PLAN OF REORGANIZATION
by and between
GROUP 32 CORPORATION
and
HIREL MARKETING, INC.
______________, 1997
TABLE OF CONTENTS
ARTICLE I
RECITALS, EXHIBITS, SCHEDULES, SUBSCRIBERS.............................1
ARTICLE II
TRANSFER OF ASSETS.....................................................1
2.1 Transfer...................................................1
2.2 Excluded Assets............................................2
2.3 Assumption of Liabilities..................................2
2.4 Issuance of Stock; Transfer of Stock by Transferor. .......2
2.5 Qualification as Reorganization............................3
ARTICLE III
TRANSFEROR'S REPRESENTATIONS AND WARRANTIES............................3
3.1 Organization...............................................3
3.2 Stock Ownership............................................3
3.3 Authority and Approval of Agreement........................4
3.4 No Violations..............................................4
3.5 Names and Addresses........................................4
3.6 Financial Statements.......................................4
3.7 Conduct Since Date of Financial Statements.................5
3.8 Title to Assets............................................6
3.9 Lease of Real Property.....................................6
3.10 Contracts..................................................6
3.11 Offers.....................................................7
3.12 Officers, Employees, Agents, etc...........................7
3.13 Labor Matters..............................................7
3.14 Environmental Matters......................................7
3.15 Obligations................................................7
3.16 Books and Records..........................................7
3.17 Taxes......................................................8
3.18 Proceedings................................................8
3.19 Other Liabilities..........................................8
3.20 Consents...................................................8
3.21 Judgments..................................................8
3.22 Minute Books...............................................8
3.23 Brokerage Fees.............................................9
3.24 Compliance with Laws.......................................9
3.25 ...........................................................9
Improper Payments................................................9
3.26 Full Disclosure............................................9
3.40 No Advertising or Representations.........................10
3.28 Investment Intent.........................................10
3.29 Reliance on Representations...............................10
ARTICLE IV
ACQUIROR'S REPRESENTATIONS AND WARRANTIES.............................10
4.1 Organization..............................................10
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4.2 Stock Ownership...........................................11
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4.3 Authority and Approval of Agreement.......................11
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4.4 No Violations.............................................11
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4.5 Consents..................................................11
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4.6 Brokerage Fees............................................12
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4.7 Obligations...............................................12
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ARTICLE V
INTERPRETATION AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES..................................12
5.1 Interpretation............................................12
5.2 Reliance by Acquiror......................................12
5.3 Survival..................................................12
ARTICLE VI
OBLIGATIONS PRIOR TO CLOSING..........................................12
6.1 Conduct of Transferor Pending Closing.....................12
6.2 Conduct of Acquiror Pending Closing.......................13
6.3 Investigation.............................................13
6.7 Cooperation...............................................13
ARTICLE VII
CONDITIONS PRECEDENT TO ACQUIROR'S OBLIGATIONS........................14
7.1 Representations and Warranties of the Transferor..........14
7.2 Performance of this Agreement.............................14
7.3 Absence of Proceedings....................................14
7.4 Consents..................................................14
7.5 Good Standing Certificate.................................14
7.6 Material Adverse Change...................................14
7.7 Opinion of Counsel........................................15
7.8 Failure of Conditions.....................................15
7.9 Employment Agreement......................................15
ARTICLE VII
CONDITIONS PRECEDENT TO TRANSFEROR'S OBLIGATIONS......................15
8.1 Representations and Warranties of Acquiror................15
8.2 Performance of this Agreement.............................15
8.3 Absence of Proceedings....................................15
8.4 Deliveries at Closing.....................................16
ARTICLE IX
OBLIGATIONS AT CLOSING................................................16
9.1 Obligations of Transferor to Acquiror at Closing..........16
9.2 Acquiror's Obligations to Transferor at Closing...........16
ARTICLE X
TERMINATION AND REMEDIES..............................................17
10.1 Termination on Default....................................17
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10.2 Termination at Closing....................................17
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10.3 Specific Performance......................................17
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ARTICLE XI
INDEMNIFICATION.......................................................17
11.1 Obligation to Indemnify...................................17
11.2 Notices and Payments......................................18
ARTICLE XII
MISCELLANEOUS.........................................................18
12.1 Notices...................................................18
12.2 Entire Agreement..........................................19
12.3 Binding Effect; Assignment................................19
12.4 Amendment.................................................19
12.5 No Waiver.................................................19
12.6 Gender and Use of Singular and Plural.....................19
12.7 Counterparts..............................................19
12.8 Headings..................................................19
12.9 Governing Law.............................................20
12.10 Further Assurances.......................................20
12.11 Arbitration..............................................20
12.12 Litigation...............................................21
12.14 Confidentiality..........................................21
EXHIBITS
Exhibit Description
A Definitions
B Notice
C Employment Agreements
G Form of Opinion of Corporation's Counsel
SCHEDULES
Schedule Description
2.1 Shareholders and Shares Held
3.1 Articles of Incorporation, Bylaws and Fictitious Name Registrations
of Corporation
3.2 List of Corporation's record shareholders and number of shares of
common stock owned by each
3.5 Names and addresses of the Corporation and each predecessor to the
business
3.6 Corporation financial statements
3.7 Conduct since date of balance sheet
3.10 List of contracts and copy of each contract
3.12 List of all officers, directors, contractors and agents of the
Corporation and compensation and all vacation and other benefits
3.17 Tax returns of the past three years
3.24 Brokerage Fees
3.26 Copies of Securities Filings
4.2 Certificate of Designations, Rights and Preferences for the
FJ Preferred Stock
8.2 Shareholders of Corporation entering into "Lock-Up" Agreements
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Agreement") is made and entered into as
of the ____ day of ________, 1997, by and between HIREL MARKETING, INC., a
Florida corporation ("Acquiror") and GROUP 32 CORPORATION, a Florida corporation
("Transferor").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Acquiror and Transferor
have determined that, subject to the terms, conditions, representations and
warranties set forth herein, the transaction contemplated herein will facilitate
the obtaining of necessary financing and will serve the general welfare and
advantage of their respective businesses;
WHEREAS, subject to the terms and conditions hereinafter set forth,
Acquiror desires to acquire from Transferor and Transferor desires to transfer
to Acquiror, all the Acquired Assets (as hereinafter defined), which constitute
substantially all of the assets of Transferor, in exchange for the issuance of
the Stock (as hereinafter defined).; and
WHEREAS, the above described merger is intended to comply with the
requirements of Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as
amended, the Code Sections related thereto, the Treasury Regulations promulgated
thereunder and the interpretive rulings issued pursuant thereto.
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
RECITALS, EXHIBITS, SCHEDULES, SUBSCRIBERS
The foregoing recitals are true and correct and, together with the
schedules and exhibits referred to hereinafter, are hereby incorporated into
this Agreement by this reference. Capitalized words used herein and not
otherwise defined in the text hereof shall have the meanings set forth in
Exhibit A hereof.
ARTICLE II
TRANSFER OF ASSETS
2.1 Transfer. In exchange for the issuance of the Stock, and the
assumption of the Assumed Liabilities, and subject to the terms and conditions
hereof, at Closing, the Transferor shall contribute, transfer, convey and
deliver to Acquiror, all the Acquired Assets, free and clear of all
Encumbrances, other than the Assumed Liabilities. The term "Acquired Assets"
shall mean all Assets
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that are owned by the Transferor or used in connection with the Business,
including but not limited to the Assets identified in Schedule 2.1, excluding
only the Excluded Assets. Without limiting the generality of the foregoing, the
Acquired Assets shall include, but are not limited to, the following: (a) all
software copyrights and source code; (b) Equipment identified on Schedule 2.1;
(c) the Business as a going concern, including all Inventory on hand (wherever
located); (d) all Contracts with the Transferor's customers, agents,
contractors, and employees; (e) all Leases of Equipment identified on Schedule
2.1; (f) all Transferor's cash on hand or in bank accounts; (g) all Accounts
Receivable of the Transferor or arising from the Business; (h) all prepaid and
deferred items of Transferor including, but not limited to, prepaid rentals,
insurance, unbilled charges, and deposits relating to the operations of
Transferor; (i) all general business records of Transferor; (j) the Lease of
Real Property consisting of the premises located at _____________________,
Florida ("Premises") as described in Schedule 2.1; and (k) all of Transferor's
Intangibles identified in Schedule 2.1.
