Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SURGE GLOBAL ENERGY, INC.,
ZENVESCO, INC.,
XXXXXXX X. XXXXXX,
HIGHLAND PIPE COMPANY DBA MONARCH PIPE COMPANY,
CAMDEN STRUCTURE, INC.
AND
PK VENTURES, INC.
DATED AS OF DECEMBER 16, 2004
TABLE OF CONTENTS
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Page
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Section 1 PURCHASE AND SALE OF ASSETS..........................................2
1.1. Purchase and Sale of Assets..................................2
1.2. Assumption of Liabilities....................................3
1.3. Purchase Price...............................................3
1.4. Allocation of Purchase Price.................................3
1.5. Consent to Transfer Shares...................................4
1.6. Release of Liability.........................................4
Section 2 . CLOSING...........................................................4
2.1. Closing Date.................................................4
2.2. Buyer's Closing Date Deliveries..............................5
2.3. Seller's Closing Date Deliveries.............................6
Section 3 . REPRESENTATIONS AND WARRANTIES OF SELLER..........................6
3.1. Organization and Power and Authority of Seller...............6
3.2. Authority of Seller; Conflicts...............................6
3.3. No Violation, Litigation or Regulatory Action................7
Section 4 . REPRESENTATIONS AND WARRANTIES OF BUYER AND SHAREHOLDER...........7
4.1. Organization of Buyer........................................7
4.2. Authority of Buyer...........................................8
4.3. No Violation of Law and Agreements...........................8
4.4. No Litigation or Regulatory Action...........................8
4.5. No Brokers...................................................9
4.6. Financial Ability............................................9
4.7. No Knowledge of Breach.......................................9
4.8. Independent Analysis.........................................9
Section 5 . REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.....................9
5.1. Authority....................................................9
5.2. Ownership of Shares.........................................10
5.3. Assets......................................................10
5.4. Liabilities.................................................10
5.5. Financials..................................................10
5.6. No Brokers..................................................10
5.7. No Knowledge of Breach......................................10
Section 6 . ACTION PRIOR TO THE CLOSING DATE.................................10
6.1. Access to Information.......................................10
6.2. Reasonable Efforts..........................................10
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Section 7 . CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.....................10
7.1. No Misrepresentation or Breach of Covenants and Warranties..11
7.2. Necessary Governmental Approvals............................11
7.3. Deliveries by Seller........................................11
7.4. No Injunction...............................................11
Section 8 . CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER....................11
8.1. Board Approval..............................................11
8.2. [INTENTIONALLY OMITTED].....................................11
8.3. No Misrepresentation or Breach of Covenants and Warranties..11
8.4. Necessary Governmental Approvals............................11
8.5. Delivery by Buyer...........................................12
8.6. No Injunction...............................................12
8.7. Redemption..................................................12
8.8. Funding.....................................................12
Section 9 . INDEMNIFICATION..................................................12
9.1. Indemnification by Seller...................................12
9.2. Indemnification by Buyer and Shareholder....................12
9.3. Notice of Claims............................................12
9.4. Limitations.................................................13
Section 10 . TERMINATION.....................................................13
10.1. Termination.................................................13
Section 11 . GENERAL PROVISIONS..............................................14
11.1. Survival of Covenants, Representations and Warranties.......14
11.2. No Public Announcement......................................15
11.3. Notices.....................................................15
11.4. Successors and Assigns......................................17
11.5. Seller's Access to Records after Closing....................17
11.6. Cooperation By Shareholder..................................18
11.7. Entire Agreement............................................18
11.8. Interpretation..............................................18
11.9. Amendments and Waivers......................................19
11.10. Bulk Sales Laws.............................................19
11.11. Expenses....................................................19
11.12. Partial Invalidity..........................................19
11.13. Execution in Counterparts; Facsimile........................19
11.14. Governing Law...............................................19
11.15. Jurisdiction; Waiver of Jury Trial..........................20
11.16. Attorneys' Fees.............................................20
11.17. Time of Essence.............................................20
11.18. Disclaimer of Warranties....................................20
11.19. Further Assurances..........................................21
Section 12 . DEFINITIONS.....................................................21
12.1. Definitions.................................................21
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LIST OF EXHIBITS
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EXHIBIT A Assignment and Assumption Agreement
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EXHIBIT B Guarantee
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EXHIBIT C Pledge Agreement
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EXHIBIT D Escrow Agreement
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EXHIBIT E Separation Agreement
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EXHIBIT F Xxxx of Sale
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EXHIBIT G Assignment of Patents and Marks
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LIST OF SCHEDULES
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Schedule 1.1(a) Assets
Schedule 1.1(a)(iii) Accounts Receivable
Schedule 1.1(a)(iv) Equipment Furniture & Fixtures
Schedule 1.1(b) Excluded Assets
Schedule 1.2(b)(i) Accounts Payable
Schedule 1.2(b)(ii) Payroll Liabilities
Schedule 3.3(a) Actions (Seller)
Schedule 4.4 Actions (Buyer)
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ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT, is entered into as of December 16, 2004,
by and between SURGE GLOBAL ENERGY, INC., a Delaware corporation ("SELLER"), and
ZENVESCO, INC., a NEVADA corporation ("BUYER"), XXXXXXX X. XXXXXX, an individual
("SHAREHOLDER"), HIGHLAND PIPE COMPANY dba MONARCH PIPE COMPANY, an OKLAHOMA
Corporation ("Monarch"), CAMDEN STRUCTURE, INC., a NEVADA Corporation
("Camden"), and PK VENTURES, INC., a CALIFORNIA Corporation ("P & K").
R E C I T A L S:
Seller is engaged in the business of resale of tobacco products and
accessories (the "TOBACCO BUSINESS").
Seller is also engaged in the exploration and acquisition of oil and
gas interests (the "OTHER BUSINESS"). The Other Business is not being sold.
Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the assets, properties and rights owned and used by Seller exclusively
in connection with the Tobacco Business (other than the Excluded Assets (as
hereinafter defined)), and Buyer is willing to assume the Assumed Liabilities
(as hereinafter defined) with respect to the Tobacco Business, all on the terms
and subject to the conditions set forth herein.
Seller is indebted to Buyer in the amount of Seventy Nine Thousand
Three Hundred and Six Dollars ($79,306.00) ("Buyer's Debt").
Shareholder is the sole shareholder of Buyer and is interested in its
success; furthermore, Shareholder was the chief executive officer and a director
of the Seller until November 17, 2004.
Seller is the sole shareholder of Monarch, which is engaged in the sale
of tobacco products. The Seller owes the sum of approximately Eleven Thousand
Seven Hundred Ninety-Two Dollars ($11,792.00) (the "Monarch Debt") to Monarch as
an inter company obligation.
Shareholder is the sole shareholder of Camden. The Seller owes the sum
of approximately Two Hundred Twenty-Five Thousand Four Hundred Five Dollars
($225,405.00) (the "Camden Debt") to Camden.
Seller is the sole shareholder of P & K which is engaged in the sale of
tobacco products.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
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SECTION 1 PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of Assets.
