COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made and entered
into as of the 1st day of June, 2002, between Sterling FBO Holdings, Inc., an
Nevada Corporation (the "Seller"), with its principal office 0000 Xxxx Xxx
Xxxx., Xxxxx 0000, Xxxxxxx, Xxxxx 00000, and BlueStar Leasing, Inc., a Nevada
Corporation ("Buyer"), of 0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx
00000.
RECITALS
1. The Seller has authorized the exchange of a total of 49,000,000 Common
Shares (the"Shares") of Common Stock of the Seller (as defined below).
2. The Buyer desires to exchange 42,750,000 Common Shares of the Buyer's
Common Stock for 49,000,000 Common Shares of the Seller, pursuant to the
terms and conditions contained here.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
conditions, representations, and warranties contained in this agreement, the
Seller and Buyer hereby each agree as follows:
1. DEFINITIONS
As used in this Agreement, and unless the context requires a different
meaning, the following terms shall have the meaning indicated:
"Affiliate" means, with respect to any specified Person, any Person that,
directly or indirectly, Controls, is controlled by, or is under common Control
with, such specified Person, whether by contract, through one or more
intermediaries or otherwise.
"Articles" means the Articles of Incorporation of the Seller filed with
Secretary of State, in the form delivered to the Buyer, as the same may be
amended from time to time.
"Audit Date" means December 31, 2001.
"Balance Sheet Date" means December 31, 2001.
"Board of Directors" means the Board of Directors of the Seller.
"Business Days" means all days other than Saturday or Sunday or any day on
which banking institutions in Las Vegas, Nevada, are authorized or obligated to
close.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Common Stock" means (i) the common stock of the Seller; (ii) any other
capital stock of the Seller into which such common stock is converted,
exchanged, reclassified or reconstituted; (iii) any warrants or options
exercisable for any of the foregoing; and (iv) any right to receive any of the
foregoing other than upon conversion of any security convertible into any of the
foregoing.
"Control" means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Disclosure Materials" means the disclosure materials previously delivered
to the Buyer.
"Environmental Laws" means any and all present and future laws (whether
common or statutory), compacts, treaties, conventions or rules, regulations,
codes, plans requirements, criteria, standards, orders, decrees, judgments,
injunctions, notices or demand letters issued, promulgated or entered thereunder
by any foreign federal, tribal, state or legal governmental entity relating to
public or employee health and safety, pollution or protection of the
environment, including without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendment and Reauthorization Act of 1986 ("CERCLA"), the Resource conservation
and Recovery Act ("RCRA"), the Federal Safe Drinking Water Act, the Federal
Water Pollution Control Act, the Used Oil Recycling Act of 1980, the Solid Waste
Dispose Act, the Emergency Planning and Community Right-To-Know Xxx 0000, the
Clean Air Act and any and all other foreign, federal, state, tribal, and local
laws, rules, regulations and orders relating to the reclamation of land,
wetlands and waterways or relation to use, storage, emissions, discharges,
clean-up release or threatened release of pollutants, contaminants, chemicals or
industrial, toxic or Hazardous Substances on or into the workplace or the
environment (including without limitation, ambient air oceans, waterways,
wetlands, surface water, ground water {tributary and non-tributary] land surface
or subsurface strata) or otherwise, relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals, or industrial, toxic, hazardous or similar
substances, as all of the foregoing may be amended, supplemented or
re-authorized from time to time.
"ERISA" means Employee Retirement Income Security Act of 1974, as amended,
or any successor statute thereto.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules and
regulations thereunder, as amended from time to time.
"Financial Statements" means (i) the audited consolidated balances sheet of
the Seller as of the Audit date, together with the audited consolidated
statements of operations, audited consolidated statements of shareholders'
equity, and audited consolidated statements of cash flows for the fiscal year
then ended, accompanied by the report of an independent audit; and (ii) the
unaudited balance sheet of the Company as of the Balance Sheet Date, together
with the unaudited consolidated statements of operations, unaudited consolidated
statements of shareholders' equity, and unaudited consolidated statements of
cash flows of the Seller for the five months then-ended, both monthly and
annual.
"GAAP" means generally accepted accounting principles in effect from time
to time, consistently applied.
"Hazardous Substances" means (i) any and all "waste" and "hazardous
wastes", as defined by CERCLA; (ii) "solid wastes" and "hazardous wastes", as
defined by RCRA; (iii) any pollutant, contaminate or hazardous, dangerous or
toxic chemicals, materials or substances within the meaning of any Environmental
Law; (iv) any radioactive material, including any source, special nuclear or
by-product material; as defined at 42 U.S.C. 2011 et seq., as amended; and (v)
asbestos in any form or condition.
"Option Plan" means the Seller's stock option plans, copies of which have
been provided to Buyer.
"Person" means any natural person, incorporated entity, limited or general
partnership, business trust, association, joint venture, limited liability
company, agency (government or private), division, political sovereign, or
subdivision or instrumentality, or any other entity of any kind, including those
groups identified as "persons" in 13 (d)(3) and 14(d)(2) of the Exchange Act,
and any successor, by merger or otherwise, of such entity.
"Registration Rights Agreements" means the Registration Rights Agreement
attached hereto as Exhibit A.
"Secretary of State" means the Secretary of State of the State of Nevada.
"Securities Act" means the Securities Act of 1933 and rules and regulations
thereunder, as amended from time to time.
2. PURCHASE AND SALE
2.1 Purchase and Sale. Subject to all the terms and conditions of this
Agreement, at the closing described below (the "Closing"), the Seller
agrees to receive from the Buyer, and Buyer agrees to issue to the
Shareholders of the Seller 42,750,000 Shares, in exchange for
49,000,000 shares of the Common Stock of the Seller.
2.2 Authorization. At the Closing, the Seller will have authorized the
sale and issuance to Buyer of the Shares. The Shares shall have the
rights, preferences, privileges and restrictions set forth in the
Articles.
2.3 Closing; Delivery. The Closing shall take place on June 1, 2002, at
11:00 a.m., local time, at the offices of the Buyer, or at such other
time or place as the Seller and Buyer may mutually agree (the date of
the Closing is hereinafter referred to as the "Closing Date"). At the
Closing, the Seller shall deliver to Pacific Stock Transfer a
Corporate resolution that will instruct the transfer agent about the
exchange ratio representing Buyer's Shares purchased hereunder, and
Buyer shall deliver to the Seller a corporate resolution that will be
relayed to Pacific Stock Transfer.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER
As a material inducement to Buyer to enter into this Agreement, the Seller
makes the following representations and warranties to Buyer, subject only
to such disclosures and exceptions as set forth in the Disclosure
Materials.
3.1 Organization, Standing, and Qualification of the Seller. The Seller is
a Subchapter C Corporation pursuant to the Code, duly organized,
validly existing, and in good standing under the laws of the State of
Nevada. The Seller has all necessary corporate power and authority to
own and operate its properties and assets, to execute and deliver this
Agreement and the Related Agreements, to issue and sell the shares and
to carry out the provisions of this Agreement and the Related
Agreements, and to carry on its business as now owned and operated by
it. The Seller is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions, both
nationally and internationally, in which failure to so qualify would
have a materially adverse effect upon its operations or financial
condition.
3.2 Capitalization. As of the date of and taking into account the
transactions occurring by or at the initial Closing, the authorized
capital stock of the Buyer consists of 70,000,000 shares of Common
stock and 5,000,000 authorized shares of Undesignated Preferred Stock.
