SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (the "Agreement"), is made this 21st day of
May, 1999, by and between SPORTS GROUP INTERNATIONAL, INC. ("SPGK"), a Florida
corporation, Xxxx X. Xxxxx ("Xxxxx") and XXXXXX SYSTEMS, INC., a Texas
corporation ("Xxxxxx Systems").
RECITALS
1. Xxxxxx Systems is a corporation duly organized and existing under the
laws of the State of Texas with authorized capital stock consisting of 1,000,000
shares of voting common stock, $.01 par value, of which 10,000 shares are issued
and outstanding ("Xxxxxx Common Stock") and 100,000 authorized shares of
Preferred Stock with a par value of $.01 per share, of which 10,000 have been
designated as "Series A Preferred Stock, of which 0 shares are issued and
outstanding ("Xxxxxx Preferred Stock"). (Xxxxxx Common Stock and Xxxxxx
Preferred Stock are collectively referred to herein as "Xxxxxx Stock").
2. Xxxxxx Systems owns 100% of the stock of Frullati, Inc., a Texas
corporation, Frullati Systems, Inc., a Texas corporation, Frullati Franchise
Systems, Inc., a Texas corporation, and Frullati Enterprises, Inc., a Texas
corporation. Frullati, Inc., Frullati Systems, Inc., Frullati Franchise Systems,
Inc., and Frullati Enterprises, Inc., are hereinafter collectively referred to
herein as the "Subsidiaries."
3. Xxxxxx Systems and the Subsidiaries are the operators, owners and
franchisors of the juice bar commonly known as and doing business as "Frullati."
4. SPGK will pay $6,500,000.00 in exchange for 100% of the outstanding
Xxxxxx Stock, including the stock of any and all Subsidiaries.
5. Xxxx X. Xxxxx ("Xxxxx") is the sole owner of all of the shares of Xxxxxx
Stock.
6. Xxxxx desires to make certain representations, warranties, covenants and
agreements in connection with the transaction, and SPGK desires to prescribe
various conditions precedent to the transaction. Xxxxxx Systems, Xxxxx, and all
Subsidiaries and related companies are hereinafter collectively referred to
herein as "Xxxxxx."
NOW, THEREFORE, in consideration of the recitals which are a part of this
Agreement, and of the mutual agreements set forth herein and the covenants
herein contained, including the recitals above which are part of this Agreement,
the parties hereto hereby agree as follows:
ARTICLE 1
1. CONSIDERATION AND PLAN OF TRANSACTION
1.1 CONSIDERATION. Subject to all of the terms and conditions of this
Agreement, SPGK agrees on the Closing Date (as defined below) to pay to Xxxxx
$6,500,000.00 by wire transfer to an account to be designated by Xxxxx in
exchange for 100% of the Xxxxxx Stock and 100% of the stock of any and all
Subsidiaries and related businesses of Xxxxxx Systems. After the completion of
the purchase, Xxxxxx Systems will become a wholly-owned subsidiary of SPGK.
1 of 15
ARTICLE 2
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF XX. XXXXX.
Xxxxx represents and warrants to SPGK that the statements contained in this
Section 2.1 are correct and complete as of the date of this Agreement, except as
set forth in the Disclosure Schedule delivered by Xxxxx to SPGK on the date
hereof and attached hereto as Exhibit "A" (the "Disclosure Schedule"). Nothing
in the Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein, however, unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 2.1.
a) AUTHORIZATION OF TRANSACTION. Xxxxx has full power and authority to
execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Xxxxx, enforceable in accordance with its terms and
conditions. Xxxxx need not give any notice to, make any filing with, or
obtain any authorization, consent or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.
b) BROKERS' FEES. Xxxxx has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement, and Xxxxx has no liability or
obligation to pay any fees or commissions to any broker, finder or agent
for which SPGK could become liable or obligated.
c) SHARES. Xxxxx holds of record and owns beneficially 10,000 shares
of Xxxxxx Common Stock, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act of 1933, as amended
(the "Securities Act") and state securities laws), taxes, security
interests, options, warrants, purchase rights, contracts, commitments,
equities, claims and demands, constituting 100% of the issued capital stock
of Xxxxxx Systems. Xxxxx is not a party to any option, warrant, purchase
right or other contract or commitment that could require Xxxxx to sell,
transfer or otherwise dispose of any capital stock of Xxxxxx Systems or any
of its Subsidiaries, or any of the assets of either Xxxxxx Systems or any
of its Subsidiaries (other than this Agreement). Xxxxx is not a party to
any voting trust, proxy or other agreement or understanding with respect to
the voting of any capital stock of any of Xxxxxx Systems or any of its
Subsidiaries.
2.2 XXXXXX REPRESENTATIONS AND WARRANTIES. Xxxxx represents and warrants to
SPGK that the statements contained in this Section 2.2 are correct and complete
as of the date of this Agreement, except as set forth in the Disclosure
Schedule.
(a) ORGANIZATION. Each of Xxxxxx Systems and its Subsidiaries, is a
corporation duly organized, validly existing and in good standing under the
laws of the State of its jurisdiction of incorporation, with full corporate
power and authority to conduct its business as it presently is being
conducted and to own and lease its properties and assets. Each of Xxxxxx
Systems and its Subsidiaries, is qualified to do business as a foreign
corporation in each of the jurisdictions in which it does business.
(b) OPTIONS & WARRANTS. There are no options and/or warrants issued
and/or outstanding. Further, there are no options and/or warrants to be
issued to any party under any contract or agreement.
