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EXHIBIT 2.04
STOCK PURCHASE AGREEMENT
THIS IS A STOCK PURCHASE AGREEMENT (the "Agreement") dated January 26,
1999, by and between XXXXXXX HILLS, LTD., a Utah corporation (the "Buyer") and
XXXXXX X. XXXXXXXXX (the"Seller"), with respect to the purchase and sale of 100%
of the issued and outstanding capital stock of PRO'S EDGE WHOLESALE, INC., a
Florida corporation (the "Company").
The Seller is the beneficial and record owner of 500 shares of the issued
and outstanding common stock, $1 par value per share, of the Company (the
"Shares"), constituting 100% of the outstanding capital stock of the Company.
The Seller wishes to sell to the Buyer, and the Buyer wishes to purchase from
the Seller, all of the Shares, upon the terms and subject to the conditions of
this Agreement.
Certain terms used in this Agreement are defined in Section 6.1 hereof.
IN CONSIDERATION OF the mutual covenants contained herein and intending
to be legally bound hereby, the parties hereto accordingly agree as follows:
l. SALE AND PURCHASE OF SHARES. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements of the Seller contained herein, the Seller is hereby
selling to the Buyer and the Buyer is hereby purchasing from the Seller, all of
the Shares, free and clear of all Liens.
1.1 PURCHASE PRICE: The Buyer shall pay to the Seller and the Seller
agrees to accept, as and for the Purchase Price of the Shares, $200,000 in cash.
1.2 INCLUDED ASSETS. Except as may be specifically identified in
Schedule 1.2 ("Excluded Assets"), the Company is sold with all of its property
and assets of any kind, real or personal, tangible or intangible, including but
not limited to any and all of its inventory, pending orders, accounts
receivable, equipment, fixtures, leases, leasehold improvements, Cash on hand,
deposits, Contracts and contract rights, customer lists, contacts, advantageous
business relationships with vendors and other parties, computer software,
Internet web sites, trade names, trademarks, service marks and other
Intellectual Property rights, business records, and good will. All utility and
lease deposits, accounts receivable and cash drawer amounts shall remain in
place. Any utility and lease deposits which were paid or advanced by Seller will
be separately assigned by the Seller to the Buyer at the Closing.
1.3 THE CLOSING. The closing of the purchase and sale of the Shares
(the "Closing") will take place on the date of this Agreement (the "Closing
Date").
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1.4 DELIVERIES BY SELLER. At the Closing, the Seller shall deliver to
the Buyer stock certificates representing the Shares, which shall be free and
clear of all Liens, security interests, Claims and encumbrances, and which shall
be duly endorsed or accompanied by properly executed stock powers in favor of
the Buyer and with all appropriate stock transfer tax stamps affixed thereto.
The Seller will also deliver to Buyer the Company's minute book, stock
certificate book and stock transfer ledger.
1.5 DELIVERIES BY BUYER. At the Closing, the Buyer shall deliver to
the Seller a check payable to the order of the Seller in the amount of the
Purchase Price specified in Section 1.1 above.
1.6 ACTIONS TO BE TAKEN AT THE CLOSING; OTHER AGREEMENTS.
1.61 LEASE. The Seller, as Lessor, and the Company, as Lessee,
shall enter into a written lease with respect to the business premises occupied
by the Company in Fort Xxxxx, Florida, in the form attached hereto as Exhibit 1.
1.62 SUBLEASE. The Company, as Sublessor, and Magnetic Therapy
Sales Specialists, Inc., as Sublessee, shall enter into a sublease with respect
to a portion of the business premises occupied by the Company in Fort Xxxxx,
Florida, in the form attached hereto as Exhibit 2.
1.63 ASSIGNMENT OF RIGHTS TO DISTINCTIVE PRODUCTS AND PRODUCT
NAMES. Among other golf clubs and accessories, the Company distributes a line of
line of golf clubs which are marketed as the "Big Smoke" and others which are
marketed under the name "On the Money", and which incorporate certain
distinctive characteristics. At the Closing, the Seller shall execute and
deliver to the Buyer an Assignment of Rights with respect thereto, in the form
attached hereto as Exhibit 3.
