) conflict with, and will not
result in a breach of, any of the provisions of the Articles of Incorporation or
Bylaws of the Purchaser; (b) contravene any law, rule or regulation of any state
or commonwealth, the United States, (except for compliance with regulatory or
licensing laws, all of which, to the extent applicable to the Purchaser (and to
the extent within the control of the Purchaser), will be satisfied in all
material respects prior to the Closing), or any applicable foreign jurisdiction,
or contravene any order, writ, judgment, injunction, decree, determination, or
award affecting or obligating the Purchaser, in such a manner as to provide a
basis for enjoining or otherwise preventing consummation of the Transaction; (c)
conflict with or result in a material breach of or default pursuant to any
material indenture or loan or credit agreement or any other material agreement
or instrument to which the Purchaser is a party, in such a manner as to provide
a basis for enjoining or otherwise preventing consummation of the Transaction;
or (d) require the authorization, consent, approval or license of any third
party of such a nature that the failure to obtain the same would provide a basis
for enjoining or otherwise preventing consummation of the Transaction.
3.4 Brokers. No broker, finder or investment banker is entitled to any
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brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of the Purchaser.
3.5 Financial Statements. The Purchaser has heretofore delivered to the
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Seller the following:
1. The Audited Financial Statements for the Purchaser;
2. The Unaudited Financial Statements of the Purchaser;
3. All documents of the Purchaser filed with the SEC within the two years
preceding the date of execution of this Agreement.
All of the historical financial statements contained in such documents were
prepared from the books and records of the Purchaser. The Audited Financial
Statements of the Purchaser were prepared in accordance with GAAP, and fairly
and accurately present the financial position of the Purchaser as of the dates
and for the periods indicated in those financial statements. Without limiting
the generality of the foregoing, at the date of the Balance Sheet of the
Purchaser the Purchaser owned each of the assets specified on the Balance Sheet,
and the valuation of those assets is not more than the fair saleable value of
those assets (on an item by item basis) at that date; and the Purchaser has no
11
liabilities, other than those specified on the Purchaser's Balance Sheet, nor
any Liabilities in amounts and excess of the amounts specified for those
Liabilities in the Purchaser's Balance Sheet. The Unaudited Financial Statements
of the Purchaser, in the documents specified above in this section, were
prepared in a manner consistent with the basis of presentation used in the
preparation of the Purchasers Audited Financial Statements, and fairly present
the financial position of the Purchaser as at and for the periods indicated,
subject to normal year end adjustments, none of which will be material. From the
date of execution of this Agreement through the Closing Date the Purchaser will
continue to prepare financial statements on the same basis that the Purchaser
has done so in the past and will promptly deliver those financial statements to
the Seller, and from and after such delivery the representations and warranties
specified in this section shall be applicable to each financial statement so
prepared and delivered.
3.6 No Material Adverse Changes. Since the date of the Purchaser's
------------------------------------
Balance Sheet, there has not been (i) any material adverse change in the
business, condition (financial or otherwise) operations, or prospects of the
Purchaser (ii) any damage, destruction or loss, whether insured or not, having a
material adverse effect on the business, condition (financial or otherwise)
operations or prospects of the Purchaser; (iii) any entry into or termination of
any material commitment, contract, agreement or transaction affecting the
Purchaser, including, without limiting the generality of the foregoing, any
material borrowing or capital expenditure or sale or other disposition of any
material asset or assets other than agreements executed in the ordinary course
of business; (iv) any transfer of or right granted pursuant to any material
lease, license, agreement, patent, trademark, trade name or copyright of the
Purchaser; (v) any sale or other disposition of any asset of the Purchaser, or
any mortgage, pledge or imposition of any lien or Encumbrance on any asset of
the Purchaser, other than in the ordinary course of business, or any agreement
related to any of the foregoing; or (vi) any default or breach in any material
respect pursuant to any contract, license or permit held by or for or affecting
the Purchaser.
3.7 Conduct of Business. Since the date of the Purchaser's Balance
---------------------------
Sheet, the Purchaser has conducted its business only in the ordinary and usual
course, and, without limiting the generality of the foregoing, no changes have
been made in (i) employee compensation amounts, or (ii) the manner in which any
employees of the Purchaser are compensated or (iii) supplemental benefits
provided to any officer, director, or other employee of the Purchaser or (iv)
amounts of Inventory of the Purchaser in relation to sales, except, in any such
event in the ordinary course of business and, in any such event, without
material adverse effect on the business, condition (financial or otherwise)
operations, or prospects of the purchaser.
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3.8 Taxes. The Purchaser has properly filed or caused to be filed all
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federal, state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law to be filed by it and has paid,
or made full and adequate provision for the payment of, all federal, state,
local, and foreign income and other taxes properly due for the periods
contemplated by such returns, reports, and declarations.
3.9 Litigation. No investigation or review by any governmental agency
----------------
with respect to the Purchaser is pending or to the Knowledge of the Purchaser
threatened (other than inspections and reviews customarily made of businesses
similar to that the Purchaser), nor has any governmental agency indicated to the
Purchaser an intention to conduct the same. There is no action, litigation or
proceeding pending or to the Knowledge of the Purchaser threatened against or
affecting the Purchaser at law or in equity, or before any federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality.
3.10 Employees, Etc. There are no collective bargaining, bonus, profit
---------------------
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by the Purchaser for the benefit of its directors,
officers or employees. There are no employment, consulting, severance, or
indemnification arrangements, agreements, or understandings between the
Purchaser, on the one hand, and any of its current or former directors, officers
or other employees (or Affiliates thereof) on the other hand. The Purchaser is
not, and following the Closing will not be, obligated by any express or implied
contract or agreement to employ, directly or as consultant or otherwise, any
person for any specific period of time or until any specific age.
3.11 Compliance With Laws. The Purchaser is in compliance with all, and
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has received no notice of any violation of any, laws or regulations applicable
to its operations, including, without limitation, the laws and regulations
relevant to the use or utilization of its premises, or with respect to which
compliance is a condition of engaging in any aspect of the business of the
Purchaser, and the Purchaser has all permits, licenses, zoning rights, and other
governmental authorizations necessary to conduct its business as presently
conducted.
3.12 Ownership of Assets. The Purchaser has good, marketable and
----------------------------
insurable title, or valid, effective and continuing leasehold rights in the case
of leased property, to all real property (as to which, in the case of owned
property, such title is fee simple) and all personal property owned or leased by
the Purchaser in such a manner as to create the appearance or reasonable
expectation that the same is owned or leased by the Purchaser; such ownership is
free and clear of all liens, claims, encumbrances and charges, except liens for
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taxes not yet due and minor imperfections of title and encumbrances, if any,
which, singly and in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or materially
impair the use thereof; no other person has any ownership or similar right in,
or contractual or other right to acquire any such right in, any of such
property. The Purchaser does not know of any potential action by any party,
governmental or other, and no proceedings with respect thereto have been
instituted of which the Purchaser has notice, that would materially affect the
Purchaser's ability to use and to utilize each of its properties. The Purchaser
has received no notices from any mortgagee regarding any of its leased
properties.
3.13 Proprietary Rights. The Purchaser possesses full and complete
---------------------------
ownership of, or adequate and enforceable long-term licenses or other rights to
use (without payment), all of the Purchaser's Proprietary Rights; the Purchaser
has not received any notice of conflict which asserts the rights of others with
respect thereto; and the Purchaser has in all material respects performed all of
the obligations required to be performed by it, and is not in default in any
material respect, pursuant to any agreement relating to any such Proprietary
Right.
3.14 Subsidiaries. The Purchaser has no Subsidiaries.
-------------------
3.15 Trade Names. The Purchaser has not utilized any fictitious business
------------------
names or similar name in the conduct of the Purchaser's business or in the
utilization of the Purchaser's assets.
3.16 Employee Benefit Plans. The Purchaser does not maintain or contribute
-----------------------------
to any Pension Plan or any Welfare Plan, nor is the Purchaser presently, nor has
the Purchaser been within the last six (6) years, a participating employer in
any Multiemployer Plan, affecting, in any event, employees of the Purchaser.
3.17 Facilities. The Purchaser's facilities are (as to physical plant and
-----------------
structure) structurally sound, and none of the Purchaser's facilities, nor any
of the vehicles or other equipment used by the Purchaser in connection with its
business, has any material defects and all of them are in all material respects
in good operating condition and repair and are adequate for the uses to which
they are utilized; none of Purchaser's facilities, vehicles or other equipment
is in need of maintenance or repairs except for ordinary, routine maintenance
and repairs which are not material in nature or cost. The Purchaser is not in
breach, violation or default of any lease affecting the Purchaser's assets with
respect to, or as a result of, which the other party (whether lessor, lessee,
sublessor, or sublessee) thereto has the right to terminate the same, and the
Purchaser has not received notice of any claim or assertion that the Purchaser
is or may be in any such breach, violation or default.
14
3.18 Accounts Receivable. All accounts receivable of the Purchaser
---------------------------
represent transactions in the ordinary course of business and are current and
collectible.
3.19 Inventories. All Inventories of the Purchaser are of a quality and
------------------
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which, in the
aggregate, are immaterial in amount. Items included in such Inventories are
specified on the books and records of the Purchaser at the lower of cost or
market and, in any event, at not more than their net realizable value, on an
item by item basis, after appropriate deduction for costs of completion,
marketing costs, transportation expense and allocation of all other expenses.
3.20 Contracts. The Purchaser is not a party to or affected by any
----------------
contracts, agreements or understandings, whether express or implied, written or
verbal; provided, however, that the Purchaser, may be a party to or affected by
any such contracts, agreements, or understandings that (1) are terminable on
notice of less than thirty-two (32) days and do not involve payments or
obligations of more than $1,000.00 in any period of thirty-one (31) days or less
(on termination or otherwise); or (2) involve aggregate payment or obligation
remaining unpaid as of the date of the Agreement of less than $5,000.00. The
Purchaser is not a party to any executory contract to sell or transfer any part
of any asset or any leasehold interest in any asset utilized by the Purchaser.
True and accurate copies of all such leases, and of all amendments, supplements,
extensions and modifications thereof, have heretofore been delivered to the
Seller by the Purchaser.
3.21 Accounts Payable. The accounts payable of the Purchaser specified on
-----------------------
the Purchaser's Balance Sheet do, and those specified in the most recent balance
sheet included in the Purchaser's Unaudited Financial Statements at the time of
the Closing will, be all amounts owed by the Purchaser regarding trade accounts
due and other Payables of the Purchaser, and the actual Liability of the
Purchaser with respect of those obligations is not, and will not be, or any of
such dates, in excess of the amounts so specified on those balance sheets.