2 of 15
(c) AUTHORITY. Xxxxxx Systems has full power and authority to enter
into this Agreement and to carry out the transactions contemplated herein.
The execution and delivery of this agreement and the consummation of the
transactions contemplated herein have been duly and validly authorized and
approved by the Board of Directors of Xxxxxx Systems and all shareholders
of record of Xxxxxx Systems as of the date of this Agreement, and no other
corporate proceedings on the part of Xxxxxx Systems are necessary to
authorize this Agreement or the consummation of the transactions
contemplated herein. This Agreement has been duly and validly executed and
delivered by Xxxxxx Systems and constitutes a valid and binding agreement
of Xxxxxx Systems, enforceable against Xxxxxx Systems in accordance with
the terms hereof.
(d) CONFLICTS/APPROVALS. Neither the execution and delivery of this
Agreement nor compliance by Xxxxxx Systems with the terms thereof by Xxxxxx
Systems will (1) violate or conflict with or result in a breach or default
of any of the terms or conditions of the Articles of Incorporation or
Bylaws of Xxxxxx Systems; or (2) violate any applicable law, statute, rule,
regulation or order promulgated by any governmental authority; or (3)
conflict with or result in a material breach, acceleration or material
default or under any of the terms, conditions of (A) any judgment, order,
decree, or ruling to which Xxxxxx Systems is a party, or any injunction to
which Xxxxxx Systems is subject, or any court or governmental authority,
domestic or foreign, or (B) any agreement, contract or commitment to which
Xxxxxx Systems is a party; or (4) require the consent or approval of, or
declaration, filing or registration with, any non-governmental third party
or, to the best knowledge of Xxxxx and Xxxxxx Systems, any governmental
authority, or stock exchange in the United States; or (5) cause any Lease
(listed in Exhibits "D" and/or "F") to become breached, in default,
accelerated, or terminated for any reason.
(e) LITIGATION. Except as set forth in Section 2.2(e) of the
Disclosure Schedule, there is no litigation, proceeding, or investigation
pending or, to the knowledge of each of Xxxxx, Xxxxxx Systems and its
Subsidiaries, threatened against Xxxxx, Xxxxxx Systems and/or its
Subsidiaries, or any of their principal owners, officers, employees, or
affiliates that may result in a material adverse change in the business
operations, or financial condition of Xxxxxx Systems and its Subsidiaries
(taken as a whole). In addition, Xxxxxx Systems has no actual knowledge of
any facts or circumstances that could lead to any such litigation,
investigation, or arbitration against Xxxxxx Systems or its Subsidiaries
(including without limitation litigation or arbitration that might be
brought by past or present employees of Xxxxxx Systems or its
Subsidiaries).
(f) TAXES. Xxxxxx Systems and its Subsidiaries and each other member
of the Xxxxxx Affiliated Group (as defined below) has each timely filed all
Tax Returns (as defined below) required to be filed by it. All such Tax
Returns are true, correct and complete in all material respects. Xxxxxx
Systems and its Subsidiaries and each other member of the Xxxxxx Affiliated
Group has each made timely payment of all Taxes (as defined below) required
to be paid by it. There are no liens on the stock of Xxxxxx Systems and its
Subsidiaries or on any of the assets of Xxxxxx Systems and its Subsidiaries
that arose in connection with any failure (or alleged failure) to pay any
Tax. Each of Xxxxxx Systems and its Subsidiaries has complied in all
material respects with all applicable laws, rules and regulations relating
to the withholding and payment of Taxes and has, within the time and manner
prescribed by law, paid over to the proper governmental authorities all
amounts so withheld. Except as set forth in Section 2.2(f) of the
Disclosure Schedule, to the knowledge of Xxxxx and Xxxxxx Systems, no
governmental authority is now asserting or threatening to assert any claim
for assessment or collection of any Taxes against Xxxxxx Systems or its
Subsidiaries or any other member of the Xxxxxx Affiliated Group. Xxxxx is
not a "foreign person" as defined in Code Section 1445(f)(3). As a result
of the acquisition of the Xxxxxx Stock and any of the stock of its
Subsidiaries pursuant to this Agreement, SPGK and Xxxxx will be eligible to
make an election pursuant to Section 338(h)(10) of the Code.
(i) "XXXXXX AFFILIATED GROUP" shall mean the affiliated group of
corporations (as defined in Section 1504(a) of the Code) of which
Xxxxxx was the parent for tax periods ending on or before the Closing
Date.
3 of 15
(ii) "TAX" OR "TAXES" shall mean any and all taxes, charges,
fees, levies or other assessments in the nature of taxes, including,
without limitation, income, gross receipts, excise, real and personal
property, sales, use, VAT, withholding, social security, occupation,
service, service use, license, net worth, payroll, franchise, transfer
and recording taxes, fees and charges whether domestic or foreign and
whether computed on a separate, consolidated, unitary, combined or any
other basis; and each such term shall also include any interest,
fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to any such taxes, charges, fees, levies or
other assessments.
(iii) "TAX RETURNS" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns
relating to or required to be filed in connection with, any Taxes,
including information returns or reports with respect to backup
withholding and other payments to third parties.
(g) TITLE. To the best of its knowledge and belief, except as set
forth in Item 2.2(g) of the Disclosure Schedule, Xxxxxx has good and
marketable title to all of the properties and assets, real and personal,
which it purports to own, free and clear of all liens, claims, charges,
encumbrances and restrictions of whatsoever nature ("Encumbrances").