2.2 Excluded Assets. The Acquired Assets exclude, and the Acquiror
shall not purchase, the Assets of the Transferor identified on Schedule 2.2
hereof.
2.3 Assumption of Liabilities. At Closing, Acquiror shall assume the
Transferor's Obligations only to the extent expressly identified on Schedule 2.3
hereof as being assumed by Acquiror hereunder (collectively, the "Assumed
Liabilities"). Acquiror does not and will not assume, nor shall Acquiror be
responsible for, any other Obligations of the Transferor, nor, as to any Assumed
Liability, shall Acquiror be deemed to have any Obligation for, to cure, or to
otherwise remedy, any breach, default or nonpayment of any Contract or Lease
arising as a result of events occurring prior to the date hereof, or as to which
any representation or warranty made pursuant to this Agreement is untrue,
inaccurate or misleading in any respect.
2.4 Issuance of Stock; Transfer of Stock by Transferor.
(a) In exchange for the transfer of the Acquired Assets to Acquiror,
at Closing, Acquiror shall issue to the Transferor ________________
(___________) shares of Common Stock ("Stock") of Acquiror. All shares of the
Stock shall be subject to the lock-up provisions of Section 2.6 hereof. The
certificates evidencing the Stock shall bear the following legends:
The shares of common stock represented by this certificate are
subject to a lock-up agreement between the holder of this
certificate and the Company which restricts the transfer of the
common stock represented by this certificate. The lock-up agreement
is incorporated herein by reference. A copy of the lockup agreement
is available for inspection at the principal executive office of the
Company.
These shares have not been registered under the Securities Act
of 1933 or under any applicable state law. They may not be offered
for sale,
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sold, transferred or pledged without (1) registration under the
Securities Act of 1933 and any applicable state law, or (2) an
opinion of counsel (satisfactory to the Company) that such
registration is not required.
(b) Transferor hereby represents to Acquiror that the Transferor
intends, at some point following the Closing, to distribute the Stock to its
Shareholders. Notwithstanding anything contained herein to the contrary,
Acquiror shall not have any obligation to the Transferor Shareholders with
respect to the manner or timing of distributions of the Stock to such
shareholders. The Transferor Shareholders and the Group B Shareholders shall
enter into the Joinder attached hereto agreeing to be bound by the provisions of
Sections ___________ of this Agreement.
2.5 Qualification as Reorganization. The parties hereto hereby agree that
this transaction is intended to qualify as a reorganization within the meaning
of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended ("A
Reorganization"). Each of the parties agrees that it shall report the
transaction as an A Reorganization on its respective federal income tax return,
and shall cooperate to the extent reasonably necessary to complete all
information reporting necessary in connection therewith.
ARTICLE III
TRANSFEROR'S REPRESENTATIONS AND WARRANTIES
Transferor hereby makes the following representations and warranties to
Acquiror, each of which Transferor represents to be true and correct on the date
hereof and (except as Transferor may notify the President of Acquiror in writing
prior to the Closing) shall be deemed made again as of the Closing Date and
represented by Transferor to be true and correct on the Closing Date.
3.1 Organization. Transferor is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Florida and is not
required to be qualified or licensed as a foreign corporation in any other
jurisdiction. Transferor has the full power and authority to own all its Assets
and to conduct the business in which it will engage upon completion of the
transaction contemplated herein. Transferor does not have any subsidiary or
equity interest in any Person. Accurate, current and complete copies of the
Articles of Incorporation and Bylaws of Transferor, and, if any, all fictitious
name registrations of Transferor are attached hereto as Schedule 3.1.
3.2 Stock Ownership. The authorized capital stock of Transferor consists
of_________________ shares of Common Stock, _________________ shares of which
are issued and outstanding. An accurate and complete list of all Transferor's
record shareholders and the number of shares of Common Stock owned by each is
attached as part of Schedule 3.2. Transferor has provided Acquiror with a copy
of its stock transfer records ("Stock Records"). The Stock Records completely
and accurately reflect the issuance of Transferor's capital stock from the date
of its incorporation through the date as of which this representation is made.
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All the issued and outstanding shares of capital stock of Transferor are
duly authorized, validly issued, fully paid and nonassessable, and all Taxes
related to the issuance or transfer of such shares have been timely paid.
There are no Stock Issuance Agreements (other than subscription agreements
accepted in the Private Offering) to which Transferor is a party or by which it
may be bound. There have been no violations of the preemptive rights, if any, of
any shareholders of Transferor. No shares of capital stock are held in treasury
by Transferor. Transferor has never been a party to any Stock Issuance
Agreements.
3.3 Authority and Approval of Agreement.
(a) The execution and delivery of this Agreement by Transferor and
the performance of all Transferor's obligations hereunder have been duly
authorized and approved by all requisite corporate action on the part of
Transferor pursuant to applicable Law. Transferor has the power and authority to
execute and deliver this Agreement and to perform all its obligations hereunder.
(b) This Agreement and each of the other documents, instruments and
agreements executed by Transferor in connection herewith constitute the valid
and legally binding agreements of Transferor, enforceable against Transferor in
accordance with its terms, except that: (i) enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the enforcement of the rights and remedies of
creditors; and (ii) the availability of equitable remedies may be limited by
equitable principles.
3.4 No Violations. Neither the execution, delivery nor performance of this
Agreement or any other documents, instruments or agreements executed by
Transferor in connection herewith, nor the consummation of the transactions
contemplated hereby: (i) constitutes a violation of or default under (either
immediately, upon notice or upon lapse of time) the Articles of Incorporation or
Bylaws of Transferor, any provision of any Contract to which Transferor or its
Assets may be bound, any Judgment or any Law; or (ii) will or could result in
the creation or imposition of any Encumbrance upon, or give to any third person
any interest in or right to, the Exchanged Corporation Stock or any other
capital stock of Transferor or any of the Assets of Transferor; or (iii) will or
could result in the loss or adverse modification of, or the imposition of any
fine or penalty with respect to, any license, permit or franchise granted or
issued to, or otherwise held by or for the use of, Transferor.
3.5 Names and Addresses. The names under which, and the addresses at
which, Transferor and each predecessor to Transferor has done business are
accurately stated on Schedule 3.5 hereto.
3.6 Financial Statements. Attached hereto as Schedule 3.6 are financial
statements of Transferor ("Financial Statements"), including audited balance
sheets and statements of operations
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for the fiscal years ended June 30, 1996 ("Audited Statements"), and an
unaudited balance sheet and year-to-date statements of operations as of December
31, 1996 ("Unaudited Statements"). The Financial Statements are true, correct
and complete, were prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated, and accurately
reflect Transferor's financial condition and the results of Transferor's
operations for the periods and as of the dates which they purport to cover.
Transferor does not have any Obligation except for those Obligations set forth
on the face of the Unaudited Statements.
3.7 Conduct Since Date of Financial Statements. Except as disclosed in
Schedule 3.7 hereto, none of the following have occurred since the date of the
Unaudited Statements:
(a) Any material adverse change in the financial condition, Assets,
Obligations, capitalization, business or operations of Transferor, nor are there
any circumstances known to Transferor which might result in such a change or
such an effect.
(b) Any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Assets or Business of Transferor.