3.22 Labor Matters. There are no activities or controversies, including,
--------------------
without limitation, any labor organizing activities, election petitions or
proceedings, proceedings preparatory thereto, unfair labor practice complaints,
labor strikes, disputes, slowdowns, or work stoppages, pending or, to the
Knowledge of the Purchaser, threatened, affecting employees of the Purchaser.
3.23 Insurance. The Purchaser has insurance policies in full force and
----------------
effect insuring the assets of the Purchaser, and such insurance policies provide
15
for coverages which are usual and customary in the business of the Purchaser as
to amount and scope and are adequate to protect the assets of the Purchaser
against any reasonably foreseeable risk of loss, including business
interruption. The Purchaser has not within the past three (3) years received any
notice of cancellation of any insurance policy or agreement affecting the assets
of the Purchaser.
3.24 Title to and Utilization of Real Properties. The Purchaser owns fee
---------------------------------------------------
simple, insured title to all real property utilized and has the unfettered and
unconditional right to use the same, and is not aware of any claim, notice or
threat to the effect that the Purchaser's right to own and use such property is
subject in any way to any challenge, claim, assertion of rights, proceedings
toward condemnation or confiscation, in whole or in part, or is otherwise
subject to challenge.
3.25 Full Disclosure. The documents, certificates, and other writings
-----------------------
furnished or to be furnished by or on behalf of the Purchaser to the Seller
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made, in light of the
circumstances pursuant to which they are made, not misleading.
3.26 Capitalization; the Subject Stock; Related Matters. The authorized
-----------------------------------------------------------
capital stock of the Purchaser consists of (i) 50,000,000 shares of $.001 par
value common stock and (ii) 10,000,000 shares of $.001 par value Preferred
Stock. There is no other capital stock authorized for issuance. The Subject
Shares, when issued, will be duly, legally and validly issued and will be
non-assessable.
3.27 Options, Warrants and Other Rights and Agreements Affecting the
---------------------------------------------------------------------------
Purchaser's Capital Stock. The Purchaser has no authorized or outstanding
----------------------------
options, warrants, calls, subscriptions, rights, convertible securities or other
securities, as defined by the provisions of the Securities Act, or any
commitments, agreements, arrangements or understandings of any manner or nature
whatsoever obligating the Purchaser, in any such event, to issue shares of the
Purchaser's capital stock or other securities or securities convertible into or
evidencing the right to purchase shares of the Purchaser's capital stock or
other securities. Neither the Purchaser nor any officer, director, or
shareholder of the Purchaser is a party to any agreement, understanding,
arrangement or commitment, or obligated by any provision which creates any
rights in any person with respect to the authorization, issuance, voting, sale
or transfer of any shares of the Purchaser's capital stock or other securities.
16
3.28 Questionable Payments. Neither the Purchaser, nor any director,
-----------------------------
officer, agent, employee, or other person associated with or acting on behalf of
the Purchaser has, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign and domestic political
parties or campaigns, from corporate funds; violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entry on the books or records of the Purchaser; made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment; given
any favor or gift which is not deductible for federal income tax purposes; or
made any bribe, or kickback, or other payment of a similar or comparable nature,
whether lawful or not, to any person or Entity, private, or public, regardless
of form, whether in money, property, or services, to obtain favorable services,
to obtain favorable treatment in securing business or to obtain special
concessions, or to pay for favorable treatment for business secured or for
special concessions already obtained.
3.29 Litigation and Claims. There is no litigation, arbitration, claim,
----------------------------
governmental or other proceeding (formal or informal), or investigation pending
or threatened (or any basis therefor known to the Purchaser) against the
Purchaser or any of the Purchaser's businesses, properties, or assets.
3.30 Bulk Transfer Compliance. The Purchaser is aware, in connection with
-------------------------------
the sale by the Seller of the Acquired Assets, the Seller shall not take any
action necessary or appropriate to comply with applicable bulk transfer
requirements of the Uniform Commercial Code.
3.31 SEC Documents. The Purchaser has filed all reports required to be
---------------------
filed by the Purchaser pursuant to the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, ("SEC Documents") on a timely basis or received
a valid extension of such time of filing and has filed any such SEC Documents
prior to the expiration of any such extension of time. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC promulgated
pursuant thereto, and none of the SEC Documents, when filed, contained any
untrue statement of material fact or omitted to specify a material fact required
to be specified therein or necessary in order to make the information therein
not misleading. All material agreements to which the Purchaser is a party or to
which the property or assets of the Purchaser are subject have been filed as
exhibits to the SEC Documents, as required. The financial statements of the
Purchaser included in the SEC Documents comply in all material respects with
applicable accounting requirements and the rules and regulations of the SEC with
17
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with GAAP during the periods involved, except
as may be otherwise specified in such financial statements or the notes thereto,
and fairly present, in all material respects, the financial situation of the
Purchaser as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal year-end audit adjustments. Since the date of the financial
statements. included in the Purchaser's last filed Quarterly Report on Form 10-Q
there has been no event, occurrence or development that has had, or would
reasonable be expected to have, a material adverse effect on the Purchaser or
its business that has not been specifically disclosed to the Seller by the
Purchaser.
3.32 Investment Company. The Purchaser is not, and is not controlled by
--------------------------
or under common control with an affiliate of, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
3.33 Internal Accounting Controls. The Purchaser maintains a system of
-------------------------------------
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
3.34 Private Offering. The Purchaser and all Persons acting on its behalf
-----------------------
have not made, and will not make, offers or sales of any securities that might
be integrated with issuance of the Subject Shares and which would disqualify the
Purchaser from relying on that exemption from the registration and prospectus
delivery requirements of the Securities Act specified by the provisions of
Section 4(2) of the Securities Act and Rule 506 of Regulation D. The issuance by
the Purchaser to the Seller of the Subject Shares is exempt from the
registration and prospectus delivery requirements of the Securities Act. Neither
the Purchaser, nor any Person acting on its behalf, has directly or indirectly
made any offers or sales in any security of the Purchaser or solicited any
offers to purchase any securities of the Purchaser pursuant to circumstances
that would cause the issuance of the Subject Shares, pursuant to this Agreement,
to be integrated with prior offerings by the Purchaser for the purposes of the
Securities Act.
3.35 Actions Since Balance Sheet Date. Since the date of the Purchaser's
---------------------------------------
Balance Sheet, the Purchaser has taken no action that would be prohibited
18
pursuant to the provisions of this Agreement (without the prior written consent
of the Seller, after the date of execution of this Agreement).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
4.1 Organization and Qualification. The Seller is a corporation duly
--------------------------------------
organized, validly existing and in good standing pursuant to the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to conduct its business as that business is now being conducted. The
Seller is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned or
leased by it, or the nature of its activities, is such that qualification as a
foreign corporation in that jurisdiction is required by law.
4.2 Authority Relative to This Agreement. The Seller has the requisite
--------------------------------------------
corporate power and authority to perform its obligations specified by the
provisions of this Agreement. The execution and delivery of this Agreement and
the consummation of the Transaction have been duly authorized and approved by
the requisite corporate authority of the Seller and no other corporate action on
the part of the Seller is necessary to approve and adopt this Agreement or to
approve the consummation of the Transaction, except for shareholder approval
specified elsewhere in this Agreement. The Seller has, and any officer, director
or representative executing this Agreement for and on behalf of the Seller has,
the legal capacity and authority to enter into and deliver this Agreement. This
Agreement is a valid and legally binding obligation of the Seller and is
enforceable completely against the Seller in accordance with its terms, except
as such enforceability may be limited by general principles of equity,
bankruptcy, insolvency, moratorium and similar laws relating to creditors'
rights generally, and subject to approval of any and all governmental regulatory
agencies and authorities having jurisdiction of the parties to this Agreement or
the Transaction.
4.3 Absence of Breach; No Consents. The execution, delivery and
------------------------------------------
performance of this Agreement, and the performance by the Seller of its
obligations specified by the provisions of this Agreement (except for compliance
with any regulatory or licensing laws applicable to the business of the Seller,
all of which, and to the extent applicable to and with the control of the
Seller, will be satisfied in all material respects prior to the Closing) do not
(a) conflict with, and will not result in a breach of, any of the provisions of
the Certificate of Incorporation or Bylaws of the Seller; (b) contravene any
law, rule or regulation of any state or commonwealth, the United States, (except
19
for compliance with regulatory or licensing laws, all of which, to the extent
applicable to and within the control of the Seller, will be satisfied in all
material respects prior to the Closing), or any applicable foreign jurisdiction,
or contravene any order, writ, judgment, injunction, decree, determination, or
award affecting or obligating the Seller, in such a manner as to provide a basis
for enjoining or otherwise preventing consummation of the Transaction; (c)
conflict with or result in a material breach of or default pursuant to any
material indenture or loan or credit agreement or any other material agreement
or instrument to which the Seller is a party, in such a manner as to provide a
basis for enjoining or otherwise preventing consummation of the Transaction; or
(d) require the authorization, consent, approval or license of any third party
of such a nature that the failure to obtain the same would provide a basis for
enjoining or otherwise preventing consummation of the Transaction.
4.4 Investment Representation. The Seller (i) is aware that the Subject
--------------------------------
Shares will be restricted securities subject to the provisions of Rule 144 and
the limits regarding the resale of the Subject Shares, because of the nature of
the Transaction; and (ii) is acquiring the Subject Shares without Registration
pursuant to the provisions of the Securities Act in reliance from the exemption
from the registration and prospectus delivery requirements of the Securities Act
specified by the provisions of Section 4(2) of the Securities Act and Rule 506
of Regulation D for investment and without any intention of sale, resale, or
other distribution of the Subject Shares in any manner that is in violation of
the Securities Act.
4.5 Brokers. No broker, finder, or investment banker is entitled to any
-------------
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of the Seller.
4.6 No Undisclosed Liabilities. The Seller has no Liabilities relating to
--------------------------------
or affecting the Acquired Assets which have not been disclosed to the Purchaser
on that schedule attached to this Agreement marked Schedule 4.5 and the
provisions of which, by this reference, are made a part of this Agreement.
4.7 Taxes. The Seller has properly filed or caused to be filed all
-----------
federal, state, local, and foreign income and other tax returns, reports, and
declarations that are required by applicable law to be filed by the Seller and
that relate to or in any way affect the Acquired Assets, and has paid, or made
full and adequate provision for the payment of, all federal, state, local, and
foreign income and other taxes properly due for the periods contemplated by such
returns, reports, and declarations.
20
4.8 Litigation. No investigation or review by any governmental agency
----------------
with respect to the Acquired Assets or the use thereof is pending or threatened
nor has any governmental agency indicated to the Seller an intention to conduct
the same. There is no action, litigation or proceeding pending or threatened
against or affecting the Acquired Assets at law or in equity, or before any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality.