(h) SECURITIES COMPLIANCE. To the best knowledge of Xxxxx and Xxxxxx
Systems, during the five (5) year period prior to the execution of this
Agreement, no Director or Officer of Xxxxxx Systems or its Subsidiaries has
been involved in any of the events set forth in Rule 401(f) of Regulation
S-K of the Securities Act. Xxxxxx Systems has never been subject to any
claim or proceeding brought by any shareholder of it under either state or
federal securities laws.
(i) LOANS. Xxxxxx has not received any notices of default, other than
those already disclosed, regarding any of their loans or other credit
facilities. A complete list of all loans along with their terms and payment
status and balance are included on the list attached hereto as Exhibit "B"
and incorporated herein by this reference. The entering into this Agreement
shall not cause any listed loan agreement to be breached, accelerated,
terminated or in default.
(j) CONDUCT OF BUSINESS. Since December 27, 1998, except as set forth
in Item 2.2(j) of the Disclosure Schedule, Xxxxxx has not:
1. Directly or indirectly redeemed, purchased or otherwise
acquired or re-capitalized or reclassified any of its capital stock or
liquidated in whole or in part;
2. Merged or consolidated with any other companies.
3. Mortgaged, pledged or otherwise encumbered any of its assets;
4. Altered or amended its certificate of incorporation or bylaws;
5. Entered into, materially amended or terminated any material
contract, agreement, franchise, area development agreement, permit or
license; and
6. Except in the normal course of business made any material
increase in compensation payable or to become payable by Xxxxxx to its
directors, officers or employees, or any increase in benefits or
benefit plan costs, or any increase in any bonus, insurance, pension,
compensation or other benefit plan covering any directors or officers.
(k) CAPITALIZATION. Xxxxxx Systems authorized capital stock consists
of 1,000,000 shares of voting common stock, .01 par value per share, of
which 10,000 shares are issued and outstanding and 100,000 shares of
Preferred Stock with a par value of $.01 per share, of which 10,000 shares
4 of 15
have been designated as Series A Preferred Stock, of which 0 shares are
issued and outstanding. The stock of the Subsidiaries, all of which is
owned by Xxxxxx Systems is identified in Item 2.2(k) of the Disclosure
Schedule. All issued and outstanding shares of Xxxxxx Common Stock have
been duly authorized and validly issued, and are fully paid and
nonassessable, and are free of any preemptive rights. Xxxxx owns all of the
outstanding shares of Xxxxxx Systems and Xxxxxx Systems owns all of the
outstanding shares of its Subsidiaries. There are no options, warrants, or
rights outstanding of any kind to purchase or acquire shares of capital
stock of Xxxxxx or its Subsidiaries. Xxxxx has full voting power over the
Xxxxxx Stock, subject to no proxy, shareholders' agreement, voting trust or
other agreement relating to the voting of such stock. Other than this
Agreement and other than as described in Section 2.2(k) of the Disclosure
Schedule, there is no agreement between Xxxxx and any other person with
respect to the sale, transfer, disposition or encumbrance of the Xxxxxx
Stock or otherwise relating to the Xxxxxx Stock.
(l) SUBSIDIARIES. Neither Xxxxxx Systems nor any of its Subsidiaries
has any direct or indirect stock or other equity or ownership interest
(whether controlling or not) in any corporation, association, partnership,
joint venture or other entity, except for Xxxxxx Systems' ownership of its
Subsidiaries.
(m) FINANCIALS. Attached hereto as Exhibit "C" are true and correct
copies of: (1) the audited financial statement for the year ending December
28, 1997; (2) the audited financial statements for the year ending December
27, 1998; (3) the unaudited financial statements for the sixteen (16) week
period beginning December 28, 1998 and ending April 18, 1998; (4) the
unaudited balance sheet as of April 18, 1999 ("the Interim Balance Sheet");
and (5) the 1999 Plan Projections dated April 4, 1999. There has not been
any material adverse change in the Financial Condition, results of
operations or business of Xxxxxx since April 5, 1999, and no event or
condition has occurred or exists which will result in a material adverse
change other than changes resulting from general economic conditions.
Further, there has been no material adverse change which would effect the
achievability of the 1999 Plan Projections dated April 4, 1999 provided
that no representation is made as to whether such projections will be
achieved.
(n) ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected
or reserved against in the Interim Balance Sheet, neither Xxxxxx Systems
nor any of its Subsidiaries had on such dates any liabilities or
obligations (secured, unsecured, contingent or otherwise) of a nature
customarily reflected in a corporate balance sheet prepared in accordance
with generally accepted accounting principles. There is no existing
indebtedness owed by Xxxxxx Systems or its Subsidiaries, except as listed
on the Interim Balance Sheet or the Disclosure Schedule..
(o) COMPANY LEASES. Attached hereto as Exhibit "D" is a complete list
of all leases entered into for the operation of company stores owned and
operated by Xxxxxx. Said list contains a complete listing of all lease
locations, the opening date of the store (the commencement date if other
than the opening date of the store), the term, if less than 10 years, and
whether there is an option to renew. None of the leases listed are in
default. Other than monthly rent due and payable, including base rent, CAM
charges, and percentage rent (hereinafter referred to as "Total Rent")
after the date of this Agreement, there is no rent or other charges or fees
due to the owners or lessors of the premises on Exhibit "D."