(a) Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, Buyer shall purchase from Seller, and Seller
shall sell and deliver to Buyer, all of Seller's right, title and interest in
and to all of the assets, properties and rights of Seller which are listed on
Schedule 1.1(a) wherever located, existing as of the Closing Date, which are
utilized exclusively in the Tobacco Business (the "ASSETS"), including, without
limitation, all of Seller's right, title and interest in and to the following
assets, properties and rights, in each case to the extent existing as of the
Closing Date and exclusively utilized in or relating to the Tobacco Business:
(i) The cash held in checking accounts under the name
Charter One or Monarch in the approximate amount of $4,579;
(ii) The escrow account in the approximate amount of
$4,200, subject to the requirements or liabilities imposed on such escrow
account pursuant to the State of Ohio;
(iii) The accounts receivable listed on Schedule
1.1(a)(iii), other than any intercompany accounts receivable;
(iv) The corporation equipment, furniture and
fixtures listed on Schedule 1.1(a)(iv);
(v) All Intellectual Property, artwork, and
trademarks associated with the names X. X. Xxxxx, Xxxxx'x Smoke Shop or Havana
Group and the website xxXxxxx.xxx ;
(vi) All Inventory of tobacco and tobacco products,
including all catalogs related thereto;
(vii) All catalog sales orders and customer lists
related to the Tobacco Business, including the X. X. Xxxxx customer list;
(viii) All of Seller's leasehold interest in the real
property located at 0000 Xxxxxxx Xxxxxx, X.X., Xxxxxx, Xxxx, 00000; and
(ix) All of the shares ("Shares") of Monarch and P &
K held by the Seller.
(b) Notwithstanding anything to the contrary herein, Seller
shall not contribute, convey, assign, or transfer to Buyer, and Buyer shall not
acquire or have any rights to acquire, any assets (the "EXCLUDED ASSETS") other
than those specifically set forth in SECTION 1.1(a). Without limiting the
generality of the foregoing, the Excluded Assets shall be listed on Schedule
1.1(b).
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1.2. Assumption of Liabilities.
(a) Upon the terms and subject to the conditions set forth
herein, at the Closing, Buyer shall assume from Seller (and thereafter pay,
perform, discharge or otherwise satisfy in accordance with their respective
terms), and Seller shall irrevocably convey, transfer and assign to Buyer, all
of the Assumed Liabilities.
(b) For all purposes of and under this Agreement, the term
"ASSUMED LIABILITIES" shall mean, refer to and include all Liabilities of
Seller, arising out of or relating to the operation of the Tobacco Business and
and/or the Assets, whether arising before (except to the extent satisfied prior
to the Closing Date) or after the Closing Date, known or unknown, contingent or
mature, including the following:
(i) Accounts payable related to the Tobacco Business
in the approximate amount of $230,339, as more particularly described on
Schedule 1.2(b)(i);
(ii) Payroll liabilities in the amount of $6,508, as
more particularly described in Schedule 1.2(b)(ii);
(iii) Accrued expenses in the approximate amount of
$642;
(iv) Sales taxes payable in the amount of $1,369;
(v) Deferred Income in the approximate amount of
$22,683 as well as all obligations related to the program known as the Tobacco
Lovers Club;
(vi) Amounts due to the Buyer in the approximate
amount of $17,277 and Monarch Pipe Company in the amount of $586, which are
hereby forgiven; and
(vii) All liability related to the escrow account
established pursuant to requirements imposed by the State of Ohio, as described
in Section 1.1(a)(ii); and
(viii) all liability for rent, utilities, taxes or
other expenses related to the property occupied by the Seller at 0000 Xxxxxxx
Xxxxxx, X.X., Xxxxx Xxxxxx, XX 00000
1.3. Purchase Price. On the Closing Date, Buyer shall pay to Seller,
and Seller shall accept, together with the assumption of the Assumed Liabilities
provided in SECTION 1.2, in full payment for the Assets, an aggregate cash
amount equal to One Hundred Dollars ($100) (the "PURCHASE PRICE"). At the
Closing, Buyer shall pay the Purchase Price to Seller.
1.4. Allocation of Purchase Price.
(a) Section 338(h)(10) Election. For purposes hereof, (i)
"Section 338(h)(10) Election" means an election described in Section 338(h)(10)
of the United States Internal Revenue Code with respect to Seller's sale to
Buyer of the Assets pursuant to this Agreement (including any corresponding
election under any state, local and foreign tax laws for which a separate
election is permissible with respect to the transactions contemplated by this
Agreement) and (ii) "Section 338 Forms" means all returns, documents,
statements, and other forms that are required to be submitted to any federal,
state, local or foreign taxing authority in connection with a Section 338(h)(10)
Election (including without limitation United States IRS Form 8023). If Seller
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so requests, Buyer shall join with Seller in making a Section 338(h)(10)
Election with respect to the purchase and sale of the Assets. Buyer shall
execute and deliver to Seller such Section 338 Forms as are requested by Seller
at least 10 days before the date such Section 338 Forms are required to be
filed. To the extent permitted by state, local or foreign tax laws, (i) the
principles and procedures hereof relating to the Section 338(h)(10) Election
shall apply to any equivalent or comparable provision under the tax laws of such
other jurisdiction, and (ii) Buyer shall cooperate and join in any election as
reasonably requested by Seller in order to effect such an election so as to
treat the purchase of the Assets contemplated by this Agreement as a purchase of
assets under the tax laws of such other jurisdiction.
(b) Purchase Price Allocation. Seller and Buyer agree that the
purchase price for the Assets, as determined for United States federal income
tax purposes (and the purchase price, as so determined, deemed to be paid for
the assets of the Subsidiaries if Seller elects to require a Section 338(h)(10)
Election be made with respect to the sale of the Shares), shall be allocated as
reasonably determined by Seller in a manner consistent with Sections 338 and
1060 of the Internal Revenue Code and the regulations thereunder.
1.5. Consent to Transfer Shares. Monarch and P & K hereby consent to
the transfer of the Shares as contemplated by this Agreement.
1.6. Release of Liability.
(a) Monarch acknowledges full payment and complete
satisfaction of the Monarch Debt. Monarch further acknowledges that all amounts
due to it from Seller or any Affiliate of Seller have been paid in full or
satisfied;
(b) P & K acknowledges that there are no amounts due to it
from Seller or any Affiliate of Seller;
(c) Camden acknowledges full payment and complete satisfaction
of the Camden Debt by virtue of the payments made pursuant to the Separation
Agreement, as referenced at Section 2.2(i) of this Agreement. Camden further
acknowledges that there are no other amounts due to it from Seller or any
Affiliate of Seller; and
(d) Buyer acknowledges full payment and complete satisfaction
of the Buyer's Debt by virtue of the payments made pursuant to the Separation
Agreement, as referenced at Section 2.2(i) of this Agreement. Buyer acknowledges
that there are no other amounts due to it from Seller or any Affiliate of
Seller.
SECTION 2. CLOSING
2.1. Closing Date. The Closing shall be consummated on a date and at a
time agreed upon by Buyer and Seller, but in no event later than December 31,
2004 at the offices of Seller, 00000 Xx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx XXX 92130, or at such other place as shall be agreed upon by Buyer
and Seller. The time and date on which the Closing is actually held is referred
to herein as the "CLOSING DATE."