Immediately after the Closing, the outstanding capital stock of the
Buyer shall be 49,000,000 shares of Common Stock and no shares of
Undesignated Preferred Stock outstanding. A schedule listing all
shareholders of record of the Buyer and the numbers of shares of
capital stock held or recorded by each such shareholder, and a listing
of all outstanding options and warrants and other obligation of the
Buyer to issue capital stock or securities convertible into capital
stock of the Buyer is contained in the Disclosed Materials. Such
schedule is complete and accurate as of the Closing Date. Except as
set forth in the Disclosure Materials, and taking into account the
transactions occurring by or at the Closing Date, there are no
outstanding rights, subscriptions, options, warrants, conversion
privileges, preemptive rights, or other agreements or commitments
obligating the Buyer to issue or transfer any additional equity
securities.
3.3 Validity of Stock. The Shares, when issued, sold, and delivered by the
Seller in accordance with the terms of this Agreement, as well as all
prior issuances of the Buyer's capital stock, shall be (or have been)
duly authorized, validly issued, fully paid, and non-assessable and
free of any liens or encumbrances.
3.4 Authorization: Enforceability All corporate action on the part of the
Seller necessary for (i) the authorization, execution, delivery, and
performance of all the obligations of the Seller under this Agreement
and the consummation of the transactions contemplated herein and
thereunder, and (ii) and the authorization, issuance, execution, the
delivery of the shares being sold by the Seller hereunder has been
taken. This Agreement constitutes a valid and binding obligation of
the Seller, enforceable against the Seller in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization,
and moratorium laws and other laws of general application affecting
enforcement of creditors' rights generally and to general equitable
principles.
3.5 Affiliates. The Seller does own, directly and indirectly, interests
and investments (debt or equity) in other corporations, partnerships,
businesses, trusts, or other entities, and is a party to agreements
related thereto, as disclosed in the Disclosure Materials.
3.6 Financial Statements. The Seller has provided to Buyer the Financial
Statements. The Financial Statements have been prepared in accordance
with GAAP throughout the periods indicated and with each other, except
that unaudited Financial Statements may not contain all footnotes
required by GAAP. The Financial Statements present fairly the
financial condition and operating results of the Seller as of the
dates, and for the periods indicated therein, subject in the case of
unaudited Financial Statements to normal year-end audit adjustments.
Except as set forth in the Financial Statements, the Seller has no
material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business after the
Balance Sheet Date, and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not
required under GAAP to be reflected in the Financial Statements,
which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the
Seller. Except as disclosed in the Financial Statements, the Seller is
not a guarantor or indemnitor of any indebtedness of any other person,
firm or corporation. The Seller knows of no information or fact which
has or would have a material adverse effect on the financial
condition, business or business prospects of the Seller which has not
been disclosed to the Buyer. The Seller maintains and will continue to
maintain a standard system of accounting established and administered
in accordance with GAAP.
3.7 Conduct of Business in the Ordinary Course. Since the Balance Sheet
Date, and excluding the transactions contemplated in this Agreement
there has not been:
(a) any change in the assets, liabilities, financial condition, or
operating results of the Seller from that reflected in the Financial
Statements, other than changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by insurance,
that has materially and adversely affected the business, properties,
prospects, of financial condition of the Seller (as such business is
presently conducted and as it is presently proposed to be conducted);
(c) any waiver or compromise by the Seller of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Seller, except in the ordinary course
of business and that is not material to the business, properties,
prospects, of financial condition of the Seller (as such business is
presently conducted and as it is presently proposed to be conducted);
(e) any material changes to a Material Contract or arrangement by which
the Seller or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or agreement with
any employee, officer, director, or shareholder;
(g) any sale, assignment, or transfer of any patents, trademarks, copy
rights, trade secrets, or other intangible assets;
(h) any resignation or termination of employment of any key officer of the
Seller, and the Seller, to the best of its knowledge, does not know of
the impending resignation or termination of employment of any such
officer;
(i) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Seller;
(j) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Seller, with respect to any of its material properties
or assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Seller to or for the benefit of
its employees, shareholders, officers, or directors, or any members of
their immediate families, other than travel advances and other
advances made in the ordinary course of its business;
(l) any declaration, setting aside, or payment of any dividend or other
distribution of the Seller's assets in respect to any of the Seller's
capital stock, or any direct or indirect redemption, purchase, or
other acquisition of any such stock by the Seller;
(m) to the best of the Seller's knowledge, any other events or condition
of any character that might materially and adversely affect the
business, properties, prospects, or financial condition of the Seller
(as such business is presently conducted and as it is presently
proposed to be conducted); or
(n) any agreement or commitment by the Seller to do any of the things
described in this Section.
3.8 Absence of Undisclosed Liabilities. To the Seller's knowledge, the Seller
does not have any material liabilities (fixed or contingent, including any
material tax liabilities due or to become due) which are not reflected or
provided for in the Financial Statements.
3.9 Tax Returns and Audits. The Seller has timely filed all federal, state,
county, local and foreign tax returns and reports within the times and in
the manner prescribed by law and has paid (or made adequate provision in
the Financial Statements) for: all taxes shown due on such returns, as well
as all other assessments and penalties which have become due and payable.
The Seller's federal income and other tax returns have not been audited by
the Internal Revenue Service or any other taxing authority and no notice of
audit has been received. To the Seller's knowledge, the provisions for
taxes in the Financial Statements are adequate for any and all federal,
state, county, local and foreign taxes for the period ending on the Balance
Sheet Date and for all prior periods, whether or not disputed. The Seller
has not received notice of any disputes, deficiency assessments, or
proposed adjustments to taxes payable by the Seller.
3.10 Assets. The Seller has good and marketable title to all of its personal
property, including all assets reflected on the balance sheets included in
the Financial Statements or acquired by the Seller since the Balance Sheet
Date, all of which are in good operating condition and free and clear of
material restrictions on or conditions to transfer or assignment, and free
and clear of all liens, claims, mortgages, pledges, charges, equities,
easements, rights of way, covenants, conditions, security interests,
encumbrances, or restrictions, except for liens for current taxes or
materialmen not yet due and payable or being contested in good faith. The
properties of the Seller are sufficient for the conduct of the Seller
business as not being and presently planned to be conducted. The Seller
holds a valid leasehold interest in all leased properties listed in the
Disclosure Materials, free of any liens, claims, or encumbrances granted by
the Seller and is not in default under any such lease. The Seller enjoys
peaceful and undisturbed possession of all premises owned by it, or leased
to it from others, and does not occupy any real property in material
violation of any law, regulations, or decree.
3.11 Insurance Policies. The Seller has in full force and effect (i) adequate
insurance policies to protect its assets and businesses covering property
damage by fire, business interruption or other casualty, sufficient in
amount to allow it to replace any of its properties damaged or destroyed;
and (ii) insurance policies to protect against all liabilities, claims, and
risks against which it is customary in amounts customary for companies
similarly situated with the Seller.
3.12 Articles and Bylaws. The Seller is not currently in violation of any
provision of the Articles or its Bylaws, as in effect on each Closing Date.
There is no default or event that, with notice or lapse of time, or both,
would conflict with or constitute a breach of the Articles of the Seller's
Bylaws.
3.13 Material Contracts.
(a) Except as set forth in the Disclosure Materials, the Seller does not
have, nor is it bound by, any contract, agreement, lease, commitment, or
proposed transaction, judgment, order, writ or decree, written or oral,
absolute or contingent, other than (i) contracts for the purchase of
supplies and services that were entered into in the ordinary course of
business and that does not involve more than $10,000 and do not extend for
more than one year beyond the date hereof; (ii) sales contracts entered
into in the ordinary course of business; and (iii) contracts terminable at
will by the Seller on no more than 30 days' notice without cost or
liability to the Seller and that do not involve any employment or
consulting arrangement and are not material to the conduct of the Seller's
business. For the purpose of this paragraph, employment and consulting
contracts and contracts with labor unions, and license agreements and any
other agreements relating to the Seller's acquisition or disposition of
patent, copyright, trade secret or other proprietary rights or technology
(other than standard end-user license agreements) shall not be considered
to be contracts entered into in the ordinary course of business. Every
contract disclosed in the Disclosure Materials (collectively, the "Material
Contracts") is a legal, valid and binding obligation, enforceable in
accordance with its terms with respect to the Seller and any other parties
bound thereby, and true and complete copies of all Material Contracts have
been provided to the Buyer. The Seller is not, nor has it given or been
given notice that any other party is, currently in breach of any of the
terms of any Material Contract. There is no default or event that, with
notice or lapse of time, or both, would conflict with or constitute a
breach of any Material Contract or would result in the creation or
imposition of any lien or encumbrance on any of the Seller's property. The
Seller has not received notice that any party to any Material Contract
intends to cancel, amend or terminate any such agreement.