(p) FRANCHISE AND DEVELOPMENT AGREEMENTS. Attached hereto as Exhibit
"E" is a complete list of all Franchise and Area Development Agreements (in
the United States and Worldwide) in operation or existence as of the date
of this Agreement. Said list contains a complete listing of each Franchisee
by store number, the name of the Franchisee, the legal name used by the
Franchisee to conduct business, the beginning date of the franchise
granted, any payments due and owing as of the date of this Agreement, any
other fees due and owing as of the date of this agreement and/or following
the date of this Agreement - with explanation (including the royalty
percentage or formula used for each Franchise). None of the Franchise
Agreements is in default by Xxxxxx as of the date of this Agreement. For
Development Agreements (DA), said list shall include the date of the DA,
5 of 15
the ending date of the DA, the number of Franchises granted by the DA, the
number of Franchises operating under the DA, the franchise fee due for
future franchises opened under the DA and the royalties for said franchises
opened under the DA. The sale of the Xxxxxx Stock does not cause a default
or termination of the Franchise or Development Agreements listed on Exhibit
"E."
(q) FRANCHISEE SUBLEASES. Attached hereto as Exhibit "F" is a complete
list of all subleases entered into with Franchisees. Said list contains a
complete listing of all lease locations, the rent amount (if less than the
Total Rent charged in the underlying lease), the beginning date of the
lease and the ending date of the lease. Except as noted on Exhibit "F",
Xxxxxx is not aware of any leases listed on Exhibit "F" being in default.
Other than monthly rent due and payable after the date of this Agreement,
there is no rent or other charges or fees due to Xxxxxx or the owners or
lessors of the premises on Exhibit "F." In addition, Xxxxxx is not aware of
any underlying leases being in default.
(r) EMPLOYMENT RELATED AGREEMENTS. Except as set forth in Item 2.2(r)
of the Disclosure Schedule, there are no collective bargaining agreements,
employment agreements or consulting agreements between Xxxxxx Systems
and/or any of its Subsidiaries and any other party. Any such agreements so
disclosed, shall include a complete summary of the material terms of the
agreements and any agreements so summarized shall be provided to counsel
for SPGK prior to the Closing for review.
(s) TRADEMARKS. Attached hereto as Exhibit "J" is a list of all
Trademarks owned by Xxxxxx Systems. Except as set forth in Item 2.2(s) of
the Disclosure Schedule, Xxxxxx is not aware of any claim to said
Trademark(s) so listed nor aware of any infringement on or upon said
Trademark(s).
(t) EMPLOYEE COMPENSATION. Except as set forth in Item 2.2(t) of the
Disclosure Schedule, there are no bonuses due or agreed to, no retirement
plans or options to be covered by a retirement plan or plans, no profit
sharing agreements, no incentive compensation agreements, no pension or
other employee benefit plans or agreements between Xxxxxx Systems and/or
any of its Subsidiaries and any other party or person. None of Xxxxxx
Systems or any of its Subsidiaries has entered into any severance or
similar arrangement in respect of any present or former personnel that will
result in any obligation (absolute or contingent) of SPGK or Xxxxxx Systems
and any of its Subsidiaries to make any payment to any present or former
personnel following termination of employment.
(u) CONSENT DECREES/SETTLEMENT AGREEMENTS. Except as set forth in Item
2.2(u) of the Disclosure Schedule, there are no consent decrees, judgments,
other decrees or orders, settlement agreements and/or other agreements to
which Xxxxxx Systems or any of its Subsidiaries or related companies is a
party or is bound, requiring or prohibiting any future activities.
(v) OFFERING CIRCULAR & REGISTRATION OF FRANCHISOR. Attached hereto as
Exhibit "K" and incorporated herein by this reference is a complete list of
the states in which Xxxxxx is registered to offer franchises. Said list
contains the date of said registration, the date said registration is set
to expire. Xxxxxx shall provide to SPGK, prior to closing, a copy of all
Offering Circulars currently in effect along with all exhibits to said
Offering Circular and current franchise agreement forms and exhibits. At
Closing, said complete documents shall be provided by Xxxxxx to SPGK by
electronic media via e-mail, on disk and/or Zip Disk.
(w) EMPLOYEE & EMPLOYMENT BENEFIT MATTERS. No employees of Xxxxxx
Systems or any of its Subsidiaries have any right to accrued vacation (or
payment in lieu of all or part thereof) in excess of 20 business days,
except as listed in Section 2.2(w) of the Disclosure Schedule. Other than
the plans described on Section 2.2(w) of the Disclosure Schedule, there are
no employee benefit plans in place including, but not limited to, pension,
stock bonus, 401(k), employee stock ownership, money purchase, stock
6 of 15
option, cafeteria, medical expense reimbursement or phantom stock plans,
under which Xxxxxx Systems or any of its Subsidiaries is subject to
liability.
(x) PROPRIETARY RIGHTS. For purposes of this Section 2.2(x),
"Proprietary Rights" means (a) all trademarks, service marks, trade dress,
logos, trade names and corporate names, and all applications, registrations
and renewals in connection therewith, (b) all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith, (c) all trade secrets and confidential business information
(including customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (d) all computer software, (e)
all other proprietary rights and (f) all copies and tangible embodiments
thereof (in whatever form or medium). Section 2.2(x) of the Disclosure
Statement lists all of Xxxxxx System's and its Subsidiaries' domestic or
foreign federal, state and foreign registrations of trademarks and of other
marks, trade names or other trade rights, and all pending applications for
any such registrations and all of Xxxxxx Systems' and its Subsidiaries'
copyrights and all pending applications therefor. Neither Xxxxxx Systems
nor any of its Subsidiaries has any patents or pending patent applications.