(c) Any disposition, lease or Encumbrance of the Assets of
Transferor, or increase of indebtedness of or guaranteed by Transferor, other
than in the ordinary course of business consistent with past practices;
provided, however, that no such disposition, lease or Encumbrance, regardless of
the consideration therefor, has been made between Transferor and any of its
shareholders, directors, officers, agents, contractors, or employees (or any
member of their respective families);
(d) Any settlement of any dispute involving a payment by Transferor
of an amount in excess of Five Thousand Dollars ($5,000); provided, however,
that no such settlement, regardless of the payment involved, has been made
between Transferor, and any shareholders, directors, officers, agents,
contractors, or employees (or any member of their respective families);
(e) Any grant of an increase in compensation or any authorization or
payment of any bonus or other extraordinary benefit or the making of any advance
(excluding advances for ordinary and necessary business expenses) or loan to any
of Transferor's employees or any increase in, or any addition to, other benefits
to which any of Transferor's employees may be entitled, except in the ordinary
course of business consistent with past practices;
(f) Any transaction entered into by Transferor other than in the
ordinary course of business consistent with past practices;
(g) Any merger or consolidation involving Transferor, the
acquisition by Transferor of any stock, business or assets of any other Person,
the issuance of any membership interests or other equity interests by Transferor
or the entry into any Stock Issuance Agreements by Transferor;
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(h) Any notice received by Transferor of any actual or threatened
labor dispute or any event or condition of any character which has had or can be
reasonably expected to have a material adverse effect on the Assets or the
operations or prospects of Transferor;
(i) Any cancellation by Transferor, without payment in full, of
any Obligation to Transferor;
(j) Any Obligation incurred by Transferor, except Obligations
incurred, or under Contracts entered into, in the ordinary course of business
consistent with past practices;
(k) Any payment, discharge or satisfaction of any Obligation,
other than the payment, discharge or satisfaction in the ordinary course of
business;
(l) Any commitments or agreements entered into by Transferor for
capital expenditures or capital additions exceeding, in the aggregate, Five
Thousand Dollars ($5,000);
(m) Any amendment or termination of any Contract, commitment or plan
to which Transferor is a party or by which it is bound, except in the ordinary
course of business;
(n) Any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility or other services required to conduct the
business and operations of Transferor;
(o) Any dividend or distribution of cash or other property by
Transferor to its shareholders or any redemption by Transferor of Transferor
Shareholders; or
(p) Any Contract binding Transferor to do or take any of the actions
referred to in this Section 3.6.
3.8 Title to Assets. Transferor is the sole owner of all Assets identified
on the Balance Sheet, all of which Assets are free and clear of all
Encumbrances. No Person has any right, claim or interest in or to any Assets now
owned or that may be acquired by Transferor, except the interest of the
shareholders of Transferor arising from the ownership of their shares.
3.9 Lease of Real Property. Transferor does not own and has never owned
any Real Property. Schedule 3.9 hereto is an accurate, complete, current, and
complete list of each lease or sublease of Real Property to which Transferor is
a party or by which Transferor may be bound and a description of the Real
Property leased thereunder. With respect to each lease or sublease described on
Schedule 3.9 hereto: (i)Transferor has been in peaceful possession of the
property leased thereunder and neither Transferor nor the landlord (to the
knowledge of Transferor) is in default thereunder; (ii) no waiver, indulgence or
postponement of any of the Obligations thereunder has been granted by the lessee
or lessor thereunder; and (iii) there exists no event, occurrence, condition, or
act known to Transferor which upon notice or lapse of time would be or become a
default thereunder. Transferor has not violated or breached any provision of any
such lease or sublease, and all
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Obligations required to be performed by Transferor under any such lease or
sublease have been fully and properly performed. Except as set forth on Schedule
3.9 hereto, no Consent of any Person is required under any such lease or
sublease in order for such lease or sublease to continue to be valid and
subsisting and entitle Transferor to remain in possession of the premises
demised thereunder after the consummation of the transactions contemplated by
this Agreement.
3.10 Contracts. Schedule 3.10 hereto is an accurate, current and complete
list and description of each Contract (other than this Agreement) to which
Transferor is a party or by which Transferor or any of its Assets are bound. An
accurate, current and complete copy of each Contract described on Schedule 3.10
hereto has been furnished to Acquiror.
3.11 Offers. There are no outstanding offers, bids, proposals or
quotations made by Transferor which, if accepted, would create a Contract with
Transferor.
3.12 Officers, Employees, Agents, etc. Set forth on Schedule 3.12 annexed
hereto is a complete list of all officers (with office held), directors,
contractors and agents of Transferor, and the compensation and all vacation and
other benefits they are entitled to receive from Transferor. Other than the
above described officers, Transferor has no employees.
3.13 Labor Matters. Transferor is not and has never been a party to: (i)
any profit sharing, pension, retirement, deferred compensation, bonus, stock
option, stock purchase, retainer, consulting, health, welfare or incentive plan
or agreement or other Employee Benefit Plan, whether legally binding or not; or
(ii) any plan providing for "fringe benefits" to its employees, including, but
not limited to, vacation, disability, sick leave, medical, hospitalization and
life insurance and other insurance plans, or related benefits; or (iii) any
employment agreement. No former employee of Transferor has any claim against
Transferor (whether under federal or state law, any employment agreement or
otherwise) on account of or for: (i) overtime pay; (ii) wages or salary for any
period; (iii) vacation, time off or pay in lieu of vacation or time off; or (iv)
any violation of any statute, ordinance or regulation relating to minimum wages
or maximum hours of work. No person or party (including, but not limited to,
governmental agencies of any kind) has any claim or basis for any action or
proceeding against Transferor arising out of any statute, ordinance or
regulation relating to discrimination in employment or to employment practices
or occupational safety and health standards.
3.14 Environmental Matters. Transferor has not generated any hazardous
wastes or engaged in activities which are or could be interpreted to be
potential violations of Laws or judicial decrees in any manner regulating the
generation or disposal of hazardous waste. There are no on-site or off-site
locations where Transferor has stored, disposed or arranged for the disposal of
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or
petroleum products; there are no underground storage tanks located on property
owned or leased by Transferor, and no polychlorinated biphenyls are used or
stored at any property owned or leased by Transferor.
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3.15 Obligations. Transferor has no Obligation to any Person, except
pursuant to this Agreement and the other Contracts executed by Transferor in
connection with this transaction as contemplated herein. Transferor is not
directly or indirectly liable, by guaranty or otherwise, upon or with respect
to, or obligated to guaranty or assume, any Obligation of any Person.
3.16 Books and Records. Transferor's books and records are and have been
properly prepared and maintained in form and substance adequate for preparing
audited financial statements in accordance with generally accepted accounting
principles, and fairly and accurately reflect all of Transferor's Assets,
Obligations and accruals, and all transactions (normally reflected in books and
records in accordance with generally accepted accounting principles) to which
Transferor is or was a party or by which Transferor or any of its Assets are or
were affected.
3.17 Taxes. All Taxes due, owing and payable, or which may be due, owing
and payable, by Transferor have been fully paid. The amounts set up as provision
for Taxes on the Balance Sheet are sufficient for the payment of all accrued and
unpaid Taxes of Transferor, whether or not disputed. The amount set up as
provision for Taxes on Transferor's books and records for the current fiscal
year through the Closing Date shall be sufficient for the payment of all accrued
and unpaid Taxes of Transferor, whether or not disputed, for such period. No
claim for any Tax due from or assessed against Transferor is being contested by
Transferor. None of Transferor's Tax returns or reports have been audited by the
Internal Revenue Service or any state or local Tax authority, and Transferor has
not received any notice of deficiency or other adjustment from the Internal
Revenue Service or any state or local Tax authority. There are no agreements,
waivers, or other arrangements providing an extension of time with respect to
the assessment of any Tax against Transferor, nor are there any Tax Proceedings
now pending or threatened against Transferor. No state of facts exists or has
existed, nor has any event occurred, which would constitute grounds for the
assessment of any further Tax against Transferor. Transferor has never consented
to the application of Section 341(f) of the Internal Revenue Code of 1986, as
amended.