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2.2. Buyer's Closing Date Deliveries. At the Closing, Buyer shall
deliver to Seller all of the following:
(a) An amount in cash equal to the Purchase Price;
(b) The following instruments of assumption and assignment:
(i) An Assignment and Assumption Agreement, providing
for the assignment of the Assumed Liabilities by Seller to Buyer and the
assumption of the same by Buyer, substantially in the form of EXHIBIT A (the
"ASSIGNMENT AND ASSUMPTION AGREEMENT"), executed by a duly authorized officer of
Buyer; and
(ii) All other instruments and certificates of
assumption and release as Seller may reasonably request in order to effectively
make Buyer responsible for all Assumed Liabilities and release Seller therefrom
to the fullest extent permitted under applicable Law.
(c) A copy of Buyer's charter certified as of a recent date by
the Secretary of State of the State of Nevada;
(d) A certificate of good standing of Buyer issued as of a
recent date by the Secretary of State of the State of Nevada;
(e) A certificate of the secretary or an assistant secretary
of Buyer, dated the Closing Date, in form and substance reasonably satisfactory
to Seller, as to (i) the lack of amendments to the certificate of incorporation
of Buyer since the date of the certificate referred to in SECTION 2.2(c) above;
(ii) the bylaws of Buyer; (iii) the resolutions of the Board of Directors of
Buyer authorizing the execution and performance of this Agreement, any Buyer
Transaction Agreement and the transactions contemplated hereby and thereby; and
(iv) the incumbency and signatures of the officers of Buyer executing this
Agreement and any Buyer Transaction Agreement;
(f) The guaranty of Shareholder in the form of EXHIBIT B (the
"Guarantee") duly executed by Shareholder;
(g) The pledge of shares of Seller by Shareholder in the form
of EXHIBIT C (the "Pledge Agreement") to secure the obligation set forth in the
Guarantee;
(h) An escrow agreement in the form of EXHIBIT D duly executed
by Shareholder along with a certificate representing the two hundred thousand
(200,000) shares owned by Shareholder and endorsed to the escrow holder, in form
and substance satisfactory to the Seller;
(i) The Separation Agreement and General Release of all claims
("Separation Agreement") in the form of EXHIBIT E, executed by the Shareholder;
and
(j) The certificate contemplated by SECTION 8.3, executed by a
duly authorized officer of Buyer.
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2.3. Seller's Closing Date Deliveries. At the Closing, Seller shall
deliver to Buyer all of the following:
(a) A Xxxx of Sale, substantially in the form of EXHIBIT F,
executed by a duly authorized officer of Seller;
(b) The Assignment and Assumption Agreement, executed by a
duly authorized officer of Seller;
(c) An Assignment of Patents and Marks, substantially in the
form of EXHIBIT G (the "Assignment of Patents and Marks"), executed by a duly
authorized officer of Seller;
(d) A copy of the certificate of incorporation of Seller
certified by its Secretary or an Assistant Secretary as of a recent date;
(e) A certificate of good standing of Seller issued as of a
recent date by the Secretary of State of the State of Delaware;
(f) A certificate of the Secretary or an Assistant Secretary
of Seller, dated the Closing Date, in form and substance reasonably satisfactory
to Buyer, as to (i) the lack of amendments to the certificate of incorporation
of Seller since the date of the certificate referred to in SECTION 2.3(e) above;
(ii) the by-laws of Seller; (iii) any resolutions of the Board of Directors of
Seller relating to the transactions contemplated by this Agreement and any
Seller Transaction Agreement; and (iv) the incumbency and signatures of the
officers of Seller executing this Agreement; and
(g) The certificate contemplated by SECTION 7.1, executed by a
duly authorized officer of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller hereby represents and
warrants to Buyer as set forth below.
3.1. Organization and Power and Authority of Seller. Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Seller has the corporate power and corporate
authority to own and operate the Assets and to carry on the Tobacco Business in
the manner conducted immediately prior to the date of this Agreement.
3.2. Authority of Seller; Conflicts.
(a) Seller has the corporate power and corporate authority to
execute, deliver and perform this Agreement and the Seller Transaction
Agreements and its obligations hereunder and thereunder. The execution, delivery
and performance of this Agreement and the Seller Transaction Agreements by
Seller and its obligations hereunder and thereunder have been duly authorized
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and approved by all necessary corporate action. This Agreement has been duly
authorized, executed and delivered by Seller and (assuming the valid
authorization, execution and delivery of this Agreement by Buyer) is the legal,
valid and binding obligation of Seller, enforceable in accordance with its
terms, and each of the Seller Transaction Agreements has been duly authorized by
Seller and upon execution and delivery by Seller will be (assuming the valid
authorization, execution and delivery by each other party thereto) the legal,
valid and binding obligation of Seller enforceable in accordance with its terms,
in each case subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general equity principles.
(b) The execution and delivery by Seller of this Agreement and
each Seller Transaction Agreement, and the performance by it of its obligations
hereunder and thereunder, does not and will not:
(i) Violate any provision of the certificate of
incorporation or bylaws of Seller;
(ii) To the knowledge of Seller, violate any
provision of applicable Law relating to the Tobacco Business or require a
registration, filing, application, notice, consent, approval, order,
qualification, authorization, designation, declaration or waiver with, to or
from any Governmental Authority;
(c) To the Knowledge of Seller, (A) require a consent,
approval or waiver from, or notice to, any party to a Business Agreement, or (B)
result in a breach of, or cause a default under any provision of a Business
Agreement; except in any case, under clauses (i) and (ii) above, any violation,
breach, default or non-compliance that would not have a Material Adverse Effect.
3.3. No Violation, Litigation or Regulatory Action.
(a) Except as set forth on SCHEDULE 3.3 (a), to the Knowledge
of Seller there are no Actions relating to the Tobacco Business pending or, to
the Knowledge of Seller, threatened, against Seller which would reasonably be
expected to have a Material Adverse Effect; and
(b) To the Knowledge of Seller, there are no Actions pending
or threatened, that questions the legality or propriety of the transactions
contemplated by this Agreement or any of the Seller Transaction Agreements.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER AND SHAREHOLDER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer and Shareholder, jointly
and severally, hereby represents and warrants to Seller as follows:
4.1. Organization of Buyer. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Nevada.
Buyer has the corporate power and corporate authority to own or lease and
operate its assets and to carry on its businesses in the manner that they were
conducted immediately prior to the date of this Agreement.
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4.2. Authority of Buyer. Buyer has the corporate power and corporate
authority to execute, deliver and perform this Agreement and the Buyer
Transaction Agreements and its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Buyer Transaction
Agreements by Buyer and its obligations hereunder and thereunder have been duly
authorized and approved by all necessary corporation action. This Agreement has
been duly authorized, executed and delivered by Buyer and (assuming the valid
authorization, execution and delivery of this Agreement by Seller) is the legal,
valid and binding obligation of Buyer, enforceable in accordance with its terms,
and each of the Buyer Transaction Agreements has been duly authorized by Buyer
and upon execution and delivery by Buyer will be (assuming the valid
authorization, execution and delivery by each other party thereto) the legal,
valid and binding obligation of Buyer enforceable in accordance with its terms,
in each case subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general equity principles.
