MUTUAL STOCK PURCHASE AGREEMENT
by
and
among
United
Fuel & Energy Corporation,
Cardlock
Fuels System, Inc.,
Xxxxx
X.
Xxxxxxx,
and
Xxxxx
X.
Xxxxxxx, as Trustee under the
Greinke
Business Living Trust
Dated:
September 14, 2007
TABLE
OF
CONTENTS
Page
|
||
ARTICLE
1 DEFINITIONS
|
1
|
|
ARTICLE
2 PURCHASE AND SALE OF SHARES
|
10
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2.1
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Purchase
and Sale of Shares.
|
10
|
2.2
|
Purchase
Price.
|
10
|
2.3
|
The
Closing.
|
10
|
2.4
|
Deliveries
at the Closing.
|
10
|
ARTICLE
3 REPRESENTATIONS AND WARRANTIES CONCERNING THE
TRANSACTION
|
11
|
|
3.1
|
Power
and Authority; Enforceability.
|
11
|
3.2
|
No
Violation.
|
12
|
3.3
|
Brokers’
Fees.
|
12
|
3.4
|
Shares;
Greinke Information.
|
12
|
3.5
|
Investment.
|
12
|
3.6
|
UFEN
Review.
|
12
|
ARTICLE
4 REPRESENTATIONS AND WARRANTIES CONCERNING CFS
|
13
|
|
4.1
|
Entity
Status.
|
13
|
4.2
|
Power
and Authority; Enforceability.
|
14
|
4.3
|
No
Violation.
|
14
|
4.4
|
Brokers’
Fees.
|
14
|
4.5
|
Capitalization.
|
14
|
4.6
|
Records.
|
14
|
4.7
|
Subsidiaries.
|
15
|
4.8
|
Financial
Statements.
|
15
|
4.9
|
Subsequent
Events.
|
15
|
4.10
|
Liabilities.
|
17
|
4.11
|
Legal
Compliance.
|
17
|
4.12
|
Tax
Matters.
|
18
|
4.13
|
Title
to and Condition of Assets.
|
18
|
4.14
|
Real
Property.
|
18
|
4.15
|
Intellectual
Property.
|
19
|
4.16
|
Inventory.
|
19
|
4.17
|
Contracts.
|
20
|
4.18
|
Receivables.
|
21
|
4.19
|
Powers
of Attorney.
|
21
|
4.20
|
Insurance.
|
21
|
4.21
|
Litigation.
|
22
|
4.22
|
Intentionally
omitted.
|
22
|
4.23
|
Product
Liability.
|
22
|
4.24
|
Labor;
Employees.
|
22
|
4.25
|
Employee
Benefits.
|
22
|
4.26
|
Environmental,
Health, and Safety Matters.
|
23
|
ii
4.27
|
Customers
and Suppliers.
|
24
|
4.28
|
Permits.
|
24
|
4.29
|
Foreign
Corrupt Practices Act Compliance.
|
24
|
4.30
|
Certain
Business Relationships with CFS.
|
24
|
4.31
|
Accuracy
of Information Furnished.
|
25
|
4.32
|
Representations
Complete.
|
25
|
ARTICLE
5 REPRESENTATIONS AND WARRANTIES CONCERNING UFEN
|
25
|
|
5.1
|
Entity
Status.
|
25
|
5.2
|
Power
and Authority; Enforceability.
|
26
|
5.3
|
No
Violation.
|
26
|
5.4
|
Brokers’
Fees.
|
26
|
5.5
|
Capitalization.
|
26
|
5.6
|
Records.
|
27
|
5.7
|
Subsidiaries.
|
27
|
5.8
|
UFEN’s
Securities Filings and Financial Statements.
|
27
|
5.9
|
Subsequent
Events.
|
28
|
5.10
|
Liabilities.
|
30
|
5.11
|
Legal
Compliance.
|
30
|
5.12
|
Tax
Matters.
|
30
|
5.13
|
Title
to and Condition of Assets.
|
30
|
5.14
|
Real
Property.
|
31
|
5.15
|
Intellectual
Property.
|
33
|
5.16
|
Inventory.