1.64 EMPLOYMENT AGREEMENT. The Company and the Seller will enter
into an employment agreement in the form attached hereto as Exhibit 4.
1.65 NON-COMPETITION AGREEMENT. The Seller will execute and
deliver to the Buyer a Non-Competition Agreement in the form attached hereto as
Exhibit 5.
1.66 OPINION OF COUNSEL. The Buyer shall receive an opinion of
counsel to the Seller, dated as of the Closing Date, in the form attached hereto
as Exhibit 6.
1.67 RESIGNATIONS. All of the directors and officers of the
Company shall deliver their written resignations, in the form attached hereto as
Exhibit 7.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents,
warrants and covenants to and with Buyer as follows:
2.l COMPANY ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite
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power and authority to own, lease and operate its properties and assets as now
owned or leased and to carry on its business as and where now being and
heretofore conducted.
2.2 SUBSIDIARIES. Schedule 2.2 sets forth the name and
jurisdiction of organization of each entity in which, as of the Closing Date,
the Company directly or indirectly owns or has the power to vote shares or other
ownership interests having voting power to elect a majority of the directors of
such entity. Except as set forth on Schedule 2.2, all of the issued and
outstanding capital stock or other ownership interests of each Subsidiary is
owned by the Company, free and clear of any Lien. Except as set forth on
Schedule 2.2, the Company does not directly or indirectly own any interest in
any other person.
2.3 QUALIFICATION. The Company is duly qualified or otherwise
authorized as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification or authorization is required by
Law.
2.4 CAPITALIZATION.
(a) The Company's authorized capital stock consists solely of
500 shares of common stock, $1.00 par value, all of which are issued and
presently outstanding. All of such outstanding shares have been duly authorized,
validly issued and are fully paid and non-assessable. The owners and holders of
all of the issued and outstanding capital stock of the Company, and the number
of shares held by each, are as follows:
Xxxxxx X. Xxxxxxxxx 500 Shares
(b) Seller represents and warrants to Buyer that he (a) is the
sole record and beneficial owner of the Shares, free and clear of any Lien,
security interest, restriction, encumbrance or Claim; and (b) has full legal
right, power and authority to enter into this Agreement, transfer the Shares to
Buyer in accordance with this Agreement and to perform his other obligations
hereunder, without the need for the consent of any other person or entity.
(c) There are no outstanding options, warrants, rights,
agreements, calls, commitments or demands of any character relating to the
capital stock of the Company, and no securities convertible into or exchangeable
for any of such capital stock.
2.5 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Seller has
delivered, or is delivering to the Buyer upon the execution of this Agreement,
true and complete copies of the Company's Certificate or Articles of
Incorporation and By-laws. The Company's minute book has heretofore been made
available to the Buyer for its inspection and contains true and complete records
of all meetings and consents in lieu of meeting of the Company's Board of
Directors and of the Company's stockholders since the time of the Company's
organization and accurately reflect all transactions referred to in such minutes
and consents in lieu of meeting.
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2.6 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT; NO BREACH. The
execution and delivery by the Seller of this Agreement and each and every
agreement and instrument contemplated hereby to which the Seller is or will be a
party, the consummation of the transactions contemplated by this Agreement and
the performance by the Seller of this Agreement and each such other agreement
and instrument in accordance with their respective terms and conditions will not
(a) require the Seller or the Company to obtain any consent, approval,
authorization or action (the "Consents") of any Governmental Body or any other
person except for the Consents set forth on Schedule 2.6 (which Consents have
been obtained prior to Closing) and except for those Consents the failure to
obtain which would not have a material adverse effect on the Company's business,
condition (financial or otherwise) or prospects; (b) violate, conflict with or
result in the breach of any of the terms and conditions of, result in a material
modification of the effect of, otherwise cause the termination of or give any
other contracting party the right to terminate, or constitute (or with notice of
lapse of time or both would constitute) a default under any Contracts to which
the Company or any of its properties is or may be bound or subject; (c) violate
any Law or Order of any Governmental Body applicable to the Company or any of
its properties; (d) violate any provision of the Certificate of Incorporation or
By-laws (or comparable instruments) of the Company; or (e) violate or result in
the revocation or suspension of any Permit.
