Exhibit 10.10
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, made and entered into as of June 7, 1999,
by and among, USA Digital, Inc., a Nevada corporation (the "Holding Company"),
Telephone Engineering and Maintenance, Inc., a Florida corporation (the
"Acquired Company"), and H. Xxxxx Xxxx, an individual residing in Florida (the
"Seller").
W I T N E S S E T H :
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WHEREAS, the Holding Company is engaged in the business of acquiring
internet service providers, switchless resellers, interconnect companies and
various other communication companies, so as to be able to offer its customer
base a complete variety of convergent communication products and services; and
WHEREAS, the Holding Company is publicly traded; and
WHEREAS, the Acquired Company is engaged in the business of a telephone
interconnect company and the sale of related products and services to
predominately small to medium sized businesses; and
WHEREAS, the Seller owns all of the issued and outstanding shares of
the Acquired Company (the "Stock") and desires to sell the Stock to the Holding
Company; and
WHEREAS, the Holding Company desires to purchase the Stock for the
purpose of owning and operating the Acquired Company as a wholly owned
subsidiary; and
WHEREAS, the parties desire the Holding Company to acquire from the
Seller all of the Stock in a transaction intended to qualify as a reorganization
within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986,
as amended.
NOW, THEREFORE, in consideration of the premises herein set forth, and
the mutual promises and respective representations and warranties of the
parties, one to another made herein, and the reliance of each party upon the
other(s) based hereon, the parties hereto adopt this plan of reorganization and
agree, as follows:
ARTICLE I
PRELIMINARY MATTERS
SECTION 1.01. RECITALS. The parties acknowledge the recitals herein
above set forth in the preamble are correct, incorporated herein and are made a
part of this Agreement.
SECTION 1.02. EXHIBITS AND SCHEDULES. Exhibits (which are documents to
be executed and delivered at the Closing (as hereinafter defined) by the party
identified therein or in the provision requiring its delivery) and Schedules
(which are documents setting forth information about either
the Acquired Company or the Holding Company) referred to herein and annexed
hereto are, by this reference, incorporated herein and made a part of this
Agreement, as if set forth fully herein.
SECTION 1.03. USE OF WORDS AND PHRASES. Natural persons may be
identified by last name, with such additional descriptors as may be desirable.
The words "herein," "hereby," "hereunder," "hereof," "herein before,"
"hereinafter" and any other equivalent words refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision hereof. The
words, terms and phrases defined herein and any pronoun used herein shall
include the singular, plural and all genders. The word "and" shall be construed
as a coordinating conjunction unless the context clearly indicates that it
should be construed as a copulative conjunction.
SECTION 1.04. ACCOUNTING TERMS. All accounting terms not otherwise
defined herein shall have the meanings assigned to them under the profession's
generally accepted accounting principles ("GAAP") unless specifically referenced
to regulatory accounting principles.
SECTION 1.05. CALCULATION OF TIME LAPSE OR PASSAGE; ACTION REQUIRED ON
HOLIDAYS. When a provision of this Agreement requires or provides for the
calculation of the lapse or passage of a time period, such a time period shall
be calculated by treating the event which starts the lapse or passage as zero;
provided, that this provision shall not apply to any provision which specifies a
certain day for action or payment, e.g. the first day of each calendar month.
Unless otherwise provided, the term "month" shall mean a period of thirty days
and the term "year" shall mean a period of 360 days, except that the term
"calendar year" shall mean the actual calendar year period. If any calendar day
on which action is required to be taken or payment is required to be made under
this Agreement is not a business day (meaning Monday through Friday, excluding
national holidays), then such action or payment shall be taken or made on the
next succeeding business day.
SECTION 1.06. USE OF TITLES, HEADINGS AND CAPTIONS. The titles,
headings and captions of Articles, sections, paragraphs and other subdivisions
contained herein are for the purpose of convenience only and are not intended to
define or limit the contents of said articles, sections, paragraphs and other
subdivisions.
ARTICLE II
TERMS OF THE TRANSACTION
SECTION 2.01. ACQUISITION. Upon and subject to the terms and conditions
of this Agreement, the Seller will sell, assign and transfer the Stock, free and
clear of all liens, pledges, security interests, claims, charges, restrictions,
equities or encumbrances of any kind whatsoever, to the Holding Company (the
"Acquisition") in exchange for, and the Holding Company will issue and deliver
to the Seller, fifty thousand (50,000) shares of preferred stock described in
Section 2.02 herein. (the "Preferred Stock").
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SECTION 2.02. PREFERRED STOCK The Preferred Stock will be designated as
Class B Convertible Preferred Stock, Series "1", of which each share (a) will
have a liquidation value of $4.00, (b) will be convertible into five (5) shares
of the Holding Company's common stock beginning one year after the Closing Date,
(c) will be entitled to one vote on matters submitted to a vote of the holders
of the common stock, (d) will be subject to cash redemption at the election of
either the Holding Company or the Seller beginning three years from the date
hereof, upon thirty days' written demand for redemption by either party, at
liquidation value.
SECTION 2.03. SECURITY FOR HOLDING COMPANY'S OBLIGATIONS. As security
for the Holding Company's obligation under Section 2.02 of this Agreement, the
Holding Company and the Acquired Company shall (a) grant to Seller a security
interest in all of the Stock of the Acquired Company, as evidenced by the Pledge
Agreement in the form of Exhibit B attached hereto (the "Pledge Agreement"), and
(b) grant to the Seller a security interest in all assets of the Acquired
Company, as evidenced by the Security Agreement in the form of Exhibit C
attached hereto (the "Security Agreement"). Any default by the Acquired Company
(after acquisition by the Holding Company, if maintained as a separate legal
entity) or the Holding Company under the Security Agreement or the Pledge
Agreement shall constitute a default under this Agreement.
SECTION 2.04. PRESS RELEASES. Promptly following the execution hereof,
the Holding Company may in its discretion issue a press release announcing the
transaction, summarizing its pertinent terms and providing such other
information as it deems necessary. Neither the Acquired Company nor the Seller
will make a public announcement regarding the transaction contemplated by this
Agreement or issue a press release with respect thereto.
SECTION 2.05. TRANSACTION COSTS. Each party to this Agreement shall
bear its own costs associated with the negotiation, drafting and closing of this
agreement and its related documents.
SECTION 2.06. CAPITAL INFUSION. The Holding Company agrees to lend to
the Acquired Company up to a maximum of ten thousand ($10,000) dollars per month
for a six month period, to be used to expand Acquired Company's business.
Disbursement of funds will be evidenced by, the parties will execute a mutually
agreed upon promissory note. The initial loan will be made available to Acquired
Company at closing, with subsequent loans to be made available on the first
business day of each of the following five months.
ARTICLE III
CLOSING OF THE TRANSACTION
SECTION 3.01. LOCATION, DATE AND TIME OF THE CLOSING. The closing of
the transaction herein contemplated (the "Closing") shall take place on or
before July 1, 1999 (the "Closing Date") at the offices of T.E.A.M, subject to
the satisfaction of the conditions to Closing set forth in Sections 3.08 and
3.09.
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SECTION 3.02. OBLIGATIONS OF THE ACQUIRED COMPANY AT CLOSING. At the
Closing, the Acquired Company will deliver the following documents:
(a) An Officer's Certificate and Secretary's Certificate of
the Acquired Company, in the respective forms of Exhibit "C" and Exhibit "D";
(b) A certificate of good standing issued by the Secretary
of State of its State of incorporation and of each State in which it is
qualified to do business as a foreign corporation; and
(c) A duly executed closing memorandum.
SECTION 3.03. OBLIGATIONS OF THE HOLDING COMPANY AT CLOSING. At the
Closing, the Holding Company will deliver the following documents:
(a) An officer's certificate and secretary's certificate of
the Acquired Company, in the respective forms of Exhibit "C" and Exhibit "D";
and
(b) A certificate of good standing issued by the Secretary
of State of its State of incorporation and of each State in which it is
qualified to do business as a foreign corporation; and
(c) A duly executed pledge agreement,
(d) Certificates for the Preferred Stock, bearing the
restrictive legend set forth in Section 6.04 hereof, issued to and registered to
the order of the Seller;
(e) A duly executed security agreement and;
(f) A duly executed closing memorandum.
SECTION 3.04. OBLIGATIONS OF THE SELLER AT CLOSING. At the Closing, the
Seller will deliver the following documents:
(a) The certificate(s) representing all forms, delineation's
and classes of the Stock of the Acquired Company, together with a duly executed
stock power in favor of the Holding Company;
(b) A certificate to the same tenor and effect as Exhibits
"C" and "D";
(c) A duly executed security agreement; and
(d) A duly executed closing memorandum.