Xxxxxx System and its Subsidiaries own and has the sole right to use each
of the Proprietary Rights. None of the Proprietary Rights is involved in
any pending or threatened litigation. Neither Xxxxxx Systems nor its
Subsidiaries has received any notice of invalidity or infringement of any
rights of others with respect to such Proprietary Rights. All of the
Proprietary Rights are valid and enforceable rights of Xxxxxx Systems or
its Subsidiaries. The execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated hereby will not affect
the validity or enforceability of the Proprietary Rights and will not cause
Xxxxxx Systems or its Subsidiaries to lose its rights to use any of its
Proprietary Rights, including the name "Frullati."
(y) INSURANCE. Exhibit "K" of the Disclosure Schedule includes a list
of all insurance policies carried by or for the benefit of Xxxxxx Systems
and its Subsidiaries. Such insurance policies are valid, outstanding and
enforceable and will remain in force and effect through the Closing Date.
(z) FULL DISCLOSURE. None of the representations and warranties made
by Xxxxxx Systems and its Subsidiaries contain any untrue statement of a
material fact or omit any material fact, the omission of which would be
misleading. No notice given pursuant to Section 2.2 will contain any untrue
statement or omit to state a fact necessary to make the statements therein
or in this Agreement, in light of the circumstances in which they were
made, not misleading.
7 of 15
ARTICLE 3
POST CLOSING COVENANTS; PREPARATION OF TAX RETURNS.
3.1. POST-CLOSING COVENANTS. The parties agree as follows with respect to
the period following the Closing:
a) GENERAL. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each
of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
reasonably may request, all at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor
under Section 7.16). Xxxxx acknowledges and agrees that from and after the
Closing, SPGK will be entitled to possession of all documents, books,
records (including Tax records), agreements and financial data of any sort
relating to Xxxxxx and any of its Subsidiaries. Xxxxx shall furnish to SPGK
all information regarding the operations and liabilities of Xxxxxx Systems
and any of its Subsidiaries that SPGK may reasonably request.
b) LITIGATION SUPPORT. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction that
accrued or existed on or prior to the Closing Date involving Xxxxxx Systems
or any of its Subsidiaries, each of the other parties will cooperate with
him, her or it (and his, her or its counsel) in the contest or defense,
make available their personnel and provide such testimony and access to
their books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under Section 7.16).
c) TRANSITION. Xxxxx will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier or other business associate of Xxxxxx from maintaining the same
business relationships with Xxxxxx after the Closing as it maintained with
Xxxxxx prior to the Closing. Xxxxx will refer all customer inquiries
relating to the businesses of Xxxxxx Systems and its Subsidiaries to SPGK
from and after the Closing.
d) CONFIDENTIALITY. Xxxxx will treat and hold as confidential all of
the information concerning the businesses and affairs of Xxxxxx that is not
already generally available to the public ("Confidential Information"),
refrain from using any of the Confidential Information except in connection
with this Agreement and deliver promptly to SPGK or destroy, at the request
and option of SPGK, all tangible embodiments (and all copies) of the
Confidential Information which are in his or her possession. In the event
that Xxxxx is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process) to disclose any Confidential
Information, Xxxxx will notify SPGK promptly of the request or requirement
so that SPGK may seek an appropriate protective order or waive compliance
with the provisions of this Section 3.1(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, Xxxxx is, on the
advice of counsel, compelled to disclose any Confidential Information to
any tribunal or else stand liable for contempt, Xxxxx may disclose the
Confidential Information to the tribunal; provided, however, that Xxxxx
shall use his reasonable best efforts to obtain, at the reasonable request
and expense of SPGK, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as SPGK shall designate. The foregoing provisions
shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.
8 of 15
ARTICLE 4
4. CONDITIONS TO SPGK PERFORMANCE
4.1 CONDITIONS. SPGK's obligations hereunder shall be subject to the
satisfaction, at or before the Closing Date, of all the conditions set forth in
this Agreement. Failure to obtain such approval will not void this Agreement.
SPGK may waive any or all of these conditions, in whole or in part, without
prior notice, so long as such waiver is in writing and provided, however, that
no such waiver of a condition shall constitute a waiver by SPGK of any other
condition or any of SPGK's rights or remedies, at law or in equity, if Xxxxx
shall be in default of any of his representations, warranties, or covenants
under this Agreement.
4.2 ACCURACY OF REPRESENTATION. Except as otherwise permitted by this
Agreement, all representations and warranties by Xxxxx in this Agreement, or in
any written statement that shall be delivered to SPGK by Xxxxxx or Xxxxx under
this Agreement, shall be true and accurate in all material respects as of the
Closing Date, as though made at that time.
4.3 PERFORMANCE. Xxxxxx shall have performed, satisfied, and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date. If Xxxxxx has
not performed, SPGK may terminate this Agreement at its sole discretion any time
before seven (7) days from the date of the last signature on this Agreement.
4.4 ABSENCE OF LITIGATION. No action, suit or proceeding before any court
or any governmental body or authority pertaining to the transaction contemplated
by this Agreement or to its consummation shall have been instituted or
threatened against Xxxxxx on or before the Closing Date except as described on
Exhibit "I" attached hereto and incorporated herein by this reference.
4.5 CORPORATE PROCEEDINGS. All corporate and other necessary proceedings
contemplated herein and all documents necessary thereto shall be reasonably
satisfactory in form and substance to the parties hereto and to their counsel.