|
33
|
5.17
|
Contracts.
|
33
|
5.18
|
Receivables.
|
35
|
5.19
|
Powers
of Attorney.
|
35
|
5.20
|
Insurance.
|
35
|
5.21
|
Litigation.
|
35
|
5.22
|
Intentionally
omitted.
|
35
|
5.23
|
Product
Liability.
|
35
|
5.24
|
Labor;
Employees.
|
36
|
5.25
|
Employee
Benefits.
|
36
|
5.26
|
Environmental,
Health, and Safety Matters.
|
36
|
5.27
|
Customers
and Suppliers.
|
37
|
5.28
|
Permits.
|
37
|
5.29
|
Foreign
Corrupt Practices Act Compliance.
|
38
|
5.30
|
Accuracy
of Information Furnished.
|
38
|
5.31
|
CFS
Review.
|
38
|
5.32
|
Representations
Complete.
|
39
|
ARTICLE
6 PRE-CLOSING COVENANTS
|
39
|
|
6.1
|
General.
|
39
|
6.2
|
Notices
and Consents.
|
39
|
6.3
|
Operation
of Business.
|
40
|
6.4
|
Preservation
of Business.
|
40
|
6.5
|
Full
Access.
|
40
|
iii
6.6
|
Notice
of Developments.
|
41
|
6.7
|
Exclusivity.
|
41
|
6.8
|
Confidentiality;
Publicity.
|
41
|
6.9
|
Affiliated
Transactions.
|
42
|
6.10
|
Charges,
Fees, and Prepayment Obligations.
|
42
|
6.11
|
Repayment
of Certain Liabilities from Greinke.
|
42
|
6.12
|
Site
Inspections.
|
43
|
6.13
|
Consents.
|
43
|
6.14
|
Shareholder
Approval.
|
43
|
6.15
|
CFS
Audit.
|
43
|
6.16
|
UFEN
Restatement.
|
44
|
ARTICLE
7 POST-CLOSING COVENANTS
|
44
|
|
7.1
|
General.
|
44
|
7.2
|
Litigation
Support.
|
44
|
7.3
|
Transition.
|
45
|
7.4
|
Confidentiality.
|
45
|
7.5
|
Restrictive
Covenants.
|
45
|
7.6
|
Release.
|
46
|
7.7
|
UFEN
Stock Certificates.
|
47
|
7.8
|
CFS
Employee Matters.
|
47
|
7.9
|
Board
Matters; Chairman; Vice Chairman.
|
47
|
7.10
|
Discharge
of Certain Liabilities to Greinke.
|
48
|
ARTICLE
8 CLOSING CONDITIONS
|
48
|
|
8.1
|
Conditions
Precedent to Obligation of UFEN.
|
48
|
8.2
|
Conditions
Precedent to Obligation of Greinke Parties.
|
50
|
ARTICLE
9 TERMINATION
|
51
|
|
9.1
|
Termination
of Agreement.
|
51
|
9.2
|
Effect
of Termination.
|
52
|
ARTICLE
10 INDEMNIFICATION
|
52
|
|
10.1
|
Survival
of Representations and Warranties.
|
52
|
10.2
|
Indemnification
Provisions for UFEN’s Benefit.
|
53
|
10.3
|
Indemnification
Provisions for Greinke’s Benefit.
|
53
|
10.4
|
Indemnification
Claim Procedures.
|
54
|
10.5
|
Limitations
on Indemnification Liability.
|
55
|
10.6
|
Indemnification
if Negligence of Indemnitee.
|
56
|
10.7
|
Other
Indemnification Provisions.
|
57
|
ARTICLE
11 MISCELLANEOUS
|
57
|
|
11.1
|
Schedules.
|
57
|
11.2
|
Entire
Agreement.
|
58
|
11.3
|
Successors.
|
58
|
11.4
|
Assignments.
|
58
|
11.5
|
Notices.
|
58
|
11.6
|
Specific
Performance.
|
59
|
iv
11.7
|
Submission
to Jurisdiction; Process Agent; No Jury Trial.
|
60
|
11.8
|
Time.
|
60
|
11.9
|
Counterparts.