4.9 Employees, Etc. There are no collective bargaining, bonus, profit
---------------------
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by the Seller for the benefit of its directors, officers
or employees. There are no employment, consulting, severance, or indemnification
arrangements, agreements, or understandings between the Seller, on the one hand,
and any of its current or former directors, officers or other employees (or
Affiliates thereof) on the other hand. The Seller is not, and following the
Closing will not be, obligated by any express or implied contract or agreement
to employ, directly or as consultant or otherwise, any person for any specific
period of time or until any specific age.
4.10 Compliance With Laws. The Acquired Business and each of the Acquired
---------------------------
Assets is in substantial compliance with all, and has received no notice of any
violation of any, laws or regulations applicable to its operations, including,
without limitation, the laws and regulations relevant to the use or utilization
of premises, or with respect to which compliance is a condition of engaging in
any aspect of the business of the Acquired Business, and the Acquired Business
has all permits, licenses, zoning rights, and other governmental authorizations
necessary to conduct its business as presently conducted. All such permits,
licenses, zoning rights, and other governmental authorizations will, as a part
and consequence of the Transaction, be transferred to the Purchaser at the
Closing.
4.11 Ownership of Assets. The Seller has, except as disclosed in the
---------------------------
Acquired Business Disclosure Document, good, marketable and insurable title, or
valid, effective and continuing leasehold rights in the case of leased property,
to all real property (as to which, in the case of owned property, such title is
fee simple) and all personal property owned or leased by the Seller and
comprising a part of the Acquired Assets or the Acquired Business, or used by
the Seller in the conduct of the Acquired Business in such a manner as to create
the appearance or reasonable expectation that the same is owned or leased by the
Seller; such ownership is free and clear of all liens, claims, encumbrances and
charges, except liens for taxes not yet due and minor imperfections of title and
encumbrances, if any, which, singly and in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or materially impair the use thereof; no other person has any ownership
21
or similar right in, or contractual or other right to acquire any such right in,
any of such assets; and such ownership will be conveyed to the Purchaser at the
Closing pursuant to the Transaction. The Seller does not know of any potential
action by any party, governmental or other, and no proceedings with respect
thereto have been instituted of which the Seller has notice, that would
materially affect the Seller's ability to use and to utilize each of such assets
in the business of the Acquired Business. The Seller has received no notices
from any mortgagee regarding any leased properties of the Acquired Business of
the leasehold interest in which comprises any part of the Acquired Assets. The
Acquired Business Disclosure Document specifies a detailed listing of all
Acquired Business or the leasehold interest in which comprises any part of the
Acquired Assets. The Acquired Business Disclosure Document contains a detailed
listing of all Acquired Assets that consist of (a) accounts receivable (b)
miscellaneous current assets in excess (c) prepaid expenses, (d) real property,
and (e) gross aggregate additions for each of the past four (4) years by
location of (i) buildings and improvements, (ii) furniture and fixtures, (iii)
leasehold improvements, and (iv) automobiles and trucks.
4.12 Condition of Tangible Assets. All tangible assets included in the
------------------------------------
Acquired Assets are in good operating condition and repair (except for ordinary
wear and tear) and are in conformity in all material respects with all
applicable laws, ordinances, orders, regulations and other requirements
(including applicable zoning, environmental, motor vehicle safety standards,
occupational safety and health laws and regulations) relating thereto currently
in effect.
4.13 Trade Names. The Seller has not utilized any trade name, fictitious
------------------
business name, or other similar name to utilize any of the Acquired Assets
during the ten (10) years preceding the date of this Agreement.
4.14 Employee Benefit Plans.
-----------------------------
(a) All Pension Plans and Welfare Plans of the Seller affecting
employees of the Acquired Business or employees of the Seller,
have been administered in substantial compliance with their
terms, ERISA and, where applicable, the Code. The IRS has issued
a favorable determination letter with respect to the
qualification of each such Pension Plan and the exemption of any
corresponding trust. A copy of the Plan has been furnished to
Purchaser, and nothing has occurred since the date of any such
determination letter that could cause the relevant Pension Plan
or trust to lose such qualification or exemption.
22
(b) With respect to each Pension Plan or Welfare Plan affecting
employees of the Acquired Business or employees of the Seller:
(i) there is no fact, including, without limitation, any
Reportable Event, that exists that would result in a reason for
termination of such Plan by the PBGC or for the appointment by
the appropriate United States District Court of a trustee to
administer such plan, in each case as contemplated by ERISA; (ii)
neither the Seller nor any fiduciary, trustee or administrator of
any such Pension Plan or welfare Plan, has engaged in a
Prohibited Transaction that could subject the Seller to any
material tax or any material penalty imposed by ERISA or the
Code; (iii) the Seller has not incurred any material liability to
the PBGC (other than for payment of premiums); and (iv) there is
no material Accumulated Funding Deficiency with respect to any
Pension Plan, whether or not waived.
(c) There has been no Plan Termination that has occurred during the
five-year period ending on the date of this Agreement affecting
employees of the Acquired Business or employees of the Seller.
(d) The Seller has no Knowledge of any liability being incurred
pursuant to Title IV of ERISA by the Seller with respect to any
Pension Plan maintained by a trade or business (whether or not
incorporated) which is under common control with, or part of a
controlled group of corporations with, the Seller, within the
meaning of Sections 414(b) or (c) of the Code and affecting
employees of the Acquired Business or employees of the Seller.
(e) No Welfare Plan affecting employees of the Acquired Business or
employees of the Seller is funded with a trust or other funding
method, other than insurance policies.
(f) There has occurred no Complete Withdrawal or Partial Withdrawal
with respect to any Muliemployer Plan affecting employees of the
Acquired Business that could cause the Acquired Business or any
part thereof or any of the Acquired Assets to be exposed or
subjected to any liability, or any lien or similar charge in
relation to any liability, pursuant to or as a result of ERISA
other than to the extent previously paid or fully provided for in
23
the Seller's Balance Sheet, and all payment required to be made
to any such Plan by the Seller pursuant to any applicable
collective bargaining agreements have been made.
4.15 Facilities. The Acquired Facilities are (as to physical plant and
-----------------
structure) structurally sound and none of the Acquired Facilities, nor any of
the vehicles or other equipment used by the Acquired Business in connection with
its business, has any material defects and all of them are in all material
respects in good operating condition and repair and are adequate fro the uses to
which they are being put; none of such Acquired Facilities, vehicles or other
equipment is in need of maintenance or repairs which are not material in nature
or cost. The Seller is not in breach, violation or default of any lease
affecting the Acquired Business or the Acquired Assets with respect to, or as a
result of, which the other party (whether lessor, lessee, sublessor, or
sublessee) thereto has the right to terminate the same, and the Seller has not
received notice of any claim or assertion that it is or may be in any such
breach, violation or default.
4.16 Accounts Receivable. All accounts receivable of the Seller, whether
--------------------------
or not reflected in the Seller's Balance Sheet, represent transactions in the
ordinary course of business, and are current and collectible net of any reserves
shown on such Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). The Acquired Business Disclosure Document
specifically identifies (a) the aging of Receivables; (b) each receivable in
excess of $1,000.00 (c) each Receivable that is more than 90 days past due; and
(d) each Receivable from a Person from whom the aggregate of such receivables
exceeds $ 1,000.00.
4.17 Inventories. All Inventories of the Seller, whether or not specified
------------------
in the Seller's Balance Sheet, are of a quality and quantity useable and salable
in the ordinary course of business, except for obsolete items of below standard
quality, all of which, in the aggregate, are immaterial in amount. Items
included in such Inventories are carried on the books of the Seller, at the
lower of cost or market and, in any event, at not greater than their net
realizable value, on an item by item basis, after appropriate deduction for
costs of completion, marketing costs, transportation expense and allocation of
overhead.
4.18 Contracts. Except as identified in the Acquired Business Disclosure
----------------
Document, the Acquired Assets and the Acquired Business are not parties to or
affected by any contracts, agreements or understandings, whether express or
implied, written or verbal, provided, however, that the Acquired Assets or the
Acquired Business may be parties to or affected by, and the Acquired Business
Disclosure Document need not identify, any such contracts, agreements, or
understandings that (a) are terminable on notice of less than thirty-two (32)
days and do not involve payments or obligation of more than $ 1,000.00 in any
24
period of thirty-one (31) days or less (on termination or otherwise); or (b)
involve aggregate payment or obligation remaining unpaid as of the date of the
Agreement of less that $ 1,000.00. The Acquired Business Disclosure Document
shall, however, identify the aggregate amount of payment obligations remaining
unpaid as of the Agreement of all contracts exempt from disclosure by clause (b)
above. The Acquired Business Disclosure Document included a brief summary of
each such contract, agreement or understanding identified therein. Without in
any respect limiting the foregoing, the Acquired Business Disclosure Document
contains a description of all leases of properties included in the Acquired
Assets or utilized by the Acquired Business, including all amendments,
supplements, extensions and modifications thereof, identifying, inter alia, the
date each such document was executed and its effective period. The Seller is not
a party to any executory contract to sell or transfer any part of any leasehold
interest included in the Acquired Assets or utilized by the Acquired Business.
True and accurate copies of all such leases, and of all amendments, supplements,
extensions and modifications thereof, have heretofore been delivered to the
Purchaser by the Seller.
4.19 Accounts Payable. The accounts payable specified on the Seller's
------------------------
Balance Sheet do, and those specified in the most recent balance sheet included
in the Unaudited Financial Statements of the Acquired Business do, and those
specified on the books of the Seller at the time of the Closing will, specify
all amounts owed by the Seller in respect of trade accounts due and other
Payables of the Acquired Business or relating to the Acquired Assets, and the
actual Liability of the Seller in respect of such obligations was not, and will
not be, on any of such dates, in excess of the amounts so specified on the
balance sheets or the books of the Acquired Business, as the case may be.
4.20 Insurance. The Seller has insurance policies in full force and
----------------
effect insuring the Acquired Assets and the Acquired Business, and such
insurance policies provide for coverages which are usual and customary in the
business of the Acquired Business as to amount and scope, and are adequate to
protect the Acquired Business against any reasonably foreseeable risk of loss,
including business interruption. The Acquired Business Disclosure Document
identities each of such insurance policies, indicating the carrier, amount of
coverage, annual premium, risks covered, placing broker or agent, and other
relevant information as to each. The Seller has not within the past three (3)
years received any notice of cancellation of any insurance agreement affecting
the Acquired Assets or the Acquired Business.