(a) STATUTORY REGULATIONS. All statutory requirements for the valid
consummation of the transactions contemplated by this Agreement shall have
been fulfilled, all authorizations, consents and approvals of all
non-governmental third parties, and all governmental authorities required
to be obtained in order to permit consummation of the transactions
contemplated by this Agreement and to permit the business currently carried
on by it to continue unimpaired immediately following the Closing Date
shall have been obtained.
(b) SHAREHOLDER APPROVAL. The transactions contemplated by this
Agreement have been approved in the manner required by law by the holders
of the issued and outstanding shares of Xxxxxx Stock, entitled to vote
thereon, and all other corporate action required by law with respect to the
Transaction has been taken.
4.6 OFFICER'S CERTIFICATE. Xxxxxx shall deliver to SPGK a certificate,
dated the Closing Date and signed by its President, certifying that the
conditions specified in this Agreement have been fulfilled and accepted. In the
alternative, the signature of an Officer to this Agreement shall constitute
certification that the conditions specified in this Agreement have been
fulfilled and accepted.
9 of 15
ARTICLE 5
5. CLOSING.
5.1 CLOSING. The closing (the "Closing") shall take place at such location
and time on May 20, 1999, or on such date and at such time as the parties may
mutually agree upon (the "Closing Date").
5.2 XXXXXX DELIVERIES TO SPGK. At Closing, Xxxxxx shall deliver to SPGK the
following instruments and documents:
(a) Certificates representing 10,000 shares of Xxxxxx, Common Stock,
which shares represent 100% of the outstanding common stock of Xxxxxx which
represents 100% of all outstanding Xxxxxx Stock.
(b) Certified resolutions of the Board of Directors of Xxxxxx Systems,
in a form satisfactory to counsel for SPGK authorizing the execution and
performance of this Agreement and all actions to be taken by Xxxxxx Systems
under this Agreement.
(c) Intentionally Deleted.
(d) Xxxxxx shall deliver the opinion of its counsel, dated the Closing
Date, in form and in substance satisfactory to counsel for SPGK to the
effect that:
(1) Xxxxxx Systems is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas.
(2) The authorized capital stock of Xxxxxx Systems is as set
forth in Section 2.2(k).
(3) The execution and consummation of this Agreement have been
duly authorized and approved by the Board of Directors of Xxxxxx
Systems. To the best of counsel's knowledge and belief, after
reasonable inquiry, the making and performance of this Agreement by
Xxxxxx Systems will not cause Xxxxxx Systems to violate any laws,
rules, regulations, decrees, orders or judgments, Articles of
Incorporation, or bylaws known to such counsel.
(4) Counsel has no knowledge of any litigation, proceeding or
investigation of the type described in Section 2.2(e) hereof.
(5) The Xxxxxx Stock being transferred pursuant to this Agreement
are duly and validly authorized and issued and are fully paid and
non-assessable.
(6) To the knowledge of counsel, all applicable approvals,
permits, consents, orders and authorizations have been obtained, and
the necessary documents have been filed under all applicable laws of
the United States and, except for filing of requisite notices or other
documentation with any applicable governmental authority or stock
exchange in the United States, no other regulatory action is required
in connection with the issuance and delivery of the Xxxxxx Stock.
10 of 15
ARTICLE 6
6. DISPUTE RESOLUTION.
6.1 COURT PROCEEDINGS.
(a) If a dispute arises, either party may avail itself of the right to
seek relief from a court of competent jurisdiction in or about San Diego
County, in San Diego, California, and only in that location.
(b) All disputes which involve adjudication in a court shall be
governed by the provisions of section 6 of this Agreement. If, in an action
commenced in a court pursuant to section 6 of this Agreement, a party seeks
temporary or preliminary injunctive relief, the court hearing the matter
shall proceed to adjudicate the issues before it with respect to such
relief and shall not delay the entry of any order with respect to such
relief; provided, however, that except for matters fully determined in
connection with proceedings for temporary or preliminary relief, the
dispute resolution procedures set forth herein shall be used.
6.2 VENUE; WAIVER OF JURY; LIMITATION OF DAMAGES. The parties hereby agree
as follows:
(a) ANY AND ALL COURT PROCEEDINGS ARISING FROM MATTERS RELATED TO THIS
AGREEMENT SHALL BE BROUGHT IN, AND ONLY IN, A COURT OF COMPETENT
JURISDICTION IN SAN DIEGO COUNTY, SAN DIEGO, CALIFORNIA. IN EITHER CASE,
THE PARTIES HEREBY CONSENT TO THE EXERCISE OF SUBJECT MATTER AND PERSONAL
JURISDICTION BY SUCH COURTS.
(b) THE PARTIES AGREE THAT ALL DISPUTES ADMITTED TO THE COURT PURSUANT
TO THIS AGREEMENT SHALL BE TRIED TO THE COURT SITTING WITHOUT A JURY,
NOTWITHSTANDING ANY STATE OR FEDERAL CONSTITUTIONAL OR STATUTORY RIGHTS OR
PROVISIONS.
(c) NO PUNITIVE OR EXEMPLARY DAMAGES SHALL BE AWARDED AGAINST EITHER
PARTY, OR ANY AFFILIATES OF EITHER OF THEM, IN ANY PROCEEDING ARISING UNDER
THIS AGREEMENT, AND ALL CLAIMS TO SUCH DAMAGES ARE HEREBY WAIVED.
ARTICLE 7
7. MISCELLANEOUS
7.1 CAPTIONS AND HEADINGS. The article and paragraph headings throughout
this Agreement are for convenience and reference only and shall in no way be
deemed to define, limit, or add to the meaning of this Agreement.