(b) As previously disclosed, the Seller is not presently engaged in any
discussion, unless previously disclosed (i) with any representative of any
corporation or corporations regarding the consolidation or merger of the
Seller with or into any such corporation or corporations; (ii) with any
corporation, partnership, association or other business entity or any
individual regarding the sale, conveyance or disposition of all or
substantially all of the assets of the Seller, or a transaction or series
of related transactions in which more than 50% of the voting power of the
Seller is or was to be disposed; or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up or the Seller.
3.14 Litigation. There are no actions, suits, or legal, administrative, or other
proceedings or investigations pending, or, to the best of the Seller's
knowledge, threatened before any court, agency, or other tribunal to which
the Seller is a party or against or affecting any of the property, assets,
businesses, or financial condition of the Seller, except as set forth in
the Disclosure Materials. The Seller is not in default with respect to any
other, writ, injunction, or decree of any federal, state, local or foreign
court, department, agency, or instrumentality to which it is a party. The
Seller has provided Buyer and its counsel with true and accurate copies of
material documents relating to any of these matters that are disclosed in
the Disclosure Materials.
3.15 Related Transaction. Except as set forth in the Disclosure Materials, there
are no obligations of the Seller to officers, directors, shareholders or
employees of the Seller other than (a) for payment of salary for services
rendered; (b) reimbursement for reasonable expenses incurred on behalf of
the Seller; and (c) for other standard employee benefits made generally
available to all employees (including any stock options outstanding under
the Option Plan). None of the officers, directors of shareholders of the
Seller, or any members of their immediate families, are indebted to the
Seller or have any direct or indirect ownership interest in any firm or
corporation with which the Seller has a business relationship, or any firm
or corporation which competes with the Seller, except that officers,
directors and/or shareholders of the Seller may own stock in publicly
traded companies which may compete with the Seller. No officer, director or
shareholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Seller (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of the Seller). Except as may be disclosed in the
Financial Statements, the Seller is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
3.16 Agreement Will Not Cause Breach or Violation. The consummation of the
transactions contemplated by this Agreement (including the issuance and
sale of the Shares) will not result in any violation of or constitute a
default or any event that, with notice or lapse of time, or both, would
conflict with or constitute a breach or default of the Bylaws of the Seller
or of any Material Contract or any material provision of local, state,
federal or foreign law, rule or regulation and will not result in the
creation or imposition of any lien or encumbrance on any of the Seller's
property or on the Shares.
3.17 Governmental Approvals/Third Party Consents. All consents, approvals, or
authorizations of, or registrations, qualifications, designations,
declarations, or filings with any federal or state governmental authority,
and all consents, approvals or authorizations of any third party required
in connection with the execution of this Agreement, the Registration Rights
Agreement and the performance of the transactions contemplated hereby
(including the issuance and sale of the Shares) have been obtained by the
Seller. The Seller has, or has rights to acquire, all licenses, permits,
and other similar authority necessary for the conduct of its business as
now being conducted by it and as planned to be conducted, the lack of which
could materially and adversely affect the operations or condition,
financial or otherwise, of the Seller, and it is not in default in any
material respect under any of such licenses, permits or other similar
authority.
3.18 Environmental Matters. The Seller is in compliance in all material respects
with all Environmental Laws and, to its knowledge no material expenditures
are or will be required in order to comply with any Environmental Law. The
Seller has not knowingly handled, stored or released, or exposed any person
to, any Hazardous Substances. The Seller is not, and has no knowledge that
it will be in the future, liable, or responsible for clean-up costs,
remedial work or damages in connection with the handling, storage, release,
or exposure by the Seller of any Hazardous Substances. To the Seller's
knowledge, no claims for clean-up costs, remedial work or damages have been
made by any person or entity in connection with the handling, storage,
release, or exposure by the Seller of any Hazardous Substances, or in
connection with any Environmental Law.
3.19 Bankruptcy. The Seller has not admitted in writing its inability to pay its
debts generally as they become due, filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of
any insolvency act, made an assignment for the benefit of creditors,
consented to the appointment of a receiver for itself or for the whole or
any substantial part of its property, or had a petition in bankruptcy filed
against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or
any other law or statute of the United States of America or any other
jurisdiction.
3.20 Intellectual Property.
(a) The Seller owns rights to all intellectual property necessary to
conduct its business as now being conducted and as planned to be
conducted, including all such rights relating to patents, trademarks,
service marks, copyrights, applications therefor, trade names, trade
secrets, export of technology and other information (collectively
"Proprietary Information").
(b) The Seller possesses commercial rights to all Proprietary Information
and the Proprietary Information is not subject to any kind of lien,
judgment or other encumbrance, except as otherwise disclosed in the
Disclosure Materials.
(c) There is no pending or, to the knowledge of the Seller, threatened
claim or litigation against the Seller or its Proprietary Information
asserting the infringement or other violation of any intellectual
property rights of any third party or past or current employee of the
Seller.
(d) To the best of the Seller's knowledge and belief, there is no claim
that can be asserted by or against a third party for infringement,
misappropriation, breach or otherwise relating to the Proprietary
Information.
(e) None of the Seller's employees has any ownership rights in any
Proprietary Information or any other intellectual property rights
related to the business, products or services of the Seller.
(f) No shareholder, director, officer or employee of the Seller has any
right, title or interest in or to any of the Proprietary Information.
3.21 Employees and Consultants. Except as set forth in the Disclosure Materials,
the Seller has not entered into any arrangement with any present or former
employee that will result in any obligation of the Seller to make any
payment to such employee upon termination. True and complete copies of all
written employment agreements with the key executive officers of the Seller
have been delivered to Buyer prior to the Closing Date. To the Seller's
knowledge, no employee of or consultant to the Seller is in material
violation of any term of any employment contract or any other contract or
agreement relating to the relationship of any such employee or consultant
with the Seller. The Seller has not received notice that any executive
officer intends to terminate his employment with the Seller, nor does the
Seller have any present intention to terminate the employment of any
executive officer. To the Seller's knowledge, none of its employees are
obligated under any contract (including licenses, covenants, or commitments
of any nature) or other agreement, or subject to any judgment, decree, or
order of any court of administrative agency, that would interfere with the
use of his/her reasonable diligence to promote the interests of the Seller
that would conflict with the Seller's business as proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the conduct of
the Seller's business as proposed, will, to the Seller's knowledge,
conflict with or result in a breach of terms, conditions or provisions of,
or constitute a default under, any contract, covenant, or instrument under
which any of such employees is obligated, which conflict, breach, or
default would be materially adverse to the Seller.
3.22 Employee Benefits Matters. The Seller does not maintain or contribute to
any plan or arrangement that constitutes an "employee pension benefit plan"
as defined in Section 3(2) of ERISA, and is not obligated to contribute to
or accrue or pay benefits under any deferred compensation or retirement
funding arrangement.
