Contract
AMENDED
AND RESTATED ASSET PURCHASE AGREEMENT
This
AMENDED AND RESTATED ASSET PURCHASE
AGREEMENT, dated as of July 1, 2008 (this “Agreement”), by and
among LaPolla Industries, Inc., a Delaware corporation (“Buyer”), Air-Tight
Marketing & Distribution, Inc., a Georgia corporation (“Seller”), and Xxxxx
X. Xxxxxxx and Xxx X. Xxxxxxx (“Selling Shareholders”) (“Seller” together with
“Selling
Shareholders”, the “Selling
Parties”).
WHEREAS,
Seller is engaged in the business of designing, sourcing, marketing and selling
spray polyurethane foam and application equipment, for residential, commercial
and industrial insulation applications (collectively, the "Business");
and
WHEREAS,
Selling Shareholders are the only shareholders of Seller; and
WHEREAS,
Buyer desires to purchase from Seller, and Seller desires to sell, assign,
transfer, convey and deliver to Buyer, certain of the assets of Seller related
to the Business, together with certain obligations and liabilities relating
thereto, on the terms and subject to the conditions set forth
herein.
NOW
THEREFORE, in consideration of the premises and the covenants, agreements,
representations and warranties contained herein, intending to be legally bound
hereby, the parties hereto hereby agree as follows:
PURCHASE AND SALE OF
ASSETS
(a) Acquired Assets. Upon
the terms and subject to the satisfaction or waiver of the conditions set forth
in this Agreement, at the Closing and effective as of the Closing, Seller shall
sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase
and acquire from Seller, all of the following assets of Seller (collectively,
the “Assets”):
(i) all
accounts receivable, machinery and equipment, vehicles, computers, and goodwill
of the Business as a going concern;
(ii) all
contracts, agreements, leases, instruments, obligations, arrangements or other
understandings (whether written or oral) (including amendments and supplements,
modifications, and side letters or agreements) (the “Business Contracts”),
identified in Section 1.1(a)(ii) of the written statement delivered to Buyer by
Seller herewith and dated as of the date hereof (the “Seller Disclosure
Schedule”);
(iii) all
marketing, sales and promotional literature, books, records, files, documents,
financial records, bills, accounting, internal and audit records, operating
manuals, personnel records, customer and supplier lists and files, preprinted
materials and similar materials primarily related to the Assets or those
employees of Seller who become Transferred Employees;
(iv) all
rights, title and interests in and to the Xxxxxxxx Lease, including Seller’s
right to any improvements, fixtures, fittings thereon and appurtenances
thereto. Prior to or at Closing, the Selling Shareholders shall cause
the Xxxxxxxx Lease to be amended so that at least three (3) years of the term
shall remain in duration from and after Closing, with two (2) automatic three
(3) year extensions (subject to approval of the terms by Buyer);
(v) all
rights to all telephone numbers related to the Business and the rights to the
name “Air-Tight
Marketing & Distribution” and the corporate name “Air-Tight Marketing &
Distribution, Inc.” and all derivations and variations
thereof;
(vi) all
intangible assets related to the Business, including the Business Intellectual
Property;
(vii) all
deposits (including security deposits) and prepaid expenses as set forth on
Section 1.1(a)(vii) of the Seller Disclosure Schedule;
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(viii) all
raw materials, components, work-in-progress, finished products, inventory (other
than inventory that have been billed and are being held for customers’
accounts), inventory in-transit, pre-paid deposits for inventory, packaging
materials, samples and other accessories related thereto, related to the
Business, wherever located;
(ix) all
furnishings, furniture, fixtures, equipment, tools, machinery, art work, office
and other supplies, spare parts and other tangible personal property located at
Seller’s Xxxxxxxx facility covered by the Xxxxxxxx Lease as set forth on Section
1.1(a)(ix) of the Seller Disclosure Schedule;
(x) all
rights under warranties, representations and guarantees made by suppliers,
manufacturers or contractors related to the Assets;
(xi) all
vendor numbers related to the Business;
(xii)
all sales orders related to the Business as set forth on Section 1.3(a) of the
Seller Disclosure Schedule except for sales orders for any portion of inventory
included in the calculation of Inventory Value that are not included in the
calculation of Inventory Value in the Final Closing Statement; and
(xiii)
the Business’ software and associated data, to the extent transferable by the
Selling Parties.
(a) The
obligations under purchase orders and sales orders relating to the Business set
forth on Section 1.3 of the Seller Disclosure Schedule, except for any
liabilities arising out of (A) the failure of Seller or any of its
affiliates to comply with the terms of any such orders during the period prior
to Closing; (B) indemnity obligations of Seller and its affiliates under
orders arising primarily out of events occurring prior to the Closing; or
(C) purchase orders for any portion of the inventory included in the
calculation of Inventory Value which is included in the Purchase
Price;
(b) the
Xxxxxxxx Lease with respect to the period from and after the
Closing;
(c) the
obligations of Seller under the Business Contracts, but only to the extent such
obligations arise from and after the Closing; and
(d) any
Liability of Buyer which relates to, or arises out of, directly or indirectly,
the operation of the Business or Buyer’s use of the Assets from and after the
Closing.
1.4
Excluded
Liabilities.
Except
for the Assumed Liabilities, Buyer shall not assume or be liable for any
Liabilities of Seller or any other Person, whether or not relating to the
Business (the “Excluded
Liabilities”), including the following:
(a) except
as otherwise specifically provided herein, all Liabilities relating to Taxes
attributable to or imposed upon Seller, the Selling Shareholders or any of their
affiliates (or for which Seller, the Selling Shareholders or any of their
affiliates may otherwise be liable) for any period (or portion thereof) ending
on or prior to the Closing Date;
(b) any
Liability of Seller for any fees, costs or expenses of the type referred to in
Section 8.2;
(c) any
Liability relating to any Excluded Asset;
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(d) indebtedness,
including amounts loaned or advanced by any lender, or loaned or advanced to
Seller by Selling Shareholders or any related party;
(e) any
Liability that relates to, or arises out of, directly or indirectly, the
operation of the Business or Seller’s ownership, control or use of the Assets
prior to the Closing, including any Liability under any Environmental
Laws;
(f) any
Liability under or otherwise attributable to the Benefit Plans (as defined in
Section 2.8(a)), including any Liability for benefits payable
thereunder;
(g) any
Liability for salary, commission, bonuses, expense reimbursement or other
compensation earned by any employee of Seller for periods prior to the Closing
or any other employee related Liabilities, including Liabilities relating to
severance, workers’ compensation claims or failure to comply with any employment
related statute;
(h) any
Liabilities with respect to chargebacks, returns, allowances, promotional
agreements or product warranties entered into or regarding sales shipped by
Seller prior to the Closing; and
(i) except
expressly as set forth in Sections 1.3 and 1.5(b), any Liability in any way
attributable to the performance of services for Seller prior to the Closing by
any employee, independent contractor or agent of Seller or any other individuals
rendering services to Seller.
1.5 Purchase Price;
Allocation.
(a) Upon
the terms and subject to the conditions set forth herein, in consideration for
the aforesaid sale, assignment, transfer and conveyance of the Assets and the
assumption of the Assumed Liabilities, Buyer shall deliver or cause to be
delivered to Seller the Purchase Price.
(b) For
purposes of this Agreement, “Purchase Price” shall
mean $1,500,000 in cash, payable in 6 installments, with the first installment
of $100,000 due at Closing and 4 subsequent installments of $250,000 each due on
the last day of each calendar year of 2008, 2009, 2010, and 2011, and a final
installment of $400,000, due on December 31, 2012, subject to adjustment as more
fully set forth in the Note (as defined below), and 2,000,000 shares of
restricted common stock, par value $.01, of Buyer. The installment
payments are to be evidenced by a Promissory Note (the "Note") in the form
attached hereto as Exhibit 1.5(b).
(c) The
Purchase Price (plus the Assumed Liabilities assumed pursuant to Section 1.3 to
the extent properly taken into account) will be allocated among the Assets, the
restrictive covenant contained in Section 4.9 as set forth in
Exhibit 1.5(c) attached hereto, the list of Seller’s customers, and in the
manner consistent with Section 1060 of the Code.
(d) Seller
and Buyer shall (i) be bound by the allocation for all Tax purposes;
(ii) prepare and file all Tax Returns in a manner consistent with the
allocation; and (iii) take no position inconsistent with the allocation in
any Tax Return, any proceeding before any taxing authority or otherwise unless
required to do so pursuant to a determination as defined in Section 1313 of
the Code or a similar provision of state or local Law. In the event that the
allocation is disputed by any taxing authority, the party receiving notice of
such dispute shall promptly notify and consult with the other party and keep the
other party apprised of material developments concerning resolution of such
dispute.
1.6 Payment of Purchase
Price.
(a) At
or prior to Closing, Seller shall prepare in good faith and deliver Buyer a
statement (“Estimated
Value Statement”) setting forth in reasonable detail the calculation of
the estimated Inventory Value, Accounts Receivable, and Accounts Payable as of
the open of business on the Closing Date.