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SECTION 3.05. CLOSING MEMORANDUM AND RECEIPTS. As evidence that all
parties deem the Closing to have been completed, the conditions precedent to
have been satisfied, and the transaction contemplated by this Agreement to have
been consummated, the parties will jointly execute and deliver a memorandum
acknowledging such completion and consummation, setting forth any matters or
conditions which the parties agree to complete after the Closing and containing
an acknowledgment receipt for the Stock referenced above.
SECTION 3.06. WAIVER OF CONDITIONS. Notwithstanding Section 11.03
herein, any condition to the Closing which is not satisfied at or prior to the
Closing will be deemed to be waived by each of the affected parties or satisfied
by virtue of such party's execution of the Closing memorandum; provided, that
any condition which is unsatisfied and is to be preserved for completion or
consummation after the Closing shall be set forth in the Closing memorandum and
thereupon will become a covenant for completion or consummation by the parties
obligated for the performance thereof.
SECTION 3.07. FURTHER ASSURANCES. At any time and from time to time
after the Closing, at the reasonable request of any party and without further
consideration, any other party shall execute and deliver such other instruments
and documents as such party may deem reasonably desirable or necessary to
complete the transactions contemplated by this Agreement.
SECTION 3.08. CONDITIONS PRECEDENT TO THE ACQUIRED COMPANY'S AND THE
SELLER'S OBLIGATION TO CLOSE. All obligations of the Acquired Company and the
Seller hereunder are subject to the fulfillment of each of the following
conditions at or prior to the Closing, and the Holding Company shall exert its
best efforts to cause each such condition to be fulfilled:
(a) All representations and warranties of the Holding
Company contained herein or in any document delivered pursuant hereto shall be
true and correct in all material respects when delivered and shall be deemed to
have been made again at and as of the date of the Closing, and shall then be
true and correct in all material respects except for changes in the ordinary
course of business after the date hereof in conformity with the covenants and
agreements contained herein.
(b) All covenants, agreements and obligations required by
the terms of this Agreement to be performed by Holding Company on or before the
Closing shall have been duly and properly performed in all material respects.
(c) Since the date of this Agreement there shall not have
occurred any material adverse change in the condition or prospects (financial or
otherwise), business, properties or assets of the Holding Company not disclosed
to and acknowledged by the Acquired Company and the Seller.
(d) The Holding Company shall have delivered the certificate
set forth in Exhibit "G", certifying that the conditions set forth in paragraphs
(a), (b), (c) of this Section 3.08 have been fulfilled.
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(e) All documents required to be delivered by the Holding
Company at or prior to the Closing shall have been so delivered.
(f) The Holding Company shall have delivered an opinion of
counsel, as of the date of the Closing, confirming the legality of the Preferred
Stock issued to the Seller.
Section 3.09. CONDITIONS PRECEDENT TO THE HOLDING COMPANY'S OBLIGATION
TO CLOSE. All obligations of the Holding Company at the Closing are subject to
the fulfillment of each of the following conditions at or prior to the Closing,
and the Acquired Company and the Seller shall each exert their best efforts to
cause each such condition to be fulfilled.
(a) All representations and warranties of the Acquired
Company and the Seller contained herein or in any document delivered pursuant
hereto shall be true and correct in all material respects when delivered and
shall be deemed to have been made again at and as of the date of the Closing,
and shall then be true and correct in all material respects except for changes
in the ordinary course of business after the date hereof in conformity with the
covenants and agreements contained herein.
(b) All covenants, agreements and obligations required by
the terms of this Agreement to be performed by Acquired Company and the Seller
on or before the Closing shall have been duly and properly performed in all
material respects.
(c) Since the date of this Agreement there shall not have
occurred any material adverse change in the condition or prospects (financial or
otherwise), business, properties or assets of the Acquired Company not disclosed
to and acknowledged by the Holding Company.
(d) The Acquired Company shall have delivered the
certificate set forth in Exhibit "G", certifying that the conditions set forth
in paragraphs (a), (b), (c) of this Section 3.09 have been fulfilled.
(e) All documents required to be delivered by the Acquired
Company and by the Seller on or before the Closing shall have been so delivered.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
Section 4.01. THE ACQUIRED COMPANY AND THE SELLER'S REPRESENTATIONS AND
WARRANTIES. The Acquired Company and the Seller, jointly and severally,
represent and warrant to the Holding Company that:
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(a) The Acquired Company is a corporation duly organized,
validly existing and in good standing under the laws of its State of
incorporation, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The Acquired Company is duly qualified and licensed to do business and is in
good standing in every jurisdiction where the conduct of its business or the
nature of its properties require it to be qualified. The Acquired Company has
delivered to the Holding Company true, correct and complete copies of its
articles of incorporation, as amended, bylaws and the records of proceeding of
its board of directors and stockholders, to the extent such records exist, since
the inception of the Acquired Company. The Acquired Company does not own,
directly or indirectly, any of the capital stock of any other corporation or any
equity, profit sharing, participation or other interest in any corporation,
partnership, joint venture or other entity.
(b) The Acquired Company has the power to conduct its
business as it is now being conducted and to own and lease the properties
associated therewith shown on its most recent balance sheet and used in the
conduct of its business.
(c) This Agreement has been duly and validly authorized by
all necessary corporate action of the Acquired Company (including the approval
of the board of directors and stockholders), executed and delivered by the
Acquired Company and the Seller and constitutes the legal, valid and binding
obligation of each of them enforceable against them individually and severally,
in accordance with its terms subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of, relating to or affecting
shareholders and creditors rights generally and to general equitable principles.
(d) The execution of this Agreement and consummation of the
transaction contemplated hereby does not conflict with and will not (i) violate
any provision of the Acquired Company's articles of incorporation or bylaws,
(ii) violate any provision of or result in the breach of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, any mortgage, lien, lease, material contract, license, permit,
instrument or any other material agreement to which the Acquired Company is a
party, (iii) result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any property of the Acquired
Company, (iv) violate or conflict with any order, award, judgment or decree or
other restriction or conflict with any law, ordinance, rule or regulation to
which the Acquired Company or its property is subject or by which the Acquired
Company or its property may be bound or affected, or (v) result in the loss,
forfeiture or waiver of any rights or franchise owned by the Acquired Company,
from which the Acquired Company benefits or which is desirable in the conduct of
the Acquired Company's business.
(e) The Acquired Company's authorized capital stock consists
of 7,500 shares of common stock, of which 100 shares are issued and outstanding.
The Acquired Company's issued and outstanding capital stock has been duly and
validly authorized, is validly issued and fully paid and nonassessable. All of
the outstanding capital stock of the Acquired
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Company is legally and beneficially owned by the Seller, free of any security
interests, liens, claims, encumbrances, equities, proxies, shareholder
agreements, or other restrictions of any kind. No shares of the Acquired
Company's Common Stock are owned by the Acquired Company in treasury. No shares
of the Acquired Company's Common Stock have been issued or disposed of in
violation of the preemptive rights, rights of first refusal or similar rights of
any of the Acquired Company's stockholders. The Acquired Company has no bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or are convertible into or exercisable for securities having the right to
vote) with the stockholders of the Acquired Company on any matter.
(f) The Acquired Company has not acquired any capital stock
of the Acquired Company within the two (2) year period preceding the execution
of this Agreement. There exist no options, warrants, subscriptions or other
rights to purchase, or securities convertible into or exchangeable for, any of
the authorized or outstanding securities of the Acquired Company, and no option,
warrant, call, conversion right or commitment of any kind exists which obligates
the Acquired Company to issue any of its authorized but unissued capital stock.
The Acquired Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any distribution in respect thereof.
Neither the equity structure of the Acquired Company nor the ownership of shares
among its stockholders has been altered or changed within the two (2) year
period preceding the date of this Agreement.
(g) No action by or before any governmental body or
authority of the United States of America, any State or subdivision thereof or
any self-regulatory body to which the Acquired Company is subject is required in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby on the part of the Acquired
Company.
(h) Except as contemplated by this Agreement, there has not
been any sale, distribution or spin-off of significant assets of the Acquired
Company other than in the ordinary course of business within the two (2) year
period preceding the date of this Agreement.
(i) The information the Acquired Company and the Seller have
delivered to the Holding Company relating to the Acquired Company, its business,
its operations and its prospects (financial and otherwise) was on the date
reflected in each such item of information accurate in all material respects and
such information at the date hereof taken as a whole provides full and fair
disclosure of all material information relating to the Acquired Company, its
business, its operations, its financial condition and its prospects (financial
and otherwise) and does not contain any untrue statements, misstatements or
omissions of material fact (which have not been subsequently corrected)
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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(j) Neither the Acquired Company nor Seller nor, to the best
of the knowledge of the Acquired Company and the Seller, any employee of the
Acquired Company, has paid or caused to be paid, directly or indirectly, in
connection with the business of the Company to any government or agency thereof
or any agent of any supplier or customer any bribe, kick-back or other similar
payment or any contribution to any political party or candidate (other than from
personal funds of directors, officers or employees not reimbursed by the Company
or as otherwise permitted by applicable law).