3.23 Compliance with Laws. (a) The Seller has complied with and is in compliance
in all material respects with all foreign, federal, state and local
statutes, laws, ordinances, regulations, rules, judgments, order and
decrees applicable to it and its assets, business and operations, and (b)
the Seller has not received written notice of any claim of default under or
violation of any statute, law, ordinance, regulation, rule, judgment, order
or decree except for any such noncompliance or claim of default or
violation, if any, which in the aggregate do not and will not have a
material adverse affect on the property, operations, financial condition or
prospects of the Seller.
3.24 Brokers. All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on by the Seller directly with the
Buyer and without the intervention of any person on behalf of the Seller,
and in such manner as not to give rise to any valid claim against any of
the parties for a finder's fee, brokerage commission or like payment.
3.25 Accuracy of Information Furnished. This Agreement, the Disclosure
Materials, the Financial Statements, as well as any exhibit, certificate,
written statement, material or information furnished by or on behalf of the
Seller pursuant hereto or in connection with the transactions contemplated
hereby to the Buyer, do not contain any untrue statement of a material fact
or omit to state any material fact that is necessary to make the statements
contained herein or therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer makes the following representations and warranties to the Seller
as to itself that:
4.1 Requisite Power and Authority. Buyer is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of
Nevada, and has all requisite partnership or corporate power and authority
to own its assets and operate its business. Buyer has all necessary
corporate or partnership power and authority under all applicable
provisions of law to execute and deliver this Agreement and to carry out
their provisions. All action on Buyer's part required for the lawful
execution and delivery of this Agreement has been or will be effectively
taken prior to the Closing Date. Upon its execution and delivery, this
Agreement will be a valid and binding obligations of the Buyer, enforceable
in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; (ii) general
principles of equity that restrict the availability of equitable remedies.
4.2 Organization, Standing, and Qualification of the Buyer. The Buyer has all
necessary corporate power and authority to own and operate its properties
and assets, to execute and deliver this Agreement and the Related
Agreements, to issue and sell the shares and to carry out the provisions of
this Agreement and the Related Agreements, and to carry on its business as
now owned and operated by it. The Buyer is duly qualified to do business as
a foreign corporation and is in good standing in all jurisdictions, both
nationally and internationally, in which failure to do so qualify would
have a materially adverse effect upon its operations or financial
condition.
4.3 Capitalization. As of the date of and taking into account the transactions
occurring by or at the initial Closing, the authorized capital stock of the
Buyer consists of 70,000,000 shares of Common stock and 5,000,000
authorized shares of Undesignated Preferred Stock. Immediately after the
Closing, the outstanding capital stock of the Buyer shall be 49,000,000
shares of Common Stock and no shares of Undesignated Preferred Stock
outstanding. A schedule listing all shareholders of record of the Buyer and
the numbers of shares of capital stock held or recorded by each such
shareholder, and a listing of all outstanding options and warrants and
other obligation of the Buyer to issue capital stock or securities
convertible into capital stock of the Buyer is contained in the Disclosed
Materials. Such schedule is complete and accurate as of the Closing Date.
Except as set forth in the Disclosure Materials, and taking into account
the transactions occurring by or at the Closing Date, there are no
outstanding rights, subscriptions, options, warrants, conversion
privileges, preemptive rights, or other agreements or commitments
obligating the Buyer to issue or transfer any additional equity securities.
4.4 Validity of Stock. The Shares, when issued, sold, and delivered by the
Buyer in accordance with the terms of this Agreement, as well as all prior
issuances of the Buyer's capital stock, shall be (or have been) duly
authorized, validly issued, fully paid, and non-assessable and free of any
liens or encumbrances.
4.5 Authorization: Enforceability. All corporate action on the part of the
Buyer necessary for (i) the authorization, execution, delivery, and
performance of all the obligations of the Buyer under this Agreement and
the consummation of the transactions contemplated herein and thereunder,
and (ii) and the authorization, issuance, execution, the delivery of the
shares being exchanged by the Buyer hereunder has been taken. This
Agreement constitute a valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, and moratorium laws and
other laws of general application affecting enforcement of creditors'
rights generally and to general equitable principles.
4.6 Affiliates. The Buyer does not own, directly and indirectly, interests and
investments (debt or equity) in other corporations, partnerships,
businesses, trusts, or other entities, and is not a party to agreements
related thereto.
4.7 Financial Statements. The Buyer has provided to Seller the Financial
Statements. The Financial Statements have been prepared in accordance with
GAAP throughout the periods indicated and with each other, except that
unaudited Financial Statements may not contain all footnotes required by
GAAP. The Financial Statements present fairly the financial condition and
operating results of the Buyer as of the dates, and for the periods
indicated therein, subject in the case of unaudited Financial Statements to
normal year-end audit adjustments. Except as set forth in the Financial
Statements, the Buyer has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
after the Balance Sheet Date, and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required
under GAAP to be reflected in the Financial Statements, which, in both
cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Buyer. Except as disclosed in the
Financial Statements, the Buyer is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation. The Buyer knows of
no information or fact which has or would have a material adverse effect on
the financial condition, business or business prospects of the Buyer which
has not been disclosed to the Seller. The Buyer maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with GAAP.
4.8 Conduct of Business in the Ordinary Course. Since the Balance Sheet Date,
and excluding the transactions contemplated in this Agreement there has not
been:
(a) any change in the assets, liabilities, financial condition, or
operating results of the Buyer from that reflected in the Financial
Statements, other than changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by insurance,
that has materially and adversely affected the business, properties,
prospects, of financial condition of the Buyer (as such business is
presently conducted and as it is presently proposed to be conducted);
(c) any waiver or compromise by the Buyer of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Buyer, except in the ordinary course
of business and that is not material to the business, properties,
prospects, of financial condition of the Buyer (as such business is
presently conducted and as it is presently proposed to be conducted);
(e) any material changes to a Material Contract or arrangement by which
the Buyer or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or agreement with
any employee, officer, director, or shareholder;
(g) any sale, assignment, or transfer of any patents, trademarks, copy
rights, trade secrets, or other intangible assets;
(h) any resignation or termination of employment of any key officer of the
Buyer, and the Buyer, to the best of its knowledge, does not know of
the impending resignation or termination of employment of any such
officer;
(i) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Buyer, with respect to any of its material properties
or assets, except liens for taxes not yet due or payable;
(j) any loans or guarantees made by the Buyer to or for the benefit of its
employees, shareholders, officers, or directors, or any members of
their immediate families, other than travel advances and other
advances made in the ordinary course of its business;
(k) any declaration, setting aside, or payment of any dividend or other
distribution of the Buyer's assets in respect to any of the Buyer's
capital stock, or any direct or indirect redemption, purchase, or
other acquisition of any such stock by the Buyer;
(l) to the best of the Buyer's knowledge, any other events or condition of
any character that might materially and adversely affect the business,
properties, prospects, or financial condition of the Buyer (as such
business is presently conducted and as it is presently proposed to be
conducted); or
(m) any agreement or commitment by the Buyer to do any of the things
described in this Section 4.8.
4.9 Absence of Undisclosed Liabilities. To the Buyer's knowledge, the Buyer
does not have any material liabilities (fixed or contingent, including any
material tax liabilities due or to become due) which are not reflected or
provided for in the financial Statements.
4.10 Tax Returns and Audits-Buyer. The Buyer has timely filed all federal,
state, county, local and foreign tax returns and reports within the times
and in the manner prescribed by law and has paid (or made adequate
provision in the Financial Statements) for: all taxes shown due on such
returns, as well as all other assessments and penalties which have become
due and payable. The Buyer's federal income and other tax returns have not
been audited by the Internal Revenue Service or any other taxing authority
and no notice of audit has been received. To the Buyer's knowledge, the
provisions for taxes in the Financial Statements are adequate for any and
all federal, state, county, local and foreign taxes for the period ending
on the Balance Sheet Date and for all prior periods, whether or not
disputed. The Buyer has not received notice of any disputes, deficiency
assessments, or proposed adjustments to taxes payable by the Buyer.