2.7 FINANCIAL STATEMENTS. The Financial Statements attached as
Exhibit 8, and any and all other financial statements which have been provided
to the Buyer for purposes of the transactions contemplated by this Agreement,
whether prepared by the Company or by its accountants and/or auditors, (a) are
correct and complete, (b) fairly present the financial condition, assets and
liabilities of the Company as at their respective dates and the results of their
operations and changes in financial position for the periods covered thereby and
(c) have been prepared in accordance with generally accepted accounting
principles consistently maintained.
2.8 INVENTORY. Attached hereto as Schedule 2.8 is list of the
Company's inventory of products. Said list is accurate in all particulars which
it sets forth set forth, and Seller represents that the total of the Company's
inventory of products on hand as of the execution of this Agreement, at cost, is
not less than 97% of the total cost shown. All of the inventory items reflected
in Schedule 2.8 are owned by the Company, and are new and in saleable condition,
except as may be expressly indicated in said Schedule.
2.9 RECEIVABLES.
(a) All of the Company's accounts and notes receivable
reflected in the Financial Statements attached hereto as Exhibit 8 (i) have
arisen in the ordinary course of the Company's business and (ii) subject only to
a reserve for bad debts computed in a manner consistent with past practice and
reasonably estimated to reflect the probable results of collection, have been
collected or are collectible in the ordinary course of business in the aggregate
recorded amounts thereof in accordance with their terms.
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(b) Attached hereto as Schedule 2.9 is a current list of
the Company's accounts receivable prepared for purposes of this Agreement. Said
list is accurate in all particulars which it sets forth, and the total of the
Company's uncollected accounts receivable as of the execution of this Agreement
is not less than 97% of the total shown. All of said accounts receivable (i)
have arisen in the ordinary course of the Company's business and (ii) subject
only to a reserve for bad debts computed in a manner consistent with past
practice and reasonably estimated to reflect the probable results of collection,
are collectible in the ordinary course of business, in the amounts stated and in
accordance with their respective terms..
2.10 NO MATERIAL ADVERSE CHANGE. Since the dates of the Financial
Statements attached hereto as Exhibit 8, there has been no event, development or
condition of any character which has had or, to the Knowledge of the Seller
could have, a material adverse effect on the properties, business, prospects,
results of operations or condition (financial or otherwise) of the Company.
2.11 TAXES.
(a) All Federal, state, county, local, foreign and other
taxes (including income, sales, use, payroll related, withholding, employment,
unemployment compensation, profits, premium, estimated, excise, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production, transfer,
property taxes, import duties and other governmental charges and assessments),
whether or not measured in whole or in part by net income, and including
deficiencies, interest, additions to tax or interest, and penalties with respect
thereto, and including expenses associated with contesting any proposed
adjustment related to any of the foregoing (collectively, "Taxes"), required to
be paid by or with respect to the Company on or before the date of this
Agreement have been timely paid.
(b) All returns and other reports required to be filed by
or with respect to the Company with respect to Taxes (collectively, "Tax
Returns") on or before the date hereof have been timely filed and were prepared
in compliance with applicable Laws and were true, complete and correct in all
material respects as of the date on which they were filed or as subsequently
amended.
(c) The Company has complied in all material respects with
all applicable Laws relating to the withholding of Taxes and have timely
collected or withheld and paid over to the proper governmental authorities all
amounts required to be so collected or withheld and paid over for all periods up
to the date hereof.
(d) Except as set forth in Schedule 2.11(d), no extension
of time is in force with respect to any date on which any Tax Return was or is
to be filed, and no waiver or agreement is in force for the extension of time
for the assessment or payment of any Tax.
(e) Except as set forth in Schedule 2.11(e), there are no
pending audits of any of the Company's Tax Returns which are pending, and no
prospective audits of which the Company has received notice.
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(f) Except as set forth in Schedule 2.11(f), there are no
claimed deficiencies, additions to Tax, interest and/or penalties that have been
made, assessed or proposed with respect to any of the Company's Tax Returns.
(g) Schedule 2.11(g) contains a list of states, territories
and jurisdictions (whether foreign or domestic) in which the Company is required
to file Tax Returns. No claim has ever been made by a taxing authority in a
jurisdiction where the Company does not file Tax Returns that the Company is or
may be subject to taxation by such jurisdiction.