4.3. No Violation of Law and Agreements. The execution and delivery by
Buyer of this Agreement and the Buyer Transaction Agreements, and the
performance by Buyer of its obligations hereunder and thereunder, does not and
will not:
(a) Violate any provision of the certificate of incorporation
or bylaws of Buyer;
(b) Violate any provision of any applicable Law relating to
Buyer;
(c) Require a registration, filing, application, notice,
consent, approval, order, qualification, authorization, designation, declaration
or waiver with, to or from any Governmental Authority; or
(d) (i) Require a consent, approval or waiver from, or notice
to, any party to any material agreement to which Buyer is a party, or (ii)
result in a breach of, constitute a default under, result in the acceleration of
material obligations, loss of material benefit or increase in any material
liabilities or fees under, or create in any party the right to terminate, cancel
or modify, any agreement to which Buyer is a party.
4.4. No Litigation or Regulatory Action. Except as set forth on
SCHEDULE 4.4:
(a) There is no Action pending or, to the knowledge of Buyer,
threatened, against Buyer or any Affiliates of Buyer which would reasonably be
expected to prevent, hinder or delay the consummation of any of the transactions
contemplated hereby; and
(b) There is no Action pending or, to the knowledge of Buyer,
threatened, that questions the legality or propriety of the transactions
contemplated by this Agreement or any of the Buyer Transaction Agreements.
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4.5. No Brokers. Neither Buyer nor any Person acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
4.6. Financial Ability. Buyer has, and will have on the Closing Date,
sufficient cash on hand from Buyer's immediately available internal organization
funds or available under a currently established committed credit facility or
unutilized lines of credit with financial institutions to consummate the
transactions contemplated by this Agreement and perform its obligations
hereunder (including, without limitation, its obligation to pay the Assumed
Liabilities pursuant to SECTION 1.2).
4.7. No Knowledge of Breach. To the knowledge of Buyer, none of the
representations or warranties of Seller herein is inaccurate or false.
4.8. Independent Analysis. Buyer recognizes that Seller has not made
any representation or warranty upon which Buyer is relying in respect to the
ability of Buyer to obtain business through the Tobacco Business subsequent to
the Closing Date. Buyer acknowledges that it has conducted an independent
investigation of the financial condition, results of operations, Assets,
Liabilities, properties and projected operations of the Tobacco Business and, in
making its determination to proceed with the transactions contemplated by this
Agreement, Buyer has relied solely on the results of such investigation and the
representations, warranties, covenants and agreements of Seller set forth
herein, including the Schedules hereto, and in the Seller Transaction
Agreements. Such representations and warranties by Seller constitute the sole
and exclusive representations and warranties of Seller to Buyer in connection
with the transactions contemplated hereby, and Buyer acknowledges and agrees
that Seller is not making any representation or warranty whatsoever, express or
implied, beyond those expressly given in this Agreement and the Seller
Transaction Agreements, including any warranty disclaimed by Seller in SECTION
11.18. Buyer further acknowledges and agrees that any cost estimates, forecasts,
projections or other predictions or forward-looking information that may have
been provided to Buyer or any of its employees, agents or representatives were
prepared for internal planning purposes only and are not representations or
warranties of Seller, and no assurances can be given that any estimated,
forecasted, projected or predicted results will be achieved; provided that the
foregoing is not intended to and shall not limit the scope of the
representations and warranties contained herein and in the Seller Transaction
Agreements.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Shareholder hereby represents
and warrants to Seller as follows:
5.1. Authority. Shareholder has all necessary authority to enter into
this Agreement and to perform under the terms of the Buyer Transaction
Agreements, the Guaranty and the Escrow Agreement.
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5.2. Ownership of Shares. Shareholder is the sole shareholder of Buyer
and has entered into no agreement or understanding with any Person to issue
shares of Buyer to any Person or to sell any of the shares currently owned by
Shareholder to any Person.
5.3. Assets. Shareholder warrants that the Assets constitute all of the
Assets of the Seller utilized in the conduct of its Tobacco Business.
5.4. Liabilities. Shareholder warrants that the Assumed Liabilities,
constitute all of the liabilities of the Seller arising out of or relating to
the operation of the Tobacco Business or the Assets.
5.5. Financials. The Shareholder warrants that, to the best of his
knowledge, the financial statements of the Seller are true and correct,
including those comprising Form 10QSB, for the period ended September 30, 2004.
5.6. No Brokers. Neither Shareholder nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
5.7. No Knowledge of Breach. To the knowledge of Shareholder, none of
the representations or warranties of Seller herein is inaccurate or false.
SECTION 6. ACTION PRIOR TO THE CLOSING DATE
Buyer and Seller covenant and agree to take the following actions
between the date hereof and the Closing Date:
6.1. Access to Information. Seller shall afford to the officers,
employees, agents and authorized representatives of Buyer (including, without
limitation, independent public accountants, financial advisors and attorneys)
reasonable access during normal business hours, upon reasonable advance notice,
to the offices, properties, employees and business, tax and accounting records
(including computer files, retrieval programs and similar documentation) of
Seller and other records and documents relating to the Assets and the Tobacco
Business to the extent Buyer shall reasonably deem necessary or desirable.
6.2. Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each party will use all reasonable efforts to cause the Closing to
occur (including, without limitation, the use of reasonable efforts to execute
and deliver any documents reasonably requested by either party hereto and to
satisfy such party's conditions to Closing set forth herein). Each of Seller and
Buyer will promptly notify the other promptly after learning of the occurrence
of any event or circumstance which would reasonably be expected to cause any
condition to Closing not to be satisfied.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the option of
Buyer, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
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7.1. No Misrepresentation or Breach of Covenants and Warranties. The
representations and warranties of Seller made in this Agreement shall be true
and correct in all material respects: (a) as of the date hereof; and (b) on and
as of the Closing Date, as though made on such date, (i) except for those
representations and warranties which refer to facts existing at a specific date
(which shall be true and correct as of such date, subject to clause (ii) below),
(ii) except as specifically contemplated by this Agreement, and (iii) except to
the extent any breaches of such representations and warranties would not in the
aggregate have a Material Adverse Effect. Seller shall have performed or
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by Seller on or before the
Closing Date, and Seller shall have delivered to Buyer a certificate dated the
Closing Date and signed by an authorized officer of Seller confirming the
foregoing.
7.2. Necessary Governmental Approvals. All approvals and actions of or
by all Governmental Authorities required in connection with the consummation of
the transactions contemplated hereby shall have been obtained or taken place,
other than those as to which the failure to have been obtained or taken place
would not reasonably be expected to have a Material Adverse Effect.
7.3. Deliveries by Seller. Seller shall have delivered to Buyer at
Closing all of the items specified to be delivered by Seller in SECTION 2.3.
7.4. No Injunction. There shall not be in effect on the Closing Date
any Court Order restraining or enjoining the carrying out of this Agreement or
the consummation of the transactions contemplated by this Agreement.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall, at the option of
Seller, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
8.1. Board Approval. The Board of Directors of Seller shall have
approved the transaction contemplated herein.