(b) At
the Closing, Buyer shall deliver or cause to be delivered to Seller the cash
portion of the Closing Payment by wire transfer of immediately available federal
funds to an account or accounts designated by Seller. The term “Closing Payment”
shall mean an amount equal the first installment of $100,000 towards the
Purchase Price and 2,000,000 shares of restricted common stock of Buyer, each
payable in the manner required herein.
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(c) Not
later than seven (7) business days following the Closing, Buyer shall deliver or
cause to be delivered to Seller a share(s) certificate(s) representing 2,000,000
shares of fully paid and nonassessable restricted common stock of
Buyer.
1.7 Adjustments to Closing
Payment.
(a) As
soon as practicable (but not later than 30 days) following the Closing,
Buyer shall prepare and deliver to Seller a statement (the “Closing Statement”)
setting forth in reasonable detail the calculation of the Inventory Value,
Accounts Receivable, and Accounts Payable, as of the open of business on the
Closing Date. The Closing Statement shall be prepared in good
faith.
(b) After
receipt of the Closing Statement, Seller shall have ten (10) days to review it.
Seller and its representatives shall have full access to all relevant books and
records and employees of Buyer in connection with its review of the Closing
Statement. Unless Seller delivers written notice to Buyer on or prior to the
tenth day after receipt of the Closing Statement of its disagreement as to any
amount included in or omitted from the Closing Statement specifying in
reasonable detail the basis for its disagreement, Seller shall be deemed to have
accepted and agreed to the Closing Statement. If Seller so notifies Buyer of
such an objection to the Closing Statement, Seller and Buyer shall within ten
(10) days following the date of such notice (the “Resolution Period”)
attempt to resolve their differences. Any resolution by them as to any disputed
amount shall be final, binding, conclusive and nonappealable.
(c) If
at the conclusion of the Resolution Period there are amounts on the Closing
Statement still remaining in dispute, then all such amounts remaining in dispute
shall be submitted to a firm of independent public accountants reasonably
acceptable to Buyer and Seller and selected from the list attached hereto as
Exhibit 1.7(c) (the “Neutral Auditor”).
Buyer and Seller agree to execute, if requested by the Neutral Auditor, a
reasonable engagement letter. The Neutral Auditor shall act as an arbitrator to
determine, based solely on presentations by Buyer and Seller, and not by
independent review, only those amounts on the Closing Statement still in
dispute. The Neutral Auditor’s determination shall be made within 30 days
of its engagement, shall be set forth in a written statement delivered to Buyer
and Seller and shall be final, binding, conclusive and nonappealable. The fees
and expenses of the Neutral Auditor shall be allocated between Buyer and Seller
so that Seller’s share of such fees and expenses shall be equal to the product
of (i) and (ii), where (i) is the aggregate amount of such fees and
expenses of such Neutral Auditor, and where (ii) is a fraction, the
numerator of which is the amount on the Closing Statement in dispute that is
ultimately unsuccessfully disputed by Seller (as determined by the Neutral
Auditor) and the denominator of which is the total amount in dispute submitted
to the Neutral Auditor arbitration. The balance of any such fees and expenses
shall be paid by Buyer. The term “Final Closing
Statement,” means the definitive Closing Statement deemed accepted by
Seller or agreed to by Buyer and Seller in accordance with Section 1.7(b) or the
definitive Closing Statement resulting from the determinations made by the
Neutral Auditor in accordance with this Section 1.7(c) (in addition to those
items theretofore accepted by Seller or agreed to by Buyer and
Seller).
(d) Within
five (5) business days of the determination of the Final Closing
Statement:
(i) if
the estimated values (calculated as the sum of the inventory and accounts
receivable, less the accounts payable) on the Final Closing Statement are less
than the Estimated Value Statement, the Seller shall reduce the Purchase Price
to Buyer in an amount equal to such difference, which reduction shall be applied
against the last payment(s) due to the Selling Parties pursuant to Section
1.5(b); or
(ii) if
the estimated values on the Final Closing Statement are more than the Estimated
Value Statement, no adjustment shall occur.
1.8 Closing. Unless this
Agreement shall have been terminated pursuant to its terms, the closing of the
purchase and sale of the Assets and the other transactions contemplated hereby
(the “Closing”)
shall take place at the offices of LaPolla Industries, Inc., Intercontinental
Business Park, 00000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000 on July 1, 2008 subject to the satisfaction or waiver of
the conditions set forth in Article 6 or
such other time and date that is agreed to in writing by the parties hereto (the
date on which the Closing occurs, the “Closing
Date”).
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1.9 Deliveries by Seller.
At the Closing, Seller shall deliver, or cause to be delivered, to Buyer the
following:
(a) one
or more assignments and bills of sale for the Assets, in a form reasonably
satisfactory to Buyer;
(b)
instruments of assignment with respect to the Intellectual Property
included in the Assets;
(c) a
lease assignment with respect to the Xxxxxxxx Lease, in a form reasonably
satisfactory to Buyer, Seller and the landlord under such lease, subject to the
Xxxxxxxx Lease meeting the requirements set forth in Section
1.1(a)(iv);
(d) copies
of all necessary consents and approvals of governmental bodies, lenders of the
Seller, lessors and other third parties listed on Section 6.1(d) of the Seller
Disclosure Schedule;
(e)
the
certificates or letters required to be delivered pursuant to Sections
6.2(a),6.2(b), 6.2(f) and 6.2(g); and
(f)
the
Licensed Applicator Agreement in the form attached hereto as Exhibit 1.9(f) or
otherwise satisfactory to Buyer.
1.10 Deliveries by Buyer.
At the Closing, Buyer shall deliver, or cause to be delivered, to Seller the
following:
(a) the
Closing Payment;
(b) an
assumption agreement with respect to the Assumed Liabilities, in a form
reasonably satisfactory to Seller;
(c) a
lease assumption with respect to the Xxxxxxxx Lease, in a form reasonably
satisfactory to Buyer, Seller and the landlord under such lease;
(d) the
certificates required to be delivered pursuant to Sections 6.1(a) and
6.1(b);
(e) executed
originals of the Note and Security Agreement; and
(f) an
executed counterpart of the Licensed Applicator Agreement.
1.11 Consents. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to sell, assign, transfer, convey or deliver any Asset or any
benefit arising under or resulting from such Asset if the sale, assignment,
transfer, conveyance or delivery thereof, without the consent of a third party,
(i) would constitute a breach or other contravention of the rights of such
third party, (ii) would be ineffective with respect to any party to a
Business Contract concerning such Asset, or (iii) would, upon transfer, in
any way adversely affect the rights of Buyer under such Asset. If the sale,
assignment, transfer, conveyance or delivery by Seller to, or any assumption by
Buyer of, any interest in, or Liability under, any Asset requires the consent of
a third party, then such sale, assignment, transfer, conveyance, delivery or
assumption shall be subject to such consent being obtained; it being understood
that no adjustment to the Purchase Price shall be made as a result of the
failure to transfer or assign any such Asset. To the extent any Asset may not be
sold, assigned, transferred, conveyed or delivered to Buyer by reason of the
absence of any such consent (“Restricted Assets”),
Buyer and Seller, to the extent not prohibited by Law, shall take such action so
that the performance obligations of Seller thereunder shall be deemed to be
subleased or subcontracted to Buyer, or cause to be taken such other actions in
order to place Buyer, insofar as reasonably possible, in the same position as if
such Restricted Asset had been transferred as contemplated hereby and so that
all the benefits and burdens (including all obligations thereunder) relating to
such Restricted Asset, including possession, use, risk of loss, potential for
gain, control and command over such Restricted Asset, are to inure from and
after the Closing to Buyer. Buyer shall use its reasonable best efforts to
assist Seller in obtaining any necessary approvals to such subleases,
subcontracts or such other actions. As soon as a consent for the sale,
assignment, transfer, conveyance, delivery or assumption of a Restricted Asset
is obtained, the applicable Restricted Asset shall be deemed to have been
automatically and without further action transferred to Buyer in accordance with
the terms of this Agreement.
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ARTICLE
2
REPRESENTATIONS AND
WARRANTIES OF THE SELLING PARTIES
The
Selling Parties jointly and severally represent and warrant to Buyer
that:
2.1 Corporate Organization;
Subsidiaries. Seller (a) is validly existing and in good standing
under the laws of its jurisdiction of formation or organization; (b) has
full power and authority to carry on the Businesses as it is now being conducted
by it and to own the properties and assets used in the Business it now owns; and
(c) is duly qualified or licensed to do business as a foreign Person in
good standing in all the jurisdictions in which such qualification or licensing
is required, except where the failure to be so qualified or licensed would not
have a Material Adverse Effect.
2.2 Authorization. Each
Selling Party has the full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by each Selling Party of this Agreement and the
consummation of the transactions contemplated hereby, have been duly authorized
and no other corporate or securityholder actions on the part of such Selling
Party are necessary to authorize the execution and delivery by such Selling
Party of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each Selling
Party, and (assuming due and valid authorization, execution and delivery hereof
by the other parties to this Agreement) is a valid and binding obligation of
such Selling Party enforceable against such Selling Party in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar Laws affecting creditors’ rights generally and
by the availability of equitable remedies.