(h) The Company has not at any time consented under Section
341(f)(1) (dealing with "collapsible corporations") of the Internal Revenue Code
of 1986, as amended (the "Code"), to have the provisions of Section 341(f)(2) of
the Code apply to any sale of its capital stock.
2.12 COMPLIANCE WITH LAWS. The Company is not in violation of any
applicable order, judgment, injunction, award, decree or writ (collectively,
"Orders), or any material law, statute, code, ordinance, regulation or other
requirement (collectively, "Laws") of any government or political subdivision
thereof, any board or organization or other non-governmental regulating body (to
the extent that the rules, regulations or orders of such body have the force of
law) or any court or arbitrator (collectively, "Governmental Bodies"), and
neither the Company nor the Seller has received notice that any such violation
is being or may be alleged.
2.13 PERMITS. The Company has all licenses, permits, exemptions,
consents, waivers, certifications, authorizations, rights, certificates of
occupancy, franchises, orders or approvals of, and has made all required
registrations and filings with, any Governmental Body that are material to the
conduct of the Company's business (collectively, "Permits"). All of said Permits
are listed on Schedule 2.13 and are in full force and effect; no violations are
or have been recorded in respect of any Permit; and no proceeding is pending or
threatened to revoke or limit any Permit.
2.14 CLAIMS AND PROCEEDINGS. Except as set forth in Schedule 2.14,
there are no Claims (whether or not the defense thereof or liabilities in
respect thereof are covered by insurance) pending or, to the Seller's knowledge,
threatened, against or involving the Company or any of its properties and assets
(i) where the claimant seeks recovery in excess of $1,000, or where maximum
exposure with respect to such claim could reasonably be expected to exceed
$1,000, or (ii) which relate to, or could reasonably be expected to have any
effect on, the transactions contemplated by this Agreement.
2.15 CONTRACTS AND OTHER AGREEMENTS. Schedule 2.15 sets forth a
complete list of (i) all existing insurance policies, (ii) all existing
Contracts between the Company and the Seller or any related person, or between
the Company and any of its officers or directors, and (iii) all other existing
Contracts and agreements material to the conduct of the Company's business as it
has been and is now being conducted. Complete and accurate copies of all such
Contracts and agreements, and of any amendments thereto, have been provided to
the Buyer by the Seller prior to the execution of this Agreement. Except as set
forth in Schedule 2.15, all of such Contracts are valid, in full force and
effect, and binding upon each party thereto, and no party is in default thereof,
nor does any condition
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exist that with notice or lapse of time or both would constitute a default
thereunder.
2.16 REAL ESTATE; LEASES.
(a) The Company does not own any real property. The Company
occupies and utilizes, as a warehouse, certain business premises at 0000 Xxx
Xxxxx Xxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxx 00000.
(b) Said business premises are owned by the Seller, and will
be leased by the Seller to the Company by a lease in the form attached hereto as
Exhibit 1. The Seller has full power and lawful authority to enter into said
lease without the joinder or consent of any other person and said lease, upon
execution, will be valid and enforceable in accordance with all of its terms.
2.17 INTERNET WEB SITE. The Company is and will be at the time of
Closing the owner of the Internet web site at fttp//:xxx.xxxxxxxxxxx.xxx. The
Company owns or holds the exclusive rights to said web site, the applicable
domain name, and any business conducted at or by means of said site. The Company
owns or has a valid license of a continuing and/or renewable duration with
respect to any and all software used in the maintenance of said site.
2.18 COPYRIGHTS, SOFTWARE AND PRODUCT NAMES.
(a) The Company owns or is licensed or otherwise has the
exclusive right to use, practice, sell, license and dispose of, without
restriction, the Copyrights and Software, free and clear of any Liens. No third
party is infringing upon or otherwise violating the Company's Intellectual
Property rights.
(b) The Company has not infringed upon or otherwise violated
the Intellectual Property rights of third parties, and has not received or been
the subject of any Claim, charge, or notice alleging any such infringement or
other violation, and the Seller does not know of any basis for any such claim.