4.11 Assets. The Buyer has good and marketable title to all of its personal
property, including all assets reflected on the balance sheets included in
the Financial Statements or acquired by the Buyer since the Balance Sheet
Date, all of which are in good operating condition and free and clear of
material restrictions on or conditions to transfer or assignment, and free
and clear of all liens, claims, mortgages, pledges, charges, equities,
easements, rights of way, covenants, conditions, security interests,
encumbrances, or restrictions, except for liens for current taxes or
materialmen not yet due and payable or being contested in good faith. The
Buyer does not own any real property. The Buyer enjoys peaceful and
undisturbed possession of all premises owned by it, or leased to it from
others, and does not occupy any real property in material violation of any
law, regulations, or decree.
4.12 Articles and Bylaws-Buyer. The Buyer is not currently in violation of any
provision of the Articles or its Bylaws, as in effect on each Closing Date.
There is no default or event that, with notice or lapse of time, or both,
would conflict with or constitute a breach of the Articles of the Buyer's
Bylaws.
4.13 Material Contracts.
(a) Except as set forth in the Disclosure Materials, the Buyer does not
have, nor is it bound by, any contract, agreement, lease, commitment,
or proposed transaction, judgment, order, writ or decree, written or
oral, absolute or contingent, other than (i) contracts for the
purchase of supplies and services that were entered into in the
ordinary course of business and that does not involve more than
$10,000 and do not extend for more than one year beyond the date
hereof; (ii) sales contracts entered into in the ordinary course of
business; and (iii) contracts terminable at will by the Buyer on no
more than 30 days' notice without cost or liability to the Buyer and
that do not involve any employment or consulting arrangement and are
not material to the conduct of the Buyer's business. For the purpose
of this paragraph, employment and consulting contracts and contracts
with labor unions, and license agreements and any other agreements
relating to the Buyer's acquisition or disposition of patent,
copyright, trade secret or other proprietary rights or technology
(other than standard end-user license agreements) shall not be
considered to be contracts entered into in the ordinary course of
business. Every contract disclosed in the Disclosure Materials
(collectively, the "Material Contracts") is a legal, valid and binding
obligation, enforceable in accordance with its terms with respect to
the Buyer and any other parties bound thereby, and true and complete
copies of all Material Contracts have been provided to the Seller. The
Buyer is not, nor has it given or been given notice that any other
party is, currently in breach of any of the terms of any Material
Contract. There is no default or event that, with notice or lapse of
time, or both, would conflict with or constitute a breach of any
Material Contract or would result in the creation or imposition of any
lien or encumbrance on the Buyers, any of the Buyer's property. The
Buyer has not received notice that any party to any Material Contract
intends to cancel, amend or terminate any such agreement.
(c) As previously disclosed, the Buyer is not presently engaged in any
discussion, unless previously disclosed (i) with any representative of
any corporation or corporations regarding the consolidation or merger
of the Buyer with or into any such corporation or corporations; (ii)
with any corporation, partnership, association or other business
entity or any individual regarding the sale, conveyance or disposition
of all or substantially all of the assets of the Buyer, or a
transaction or series of related transactions in which more than 50%
of the voting power of the Buyer is or was to be disposed; or (iii)
regarding any other form of acquisition, liquidation, dissolution or
winding up or the Buyer.
4.14 Litigation. There are no actions, suits, or legal, administrative, or other
proceedings or investigations pending, or, to the best of the Buyer's
knowledge, threatened before any court, agency, or other tribunal to which
the Buyer is a party or against or affecting any of the property, assets,
businesses, or financial condition of the Buyer, except as set forth in the
Disclosure Materials. The Buyer is not in default with respect to any
other, writ, injunction, or decree of any federal, state, local or foreign
court, department, agency, or instrumentality to which it is a party. The
Buyer has provided Seller and its counsel with true and accurate copies of
material documents relating to any of these matters that are disclosed in
the Disclosure Materials.
4.15 Related Transaction. Except as set forth in the Disclosure Materials, there
are no obligations of the Buyer to officers, directors, shareholders or
employees of the Buyer other than (a) for payment of salary for services
rendered; (b) reimbursement for reasonable expenses incurred on behalf of
the Buyer; and (c) for other standard employee benefits made generally
available to all employees (including any stock options outstanding under
the Option Plan). None of the officers, directors of shareholders of the
Buyer, or any members of their immediate families, are indebted to the
Buyer or have any direct or indirect ownership interest in any firm or
corporation with which the Buyer has a business relationship, or any firm
or corporation which competes with the Buyer, except that officers,
directors and/or shareholders of the Buyer may own stock in publicly traded
companies which may compete with the Seller. No officer, director or
shareholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Buyer (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of the Buyer). Except as may be disclosed in the Financial
Statements, the Buyer is not a guarantor or indemnitor of any indebtedness
of any other person, firm or corporation.
4.16 Agreement Will Not Cause Breach or Violation. The consummation of the
transactions contemplated by this Agreement (including the issuance and
sale of the Shares) will not result in any violation of or constitute a
default or any event that, with notice or lapse of time, or both, would
conflict with or constitute a breach or default of the Bylaws of the Buyer
or of any Material Contract or any material provision of local, state,
federal or foreign law, rule or regulation and will not result in the
creation or imposition of any lien or encumbrance on any of the Buyer's
property or on the Shares.
4.17 Governmental Approvals/Third Party Consents. All consents, approvals, or
authorizations of, or registrations, qualifications, designations,
declarations, or filings with any federal or state governmental authority,
and all consents, approvals or authorizations of any third party required
in connection with the execution of this Agreement, and the performance of
the transactions contemplated hereby (including the issuance of the Shares)
have been obtained by the Buyer. The Buyer has, or has rights to acquire,
all licenses, permits, and other similar authority necessary for the
conduct of its business as now being conducted by it and as planned to be
conducted, the lack of which could materially and adversely affect the
operations or condition, financial or otherwise, of the Buyer, and it is
not in default in any material respect under any of such licenses, permits
or other similar authority.
4.18 Environmental Matters. The Buyer is in compliance in all material respects
with all Environmental Laws and, to its knowledge no material expenditures
are or will be required in order to comply with any Environmental Law. The
Buyer has not knowingly handled, stored or released, or exposed any person
to, any Hazardous Substances. The Buyer is not, and has no knowledge that
it will be in the future, liable, or responsible for clean-up costs,
remedial work or damages in connection with the handling, storage, release,
or exposure by the Buyer of any Hazardous Substances. To the Buyer's
knowledge, no claims for clean-up costs, remedial work or damages have been
made by any person or entity in connection with the handling, storage,
release, or exposure by the Buyer of any Hazardous Substances, or in
connection with any Environmental Law.
4.19 Bankruptcy. The Buyer has not admitted in writing its inability to pay its
debts generally as they become due, filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of
any insolvency act, made an assignment for the benefit of creditors,
consented to the appointment of a receiver for itself or for the whole or
any substantial part of its property, or had a petition in bankruptcy filed
against it, been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the federal bankruptcy laws or
any other law or statute of the United States of America or any other
jurisdiction.