4.21 Title to and Utilization of Real Properties. Except as disclosed in
---------------------------------------------------
the Acquired Business Disclosure Document, the Seller owns fee, simple, insured
title to all real property included in the Acquired Assets and has the absolute
25
right to use the same, and is not aware of any claim, notice or threat to the
effect that its right to own and use such property is subject in any way to any
challenge, claim, assertion or fights, proceedings toward condemnation or
confiscation, in whole or in part, or is otherwise subject to challenge. Each
parcel of real property the ownership of, or leasehold interest in, which is
included among the Acquired Assets is free of any and all hazardous wastes,
toxic substances, or other types of contamination or matters of environmental
concern, and the Seller is not subject to any Liability resulting from or
related to any such wastes, substances, contaminants, or matters of
environmental concern in connection with any such property.
4.22 Actions Since Balance Sheet Date. Except as set forth on the Acquired
---------------------------------------
Business Disclosure Document, since the date of the Seller's Balance Sheet, the
Seller has taken no actions that would be prohibited pursuant to the provisions
of this Agreement (without the prior consent of the Purchaser) after the date of
this Agreement.
4.23 Full Disclosure. The documents, certificates, and other writings
-----------------------
furnished or to be furnished by or on behalf of the Seller to the Purchaser
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made, in light of the
circumstances pursuant to which they are made, not misleading.
4.24 Evaluation of Risks. The Seller has such Knowledge and experience in
--------------------------
business and financial matters that the Seller is capable of evaluating the
Purchaser and the proposed activities thereof, the risks and merits of the
acquisition of the Subject Shares and of making an informed decision relating
thereto; and the Seller is not utilizing any other Person regarding the
evaluation of those risks and merits.
4.25 Questionable Payments. Neither the Seller, nor any director, officer,
----------------------------
agent, employee, or other person associated with or acting on behalf of the
Seller has, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign and domestic political
parties or campaigns, from corporate funds; violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entry on the books or records of the Seller; made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment; given
any favor or gift which is not deductible for federal income tax purposes; or
made any bribe, or kickback, or other payment of a similar or comparable nature,
whether lawful or not, to any person or Entity, private, or public, regardless
26
of form, whether in money, property, or services, to obtain favorable services,
to obtain favorable treatment in securing business or to obtain special
concessions, or to pay for favorable treatment for business secured or for
special concessions already obtained.
4.26 Labor Matters. The Seller is not a party to any labor agreement with
--------------------
respect to its employees with any labor organization, group or association. The
Seller has not experienced any attempt by organized labor or its representatives
to make the Seller conform to demands of organized labor relating to the
Seller's employees or to enter into a binding agreement with organized labor
that would relate to the employees of the Seller. The Seller is in material
compliance with all applicable laws respecting employment practices, terms and
conditions of employment and wages and hours and is not engaged in any unfair
labor practice which would have a material adverse effect on the Acquired
Assets. There is no unfair labor practice charge or complaint against the Seller
pending before the National Labor Relations Board or any other Governmental
Entity resulting from the Seller's activities, and the Seller has no Knowledge
of any facts or information which would give rise thereto; there is no labor
strike or labor disturbance pending or, to the Seller's Knowledge, threatened
against the Seller nor is any grievance currently being asserted; and the Seller
has not experienced a work stoppage or other labor difficulty.
4.27 No Other Agreements Regarding the Acquired Business or the Acquired
---------------------------------------------------------------------------
Assets. The Seller does not have any legal or equitable obligation, absolute or
-------
contingent, to any other person to sell the Acquired Business or any of the
Acquired Assets, or to enter into any agreement with respect thereto.
4.28 Compliance With Legislation Regulating Environmental Quality. To the
-------------------------------------------------------------------
Seller's Knowledge, there are no toxic wastes or other toxic or hazardous
substances or materials being stored or otherwise held in or on any of the
Seller's facilities, or which have migrated from the Seller's facilities,
whether contained in ambient air, surface water, groundwater, land surface or
subsurface strata. To the Seller's Knowledge, the Seller's facilities have been
maintained in material compliance with all federal, state and local
environmental protection, occupational, health and safety or similar laws,
ordinances, restrictions, licenses, and local environmental protection,
occupational, health and safety or similar laws ordinances, restrictions,
licenses and regulations, including, but not limited to, the Federal Water
Pollution Control Act, Resource Conservation & Recovery Act, Safe Drinking Water
Act, Toxic Substances Control Act, Clean Air Act, Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), and similar state laws. The
Seller has not disposed or arranged (by contract, agreement or otherwise),
within the meaning of Section 107(a)(3) of CERCLA, for the disposal of any
27
material or substance that was generated or used by the Seller at any off-site
location that has been or is listed or proposed for inclusion on the National
Priority List promulgated pursuant to CERCLA or any list promulgated by any
Governmental Entity for the purpose of identifying sites which pose an imminent
danger to health and safety. The Seller has delivered to the Purchaser true and
complete copies of all environmental studies, reports and analyses made or
prepared, in the last five (5) years relating to Acquired Assets.
4.29 Financial Statements. The Seller has heretofore delivered to the
----------------------------
Purchaser the Unaudited Financial Statements of the Acquired Business.
All of the historical financial statements contained in such documents were
prepared from the books and records of the Seller. The Unaudited Financial
Statements of the Acquired Business were prepared in accordance with GAAP,
and fairly and accurately present the financial position and condition of
the Seller as at the dates and for the periods indicated, subject to normal
adjustments, none of which will be material. Without limiting the
foregoing, at the date of the Seller's Balance Sheet the Seller owned each
of the assets included in preparation of the Seller's Balance Sheet, and
the valuation of such assets in the Seller's Balance Sheet is not more than
their fair saleable value (on an item by item basis) at that date; and the
Seller had no Liabilities for which the Acquired Business or any part of
the Seller's Balance Sheet, nor any Liabilities in amounts in excess of the
amounts included for them in the Seller's Balance Sheet. From the date of
this Agreement through the Closing Date the Seller will continue to prepare
financial statements for the Acquired Business on the same basis that it
has done so in the past, will promptly deliver the same to the Purchaser,
and agrees that from and after such delivery the foregoing representations
will be applicable to each financial statement so prepared and delivered.
4.30 Absence of Material Differences From Disclosure Document. Except as
----------------------------------------------------------------
specifically disclosed in the Acquired Business Disclosure Document:
4.31 No Undisclosed Liabilities. The Seller has no Liabilities relating to
---------------------------------
or affecting the Acquired Business or the Acquired Assets which are not
adequately specified or reserved against on the Seller's Balance Sheet, except
Liabilities incurred since the date of the Seller's Balance Sheet in the
ordinary course of business of the Acquired Business and consistent with past
practice. Without limiting the foregoing, (a) there are no unpaid leasehold
improvements at any of the Acquired Facilities for which the Acquired Business
is or will be responsible, and (b) there are no deferred rents due to lessors at
or with respect to any of such Acquired Facilities, and (c) the Acquired
28
Business Disclosure Document sets forth, as a part thereof, each Liability of or
affecting the Acquired Business or the Acquired Assets.
4.32 No Material Adverse Change, etc. Since the date of the Seller's
-----------------------------------------
Balance Sheet, other than as contemplated or caused by this Agreement, there has
not been (a) any material adverse change in the business, condition (financial
or otherwise), operations, or prospects of the Acquired Business; (b) any
damage, destruction or loss, whether covered by insurance or not, having a
material adverse effect on the business, condition (financial or otherwise),
operations or prospects of the Acquired Business, or adversely affecting the
Acquired Assets; (c) any entry into or termination of any material commitment,
contract, agreement or transaction affecting the Acquired Business or the
Acquired Assets (including, without limitation, any material borrowing or
capital expenditure or sale or other disposition of any material asset or
assets) other than this Agreement and agreements executed in the ordinary course
of business; (d) any redemption, repurchase or other acquisition for value of
the capital stock of any corporation included in the Acquired Assets or of
securities convertible into or rights to acquire any such capital stock or any
dividend or distribution declared, set aside or paid on any such capital stock;
(e) any transfer of or right granted under any material lease, license,
agreement, patent, trademark, trade name or copyright included among the
Acquired Assets; (f) any sale or other disposition of any asset of the Acquired
Business, or any mortgage, pledge or imposition of any lien or other encumbrance
on any asset of the Acquired Business or of any agreement relating to any of the
foregoing; or (g) any default or breach in any material respect under any
contract, license or permit held by or for or affecting the Acquired Business.
Since the date of the Seller's Balance Sheet, the Seller has conducted the
Acquired Business only in the ordinary and usual course, and, without limiting
the foregoing, no changes have been made in (a) executive compensation amounts,
or (b) the manner in which other employees of the Acquired Business, or
employees whose principal duties related to the Acquired Business or the
Acquired Assets, are compensated, or (c) supplemental benefits provided to any
such executives or other employees, or (d) inventory levels of the Acquired
Business in relation to sales levels, except, in any such case, in the ordinary
course of business and, in any even, without material adverse effect on the
business, condition (financial or otherwise), operations, or prospects of the
Acquired Business.
4.33 Proprietary Rights. The Seller possesses full and complete ownership
-------------------------
of, or adequate and enforceable long-term licenses or other rights to use
(without payment), all Proprietary Rights used in the Acquired Business or
utilized in conjunction with the Acquired Assets, and all such ownership,
29
license or other rights shall be conveyed to the Purchaser at the Closing
pursuant to the Transaction; the Seller has not received any notice of conflict
which asserts the rights of others with respect thereto; and the Seller has in
all material respects performed all of the obligations required to be performed
by it, and is not in default in any material respect, pursuant to any agreement
relating to any such Property Right.
4.34 Evaluation of Risks. At the time the Seller was offered the Subject
---------------------------
Shares and at the Closing Date, the Seller, either alone or together with its
representatives, had and will have such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of the prospective acquisition of the Subject Shares and had and will
have so evaluated the merits and risks of such acquisition. The Seller has the
authority and is duly and legally qualified to acquire and own the Subject
Shares.
4.35 Acknowledgment of Certain Risks. The Seller understands and
-------------------------------------------
acknowledges that the Seller's acquisition of the Subject Shares involves
significant and numerous risks.
4.36 Recent Operations. The Seller understands and acknowledges that the
------------------------
Purchaser has commenced operations quite recently and has no history of
operations upon which the Seller can make an evaluation of the acquisition of
the Subject Shares.
4.37 No Approval by Regulatory Agency. The Seller is aware that no federal
---------------------------------------
or state agency has approved or made any finding or determination regarding the
fairness or adequacy of the acquisition of the Subject Shares or any
recommendation or endorsement of the Subject Shares.