3.18 Proceedings. Transferor is not a party to, the subject of, or
threatened with any Proceeding nor, to the best of Transferor's knowledge, is
there any basis for any Proceeding. Transferor is not contemplating the
institution of any Proceeding.
3.19 Other Liabilities. No claim of breach of contract, tort, product
liability or other claim (whether arising from Transferor's businesses
operations or otherwise), contingent or otherwise, has been asserted or
threatened against Transferor nor, to the best of Transferor's knowledge, is
capable of being asserted by any employee, creditor, claimant or other Person
against Transferor. No state of facts exists or has existed, nor has any event
occurred, which could give rise to the assertion of any such claim by any
Person.
3.20 Consents. The execution, delivery and performance by Transferor of
this Agreement and the consummation by Transferor of the transactions
contemplated hereby do not require any Consent that has not been received prior
to the date hereof.
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3.21 Judgments. There is no outstanding Judgment against Transferor or
against or affecting any of its Assets, business or prospects. There is no
health or safety problem involving or affecting Transferor or its Assets. There
are no open workmen's compensation claims against Transferor, or any contingent
liability of Transferor, or any other Obligation, fact or circumstance which
would give rise to any right of indemnification on the part of any current or
former shareholder, partner, director, officer, employee or agent of Transferor,
or any heir or personal representative thereof, against Transferor or any
successor to the businesses of Transferor.
3.22 Minute Books. Transferor's minute book contains true and complete
minutes and records of all meetings, proceedings, and other actions of its
stockholders and directors from the date of its organization to the date hereof.
The stock certificate books and stock transfer ledgers of Transferor are true
and complete, and all of the signatures which purport to be signatures of
Transferor's officers which appear on certificates representing shares of stock
of Transferor (including all certificates which are now outstanding and all
certificates which have heretofore been cancelled) are the true signatures which
they purport to be and were actually affixed to the respective documents by the
persons whose names they represent. All stamp and other taxes levied on or
relating to the original issuance or transfer of shares of Transferor have been
duly affixed and cancelled.
3.23 Brokerage Fees. Except as set forth on Schedule 3.24, there is no
Person acting on behalf of Transferor who is entitled to or has any claim for
any brokerage or finder's fee or commission in connection with the execution of
this Agreement or the consummation of the transactions contemplated hereby.
3.24 Compliance with Laws. Transferor and its business are in full
compliance with all Laws including, but not limited to, the Securities Laws.
3.25 Improper Payments. Neither Transferor, nor any of its current or
former shareholders, partners, directors, officers, or employees or agents, nor
any Person acting on behalf of Transferor, has directly or indirectly, made any
bribe, kickback or other payment of a similar or comparable nature, whether
lawful or not, to any person, public or private, regardless of form, whether in
money, property or services, to obtain favorable treatment for business secured
or special concessions already obtained. No funds or Assets of Transferor were
donated, loaned or made available directly or indirectly for the benefit of, or
for the purpose of supporting or opposing, any government or subdivision
thereof, political party, candidate or committee, either domestic or foreign.
Transferor has not maintained and does not maintain a bank account, or any other
account of any kind, whether domestic or foreign, which account was not or is
not reflected in Transferor's corporate books and records, or which account was
not listed, titled or identified in the name of Transferor.
3.26 Full Disclosure. All the representations and warranties made by
Transferor herein or in any Schedule, and all of the statements, documents or
other information pertaining to the transaction contemplated herein made or
given by Transferor, its agents or representatives are complete and accurate,
and do not omit any information required to make the statements and
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information provided, in light of the transaction contemplated herein,
non-misleading, accurate and meaningful.
3.27 Suitability.
(a) Sophistication. The Transferor hereby represents and warrants
that it and its shareholders are capable of evaluating the merits and risks of
the Stock, because they are sophisticated investors by virtue of their numerous
prior investments and have experience in investments similar in nature to the
Stock, including investments in unlisted and unregistered securities, and have
knowledge and experience in financial and business matters in general.
(b) Direct Negotiations. The Transferor hereby acknowledges that the
terms and conditions of the transfer of the Stock were determined through
substantial negotiations between the Transferor and its shareholders and the
Acquiror, and their respective officers, in the course of which the Transferor
and its shareholders exercised sufficient economic leverage to assert and
protect their respective interests.
3.40 No Advertising or Representations. The Transferor and Xxxxxxxxx each
hereby represent and warrant that they are not acquiring the Stock as a result
of any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media, any seminar or any solicitation by a
person not previously known to the Transferor or the Transferor's Shareholders.
The Transferor and the Transferor's Shareholders each acknowledge and agree that
no representations or warranties have been made to them by the Acquiror or the
Parent, or any agent, employee or affiliate of the Acquiror or the Parent as to
the Acquiror or the Parent, the Stock or its or their future financial
performance, and in acquiring the Stock, the Transferor and the Transferor's
Shareholders are not relying upon any representation or warranty that is not
contained in the Acquiror Disclosure Documents.
3.28 Investment Intent. The Transferor represents and warrants that it is
acquiring the Stock solely for its own account for investment purposes only and
not for distribution or resale to others, other than to its shareholders in
accordance with the terms of this Agreement. Neither the Transferor nor its
shareholders shall resell or offer to resell the Stock except in strict
accordance with the applicable terms of the lock-up provisions of Section 2.6,
and in compliance with all applicable Securities Laws.
3.29 Reliance on Representations. The Transferor understands that the
Acquiror and its shareholders, officers and directors will be relying on the
accuracy and completeness of all matters set forth in this Article III, and the
Transferor represents and warrants to the Acquiror and its respective
shareholders, officers and directors that:
(a) The information, representations, warranties, acknowledgments
and all other matters set forth herein are complete, true and correct and may be
relied upon by them in determining
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whether the sale of the Stock to the Transferor is exempt from registration
under the Securities Laws; and
(b) The Transferor will notify Acquiror immediately of any change in
any statement made herein that occurs prior to the closing of the purchase of
the Stock.
ARTICLE IV
ACQUIROR'S REPRESENTATIONS AND WARRANTIES
Acquiror hereby makes the following representations and warranties to
Transferor, each of which Acquiror represents to be true and correct on the date
hereof and (except as Acquiror may notify Transferor in writing prior to the
Closing) shall be deemed made again as of the Closing Date and represented by
Acquiror to be true and correct on the Closing Date.
4.1 Organization. Acquiror is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Florida and is not
required to be qualified or licensed as a foreign corporation in any other
jurisdiction. Acquiror has the full power and authority to own all its Assets
and to conduct its business as and where its business is presently conducted.
Acquiror does not have any subsidiary or equity interest in any Person.
4.2 Stock Ownership. The authorized capital stock of Acquiror consists of
______________ Million (___,000,000) shares of Acquiror Common Stock,
___________________ (__________) of which will be outstanding at Closing. All
the issued and outstanding capital stock of Acquiror is duly authorized, validly
issued, fully paid and nonassessable, and all Taxes related to the issuance or
transfer of such shares have been timely paid. There are no Stock Issuance
Agreements to which Acquiror is a party or by which any may be bound. There have
been no violations of the preemptive rights, if any, of any shareholders of
Acquiror. No shares of capital stock are held in treasury by Acquiror.
4.3 Authority and Approval of Agreement.
(a) The execution and delivery of this Agreement by Acquiror and the
performance of all Acquiror's obligations hereunder have been duly authorized
and approved by all requisite corporate action on the part of Acquiror pursuant
to applicable Law. Acquiror has the power and authority to execute and deliver
this Agreement and to perform all its obligations hereunder.
(b) This Agreement and each of the other documents, instruments and
agreements executed by Acquiror in connection herewith constitute the valid and
legally binding agreements of Transferor, enforceable against Acquiror in
accordance with their terms, except that: (i) enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
11
similar laws of general application affecting the enforcement of the rights and
remedies of creditors; and (ii) the availability of equitable remedies may be
limited by equitable principles.