2.3 Consents and Approvals; No
Violation. Except as disclosed in Section 2.3 of the Seller Disclosure
Schedule, neither the execution, delivery or performance of this Agreement by
such Selling Party nor the consummation by such Selling Party of the
transactions contemplated hereby will (i) conflict with or violate any
provision of the organizational documents of such Selling Party;
(ii) conflict with or result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of notice, modification, payment, termination, cancellation or
acceleration) under, or result in the creation of any Lien upon any of the
Assets under, any of the terms, conditions or provisions of any Business
Contract or Xxxxxxxx Lease; (iii) violate any order, writ, judgment,
injunction, decree, law, statute, rule or regulation or other similar
authoritative matter (“Law”) applicable to
such Selling Party or any of their properties or assets except for violations
which would not have a Material Adverse Effect or (iv) require on the part
of such Selling Party any material filing or registration with, notification to,
or authorization, consent or approval of, any court, legislative, executive or
regulatory authority or agency (a “Governmental
Authority”) or, to the knowledge of Seller, any other Person, except, in
each case, such filings, registrations, notifications, authorizations, consents
or approvals the failure of which to obtain or make would not have a Material
Adverse Effect.
2.4 Leased Real Property.
The lease with respect to Seller’s Rutledge facility located at 000 Xxxxxxx Xx.,
Xxxxxxxx, Xxxxxxx 00000 (the “Rutledge Lease”) is
legal, valid, binding, enforceable, and is in full force and effect, except as
enforcement may be limited by bankruptcy, insolvency, reorganization and similar
Laws affecting creditors generally and by the availability of equitable
remedies. Neither Seller nor, to the knowledge of Seller, any other party is in
default, violation or breach in any material respect under the Xxxxxxxx
Lease. No event has occurred and is continuing that constitutes or,
with notice or the passage of time or both, would constitute a default,
violation or breach either by Seller, or, to the knowledge of Seller,
any other party, in any material respect under the Xxxxxxxx
Lease. The consent of the landlord [is/is not] required for
assignment of the Xxxxxxxx Lease. Seller has provided Buyer with a
true and complete copy of the Xxxxxxxx Lease.
2.5 Intellectual
Property. Seller either owns, or is licensed to use, all Intellectual
Property used or held for use in connection with the operation of the Business
(the “Business
Intellectual Property”). Section 2.5(a) of the Seller Disclosure
Schedule lists (by name, owner, date of first use and, where applicable,
registration number and jurisdiction of registration, application, certification
or filing) all Business Intellectual Property that are registered, or for which
an application for registration is pending, in the name of Seller that is owned
by Seller (whether solely or jointly with another Person). Section 2.5(b)
of the Seller Disclosure Schedule lists each Business Contract in which any
Business Intellectual Property is licensed to or from any third party (except
for agreements for the use of commercially available, off-the-shelf software).
There are no oppositions, cancellations, invalidity proceedings, interferences
or re-examination proceedings presently pending with respect to the Business
Intellectual Property owned by Seller. Except as set forth on
Section 2.5(c) of the Seller Disclosure Schedule, to the knowledge of
Seller, the conduct of the Business and the Business Intellectual Property owned
by Seller does not infringe on any Intellectual Property or other proprietary
rights of any Person.
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2.7 Assets. Except as set
forth on Section 2.7 of the Seller Disclosure Schedule, Seller owns all of
the Assets free and clear of all Liens, except Permitted Liens.
2.8 Benefit Plans;
ERISA.
(a) For
purposes of this Agreement, “Benefit Plan” shall
mean each deferred compensation plan, each incentive compensation or equity
compensation plan, “welfare” plan, fund
or program (within the meaning of Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)); “pension” plan, fund
or program (within the meaning of Section 3(2) of ERISA); each employment,
retention, termination or severance agreement; and each other employee benefit
plan, fund, program, agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by a
Seller.
(b)
No Benefit Plan is or ever has been subject to Title IV or Section 302 of
ERISA. No liability under Title IV or Section 302 of ERISA has been
incurred by Seller that has not been satisfied in full, and no condition exists
that presents a material risk to Seller incurring any such
liability.
(c) Each
Benefit Plan has been operated and administered in all material respects in
accordance with its terms and applicable Law, including but not limited to ERISA
and the Code.
(d) No
event has occurred and no condition exists that would subject Seller by reason
of its affiliation with any or by any trade or business, whether or not
incorporated, that together with a Seller would be deemed a “single employer”
within the meaning of Section 414(b), (c), (m) or (o) of the Code to
any material liability imposed by ERISA, the Code or other applicable
Laws.
2.9 Litigation. Except as
set forth on Section 2.9 of the Seller Disclosure Schedule, there is no
action, claim, suit, inquiry, judicial or administrative proceeding, audit or
investigation by or before any Governmental Authority or arbitral body pending
or to Seller’s knowledge, threatened against or involving the Assets, including,
without limitation, claims of employment discrimination or violations of health
or safety laws or regulations.
2.10 Financial
Statements. Seller has delivered to Buyer copies
of its financial statements for its 2007 fiscal year as well as
monthly financial statements for each month of the 2008 fiscal year through May
2008, all of which financial statements: (i) have been prepared in accordance
with generally accepted accounting principles consistently
applied; (ii) accurately set forth the gross income of the business;
(iii) do not over-state gross receipts of the Business; and (iv) do not
under-state expenses and other costs of the Business. Except as shown
on the financial statements or Schedule 2.10 of the Seller Disclosure Schedule,
Seller has no Liabilities.
2.11 Financial
Condition. Since the end of Seller's last fiscal year, there
has not been: (i) any material adverse change in the financial
condition of the Business or any other event or condition of any character which
has had or which may have a material adverse effect on the Business or the
Assets; (ii) any damage or destruction, whether or not covered by insurance,
materially or adversely affecting the Assets; (iii) any notice of any material
change in the purchase orders of, or relationship with, any of the customers of
Seller; or (iv) any action or transactions of Seller other than in the ordinary
and usual course of business.
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2.12 Condition of
Assets. To the best of Seller's knowledge, the Assets are in
good repair and operating condition free from any defects except for ordinary
wear and tear and such minor defects as will not interfere with the continued
use thereof in the conduct of normal operations.
2.13
List of Licenses and
Permits. Section 2.13 of the Seller Disclosure Schedule
contains is a complete and accurate list of all licenses, permits,
authorizations and approvals required by any federal, state or local
governmental authority in connection with the operation of the Business, all of
which are in full force and effect, and to the extent assignable shall be
assigned to Buyer at Closing.
2.14 Insurance. Section
2.14 of the Seller Disclosure Schedule contains a full and complete list of all
current policies of insurance relating to the Assets and/or the
Business.
2.15 Environmental
Condition. To the best of its knowledge: (i) Seller
has not violated or incurred any liability under, any of the Environmental Laws,
as hereinafter defined; (ii) Seller has not caused or suffered the Premises (as
defined below) to contain or be subject to a discharge, as hereinafter defined,
of any Regulated Substance, as hereinafter defined; and (iii) the Premises on
which the Business and the Assets are located are not the site of any
underground storage tanks. For the purpose of this subparagraph: the
term "Environmental Laws" means the Environmental Protection Act, Resource
Conservation And Recovery Act, Comprehensive Environmental Protection Act, Soil
Erosion And Sedimentation Control Act, Inland Lakes And Streams Act, and all
other statutes, laws and ordinances concerning the ecology of lands, all as
amended, including all regulations promulgated pursuant thereto; the term
"Regulated Substance" means any matter described or defined in, or which is the
subject matter of, or of which the manufacture, production, generation,
transportation or discharge is regulated or prohibited by any of the
Environmental Laws; and the term "discharge" includes, but is not necessarily
limited to, emission, disposal and spill.
2.16 Taxes. Seller
has satisfied all of its obligations for state and/or federal sales tax,
personal property taxes, unemployment compensation taxes, social security taxes,
income taxes, withholding taxes and any other obligations of Seller which may or
could constitute a lien on any of the Assets, and Seller agrees to obtain
clearance certificates from the applicable governmental authorities and paid
receipts for any of the foregoing upon Buyer’s request; Seller has
properly completed and filed in correct form all federal, state, county, local
and foreign income, excise, property, sales, use and other tax returns which are
required to be filed by Seller up to and including the Closing, all of which
have been prepared and filed on a timely basis and in accordance with applicable
law; Seller has properly withheld from the salaries, wages or other compensation
paid or payable to its officers, employees and other persons, and has paid the
appropriate federal, state and local authorities, all amounts required to be
withheld therefrom under applicable laws, rules and regulations.
2.17 Premises. The
real property described in the Xxxxxxxx Lease (the "Premises") comprise
all real property owned, leased or used in connection with the operation of the
Business of Seller; the use of the Premises by Seller does not currently violate
any applicable zoning, building or use statutes, rules, ordinances or
regulations of any federal, state, county or local entity, authority or agency,
or any other building or use restriction applicable thereto.