8.2. [INTENTIONALLY OMITTED]
8.3. No Misrepresentation or Breach of Covenants and Warranties. The
representations and warranties of Buyer made in this Agreement shall be true and
correct: (a) as of the date hereof; and (b) on and as of the Closing Date, as
though made on such date. Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Buyer on or before the Closing Date; and Buyer
shall have delivered to Seller a certificate dated the Closing Date and signed
by an authorized officer of Buyer confirming the foregoing.
8.4. Necessary Governmental Approvals. All approvals and actions of or
by all Governmental Authorities which are necessary to consummate the
transactions contemplated hereby shall have been obtained or taken place, other
than those as to which the failure to have been obtained or taken place would
not reasonably be expected to result in any Liability to Seller or to result in
any violation of any Law.
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8.5. Delivery by Buyer. Buyer shall have delivered to Seller at Closing
all of the items specified to be delivered by Buyer in SECTION 2.2.
8.6. No Injunction. There shall not be in effect on the Closing Date
any Court Order restraining or enjoining the carrying out of this Agreement or
the consummation of the transactions contemplated by this Agreement.
8.7. Redemption. All of the preferred shares of the Seller shall have
been redeemed or cancelled so that there are no outstanding preferred shares of
the Seller as of the Closing.
8.8. Funding. Seller shall have obtained funding in the amount of at
least $500,000.00 Dollars (Five Hundred Thousand Dollars) on no later than 90
days from the date of this Agreement on terms satisfactory to Seller.
SECTION 9. INDEMNIFICATION
9.1. Indemnification by Seller. After the Closing Date, subject to the
limitations set forth in this SECTION 9, Seller shall indemnify and hold
harmless Buyer and Shareholder from and against any and all Liabilities and
Expenses incurred by Buyer in connection with or arising from: (a) any breach of
any warranty or the inaccuracy of any representation of Seller contained in this
Agreement, and (b) any breach by Seller of, or failure by Seller to perform, any
of its covenants or obligations contained in this Agreement.
9.2. Indemnification by Buyer and Shareholder. After the Closing Date
and subject to the limitations set forth in this SECTION 9, Buyer and
Shareholder shall jointly and severally indemnify and hold harmless Seller from
and against any and all Liabilities and Expenses incurred by Seller in
connection with or arising from: (a) any breach of any warranty or the
inaccuracy of any representation of Buyer contained in this Agreement, (b) any
breach by Buyer of, or failure by Buyer to perform, any of its covenants and
obligations contained in this Agreement, and (c) the Assumed Liabilities.
9.3. Notice of Claims.
(a) Any party seeking indemnification hereunder (the
"INDEMNIFIED PARTY") shall give promptly to the party obligated to provide
indemnification to such Indemnified Party (the "INDEMNITOR") a written notice (a
"CLAIM NOTICE") describing in reasonable detail the facts giving rise to the
claim for indemnification hereunder and shall include in such Claim Notice (if
then known) the amount or the method of computation of the amount of such claim,
and a reference to the provision of this Agreement or any other agreement,
document or instrument executed hereunder or in connection herewith upon which
such claim is based; PROVIDED, HOWEVER, that the failure of any Indemnified
Party to give the Claim Notice promptly as required by this SECTION 9.3(a) shall
not affect such Indemnified Party's rights under this SECTION 9 except to the
extent such failure is actually prejudicial to the rights and obligations of the
Indemnitor.
(b) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be entitled under
this SECTION 9 shall be determined: (i) by the written agreement between the
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Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have expired
and no appeal shall have been taken or when all appeals taken shall have been
finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Liabilities and Expenses suffered by it. All amounts
due to the Indemnified Party as so finally determined shall be paid by wire
transfer within thirty (30) calendar days after such final determination.
notice.
9.4. Limitations.
(a) No party shall have any liability under this SECTION 9 for
any inaccuracy in or breach of any representation or warranty by such party if
the other party or any of its officers, employees, attorneys or other
representatives or advisors had actual knowledge on or before the Closing Date
of the facts as a result of which such representation or warranty was inaccurate
or breached.
(b) No party hereto shall have any liability for any special,
exemplary, punitive or consequential damages (including loss of profit or
revenue) suffered or incurred by any other party, as the case may be.
(i) Seller shall have no liability under any provisions of
this Agreement for any Liabilities and Expenses to the extent that such
Liabilities and Expenses relate to actions taken or omitted to be taken by
Buyer, Shareholder or any of their Affiliates with respect to the Assets after
the Closing Date.
SECTION 10. TERMINATION
10.1. Termination.
(a) Notwithstanding anything contained in this Agreement to
the contrary, this Agreement may be terminated at any time prior to the Closing
Date:
(i) by Seller, by giving written notice to Buyer if
any of the conditions set forth in SECTION 8 is not satisfied or waived by such
date, unless such satisfaction has been frustrated or made impossible by any act
or failure to act by Seller;
(ii) by Buyer, by giving written notice to Seller if
any of the conditions set forth in SECTION 7 is not satisfied or waived by such
date, unless such satisfaction has been frustrated or made impossible by any act
or failure to act by Buyer;
(iii) by Seller, by giving written notice to Buyer at
any time, if Buyer has breached any representation, warranty, covenant or
agreement contained in this Agreement and such breach has not been cured within
thirty (30) calendar days after Seller's notice to Buyer of such breach
("SELLER'S BREACH NOTICE") or, if cure is not possible within thirty (30)
calendar days, if cure has not been commenced and is not being diligently
pursued within thirty (30) calendar days after Seller's Breach Notice;
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(iv) by Buyer, by giving notice to Seller at any
time, if Seller has breached any representation, warranty, covenant or agreement
contained in this Agreement that results in a Material Adverse Effect (it being
understood that any materiality or Material Adverse Effect qualification in any
representation and warranty shall be disregarded in determining whether any such
breach would have a Material Adverse Effect for purposes of this SECTION
10.1(a)(iv)) and such breach has not been cured within thirty (30) calendar days
after Buyer's notice to Seller of such breach ("BUYER'S BREACH NOTICE") or, if
cure is not possible within thirty (30) calendar days, if cure has not been
commenced and is not being diligently pursued within thirty (30) calendar days
after Buyer's Breach Notice; or
(v) by mutual written agreement of Seller and Buyer.
(b) In the event of termination of this Agreement pursuant to
SECTION 10.1(a) above:
(i) Each party shall return to the other party or
destroy all documents concerning confidential information of the other party
(and, upon request, certify as to the destruction thereof); and
(ii) The provisions of Sections 11.2 (No Public
Announcement), 11.3 (Notices), 11.7 (Entire Agreement), 11.8 (Interpretation),
11.11 (Expenses), 11.13 (Counterparts), 11.14 (Governing Law) and 11.15
(Jurisdiction) shall remain in full force and effect.