(k) Attached hereto as Schedule "A" are true and complete
copies of the Acquired Company's balance sheet (the "Balance Sheet") and related
statement of income at and for the period ended December 31, 1997, December 31,
1998, and April 30, 1999 (collectively, the "Financial Statements"). Such
Financial Statements have not been audited, but are complete and correct, have
been prepared in accordance with GAAP, and fairly present the financial
condition of the Acquired Company and the results of operations at the dates and
for the periods indicated. Since April 30, 1999, there has been no material
adverse change in the financial conditions, results of operations or business
prospects of the Acquired Company and, to the best knowledge of the Seller and
the Acquired Company, no fact or condition exists or is contemplated or
threatened which might cause such a change in the future. Except as disclosed in
the notes to the Financial Statements, the Acquired Company does not have any
accrued, contingent, undisclosed or hidden liabilities. The Acquired Company is
not liable for or obligated in any way to provide funds in respect of or to
guarantee or assume in any manner, any debt, obligation or dividend of any
person, corporation, association, partnership, joint venture, trust or other
entity, and the Acquired Company does not know of any valid basis for the
assertion of any other claims or liabilities of any nature or in any amount. No
person has guaranteed, indemnified or otherwise insured any obligation of the
Acquired Company.
(l) The Acquired Company has good, valid, marketable and
insurable title to all of the properties and assets which it owns or uses in its
business, free and clear of all security interests, liens, claims and
encumbrances. The assets and properties of the Acquired Company are adequate for
the conduct of the Acquired Company's business in the manner in which it is
currently conducted and contemplated to be conducted by the Acquired Company.
(m) The Acquired Company does not own any interest (other
than leasehold interests referred to on Schedule "B") in real property. The
leased real property referred to on Schedule "B" constitutes the only real
property necessary for the conduct of the Acquired Company's business as
currently conducted.
(n) Except as set forth on Schedule "C", the Acquired
Company is not a party to or bound by, nor is the Stock or any of the Company's
assets or properties subject to, or bound by, whether or not in writing, any of
the following (collectively, the "Contracts"): (i) partnership or joint venture
agreement; (ii) guaranty or suretyship, indemnification or contribution
agreement or performance bond; (iii) debt instrument, loan agreement or other
obligation relating to indebtedness for borrowed money or money lent or to be
lent to another; (iv) contract to purchase
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real property; (v) agreement with sales agents, public relations or advertising
agencies, accountants or attorneys (other than in connection with this Agreement
and the transactions contemplated hereby) involving total payments within any
twelve (12) month period in excess of $5,000 and which is not terminable on
thirty (30) days' notice or without penalty; (vi) agreement relating to any
material matter or transaction in which an interest is held by a person or
entity that is an officer, director, employee, stockholder or affiliate of the
Acquired Company or Seller; (vii) agreement for the acquisition of services,
supplies, equipment, inventory, fixtures or other property involving more than
$5,000 in the aggregate, except in the ordinary course of business; (viii)
powers of attorney; (ix) contracts containing non-competition covenants; (x)
agreement providing for the purchase from a supplier of all or substantially all
of the requirements of the Acquired Company of a particular product or services;
(xi) any other agreement or commitment in excess of $5,000 not made in the
ordinary course of business or that is material to the business, operations,
condition (financial or otherwise) or results of operations of the Company.
Copies of all of the Contracts have been delivered to the Holding Company. All
of such Contracts are valid and binding, enforceable in accordance with their
respective terms (except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies), in full force and effect, and no defenses, off-sets or
counterclaims have been asserted, nor has the Company waived any material rights
thereunder. There are no existing events of default or events, which after the
giving of notice or lapse of time or both, would constitute a default or result
in a right to accelerate or a loss of rights in connection with any such
Contract, and no penalties have been incurred nor are amendments pending, with
respect to the Contracts. The Acquired Company has not received notice of any
plan or intention of any other party to any Contracts to exercise any right to
cancel or terminate such Contracts, and neither the Acquired Company nor Seller
knows of any fact that would justify the exercise of such a right. No consents
or approvals are required under the terms of any Contracts in connection with
the transactions contemplated herein. None of the Contracts is, either when
considered singly or in the aggregate with others, unduly burdensome, onerous or
materially adverse to the Acquired Company's business, properties, assets,
earnings or prospects or is likely, either before or after the Closing, to
result in any material loss or liability.
(o) All of the fixtures, structures and equipment reflected
in the Financial Statements and used by the Acquired Company in its business are
in good operating condition and repair, subject to normal wear and tear, and
conform in all material respects with all applicable ordinances, regulations and
other laws, and the Acquried Company has no actual knowledge of any latent
defects therein.
(p) Except as set forth in Schedule "D", there is no claim,
violation notice, legal action, suit, arbitration, governmental investigation,
or other legal or administrative proceeding, nor any order, decree or judgment
in progress, pending or in effect, or, to the Acquired Company's or Seller's
best knowledge, threatened, against or relating to the Acquired Company, its
directors, officers or employees, its properties, assets or business, Seller, or
the transaction contemplated by this Agreement and neither the Acquired Company
nor Seller know or has any reason to be aware of any basis for the same,
including any basis for a claim of sexual harassment or discrimination based on
race, age, sexual orientation or other protected class of
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individuals, as well as health, safety or other environmental complaints or
exposure. Neither the Acquired Company nor Seller is subject to or in default of
any court or administrative order, judgment, writ, injunction or decree
applicable to the Acquired Company or to its business, assets, operations or
employees. All claims asserted, general liability incidents and incident reports
have been submitted to the Acquired Company's insurer therefor. All claims made
or threatened against the Acquired Company in excess of its deductible are
covered under its Insurance Policies.
(q) All taxes, including without limitation, income,
property, special assessments, sales, use, franchise, intangibles, employees'
income withholding and social security taxes, imposed by the United States of
America, foreign government or any state, municipality, subdivision, authority
therein, which are due and payable, and all interest and penalties thereon,
unless disputed in good faith in proper proceedings and reserved for or set
aside, have been paid in full and all tax returns required to be filed in
connection therewith have been accurately prepared and timely filed
(collectively, the "Tax Returns") and all monies required to be withheld by the
Company and paid to governmental agencies for all income, social security,
unemployment insurance, sales, excise, use and other taxes have been collected
or withheld and paid to the respective governmental agencies. All such Tax
Returns or reports are complete and accurate in all material respects and
properly reflect the taxes of the Company for the periods covered thereby. The
Acquired Company is not and has no reason to believe that it will be the subject
of an audit by any taxing authority. There is not now in force any extension of
time with respect to the date when tax return was or is due to be filed, or any
waiver or agreement by the Acquired Company for the extension of time for the
assessment of any tax and the Acquired Company is not a "consenting corporation"
within the meaning of Section 341(f)(1) of the Internal Revenue Code of 1986, as
amended; and, the Acquired Company has elected to be treated as an S corporation
for federal income tax purposes. All workers' compensation, disability and
similar items due and payable under any governmental program have been paid. The
Acquired Company is not a party to any tax sharing agreement with any other
person or entity. Neither the Company nor Seller is a foreign person, as such
term is referred to in Section 1445(f)(3) of the Code. None of the assets or
properties of the Acquired Company constitutes property that the Acquired
Company, the Holding Company, or any affiliate of the Holding Company, will be
required to treat as being owned by another person pursuant to the "Safe Harbor
Lease" provisions of Section 168(f)(8) of the Code prior to repeal by the Tax
Equity and Fiscal Responsibility Act of 1982. None of the assets of the Acquired
Company are subject to a lease to a "tax exempt entity" as such term is defined
in Section 168(h)(2) of the Code. The Acquired Company has not at any time
consented, and Seller will not permit the Acquired Company to elect, to have the
provisions of Section 341(f)(2) of the Code apply to it. The Acquired Company
has not at any time participated in or cooperated with any international boycott
as defined in Section 999 of the Code. No payment required or contemplated to be
made by the Acquired Company will be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code..
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(r) The Acquired Company does not have any employee benefit,
pension or profit sharing plans subject to ERISA or other similar retirement
plans to which the Acquired Company is obligated or required to make
contributions. The Acquired Company does not have any obligation or commitment
to provide medical, dental or life insurance benefits to or on behalf of any of
its employees who may retire or any of its former employees who have retired.