4.20 Employees and Consultants. Except as set forth in the Disclosure Materials,
the Buyer has not entered into any arrangement with any present or former
employee that will result in any obligation of the Buyer to make any
payment to such employee upon termination. True and complete copies of all
written employment agreements with the key executive officers of the Buyer
have been delivered to Seller prior to the Closing Date. To the Buyer's
knowledge, no employee of or consultant to the Buyer is in material
violation of any term of any employment contract or any other contract or
agreement relating to the relationship of any such employee or consultant
with the Buyer. The Buyer has not received notice that any executive
officer intends to terminate his employment with the Buyer, nor does the
Buyer have any present intention to terminate the employment of any
executive officer. To the Buyer's knowledge, none of its employees are
obligated under any contract (including licenses, covenants, or commitments
of any nature) or other agreement, or subject to any judgment, decree, or
order of any court of administrative agency, that would interfere with the
use of his/her reasonable diligence to promote the interests of the Buyer
that would conflict with the Buyer's business as proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the conduct of
the Buyer's business as proposed, will, to the Buyer's knowledge, conflict
with or result in a breach of terms, conditions or provisions of, or
constitute a default under, any contract, covenant, or instrument under
which any of such employees is obligated, which conflict, breach, or
default would be materially adverse to the Buyer.
4.21 Employee Benefits Matters. The Buyer does not maintain or contribute to any
plan or arrangement that constitutes an "employee pension benefit plan" as
defined in Section 3(2) of ERISA, and is not obligated to contribute to or
accrue or pay benefits under any
4.22 deferred compensation or retirement funding arrangement. Compliance with
Laws. (a) The Buyer has complied with and is in compliance in all material
respects with all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, judgments, order and decrees applicable to
it and its assets, business and operations, and (b) the Buyer has not
received written notice of any claim of default under or violation of any
statute, law, ordinance, regulation, rule, judgment, order or decree except
for any such noncompliance or claim of default or violation, if any, which
in the aggregate do not and will not have a material adverse affect on the
property, operations, financial condition or prospects of the Buyer.
4.23 Brokers. All negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on by the Buyer directly with the
Seller and without the intervention of any person on behalf of the Buyer,
and in such manner as not to give rise to any valid claim against any of
the parties for a finder's fee, brokerage commission or like payment.
4.24 Accuracy of Information Furnished. This Agreement, the Disclosure
Materials, the Financial Statements, as well as any exhibit, certificate,
written statement, material or information furnished by or on behalf of the
Buyer pursuant hereto or in connection with the transactions contemplated
hereby to the Buyer, do not contain any untrue statement of a material fact
or omit to state any material fact that is necessary to make the statements
contained herein or therein not misleading.
4.33 Investment Representations. Buyer understands that the Shares have not been
registered under the Securities Act. Buyer also understands that the Shares
are being exchanged pursuant to an exemption from registration contained in
the Securities Act based in part upon Buyer's representations contained in
this Agreement. Buyer hereby represents and warrants as follows:
(e) Buyer Information. Seller has received and read the Financial
Statements and has had an opportunity to discuss the Buyer's business,
management and financial affairs with directors, officers and
management of the Buyer and has had the opportunity to review the
Buyer's operations and facilities. Seller also has had the opportunity
to ask questions of and receive answers from the Buyer and its
management regarding the terms and conditions of this exchange.
5. CONDITIONS TO SELLER'S OBLIGATIONS AT CLOSING.
The obligation of Buyer to consummate the transactions contemplated hereby
on the Closing Date is subject to the satisfaction on or before the Closing Date
of the following conditions (unless such condition provides specifically that it
shall relate solely to a later date):
5.1 Representation and Warranties. All representations and warranties of the
Seller herein or in any exhibit or certificate delivered hereunder shall be
true and correct as of the date hereof, and as of the Closing Date, with
the same force and effect as if made on and as of such Closing Date,
subject to such disclosures and exceptions as may be specifically described
in the Disclosure Materials.
5.2 Performance. All covenants, obligations and conditions required by the
terms of this Agreement to be performed or complied with by the Seller at
or before the Closing Date shall have been duly and properly performed.
5.3 Approval of Documentation. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and the
form and substance of all documents delivered hereunder shall be reasonably
satisfactory to Buyer and to its counsel.
5.4 Consents. All necessary agreements and consents of any third parties to the
consummation of the transactions contemplated by this Agreement shall have
been obtained by the Seller and delivered to Buyer.
5.5 Approvals. All necessary approvals or authorizations of any governmental
authority of the United States or of any state therein or of any foreign
governmental authority that are required in connection with the execution
and performance of this Agreement, including the issuance and sale of the
Shares, shall have been obtained and shall be effective as of the Closing
Date.
5.6 Board of Director Resolutions. All resolutions required by the Board of
Directors pertaining to this Agreement shall have been delivered to Buyer
and Seller on or before the Closing Date, and approved by it.
5.7 Buyer Review. The Seller shall have completed its review of, and shall be
satisfied with its conclusions regarding, the Buyer's business, operations
and projections on or before the closing Date.
5.8 Maintenance of Corporate Status. The Seller and Buyer shall maintain its
corporate or partnership existence in good standing or effective under the
laws of its jurisdiction of organization and any other states or
jurisdictions in which its failure to qualify as a foreign corporation or
entity would have a material adverse effect on its operations or financial
condition.
5.9 Compliance with Governing Documents. The Seller shall comply in all
material respects with its Articles; Bylaws or other governing documents.
5.10 Compliance with Laws, Licenses and Permits: No infringement. The Buyer and
Seller shall comply with all applicable federal, state, local, foreign and
other laws, regulations and ordinances, and with all applicable federal,
state, local and foreign governmental licenses and permits necessary for
conducting its business, except to the extent that any noncompliance would
not have a material adverse effect upon the Buyer. The Seller shall not
knowingly engage in any activities that infringe upon the intellectual
property rights of any other person, corporation, partnership or other
entity which could have a material adverse effect upon the Buyer.
5.11 Discharge of Obligations. The Seller shall pay and discharge all taxes,
assessments, and governmental charges lawfully levied or imposed upon it
(in each case before they become delinquent and before penalties accrue),
all lawful claims for labor, materials, supplies and rents, and all other
debts and liabilities that if unpaid would by law be a lien or charge upon
any of the assets or properties of the Seller or lead to suspension of the
business of the Seller (except to the extent contested in good faith by the
Seller and for which adequate reserves are established).
5.12 Maintenance of Properties. The Seller shall maintain all real and personal
property used in the business of the Seller in good operating condition,
and shall make all repairs, renewals, replacements, additions and
improvements to those properties as are necessary or appropriate in the
ordinary course of business.
5.13 Maintenance of Proprietary Information. The Seller shall maintain all
Proprietary Information, and all applications and registrations therefor
owned or held by the Seller, in full force and effect, except as otherwise
determined in the ordinary course of business. The Seller shall not
encumber or license others to use the Proprietary Information owned by it
except in the ordinary course of the Seller's business and shall maintain
the confidentiality and trade secret status of all Proprietary Information
that is confidential except where disclosure is necessary to obtain
copyright registrations or patents, or is necessary or desirable in the
ordinary course of the Seller's business. The Seller shall cause each key
management employee of the Seller and each Consultant to enter into
confidentiality agreements in a form approved in writing by the Buyer
within 30 days of the Closing. The Seller shall consult with the Buyer and
shall take such actions in accordance with the Buyer's advice as may be
necessary or desirable to protect and enhance the Proprietary Information
of the Buyer.
5.14 Insurance. The Seller shall maintain in full force and effect (a) adequate
insurance policies to protect its assets and businesses covering property
damage by fire, business interruption or other casualty, sufficient in
amount to allow it to replace any of its properties damaged or destroyed;
(b) insurance policies to protect against all liabilities, claims, and
risks against which it is customary, in amounts customary for companies
similarly situated with the Seller; and (c) customary liability insurance
policies for its directors and officers.
5.15 Compensation of Directors. Each member of the Board of Directors shall be
entitled to (a) customary liability insurance obtained at commercially
reasonable rates, and (b) reimbursement by the Seller for all out-of-pocket
expenses, including, without limitation, travel expenses, incurred by such
director in connection with the performance of such director's duties,
subject to approval by the Board of Directors, such approval not to be
unreasonably withheld.