|
60
|
11.10
|
Headings.
|
60
|
11.11
|
Governing
Law.
|
61
|
11.12
|
Amendments
and Waivers.
|
61
|
11.13
|
Severability.
|
61
|
11.14
|
Expenses.
|
61
|
11.15
|
Construction.
|
61
|
11.16
|
Incorporation
of Exhibits, Annexes, and Schedules.
|
62
|
11.17
|
Joint
and Several Obligations.
|
62
|
11.18
|
Remedies.
|
62
|
11.19
|
Electronic
Signatures.
|
62
|
v
This
Mutual Stock Purchase Agreement (this “Agreement”),
dated
September 14, 2007, is by and among (i) United Fuel & Energy Corporation, a
Nevada corporation (“UFEN”),
(ii)
Cardlock Fuels System, Inc., a California corporation (“CFS”),
(iii)
Xxxxx X. Xxxxxxx (“Greinke”),
and
(iv) Xxxxx X. Xxxxxxx, as Trustee under the Greinke Business Living Trust dated
April 20, 1999 (“Trust”
and,
together with Greinke and CFS, each a “Greinke
Party”
and
collectively, the “Greinke
Parties”).
RECITALS:
A. Trust
owns all of the outstanding capital stock of CFS.
X. XXXX
desires to purchase from Trust all of the outstanding capital stock of CFS,
and
Trust desires to sell to UFEN all of these outstanding capital stock of CFS,
in
exchange for a certain number of shares of Common Stock and in accordance with
this Agreement’s terms and conditions.
X. XXXX
and
the Greinke Parties (the “Parties”)
intend
for the purchase and sale of the Shares (as defined) to be treated as
a
tax
free reorganization
for tax
purposes.
AGREEMENT:
NOW,
THEREFORE, in consideration of the premises and the mutual promises herein
made,
and in consideration of the representations, warranties, and covenants contained
herein, UFEN and each Greinke Party agree as follows:
ARTICLE
1
DEFINITIONS
“Action”
means
any action, appeal, petition, plea, charge, complaint, claim, suit, demand,
litigation, arbitration, mediation, hearing, inquiry, investigation or similar
event, occurrence, or proceeding.
“Affiliate”
or
“Affiliated”
with
respect to any specified Person, means a Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, such specified Person. For
this
definition, “control”
(and its
derivatives) means the possession, directly or indirectly, of 50%
or more
of the voting Equity Interests of a Person, or the power, directly or
indirectly, to vote 50% or more of the voting Equity Interests of a
Person.
“Affiliated
Group”
means
any affiliated group under Code Section 1504(a) or any similar group defined
under provisions of applicable Law.
“Agreement”
is
defined in the preamble to this Agreement.
“Ancillary
Agreements” means
the
Trademark License and Supply Agreement, Employment Agreement, Registration
Rights Agreement, and Stockholders Agreement.
1
“Balance
Sheet Date”
is
defined in Section
4.8.
“Basis”
means
any past or current fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction about which the relevant Person has Knowledge that forms or could
form the basis for any specified consequence.
“Best
Efforts”
means
the efforts, time, and costs that a prudent Person desirous of achieving a
result would use, expend, or incur in similar circumstances to ensure that
such
result is achieved as expeditiously as possible; provided,
however,
that no
such use, expenditure, or incurrence will be required if it would have a
Material Adverse Effect on such Person calculated immediately prior to the
Closing Date.
“Breach”
means
(a) any breach, inaccuracy, failure to perform, failure to comply, conflict
with, failure to notify, default, or violation or (b) any other act, omission,
event, occurrence or condition the existence of which would (i) permit any
Person to accelerate any obligation or terminate, cancel, or modify any right
or
obligation or (ii) require the payment of money or other
consideration.
“CFS”
is
defined in the preamble to this Agreement.