(c) Neither the Company nor the Seller has granted any right,
title or interest in, or any license or permission to utilize, the name "Big
Smoke" in connection with the marketing of any golf clubs or other products, and
there is no person who, to the knowledge of the Company or that of the Seller,
is presently using such name or claims any right to do so.
2.19 TITLE TO PROPERTIES. The Company owns outright and has good
title to all of its properties and assets, including all of the assets reflected
on its Balance Sheet included in Exhibit 8, in each case free and clear of any
Lien, except for (a) Liens specifically described in the financial statements
comprising Exhibit 8, (b) assets disposed of in the ordinary course of business
since the preparation of the Financial Statements comprising Exhibit 8, (c)
Liens with respect to leased equipment and (d) Liens, if any, set forth on
Schedule 2.19.
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2.20 UNDISCLOSED LIABILITIES. The Company has no liability or
obligation of any nature, whether due or to become due, absolute, contingent or
otherwise, including liabilities for or in respect of federal, state and local
taxes and any interest or penalties relating thereto, except (i) liabilities
reflected or reserved against in the Financial Statements which have been
provided to the Buyer and (ii) liabilities incurred in the ordinary course of
business since the date of said Financial Statements and reflected on the
Company's books of account, or (iii) liabilities otherwise disclosed in this
Agreement or in any Exhibit or Schedule hereto. Seller knows of no basis for the
assertion against the Company of any other liability of any nature.
2.21 EMPLOYEE BENEFIT PLANS. Except as set forth in Schedule 2.21,
the Company is not and has not been the sponsor of any employee benefit plan or
arrangement, whether subject to ERISA or otherwise, and has no liability, actual
or contingent, direct or indirect, in respect of any such plan.
2.22 INSURANCE. Schedule 2.22 sets forth a list of all policies or
binders of fire, liability, worker's compensation, health, life, short-term and
long-term disability, vehicular and other insurance held by or on behalf of the
Company (collectively, the "Insurance Policies"). The Seller has delivered or
has caused the Company to deliver to the Buyer a copy of each of the Insurance
Policies. Except as set forth in Schedule 2.22, all of the Insurance Policies
are and will be at the time of Closing in full force and effect, and there are
not and will not be at the time of Closing any premiums due but unpaid with
respect to any of them.
2.23 OPERATIONS OF THE COMPANY. Except as set forth in Schedule
2.23, since December 31, 1998, the Company has not (a) declared or paid any
dividends or declared or made any other distributions of any kind to its
shareholders, other than distributions not exceeding the Company's net income
(it being acknowledged that the Company is a Subchapter S corporation); (b)
except for short-term bank borrowings in the ordinary course of business,
incurred any indebtedness for borrowed money; (c) reduced its Cash, other than
to meet cash needs arising in the ordinary course of business; (d) waived any
material right under any Contract or other agreement of the type required to be
set forth on any Schedule; (e) made any change in its accounting methods or
practices or made any change in depreciation or amortization policies or rates
adopted by it; (f) made any loan or advance other than in the ordinary course of
business; (g) except in the ordinary course of business, sold, abandoned or made
any other disposition of any of its properties or assets; or (h) engaged in any
other material transaction other than in the ordinary course of business.
2.24 LITIGATION. Except as set forth in Schedule 2.24, there are
no actions, suits, investigations, or proceedings of any kind pending or
threatened against or affecting the Company or any of its assets.
2.25 FULL DISCLOSURE. No representation or warranty by the Seller
in this Agreement, and no Exhibit, Document, statement, certificate or Schedule
which has been furnished or to be furnished to Buyer pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
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2.26 NO BROKERS, FINDERS, ETC. No broker, finder, agent or similar
intermediary ("Broker") has acted on behalf of the Company or the Seller in
connection with this Agreement or the transactions contemplated hereby, and
there are no brokerage commissions, finder's fees or similar fees or commissions
payable in connection therewith.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represent and warrant
to the Seller that:
3.1 BUYER'S ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the state of Utah, and
has all requisite power and authority to acquire the Shares.