4.4 No Violations. Neither the execution, delivery nor performance of this
Agreement or any other documents, instruments or agreements executed by Acquiror
executed in connection herewith, nor the consummation of the transactions
contemplated hereby: (i) constitutes a violation of or default under (either
immediately, upon notice or upon lapse of time) the Articles of Incorporation or
Bylaws of Acquiror, any provision of any Contract to which Acquiror or its
Assets may be bound, any Judgment to which Acquiror is bound or any Law
applicable to Acquiror; or (ii) result in the creation or imposition of any
Encumbrance upon, or give to any third person any interest in or right to, any
other capital stock of Acquiror or any of the Assets of Acquiror; or (iii)
result in the loss or adverse modification of, or the imposition of any fine or
penalty with respect to, any license, permit or franchise granted or issued to,
or otherwise held by or for the use of, Acquiror.
4.5 Consents. The execution, delivery and performance by Acquiror of this
Agreement and the consummation by Acquiror of the transactions contemplated
hereby do not require any Consent that has not been received prior to the date
hereof.
4.6 Brokerage Fees. There is no Person acting on behalf of Acquiror who is
entitled to or has any claim for any brokerage or finder's fee or commission in
connection with the execution of this Agreement or the consummation of the
transactions contemplated hereby.
4.7 Obligations. Acquiror has no obligation existing on the date hereof
for which Transferor could be held liable after the consummation of the
transactions contemplated hereby.
ARTICLE V
INTERPRETATION AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
5.1 Interpretation. Each warranty and representation made by a party in
this Agreement or pursuant hereto is independent of all other warranties and
representations made by the same party in this Agreement or pursuant hereto
(whether or not covering identical, related or similar matters) and must be
independently and separately satisfied. Exceptions or qualifications to any such
warranty or representation shall not be construed as exceptions or
qualifications to any other warranty or representation.
5.2 Reliance by Acquiror. Notwithstanding the right of Acquiror to
investigate Transferor, its business and Assets, and notwithstanding any
knowledge of facts determined or determinable by them as a result of such
investigation or right of investigation, Acquiror has the unqualified right to
rely upon the representations and warranties made by Transferor in this
Agreement and in the Schedules attached hereto or pursuant hereto. Each and
every representation
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and warranty of Transferor made herein is material to the decision of the other
parties hereto to enter into this Agreement and to consummate the transaction
contemplated herein.
5.3 Survival. All representations and warranties of Transferor made in
this Agreement or pursuant hereto shall survive the date hereof, the Closing
Date, the consummation of the transactions contemplated hereby, and any
investigation.
ARTICLE VI
OBLIGATIONS PRIOR TO CLOSING
6.1 Conduct of Transferor Pending Closing. During the period from the date
hereof until the Closing Date, except with the express prior written consent of
Acquiror, Transferor hereby covenants and agrees that:
(a) Transferor shall maintain its existence in good standing in the
state of Florida and each other jurisdiction where it is required to be licensed
or qualified as a foreign corporation, and shall not alter or amend its Articles
of Incorporation or Bylaws.
(b) Transferor shall duly and timely file all returns and reports
required by any law to be filed by Transferor, shall promptly pay when due all
Taxes assessed against Transferor or any of its Assets, and shall conform to and
fully comply with all the laws pertaining to its Assets or the conduct of its
business.
(c) Except for the actions required by the covenants set forth in
this Article VI, Transferor shall not take or do any act or thing without the
express prior written consent of the President of Acquiror.
(d) Transferor shall not take any action, or enter into any contract
which requires or permits Transferor to take any action, which would be
inconsistent with any of the foregoing provisions of this Section 6.1.
6.2 Conduct of Acquiror Pending Closing. During the period from the date
hereof until the Closing Date, except with the express prior written consent of
Transferor, Acquiror hereby covenants and agrees with Transferor that:
(a) It shall maintain its existence and good standing in the State
of Florida and each other jurisdiction where it is licensed or qualified as a
foreign corporation, and shall not alter or amend its Articles of Incorporation
or Bylaws.
(b) It shall duly and timely file all returns and reports required
by any Law to be filed by it, shall promptly pay when due all Taxes assessed
against it or any of its Assets, and shall
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conform to and fully comply with all other Laws pertaining to its Assets or the
conduct of its business.
(c) It shall not take any action, or enter into any Contract which
requires or commits it to take any action, which would be inconsistent with any
of the foregoing provisions of this Section 6.2.
6.3 Investigation. During the period from the date hereof until the
Closing Date, Transferor shall permit Acquiror and its authorized
representatives and agents full access to Transferor and its business and
properties during normal business hours to observe and investigate Transferor,
its business, Assets and Obligations, to meet with Transferor's officers, agents
and contractors, and to audit, examine and copy all of Transferor's files, books
and records, and other documents and papers. Transferor shall furnish Acquiror
and its authorized representatives and agents with all information concerning
Transferor's business, Assets and Obligations, which they reasonably request.
6.7 Cooperation. During the period from the date hereof until the Closing
Date, Transferor shall fully cooperate with Acquiror and its authorized
representatives and agents, and shall promptly execute and deliver all
agreements, certificates, instruments and documents and take such other actions
as are reasonably requested by Acquiror or its authorized representatives and
agents.
ARTICLE VII
CONDITIONS PRECEDENT TO
ACQUIROR'S OBLIGATIONS
Notwithstanding the execution and delivery of this Agreement or the
performance of any part hereof, Acquiror's obligations to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
of each of the conditions set forth in this Article VII, except to the extent
that such satisfaction is waived in writing by Acquiror.
7.1 Representations and Warranties of the Transferor. All representations
and warranties made by the Transferor or Xxxxxx in this Agreement and the
Schedules hereto shall have been true and correct in all respects on the date of
this Agreement, and shall be true and correct in all respects on the Closing
Date as though such representations and warranties were again made, without
exception or deviation, on the Closing Date.
7.2 Performance of this Agreement. Transferor and Xxxxxx shall have duly
performed or complied with all of their covenants and obligations under this
Agreement that are to be performed or complied with by the Transferor and/or
Xxxxxx on or prior to the Closing Date.
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7.3 Absence of Proceedings. No Proceeding shall have been instituted or
threatened on or before the Closing Date by any Person, the result of which did
or could prevent or make illegal the consummation of all or any of the
transactions contemplated by this Agreement, or which had or could have a
material adverse effect on the Business or the Acquired Assets.
7.4 Consents. Transferor shall deliver to Acquiror, all Consents, in form
and substance reasonably acceptable to Acquiror, as the Acquiror reasonably
deems required under any of the Transferor's Contracts or Permits as a result of
the sale of the Acquired Assets to Acquiror and the other transactions
contemplated under this Agreement. Included specifically in the foregoing shall
be consents from all lessors of Real Property to Transferor, if any, together
with estoppel letters from such lessors, in form reasonably acceptable to
Acquiror, acknowledging that each applicable lease is in full force and effect,
all rent and other payments due thereunder have been paid and no event of
default has occurred.
7.5 Good Standing Certificate. Transferor shall deliver to Acquiror a Good
Standing Certificate , certifying that the Transferor is duly qualified and is
currently in good standing under the laws of the State of Florida, dated no
earlier than five (5) days before the Closing Date.
7.6 Material Adverse Change. There shall have not occurred any material
adverse change, actual or threatened, for whatever reason, in any of the
Acquired Assets, the Business or its financial condition or otherwise, or in the
results of operations of the Transferor, including, but not limited to any
casualty loss, whether or not covered by insurance.
7.7 Opinion of Counsel. At Closing, Transferor shall deliver an opinion of
counsel rendered to Acquiror, in form, substance, and by a law firm reasonably
acceptable to Acquiror, and its counsel, as to the matters set forth in Exhibit
C attached hereto.