5.16 Books and Records. The Seller shall keep proper books of records and
account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Seller in accordance with
GAAP. The Seller shall provide Buyer with access to all such books and
records and allow Buyer to make copies and abstracts thereof at reasonable
times.
5.19 Stock Redemptions. The Seller shall not apply any of its assets for the
redemption, retirement, purchase or acquisition of any shares of any series
or class of stock of the Seller, except as provided in the Articles.
5.20 Further Assurances. The Seller, at its expense, will execute and deliver
promptly to the Buyer upon request all such other and further documents,
agreements and instruments in compliance with or pursuant to its covenants
and agreements herein, and will make any recordings, file any notices, and
obtain any consents as may be necessary or appropriate in connection
therewith.
5.21 Notices. Within five business days of obtaining knowledge of any of the
events described below, the Seller shall give written notice to each member
of the Board of Directors of:
(a) any (i) default or event of default under any Material Contract of the
Seller; (ii) initiation or resolution of any material dispute,
litigation, investigation, or proceeding which may exist at any time
between the Seller and any private third party or governmental
authority; (iii) any default or breach of the terms of this Agreement
or any of the Registration Rights Agreement by the Seller; (iv) any
events which would render any of the representations, warranties and
covenents of the Seller contained herein to be untrue; and (v) any
other matter that has resulted in a material adverse effect in the
condition of the Seller, whether financial or otherwise.
(b) Each notice pursuant to this Section shall be accompanied by a
statement on behalf of the Seller by the Chief Executive Officer,
President or Chief Financial Officer of the Seller setting forth
details of the occurrence referred to therein, stating what action the
Seller proposes to take with respect thereto, the Seller officer
responsible for such action and the timetable with respect to such
action.
6. SURVIVAL
All covenants, agreements, representations and warranties and other
statements of the Seller made herein and in the certificates, lists, exhibits,
schedules or other written information delivered or furnished to the Buyer in
connection herewith shall be deemed material and to have been relied upon by the
Buyer, and, except as may be provided otherwise in this Agreement, shall survive
the execution and delivery of this Agreement, the Closing, the delivery of the
Shares, and any investigation at any time (or any statement as to the results
thereof) made by or on behalf of the Buyer and shall remain in full force and
effect, and shall bind the Seller's successors and assigns, whether so expressed
or not, and all such covenants, agreements, representations and warranties shall
inure to the benefit of the Buyer's successors and assigns and to transferees of
the Shares, whether so expressed or not.
7. INDEMNIFICATION
7.1 Indemnification from the Seller.
(a) Without limitation of any other provision of this Agreement, the Seller
agrees to defend, indemnify and hold the Buyer and is Affiliates and their
respective direct and indirect partners, members, shareholders, directors,
officers, employees and agents and each person who controls any of them
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (parties receiving the benefit of the indemnification
provisions herein shall be referred to collectively as "Indemnified
Parties" and individually as an "Indemnified Party") harmless from and
against any and all losses, claims, damages, obligations, liens,
assessments, judgments, fines, liabilities, and other costs and expenses
(including without limitation interest, penalties and any investigation,
legal and other expenses incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted, as
the same are incurred, and including any diminution in the value of the
Shares) of any kind or nature whatsoever (collectively, "Liabilities")
which may be sustained or suffered by any such indemnified Party, based
upon, arising out of, by reason of or otherwise in respect of or in
connection with (i) any inaccuracy in or breach of any representation or
warranty made by the Seller in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other document
delivered pursuant to this Agreement or the Registration Rights Agreement,
(ii) any breach of any covenant or agreement made by the Seller in this
Agreement, in the Registration Rights Agreement, or in any other agreement,
instrument or other document delivered pursuant to this Agreement or the
Registration Rights Agreement, or (iii) any third party or governmental
action relating to any action taken or omitted to be taken or alleged to
have been taken or omitted to have been taken by an Indemnified Party as
Shareholder, director, agent, representative or controlling person of the
Seller, including, without limitation, any and all losses, claims, damages,
expenses and liabilities, joint or several (including any investigation,
legal and other expenses incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted as
the same may be incurred) arising or alleged to arise under the Securities
Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, including without limitation any
such claim alleging so-called control person liability or securities law
liability; provided, however, that the Seller will not be liable to an
Indemnified Party (A) to the extent that it is finally judicially
determined that such Liabilities resulted from the willful misconduct or
gross negligence of such Indemnified Party; or (B) to the extent that it is
finally judicially determined that such Liabilities resulted from the
material breach by such Indemnified Party of any representation, warranty,
covenant or other agreement of such Indemnified Party contained in this
Agreement or the Registration Rights Agreement; provided, further that if
and to the extent that such indemnification is unenforceable for any
reason, the Seller shall make the maximum contribution to the payment and
satisfaction of such indemnified liability which shall be permissible under
applicable laws.
(b)The indemnification and contribution provided for in this Section will
remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Parties or any officer, director, partner,
employee, agent or controlling person of the Indemnified Parties.
(c)The Seller agrees to pay any and all stamp, transfer and other similar
taxes, if any, payable or determined to be payable in connection with the
execution and delivery of this Agreement and the issuance of securities
hereunder.
7.2 Indemnification from the Buyer.
(a) Without limitation of any other provision of this Agreement, the Buyer
agrees to defend, indemnify and hold the Seller and is Affiliates and their
respective direct and indirect partners, members, shareholders, directors,
officers, employees and agents and each person who controls any of them
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (parties receiving the benefit of the indemnification
provisions herein shall be referred to collectively as "Indemnified
Parties" and individually as an "Indemnified Party") harmless from and
against any and all losses, claims, damages, obligations, liens,
assessments, judgments, fines, liabilities, and other costs and expenses
(including without limitation interest, penalties and any investigation,
legal and other expenses incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted, as
the same are incurred, and including any diminution in the value of the
Shares) of any kind or nature whatsoever (collectively, "Liabilities")
which may be sustained or suffered by any such indemnified Party, based
upon, arising out of, by reason of or otherwise in respect of or in
connection with (i) any inaccuracy in or breach of any representation or
warranty made by the Buyer in this Agreement, in the Registration Rights
Agreement, or in any other agreement, instrument or other document
delivered pursuant to this Agreement or the Registration Rights Agreement,
(ii) any breach of any covenant or agreement made by the Buyer in this
Agreement, in the Registration Rights Agreement, or in any other agreement,
instrument or other document delivered pursuant to this Agreement or the
Registration Rights Agreement, or (iii) any third party or governmental
action relating to any action taken or omitted to be taken or alleged to
have been taken or omitted to have been taken by an Indemnified Party as
Shareholder, director, agent, representative or controlling person of the
Buyer, including, without limitation, any and all losses, claims, damages,
expenses and liabilities, joint or several (including any investigation,
legal and other expenses incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted as
the same may be incurred) arising or alleged to arise under the Securities
Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, including without limitation any
such claim alleging so-called control person liability or securities law
liability; provided, however, that the Buyer will not be liable to an
Indemnified Party (A) to the extent that it is finally judicially
determined that such Liabilities resulted from the willful misconduct or
gross negligence of such Indemnified Party; or (B) to the extent that it is
finally judicially determined that such Liabilities resulted from the
material breach by such Indemnified Party of any representation, warranty,
covenant or other agreement of such Indemnified Party contained in this
Agreement or the Registration Rights Agreement; provided, further that if
and to the extent that such indemnification is unenforceable for any
reason, the Buyer shall make the maximum contribution to the payment and
satisfaction of such indemnified liability which shall be permissible under
applicable laws.
(b)The indemnification and contribution provided for in this Section will
remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Parties or any officer, director, partner,
employee, agent or controlling person of the Indemnified Parties.