4.38 Opportunity Regarding Review and Inspection. The Seller has had the
---------------------------------------------------
opportunity to make such inspections as the Seller has deemed necessary or
appropriate to complete the Seller's acquisition of the Subject Shares.
4.39 No Advertisement or Solicitation. The Seller has not received from
-----------------------------------------
the Purchaser or any Person acting on behalf of the Purchase any advertisement
or general solicitation in connection with the Seller's acquisition of the
Subject Shares.
4.40 Conflict of Interest and Consent to Multiple Representation. The
----------------------------------------------------------------------
Purchaser and the Seller have both requested that Xxxxx Law Group ("Firm")
represent both parties in connection with the Transactions. The Firm has
represented, and continues to represent, both Purchaser and Seller in regard to
certain transactional and securities matters. The relationship between the
30
parties and the multiple representation of the parties by the Firm in connection
with the Transaction may result in the representation of adverse interests by
the Firm regarding representation of both of the parties to the Transaction.
Accordingly, the Firm has disclosed to both Purchaser and Seller, in writing,
the existing and potential conflicts of interest inherent in such multiple
representation. This Agreement constitutes a written acknowledgment by Purchaser
and Seller, jointly and severally, that the Firm has informed both parties, in
writing, of those conflicts of interest and, by signing this Agreement, the
Seller provides written consent to the multiple representation by the Firm of
the parties in connection with the Transaction.
ARTICLE V
COVENANTS OF THE PURCHASER
5.1 Affirmative Covenants. From the date of this Agreement through the
----------------------------
Closing Date, the Purchaser will take every action reasonably required of it in
order to satisfy the conditions to Closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the Transaction
substantially as contemplated by this Agreement, and will exert all reasonable
efforts to cause the Transaction to be consummated; provided, however, in all
instances that the representations and warranties of the Seller in this
Agreement are and remain true and accurate and the covenants and agreements of
the Seller in this Agreement are performed and that the conditions to the
obligations of the Purchaser set forth in this Agreement are capable of being
performed.
5.2 Cooperation. The Purchaser shall cooperate with the Seller and its
-----------------
counsel, accountants and agents in every way in closing and consummating the
Transaction, and in delivering all documents and instruments deemed reasonably
necessary or useful by counsel to the Seller.
5.3 Expenses. Whether or not the Transaction is consummated, all costs
--------------
and expenses incurred by the Purchaser in connection with this Agreement and the
Transaction shall be paid by the Purchaser.
5.4 Publicity. Prior to the Closing any written news releases by the
---------------
Purchaser pertaining to this Agreement or the Transaction shall be submitted to
the Seller for review and approval prior to release by the Purchaser, and shall
be released only in a form approved by the Seller; provided, however, that (1)
such approval shall not be unreasonably withheld, and (2) such review and
approval shall not be required of releases by the Purchaser, if prior review and
approval would prevent the timely and accurate dissemination of such news
release as required to comply, in the judgment of counsel, with any applicable
law, rule or policy.
31
5.5 Access and Information. The Purchaser shall provide to the Seller and
----------------------------
to the Seller's accountants, counsel, and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of the Purchaser's properties, books, contracts, commitments, records
(including, but not limited to, tax returns), and personnel relating to the
Purchaser and, during such period, the Purchaser shall furnish promptly to the
Seller (1) all written communications relating to the business of the Purchaser,
(2) internal monthly financial statements of the Purchaser when and as
available, and (3) all other information relating to the business of the
Purchaser as the Seller may reasonably request, but no investigation pursuant to
this Section 5.5 shall affect any representations or warranties of the Purchaser
or the conditions to the obligations of the Seller to consummate the
Transaction. In the event of the termination of this Agreement, the Seller will,
and will cause its representatives to, deliver to the Purchaser or destroy all
documents, work papers, and other material, and all copies thereof, obtained by
the Seller or on its behalf from the Purchaser as a result of this Agreement or
in connection herewith, whether so obtained before or after the execution
hereof, and will hold in confidence all information received from the Purchaser,
whether or not such information has been designated as confidential by the
Purchaser in writing or by appropriate and obvious notation, and the Seller will
not use any such information, except in connection with the Transaction, until
such time as such information is otherwise publicly available. Seller and its
representatives shall assert their rights pursuant to this Section 5.5 in such a
manner as to minimize interference with the business of the Purchaser.
5.6 Conduct of Business Pending Closing of the Transaction. Prior to the
-------------------------------------------------------------
consummation of the Transaction or the termination of this Agreement pursuant to
its terms, unless the Seller shall otherwise consent in writing, which consent
shall not be unreasonably withheld or delayed, and except as otherwise
contemplated by this Agreement, the Purchaser will comply with each of the
following:
(1) The business of the Purchaser will be conducted only in the
ordinary and usual course, the Purchaser shall keep intact the
business organization and goodwill of the Purchaser and its
business, keep available the services of the employees of the
Purchaser and maintain good relationships with suppliers,
lenders, creditors, distributors, employees, customers and others
having business or financial relationships with the Purchaser,
and the Purchaser shall immediately notify the Seller of any
event or occurrence or emergency material to, and not in the
ordinary and usual course of business of, the Purchaser.
32
(2) The Purchaser will continue properly and promptly to file when
due all federal, state, local, foreign, and other tax returns,
reports, and declarations required to be filed by it, and will
pay, or make full and adequate provision for the payment of, all
taxes and governmental charges due from or payable by it.
(3) The Purchaser will comply with all laws and regulations
applicable to the operations of the Purchaser.
(4) The Purchaser will maintain in complete force and effect
insurance coverage relating to its business of a type and amount
customary in the business of the Purchaser (but not less than
that presently in effect).
5.7 Updating of Exhibits and Schedules. The Purchaser shall notify the
-----------------------------------------
Seller of any changes, additions or events which may cause any change in or
addition to any schedules or exhibits delivered by the Purchaser pursuant to
this Agreement, promptly after the occurrence of the same and at the Closing by
the delivery of updates of all such schedules and exhibits. No notification made
pursuant to this section shall be deemed to cure any breach of any
representation or warranty made in this Agreement, unless the Seller
specifically agrees thereto in writing, nor shall any such notification be
considered to constitute or result in a waiver by the Seller of any condition
set forth in this Agreement.
5.8 Issuance and delivery of the Consideration. On the Closing, the
----------------------------------------------------
Purchaser shall issue or cause to be issued to the Seller a certificate
evidencing the Subject Shares.
5.9 Notice of Changes. Until the Closing, the Purchaser will immediately
-----------------------
inform the Seller, in a detailed written notice, of any fact or occurrence or
any pending or threatened occurrence of which the Purchaser obtains Knowledge
and which (if existing and known at the time of the execution of this Agreement)
or at the time of closing (a) would have been required to be set forth or
disclosed in or pursuant to this Agreement or an exhibit or schedule hereto, (b)
would make the performance by the Seller of a covenant specified in this
Agreement impossible or make that performance materially more difficult that in
the absence of that fact or occurrence, or (c) (if existing and known at the
time of the Closing) would cause a condition to the Seller's obligations
pursuant to this Agreement not to be satisfied completely.
5.10 Brokerage Fees. If any person shall assert against the Seller a claim
---------------------
to a fee, commission, or other compensation because of alleged performance of
services as a broker or finder of the Purchaser, in connection with or as a
33
result of the Transaction the Purchaser shall (subject to next sentence)
indemnify and hold the Seller harmless against any and all losses, liabilities,
claims, damages, and expenses whatsoever as and when incurred resulting from,
based upon or in connection with such claim by such person, and the Purchaser
shall, at its expense, defend, any and all lawsuits, actions, proceedings
(formal or informal), or investigations involving the claim that may at any time
be brought against the Seller and satisfy promptly any settlement or judgment
arising therefrom; but, if the Purchaser fails to defend any such lawsuit,
action, proceeding, or investigation in a timely manner, the Seller, shall have
the right to defend and settle the same and pay any judgment or settlement
pertaining thereto, as it may reasonably deem appropriate, at the cost of
Purchaser. If, however, it is ultimately determined in any suit, action, or
proceeding (in which the Seller was provided the opportunity to have its counsel
participate in the defense) the Seller was the sole employer of the broker or
finder, or services were performed solely for Seller, the Purchaser shall not be
responsible pursuant to this Section 5.10 and amounts therefor paid by the
Purchaser pursuant to this Section 5.10 shall be reimbursed by the Seller.
5.11 Changes in Members of Board of Directors. On the Closing Date, as
--------------------------------------------------
the only member of the Board of Directors of the Purchaser, shall appoint those
persons as members of the Board of Directors of the Purchaser as designated by
the Seller.
5.12 Registration Rights Agreements. On or before the Closing Date, the
---------------------------------------
Purchaser shall enter into and execute with the Seller the Registration Rights
Agreement. The Purchaser shall perform each and every obligation to be performed
by the Purchaser pursuant to the Registration Rights Agreement.
5.13 Stop Transfer Orders; Suspension of Qualification. The Purchaser
------------------------------------------------------------
shall not make any notation on its records or give instructions to any transfer
agent of the Purchaser which enlarge the restrictions of transfer imposed by
law. The Purchaser will advise the Seller, promptly after the Purchaser receives
notice of issuance by the SEC, any state securities commission or any other
regulatory authority of any stop order or of any order preventing or suspending
the use of any offering of any securities of the Purchaser, or of the suspension
of the qualification of the Subject Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purpose.
5.14 Furnishing of Information. The Purchaser shall file timely (or
----------------------------------
obtain extensions in respect thereof and file within the applicable extension
period) all reports required to be filed by the Purchaser after the (i) date of
this Agreement and (ii) Closing Date pursuant to Section 13(a) or 15(d) of the
Exchange act and to furnish the Seller promptly with true and complete copies of
all such reports. Upon the request of any Person, the Purchaser shall deliver to
34
such Person a written certification of a duly authorized officer of the
Purchaser as to whether the Purchaser has complied with such requirements.
5.15 Form D; Blue Sky Laws. The Purchaser shall file a Form D with
--------------------------------
respect to the Subject Shares as required pursuant to Regulation D and to
provide a copy thereof to the Seller promptly after such filing. The Purchaser
shall, on or before the Closing Date, take such action as the Purchaser shall
reasonably determine is necessary to qualify the Subject Shares for, or obtain
exemption for the Subject Shares for, issuance to the Seller at the Closing
pursuant to this Agreement pursuant to applicable securities or "Blue Sky" laws
of the states of the United States, and shall provide to the Seller evidence of
any such action so taken on or prior to the Closing Date. The Purchaser shall
make all filings and reports relating to the offer and sale of the Subject
Shares required pursuant to applicable securities or "Blue Sky" laws of the
states of the United States following the Closing Date.