2.18 Employees/Collective
Bargaining Agreements. No collective bargaining agreement
presently covers any employees of Seller, nor is any such agreement currently
being negotiated by Seller and, to the best knowledge, information and belief of
Seller, no attempt to organize any group or all of the employees of Seller has
been made or proposed; Seller is in compliance in all respects with
all state and federal laws relating to employment and employment practices,
terms and conditions of employment and wages and hours, and Seller has not
engaged in any unfair labor practices; to the best of Seller's knowledge, no
executive, key employee or group of employees has indicated any intention or
desire to decline employment with Buyer, if offered. Section 2.18 of
the Seller Disclosure Schedule lists all of Seller’s employees as well as
current salary and benefit information (including such information for those
employees on leave).
2.19 Brokers. Seller is
not a party to any agreement with any finder, broker or consultant, or in any
way obligated to any finder, broker or consultant for any commissions, fees or
expenses, in connection with the origin, negotiation, execution or performance
of this Agreement.
8
2.20 Product
Warranties. Section 2.20 of the Seller Disclosure Schedule
contains is a complete and accurate list of all product warranties in effect
(the "Product Warranties"). Except as disclosed on Section 2.20 of
the Seller Disclosure Schedule, there are no outstanding claims, and Seller does
not know of any basis for such a claim, with respect to the Product
Warranties.
2.21 No Other Representations or
Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 2, NEITHER
SELLER NOR SELLING SHAREHOLDERS MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED, AT LAW OR IN EQUITY, REGARDING SELLER, SELLING SHAREHOLDERS, THE
BUSINESS OR ANY OF ITS RESPECTIVE ASSETS, LIABILITIES, OPERATIONS OR PRACTICES
OR THE CONDUCT OF ANY EMPLOYEES OR CONTRACTORS OF SELLER. EACH OF SELLER AND
SELLING SHAREHOLDERS EXPRESSLY DISCLAIMS ANY OTHER REPRESENTATIONS OR
WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR ITS
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION.
2.22
Scope of
Representations and Warranties. The representations and
warranties of Seller contained in this Agreement are accurate and complete in
all material respects and do not contain any untrue statement of material fact
or omit to state a material fact necessary to make the statements herein and
therein not misleading. To the best of its knowledge, Seller has
disclosed to Buyer all material facts relating to the Assets and/or the Business
and the assets, liabilities, operations, financial condition, operating results
and prospects of Seller. There are no facts, conditions or
circumstances known to Seller which would or may have a material adverse effect
on Seller by reason of any matter relating to defective products designed,
manufactured or sold, or services rendered or performed, by Seller under any
express or implied warranty with respect to jobs completed, products or goods
delivered to customers of Seller or services performed by Seller
2.23 Acceptance of Purchase Price
Shares.
(a) The
Selling Shareholders acknowledge that, unless they have been advised by Buyer
that a current registration statement is in effect covering the resale of the
Purchase Price Shares, because the Purchase Price Shares have not been
registered under the Act, the Purchase Price Shares must be held by the Selling
Shareholders indefinitely unless subsequently registered under the Act or an
exemption from such registration is available. The Selling Shareholders are
aware of the provision of Rule 144 promulgated under the Act that permits the
limited resale of shares subject to the satisfaction of certain conditions,
including, among other things, the satisfaction of having held the Purchase
Price Shares for a certain duration of time, the availability of certain current
public information about the Buyer, the sale being through a "broker's
transaction" (as provided by Rule 144(f)), and the volume of shares sold not
exceeding specified limitations (unless the sale is within the requirements of
Rule 144(k)).
(b) The
Selling Shareholders each is: (i) an accredited investors as defined in Rule
501(a) of Regulation D of the SEC; (ii)(A) either alone or with the Selling
Shareholders’ professional advisor or advisors, has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of acquiring the Purchase Price Shares, (B) either alone by
reason of the Selling Shareholders’ business or financial experience or together
with the Selling Shareholders’ professional advisor or advisors, has the
capacity to protect the Selling Shareholders’ interests in connection with
acquisition of the Purchase Price Shares; and (iii) able to bear the economic
risk of the investment in the Purchase Price Shares, including a complete loss
of the investment.
(c) The
Selling Shareholders each has had an opportunity to ask questions of and receive
answers from Buyer or its representatives concerning the Purchase Price Shares,
all such questions have been answered to the full satisfaction of each Selling
Shareholder, and the Selling Shareholders each has had the opportunity to
request and obtain any additional information the Selling Shareholders deemed
necessary to verify or supplement the information contained therein. Each of the
Selling Shareholders has reviewed and understands the disclosure provided in
Buyer’s Form 10-K filed with the SEC on April 15, 2008, Form 10-K/A filed with
the SEC on April 30, 2008 and Form 10-Q filed with the SEC on May 19,
2008.
(d) The
Selling Shareholders each recognize that an investment in the Purchase price
Shares involves substantial risks, and is fully aware of and understands all of
the risk factors related to the acquisition of the Purchase Price Shares. Each
of the Selling Shareholders has determined that the acquisition of the Purchase
Price Shares is consistent with their investment objectives.
9
(e) The
Selling Shareholders are not relying on Buyer with respect to tax and other
economic considerations involved in the acquisition of the Purchase Price Shares
and each has carefully considered and has, to the extent they believe such
discussion is necessary, discussed with each of their professional, legal, tax,
accounting and financial advisors the suitability of an investment in the
Purchase Price Shares for each of the Selling Shareholders’ particular tax and
financial situation.
(f) The
Selling Shareholders understand that the Purchase Price Shares shall bear one or
more of the following restrictive legends:
(i) "THESE
SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS OF ANY
STATE. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION AND
QUALIFICATION UNDER THE ACT AND SUCH LAWS IS NOT REQUIRED"; and
(ii)
Any
legend required by applicable state law.
(g) he
provisions of Rule 144 promulgated under the Act notwithstanding, the Selling
Shareholders acknowledge and agree that, in the absence of an effective
registration statement with respect to the Purchase Price Shares stating
otherwise: (i) A total of one million Purchase Price Shares shall be held by
Selling Shareholders for a minimum period of two years from the date of closing,
prior to any sale, transfer or hypothecation of such shares; and (ii) a total of
one million Purchase price Shares shall be held by Selling Shareholders for a
minimum period of three years from the date of closing, prior to any sale,
transfer or hypothecation of such shares.
ARTICLE
3
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer
hereby represents and warrants to the Selling Parties that:
3.1 Corporate
Organization. Buyer is a corporation duly formed, validly existing and in
good standing under the laws of Delaware. Buyer has delivered to Seller all
documents requested by Seller relating to the existence of Buyer, the authority
of Buyer to enter into this Agreement and in furtherance of the transactions
contemplated by this Agreement, including any financing documents.
3.2 Authorization. Buyer
has the full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized and no other
corporate or shareholder actions on the part of Buyer are necessary to authorize
the execution and delivery by Buyer of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and (assuming due and valid authorization, execution and
delivery hereof by the Selling Parties) is a valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar Laws affecting creditors’ rights generally and by the availability of
equitable remedies.
3.3 No Violation;
Consents. Neither the execution, delivery or performance of this
Agreement by Buyer nor the consummation by Buyer of the transactions
contemplated hereby will (i) conflict with or violate any provision of the
Restated Certificate of Incorporation, as amended from time to time, of Buyer;
(ii) conflict with or result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of notice, modification, payment, termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, lease, license, permit, contract, agreement or
other instrument, obligation, arrangement or understanding to which Buyer is a
party or by which it or any of its properties or assets may be bound;
(iii) violate any Law applicable to Buyer or any of its properties or
assets or (iv) require on the part of Buyer any material filing or
registration with, notification to, or authorization, consent or approval of,
any Governmental Authority, except in the case of clause (ii) or
(iv) for such violations, breaches or defaults which, or filings,
registrations, notifications, authorizations, consents or approvals the failure
of which to obtain would prevent Buyer from consummating the transactions
contemplated by this Agreement.
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3.5 Brokers. Buyer is not
a party to any agreement with any finder, broker or consultant, or in any way
obligated to any finder, broker or consultant for any commissions, fees or
expenses, in connection with the origin, negotiation, execution or performance
of this Agreement.
ARTICLE
4
COVENANTS
4.1 Taxes; Post-Closing
Access.
(a) All
real estate Taxes, personal property Taxes and similar ad valorem obligations
levied with respect to the Assets for a taxable period that includes (but does
not end on) the Closing Date shall be apportioned between Seller, on the one
hand, and Buyer, on the other hand, as of the Closing Date based on the number
of days of such taxable period included in the period ending with and including
the Closing Date (with respect to any such taxable period, the “Pre-Closing Tax
Period”), and the number of days of such taxable period beginning after
the Closing Date (with respect to any such taxable period, the “Post-Closing Tax
Period”). Seller shall be liable for the proportionate amount of such
Taxes that is attributable to the Pre-Closing Tax Period, and Buyer shall be
liable for the proportionate amount of such Taxes that is attributable to the
Post-Closing Tax Period.