7.8 Failure of Conditions. In the event any of the conditions set forth in
this Agreement are not satisfied or waived in writing by the Acquiror on or
before the Closing Date, the Acquiror shall have the right to terminate this
Agreement whereupon the parties shall be relieved of all further obligations to
the other except for remedies provided in this Agreement against Transferor for
breach of its covenants, representations or warranties set forth in this
Agreement. The Transferor hereby represents and warrants to the Acquiror that it
understands that some or all of the conditions may not be satisfied by
Transferor or waived by the Acquiror and the Acquiror shall have the right, in
his sole discretion, to terminate this Agreement as a result thereof and the
Transferor hereby assumes the risk that the Acquiror may elect to terminate this
Agreement and is hereby estopped from objecting to and waives any action against
the Acquiror for the Acquiror's election to terminate this Agreement as a result
of any condition precedent not being satisfied or waived in writing by the
Acquiror, or pursuant to Section 10.3 of this Agreement.
7.9 Employment Agreement. Xxxxxx Xxxxxx, President of Transferor, shall
have executed and delivered to Acquiror an Employment Agreement with Acquiror in
the form of Exhibit D ("Employment Agreement").
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ARTICLE VII
CONDITIONS PRECEDENT TO TRANSFEROR'S OBLIGATIONS
Notwithstanding the execution and delivery of this Agreement or the
performance of any part hereof, Transferor's obligation to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
of each of the conditions set forth in this Article VII, except to the extent
that such satisfaction is waived by Transferor in writing.
8.1 Representations and Warranties of Acquiror. The representations and
warranties of Acquiror contained in this Agreement and the exhibits and
schedules hereto shall be true and correct in all respects on the date hereof,
and shall be true and correct in all respects on the Closing Date as though such
representations and warranties were again made, without exception or deviation,
on the Closing Date.
8.2 Performance of this Agreement. Acquiror shall have duly performed or
complied with all of the covenants and obligations under this Agreement to be
performed or complied with by them on or prior to the Closing Date.
8.3 Absence of Proceedings. No Proceeding shall have been instituted or
threatened on or before the Closing Date by any Person the result of which did
or could prevent or make illegal the consummation of all or any of the
transactions contemplated by this Agreement.
8.4 Deliveries at Closing. At Closing, in addition to all other deliveries
to be made to Transferor hereunder, Transferor shall receive a certificated
signed by the President of Acquiror and dated the Closing Date, certifying that
(a) all of the terms and conditions of this Agreement to be satisfied or
performed by it on or before the Closing Date have been satisfied or performed;
(b) no Proceedings have been instituted or threatened on or before the Closing
Date by any Person, the result of which did or could prevent or make illegal the
consummation of all or any of the transactions contemplated by this Agreement,
or which had or could have a material adverse effect on its business; and (c)
there has not been any material adverse change in or affecting it between the
date of this Agreement and the Closing Date.
ARTICLE IX
OBLIGATIONS AT CLOSING
9.1 Obligations of Transferor to Acquiror at Closing. The Transferor
hereby covenants and agrees to deliver or cause to be delivered to Acquiror, at
Closing, the following:
(a) The Acquired Assets, subject to the Encumbrances set forth on
Schedule 2.3;
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(b) A duly executed Xxxx of Sale in the form of Exhibit F attached
hereto;
(c) All Consents referred to in Section 7.4 of this Agreement;
(d) The Good Standing Certificate referred to in Section 7.5
of this Agreement;
(e) A certificate signed by the President of Transferor, dated the
Closing Date, certifying that (a) all of the terms and conditions of this
Agreement to be satisfied or performed by it on or before the Closing Date have
been satisfied or performed; (b) all the representations and warranties of
Transferor made herein are true, correct and complete in all respects; (c) no
Proceedings have been instituted or, to the best of such President's knowledge,
threatened on or before the Closing Date by any Person, the result of which did
or could prevent or make illegal the consummation of all or any of the
transactions contemplated by this Agreement, or which had or could have a
material adverse effect on its business; and (d) there has not been any material
adverse change in or affecting it between the date of this Agreement and the
Closing Date;
(f) The opinion of counsel referred to in Section 7.7 of this
Agreement; and
(g) Such other documents and instruments as counsel to Acquiror may
reasonably request including, without limitation, such documents as necessary to
convey to Acquiror all rights to the Acquired Assets.
9.2 Acquiror's Obligations to Transferor at Closing. Acquiror agrees to
deliver or cause to be delivered to Transferor, at the Closing, the following:
(a) A good standing certificate for such corporation dated not
earlier than ten (10) days prior to the Closing Date from the State of Florida;
and
(b) A copy of the resolutions adopted by the Board of Directors of
such corporation, certified by its Corporate Secretary, which resolutions
authorize it to execute and deliver and perform this Agreement and consummate
the transactions contemplated hereby.
ARTICLE X
TERMINATION AND REMEDIES
10.1 Termination on Default. If, prior to the Closing Date, a party hereto
shall materially breach or default in the full and timely performance and
satisfaction of any of its representations and warranties or obligations under
this Agreement, and such breach or default is not cured on or before the fifth
(5th) day after the date notice is given by the nondefaulting party to the
defaulting party specifying the nature of such breach or default (or on or
before the Closing Date if sooner), then the nondefaulting party may terminate
this Agreement immediately upon notice to the defaulting party.
17
10.2 Termination at Closing. If any of the conditions set forth in Article
VII hereof are not satisfied on or before the Closing Date, then Acquiror may
terminate this Agreement by notifying Transferor on the Closing Date. If any of
the conditions set forth in Article VIII hereof are not satisfied on or before
the Closing Date, then Transferor may terminate this Agreement by notifying
Acquiror on the Closing Date.
10.3 Specific Performance. Transferor's Obligations under this Agreement
are unique, and each party hereby expressly acknowledges that, in the event of a
breach or default in the full and timely performance and satisfaction of any
such obligation, it would be extremely difficult to measure the resulting
damages. Accordingly, in the event of any breach or default by Transferor, then
Acquiror shall be entitled, in addition to all other rights and remedies which
it may have at law or in equity, to xxx for and receive the remedy of specific
performance, and Transferor waives the defense that a remedy in damages is
adequate.
ARTICLE XI
INDEMNIFICATION
11.1 Obligation to Indemnify. In addition to, and not in lieu of, any
right or remedy available to Acquiror at law or in equity (which, in the case of
Transferor's material breach of this Agreement shall be deemed to include
rescission), Transferor hereby indemnifies and holds harmless Acquiror and the
respective officers and directors from and against any and all Proceedings,
Judgments, Obligations, losses, damages, deficiencies, settlements, assessments,
charges, costs and expenses (including without limitation reasonable attorneys'
fees, paralegals' fees, investigation expenses, court costs, interest and
penalties) arising out of or in connection with, or caused by, directly or
indirectly, any or all of the following ("Indemnified Matter"):
(a) Any misrepresentation, breach or failure of any warranty or
representation made by Transferor in this Agreement or pursuant hereto;
(b) Any failure or refusal by Transferor to satisfy or perform any
covenant or agreement; and
(c) Any failure by Transferor to duly and timely file with the
appropriate governmental agencies all Tax and other returns and reports required
by any Law to be filed by it, and Transferor's failure to prepare and properly
complete all such returns and reports.
11.2 Notices and Payments. With respect to each separate matter or series
of matters against which a party ("Indemnitee") is indemnified under this
Article XI:
(a) Upon Indemnitee's receipt of written documents pertaining to the
Proceeding or otherwise underlying such matter or series of matters, or, if such
matter or series of matters does
18
not involve a third party claim, after Indemnitee first learns of such matter or
series of matters and the amount demanded or claimed in connection therewith,
Indemnitee shall give written notice to Transferor of and copies of such
documents and information as it shall have so received.