7.2 MODIFICATIONS. This Agreement may be waived, changed, modified or
discharged in written form only, signed by the party seeking the waiver, change,
modification or discharge and by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
7.3 NON-WAIVER. Except as otherwise expressly provided herein, no waiver of
any covenant or condition of this Agreement shall be deemed to have been made,
unless expressly in writing and signed by the party against whom such waiver is
charged; and (i) the failure of any party to insist in any one or more cases
upon the performance of any of the covenants or conditions of this Agreement or
to exercise any option herein contained shall not be construed as a waiver or
relinquishment for the future of any such covenant or condition; (ii) the
acceptance of performance of anything required by this Agreement to be performed
with knowledge of the breach or failure of a covenant or condition of this
Agreement hereof shall not be deemed a waiver of such breach or failure; and
(iii) no waiver by any party of one breach by another party shall be construed
as a waiver with respect to any other subsequent breach.
11 of 15
7.4 TIME OF THE ESSENCE. Time is of the essence in this Agreement and of
each and every provision hereof.
7.5 ENTIRE AGREEMENT; MODIFICATION. This Agreement contains all of the
terms and conditions and representations agreed upon by the parties hereto with
reference to the subject matter hereof. No other agreements or representations,
oral or otherwise shall be deemed to exist or to bind any of the parties hereto
and all prior agreements and understandings are superseded hereby. No officer or
employee or agent of SPGK has any authority to make any representation or
promise not contained in this Agreement. Xxxxxx agrees that it has executed this
Agreement without reliance upon any such unauthorized representation or promise
and in fact has received no representation or promise not contained within this
agreement. This Agreement cannot be modified or changed except by written
instrument signed by all of the parties hereto.
7.6 COUNTERPARTS. This Agreement may be executed simultaneously in one or
more counterparts and/or by facsimile signatures, each of which shall be deemed
an original but which together shall constitute one and the same instrument and
have the same force and effect as if executed in one complete document.
7.7 NOTICES. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service, if served personally, on the party to whom notice is to
be given or on the third day after mailing, if mailed, to the party to whom
notice is to be given by first class, registered or certified mail, postage
prepaid, and properly addressed as follows:
To SPGK: Mr. Xxxxx Xxxxxxxxx
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxx Xxxxxx, Esq.
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
To Xxxxxx: Xxxx X. Xxxxx
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000
with a copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxx, LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
7.8 BINDING EFFECT. This Agreement is and shall inure to and be binding
upon the heirs, executors, personal representatives, successors and assigns of
the parties to this Agreement.
7.9 MUTUAL COOPERATION. Each party hereby agrees, certifies and covenants
that they will assist each other in completing and preparing any documents to
effectuate the Agreement. Each party agrees, certifies and covenants that they
will immediately execute and revise any corrected documents or forms as
necessary and upon request in order to obtain the benefits agreed to pursuant to
the terms of this Agreement. The Parties further agree to immediately initial
any corrections on any documents containing typographical errors or omissions
upon the request of the other Party.
12 of 15
7.10 BROKERS. Each of the parties hereto shall indemnify and hold the other
harmless against any and all claims, losses, liabilities or expenses which may
be asserted against it as a result of its dealings, arrangements or agreements
with any broker, finder or person claiming to have a right to compensation for
bringing the parties into agreement.
7.11 ANNOUNCEMENTS. SPGK and Xxxxxx will consult and cooperate with each
other as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers. No party is permitted to announce this transaction until all parties
have signed this Agreement. This shall not prevent the parties from providing
necessary persons with information about the Agreement.
7.12 EXPENSES. SPGK shall bear and pay all legal, accounting and any other
out-of-pocket expenses reasonably incurred in connection with the transaction,
including all reasonable legal fees and expenses of Xxxxxx and Xxxxx.
7.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to Section 7.16,
the representations, warranties, covenants and agreements of the parties set
forth in this Agreement, or in any instrument, certificate, opinion or other
writing providing for it, shall survive for a period of twelve (12) months after
Closing, irrespective of any investigation made by or on behalf of any party.
7.14 EXHIBITS. As of the execution hereof, the parties hereto have provided
each other with the Exhibits and a Disclosure Schedule provided for herein
above, including any items referenced therein or required to be attached
thereto. Any material changes to the Exhibits and Disclosure Schedule shall be
immediately disclosed to the other party. All such Exhibits or Schedules are
incorporated herein and made a part of this Agreement.
7.15 AUTHORITY. The parties to this Agreement acknowledges that: (1) this
Agreement and its reduction to final form is the result of extensive good faith
negotiations between the parties through their respective counsel; (2) said
counsel have carefully reviewed and examined this agreement for execution by
said parties, or any of them; and (3) any statute or rule of construction that
ambiguities are to be resolved against the drafting party should not be employed
in the interpretation of this Agreement.