(b) After
the Closing, upon reasonable notice, Buyer, on the one hand, and Seller, on the
other hand, agree to furnish or cause to be furnished to each other and their
representatives, employees, counsel and accountants access, during normal
business hours, to such information (including access to books and records) and
assistance relating to the Assets as are reasonably necessary for financial
reporting and accounting matters relating to the Assets, the preparation and
filing of any Tax Returns, reports or forms relating to the Assets, the making
of any election relating to Taxes, the preparation for any audit, including but
not limited to, by any taxing authority, the defense of any Tax or other claim
or assessment relating to the Assets or, in the case of Seller, for any lawful
purpose relating to the conduct of the Business prior to the Closing, provided,
however, that such access and assistance do not unreasonably disrupt the normal
operations of Buyer, in the case of access and assistance given to Seller, or
Seller, in the case of access and assistance given to Buyer.
(c) At
the request of Seller in reliance on Seller’s representation in Section 2.10 of
this Agreement, Seller’s covenant in Section 4.8 of this Agreement, and the
Selling Parties’ indemnification obligation in Article 5 of this Agreement, the
parties have not complied with the provisions of the “bulk sales,” “bulk transfer” or
similar Laws of any state or political subdivision.
4.2 Employees.
(a) Prior
to the Closing, Buyer shall not be prohibited from soliciting any of Seller’s
employees and the Selling Parties shall reasonably cooperate with the Buyer in
connection with any employment offers contemplated under this
Section 4.2. Buyer shall undertake good-faith efforts to conduct
such solicitation in a manner which is not disruptive to Seller's ongoing
business activities.
(b) Effective
immediately prior to the Closing, Seller has terminated all employees and will
pay any and all obligations arising from that termination. Effective
as of the Closing, the Buyer shall offer employment to all employees listed on
Section 4.2(b) of the Seller Disclosure Schedule on terms (including
salary) comparable to currently offered terms to such employees by Seller. Any
employees receiving offers of employment from the Buyer and who accept such
employment offer are hereinafter referred to as “Transferred
Employees”. Buyer may require the Transferred Employees waive
any claims against Buyer for any matters arising prior to Closing as a condition
of hiring.
4.3 Publicity. Except as
may be required by Law, no public announcements relating to the Agreement or the
transaction shall be made without the prior consent of the other party. Buyer
acknowledges that the Selling Parties will issue a press release relating to the
transactions contemplated by this Agreement and will file a Form 8-K with the
United States Securities and Exchange Commission which will include a copy of
this Agreement, provided, that Buyer will have an opportunity to review and
comment on the Form 8-K and press release prior thereto.
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4.5 Confidentiality. The
Selling Parties agree that, from and after the Closing, except as otherwise
consented to in writing by Buyer or to comply with this Agreement or applicable
Laws, (i) they will not directly or indirectly disclose or use in a manner
adverse to Buyer or the Business, any confidential information related to the
Business or the Assets, and (ii) if any of the Selling Parties receive a request
to disclose all or any part of such confidential information in connection with
a legal proceeding, such party will (A) promptly notify Buyer of the
existence, terms and circumstances surrounding such request, to the extent
permitted by Law, (B) if requested by Buyer, seek a protective order with
respect to the disclosure of such confidential information at the expense of
Buyer, and (C) in the event no such protective order or other remedy is
obtained and disclosure of such information is required, exercise their
reasonable best efforts, if requested by Buyer, to obtain an order or other
reliable assurance that confidential treatment will be accorded to such
confidential information required to be disclosed, at the reasonable expense of
Buyer.
4.6 Further Assurances.
After the Closing, the Selling Parties shall, from time to time, at the request
of Buyer, and without further expense to Buyer, execute and deliver such other
instruments of conveyance and transfer (including powers of attorney) as Buyer
may reasonably request, in order to more effectively consummate the transactions
contemplated hereby and to vest in Buyer good and marketable title to the Assets
(or in the case of the Xxxxxxxx Lease, valid leasehold interests), including
assistance in the collection or reduction to possession of any such
Assets.
4.7 Change of Name. On
the Closing Date, Seller shall amend its organizational documents so as to
delete therefrom the words “Air-Tight Marketing &
Distribution” or “Air-Tight Marketing &
Distribution, Inc.” as applicable and will file, as promptly as
practicable, but in no event later than three (3) business days therafter, such
documents as are necessary to reflect such name change in its state of formation
or organization and the other jurisdictions where it is qualified to do business
as a foreign Person. Seller further agrees that, from and after the Closing,
except as otherwise provided in the Licensed Applicator Agreement, Seller will
not adopt any name that is confusingly similar to “Air-Tight Marketing &
Distribution” or “Air-Tight Marketing &
Distribution, Inc.”.
4.9 Non-Competition and Related
Matters.
(a) Non-Competition. As
a material inducement to Buyer entering into this Agreement, the Selling Parties
agree that they shall not for a period of five (5) years (“Restricted Period”),
either directly or indirectly, for himself or any third party, anywhere in North
America: (a) engage in or have any interest in any activity that
directly or indirectly competes or intends to compete with the business of Buyer
or of any of its affiliates (which for purposes hereof shall include all
subsidiaries or parent companies of Buyer, now or in the future during the
Restricted Period), as currently conducted and contemplated and disclosed to the
Sellers, including without limitation, accepting employment from or providing
consulting services to any such competitor, owning any interest in or being a
partner, shareholder or owner of any such competitor, (b) solicit, induce,
recruit, or cause another person in the employ of Buyer or its affiliates or who
is a consultant or independent contractor for Buyer or its affiliates to
terminate his employment, engagement or other relationship with Buyer or its
affiliates, or (c) except as permitted in the Licensed Applicator Agreement,
solicit or accept business from any individual or entity which shall have
obtained the goods or services of, or purchased goods or services from, Seller
or Buyer or which otherwise competes with or engages in a business which is
competitive with or similar to the business of Buyer or any of its affiliates,
(d) except as permitted in the Licensed Applicator Agreement, call on, solicit
or accept any business from any of the actual or targeted prospective customers
of Seller or Buyer and its affiliates (the identity of and information
concerning which constitute trade secrets and Confidential Information of Buyer)
on behalf of any person or entity in connection with any business competitive
with the business of Buyer, nor shall Sellers make known the names and addresses
of such customers or any information relating in any manner to Seller’s or
Buyer’s trade or business relationships with such customers.
12
(b) Acknowledgment by Selling
Parties. The Selling Parties acknowledge and confirm that (i)
the restrictive covenants contained in this Agreement are reasonably necessary
to protect the legitimate business interests of the Buyer, and (ii) the
restrictions contained in this Agreement (including without limitation the
geographic area and length of the term of the provisions of Section 2 are not
overbroad, overlong, or unfair and are not the result of overreaching, duress or
coercion of any kind. The Selling Shareholders acknowledge and confirm that
their special knowledge of the business of Seller is or will be such as would
cause Buyer serious injury or loss and substantially diminish the value of the
Business if he were to use such ability and knowledge to the benefit of a
competitor or were to compete with Buyer in violation of the terms of this
Agreement. The Selling Parties further acknowledges that the restrictions
contained in this Agreement are intended to be, and shall be, for the benefit of
and shall be enforceable by, Buyer’s successors and assigns and shall be
enforced to the fullest extent of the law applicable at the time that Buyer
deems it necessary or advisable to enforce the restrictive covenants and other
provisions of this Agreement.
(c) Injunctive Relief;
Damages. Because of the difficulty of measuring economic
losses to Buyer as a result of a breach of the covenants in this Agreement, and
because of the immediate and irreparable damage that could be caused to Buyer
for which it would have no other adequate remedy, the Selling Parties agree that
the covenants in this Agreement may be enforced by Buyer in the event of breach
by any of the Selling Parties, by injunctions and restraining orders. Nothing
herein shall be construed as prohibiting Buyer from pursuing any other available
remedy for such breach or threatened breach, including recovery of
damages.
(d) Severability; Reformation;
Independent Covenants. The covenants in this Agreement are severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed. Each covenant and agreement of the
Selling Parties in this Agreement shall be construed as an agreement independent
of any other provision in this Agreement, and the existence of any claim or
cause of action by the Selling Parties against Buyer (including the affiliates
thereof), whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Buyer of such covenants or
agreements. It is specifically agreed that the periods of restriction
during which the agreements and covenants of the Selling Parties made in this
Agreement shall be effective, shall be computed by extending such periods by the
amount of time during which the Selling Parties each is in violation of any
provision of this Agreement. The covenants contained in this Agreement shall not
be affected by any breach of any other provision hereof by any party
hereto.
(e) Survival. The
obligations of the parties under this Agreement shall survive the termination of
this Agreement.
(a) All
payments and reimbursements made in the ordinary course of business by any third
party in the name of or to Seller or any affiliate thereof in connection with or
arising out of the Assets or the Assumed Liabilities after the Closing Date, or
any inventory that is part of the Assets that is returned to Seller or any
affiliate thereof, shall be held by such Person in trust for the benefit of
Buyer and, immediately upon receipt by such Person of any such payment,
reimbursement or inventory such Person shall pay over to Buyer the amount of
such payment or reimbursement or deliver to Buyer such inventory without right
of set off.