(b) After a final agreement is reached or a final Judgment is
rendered with respect to such matter or series of matters or the amount owing by
Transferor pursuant to this Article XI as a result of such matter or series of
matters, is otherwise determinable in whole or in part, Indemnitee shall give
notice to Transferor of the amount owing by Transferor ("Indemnification
Amount") with respect to such matter or series of matters ("Indemnification
Payment Notice").
(c) Transferor shall pay the Indemnification Amount to Indemnitee
(or to such Person as Indemnitee instructs) within ten (10) days after the
Indemnification Payment Notice was given.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if the same shall be in
writing and shall be delivered personally or sent by registered or certified
mail, postage prepaid, and addressed as set forth below:
If to Transferor: 0000 Xxxxxxx Xxxx, Xxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to Acquiror: Hirel Marketing, Inc.
000 X.X. 00xx Xxxxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, President
With a copy to: Xxxxx, McClosky, Smith, Xxxxxxxx & Xxxxxxx, P.A.
000 Xxxx Xxxxxxx Xxxxxxxxx
00xx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
12.2 Entire Agreement. This Agreement, including the Exhibits and
Schedules attached hereto and the documents delivered pursuant hereto, sets
forth all the promises, covenants, agreements, conditions and understandings
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements, understandings, inducements
or conditions, expressed or implied, oral or written, except as herein
contained. No
19
changes of or modifications or additions to this Agreement shall be valid unless
the same shall be in writing and signed by the parties hereto.
12.3 Binding Effect; Assignment. This Agreement shall be binding upon the
parties hereto, their beneficiaries, heirs and administrators. No party may
assign or transfer its interests herein, or delegate its duties hereunder,
without the written consent of the other parties.
12.4 Amendment. The parties hereby irrevocably agree that no attempted
amendment, modification, or change (collectively, "Amendment") of this Agreement
shall be valid and effective, unless the parties shall unanimously agree in
writing to such Amendment.
12.5 No Waiver. No waiver of any provision of this Agreement shall be
effective, unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
future waiver.
12.6 Gender and Use of Singular and Plural. All pronouns shall be deemed
to refer to the masculine, feminine, neuter, singular or plural, as the identity
of the party or parties or their personal representatives, successors and
assigns may require.
12.7 Counterparts. This Agreement and any amendments may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together will constitute one and the same instrument.
12.8 Headings. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
12.9 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Florida and any proceeding arising between the parties
in any manner pertaining or related to this Agreement shall, to the extent
permitted by law, be held in Broward County, Florida.
12.10 Further Assurances. The parties hereto will execute and deliver such
further instruments and do such further acts and things as may be reasonably
required to carry out the intent and purposes of this Agreement.
12.11 Arbitration.
(a) The parties hereto agree that the arbitration procedure set
forth below shall be the sole and exclusive method for resolving and remedying
claims hereunder (the "Disputes"). Nothing in this Section 12.11 shall prohibit
a party hereto from instituting litigation to enforce any Final Determination
(as defined below). The parties hereby agree and acknowledge that, except as
otherwise provided in this Section 12.11, the arbitration procedures and any
Final Determination hereunder shall be governed by, and shall be enforced
pursuant to the Florida Arbitration Code.
20
(b) In the event that any party asserts that there exists a Dispute,
such party shall deliver a written notice to each other party involved therein
specifying the nature of the asserted Dispute and requesting a meeting to
attempt to resolve the same. If no such resolution is reached within ten
business days after delivery of such notice, the party delivering such notice
(the "Disputing Person") may, within 45 business days after delivery of such
notice, commence arbitration hereunder by commencing arbitration proceedings
under the Commercial Arbitration Rules of the American Arbitration Association
and delivering to each other party involved therein a notice of arbitration (a
"Notice of Arbitration"). Such Notice of Arbitration shall specify the matters
as to which arbitration is sought, the nature of any Dispute, the claims of each
party to the arbitration and shall specify the amount and nature of damages, if
any, sought to be recovered as a result of any alleged claim, and any other
matters required by the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time to be included therein.
(c) The arbitrator(s) will be selected in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Each party
shall submit a proposed arbitration award (including proposed findings of fact)
within fifteen (15) days of the conclusion of the arbitration hearing. The
arbitrator shall select one of the proposed arbitration awards (including
proposed findings of fact) in its entirety and both parties shall be bound by
its terms. The cost of the arbitration will be divided equally between each
party.
(d) The arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association as in effect from time
to time, except as modified by the agreement of all of the parties to this
Agreement. The arbitrator(s) shall use their best efforts to conduct the
arbitration so that a final result, determination, finding, judgment and/or
award (the "Final Determination") is made or rendered no later than ninety (90)
business days after the delivery of the Notice of Arbitration nor later than
twenty (20) days following conclusion of the arbitration hearing. The Final
Determination must be signed by the arbitrator. The Final Determination shall be
final and binding on all parties and there shall be no appeal from or
reexamination of the Final Determination, except for fraud, perjury, evident
partiality or misconduct by an arbitrator prejudicing the rights of any party
and to correct manifest clerical errors.
(e) The parties to such arbitration may enforce any Final
Determination in any state or federal court having jurisdiction over the
dispute.
12.12 Litigation. If any party hereto is required to engage in litigation
or arbitration against any other party hereto, either as plaintiff or as
defendant, in order to enforce or defend any of its or his rights under this
Agreement, and such litigation results in a final judgment in favor of such
party ("Prevailing Party"), then the party or parties against whom said final
judgment is obtained shall reimburse the Prevailing Party for all direct,
indirect or incidental expenses incurred by the Prevailing Party in so enforcing
or defending its or his rights hereunder, including, but not limited to, all
attorneys' fees, paralegals' fees and all sales tax thereon, and all court costs
and other expenses incurred throughout all negotiations, trials or appeals
undertaken in order to enforce the Prevailing Party's rights hereunder.
21
12.13 Remedies. Each of the parties acknowledges and agrees that in the
event that a party hereto shall violate any of the restrictions or fail to
perform any of the obligations hereunder, the other parties will be without
adequate remedy at law and will therefore be entitled to enforce such
restrictions or obligations by temporary or permanent injunctive or mandatory
relief obtained in an action or proceeding instituted in any court of competent
jurisdiction without the necessity of proving damages and without prejudice to
any other remedies it may have at law or in equity.
12.14 Confidentiality. Except for discussions of the transactions
contemplated by this Agreement among the parties hereto and their respective
representatives and counsel participating in this transaction, each party hereto
shall, unless all other parties hereto shall otherwise agree, keep confidential
and not, directly or indirectly, disclose to any person the existence of this
Agreement, the transaction contemplated by this Agreement or any of the terms
thereof, or the fact that Acquiror and Transferor have entered into discussions
or negotiations for any purpose whatsoever, and each party hereto shall use its
good faith efforts to cause its employees, agents, officers, directors and
representatives to abide by the foregoing restrictions on disclosure.
THIS SPACE INTENTIONALLY BLANK
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year set forth above.
GROUP 32 CORPORATION
____________________________ By:________________________________
----------------------------
HIREL MARKETING, INC.
____________________________ By:________________________________
----------------------------
23
EXHIBIT A
Defined Terms
All defined terms used in this Agreement and not specifically defined in
context are as defined in this Exhibit A.
"Accounts Receivable" means any right to payment for goods sold, leased or
licensed or for services rendered whether or not it has been earned by
performance, any note receivable, and any other receivable or right to payment
of any nature whatsoever.
"Act" means the Securities Act of 1933, as amended.
"Asset" means any real, personal, mixed, tangible or intangible property
of any nature whatsoever, including, without limitation, Real Property,
Equipment, Accounts Receivable, Inventory, Permits, Intangibles and Contract
Rights.
"Closing" means the consummation of the reorganization contemplated by
this Agreement.
"Closing Date" means the date of the Closing.