“Change
in Control”
of UFEN
shall be deemed to have occurred if, in a single transaction or series of
related transactions: (i) any person (as such term is used in Section 13(d)
and
14(d) of the Exchange Act), or person acting as a group, other than a trustee
or
fiduciary holding securities under an employment benefit program, is or becomes
a “beneficial
owner”
(as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of UFEN representing more than 50% of the outstanding voting power
of
UFEN; provided, however, that the beneficial ownership of Greinke or any of
his
affiliates of more than 50% of the outstanding voting power of UFEN shall not
constitute a Change of Control, (ii) there is a merger, consolidation or other
business combination transaction of UFEN with or into another corporation,
entity or person, other than a transaction in which the holders of at least
a
majority of the shares of voting capital stock of UFEN outstanding immediately
prior to such transaction continue to hold (either by such shares remaining
outstanding or by their being converted into shares of voting capital stock
of
the surviving entity) a majority of the total voting power represented by the
shares of voting capital stock of UFEN (or the surviving entity) outstanding
immediately after such transaction, or (iii) all or substantially all of UFEN’s
assets are sold.
“Closing”
is
defined in Section
2.3.
“Closing
Date”
is
defined in Section
2.3.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Commitment”
means
(a) options, warrants, convertible securities, exchangeable securities,
subscription rights, conversion rights, exchange rights, or other Contracts
that
could require a Person to issue any of its Equity Interests or to sell any
Equity Interests it owns in another Person; (b) any other securities convertible
into, exchangeable or exercisable for, or representing the right to subscribe
for any Equity Interest of a Person or owned by a Person; (c) statutory
pre-emptive rights or pre-emptive rights granted under a Person’s Organizational
Documents; and (d) stock appreciation rights, phantom stock, profit
participation, or other similar rights with respect to a Person.
2
“Common
Stock” means
the
common stock, par value $0.001 per share, of UFEN.
“Confidential
Information”
means
any information concerning the businesses and affairs of UFEN or
CFS.
“Consent”
means
any consent, approval, notification, waiver, or other similar action that is
necessary or convenient.
“Contract”
means
any contract, agreement, arrangement, commitment, letter of intent, memorandum
of understanding, heads of agreement, promise, obligation, right, instrument,
document, or other similar understanding, whether written or oral.
“Damages”
means
all damages (including incidental and consequential damages), losses (including
any diminution in value), Liabilities, payments, amounts paid in settlement,
obligations, fines, penalties, costs of burdens associated with performing
injunctive relief, and other costs (including reasonable fees and expenses
of
outside attorneys, accountants and other professional advisors, and of expert
witnesses and other costs (including the allocable portion of the relevant
Person’s internal costs) of investigation, preparation and litigation in
connection with any Action or Threatened Action) of any kind or nature
whatsoever, whether known or unknown, contingent or vested, or matured or
unmatured.
“Employee
Agreement”
means
each management, employment, severance, consulting, non-compete,
confidentiality, or similar Contract between CFS and any employee, consultant,
independent contractor, or other individuals providing services thereto pursuant
to which CFS has or may have any Liability.
“Employee
Benefit Plan”
means
each plan, program, policy, payroll practice, contract, agreement (including
Employee Agreements), or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or stock related awards,
fringe benefits or other employee benefits of any kind, whether formal or
informal, funded or unfunded, written or oral and whether or not legally
binding, including each “employee
benefit plan”
within
the meaning of Section 3(3) of ERISA and each “Multiemployer
Plan”
within
the meaning of Sections 3(37) or 4001(a)(3) of ERISA.
“Employee
Pension Benefit Plan”
is
defined in ERISA Section 3(2).
“Employee
Welfare Benefit Plan”
is
defined in ERISA Section 3(1).
“Employment
Agreement”
means
the employment Contract between UFEN and
Xxxxxxx XxXxxxxx, in substantially the form of Exhibit
A.
“Encumbrance”
means
any Order, Security Interest, Contract, easement, covenant, community property
interest, equitable interest, right of first refusal, or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income,
or
exercise of any other attribute of ownership.
3
“Enforceable”
- a
Contract is “Enforceable”
if it is
the legal, valid, and binding obligation of the applicable Person enforceable
against such Person in accordance with its terms, except as such enforceability
may be subject to the effects of bankruptcy, insolvency, reorganization,
moratorium, or other Laws relating to or affecting the rights of creditors,
and
general principles of equity.