(s) Schedule "E" contains (i) a complete and accurate list
of the names, titles and annual cash compensation as of the Closing Date,
including without limitation wages, salaries, bonuses (discretionary and
formula) and other cash compensation (the "Cash Compensation"), of all employees
of the Acquired Company, (ii) a complete and accurate description of all
increases in Cash Compensation of employees of the Acquired Company during the
current fiscal year and the immediately preceding fiscal year and any promised
increases in Cash Compensation of employees of the Acquired Company that have
not yet been effected, (iii) a complete and accurate list of all compensation
plans, arrangements or practices (the "Compensation Plans") sponsored by the
Acquired Company or to which the Company contributes on behalf of its employees,
and (iv) a complete and accurate list of all employment arrangements which the
Acquired Company is a party to or affected by, including without limitation,
employee leasing, employee services, consulting and non-competition agreements.
The Acquired Company does not have any written employment agreements with its
employees. The Compensation Plans include without limitation plans, arrangements
or practices that provide for performance awards and stock ownership or stock
options. The Company has provided or made available to the Holding Company a
copy of each written Compensation Plan, including all amendments to date, and a
written description of each unwritten Compensation Plan. Each of the
Compensation Plans can be terminated or amended at will by the Company. The
Company has provided or made available to Holding Company a copy of all employee
manuals and all written material policies, procedures and work-related rules,
including all amendments to date, and a written description of all material
unwritten Employee policies and procedures.
(t) The Acquired Company has been and is in compliance with
all applicable laws, rules, regulations and ordinances respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except for any such failures to be in compliance that, individually or in the
aggregate, would not result in a material adverse effect, and the Acquired
Company is not liable for any arrearages of wages or penalties for failure to
comply with any of the foregoing. The Acquired Company has not engaged in any
unfair labor practices or discriminated on the basis of race, color, religion,
sex, national origin, age, disability or handicap in its employment conditions
or practices and no such charges or complaints are pending or, to the best
knowledge of the Acquired Company and Seller, threatened against the Acquired
Company before any federal, state or local court, board, department, commission
or agency (nor, to the best knowledge of the Acquired Company and Seller, does
any valid basis therefor exist). No labor strikes, disputes, grievances,
controversies or other labor troubles affecting the Acquired Company are pending
or threatened (nor, to the best knowledge of the Acquired Company and Seller,
does any valid basis therefor exist).
12
(u) The Acquired Company has never been a party to any
agreement with any union, labor organization or collective bargaining unit. None
of the Acquired Company's employees are represented by a union, labor
organization or collective bargaining unit or are subject to a collective
bargaining agreement and the Acquired Company considers its relations with its
employees as a whole to be good. The Acquired Company has not been subject to
any strikes, work stoppages or labor unrest. To the best knowledge of the
Acquired Company and Seller, none of the employees of the Company has threatened
to organize or join a union, labor organization or collective bargaining unit.
All employees of the Acquired Company are, to the best knowledge of the Acquired
Company and Seller, citizens of, or are authorized in accordance with federal
immigration laws to be employed in, the United States.
(v) Except as set forth on Schedule "F" or as contemplated
in this Agreement, since the date of the Balance Sheet, the Acquired Company has
not (i) suffered a material adverse effect; (ii) contracted for the purpose of
acquiring any capital asset having a cost in excess of $5,000 or made any single
expenditure for a capital asset in excess of $5,000; (iii) incurred any
indebtedness for borrowed money in excess of $5,000 (other than short-term
borrowings in the ordinary course of business), or issued or sold any debt
securities; (iv) incurred or discharged any material liabilities or obligations
except in the ordinary course of business; (v) paid any amount on any
indebtedness prior to the due date, forgiven or canceled any claims or any debt
in excess of $5,000, or released or waived any rights or claims except in the
ordinary course of business; (vi) mortgaged, pledged or subjected to any
security interest, lien, lease or other charge or encumbrance any of its
properties or assets (other than statutory liens arising in the ordinary course
of business or other liens that do not materially detract from the value or
interfere with the use of such properties or assets); (vii) suffered any damage
or destruction to or loss of any assets (whether or not covered by insurance)
that has, individually or in the aggregate, resulted in a material adverse
effect; (viii) acquired or disposed of any assets having an aggregate value in
excess of $5,000, except in the ordinary course of business; (ix) written up or
written down the carrying value of any of its assets, other than accounts
receivable in the ordinary course of business; (x) changed the costing system or
depreciation methods of accounting for its assets in any material respect; (xi)
lost or terminated any employee, patient, customer or supplier that has,
individually or in the aggregate, resulted in a material adverse effect; (xii)
increased the compensation of any director, officer, key employee or consultant;
(xiii) increased the compensation of any employee (except for increases in the
ordinary course of business consistent with past practice) or hired any new
employee who is expected to receive annualized compensation of at least $5,000;
(xiv) formed or acquired or disposed of any interest in any corporation,
partnership, joint venture or other entity; (xv) redeemed, purchased or
otherwise acquired, or sold, granted or otherwise disposed of, directly or
indirectly, any of its capital stock, paid any dividend or made any distribution
or payment on any of its capital stock, or agreed to change the terms and
conditions of any such capital stock; (xvi) entered into any agreement providing
for total payments in excess of $5,000 in any twelve (12) month period with any
person or group, or modified or amended in any material respect the terms of any
such existing agreement, except in the ordinary course of business whereupon the
sum of total payments shall not exceed $5,000 in any twelve (12) month period;
or (xvii) entered into any other commitment or transaction or experienced any
other event that would materially interfere
13
with its performance under this Agreement or any other agreement or document
executed or to be executed pursuant to this Agreement, or otherwise has,
individually or in the aggregate, resulted in a material adverse effect.
(w) All offers and sales of securities by the Acquired
Company have been made in compliance with the requirements of federal and
applicable state securities laws.
(x) The Acquired Company carries property, liability,
workers' compensation and such other types of insurance pursuant to the
insurance policies listed and briefly described on Schedule "G" (the "Insurance
Policies"). All of the Insurance Policies are issued by insurers of recognized
responsibility and, to the best knowledge of the Acquired Company, are valid and
enforceable policies. All Insurance Policies shall be maintained in force
without interruption up to and including the Closing Date. True, complete and
correct copies of all Insurance Policies have been provided or made available to
the Holding Company. Except as set forth on Schedule "G", neither the Acquired
Company nor Seller has received any notice or other communication from any
issuer of any Insurance Policy canceling such policy, materially increasing any
deductibles or retained amounts thereunder, and to the best knowledge of the
Acquired Company and Seller, no such cancellation or increase of deductibles,
retainages or premiums is threatened. The Acquired Company does not have any
outstanding claims, settlements or premiums owed against any Insurance Policy,
and the Acquired Company has given all notices or has presented all potential or
actual claims under any Insurance Policy in due and timely fashion. Schedule "G"
also sets forth a list of all claims under any Insurance Policy in excess of
$10,000 per occurrence filed by the Acquired Company since its inception. The
Acquired Company has established and maintains all required insurance company
reserves in all of those states that it is required to do so and has established
and maintains all required deposits and bonds as are necessary in such state.
(y) Schedule "H" sets forth a true and correct description
of all trademarks, trade-names, service marks and other trade designations,
including common law rights, registrations and applications therefor, and all
patents and applications therefor currently owned, in whole or in part, by the
Acquired Company, and all licenses, royalties, assignments and other similar
agreements relating to the foregoing to which the Acquired Company is a party
(including the expiration date thereof if applicable); and all agreements
relating to technology, know-how or processes that the Acquired Company is
licensed or authorized to use by others (other than technology, know-how or
processes generally available to other healthcare providers), or which it
licenses or authorizes others to use (collectively, the "Proprietary Rights").
The Acquired Company owns or has the legal right to use the Proprietary Rights,
and to the best knowledge of the Acquired Company, such ownership or use does
not conflict, infringe or violate the rights of any other person. No consent of
any person will be required for the use thereof by the Holding Company upon
consummation of the transactions contemplated hereby and the Proprietary Rights
are freely transferable. The Acquried Company has the right to use, free and
clear of any adverse claims or rights of others, all trade secrets, customer
lists and proprietary information required for the marketing of all merchandise
and services formerly or presently sold or marketed by it.
14
(z) No officer, director, stockholder or employee of the
Acquired Company, or their respective spouses, children or affiliates owns,
directly or indirectly, on an individual or joint basis, any interest in, has a
compensation or other financial arrangement with, or serves as an officer or
director of, any customer or supplier of the Acquired Company or any
organization that has a material contract or arrangement with the Acquired
Company. Neither the Acquired Company nor Seller owns, directly or indirectly,
any interest or has any investment in any person or entity that is a competitor
of the Acquired Company.