SECTION 11. GENERAL PROVISIONS
11.1. Survival of Covenants, Representations and Warranties. No
covenant or agreement contained herein to be performed prior to the Closing Date
shall survive the Closing Date unless otherwise expressly agreed by the parties
and any covenant and agreement to be performed after the Closing Date shall
survive the Closing indefinitely, except as otherwise provided herein. Except as
expressly provided otherwise herein, each representation and warranty contained
herein shall survive the Closing until, and will expire and be of no force and
effect on, the conclusion of one year after the Closing Date, with the exception
of each representation and warranty contained in SECTION 4.5, which shall
survive the Closing until the conclusion of the statutory period of limitations
applicable to the underlying claim. Notwithstanding the foregoing, if an
indemnification claim is properly asserted prior to the expiration as provided
in this SECTION 11.1 of the representation or warranty that is the basis for
such claim, then such representation or warranty shall survive until, but only
for the purpose of, the resolution of such claim. Thereafter, except with
respect to fraud or willful misconduct, the parties hereto shall, by virtue
hereof, be released from any liability whatsoever, including any indemnification
obligations under SECTION 9, with respect to any such representation or warranty
and shall, by virtue hereof, waive and release all claims with respect thereto,
whether known or unknown, contingent or fixed and whether or not, in any such
case, any party hereto (or any Affiliate of such party) or any other Person has
actual knowledge of such claims, or facts giving rise to such claims. In
connection therewith, each party hereby expressly waives all rights under any
applicable Law.
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11.2. No Public Announcement. From the date of this Agreement, neither
Buyer nor Seller shall, without the written approval of the other (such approval
not to be unreasonably withheld or delayed), make any press release or other
public announcement concerning the transactions contemplated by this Agreement,
except as and to the extent that any such party shall be so obligated by
applicable Law, in which case such party shall allow the other party reasonable
time to comment on such release or announcement and the parties shall use their
reasonable efforts to cause a mutually agreeable release or announcement to be
issued; PROVIDED, HOWEVER, that the foregoing shall not preclude communications
or disclosures necessary to implement the provisions of this Agreement or to
comply with any accounting or Securities and Exchange Commission disclosure
obligations or the rules of any stock exchange or national market system.
11.3. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(a) when delivered personally, against written receipt, (b) if sent by
registered or certified mail, return receipt requested, postage prepaid, when
received, (c) when received by facsimile transmission, if confirmed by the other
means described in clause (a) or (b), and (d) when delivered by a nationally
recognized overnight courier service, prepaid, and shall be addressed as
follows:
If to Seller, to:
Surge Global Energy, Inc.
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx XXX 92130
Attention: Xxxx Xxxxx, CEO
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Xxxxx, PLLC
000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
If to Buyer, to:
Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx, Esq.
0000 Xxxxxxx Xxx XX
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
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If to Shareholder, to:
Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx, Esq.
0000 Xxxxxxx Xxx XX
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
If to Monarch, to:
Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxx XX
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx, Esq.
0000 Xxxxxxx Xxx XX
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
If to Camden, to:
Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxx XX
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxx, Esq.
0000 Xxxxxxx Xxx XX
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
If to P & K, to:
Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxx XX
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx, Esq.
0000 Xxxxxxx Xxx XX
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
or to such other address as such party may indicate by a written notice
delivered to the other parties hereto.
11.4. Successors and Assigns. The rights of a party under this
Agreement shall not be assignable by such party without the written consent of
the other parties hereto.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing in
this Agreement, expressed or implied, is intended or shall be construed to
confer upon any Person, other than the parties and successors and assigns
permitted by this SECTION 11.4, and the Indemnified Parties under SECTION 9, any
right, remedy or claim under or by reason of this Agreement.
11.5. Seller's Access to Records after Closing. For a period of ten
(10) years after the Closing Date, Seller and its representatives shall have
reasonable access to all of the books and records of the Tobacco Business
(including any books and records relating to Taxes and Tax Returns of the
Tobacco Business), other than any books and records which are subject to the
attorney-client privilege, to the extent that such access may reasonably be
required by Seller in connection with matters relating to or affected by the
operations of the Tobacco Business, prior to the Closing Date. Such access shall
be afforded by Buyer upon receipt of reasonable advance notice and during normal
business hours in a manner so as to not unreasonably interfere with the conduct
of the Tobacco Business. Seller shall be exclusively responsible for any costs
or expenses incurred by it pursuant to this SECTION 11.5. If Buyer shall desire
to dispose of any of such books or records prior to the expiration of such ten
(10) year period, Buyer shall, prior to such disposition, give Seller a
reasonable opportunity, at Seller's expense, to segregate and remove such books
and records as Seller may select.
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11.6. Cooperation By Shareholder. Shareholder agrees to cooperate with
Seller and its attorneys and accountants in the preparation of any reports or
filings required by the Securities Exchange Commission, the Internal Revenue
Service or any other governmental authority.
11.7. Entire Agreement. This Agreement, the Schedules and Exhibits
referred to herein, the documents delivered on or after the Closing Date
pursuant hereto contain the entire understanding of the parties hereto with
regard to the subject matter contained herein or therein, and supersede all
other prior agreements, understandings, term sheets, heads of terms or letters
of intent between or among any of the parties hereto.
11.8. Interpretation.
(a) Titles and headings to sections and subsections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
(b) The Schedules referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. Disclosure of any fact or item in any Schedule hereto
referenced by a particular Section in this Agreement shall be deemed to have
been disclosed with respect to every other Section in this Agreement.
(c) Seller may, from time to time prior to or at the Closing,
by notice in accordance with SECTION 11.3 of this Agreement, supplement, amend
or create any Schedule, in order to add information or correct previously
supplied information. No such supplement, amendment or addition shall be
evidence, in and of itself, that the representations and warranties in the
corresponding Section are no longer true and correct in all material respects.
It is specifically agreed that such Schedules may be supplemented, amended
and/or added to, to add immaterial, as well as material, items thereto. No such
supplemental, amended or additional Schedule shall be deemed to cure any breach
for purposes of SECTION 7.1 or SECTION 10.1(a)(iv). If, however, the Closing
occurs, any such supplement, amendment or addition will be effective to cure and
correct for all other purposes any breach of any representation, warranty,
covenant or agreement which would have existed if Seller had not made such
supplement, amendment or addition, and all references to any Schedule hereto
which is supplemented or amended as provided in this SECTION 11.7 shall for all
purposes after the Closing be deemed to be a reference to such Schedule as so
supplemented or amended. In such case, Buyer shall be deemed to have waived any
and all rights, remedies or other recourse against Seller to which Buyer might
otherwise be entitled in respect of such breach, including any rights or
remedies under Section 9, and no reduction to the Purchase Price shall be made
as a result of any such breach.
(d) For the purposes of this Agreement, (i) words in the
singular shall be held to include the plural and vice versa and words of one
gender shall be held to include the other gender as the context requires, (ii)
the terms "hereof", "herein" and "herewith" and words of similar import shall be
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construed to refer to this Agreement in its entirety and to all of the Schedules
and not to any particular provision, unless otherwise stated, and (iii) the term
"including" shall mean "including, without limitation."