“Environment”
means
soil, land surface or subsurface strata, waters (including, navigable ocean,
stream, pond, reservoirs, drainage, basins, wetland, ground, and drinking),
sediments, ambient air (including indoor), noise, plant life, animal life,
and
all other environmental media or natural resources.
“Environmental,
Health, and Safety Requirements”
means
all Orders, Contracts, Laws, and programs (including those promulgated or
sponsored by industry associations, insurance companies, and risk management
companies) concerning or relating to public health and safety,
worker/occupational health and safety, and pollution or protection of the
Environment, including those relating to the presence, use, manufacturing,
refining, production, generation, handling, transportation, treatment,
recycling, transfer, storage, disposal, distribution, importing, labeling,
testing, processing, discharge, Release, Threatened Release, control, or other
action or failure to act involving cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise, or radiation, each as amended and as now
or
hereafter
in
effect and
in
effect at Closing.
“Equity
Interest”
means
(a) with respect to a corporation, any and all shares of capital stock
and
any
Commitments with respect thereto,
(b)
with respect to a partnership, limited liability company, trust or similar
Person, any and all units, interests or other partnership/limited liability
company interests,
and any
Commitments with respect thereto,
and (c)
any other direct or
indirect
equity
ownership or participation in a Person.
“ERISA”
means
the Employee Retirement Income Security Act of 1974.
“ERISA
Affiliate”
means
each business or entity which is a member of a “controlled
group of corporations,”
under
“common
control”
or an
“affiliated
service group”
with CFS
within the meaning of Sections 414(b), (c) or (m) of the Code, or required
to be
aggregated with CFS under Section 414(o) of the Code, or is under “common
control”
with
CFS, within the meaning of Section 4001(a)(14) of ERISA.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Expiration
Date”
means
October 31, 2007.
“Fiduciary”
is
defined in ERISA Section 3(21).
“Financial
Statements”
is
defined in Section
4.8.
4
“Foreign
Corrupt Practices Act”
means
the Foreign Corrupt Practices Act of 1977.
“GAAP”
means
United States generally accepted accounting principles as
in
effect from time to time.
“Governmental
Body”
means
any legislature, agency, bureau, branch, department, division, commission,
court, tribunal, magistrate, justice, multi-national organization,
quasi-governmental body, or other similar recognized organization or body of
any
federal, state, county, municipal, local, or foreign government or other similar
recognized organization or body exercising similar powers or
authority.
“Greinke”
is
defined in the preamble to this Agreement.
“Greinke
Indemnified Parties”
means
(a) UFEN and its officers, directors, managers, employees, agents,
representatives, controlling Persons, and stockholders, and (b) CFS.
“Greinke
Indemnified Parties Threshold Amount” is
defined in Section
10.5(b)(ii).
“Greinke
Parties”
is
defined in the preamble to this Agreement.
“Indemnification
Claim”
is
defined in Section
10.4(a).
“Indemnified
Parties”
means,
individually and as a group, the UFEN Indemnified Parties and the Greinke
Indemnified Parties.
“Indemnitor”
means
any Party having any Liability to any Indemnified Party under this
Agreement.
“Intellectual
Property”
means
any rights, licenses, liens, security interests, charges, encumbrances, equities
and other claims that any Person may have to claim ownership, authorship or
invention, to use, to object to or prevent the modification of, to withdraw
from
circulation or control the publication or distribution of any: (a) copyrights
in
both published works and unpublished works, (b) fictitious business names,
trading names, corporate names, registered and unregistered trademarks, service
marks, and applications, (c) any (i) patents and patent applications, and (ii)
business methods, inventions, and discoveries that may be patentable, (d)
computer software or middleware, and (e) know-how, trade secrets, confidential
information, customer lists, software (source code and object code), technical
information, data, process technology, plans, drawings, and blue
prints.
“Interim
Balance Sheet”
means
the balance sheet contained within the Interim Financial
Statements.
“Interim
Financial Statements” is
defined in Section
4.8.