5.16 Integration. The Purchaser shall not sell, offer for sale or solicit
------------------
offers to purchase or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the issuance
of the Subject Shares in a manner that would require the registration pursuant
to the Securities Act of the issuance of any or all of the Subject Shares to the
Seller.
5.17 Conflict of Interest and Consent to Multiple Representation. The
----------------------------------------------------------------------
Purchaser and the Seller have both requested that Xxxxx Law Group ("Firm")
represent both parties in connection with the Transaction. The Firm has
represented, and continues to represent, both Purchaser and Seller in regard to
certain transactional and securities matters. The relationship between the
parties and the multiple representation of the parties by the Firm in connection
with the Transaction may result in the representation of adverse interests by
the Firm regarding representation of both of the parties to the Transaction.
Accordingly, the Firm has disclosed to both Purchaser and Seller, in writing,
the existing and potential conflicts of interest inherent in such multiple
representation. This Agreement constitutes a written acknowledgment by Purchaser
and Seller, jointly and severally, that the Firm has informed both parties, in
writing, of those conflicts of interest and, by signing this Agreement, the
Purchaser provides written consent to the multiple representation by the Firm of
the parties in connection with the Transaction.
35
ARTICLE VI
COVENANTS OF THE SELLER
6.1 Affirmative Covenants. From the date hereof through the Closing Date,
---------------------------
the Seller will take every action reasonably required of it to satisfy the
conditions to Closing set forth in this Agreement and otherwise to ensure the
prompt and expedient consummation of the Transaction substantially as
contemplated hereby, and will exert all reasonable efforts to cause the
Transaction to be consummated; provided, however, in all instances that the
representations and warranties of the Purchaser in this Agreement are and remain
true and accurate and that the covenants and agreements of the Purchaser in this
Agreement are correct and that the conditions to the obligations of the Seller
set forth in this Agreement are capable of satisfaction.
6.2 Dissolution and Liquidation of the Seller. After the Closing and at
-------------------------------------------------
the Seller's expense, the Seller shall take all action necessary or appropriate
for the prompt distribution of the Subject Shares to the Seller's shareholders.
6.3 Access and Information. The Seller shall provide to the Purchaser and
----------------------------
to the Purchaser's accountants, counsel, and other representatives reasonable
access during normal business hours throughout the period prior to the Closing
to all of the Seller's properties, books, contracts, commitments, records
(including, but not limited to, tax returns), and personnel relating to the
Acquired Assets and, during such period, the Seller shall furnish promptly to
the Purchaser (1) all written communications relating to the Acquired Assets,
and (2) all other information relating to the Acquired Assets as the Purchaser
may reasonably request, but no investigation pursuant to this Section 6.3 shall
affect any representations or warranties of the Seller, or the conditions to the
obligations of the Purchaser to consummate the Transaction. In the event of the
termination of this Agreement, the Purchaser will, and will cause its
representatives to, deliver to the Seller or destroy all documents, work papers,
and other material, and all copies thereof, obtained by the Purchaser or on its
behalf from the Seller as a result of this Agreement or in connection herewith,
whether so obtained before or after the execution hereof, and will hold in
confidence all information received from the Seller, whether or not such
information has been designated as such by the Seller in writing or by
appropriate and obvious notation, and the Purchaser will not use any such
information, except in connection with the Transaction, until such time as such
information, is otherwise publicly available. Purchaser and its representatives
shall assert their rights pursuant to this Section 6.3 in such manner as to
minimize interference with the business of the Seller.
6.4 No Solicitation. The Seller and those persons and Entities acting on
---------------------
behalf of the Seller will not, and the Seller will use its best efforts to cause
its employees, agents, and representatives (including any investment banker)
not, directly or indirectly, to solicit, encourage, or initiate any discussions
with, or negotiate or otherwise deal with, or provide any information to, any
36
person or Entity other than the Purchaser and its officers, employees, and
agents, relating to the Acquired Assets. The Seller will notify the Purchaser
immediately upon receipt of any inquiry, offer or proposal relating to any of
the foregoing. None of the foregoing shall prohibit providing information to
others in a manner in keeping with the ordinary conduct of the Seller's
business, or providing information to government authorities.
6.5 Conduct of Business Pending Closing of the Transaction. Prior to the
-------------------------------------------------------------
consummation of the Transaction or the termination of this Agreement pursuant to
its terms, unless the Purchaser shall otherwise consent in writing, which
consent shall not be unreasonably withheld or delayed, and except as otherwise
contemplated by this Agreement, the Seller will comply with each of the
following:
(1) The Seller's business will be conducted only in the ordinary and usual
course, the Seller shall keep intact the business organization and
goodwill of the Seller and the Seller's business, keep available the
services of the employees of the Seller and maintain good
relationships with suppliers, lenders, creditors, distributors,
employees, customers and others having business or financial
relationships with the Seller's business, and the Seller shall
immediately notify the Purchaser of any event or occurrence affecting
the Acquired Assets.
(2) The Seller shall not create, incur or assume any long-term or
short-term indebtedness for money borrowed or make any capital
expenditures or commitment affecting any of the Acquired Assets.
(3) The Seller shall not sell, lease, mortgage, encumber, or otherwise
dispose of or grant any interest in any of the Acquired Assets.
(4) The Seller shall not enter into any contract, agreement, commitment,
or understanding relating to or affecting the Acquired Assets.
(5) The Seller shall not enter into any agreement, commitment, or
understanding, whether in writing or otherwise, with respect to any of
the matters referred to in subparagraphs (1) through (4) above.
(6) The Seller will continue properly and promptly to file when due all
federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it relating to the Acquired
Assets, and will pay, or make full and adequate provision for the
37
payment of, all taxes and governmental charges due from or payable by
the Seller relating to the Acquired Assets.
(7) The Seller will comply with all laws and regulations applicable to the
operations of the Seller's business and the utilization of the
Acquired Assets.
(8) The Seller will maintain in full force and effect insurance coverage
relating to the Acquired Assets (but not less than that presently in
effect).
6.6 Cooperation. The Seller will cooperate with the Purchaser and its
-----------------
counsel, accountants, and agents in every way in consummating and closing the
Transaction and in delivering all documents and instruments deemed reasonably
necessary or useful by the Purchaser.
6.7 Expenses. Whether or not the Transaction is consummated, all costs
--------------
and expenses incurred by the Seller in connection with this Agreement and the
Transaction shall be paid by the Seller.
6.8 Publicity. Prior to the Closing any written news releases by the
---------------
Seller pertaining to this Agreement or the Transaction shall be submitted to the
Purchaser for review and approval prior to release by the Seller, and shall be
released only in a form approved by the Purchaser; provided, however, that (1)
such approval shall not be unreasonably withheld, and (2) such review and
approval shall not be required of releases by the Seller, if prior review and
approval would prevent the timely and accurate dissemination of such news
release as required to comply, in the judgment of counsel, with any applicable
law, rule or policy.
6.9 Updating of Exhibits and Disclosure Documents. The Seller shall
--------------------------------------------------------
notify the Purchaser of any changes, additions, or events which may cause any
change in or addition to any schedules or exhibits delivered by the Seller
pursuant to this Agreement promptly after the occurrence of the same and again
at the Closing by delivery of appropriate updates to all such schedules and
exhibits. No such notification made pursuant to this section shall be deemed to
cure any breach of any representation or warranty made in this Agreement, unless
the Purchaser specifically agrees thereto in writing, nor shall any such
notification be considered to constitute or result in a waiver by the Purchaser
of any condition set forth in this Agreement.
6.10 Payment of Unassumed Liabilities. The Seller agrees promptly to pay
----------------------------------------
when due, or otherwise to discharge, without cost or expense to the Purchaser,
each and every unassumed Liability of the Seller.
38
6.11 Notice of Changes. Until the Closing, the Seller will immediately
------------------------
inform the Purchaser, in a detailed written notice, of any fact or occurrence or
any pending or threatened occurrence of which the Seller obtains Knowledge and
which (a) (if existing and known at the time of the execution of this Agreement)
would have been required to be set forth or disclosed in or pursuant to this
Agreement or an exhibit or schedule hereto, (b) (if existing and known at any
time prior to or at the Closing) would make the performance by the Purchaser of
a covenant specified in this Agreement impossible or make that performance
materially more difficult that in the absence of that fact or occurrence, or (c)
(if existing and known at the time of the Closing) would cause a condition to
the Purchaser's obligations pursuant to this Agreement not to be fully
satisfied.
6.12 Consents Without Any Condition. The Seller shall not make any
----------------------------------------
agreement or enter into any understanding not approved in writing by Purchaser
as a condition for obtaining any consent, authorization, approval, order,
license, certificate, or permit required or contemplated by this Agreement.
6.13 Brokerage Fees. If any person shall assert against the Purchaser a
----------------------
claim to a fee, commission, or other compensation on account of alleged
performance of services as a broker of finder, in connection with or as a result
of the Transaction, the Seller shall (subject to next sentence) indemnify and
hold the Purchaser harmless against any and all losses, liabilities, claims,
damages, and expenses whatsoever as and when incurred resulting from, based upon
or in connection with such claim by such person, and the Seller shall, at its
expense, defend, any and all lawsuits, actions, proceedings (formal or
informal), or investigations involving the claim that may at any time be brought
against the Seller and satisfy promptly any settlement or judgment arising
therefrom; but, if the Seller fails to defend any such lawsuit, action,
proceeding, or investigation in a timely manner, the Purchaser shall have the
right to defend and settle the same and pay any judgment or settlement
pertaining thereto, as the Purchaser may reasonably deem appropriate, at the
cost of the Seller. If, however, it is ultimately determined in any suit,
action, or proceeding (in which the Purchaser was provided the opportunity to
have its counsel participate in the defense) the Purchaser, was the sole
employer of the broker or finder, or services were performed solely for the
Purchaser, the Seller shall not be responsible pursuant to this Section 6.13 and
amounts therefor paid by the Seller because of this Section 6.13 shall be
reimbursed by the Purchaser.
6.14 Consent of Shareholders. As soon as practicable after the execution
-------------------------------
of this Agreement, Seller shall commence activities towards obtaining the
approval of the Transaction by the holders of the majority in interest (fifty
one percent (51%) or more) of the issued and outstanding shares of the $.001 par
39
value common stock of the Seller, which approval may be obtained in any manner
consistent with the General Corporation Law of the State of California.