(c)The Buyer agrees to pay any and all stamp, transfer and other similar
taxes, if any, payable or determined to be payable in connection with the
execution and delivery of this Agreement and the issuance of securities
hereunder.
7.3 Notification. Each Indemnified Party under this Section 7 shall promptly,
after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Company under this
Section 7, notify the Company in writing of the commencement thereof. The
failure of any Indemnified Party to so notify the Company of any such
action shall not relieve the Company from any liability to such Indemnified
Party under this Section 7 except to the extent that such failure to notify
results in a loss of a material defense of such Indemnified Party or in
actual prejudice due to such action. In case any such action, claim or
other proceeding shall be brought against any Indemnified Party and such
Indemnified Party shall notify the Company of the commencement thereof, the
Company shall be entitled to assume the defense thereof at its own expense,
with counsel satisfactory to such Indemnified Party in its reasonable
judgment; provided, however, that any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action, claim or proceeding in which
both the Company on the one hand and an Indemnified Party on the other hand
is, or is reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel at the Company's expense
and to control its own defense of such action, claim or proceeding if, in
the reasonable opinion of counsel to the Company, a conflict or potential
conflict exists between the parties makes separate representation
advisable. The Company agrees that it will not, without the prior written
consent of the Buyer (such consent not to be unreasonably withheld),
settle, compromise or consent to the entry of any judgment in any pending
or threatened claim, action or proceeding relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has
been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
Buyer and each other Indemnified Party from all liability arising or that
may arise out of such claim, action or proceeding. The rights accorded to
Indemnified Party hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or
otherwise.
7.4 Registration Rights Agreement. Notwithstanding anything to the contrary in
this Section 7, the Indemnification and contribution provisions of the
Registration Rights Agreement shall govern any claim made with respect to
registration statement filed pursuant thereto or sales made thereunder.
8. MISCELLANEOUS PROVISIONS
8.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by the mutual written consent of the Buyer and the Seller;
(b) by either Buyer or the Seller if the Closing shall not have occurred
prior to June 15, 2002 (the "Termination Date") unless such
Termination Date is extended by mutual written consent of the Buyer
and the Seller, provided that the right to terminate this Agreement
under this Section shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of,
or results in, the failure of the Closing to have occurred by the
Termination Date.
8.2 Modification and Waivers. This Agreement may not be amended or modified,
nor may the right of any party be waived, except by a written document that
is executed by Buyer and the Seller.
8.3. Assignment. This Agreement is and shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted
assigns. Neither party may assign the Agreement to any third party without
the prior written consent of the other parties.
8.4 Rights and Obligations of Third Parties. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or
by reason of this Agreement on any persons other than the parties to it and
their respective successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of
any third parties to any party to this Agreement, nor shall any provision
give any third party any right of subrogation against any party to this
Agreement.
8.5 Name Retention. In the event Sterling FBO Holdings, Inc. decides to use
some corporate name other than BlueStar Leasing, Inc., the right to use the
name of BlueStar Leasing, Inc. shall revert to Xxxxxxxxxxx X. Xxxxxxx and
Xxxxxx X. Xxxxx.
8.6 Delivery Condition. Upon closing, BlueStar Leasing, Inc. shall have minimal
assets and no liabilities.
8.7 Notices. Any notice, request, consent, or other communication hereunder
shall be in writing, and shall be sent by one of the following means: (a)
by registered or certified first class mail, postage prepaid, return
receipt requested; (b) by facsimile transmission with confirmation of
receipt; (c) by overnight courier service; or (d) by personal delivery, and
shall be properly addressed as follows:
If to the Seller, to: Sterling FBO Holdings, Inc.
0000 Xxxx Xxx Xxxx.
Xxxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Buyer, to: BlueStar Leasing, Inc.
0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Or to such other address or addresses as the Seller or Buyer shall hereafter
designate to the other parties in writing. Notices sent by mail shall be
effective five days after they are sent, and notices delivered personally, by
facsimile or by courier shall be effective at the time of delivery thereof.
8.8 Entire Agreement. This Agreement, including the exhibits to the Agreement,
constitutes the entire agreement between the parties hereto in relation to
the subject matter hereof, Any prior written or oral negotiations,
correspondent, or understandings relating to the subject matter hereof
shall be superseded by this Agreement and shall have no force or effect.
The representations, warranties, covenants and agreements made herein shall
survive any investigation made by Buyer.
8.9 Severability. If any provision that is not essential to the effectuation of
the basic purpose of this Agreement is determined by a court of competent
jurisdiction to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of the remaining provisions of
this Agreement.
8.10 Headings. The headings of the Sections of this Agreement are inserted for
convenience of reference only and shall not affect the construction or
interpretation of any provisions hereof.
8.11 Exhibits. The exhibits to this Agreement are a part of this Agreement for
all purposes. Terms which are defined in this Agreement shall have the same
meanings when used in such exhibits.
8.12 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be an original, but all of
which together shall constitute one and the same instrument.
8.13 Expenses. Reasonable expense incurred in preparation of this Agreement
shall be paid by the Seller.
8.14 Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Nevada (as applied to contracts
entered into wholly within such state).
8.15 Delays or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to either party, upon any breach or default of the other
party under this Agreement, shall impair any such right, power, or remedy,
nor shall it be construed to be a waiver of any such breach or default, or
an acquiescence therein or of or in any similar breach of default
thereafter occurring; nor shall any waiver of any single breach or default
be deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent, or approval on the part of either
party of any breach or default by the other party under this Agreement, or
any waiver of any provisions or conditions of this Agreement must be made
in writing signed by the parties and shall be effective only to the extent
specifically set forth in such writing. All remedies either under this
Agreement or by law or otherwise afforded to either party, shall be
cumulative and not alternative.
8.16 Arbitration. Except as set forth in Section 7 hereof, the parties hereby
covenant and agree that any legal suit, dispute, claim, demand, controversy
or cause of action of any kind and nature whatsoever, known or unknown,
fixed or contingent, that either a Shareholder or the Seller may have or
any time in the future claim to have based in whole or in part, or arising
from or out of or that in any way is related to the negotiations,
execution, interpretation or enforcement of this Agreement (collectively,
the "Disputes") shall be completely and finally settled by submission of
any such Disputes to arbitration under the rules of the American
Arbitration Association ("AAA") then in effect. There shall be one
arbitrator, and such arbitrator shall be chosen my mutual agreement of the
parties in accordance with AAA rules. Unless the parties agree otherwise,
the arbitration proceedings shall take place in Las Vegas, Nevada. The
arbitrator shall apply Nevada law to all issues in dispute, in accordance
with Section 8.14 above. Notice of demand for arbitration shall be filed in
writing with the other party to this Agreement and with the AAA. In no
event shall the demand for arbitration be made after the date when
institution of legal or equitable proceedings based on such Dispute would
be barred by the applicable statute of limitations. The finding of the
arbitrator shall be final and binding on the parties. Judgment on such
award may be entered in any court of competent jurisdiction, or application
may be made to that court for a judicial acceptance of the award and an
order or enforcement, as the party seeking to enforce that award may elect.
The prevailing party in any such action shall be entitled to receive from
the losing party all reasonable costs and expenses, including the
reasonable fees of attorneys, accountants, and other experts, incurred by
the prevailing party in investigating and prosecuting (or defending) such
action, together with any such fees which may be incurred in enforcing any
award of judgment.
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement by an authorized representative as of the day and year first above
written.
SELLER: Sterling FBO Holdings, Inc.
By
-----------------------------------------
Xxx X. Xxxxxxx, President & Vice Chairman
BUYER: BlueStar Leasing, Inc.
By
-----------------------------------------
Xxxxxxxxxxx X. Xxxxxxx, President & CEO