3.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. The execution,
delivery and performance of this Agreement by Buyer have been duly authorized by
all necessary corporate action on the part of Buyer, and this Agreement
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms. The execution and delivery by the
Buyer of this Agreement and each and every agreement and instrument contemplated
hereby to which the Buyer is or will be a party, the consummation of the
transactions contemplated by this Agreement and the performance by the Buyer of
this Agreement and each such other agreement and instrument in accordance with
their respective terms and conditions will not (a) violate any provision of the
organization Documents of the Buyer, (b) require the Buyer to obtain any
consent, approval, authorization or action of, or make any filing with or give
any notice to, any Governmental Body or any other person, (c) violate, conflict
with or result in the breach of any of the terms and conditions of, result in a
material modification of the effect of, otherwise cause the termination of or
give any other contracting party the right to terminate, or constitute (or with
notice of lapse of time or both would constitute) a default under any Contracts
to which the Buyer is a party or to which the Buyer or any of its properties is
or may be bound or subject; or (d) violate any Law or Order of any Governmental
Body applicable to the Buyer.
3.3 PURCHASE FOR INVESTMENT. The Buyer is purchasing the Shares
for its own account for investment and not for resale or distribution.
3.4 NO BROKERS, FINDERS, ETC. No broker, finder, agent or similar
intermediary ("Broker") has acted on behalf of the Buyer in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
therewith.
4. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations, warranties, covenants and agreements of
the Buyers and the Sellers contained in this Agreement, and all statements
contained in this Agreement or any Exhibit or Schedule hereto or any
certificate, financial statement or report or other Document delivered
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pursuant to this Agreement or in connection with the transactions contemplated
hereby, will be deemed to constitute representations, warranties, covenants and
agreements of the respective party delivering the same.
(b) The Seller acknowledges that his representations and
warranties in this Agreement will not be affected or mitigated by any
investigation conducted by Buyer or its representatives prior to Closing or any
knowledge of Buyer, except to the extent that Buyer or its officers, employees
and legal representatives shall be shown to have been provided with any
affirmative written disclosure at or prior to the Closing.
(c) All representations, warranties, covenants and agreements
contained in this Agreement shall survive the execution and delivery of this
Agreement and the Closing hereunder for a period of five (5) years (the
"Survival Period") from the Closing Date, provided, however, that, any
representation, warranty, covenant or agreement which is the subject of a claim
or dispute asserted prior to the expiration of the Survival Period shall survive
with respect to such claim or dispute until final resolution thereof.
5. INDEMNIFICATION.
5.1 OBLIGATION OF SELLER TO INDEMNIFY. Seller agrees to indemnify,
defend and hold harmless the Buyer (and the Buyer's directors, officers,
employees, affiliates, successors and assigns) from and against all Claims,
losses, liabilities, damages, deficiencies, judgments, assessments, fines,
settlements, costs or expenses (including interest, penalties and fees, expenses
and disbursements of attorneys, experts and consultants) ("Losses") incurred by
the indemnified party in any action or proceeding between the indemnifying party
and the indemnified party, or between the indemnified party and any third party,
or otherwise based upon, arising out of or otherwise in respect of any
inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Seller contained in this Agreement or in any Documents
delivered by the Seller or the Company pursuant to this Agreement.
5.2 BUYER'S RIGHT OF OFFSET. Without limiting any other rights and
notwithstanding anything to the contrary set forth herein, any amounts due to
the Buyer (or its directors, officers, employees, affiliates, successors or
assigns) pursuant to Section 5.1 above may be offset by Buyer against any unpaid
balance of the purchase price (whether cash or stock) due to Seller pursuant to
Section 1.1 of this Agreement.
5.3 OBLIGATION OF BUYER TO INDEMNIFY. Buyer agrees to indemnify,
defend and hold harmless the Seller (and the Seller's heirs executors
administrators, personal representatives and successors) from and against all
Claims, losses, liabilities, damages, deficiencies, judgments, assessments,
fines, settlements, costs or expenses (including interest, penalties and fees,
expenses and disbursements of attorneys, experts and consultants) ("Losses")
incurred by the indemnified party in any action or proceeding between the
indemnifying party and the indemnified party, or between the indemnified party
and any third party, or otherwise based upon, arising out of or otherwise in
respect
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of any inaccuracy in or any breach of any representation, warranty, covenant or
agreement of the Buyer contained in this Agreement or in any Documents delivered
by the Buyer pursuant to this Agreement.