6.15 Transfer Restrictions. If the Seller should decide to dispose of any
----------------------------
of the Subject Shares, the Seller understands and agrees that it may do so only
pursuant to an effective registration statement pursuant to the Securities Act
(such as the SB-2) of the Purchaser or pursuant to an available exemption from
the registration and prospectus delivery requirements of the Securities Act. In
connection with any transfer of any Subject Shares other than pursuant to an
effective registration statement filed by the Purchaser, the Purchaser may
require the transferor thereof to provide to the Purchaser a written opinion of
counsel, the form and substance of which opinion shall be reasonably
satisfactory to the Purchaser, to the effect that such transfer does not require
registration of such transferred securities pursuant to the Securities Act,
which opinion shall be delivered by counsel for the Purchaser.
6.16 Consent to Legend. The Seller agrees to the imprinting, so long as
--------------------------
is required, of the following legend on the certificate evidencing the Subject
Shares:
(begin boldface)
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(end boldface)
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligation of Purchaser. The obligation of the Purchaser
-------------------------------------------
to close the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Seller shall waive such
fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
40
regulatory agencies and other third parties (including lenders,
holders of debt securities and lessors) required to consummate the
Transaction;
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state court which prohibits the
consummation of the Transaction;
(3) The Seller shall have performed in all material respects each of its
agreements and obligations specified in this Agreement and required to
be performed on or prior to the Closing and shall have complied with
all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the Transaction;
(4) No adverse change shall, in the judgment of the Purchaser, have
occurred regarding the Acquired Assets since the date of this
Agreement;
(5) The representations and warranties of the Seller set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as, in the judgment of the
Purchaser, do not materially and adversely affect the Acquired Assets,
as of the Closing, as if made as of the Closing; and
(6) The Seller shall have delivered to the Purchaser other documents that
the Purchaser may reasonably request in order to enable the Purchaser
to determine whether the conditions to its obligation pursuant to this
Agreement have been satisfied and otherwise to consummate and close
the Transaction.
7.2 Conditions to Obligation of the Seller. The obligation of the Seller
---------------------------------------------
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless the Purchaser shall waive such
fulfillment in writing:
(1) This Agreement and the Transaction shall have received all approvals,
consents, authorizations, and waivers from governmental and other
regulatory agencies and other third parties;
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction;
41
(3) The Purchaser shall have performed in all material respects its
agreements and obligations specified in this Agreement required to be
performed on or prior to the Closing;
(4) The representations and warranties of the Purchaser set forth in this
Agreement shall be true in all material respects as of the date of
this Agreement and, except in such respects as do not materially and
adversely affect the business of the Purchaser, as of the Closing Date
as if made as of the Closing Date; and
(5) The Purchaser shall have delivered to the Seller other documents that
the Seller may reasonably request in order to enable the Seller to
determine whether the conditions to its obligation pursuant to this
Agreement have been satisfied and otherwise to consummate and close
the Transaction.
7.3 Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting periods in
---------------------------------------
respect of the transactions contemplated by this Agreement pursuant to the HSR
Act, as amended, shall have expired at or prior to the Closing.
ARTICLE VIII
DOCUMENTS TO BE DELIVERED AND INSTRUMENTS AT CLOSING
8.1 The Purchaser to the Seller. On the Closing, the Purchaser shall
-----------------------------------
deliver or cause to be delivered the following instruments and documents to the
Seller:
(1) A certificate evidencing and representing the Subject Shares, which
certificate shall specify an appropriate legend regarding the
restricted nature of those shares;
(2) Those documents contemplated by the provisions of Paragraph (5) of
Section 7.2 of this Agreement;
(3) Evidence of action by the members of the Board of Directors of the
Purchaser appointing as members of the Board of Directors of the
Purchaser those persons designated by the Seller; and
(4) A copy of the Registration Rights Agreement duly signed by authorized
officers of the Purchaser.
42
8.2 The Seller to the Purchaser. On the Closing, the Seller shall deliver
---------------------------------
or cause to be delivered the following instruments and documents to the
Purchaser:
(1) A Xxxx of Sale, executed by the President and Secretary of the Seller,
pursuant to which title to the Acquired Assets are transferred and
vested in the Purchaser a copy of which is attached to this Agreement
marked as Exhibit "A" ("Xxxx of Sale");
(2) Those documents contemplated by the provisions of Paragraph (6) of
Section 7.1 of this Agreement; and
(3) A copy of the Registration Rights Agreement duly signed by authorized
officers of the Seller.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Seller. The Seller shall indemnify, save and
------------------------------------
hold harmless the Purchaser, its affiliates and subsidiaries, and its and their
respective officers, employees, directors, accountants, auditors, attorneys,
partners, agents, and other representatives ("Purchaser's Representatives") from
and against any and all costs, losses (including, without limitation, diminution
in value), liabilities, damages, lawsuits, deficiencies, adverse claims, Taxes
and expenses (whether or not resulting from third-party claims) including,
without limitation, interest, penalties, reasonable attorneys' fees and all
amounts paid in investigation, defense or settlement of any of the foregoing
(collectively, "Damages"), incurred in connection with or resulting from (i) any
breach of any covenant or warranty, or the inaccuracy of any representation made
by the Seller in or pursuant to this Agreement, (ii) any actual or threatened
claim, suit, action or proceeding resulting from the Seller's use of the
Acquired Assets prior to the Closing Date and (iii) any and all liabilities of
the Seller. The term Damages as used in this Section 9.1 is not limited to
matters asserted by third parties against the Purchaser or the Purchaser's
Representatives, but includes Damages incurred or sustained by the Purchaser or
the Purchaser's Representatives, in the absences of third party claims.
9.2 Indemnification by the Purchaser. The Purchaser shall indemnify, save
--------------------------------------
and hold harmless the Seller, and the Seller's officers, employees, directors,
accountants, auditors, attorneys, partners, agents and other representatives,
from and against any and all Damages incurred in connection with or arising out
43
of or resulting from any breach of any covenant or warranty, or the inaccuracy
of any representation, made by the Purchaser in or pursuant to this Agreement.
9.3 Defense of Third-Party Claims. If any lawsuit or enforcement action is
-----------------------------------
filed against any party entitled to the benefit of indemnification pursuant to
this Article IX, written notice thereof shall be given to the indemnifying party
as promptly as practicable (and in any event no later than fifteen (15) days
after the service of the citation or summons); provided, however, that the
failure of any indemnified party to give timely notice shall not affect rights
to indemnification contemplated by this Article IX except to the extent that the
indemnifying party demonstrates actual damage caused by such failure. After such
notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated pursuant to the
terms of its indemnification pursuant to this Article IX in connection with such
lawsuit or action, then the indemnifying party shall be entitled, if such party
so elects, to take control of the defense and investigation of such lawsuit or
action and to employ and engage attorneys of its own choice to handle and defend
the same, at the indemnifying party's cost, risk and expense; provided, however,
that the indemnifying party and its counsel shall proceed with diligence and in
good faith with respect thereto. The indemnified party shall cooperate in all
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
resulting therefrom; provided, however, that the indemnified party may, at its
own cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal resulting therefrom. If a tax audit is commenced or any
Tax is claimed in connection with any of the Acquired Assets prior to the
Closing Date, such tax claim shall be treated as a lawsuit or enforcement action
for purposes of this Section 9.3; provided, however, that the Seller shall be
solely responsible for all Taxes, Liabilities and expenses resulting therefrom.
ARTICLE X
TERMINATION, AMENDMENT, WAIVER
10.1 Termination. This Agreement and the Transaction may be terminated at
------------------
any time prior to the Closing:
(1) By mutual consent of the Purchaser and the Seller; or
(2) By either Purchaser or the Seller, upon written notice to the other,
if the conditions to such party's obligations to consummate the
Transaction, in the case of Purchaser, as specified in Section 7.1 of
this Agreement, or, in the case of the Seller, as specified in Section
7.2 of this Agreement, were not, or cannot reasonably be, satisfied,
44
unless the failure or condition is the result of the material breach
of this Agreement by the party seeking to terminate this Agreement.
10.2 Amendment. This Agreement may be amended by the Purchaser and the
----------------
Seller by action taken at any time. This Agreement may not be amended, except by
an instrument in writing signed on behalf of the Purchaser and the Seller.
10.3 Waiver. At any time prior to the Closing, the Purchaser or the Seller
-------------
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations and
warranties specified in this Agreement or in any document delivered pursuant to
this Agreement, or (iii) waive compliance with any of the agreements or
conditions specified in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. Any notice, direction or instrument required or permitted
--------------
to be given pursuant to this Agreement shall be given in writing by (a)
telegram, facsimile transmission or similar method, if confirmed by mail as
herein provided; by mail, (b) if mailed postage prepaid, by certified mail,
return receipt requested; or (iii) hand delivery to any party at the addresses
of the parties specified below. If given by telegram or facsimile transmission
or similar method or by hand delivery, such notice, direction or instrument
shall be deemed to have been given or made on the day on which it was given, and
if mailed, shall be deemed to have been given or made on the second (2nd)
business day following the day after which it was mailed. Any party may, from
time to time by similar notice, give notice of any change of address, and in
such event, the address of such party shall be deemed to be changed accordingly.
The address, telephone number and facsimile transmission number for the notice
of each party are:
If to the Seller: Norstar Communications, Inc.
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 949.567.1881
45
If to the Purchaser: Universal Broadband Communications, Inc.
00000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 949.567.1883
11.2 Further Assurances. Each party, at any time and from time to time,
--------------------------
at the other party's request, shall execute, acknowledge, and deliver any and
all instruments and take any and all action that may be necessary or proper to
carry out, perform, and effectuate the intents and purposes of the provisions of
this Agreement. In the case of refusal or failure to do so by any party, the
other parties, and each of them, shall have the power and authority, as
attorney-in-fact for the party so refusing or failing, to execute, acknowledge,
and deliver such instrument.
11.3 Time of the Essence. Time is, and at all times hereafter shall be,
----------------------------
of the essence in satisfying the terms, conditions and provisions of this
Agreement.
11.4 Attorneys' Fees. In the event either party incurs any expense,
-----------------------
including attorneys' fees, by reason of any default or alleged default by the
other party, the party prevailing in any action or proceeding brought to resolve
the issue of any such default or alleged default shall be entitled to recover
such prevailing party's expenses incurred to prosecute or defend such action or
proceeding, including, without limiting the generality of the foregoing, actual
attorneys' fees and costs incurred preparatory to such prosecution and defense.