(aa) The Acquired Company is not, nor has it ever been,
under the jurisdiction of a Federal or state court in a Title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the Code.
(bb) The Acquired Company has not incurred any obligation
for any finder's, brokers or agent's fee in connection with the transactions
contemplated hereby.
(cc) No distribution, payment or dividend of any kind has
been declared or paid by the Company on any of its capital stock since the
Company Balance Sheet Date.
(dd) Disclosure made by the Acquired Company and/or the
Seller in any Exhibit or Schedule shall be deemed disclosure for purposes of all
representations and warranties contained in this Agreement.
SECTION 4.02. THE SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller
represents and warrants to the Holding Company that:
(a) This Agreement and each other agreement to be executed
in connection herewith has been duly executed and delivered by the Seller, and
all such agreements constitute legal, valid and binding obligations of such
Seller, enforceable against Seller in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies.
Seller has the legal capacity to enter into and perform this Agreement and such
other agreements to which it is a party.
(b) The execution of this Agreement and consummation of the
transaction contemplated hereby does not conflict with and will not (i) violate
any provision of or result in the breach of or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both) any obligation
under, any mortgage, lien, lease, material contract, license, permit, instrument
or any other material agreement to which Seller is a party, (ii) result in the
creation or imposition of any lien, charge, pledge, security interest or other
encumbrance upon the Stock, or (iii) violate or conflict with any order, award,
judgment or decree or other restriction or conflict with any law, ordinance,
rule or regulation to which Seller or his property is subject or by which Seller
or his property may be bound or affected.
15
(c) No action by or before any governmental body or
authority of the United States of America, any State or subdivision thereof or
any self-regulatory body to which the Seller is subject is required in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby on the part of the Seller.
(d) Set forth on Schedule "I" is an accurate and complete
list of all transfers or other transactions involving capital stock of the
Acquired Company made by Seller since January 1, 1997. All transfers of capital
stock of the Acquired Company by Seller have been made for valid business
reasons and not in anticipation or contemplation of the consummation of the
transactions contemplated by this Agreement.
(e) Seller has not paid or caused to be paid, directly or
indirectly, in connection with the business of the Acquired Company, to any
government or agency thereof or any agent of any supplier or customer any bribe,
kick-back or other similar payment; or any contribution to any political party
or candidate (other than from personal funds not reimbursed by the Company or as
otherwise permitted by applicable law).
(f) Seller has not incurred any obligation for any finder's,
broker's or agent's fee in connection with the transactions contemplated hereby.
(g) Neither Seller, nor his spouse, children or affiliates,
owns directly or indirectly, on an individual or joint basis, any interest in,
has a compensation or other financial arrangement with, or serves as an officer
or director of, any customer or supplier of the Acquired Company or any
organization that has a material contact or arrangement with the Acquired
Company. Neither Seller nor any of his affiliates is, or within the last three
(3) years was, a party to any contract, lease, agreement or arrangement,
including, but not limited to, any joint venture or consulting agreement with
any communications company, internet company, or any other person which is in a
position to make or influence referrals to, or otherwise generate business for,
the Acquired Company.
(h) Seller does not own directly or indirectly any interests
or have any investment in any person other than the Acquired Company that is a
competitor of the Holding Company.
(i) Except as set forth on Schedule "J", there are no
claims, actions, suits, proceedings (arbitration or otherwise) or investigations
pending or, to the best of Seller's knowledge, threatened against Seller at law
or at equity in any court or before or by any governmental authority, and, to
Seller's knowledge, there are no, and have not been any, facts, conditions or
incidents that may result in any such actions, suits, proceedings (arbitration
or otherwise) or investigations.
16
SECTION 4.03. THE HOLDING COMPANY'S REPRESENTATIONS AND WARRANTIES. The
Holding Company represents and warrants to the Acquired Company and the Sellers
that:
(a) The Holding Company is a corporation duly organized,
validly existing and in good standing under the laws of its State of
incorporation, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The Holding Company is duly qualified and licensed to do business and is in good
standing in every jurisdiction where the conduct of its business or the nature
of its properties require it to be qualified.
(b) The Holding Company has the power to conduct its
business as it is now being conducted and to own and lease the properties
associated therewith used in the conduct of its business.
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Holding Company and constitutes the legal, valid
and binding obligation of the Holding Company enforceable against the Holding
Company in accordance with its terms subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of, relating to or
affecting shareholders and creditors rights generally and to general equitable
principles.
(d) The execution of this Agreement and consummation of the
transaction contemplated hereby does not conflict with and will not (i) violate
any provision of the Holding Company's articles of incorporation or bylaws, (ii)
violate any provision of or result in the breach of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, any mortgage, lien, lease, material contract, license, permit,
instrument or any other material agreement to which the Holding Company is a
party, (iii) result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any property of the Holding Company,
(iv) violate or conflict with any order, award, judgment or decree or other
restriction or conflict with any law, ordinance, rule or regulation to which the
Holding Company or its property is subject or by which the Holding Company or
its property may be bound or affected.
(e) The Holding Company's authorized capital stock consists
of 50,000,000 shares of common stock and 10,000,000 shares of preferred stock,
of which 2,377,000 shares of common stock and zero shares of preferred stock are
issued and outstanding. The issuance and delivery of the Preferred Stock to be
issued by the Holding Company in connection with this Agreement have been duly
and validly authorized and, when issued pursuant hereto, will be validly issued,
fully paid and nonassessable, and shall be free and clear of all liens, pledges,
restrictions, voting trusts, security interests or other encumbrances of any
nature whatsoever. The shares of Preferred Stock to be issued pursuant to this
Agreement will not be issued and disposed of in violation of the preemptive
rights, rights of first refusal or similar rights of any of the Holding
Company's stockholders.
17
(f) No action by or before any governmental body or
authority of the United States of America, any State subdivisions thereof or any
self-regulatory body to which the Holding Company is subject, is required in
connection with the execution and delivery of this Agreement by the Holding
Company and the consummation of the transactions contemplated hereby.
(g) The information the Holding Corporation has delivered to
the Acquired Company relating to the Holding Company, its business, its
operations and its prospects (financial and otherwise) was on the date reflected
in each such item of information accurate in all material respects and, to the
knowledge of the Holding Corporation, such information at the date hereof taken
as a whole provides full and fair disclosure of all material information
relating to the Holding Corporation, its business, its operations, its financial
condition and its prospects (financial and otherwise) and does not contain any
untrue statements, misstatements or omissions of material fact (which have not
been subsequently corrected) necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
SECTION 4.04. NATURE AND SURVIVAL OF REPRESENTATION AND WARRANTIES. All
representations and warranties contained in this Agreement shall survive the
Closing Date for a period of one (1) year; provided, that (i) the
representations and warranties contained in Sections 4.01 (p), (q) and (t) shall
survive for the applicable statute of limitations periods, (ii) the
representations and warranties contained in in Section 4.01(a), (c), (e) and (l)
shall survive indefinitely.
ARTICLE V
COVENANTS OF THE PARTIES
SECTION 5.01. COVENANTS OF THE PARTIES. Each of the respective parties
identified in the following sections of this Article V covenants and agrees, as
provided in the sections which are applicable to it. These covenants shall be in
full force and effect until this Agreement is terminated by one of the parties
as provided herein or this Agreement has terminated according to its terms.
SECTION 5.02. CONDUCT OF THE ACQUIRED COMPANY'S BUSINESS PRIOR TO
CLOSING.
(a) From the date hereof to the Closing, the Acquired
Company will conduct its business and affairs in the ordinary course and
consistent with its prior practice and shall maintain, keep and preserve its
assets and properties in good condition and repair and maintain insurance
thereon in accordance with present practices, it will use all reasonable efforts
(i) to preserve its business and organization intact, (ii) to preserve for the
Acquired Company's goodwill of suppliers, customers, distributors, landlords and
others having business relations with it, and (iii) to cooperate and use its
best efforts to assist the Holding Company in obtaining the consent of any
landlord or other party to any lease or contract with the Acquired Company where
the consent of such landlord or other party may be required by reason of the
transactions contemplated hereby.
18
(b) From the date hereof to the Closing, the Acquired
Company will not (i) dispose of any of the customers, tariffs, licenses,
contracts or supplier agreements other than in the ordinary course of business,
(ii) engage in any extraordinary transactions, including but not limited to,
directly or indirectly, soliciting, entertaining, encouraging inquiries or
proposals or entering into negotiation or agreement with any third party for or
acquisition of the aforementioned assets or business as a going concern, sale of
equity securities or rights of any kind to acquire equity securities of the
Acquired Company or acquisition, consolidation, reverse acquisition, business
combination or similar transaction with any other entity, without the prior
written consent of the Holding Company (iii) enter into any employment agreement
or grant any salary or compensation increase or bonus to any employee, or
otherwise change or increase commission and compensation schedules of its
employees without the prior written approval of the Holding Company, (iv)
terminate, waive, not renew or allow to lapse any tariff; (v) make any
commitment for capital expenditures, other than as disclosed to the Holding
Company and approved by it, (vi) offer or sell any equity securities or
obligations entitling the holder thereof to purchase equity securities of the
Acquired Company, or (vii) enter into any contracts, commitments or obligations
or otherwise take any actions or enter into any transactions other than in the
ordinary course of business consistent with its previous and current business
plans, practices, policies and procedures.