5.4 INSURANCE. A party's right to indemnification shall not be
limited or affected by the existence, non-existence or extent of any insurance
coverage which may be applicable.
5.5 NOTICE AND OPPORTUNITY TO DEFEND.
(a) NOTICE OF ASSERTED LIABILITY. If any action, suit or
proceeding shall be commenced against, or any Claim or demand be asserted
against a party who may be entitled to and seek indemnification with respect
thereto pursuant to Section 5.1 or Section 5.2 of this Agreement ("Indemnitee"),
the person from whom indemnification is sought ("Indemnitor"), shall be given
written notice thereof with reasonable promptness. The notice shall describe the
asserted liability in reasonable detail, and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Loss that has been
or may be suffered by the Indemnitee.
(b) OPPORTUNITY TO DEFEND. The Indemnitor shall have the
right to assume the entire defense of such action, suit, proceeding, or claim or
demand control thereof (including the selection of counsel), provided it shall
post security for the payment of any judgement or settlement in form and amount
reasonably satisfactory to Indemnitee, subject to the right of the Indemnitee to
participate at its expense (and with counsel of its choice) in the defense,
compromise or settlement thereof. In connection therewith, the Indemnitee shall
cooperate fully in all aspects with the Indemnitor in any such defense,
compromise or settlement, including, without limitation, by making available to
the Indemnitor all pertinent information under the control of the Indemnitee.
The Indemnitor will not compromise or settle any such action, suit, proceeding,
claim or demand without the prior written consent of the Indemnitee, which
consent shall not be unreasonably withheld; provided, however, that in the event
such approval is withheld, following written request therefor, then the
liability of the Indemnitor with respect to such action, suit, proceeding, Claim
or demand shall be limited to the total amount which would have been paid by the
Indemnitor with respect thereto if the proposed compromise or settlement had
been approved, including the amount of counsel fees and other legal expenses
attributable thereto which shall have accrued at the time such approval is
withheld.
6. MISCELLANEOUS.
6.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"affiliate" means, with respect to any person, any other person
controlling, controlled by or under common control with, or the parents, spouse,
lineal descendants or beneficiaries of, such person.
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"Cash" means money or currency or a credit balance in a demand,
savings, passbook, money market or similar account maintained with a commercial
bank, savings and loan association or like institution, short-term certificates
of deposit that can be liquidated at par on the date of calculation and wire
transfers and deposits in transit on the date of calculation.
"Claim" means any action, cause of action, suit, claim, complaint,
demand, litigation or legal, administrative or arbitral proceeding or
investigation.
"Contracts" include any contract, agreement, indenture, note, bond,
loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, commitment or other binding arrangement.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights used in connection with the business of the Company.
"Documents" means all documents, Contracts, instruments,
certificates, notices, consents, affidavits, letters, telexes, faxes,
statements, schedules (including Schedules to this Agreement), exhibits
(including Exhibits to this Agreement) and any other papers whatsoever.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"Intellectual Property" includes all Copyrights, trademarks, trade
names, service marks, Software and other proprietary rights that are used in
connection with the business of the Company.
"IRS" means the Internal Revenue Service.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, license, charge, option, right of first refusal,
easement, servitude, transfer restriction, encumbrance or any other restriction
or limitation whatsoever.
"person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"property" or "properties" means real, personal or mixed property,
tangible or intangible.
"Software" means any computer software programs, information
systems, source code, object code, data and documentation used in connection
with the business of the Company.
6.2 COSTS, EXPENSES AND TAXES. The Seller will pay all costs and
expenses, including Seller's legal fees, in connection with his performance of
and compliance with this Agreement, and all transfer, documentary and similar
taxes in connection with the delivery of the Shares to be made hereunder. Buyer
will pay all costs and expenses, including legal fees, of Buyers' performance of
and compliance with this Agreement.
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6.3 NOTICES. All notices, request, demands and other
communications hereunder will be in writing and will be deemed to have been duly
given if personally delivered or, if mailed, when mailed by United States
first-class, certified or registered mail, postage prepaid, to the other party
at the following addresses (or at such other address as will be given in writing
by any party to the other):
If to Buyer, to:
Xxxxxxx Hills, Ltd.