Moreover, while a court of competent jurisdiction may assist in determining
whether or not the fees actually incurred are reasonable considering the
circumstances then existing, that court shall not to be governed by any
judicially or legislatively established fee schedule, and said fees and costs
are to include those as may be incurred on appeal of any issue and all of which
fees and costs shall be included as part of any judgment, by cost xxxx or
otherwise, and where applicable, any appellate decision rendered in or arising
out of such action or proceeding. For purposes of this Agreement, in any action
or proceeding instituted by a party based upon any default or alleged default of
this Agreement by the other party, the prevailing party shall be that party in
any such action or proceeding (i) in whose favor a judgment is entered, or (ii)
prior to trial, hearing or judgment such other party shall pay all or any
portion of amounts claimed by the party seeking payment, or such other party
shall eliminate the condition, cease the act, or otherwise cure the omission
claimed by the party initiating such action or proceeding.
11.5 Assignment. No party shall have the right, without the consent of
-----------------
the other party, to assign, transfer, sell, pledge, hypothecate, delegate, or
otherwise transfer, whether voluntarily, involuntarily or by operation of law,
any of such party's rights or obligations created by the provisions of this
46
Agreement, nor shall the parties' rights be subject to encumbrance or the claim
of creditors. Any such purported assignment, transfer, or delegation shall be
null and void.
11.6 Captions and Interpretations. Captions of the articles, sections and
-----------------------------------
paragraphs of this Agreement are for convenience and reference only, and the
works specified therein shall in no way be held to explain, modify, amplify or
aid in the interpretation, construction, or meaning of the provisions of this
Agreement. The language in all parts to this Agreement, in all cases, shall be
construed in accordance with the fair meaning of that language as if prepared by
all parties and not strictly for or against any party. Each party and counsel
for such party have reviewed this Agreement. The rule of construction, which
requires a court to resolve any ambiguities against the drafting party, shall
not apply in interpreting the provisions of this Agreement.
11.7 Entire Agreement. This Agreement and the Xxxx of Sale are the final
-----------------------
written expression and the complete and exclusive statement of all the
agreements, conditions, promises, representations, warranties and covenants
between the parties with respect to the subject matter of this Agreement, and
this Agreement and the Xxxx of Sale supersede all prior or contemporaneous
agreements, negotiations, representations, warranties, covenants, understandings
and discussions by and between and among the parties, their respective
representatives, and any other person, with respect to the subject matter
specified in this Agreement. This Agreement and the Xxxx of Sale may be amended
only by an instrument in writing which expressly refers to this Agreement or the
Xxxx of Sale and specifically indicates that such instrument is intended to
amend this Agreement or the Xxxx of Sale and is signed by each of the parties.
Each of the parties represents, warrants and covenants that in executing this
Agreement and the Xxxx of Sale that such party has relied solely on the terms,
conditions and provisions specified in this Agreement and the Xxxx of Sale. Each
of the parties additionally represents, warrants and covenants that in executing
and delivering this Agreement and the Xxxx of Sale that such party has placed no
reliance whatsoever on any statement, representation, warranty, covenant or
promise of the other party, or any other person, not specified expressly in this
Agreement and the Xxxx of Sale, or upon the failure of any party or any other
person to make any statement, representation, warranty, covenant or disclosure
of any nature whatsoever. The parties have included this section to preclude (i)
any claim that any party was in any manner whatsoever induced fraudulently to
enter into, execute and deliver this Agreement and the Xxxx of Sale, and (ii)
the introduction of parol evidence to vary, interpret, supersede, modify, amend,
annul, supplement or contradict the terms, conditions and provisions of this
Agreement or the Xxxx of Sale. No provision of the Xxxx of Sale shall supersede
or annul the terms and provisions of this Agreement, unless the matter specified
in the Xxxx of Sale shall explicitly so provide to the contrary. In the event of
47
ambiguity in meaning or understanding between the provisions of this Agreement
proper and the Xxxx of Sale, the provisions of this Agreement shall prevail and
control in all instances.
11.8 Choice of Law and Consent to Jurisdiction. This Agreement shall be
-------------------------------------------------
deemed to have been entered into in the State of Nevada. All questions
concerning the validity, interpretation, or performance of any of the terms,
conditions and provisions of this Agreement or of any of the rights or
obligations of the parties shall be governed by, and resolved in accordance
with, the laws of the State of Nevada without regard to conflicts of law
principles.
11.9 Number and Gender. Whenever the singular number is used in this
--------------------------
Agreement and, when required by the context, the same shall include the plural,
and vice versa; the masculine gender shall include the feminine and the neuter
genders, and vice versa.
11.10 Successors and Assigns. This Agreement and each of its provisions
-------------------------------
shall obligate the heirs, executors, administrators, successors, and assigns of
each of the parties. Nothing specified in this article, however, shall be a
consent to the assignment or delegation by any party of such party's respective
rights and obligations created by the provisions of this Agreement.
11.11 Third Party Beneficiaries. Except as expressly specified by the
-----------------------------------
provisions of this Agreement, this Agreement shall not be construed to confer
upon or give to any person, other than the parties hereto, any right, remedy or
claim pursuant to, or by reason of, this Agreement or of any term or condition
of this Agreement.
11.12 Severability. In the event any part of this Agreement, for any
--------------------
reason, is determined by a court of competent jurisdiction to be invalid, such
determination shall not affect the validity of any remaining portion of this
Agreement, which remaining portion shall remain in full force and effect as if
this Agreement had been executed with the invalid portion thereof eliminated. It
is hereby declared the intention of the parties that they would have executed
the remaining portion of this Agreement without including any such part, parts,
or portion which, for any reason, may be hereafter determined to be invalid.
11.13 Governmental Rules and Regulations. The Transaction is and shall
--------------------------------------------
remain subject to any and all present and future orders, rules and regulations
of any duly constituted authority having jurisdiction of the Transaction.
11.14 Execution in Counterparts. This Agreement may be prepared in
-----------------------------------
multiple copies and forwarded to each of the parties for execution. All of the
signatures of the parties may be affixed to one copy or to separate copies of
48
this Agreement and when all such copies are received and signed by all the
parties, those copies shall constitute one agreement which is not otherwise
separable or divisible.
11.15 Reservation of Rights. The failure of any party at any time or
-------------------------------
times hereafter to require strict performance by any other party of any of the
warranties, representations, covenants, terms, conditions and provisions
specified in this Agreement shall not waive, affect of diminish any right of
such party failing to require strict performance to demand strict compliance and
performance therewith and with respect to any other provisions, warranties,
terms, and conditions specified in this Agreement. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent
thereto, and whether the same or of a different type. None of the
representations, warranties, covenants, conditions, provisions and terms
specified in this Agreement shall be deemed to have been waived by any act or
Knowledge of any party, its agents, trustees, officers, or employees and any
such waiver shall be made only by an instrument in writing, signed by the
waiving party and directed to any non-waiving party specifying such waiver, and
each party reserves such party's rights to insist upon strict compliance
herewith at all times.
11.16 Survival of Covenants, Representations and Warranties. All
--------------------------------------------------------------------
covenants, representations, and warranties made by each party to this Agreement
shall be deemed made for the purpose of inducing the other party to enter into
and execute this Agreement. The representations, warranties, and covenants
specified in this Agreement shall survive the Closing and shall survive any
investigation by either party whether before or after the execution of this
Agreement. The covenants, representations, and warranties of the Seller and the
Purchaser are made only to and for the benefit of the other and shall not create
or vest rights in other persons.
11.17 Concurrent Remedies. No right or remedy specified in this Agreement
---------------------------
conferred on or reserved to the parties is exclusive of any other right or
remedy specified in this Agreement or by law or equity provided or permitted;
but each such right and remedy shall be cumulative of, and in addition to, every
other right and remedy specified in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise, and may be enforced concurrently
therewith or from time to time. The termination of this Agreement for any reason
whatsoever shall not prejudice any right or remedy which any party may have,
either at law, in equity, or pursuant to the provisions of this Agreement.
11.18 Force Majeure. If any party is rendered unable, completely or
----------------------
partially, by the occurrence of an event of "force majeure" (hereinafter
defined) to perform such party's obligations created by the provisions of this
49
Agreement, such party shall give to the other party prompt written notice of the
event of "force majeure" with reasonably complete particulars concerning such
event; thereupon, the obligations of the party giving such notice, so far as
those obligations are affected by the event of "force majeure," shall be
suspended during, but no longer than, the continuance of the event of "force
majeure." The party affected by such event of "force majeure" shall use all
reasonable diligence to resolve, eliminate and terminate the event of "force
majeure" as quickly as practicable. The requirement that an event of "force
majeure" shall be remedied with all reasonable dispatch as hereinabove
specified, shall not require the settlement of strikes, lockouts or other labor
difficulties by the party involved, contrary to such party's wishes, and the
resolution of any and all such difficulties shall be handled entirely within the
discretion of the party concerned. The term "force majeure" as used herein shall
be defined as and mean any act of God, strike, civil disturbance, lockout or
other industrial disturbance, act of the public enemy, war, blockage, public
riot, earthquake, tornado, hurricane, lightning, fire, epidemics, quarantine
restrictions, public demonstration, storm, flood, explosion, freight embargoes,
governmental action, governmental delay, restraint or inaction, unavailability
of equipment, default of a party's subcontractors or suppliers, and any other
cause or event, whether of the kind enumerated specifically herein, or
otherwise, which is not reasonably within the control of the party claiming such
suspension.
11.19 Consent to Agreement. By executing this Agreement, each party, for
----------------------------
itself, represents such party has read or caused to be read this Agreement in
all particulars, and consents to the rights, conditions, duties and
responsibilities imposed upon such party as specified in this Agreement. Each
party represents, warrants and covenants that such party executes and delivers
this Agreement of its own free will and with no threat, undue influence, menace,
coercion or duress, whether economic or physical. Moreover, each party
represents, warrants, and covenants that such party executes this Agreement
acting on such party's own independent judgment.
11.20 Waiver and Modification. No modification, supplement or amendment
---------------------------------
of this Agreement or of any covenant, representation, warranty, condition, or
limitation specified in this Agreement shall be valid unless the same is made in
writing and duly executed by both parties. No waiver of any covenant,
representation, warranty, condition, or limitation specified in this Agreement
shall be valid unless the same is made in writing and duly executed by the party
making the waiver. No waiver of any provision of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver.
50
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed
in duplicate by their respective officers thereunto duly authorized to be
effective on the date specified in the preamble of this Agreement.
Universal Broadband Communications, Inc.,
a Nevada corporation
By: /s/ Xxxx Xxxxx
---------------------------
Its: President
Norstar Communications, Inc.,
a California corporation
By: /s/ Xxxx Xxxxx
---------------------------
Its: President
51
Schedule 1.2
Acquired Assets: all of the direct billing customer base of Norstar
Communications, Inc., and all other assets of Norstar Communications, Inc.,
tangible or intangible, including contractual, warranty, and other rights, the
use or value of which will come under control by Universal Broadband
Communications, Inc., when the Transaction is consummated.
52