(b) All
payments and reimbursements made in the ordinary course of business by any third
party in the name of or to Buyer or any affiliate thereof in connection with or
arising out of the Excluded Assets or Excluded Liabilities after the Closing
Date shall be held by such Person in trust for the benefit of Seller and,
immediately upon receipt by such Person of any such payment or reimbursement,
such Person shall pay over Seller the amount of such payment or reimbursement
without right of set off.
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SURVIVAL AND
INDEMNIFICATION
5.1 Survival of Representations,
Warranties and Covenants. All representations and warranties of each
party contained in this Agreement shall survive the Closing, for a period ending
twelve months from the Closing Date, except that: (a) the representations
and warranties set forth in Sections 2.1, 2.2, 2.7, 2.8, 3.1 and 3.2 shall
survive until the applicable statute of limitations has run plus 30 days;
and (b) all representations or warranties shall survive beyond such period
with respect to any inaccuracy therein or breach thereof, notice of which shall
have been duly given within such applicable period in accordance with Section
5.3(a) hereof. The covenants and agreements contained herein shall survive the
Closing without limitation as to time unless the covenant or agreement specifies
a term, in which case such covenant or agreement shall survive for such
specified term.
5.2
Indemnification.
(a) Subject
to the limits set forth in this Article 5, the
Selling Parties agree to jointly and severally indemnify, defend and hold Buyer,
its officers, directors, employees, agents, representatives and affiliates,
harmless from and in respect of any and all actual losses, damages, costs and
expenses (including, demands, suits, claims, actions, assessments, Liabilities,
judgments, expenses of investigation and reasonable fees and disbursements of
counsel) (collectively, “Losses”), that they
may incur arising out of or due to (i) the breach of any representation or
warranty of any of the Selling Parties contained in this Agreement,
(ii) the breach by any of the Selling Parties of any covenant, undertaking
or other agreement of any of the Selling Parties contained in this Agreement,
(iii) the Excluded Liabilities, (iv) enforcing the indemnification
rights of Buyer pursuant to this Article 5, (v)
non-compliance with any applicable bulk sales laws and (vi) transfer, sales or
use taxes arising from the transactions contemplated in this
Agreement.
(b) Subject
to the limits set forth in this Article 5, Buyer
agrees to indemnify, defend and hold the Selling Parties and their respective
officers, directors, employees, agents, representatives and affiliates, harmless
from and in respect of any and all Losses that they may incur arising out of or
due to (i) the breach of any representation or warranty of Buyer contained
in this Agreement, (ii) the breach by Buyer of any covenant, undertaking or
other agreement of Buyer contained in this Agreement, (iii) the Assumed
Liabilities, and (iv) enforcing the indemnification rights of the Selling
Parties pursuant to this Article
5.
(c) Neither
the Selling Parties nor Buyer shall have any liability with respect to matters
described in Sections 5.2(a) or 5.2(b), respectively, for Losses (other than in
the case of fraud) until the total of all Losses exceeds $25,000 and then the
full amount of such Losses shall be subject to indemnification hereunder. The
parties hereby acknowledge and agree that their sole and exclusive remedy with
respect to any and all claims (other than in the case of fraud) relating to the
subject matter of this Agreement and the transactions contemplated hereby shall
be pursuant to the indemnification provisions set forth in this Article 5.
In no event shall a party be entitled to recover any consequential or punitive
damages of any kind under this Agreement. For the purposes of computing the
amount of any Losses incurred under this Article 5 there
shall be deducted an amount equal to the amount of any insurance proceeds,
indemnification payments, contribution payment or reimbursements actually
received in the respect of such Losses or any of the circumstances giving rise
thereto, other than pursuant to this Agreement. The indemnification obligations
of the Selling Parties under Sections 5.2(a)(i) and 5.2(a)(ii) and the
indemnification obligations of Buyer under Sections 5.2(b)(i) and 5.2(b)(ii)
shall survive the Closing Date for only the periods specified in Section 5.1 and
no claim for the recovery of Losses may be asserted by either the Selling
Parties or Buyer after such periods specified in Section 5.1. The parties agree
that any indemnification payments made pursuant to this Agreement shall be
treated for tax purposes as an adjustment to the Purchase Price, unless
otherwise required by applicable Law. Subject to the foregoing,
the Note shall permit Buyer to offset any unpaid obligations of the Selling
Parties pursuant to Section 5.2(a) above from any amounts due thereunder in
addition to any and all other remedies provided herein or at law or in
equity.
5.3 Claims for
Indemnification.
(a) The
parties intend that all indemnification claims be made as promptly as
practicable by the party seeking indemnification (the “Indemnified Party”).
Whenever any claim shall arise for indemnification, the Indemnified Party shall
promptly notify the party from whom indemnification is sought (“Indemnifying Party”)
of the claim, and the facts constituting the basis for such claim. The failure
to so notify the Indemnifying Party shall not relieve the Indemnifying Party of
any liability that it may have to the Indemnified Party, except to the extent
the Indemnifying Party demonstrates that the defense of such action is
materially prejudiced thereby.
14
(b) With
respect to claims made by third parties, the Indemnifying Party, upon
acknowledgement of its obligations under the terms of the indemnity hereunder in
connection with such third party claim, shall be entitled to assume the defense
of such action or claim with counsel reasonably satisfactory to the Indemnified
Party. No Indemnifying Party shall consent to the entry of any judgment or enter
into any settlement without the consent of the Indemnified Party (A) if
such judgment or settlement does not include as an unconditional term thereof
the giving by each claimant or plaintiff to each Indemnified Party of a release
from all liability in respect to such claim, (B) if such judgment or
settlement would result in the finding or admission of any violation of Law, or
(C) if as a result of such consent or settlement, injunctive or other
equitable relief would be imposed against the Indemnified Party or such judgment
or settlement would interfere with or adversely affect the business, operations
or assets of the Indemnified Party. The Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in the defense against any such
asserted claim. The Indemnified Party shall have the right to participate at its
own expense in the defense of such asserted claim, but shall not be entitled to
settle or compromise such asserted claim without the prior written consent of
the Indemnifying Party, such consent not to be unreasonably withheld.
Notwithstanding the foregoing, if (i) the claim for indemnification is with
respect to a criminal proceeding, action, indictment, allegation or
investigation against the Indemnified Party, (ii) the Indemnified Party has
been advised by counsel that a reasonable likelihood exists of a conflict of
interest between the Indemnifying Party and the Indemnified Party,
(iii) the Indemnifying Party has failed or is failing to vigorously
prosecute or defend such claim or shall have failed to have engaged counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time or (iv) the claim seeks an injunction or other equitable relief
against the Indemnified Party, then (A) the Indemnifying Party shall not be
entitled to assume the defense of any such claim or action, (B) the
Indemnified Party shall have the right to conduct and control the defense of
such action or claim with counsel of its choosing and the reasonable legal and
other expenses incurred by the Indemnified Party shall be borne by the
Indemnifying Party and (C) the Indemnifying Party shall not be bound by any
defense or settlement that the Indemnified Party shall make in respect to such
action or claim without the consent of the Indemnifying Party.
CONDITIONS TO
CLOSING
6.1 Conditions to Seller’s
Obligations. The obligation of Seller to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Seller) of each of the following conditions on or prior to the
Closing Date:
(a) the
representations and warranties of Buyer contained in this Agreement shall be
true and correct, without giving effect to any qualification as to materiality
(or any variation of such term) contained in any particular representation or
warranty, on and as of, the Closing Date, as though such representations and
warranties were made on and as of the Closing Date, except to the extent that
any such breach together with all other such breaches does not materially impair
Buyer’s ability to perform its obligations hereunder. Buyer shall have delivered
to Seller a certificate of its duly-authorized office, dated as of the Closing
Date, to the foregoing effect;
(b) Buyer
shall have performed and complied in all material respects with all covenants to
be performed or complied with by it on or prior to the Closing Date. Buyer shall
have delivered to Seller a certificate, dated the Closing Date, to the foregoing
effect;
(c) no
Law shall have been enacted, issued, promulgated, enforced or entered which is
in effect and has the effect of making the sale of the Assets by Seller to Buyer
or any of the other transaction contemplated by this Agreement illegal or
otherwise restraining or prohibiting the consummation of the sale of the Assets
by Seller to Buyer or any of the other transactions contemplated by this
Agreement; and
(d) the
consents, authorizations, approvals and waivers set on the Seller Disclosure
Schedule 6.1(d) shall have been obtained.
15
(a) the
representations and warranties of Seller and Selling Shareholders contained in
this Agreement shall be true and correct, without giving effect to any
qualification as to materiality or Material Adverse Effect (or any variation of
such terms) contained in any particular representation or warranty, on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date, except to the extent any such breach together with all other such
breaches does not, or could not reasonably be expected to constitute a Material
Adverse Effect. Seller shall have delivered to Buyer a certificate of its
President, a Vice President or Secretary, dated the Closing Date, to the
foregoing effect;
(b) Seller
shall have performed and complied in all material respects with all covenants to
be performed or complied with by it on or prior to the Closing Date. Seller
shall have delivered to Buyer a certificate of its President, a Vice President
or Secretary, dated the Closing Date, to the foregoing effect; and
(c) no
Law shall have been enacted, issued, promulgated, enforced or entered which is
in effect and has the effect of making the sale of the Assets by Seller to Buyer
or any of the other transaction contemplated by this Agreement illegal or
otherwise restraining, or prohibiting the consummation of the sale of the Assets
by Seller to Buyer or any of the other transactions contemplated by this
Agreement.