0000 Xxxxxxxxx Xxxx X.X., # X-000
Xxxxxxx, Xx. 00000
Attn: Xxxxxxx Xxxxxx, President
With a required copy to:
Xxxxx X. Xxxxxxxxx, Esq.
0X Xxxx Xxxxxx Xxx
Xxxxxxxxxx Xxxxx, X.X. 00000
If to Seller, to:
Xxxxxx X. Xxxxxxxxx
0000 X. Xxxx Xxxxxx Xx.
Xxxx Xxxxx, Xxxxxxx 00000
With a required copy to:
D. Xxxx XxXxx, C.P.A.
0000 Xxxxxxxx Xxx.
Xxxx Xxxxx, Xxxxxxx 00000
6.4 RIGHTS TO NAME. From and after the Closing, Seller shall be
deemed to have relinquished any rights to the names "Pro's Edge Wholesale", the
"Big Smoke", and all derivatives thereof, and agrees not to use such names in
connection with any business or in any other manner whatever without the
Company's written consent in advance obtained.
6.5 RESOLUTION OF DISPUTES. Any and all disputes arising out of or
in connection with this Agreement or any of its provisions (including the
attached Exhibits and Schedules), or any Documents and agreements delivered
pursuant hereto or in connection herewith, shall be resolved exclusively by
arbitration proceedings in Fort Xxxxx, Florida or at such other location as the
parties may mutually agree, in accordance with the applicable rules of the
American Arbitration Association. Judgment on the award rendered may be entered
in any Court of competent jurisdiction. In
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connection with any such proceedings, the prevailing party, as determined by the
arbitrator or arbitrators assigned, shall be entitled to its attorney's fees and
costs in addition to any other relief granted.
6.6 ENTIRE AGREEMENT. This Agreement and the Schedules and
Exhibits hereto, each of which is hereby incorporated herein, set forth all of
the promises, covenants, agreements, conditions and undertakings between the
parties hereby with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
6.7. MODIFICATIONS. This Agreement shall not be modified or
modifiable except in a writing signed by the party or parties to be charged
therewith.
6.8. SUCCESSORS AND ASSIGNS. This Agreement, and all rights and
powers granted hereby, will bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
6.9. FURTHER ASSURANCES. Each party will cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
6.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
6.11 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
hereto.
6.12. SEVERABILITY OF PROVISIONS.
(a) If any provision or any portion of any provision of this
Agreement shall be held invalid or unenforceable, the remaining portion of such
provision and the remaining provisions of this Agreement shall not be affected
thereby.
(b) If the application of any provision or any portion of any
provision of this Agreement to any person or circumstance shall be held invalid
or unenforceable, the application of such provision or portion of such provision
to persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
ATTEST: BUYER: XXXXXXX HILLS, LTD.
/s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxx
-------------------------------------------- ---------------------------
Secretary Xxxxxxx Xxxxxx, President
WITNESS: SELLER:
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------------- ------------------------
Xxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxxxx
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ACKNOWLEDGMENTS
STATE OF FLORIDA
COUNTY OF
On the ____ day of January, l999, before me personally came Xxxxxxx
Xxxxxx, as President of Xxxxxxx Hills, Ltd., to me known and known to me to be
the person described in and who executed the foregoing instrument, or who
produced _______________ as identification, and who did not take an oath, and he
acknowledged that he executed the same as the act and deed of said corporation,
voluntarily and for the purpose therein expressed.
-----------------------------------
NOTARY PUBLIC
Printed Name:
----------------------
My Commission expires:
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00
XXXXX XX XXXXXXX
XXXXXX XX
Xx the ___ day of January, 1999, before me personally came Xxxxxx X.
Xxxxxxxxx, to me known and known to me to be the person described in and who
executed the foregoing instrument, or who produced ________________ as
identification, who did not take an oath, and he acknowledged that he executed
the same as his act and deed, voluntarily and for the purpose therein expressed.
-----------------------------------
NOTARY PUBLIC
Printed Name:
----------------------
My Commission expires:
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