(e) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
11.9. Amendments and Waivers. Any term or provision of this Agreement
may be amended or waived, or the time for its performance may be extended, by
the party or parties entitled to the benefit thereof. Any such amendment or
waiver, including any such amendment to or waiver of this SECTION 11.9, shall be
validly and sufficiently authorized for the purposes of this Agreement if, as to
any party, it is authorized in writing by an authorized representative of such
party. The failure of any party hereto to enforce at any time any provision of
this Agreement shall not be construed to be a waiver of such provision, nor in
any way to affect the validity of this Agreement or any part hereof or the right
of any party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
11.10. Bulk Sales Laws. The parties hereby waive compliance with the
bulk sales laws of any state in which the Assets are located or in which
operations relating to the Tobacco Business are conducted.
11.11. Expenses. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including the fees, expenses and
disbursements of its counsel, accountants, advisors and consultants.
11.12. Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such a manner as to be effective and valid under
applicable Law. In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision or provisions shall be ineffective to the extent, but
only to the extent, of such invalidity, illegality or unenforceability, without
invalidating the remainder of such invalid, illegal or unenforceable provision
or provisions or any other provisions hereof, unless such a construction would
be unreasonable.
11.13. Execution in Counterparts; Facsimile. This Agreement may be
executed in two or more counterparts and via facsimile, each of which shall be
considered an original instrument, but all of which shall be considered one and
the same agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to Seller and Buyer.
11.14. Governing Law. This Agreement and any disputes hereunder shall
be governed by and construed in accordance with the internal laws of the State
of California without giving effect to any choice or conflict of law provision
or rule (whether of the State of California or any other jurisdiction) that
would cause the application of laws of any jurisdiction other than those of the
State of California.
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11.15. Jurisdiction; Waiver of Jury Trial. The parties hereby agree
that any Action arising out of or related to this Agreement shall be conducted
only in San Diego, California. Each party hereby irrevocably consents and
submits to the exclusive personal jurisdiction of and venue in the federal and
state courts located in San Diego, California. Each party hereto hereby waives
to the fullest extent permitted by applicable Law, any right it may have to a
trial by jury in respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement or any transaction contemplated
hereby. Each party agrees to accept service of any summons, complaint or other
initial pleading made in the manner provided for the giving of notices in
SECTION 11.3. Nothing in this SECTION 11.15, however, shall affect the right of
any party to serve such summons, complaint or initial pleading in any other
manner permitted by Law.
11.16. Attorneys' Fees. If any Action for the enforcement of this
Agreement is brought, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions hereof, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that proceeding, in addition to any
other relief to which it may be entitled.
11.17. Time of Essence. Time is of the essence for each and every
provision of this Agreement.
11.18. Disclaimer of Warranties. Seller makes no representations or
warranties with respect to any projections, forecasts or forward-looking
information provided to Buyer. There is no assurance that any projected or
forecasted results will be achieved. EXCEPT AS TO THOSE MATTERS EXPRESSLY
COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT AND THE SELLER
TRANSACTION AGREEMENTS, SELLER IS SELLING THE ASSETS AND THE TOBACCO BUSINESS
AND ASSIGNING THE ASSUMED LIABILITIES ON AN "AS IS, WHERE IS" BASIS, AND SELLER
DISCLAIMS ALL OTHER WARRANTIES, REPRESENTATIONS AND GUARANTIES, WHETHER EXPRESS
OR IMPLIED. SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED WARRANTIES WHATSOEVER. Without
limiting the generality of the foregoing, Buyer is thoroughly familiar with the
Assets and agrees to take title to the Assets "AS IS, WHERE IS" in their current
condition and state of repair, subject to reasonable use, wear and tear and
natural deterioration between the date hereof and the Closing Date, without any
reduction in the Purchase Price or claim of any kind. Buyer acknowledges that
neither Seller nor any of its representatives nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any memoranda, charts, summaries, presentations or schedules
heretofore made available by Seller or its representatives to Buyer or any
Affiliate of Buyer or any other information which is not included in this
Agreement and Seller Transaction Agreements or the Schedules hereto, and neither
Seller nor any of its representatives nor any other Person will have or be
subject to any Liability to any other Person resulting from the distribution of
any such information to, or use of any such information by any other Person.
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11.19. Further Assurances.
(a) At and after the Closing Date, and without further
consideration therefor, (i) Seller shall execute and deliver to Buyer such
further documents, instruments and certificates of conveyance and transfer and
shall take, or cause to be taken, all such further actions as Buyer may
reasonably request in order to more effectively convey and transfer the Assets
from Seller to Buyer and in order to put Buyer in operational control of the
Tobacco Business, or for aiding, assisting, collecting and reducing to
possession any of the Assets and exercising Buyer's rights with respect thereto,
and (ii) Buyer and Shareholder shall execute, or shall arrange the execution of,
and deliver to Seller such further instruments and certificates of assumption
and release as Seller may reasonably request in order to effectively make Buyer
or Shareholder responsible for all Assumed Liabilities and release Seller
therefrom to the fullest extent permitted under applicable Law.
(b) Buyer and Seller shall cooperate to insure prompt
conveyance and delivery by (i) Seller to Buyer of any Asset not conveyed to
Buyer at the Closing and (ii) Buyer to Seller of any asset conveyed to Buyer at
the Closing that is not an Asset. In the event that any accounts receivable
which constitute an Asset under SECTION 1.1(a)(iii) are not transferred to Buyer
on the Closing Date and any payments thereon are received by Seller, Seller
shall promptly deliver such payments to Buyer.
SECTION 12. DEFINITIONS
12.1. Definitions. In this Agreement, the following terms have the
meanings specified or referred to in this SECTION 12.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"ACTION" means any lawsuit, claim, proceeding, litigation,
arbitration, action, investigation, inquiry, cause of action, right of recovery
or chose in action.
"AFFILIATE" means, with respect to any Person, any other
Person, which directly or indirectly controls, is controlled by or is under
common control with such Person.
"AGREEMENT" means this Asset Purchase Agreement, together with
the Schedules and Exhibits attached hereto.
"ASSETS" is defined in Section 1.1(a).
"ASSIGNMENT AND ASSUMPTION AGREEMENT" is defined in Section
2.2(b)(i).
"ASSIGNMENT OF PATENTS AND MARKS" is defined in Section
2.3(c).
"ASSUMED LIABILITIES" is defined in Section 1.2(b).
"BUYER" is defined in the preamble of this Agreement.
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"BUYER'S BREACH NOTICE" is defined in Section 10.1(a)(iv).
"BUYER'S DEBT" is defined in the recitals of this Agreement.
"BUYER TRANSACTION AGREEMENTS" means all agreements,
instruments and documents being or to be executed and delivered by Buyer under
this Agreement or in connection herewith.
"CAMDEN" is defined in the preamble of this Agreement.
"CAMDEN DEBT" is defined in the recitals of this Agreement.
"CLAIM NOTICE" is defined in Section 9.3(a).
"CLOSING" means the consummation of the transactions
contemplated by Section 2.
"CLOSING DATE" is defined in Section 2.1.
"CONTRACT" means any written contract, agreement, license,
lease, guaranty, indenture, sales or purchase order or other legally binding
commitment in the nature of a contract to which Seller is a party.
"COPYRIGHTS" is defined in the definition of Intellectual
Property.