(c) Not withstanding anything contained in this Section
5.02, the Acquired Company will not take or fail to take any action that, in the
Acquired Company's reasonable judgment, is likely to give rise to a substantial
penalty or a claim for damages by any third party against the Acquired Company,
or is likely to result in losses either to the Acquired Company or to the
Holding Company, or is otherwise likely to prejudice in any material respect or
unduly interfere with the conduct of its business and operations in the ordinary
course consistent with prior practice, or is likely to result in a breach by the
Acquired Company of any of its representations, warranties or covenants
contained in this Agreement (unless any such breach is first waived in writing
by the Holding Company).
SECTION 5.03. CONDUCT OF SELLER PRIOR TO CLOSING. The Seller shall not
offer for sale or solicit or entertain offers to purchase its Stock prior to
Closing.
SECTION 5.04. NOTICE OF CHANGES IN INFORMATION. Each party shall give
the other party prompt written notice of any material change(s) in any of the
information contained in their respective representations and warranties made in
Article IV, or elsewhere in this Agreement, or the exhibits and schedules
referred to herein or any written statements made or given in connection
herewith which occurs prior to the Closing.
SECTION 5.05. NOTICE OF EXTRAORDINARY CHANGES. The Acquired Company
shall advise the Holding Company with respect to any of the following which are
outside of the ordinary course of business or which are materially adverse: (i)
the entering into, cancellation or breach of contracts, agreements, commitments,
tariffs, or other understandings or arrangements to which the Acquired Company
is a party, including, without limitation, purchase orders for any item of
19
inventory and commitments for capital expenditures or improvements, orderly and
gradual discontinuance of particular items or (ii) any changes in purchasing,
pricing or selling policy (including, without limitation, selling merchandise at
discounts
SECTION 5.06. ACCESS TO INFORMATION AND DOCUMENTS. Upon reasonable
notice and during regular business hours, each party will give the other party,
its attorneys, accountants and other representatives full access to its
personnel, accountants, attorneys and other professional advisors (subject to
reasonable approval as to the time thereof) and all properties, documents,
contracts, books and records and will furnish copies of such documents
(certified by officers, if so requested) and with such information with respect
to its business, operations, affairs and prospects (financial and otherwise) as
it may from time to time request, and the party to whom the information is
provided will not improperly disclose the same prior to the Closing. Any such
furnishing of such information or any investigation shall not affect that
party's right to rely on the other party's representations and warranties made
in this Agreement or in connection herewith or pursuant hereto.
SECTION 5.07. COOPERATION BY THE PARTIES. Each party hereto shall
cooperate and shall take such further action as may be reasonably requested by
any other party in order to carry out the provisions and purposes of this
Agreement.
SECTION 5.08. RESTRICTIONS ON TRANSFER OF STOCK. The Holding Company
shall not sell, exchange, assign, transfer, dispose of, pledge, mortgage,
hypothecate or otherwise encumber, transfer or permit to be transferred all or
any of the Stock at any time prior to the termination of the Security Agreement.
The shares of Stock issued to the Holding Company on the Closing Date shall bear
a legend in substantially the following form:
The voluntary or involuntary encumbering, transfer or other
disposition (including, without limitation, any disposition
pursuant to the laws of bankruptcy) of the shares of stock
evidenced by the within certificate is restricted under the
terms of an Acquisition Agreement dated June 7, 1999, by and
among the Issuer, the Registered Holder and, as defined in
said Agreement, the Seller.
SECTION 5.09. COOPERATION IN AUDITS. The Seller will cooperate with the
Holding Company and make such books and records of the Acquired Company
available as may be requested by the independent auditor engaged by the Acquired
Company to audit the financial statements of the Acquired Company and in any
audit by the Internal Revenue Service, foreign government, State, municipal or
other regulatory taxing authority. The period covered by such books and records
shall be the fiscal periods required for audit in order to comply with the
registration and reporting requirements promulgated under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, and the
Internal Revenue Code of 1986, as amended, or State income tax law, as may be
the case.
20
ARTICLE VI
SECURITIES LAW MATTERS AND STATUS OF SHARES
SECTION 6.01. "RESTRICTED" COMMON STOCK. The Sellers acknowledge that
the Holding Company Stock issued in the Acquisition (the "Securities") will not
be registered under the Securities Act of 1933, as amended, ("Securities Act")
or the securities laws of the Seller's state of residence, that the Securities
are not transferable, except as permitted under various exemptions contained in
the Securities Act and applicable state securities law and that the Securities
are defined as "restricted securities" in, and subject, to the provisions of
Rule 144 under the Securities Act. The provisions contained in the following
sections are intended to ensure compliance with the Securities Act and
applicable state securities law.
SECTION 6.02. NO TRANSFERS IN VIOLATION OF SECURITIES ACT. The Seller
will not offer, sell, assign, pledge, hypothecate, transfer or otherwise dispose
of the Securities, except after full compliance with all of the applicable
provisions of the Securities Act and applicable State securities laws and this
Agreement.
SECTION 6.03. INVESTMENT INTENT. The Seller represents and warrants to
and covenants with the Holding Company that the Seller is acquiring and will
acquire the Securities for its own account for investment, and not with a view
to resale or other distribution; that the Seller currently has no intention of
selling, assigning, transferring, pledging, hypothecating or otherwise disposing
of all or any part thereof at any particular time, for any particular price, or
on the happening of any particular event or circumstance; and the Seller
acknowledges that the Holding Company is relying on the truth and accuracy of
the covenants, warranties and representations of the Seller in issuing
Securities without first registering it under the Securities Act.
SECTION 6.04. CONDITIONS TO SALE AND INVESTMENT LEGEND ON CERTIFICATES.
The Seller agree not to sell, assign, transfer, pledge, hypothecate or otherwise
dispose of any of the Securities, otherwise than by bona fide gift, by
inheritance or in a private sale, for two years following the Closing, unless
and until (i) the Sellers have delivered to the Holding Company a written legal
opinion in form and substance satisfactory to counsel for the Holding Company to
the effect that the disposition is permissible under the terms of the Securities
Act; (ii) the Holding Company has registered the Securities for resale by the
Seller pursuant to an effective registration statement; or (iii) the Seller has
presented the Holding Company with satisfactory evidence that the transfer will
comply with Rule 144 under the Securities Act. The Seller further agree that the
certificates evidencing the Securities shall contain the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND IS A "RESTRICTED SECURITY" AS DEFINED UNDER
SAID ACT. ACCORDINGLY, NEITHER THIS SECURITY NOR ANY INTEREST
THEREIN MAY BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED,
PLEDGED OR HYPOTHECATED, EXCEPT BY BONA FIDE GIFT OR
INHERITANCE, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS SECURITY UNDER SAID ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS
NOT REQUIRED.
21
The Seller acknowledge the Holding Company will also place a "stop transfer"
order against any transfer of the Securities until one of the conditions set
forth in this section has been met.
SECTION 6.05. INDEMNIFICATION BY THE SELLER. If at any time in the
future, the Seller should offer, sell, assign, pledge, hypothecate, transfer or
otherwise dispose of any of the Securities without registration under the
Securities Act, unless an exemption from registration is available, the Seller
agrees to indemnify and hold harmless the Holding Company against any and all
claims, liabilities, penalties, costs and expenses which may be asserted against
or suffered by the Holding Company as a result of such disposition.
SECTION 6.06. FUTURE REGISTRATIONS. If at any time the Holding Company
registers securities under the Securities Act, the Holding Company may include
at the Seller's request, and at the Holding Company's expense, the Holding
Company's common stock then held by the Seller in the registration statement,
provided that sales of the Holding Company's common stock issued to the Seller
included in the registration statement shall be subject to the approval of the
Holding Company's investment banker and provided that the Seller agrees to
reasonable volume and other limitations required or desirable to maintain an
orderly market.
SECTION 6.07. THE ACQUIRED COMPANY'S OUTSTANDING SECURITIES. The
Acquired Company represents and warrants to the Holding Company that all offers
and sales which it has made of its securities prior to the date of this
Agreement and to the Closing date have been made in compliance with an exemption
from the registration requirements of the Securities Act and applicable state
securities laws.