"Consent" means any consent, approval, order or authorization of, or any
declaration, filing or registration with, or any application or report to, or
any waiver by, or any other action (whether similar or dissimilar to any of the
foregoing) of, by or with, any person, which is necessary in order to take a
specified action or actions, in a specified manner and/or to achieve a specific
result.
"Contract" means any written or oral contract, agreement, order or
commitment of any nature whatsoever, including, without limitation, any sales
order, purchase order, lease, sublease, license agreement, sublicense agreement,
loan agreement, security agreement, guarantee, management contract, employment
agreement, consulting agreement, partnership agreement, buy-sell agreement,
option, warrant, subscription, call or put.
"Contract Right" means any right, power or remedy under any Contract,
including, without limitation, any right to receive goods or services or
otherwise derive benefit from the payment, satisfaction or performance of
another party's Obligations, and right to demand that another party accept goods
or services or take any other action, and any right to pursue or exercise any
remedy or option.
"Employee Benefit Plan" means any bonus, severance, hospitalization,
vacation, deferred compensation, pension, profit sharing, retirement, payroll
savings, stock option, group insurance, death benefit or welfare plan, or any
other employee benefit plan or fringe benefit arrangement of any nature
whatsoever.
A-1
"Encumbrance" means any lien, security interest, pledge, mortgage,
easement, leasehold, assessment, covenant, restriction, reservation, conditional
sale, prior assignment, or any other encumbrance, claim, burden or charge of any
nature whatsoever.
"Equipment" means any equipment, machinery, fixtures, furniture, leasehold
improvements, vehicles, vessels, office equipment, office supplies or other
tangible personal property of any nature whatsoever, but not any such item which
constitutes Inventory.
"Transferor Shareholders" means the shareholders of record of Transferor.
"Transferor Stock" means the common stock of Transferor, $.001 par value.
"Acquiror Stock" means the common stock of Acquiror, par value $.00__, to
be issued to the Transferor Shareholders pursuant to Article II hereof.
"Intangible" means any name, corporate name, partnership name, fictitious
name, trademark, trademark application, trade name, brand name, slogan, trade
secret, know-how, patent, patent application, copyright, copyright application,
design, formula, invention, blueprint, product right, software right, license,
franchise, authorization or any other intangible property of any nature
whatsoever.
"Inventory" means any raw materials, supplies, work in process, finished
goods, or any other inventory of any nature whatsoever, and other items held for
sale or lease in the ordinary course of business and all computer software and
data systems held for sale or license in the ordinary course of business.
"Judgment" means any order, writ, injunction, fine, citation, award,
decree, or any other judgment of any nature whatsoever of any foreign, federal,
state or local court, any governmental, administrative or regulatory authority,
or any arbitration tribunal.
"Law" means any provision of any law, statute, ordinance, constitution,
charter, treaty, rule or regulation of any foreign, federal, state or local
governmental, administrative or regulatory authority.
"Obligation" means any debt, liability or obligation of any nature
whatsoever, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown or obligations under executory Contracts.
"Option" means the right to purchase one share of Acquiror Stock at an
exercise price equal to the Market Price as of the Vesting Date with respect to
such Option.
A-2
"Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature whatsoever, granted, issued,
approved or allowed by any foreign, federal, state or local governmental,
administrative or regulatory authority.
"Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, association, cooperation, trust, estate, government
(or any branch, subdivision or agency thereof), governmental, administrative or
regulatory authority, or any other entity of any nature whatsoever.
"Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing, or any other proceeding of
any nature whatsoever.
"Real Property" means any real estate, land, building, structure,
improvement, fixture or other real property of any nature whatsoever, including,
but not limited to boat slips, docks and other marine realty and improvements.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Laws" means the Act, the Securities Exchange Act of 1934, as
amended, the Investment Company Act of 1940, as amended, and all State or other
applicable securities laws, collectively.
"Stock Issuance Agreements" means any contracts which relate to the
issuance, sale, right to purchase, redemption, pledge or other disposition of
any capital stock of Corporation or any other securities or Obligations of
Corporation.
"Tax" means (a) any foreign, federal, state or local income, profits,
gross receipts, franchise, sales, use, occupancy, general property, real
property, personal property, intangible property, transfer, fuel, excise,
accumulated earnings, personal holding company, unemployment compensation,
social security, withholding taxes, payroll taxes, or any other tax of any
nature whatsoever, (b) any foreign, federal, state or local organization fee,
qualification fee, annual report fee, filing fee, occupation fee, assessment,
rent, or any other fee or charge of any nature whatsoever, or (c) any
deficiency, interest or penalty imposed with respect to any of the foregoing.
A-3
EXHIBIT C
FORM OF OPINION OF CORPORATION'S COUNSEL
1. Transferor is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Florida and is not required to be
qualified or licensed as a foreign corporation in any other jurisdiction.
Transferor has the full power and authority to own all its Assets and to conduct
the business in which it will engage upon completion of the transaction
contemplated herein.
2. The authorized capital stock of Transferor consists of _______________
shares of Common Stock, ________________shares of which are issued and. All the
issued and outstanding shares of capital stock of Transferor are duly
authorized, validly issued, fully paid and nonassessable. To our knowledge after
reasonable investigation, there are no Stock Issuance Agreements to which
Transferor is a party or by which it may be bound. There have been no violations
of the preemptive rights, if any, of any shareholders of Transferor. No shares
of capital stock are held in treasury by Transferor.
3. (a) The execution and delivery of the Agreement and Plan of Merger by
Transferor and the performance of all Transferor's obligations thereunder have
been duly authorized and approved by all requisite corporate action on the part
of Transferor pursuant to applicable Law. Transferor has the power and authority
to execute and deliver the Agreement and Plan of Merger and to perform all its
obligations hereunder.
(b) Each of the Agreement and Plan of Merger and the other
documents, instruments and agreements executed by Transferor in connection
therewith constitute the valid and legally binding agreements of Transferor,
enforceable against Transferor in accordance with its terms, except that: (i)
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application affecting the
enforcement of the rights and remedies of creditors; and (ii) the availability
of equitable remedies may be limited by equitable principles.
4. Neither the execution, delivery nor performance of the Agreement and
Plan of Merger or any other documents, instruments or agreements executed by
Transferor in connection therewith, nor the consummation of the transactions
contemplated thereby: (i) constitutes a violation of or default under (either
immediately, upon notice or upon lapse of time) the Articles of Incorporation or
Bylaws of Transferor, any provision of any Contract to which Transferor or its
Assets may be bound, any Judgment or any Law; or (ii) will or could result in
the creation or imposition of any Encumbrance upon, or give to any third person
any interest in or right to, the Transferor Stock or any other capital stock of
Transferor or any of the Assets of Transferor; or (iii) will or could result in
the loss or adverse modification of, or the imposition of any fine or penalty
with respect to, any license, permit or franchise granted or issued to, or
otherwise held by or for the use of, Transferor.
F-1
5. To our knowledge and belief, all the representations and warranties
made by Transferor in the Agreement and Plan of Merger or in any Schedule made
or given by Transferor, its agents or representatives are complete and accurate,
and do not omit any information required to make the statements and information
provided, in light of the transaction contemplated therein, nonmisleading,
accurate and meaningful.
6. Such other opinions as Acquiror's transfer agent may require to
issue the Acquiror Stock.
F-2
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Hirel Holdings, Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HIREL HOLDINGS, INC., a
Delaware corporation
Date: ,1997 By:
Xxxxxxx Xxxxxxxxxx, President, Chief
Executive Officer and Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
President, Chief Executive , 1997
Xxxxxxx Xxxxxxxxxx Officer and Chairman
President, HTI, and Director , 1997
Xxxxxxx X. Xxxxxx
Vice President, Sales and Marketing, , 1997
------------------ ------------
Xxxxxxx X. Xxxxxxx, Xx. HMI, and Director
Vice President and Chief Financial , 1997
------------------ ------------
Xxxxxxx X. Xxxx Officer (Principal Financial and
Accounting Officer)