7.16 INDEMNITY. Xxxxx hereby agrees to protect, defend and indemnify SPGK,
its direct or indirect parents, their subsidiaries, affiliates and designees and
their officers (past and present), board of directors (past and present),
employees (past and present), shareholders (past and present) and hold them
harmless from and against any and all costs and expenses actually incurred by
them or for which they are liable, including attorney's fees, court costs,
expert witness fees/costs, losses, liabilities, damages, claims and demands of
every kind or nature, including those incurred pursuant to a settlement entered
into in good faith with respect to any inaccuracy or breach of the
representations warranties and covenants contained within this Agreement and/or
within the Exhibits to this Agreement.
a) Upon the filing by anyone of any type of claim, cause of action or
lawsuit against an indemnified party for any type of damages arising out of
incidents for which the indemnified party is to be indemnified by Xxxxx
pursuant to this Section 7.16, the indemnified party shall, within 30 days
of the indemnified party's becoming aware thereof, notify Xxxxx of such
claim, cause of action or lawsuit. If Xxxxx does not settle or compromise
such claim, cause of action, or lawsuit at its own cost, to the extent
Xxxxx is required to indemnify the indemnified party pursuant to this
Section 7.16, then Xxxxx shall undertake the legal defense of such claim,
cause of action or lawsuit at his own cost through counsel of recognized
capacity or otherwise not reasonably disapproved by the indemnified party
until final disposition, including all appeals. The indemnified party may,
at its sole cost and expense, participate in the legal defense of any such
claim, cause of action or lawsuit by Xxxxx to defend against such claim,
cause of action or lawsuit. Any final judgment rendered against an
indemnified party for any cause for which the indemnified party is to be
13 of 15
indemnified against pursuant to this Section 7.16 shall be conclusive
against the indemnified party as to liability and amount upon the
expiration of the time for all appeals. The provisions of this Section 7.16
shall not apply to any claim or demand arising from the intentional act or
acts or fraud of the indemnified party.
b) The provisions of Section 7.16(a) shall only apply if Xxxxx, within
30 days after the mailing of a request for indemnity to Xxxxx is responded
to by Xxxxx with an agreement in writing to defend and indemnify the
requesting party or parties without a Reservation of Rights. In the event
Xxxxx fails to agree to defend and indemnify the requesting party or
parties within 30 days of the date of the request, Xxxxx will not be
relieved of his obligations under this agreement or this Section 7.16, and
the provisions of Section 7.16(c) shall apply.
c) SPGK, and its direct or indirect parents, their subsidiaries,
affiliates and designees and their officers (past and present), board of
directors (past and present), employees (past and present), shareholders
(past and present), at their sole discretion, may hire legal counsel to
defend any actions brought against SPGK, its direct or indirect parents,
their subsidiaries, affiliates and designees and officers (past and
present), board of directors (past and present), employees (past and
present), shareholders (past and present) which arise out of Dalal's
obligations herein. Xxxxx hereby agrees to pay any and all attorneys' fees,
expert costs, and any other fees and costs incurred by SPGK, its direct or
indirect parents, their subsidiaries, affiliates and designees and their
officers (past and present), board of directors (past and present),
employees (past and present), shareholders (past and present) to said
selected counsel upon the request of SPGK, its direct or indirect parents,
their subsidiaries, affiliates and designees and their officers (past and
present), board of directors (past and present), employees (past and
present). Xxxxx will, if requested by SPGK, its direct or indirect parents,
their subsidiaries, affiliates and designees and their officers (past and
present), board of directors (past and present), employees (past and
present), defend any suits at the sole cost and expense of Xxxxx. Xxxxx
hereby agrees to defend said suits with the use of attorneys requested by
SPGK, its direct or indirect parents, their subsidiaries, affiliates and
designees and their officers (past and present), board of directors (past
and present), employees (past and present).
For purposes of this Section 7.16, requests shall be made pursuant to
the Notice paragraph herein.
7.17 SEVERABILITY. Nothing contained in this Agreement shall be construed
as requiring the commission of any act contrary to law. Whenever there is any
conflict between any provisions of this Agreement and any present or future
statute, law, ordinance, regulation or judicial decision, contrary to which the
parties have no legal right under this Agreement, the latter shall prevail, but
in such event the provision of this Agreement thus affected shall be curtailed
and limited only to the extent necessary to bring it within the requirements of
the law. In the event that any part, article, section, sentence or clause of
this Agreement shall be held to be indefinite, invalid or otherwise
unenforceable, the indefinite, invalid or unenforceable provision shall be
deemed deleted, and the remaining parts thereof shall continue in full force and
effect.
7.18 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to
benefit any other person or entity except the named parties hereto and no other
person or entity shall be entitled to any rights hereunder by virtue of
so-called "third party beneficiary rights" or otherwise.
7.19 ATTORNEYS' FEES. In the event that any party to this Agreement shall
institute any action or proceeding against the other relating to the terms of
this Agreement or any default thereunder, the prevailing party shall be entitled
to recover from the other party, the prevailing party's actual attorneys' fees,
costs and expert costs and expenses incurred in connection with such action or
proceeding, including, without limitation, any post-judgment fees, costs or
expenses incurred on any appeal or in collection of any judgment.
14 of 15
7.20 AUTHORITY TO EXECUTE AGREEMENT. Each individual executing this
Agreement on behalf of a corporation and/or partnership represents that he or
she is duly authorized to execute and deliver this Agreement on behalf of the
corporation and/or partnership.
AGREED TO AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN.
Dated: May 21, 1999 SPORTS GROUP INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Xxxxx Xxxxxxxxx, its President
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxxx, its Vice
President & Secretary
Dated: May 21, 1999 XXXXXX SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx, President
Dated: May 20, 1999 /s/ Xxxx X. Xxxxx
----------------------------------------
Xxxx X. Xxxxx, an Individual and sole
shareholder of Xxxxxx Systems, Inc.
I, CONSENT TO THE TRANSACTION DESCRIBED
HEREIN.
Dated: May 20, 1999 /s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx, Spouse of Xxxx X. Xxxxx
15 of 15