(d) Buyer
shall have obtained any required written consents of its lender, ComVest Capital
LLC, to this Agreement and the Option Agreement with Xxx X. Xxxxxxx, on terms
acceptable to Buyer in its sole discretion.
(e) Each
of the Transferred Employees identified on Section 4.2(b) of the Seller
Disclosure Schedule as "Key Employees" shall have entered into employment
agreements with Buyer on terms acceptable to Buyer in its sole
discretion.
(f) Seller
shall have delivered to Buyer a Tax Clearance letter from the Georgia Department
of Revenue.
(g) Seller
shall have delivered to Buyer a sales tax exemption resale certificate with
respect to inventory included in the Assets.
(h) Buyer
shall have received a lien search report with respect to the Assets which shall
be satisfactory to Buyer in all respects.
TERMINATION
7.1 Termination. This
Agreement and the transactions contemplated hereby may be terminated in any of
the following ways at any time before the Closing and in no other
manner:
(a) by
mutual written consent of Buyer, Seller and Selling Shareholders;
(b) by
Buyer or Selling Parties (if such terminating party is not then in default of
any of its obligation hereunder), by written notice to the other, if the Closing
shall not have occurred on or before July 1, 2008;
7.2 Effect of
Termination. In the event this Agreement is terminated pursuant to
Section 7.1, all further obligations of the parties hereunder shall
terminate, except for the obligations set forth in Sections 4.4, 7.2 and 8.2,
and except that nothing in this Section 7.2 shall relieve any party hereto of
any liability for breach of this Agreement prior to such
termination.
MISCELLANEOUS
8.1 Amendment, Extension and
Waiver. Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
16
8.3 Entire Agreement; No
Third-Party Beneficiaries. This Agreement, and the Seller Disclosure
Schedule constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement shall be deemed to replace the
Asset Purchase Agreement entered into between the parties on June 3, 2008 (the
"Former Agreement").
8.4 Headings. The Article
and Section headings contained herein are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.
8.5 Notices. All notices,
requests, demands and other communications made under or by reason of the
provisions of this Agreement shall be in writing and shall be given by hand
delivery, overnight air courier or facsimile transmission to the parties at the
addresses set forth below.
|
If
to any of the Selling Parties:
|
Xxxxx
X. Xxxxxxx and Xxx X. Xxxxxxx
|
000 Xxxx
Xxxx Xxxxxx
X.X. Xxx
000
Xxxxxxxx,
Xxxxxxx 00000
Fax:
000-000-0000
With a
copy (which shall not constitute notice)
|
given
in the manner prescribed above, to:
|
Xxxxxxxx
X. Xxxxxx
|
Xxxxxxxx,
Xxxxx & Xxxxxx, LLC
5555
Glenridge Connector, Suite 000
Xxxxxxxxx
Xxxxxxxxx
Xxxxxxx,
Xxxxxxx 00000
Fax:
(000) 000-0000
|
|
If
to Buyer:
|
LaPolla
Industries, Inc.
|
00000
Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Fax:
(000) 000-0000
With a
copy (which shall not constitute notice)
|
given
in the manner prescribed above, to:
|
Xxxxxxx
X. Xxxxxxxxxx
|
Xxxxxx
Xxxxxxxx, LLP
0000 Xxx
Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Fax:
(000) 000-0000
Any such
notice, request, demand or other communication shall be deemed to have been
received (i) when delivered, if delivered by hand or sent by facsimile, or
(ii) on the second (2nd) business day after dispatch, if sent by overnight
air courier.
8.6 Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, legal representatives and assigns, but this
Agreement may not be assigned by any party without the written consent of the
other parties.
8.7 Severability. Any
term or provision of this Agreement that is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent jurisdiction or
other authority declares that any term or provision hereof is invalid, void or
unenforceable, the parties agree that the court making such determination shall
have the power to reduce the scope, duration, area or applicability of the term
or provision, to delete specific words or phrases, or to replace any invalid,
void or unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
17
8.8 Applicable Law. This
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of Texas, without giving effect to the conflict of
laws provisions thereof.
8.9 Interpretation. When
a reference is made in this Agreement to Sections, such reference shall be to a
Section of this Agreement unless otherwise indicated. Whenever the words “include”, “includes” or “including” are used
in this Agreement they shall be deemed to be followed by the words “without limitation.”
As used in this Agreement, the term “affiliate” shall have
the meaning set forth in Rule 12b-2 of the Securities Exchange Act of 1934,
as amended. The words describing the singular number shall include the plural
and vice versa, and words denoting any gender shall include all genders and
words denoting natural persons shall include corporations and partnerships and
vice versa.
8.10 Jurisdiction and
Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to conflict of
laws principles to the extent that such principles would require the application
of laws other than the laws of the state of Texas. Jurisdiction and
venue for any action brought hereunder or in connection herewith shall be in
Xxxxxx County, Texas and the parties hereto waive any claim that such forum is
inconvenient.
8.11 Arbitration. It
is the goal of the parties to maintain, at all times, a constructive and
positive relationship on the matters described above. However, should a dispute
arise between the parties, the parties believe that a prompt and fair resolution
is in the interests of all concerned. To this end, if any controversy or claim
arises out of or relating to this Agreement in connection with the above
described or any other matters, both parties waive any right to bring a court
action or have a jury trial and agree that the dispute shall be submitted to
binding arbitration to be conducted in the city of Houston, county of Xxxxxx,
state of Texas before the American Arbitration Association (“AAA”) in accordance
with the Commercial Arbitration Rules of the AAA.
8.12 Specific Performance.
Each of the parties acknowledges and agrees that the other party would be
damaged irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the parties agrees that the other party shall be entitled
to seek an injunction or injunctions to prevent breaches of the provisions of
this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof, in addition to any other remedy to which it may be entitled,
at law or in equity.
8.13 Counterparts. This
Agreement may be executed simultaneously in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
ARTICLE
9
CERTAIN
DEFINITIONS
As used
in this Agreement, the following terms shall have the following
meanings:
“Act” means the
Securities Act of 1933, as amended.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Intellectual
Property” means all patents and patent rights, trademarks and trademark
rights, trade names and trade name rights, service marks and service xxxx
rights, brand names, inventions, copyrights and copyright rights, processes,
formulae, trade dress, business and product names, logos, slogans, trade
secrets, industrial models, patterns, designs, methodologies, computer programs
and related documentation, technical information, manufacturing, engineering and
technical drawings and all pending applications for and registrations of
patents, trademarks, service marks and copyrights.
“Liabilities” means
any and all debts, losses, expenses, liabilities, damages, fines, costs,
royalties, proceedings, deficiencies or obligations of any nature (whether known
or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, due or to become due, and whether or not
resulting from third-party claims) and any out-of-pocket costs and expenses
(including attorneys, accountants or other fees) including any liability for
Taxes.
18
“Liens” means all
mortgages, pledges, security interests, deeds of trust, liens, charges, options,
conditional sales contracts, restrictions, easements, rights of way, title
defects or other encumbrances or restrictions of any nature
whatsoever.
“Material Adverse
Effect” means any event, change, development, effect or occurrence that
has a material adverse effect on (i) the business, customers, operations,
properties, condition (financial or otherwise), assets or Liabilities of Seller
or the Business, or (ii) the ability of any of the Selling Parties to
consummate the transactions contemplated by this Agreement.
“Permitted Liens”
means (a) Liens for Taxes, assessments and governmental charges or levies
not yet due and payable, or if due, (A) not delinquent or (B) being
contested in good faith by appropriate proceedings; (b) materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens
arising in the ordinary course of business that are not, individually or in the
aggregate, material or if the underlying obligations are not past due;
(c) with respect to real property only, survey exceptions, Liens, and all
matters of record (including, but not limited to, easements, rights of way,
zoning and building codes and ordinances) that do not, individually or in the
aggregate, materially adversely affect the value of such real property or the
use of such real property; or (d) Liens set forth on the Seller Disclosure
Schedule in 9 (Permitted Liens Schedule).
“Person” means any
corporation, individual, joint stock company, joint venture, partnership,
limited liability company, unincorporated association, Governmental Authority,
country, state or political subdivision thereof, trust or other
entity.
“Purchase Price
Shares” means the 2,000,000 shares of fully paid and nonassessable
restricted common stock delivered to Selling Shareholders as part of the
Purchase Price.
“Seller’s Knowledge”
or “Knowledge of
Seller” means the actual knowledge of Xxxxx X. Xxxxxxx and Xxx X. Xxxxxxx
after due investigation and inquiry.