SECTION 6.08. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Securities and Exchange
Commission (the "Commission") which may at any time permit the sale of the
Securities to the public without registration, after such time as a public
market exists for the Securities of the Holding Company, the Holding Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act (at any time
after it has become subject to such reporting requirements); and
(c) So long as the Seller owns any of the Securities, to furnish
to the Seller forthwith upon request a written statement by the Holding Company
as to its compliance with the reporting requirements of Rule 144 (at any time
after ninety days after the effective date of the first registration statement
filed by the Holding Company for an offering of its securities to
22
the general public), and of the Securities Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Holding Company, and such other reports and documents of
the Holding Company and other information in the possession of or reasonably
obtainable by the Holding Company as the Seller may reasonably request in
availing itself of any rule or regulation of the Commission allowing the Seller
to sell any of the Securities without registration.
ARTICLE VII
FEDERAL INCOME TAX MATTERS AND ELECTIONS
SECTION 7.01. TAX TREATMENT. The parties intend that the Acquisition
herein shall qualify as a tax free reorganization for federal (and all other
taxing authorities, as applicable) income tax purposes.
SECTION 7.02. TAX EFFECT ON THE SELLER. In the event the Acquired
Company has made an election under Chapter S of the Internal Revenue Code of
1986, as amended, the effect of the Acquisition on the Seller is the
responsibility of the Seller.
ARTICLE VIII
SECTION 8.01. TERMINATION FOR DEFAULT.
(a) The Holding Company may, by notice to the Acquired Company
and the Seller given in the manner provided below on or at any time prior to the
Closing Date, terminate this Agreement if default shall be made by the Acquired
Company or by the Seller in the observance or in the due and timely performance
of any of the conditions, obligations, covenants and agreements contained, made
by or imposed upon it, in this Agreement, if the default has not been fully
cured within thirty (30) days after receipt of the notice specifying the
default.
(b) The Acquired Company and the Seller may, by notice to the
Holding Company given in the manner provided below on or at any time prior to
the Closing Date, terminate this Agreement if default shall be made by the
Holding Company in the observance or in the due and timely performance of any of
the conditions, obligations, covenants and agreements contained, made by or
imposed upon it, in this Agreement, if the default has not been fully cured
within thirty (30)days after receipt of the notice specifying the default.
(c) Notwithstanding Section 2.07, the party giving notice of the
other party's default, if the default is not cured as provided in subsection (a)
or (b), above, will be entitled to recover its reasonable costs incurred in
connection with this Agreement.
SECTION 8.02. TERMINATION FOR FAILURE TO CLOSE. If the Closing does not
occur by July 1, 1999, any party, if that party is not then in default in the
observance or in the due or timely performance of any covenants and conditions
under this Agreement, may at any time terminate this Agreement by giving written
notice to the other parties; provided, that the parties may
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extend the Closing Date in writing and the Closing Date shall be automatically
and reasonably extended if the failure of the parties to Close is a result of
delay in receiving from the independent accountant the completed audited
financial statement of the Acquired Company.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 INDEMNIFICATION BY SELLER. Subject to the terms and
conditions of this Agreement, the Seller agrees to indemnify, defend and hold
the Holding Company and its directors, officers, employees, agents, attorneys
and affiliates harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (collectively, "Damages") asserted against or
incurred by the Holding Company or any of such individuals or entities, arising
out of or resulting from:
a. a breach of any representation, warranty or covenant of
the Acquired Company or the Seller contained herein or in any schedule or
certificate delivered hereunder;
b. the Acquired Company's failure to satisfy any liability
of the Acquired Company arising prior to the Closing Date; or
c. any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses and
court costs) incident to any of the foregoing or to the enforcement of this
Section 9.01.
SECTION 9.02 INDEMNIFICATION BY HOLDING COMPANY. Subject to the terms
and conditions of this Agreement, the Holding Company hereby agrees to
indemnify, defend and hold Seller harmless from and against all Damages asserted
against or incurred by Seller arising out of or resulting from:
a. a breach by the Holding Company of any representation,
warranty or covenant of the Holding Company contained therein or in any schedule
or certificate delivered hereunder;
b. the Holding Company's failure to satisfy any liability of
the Acquired Company arising from events or occurrences after the Closing Date;
or
c. any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses and
court costs) incident to any of the foregoing or to the enforcement of this
Section 9.02.
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SECTION 9.03 CONDITIONS OF INDEMNIFICATION. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
a. A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (and, in any event, at least ten (10) days
prior to the due date for any responsive pleadings, filings or other documents)
(i) notify the party from whom indemnification is sought (the "Indemnifying
Party") of any third-party claim or claims asserted against the Indemnified
Party ("Third Party Claim") that could give rise to a right of indemnification
under this Agreement and (ii) transmit to the Indemnifying Party a written
notice ("Claim Notice") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to such claim (if any), an
estimate of the amount of damages attributable to the Third Party Claim and the
basis of the Indemnified Party's request for indemnification under this
Agreement. Except as set forth in Section 4.04, the failure to promptly deliver
a Claim Notice shall not relieve the Indemnifying Party of its obligations to
the Indemnified Party with respect to the related Third Party Claim except to
the extent that the resulting delay is materially prejudicial to the defense of
such claim. Within thirty (30) days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
(i) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article 9 with respect to such Third Party Claim
and (ii) whether the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against such Third Party
Claim.
b. If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section. The Indemnifying Party shall
have full control of such defense and proceedings, including any compromise or
settlement thereof. The Indemnified Party is hereby authorized, at the sole cost
and expense of the Indemnifying Party (but only if the Indemnified Party is
entitled to indemnification hereunder), to file, during the Election Period, any
motion, answer or other pleadings that the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and not prejudicial to the Indemnifying Party (it being understood and
agreed that if an Indemnified Party takes any such action that is prejudicial
and causes a final adjudication that is adverse to the Indemnifying Party, the
Indemnifying Party shall be relieved of its obligations hereunder with respect
to such Third Party Claim). If requested by the Indemnifying Party, the
Indemnified Party agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnifying Party and its counsel in contesting
any Third Party Claim that the Indemnifying Party elects to contest, including,
without limitation, the making of any related counterclaim against the person
asserting the Third Party Claim or any cross-complaint against any person. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
Section and shall bear its own costs and expenses with respect to such
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party
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and the Indemnified Party, and the Indemnified Party has been advised by counsel
that there may be one or more legal defenses available to it that are different
from or additional to those available to the Indemnifying Party, then the
Indemnified Party may employ separate counsel at the expense of the Indemnifying
Party, and upon written notification thereof, the Indemnifying Party shall not
have the right to assume the defense of such action on behalf of the Indemnified
Party; provided further that the Indemnifying Party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for the Indemnified Party, which firm
shall be designated in writing by the Indemnified Party.
c. If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 9.03(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 9.03(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided; however, that
the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to the effect that
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article 9 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnifying Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control any defense or settlement controlled by the
Indemnified Party pursuant to this Section 9.03(b), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnifying Party has been advised by counsel that there may be
one or more legal defenses available to the Indemnified Party, then the
Indemnifying Party may employ separate counsel and upon written notification
thereof, the Indemnified Party shall not have the right to assume the defense of
such action on behalf of the Indemnifying Party.
d. In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim and
the basis of the Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not notify the Indemnified Party
within sixty (60) days from its receipt
26
of the Indemnity Notice that the Indemnifying Party disputes such claim, the
claim specified by the Indemnified Party in the Indemnity Notice shall be deemed
a liability of the Indemnifying Party hereunder. If the Indemnifying Party has
timely disputed such claim, as provided above, and if the parties do not reach a
settlement of such dispute within thirty (30) days after notice of a dispute is
given, any such dispute shall be submitted to arbitration in Tampa, Florida to a
member of the American Arbitration Association mutually appointed by the
Indemnified and Indemnifying Parties (or, in the event the Indemnified and
Indemnifying Parties cannot agree on a single such member, to a panel of three
members selected in accordance with the rules of such Association), who shall
promptly arbitrate such dispute in accordance with the rules of such Association
and report to the parties upon such disputed items, and such report shall be
final, binding and conclusive on the parties. Judgment upon the award by the
arbitrator(s) may be entered in any court having jurisdiction. The prevailing
party in any such arbitration may, as determined by the arbitrator or
arbitrators in his or their discretion, recover from, and have paid by, the
other party hereto, all fees and disbursements of such arbitrator or arbitrators
and reasonable attorney's fees, costs and expenses incurred by the prevailing
party in such arbitration.
e. Payments of all amounts owing by an Indemnifying Party
pursuant to this Article 9 relating to a Third Party Claim shall be made within
thirty (30) days after the latest of (i) the settlement of such Third Party
Claim, (ii) the expiration of the period for appeal of a final adjudication of
such Third Party Claim or (iii) the expiration of the period for appeal of a
final adjudication of the Indemnifying Party's liability to the Indemnified
Party under this Agreement. Payments of all amounts owing by an Indemnifying
Party pursuant to Section 9.03(d) shall be made within thirty (30) days after
the later of (i) the expiration of the sixty (60) day Indemnity Notice period or
(ii) the expiration of the period for appeal, if any, of a final adjudication or
arbitration of the Indemnifying Party's liability to the Indemnified Party under
this Agreement.