"COURT ORDER" means any judgment, order, writ, decision,
injunction, award or decree of any foreign, federal, state, local or other court
or tribunal and any ruling or award in any arbitration proceeding.
"ESCROW AGREEMENT" is defined in Section 2.2(h).
"EXCLUDED ASSETS" is defined in Section 1.1(b).
"EXPENSES" means any and all reasonable out-of-pocket expenses
incurred in connection with investigating, defending or asserting any claim,
action, suit or proceeding incident to any matter indemnified against hereunder
(including, without limitation, court filing fees, court costs, arbitration fees
or costs, witness fees and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, accountants and other professionals).
"GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, court, commission, board, bureau, agency or instrumentality, or any
regulatory, administrative or other department, agency, or any political or
other subdivision, department or branch of any of the foregoing.
"GUARANTEE" is defined in Section 2.2(f).
"IN-LICENSE" is defined in the definition of Intellectual
Property.
"INDEMNIFIED PARTY" is defined in Section 9.3(a).
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"INDEMNITOR" is defined in Section 9.3(a).
"INTELLECTUAL PROPERTY" means any and all of the following
which is owned by, licensed by, licensed to, used or held for use by a Person
(including all copies and embodiments thereof, in electronic, written or other
media): (a) all registered and unregistered U.S. and foreign trade names,
trademarks, trade dress and service marks, together with any applications
related thereto ("MARKS"); (b) all inventions (whether patentable or
unpatentable), all improvements thereto, and all patent, patent applications and
disclosures related thereto, together with all reissuances, continuations,
continuations in part, revisions, extensions and re-examinations thereof and all
issued U.S. and foreign patents and pending patent applications, patent
disclosures and improvements thereto (collectively, the "PATENTS"); (c) all
registered and unregistered U.S. and foreign works of authorship, fixed in any
tangible medium of expressions regardless of the availability of copyright
protection, but including all copyrights and moral rights recognized by law and
all applications to register and renewals of any of the foregoing
("COPYRIGHTS"); (d) all computer software and databases owned by the Person or
under development for the Person by third parties ("SOFTWARE") and all related
documentation; (e) all categories of ideas, trade secrets, know-how, inventions
(whether or not patentable and whether or not reduced to practice),
improvements, processes, procedures, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans,
customer and supplier lists and information, other confidential and proprietary
information, manufacturing and production processes and techniques, molds, dies,
casts and product configurations ("PROPRIETARY RIGHTS"); (f) all licenses and
other Contracts pursuant to which the Person has acquired rights in or to any of
the Marks, Patents, Copyrights, Software or Proprietary Rights ("IN-LICENSES");
and (g) all licenses and other Contracts to which the Person has sold, licensed,
leased or otherwise transferred or granted any interest or rights to any Marks,
Patents, Copyrights, Software or Proprietary Rights ("OUT-LICENSES").
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE OF SELLER," "SELLER'S KNOWLEDGE" or "KNOWLEDGE,"
when used in connection with Seller, means, as to a particular matter, the
actual current knowledge of the following persons at Seller: Xxxxx Xxxxx, Chief
Operating Officer and Xxxxxxxxx Xxxxxx, Vice President (without any duty of
inquiry).
"LAW" means any law, statute, treaty, rule, regulation,
ordinance, order, decree, consent decree or similar instrument or determination
or award of an arbitrator or a court or any other Governmental Authority.
"LIABILITY (AND WITH CORRELATIVE MEANING, "LIABILITIES")"
means all Indebtedness, obligations, damages, fines, fees, penalties, and other
liabilities (or contingencies that have not yet become liabilities), whether
absolute, accrued, matured, contingent (or based upon any contingency), known or
unknown, fixed or otherwise, or whether due or to become due, including without
limitation, any fines, penalties, judgments, awards or settlements respecting
any judicial, administrative or arbitration proceedings or any damages, losses,
claims or demands with respect to any Law.
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"MARKS" is defined in the definition of Intellectual Property.
"MATERIAL ADVERSE EFFECT" means any change, circumstance or
effect that does have, or would reasonably be expected to have, a material
adverse effect on the Assets, financial condition or results of operations of
the Tobacco Business or the ability of Seller to consummate the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that Material Adverse Effect
shall exclude any adverse changes or conditions as and to the extent such
changes or conditions relate to or result from (a) public or industry knowledge
of the transactions contemplated by this Agreement (including, without
limitation, any action or inaction by the Tobacco Business' employees and
vendors) or (b) general economic conditions or other conditions generally
affecting the industry in which the Tobacco Business competes. Seller may,
however, at its option, include in the Schedules of this Agreement or elsewhere
items that would not have a Material Adverse Effect within the meaning of the
previous sentence in order to avoid any misunderstanding, and such inclusion
shall not be deemed to be an acknowledgement by Seller that such items would
have a Material Adverse Effect or further define the meaning of such term for
the purposes of this Agreement.
"MONARCH" is defined in the preamble of this Agreement.
"MONARCH DEBT" is defined in the recitals of this Agreement.
"OTHER BUSINESS" is defined in the recitals of this Agreement.
"OUT-LICENSE" is defined in the definition of Intellectual
Property.
"P & K" is defined in the preamble of this Agreement.
"PATENTS" is defined in the definition of Intellectual
Property.
"PERSON" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"PLEDGE AGREEMENT" is defined in Section 2.2(g).
"PROPRIETARY RIGHTS" is defined in the definition of
Intellectual Property.
"PURCHASE PRICE" is defined in Section 1.3. "Seller" is
defined in the preamble of this Agreement.
"SELLER'S BREACH NOTICE" is defined in Section 10.1(a)(iii).
"SELLER TRANSACTION AGREEMENTS" means all agreements,
instruments and documents being or to be executed and delivered by Seller
pursuant to this Agreement.
"SEPARATION AGREEMENT" is defined in Section 2.2(i).
-24-
'"SHARES" refer to the shares of Monarch and P & K which are
being transferred pursuant to Section 1.1(a)(viii).
"SOFTWARE" is defined in the definition of Intellectual
Property.
"TAXES" (and, with correlative meaning, "TAXES") means any
federal, state, local or foreign income, gross receipts, estimated profits,
windfall profits, intangible property, occupation, production, emergency excess,
capital gains, capital stock, stamp, goods and services, value-added property,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty, imposed by any
Governmental Authority.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached Schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax and any affiliated, consolidated,
combined, unitary or similar return.
"TOBACCO BUSINESS" is defined in the recitals of this
Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be executed and delivered as of the day and year first above
written.
SURGE GLOBAL ENERGY, INC., a Delaware
corporation
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: XXXX X. XXXXX
Title: CEO
ZENVESCO, INC., a Nevada corp.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: XXXXXXX XXXXXX
Title: PRESIDENT
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, an individual
HIGHLAND PIPE COMPANY dba MONARCH PIPE
COMPANY, an Oklahoma corp.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: XXXXXXX XXXXXX
Title: PRESIDENT
CAMDEN STRUCTURE, INC., a Nevada corp.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: XXXXXXX XXXXXX
Title: PRESIDENT
PK VENTURES, INC., a California corp.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: XXXXXXX XXXXXX
Title: CEO
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