“Tax” or “Taxes” means all
taxes, assessments, charges, duties, fees, levies, imposts or other governmental
charges, including all federal, state, local, foreign and other income,
environmental, add-on, minimum, franchise, profits, capital gains, capital
stock, capital structure, transfer, sales, gross receipt, use, ad valorem,
service, service use, lease, recording, customs, occupation, property, excise,
gift, severance, windfall profits, premium, stamp, license, payroll, social
security, employment, unemployment, disability, value-added, withholding,
escheat and other taxes, assessments, charges, duties, fees, levies, imposts or
other governmental charges of any kind whatsoever and all estimated taxes,
deficiency assessments, additions to tax, additional amounts imposed by an
governmental authority, penalties, fines and interest, and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person, regardless of whether disputed.
“Tax Return” means any
return, report, declaration, information return, filing or other document
(including any amendments thereto or related or supporting information) filed or
required to be filed with respect to Taxes.
[THE
REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
19
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by the duly authorized officer of each of the Seller,
Selling Shareholders and Buyer as of the day and year first above
written.
|
LAPOLLA
INDUSTRIES, INC.
|
||
|
By:
|
/s/ Xxxxxxx
X. Xxxxxx, CEO
|
|
|
Name:
|
Xxxxxxx
X. Xxxxxx
|
|
|
Title:
|
President
and CEO
|
|
|
AIR-TIGHT
MARKETING & DISTRIBUTION, INC.
|
||
|
By:
|
/s/ Xxx X. Xxxxxxx | |
|
Name:
|
Xxx
X. Xxxxxxx
|
|
|
Title:
|
President
|
|
|
XXXXX
X. XXXXXXX
|
||
|
By:
|
/s/ Xxxxx
X. Xxxxxxx by Xxx X. Xxxxxxx, POA
|
|
|
Individually
and as Shareholder of
|
||
|
Air-Tight
Marketing & Distribution, Inc.
|
||
|
XXX
X. XXXXXXX
|
||
|
By:
|
/s/ Xxx X.
Xxxxxxx
|
|
|
Individually
and as Shareholder of
|
||
|
Air-Tight
Marketing & Distribution,
Inc.
|
||
20
EXHIBIT
1.5(b)
PROMISSORY
NOTE
|
$1,400,000.00
|
July
1, 0000
|
Xxxxxxx,
Xxxxx
FOR VALUE
RECEIVED, the undersigned, LaPolla Industries, Inc., a Delaware corporation
("Maker"),
promises to pay to the order of AirTight Marketing & Distribution, Inc., a
Georgia corporation, Xxxxx X. Xxxxxxx and Xxx X. Xxxxxxx (collectively herein
called "Payee",
which term shall herein in every instance refer to any owner or holder of this
Note) the sum of One Million Four Hundred Thousand and No/100 Dollars
($1,400,000.00), payable as hereinafter stated being payable in lawful money of
the United States of America at 000 Xxxx Xxxx Xxxxxx, X.X. Xxx 000, Xxxxxxxx,
Xxxxxxx 00000 or at such other place as Payee may hereafter designate
in writing.
The
principal balance hereof advanced and from time to time remaining unpaid shall
be paid in four (4) equal installments of Two Hundred Fifty Thousand and No/100
Dollars ($250,000.00), payable to Payee on the last of each calendar year, with
the first such payment due December 31, 2008, and continuing thereafter until a
final installment representing the remaining principal balance shall have been
repaid in accordance with the terms hereof on December 31, 2012 (the "Final
Payment"). Notwithstanding the foregoing, in the event Maker
is entitled to any adjustment of the Purchase Price in accordance with Section
1.7 of that certain Amended and Restated Asset Purchase Agreement by and between
Maker as buyer and Payee, as seller (the "Asset Purchase
Agreement"), dated July 1, 2008, the Final Payment shall be adjusted
accordingly and Maker's obligations hereunder shall be adjusted to reflect the
adjusted amount under the Asset Purchase Agreement. In addition,
Maker shall be entitled to offset any amount due hereunder by the amount of any
Losses (as defined in Section 5.2(a) of the Asset Purchase Agreement) suffered
by Maker. Maker may prepay this Note in whole or in part at any time
without being required to pay any penalty or premium for such
privilege.
Notwithstanding
the foregoing, in the event the none of the New Division Gross Sales Targets (as
defined herein) shall be met, the Final Payment shall be reduced by $150,000.00,
such amount being deemed waived and released by Payee for all purposes
herein. The term "New Division
Gross Sales Targets" shall mean Base Gross Revenue [as defined in that
certain Executive Employment Agreement between Xxx X. Xxxxxxx and Maker dated as
of the date hereof (the "Employment Agreement")] of the New Division (as defined
in the Employment Agreement) for the applicable calendar year as
follows:
|
Calendar
Year
|
Base Gross
Revenue
|
|||
|
2008
|
$ | 14,000,000.00 | ||
|
2009
|
$ | 17,000,000.00 | ||
|
2010
|
$ | 20,000,000.00 | ||
|
2011
|
$ | 23,000,000.00 | ||
|
2012
|
$ | 26,000,000.00 | ||
The
principal balance hereof advanced and from time to time remaining unpaid shall
not bear interest. Notwithstanding the foregoing, with respect
to all past due and matured amounts due Payee hereunder such past due amounts
shall bear interest at a per annum rate equal to to the lesser of: (i) the rate
from time to time published by the Wall Street Journal as the prime rate for
commercial banks, which interest rate (herein called "Stated
Rate") shall change when and as said prime rate shall change, effective
at the close of business on the day of such change or (ii) the maximum lawful
rate of interest permitted by the applicable usury laws, now or hereafter
enacted, which interest rate (herein called "Maximum
Rate") shall change when and as said laws shall change, effective at the
close of business on the day such change in said laws becomes
effective. Notwithstanding the foregoing if at any time the Stated
Rate shall exceed the Maximum Rate and thereafter the Stated Rate shall become
less than the Maximum Rate, then interest hereon shall accrue at a rate equal to
the Maximum Rate until the aggregate amount of interest accrued hereunder equals
the aggregate amount of interest which would have accrued hereunder at the
Stated Rate without regard to any usury limit.
This Note
shall be governed by and construed under the applicable laws of the State of
Texas and the laws of the United States of America, except that Chapter 346 of
the Texas Finance Code, as amended (which regulates certain revolving credit
loan accounts and revolving tri-party accounts), shall not apply
hereto.
For
purposes of any suit relating to this Note, Maker hereof submits itself to the
jurisdiction of any Court sitting in the State of Texas and further agrees that
venue in any suit arising out of this Note or any venue shall be fixed in Xxxxxx
County, Texas.
|
LaPolla
Industries, Inc.
|
||
|
a
Delaware corporation
|
||
|
By:
|
/s/ Xxxxxxx
X. Xxxxxx, CEO
|
|
|
Name:
|
Xxxxxxx
X. Xxxxxx
|
|
|
Title:
|
President
and CEO
|
|
21
EXHIBIT
1.5(c)
AGREED
ALLOCATION OF PURCHASE PRICE
|
Debit
|
Credit
|
|||||||||||
|
Current
Assets
|
||||||||||||
|
Cash
|
$ | 125.28 | ||||||||||
|
Checking-Regions
|
$ | 32,954.74 | ||||||||||
|
Bank
of Madison
|
$ | 715.17 | ||||||||||
|
Accounts
Receivable
|
$ | 1,446,585.73 | ||||||||||
|
Undeposited
Funds
|
$ | 0.02 | ||||||||||
|
Inventory
Asset
|
$ | 306,550.93 | ||||||||||
|
Employee
Advance
|
$ | 21,610.23 | ||||||||||
|
Loans
to Shareholders
|
$ | 19,264.16 | ||||||||||
|
Total
|
$ | 1,827,806.26 | ||||||||||
|
Fixed
Assets
|
$ | 458,881.18 | ||||||||||
|
Current
Liabilities
|
||||||||||||
|
Accounts
Payable
|
$ | 1,884,101.13 | ||||||||||
|
Credit
Cards
|
$ | 771,632.39 | ||||||||||
|
Other
Current Liabilities
|
$ | (1,280.41 | ) | |||||||||
|
Total
|
$ | 2,654,453.11 | ||||||||||
|
Long
Term Liabilities
|
$ | 206,243.80 | ||||||||||
|
Purchase
Price
|
||||||||||||
|
Cash
|
$ | 1,500,000.00 | ||||||||||
|
Common
Stock
|
$ | 1,480,000.00 | ||||||||||
|
Goodwill
|
$ | 2,054,009.47 | ||||||||||
|
Other
Intangible Assets:
|
||||||||||||
|
Trademark
|
$ | 750,000.00 | ||||||||||
|
Customer
List
|
$ | 750,000.00 | ||||||||||
| $ | 5,840,696.91 | $ | 5,840,696.91 | |||||||||
22
EXHIBIT
1.7(c)
LIST
OF NEUTRAL AUDITORS
|
1.
|
UHY
LLP, HOUSTON, TEXAS
|
|
2.
|
XXXXXXXX
XXXXXXXXXX XXXXXXXXX, ATLANTA,
GEORGIA
|
23
EXHIBIT
1.9(f)
FORM
OF LICENSED APPLICATOR AGREEMENT
(**Omitted
for Confidentiality Reasons**)