SECTION 9.04 EXCLUSIVITY OF REMEDIES. The remedies provided in this
Agreement shall be exclusive of any other rights or remedies available to one
party against the other, either at law or in equity; provided however such
remedies shall not be exclusive as to any claim based on fraud. This Article 9
regarding indemnification shall survive Closing.
SECTION 9.05 COSTS, EXPENSES AND LEGAL FEES. Each party hereto agrees
to pay the costs and expenses (including reasonable attorneys' fees and
expenses) incurred by the other parties in successfully (a) enforcing any of the
terms of this Agreement, or (b) proving that another party breached any of the
terms of this Agreement.
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ARTICLE X
NOTICES
SECTION 10.01. PROCEDURE FOR GIVING NOTICES. Any and all notices or
other communications required or permitted to be given under any of the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered (excluding telephone facsimile and
including receipted express courier and overnight delivery service) or mailed by
first class certified U.S. mail, return receipt requested showing name of
recipient, addressed to the proper party.
SECTION 10.02. ADDRESSES FOR NOTICES. For purposes of sending notices
under this Agreement, the addresses of the parties are as follows:
As to the Acquired Company H. Xxxxx Xxxx
and the Seller T.E.A.M., Inc.
0000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Copy To: Name/title: N/A
-----------------------
Address:
--------------------------
--------------------------
As to the Holding Company: Xxxx Xxxx, President
X.X. Xxx 000000
Xxxxx, Xxxxxxx 00000
Copy to: Xxxxxxxx Xxxxxxxxxxx, Esq.
Xxxxxxxx, Loop & Xxxxxxxx
000 Xxxx Xxxxxxx Xxxx. Xxxxx 0000
Xxxxx, Xxxxxxx 00000
SECTION 10.03. CHANGE OF ADDRESS. A party may change its address for
notices by sending a notice of such change to all other parties by the means
provided in Section 9.01.
SECTION 10.04. NOTICES TO THE ACQUIRED COMPANY BY THE HOLDING COMPANY
AFTER CLOSING. Any notice required or permitted by this Agreement to be given to
the Acquired Company by the Holding Company after the Closing shall be given by
the Holding Company to the Seller.
ARTICLE XI
LEGAL AND OTHER COSTS
SECTION 11.01. PARTY ENTITLED TO RECOVER. In the event that any party
(the "Defaulting Party") defaults in his or its obligation under this Agreement
and, as a result thereof, the other party (the "Non-Defaulting Party") seeks to
legally enforce his or its rights hereunder against the
28
Defaulting Party (whether in an action at law, in equity or in arbitration),
then, in addition to all damages and other remedies to which the Non-Defaulting
Party is entitled by reason of such default, the Defaulting Party shall promptly
pay to the Non-Defaulting Party an amount equal to all reasonable costs and
expenses (including reasonable attorneys' and expert witness fees) paid or
incurred by the Non-Defaulting Party in connection with such enforcement.
SECTION 11.02. INTEREST. In the event the Non-Defaulting Party is
entitled to receive an amount of money by reason of the Defaulting Party's
default hereunder, then, in addition to such amount of money, the Defaulting
Party shall promptly pay to the Non-Defaulting Party a sum equal to interest on
such amount of money accruing at the rate of 1.5% per month during the period
between the date such payment should have been made hereunder and the date of
the actual payments thereof, unless otherwise adjudicated by court order,
arbitration or mediation agreement.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. EFFECTIVE DATE. The effective date of this Agreement
shall be June 7, 1999, subject to any conditions set forth herein.
SECTION 12.02. ENTIRE AGREEMENT. This writing constitutes the entire
agreement of the parties with respect to the subject matter hereof, superseding
all prior oral or written agreements, understandings, representations and
warranties.
SECTION 12.03. WAIVERS. No waiver of any provision, requirement,
obligation, condition, breach or default hereunder, or consent to any departure
from the provisions hereof, shall be considered valid unless in writing and
signed by the party giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or similar nature.
SECTION 12.04. AMENDMENTS. This Agreement may not be modified, amended
or terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto and amendment, modification or
alteration of, addition to or termination of this Agreement or any provision of
this Agreement shall not be effective unless it is made in writing and signed by
the parties.
SECTION 12.05. CONSTRUCTION. This Agreement has been negotiated by the
parties, section by section, and no provision hereof shall be construed more
strictly against one party than against the another party by reason of such
party having drafted such provision. The order in which the provisions of this
Agreement appear are solely for convenience of organization; and later appearing
provisions shall not be construed to control earlier appearing provisions.
SECTION 12.06. INVALIDITY. It is the intent of the parties that each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable
29
law. If any provision hereof shall be prohibited, invalid, illegal or
unenforceable, in any respect, under applicable law, such provision shall be
ineffective to the extent of such prohibition, invalidity or non enforceability
only, without invalidating the remainder of such provision or the remaining
provisions of this Agreement; and, there shall be substituted in place of such
prohibited, invalid, illegal or unenforceable provision a provision which nearly
as practicable carries out the intent of the parties with respect thereto and
which is not prohibited and is valid, legal and enforceable.
SECTION 12.07. MULTIPLE COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be an original and, taken
together, shall be deemed one and the same document.
SECTION 12.08. ASSIGNMENT, PARTIES AND BINDING EFFECT. This Agreement,
and the duties and obligations of any party shall not be assigned without the
prior written consent of the other party(ies). This Agreement shall benefit
solely the named parties and no other person shall claim, directly or
indirectly, benefit hereunder, express or implied, as a third-party beneficiary,
or otherwise. Wherever in this Agreement a party is named or referred to, the
successors (including heirs and personal representative of individual parties)
and permitted assigns of such party, if any, shall be deemed to be included, and
all agreements, promises, covenants and stipulations in this Agreement shall be
binding upon and inure to the benefit of their respective successors and
permitted assigns.
SECTION 12.09. ARBITRATION. Unless a court of competent jurisdiction
shall find that a particular dispute or controversy cannot, as a matter of law,
be the subject of arbitration, any dispute or controversy arising hereunder,
other than suit for injunctive relief which can be granted only by a court of
competent jurisdiction, shall be settled by binding arbitration in Tampa,
Florida, by a panel of three arbitrators in accordance with the rules of the
American Arbitration Association; provided, that the rules of discovery of the
U.S. District Court with jurisdiction of the state of the arbitration shall
apply. Judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof. The parties may pursue all other remedies
with respect to any claim that is not subject to arbitration.
Section 12.10. JURISDICTION AND VENUE. Any action or proceeding for
enforcement of this Agreement and the instruments and documents executed and
delivered in connection herewith which is determined by a court of competent
jurisdiction not, as a matter of law, to be subject to arbitration as provided
in Section 12.09 or which seeks injunctive relief shall be brought and enforced
in the courts of the State of Florida in and for Hillsborough County and in the
United States District Court for the Middle District of Florida, Tampa Division,
and the parties irrevocably submit to the jurisdiction of each such court in
respect of any such action or proceeding.
Section 12.11 "BEST KNOWLEDGE" means, with respect to Acquired Company
or Holding Company, the actual knowledge of their respective executive officers
after they have made due and diligent inquiry as to the matters that are the
subject of such representations and warranties
30
and, with respect to Seller, the actual knowledge of Seller after he has made
due and diligent inquiry as to the matters that are the subject of such
representations and warranties.
12.11. APPLICABLE LAW. This Agreement and all amendments
thereof shall be governed by and construed in accordance with the law of the
State of Florida applicable to contracts made and to be performed therein (not
including the choice of law rules thereof).
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be signed by their respective officers thereunto duly authorized
and their respective corporate seals to be hereunto affixed, the day and year
first above written
[Corporate Seal] USA Digital, Inc.
Attest: _________________________ By: _____________________________
Secretary or Assistant Secretary Xxxx X. Xxxx, President
[Corporate Seal] Telephone Engineering and Maintenance, Inc.
Attest: _________________________ By: _____________________________
Secretary or Assistant Secretary H. Xxxxx Xxxx, President
Witness Seller
__________________________________ __________________________________
H. Xxxxx Xxxx
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