5
“Knowledge”
- an
individual will be deemed to have “Knowledge”
of a
particular fact or other matter if (a) such individual is actually aware of
such
fact or other matter; (b) such individual should be aware of such fact or
matter; or (c) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
comprehensive investigation concerning the existence of such fact or other
matter. A Person other than an individual will be deemed to have “Knowledge”
of a
particular fact or other matter if (i) any individual who is serving, or
who
has at any time served,
as a
director, manager, officer, partner, member, executor, trustee, or similar
position of such Person or a Subsidiary of such Person (or in each case any
similar capacity) or (ii) any employee who is charged with or
who
has at any time been charged with,
responsibility for a particular area of the operations of such Person or its
Subsidiaries (i.e. an employee in the environmental section with respect to
knowledge of environmental matters), has, or at any time had, Knowledge of
such
fact or other matter.
“Law”
means
any law (statutory, common, or otherwise), constitution, treaty, convention,
ordinance, equitable principle, code, rule, regulation, executive order, or
other similar authority enacted, adopted, promulgated, or applied by any
Governmental Body, each as amended and now in effect.
“Liability”
or
“Liable”
means
any liability or obligation, whether known or unknown, asserted or unasserted,
absolute or contingent, matured or unmatured, conditional or unconditional,
latent or patent, accrued or unaccrued, liquidated or unliquidated, or due
or to
become due.
“Material
Adverse Change (or Effect)”
means a
change (or effect) in the condition (financial or otherwise), properties,
assets, Liabilities, rights, obligations, operations, business, or prospects
which change (or effect), individually or in the aggregate, could reasonably
be
expected to be materially adverse to such condition, properties, assets,
Liabilities, rights, obligations, operations, business, or
prospects.
“Most
Recent Year End”
is
defined in Section
4.8.
“Multiemployer
Plan”
is
defined in ERISA Section 3(37).
“Order”
means
any order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept,
command, directive, consent, approval, award, judgment, injunction, or other
similar determination or finding by, before, or under the supervision of any
Governmental Body, arbitrator, or mediator.
“Ordinary
Course of Business”
means
the ordinary course of business consistent with past custom and practice
(including with respect to quantity, quality and frequency) in
the
industry in which the relevant Person and its Subsidiaries does
business.
“Organizational
Documents”
means
the articles of incorporation, certificate of incorporation, charter, bylaws,
articles of formation, regulations, operating agreement, certificate of limited
partnership, partnership agreement, and all other similar documents, instruments
or certificates executed, adopted, or filed in connection with the creation,
formation, or organization of a Person, including any amendments
thereto.
“Parties”
is
defined in the recitals to this Agreement.
“PBGC”
means
the Pension Benefit Guaranty Corporation.
6
“Permit”
means
any permit, license, certificate, approval, consent, notice, waiver, franchise,
registration, filing, accreditation, or other similar authorization required
by
any Law, Governmental Body, or Contract.
“Person”
means
any individual, partnership, limited liability company, corporation,
association, joint stock company, trust, entity, joint venture, labor
organization, unincorporated organization, or Governmental Body.
“Preferred
Stock” means
the
series A preferred stock, par value $0.001 per share, of UFEN.
“Prohibited
Transactions”
is
defined in ERISA Section 406 and Code Section 4975.
“Purchase
Price”
means
the Share Purchase Price.
“Receivables”
with
respect to a Person, means all receivables of such Person, including all
Contracts in transit, manufacturers warranty receivables, notes receivable,
accounts receivable, trade account receivables, and insurance proceeds
receivable.
“Registration
Rights Agreement” means
the
registration rights Contract, in substantially the form of Exhibit
C.
“Releasee”
and
“Releasees”
is
defined in Section
7.6.
“Relevant
Business”
means
the distribution of fuel to commercial vehicles at unmanned locations through
the use of an access or keycard system.
“Reportable
Event”
is
defined in ERISA Section 4043.
“Restricted
Territory”
means
the following counties located in the State of California: Los Angeles, San
Diego, Riverside, San Bernardino, Orange and Imperial.
“Schedules”
means
the Schedules to this Agreement which will be prepared and provided by the
parties hereto prior to the Closing.
“SEC”
is
defined in Section
3.2(f).
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Security
Interest”
means
any security interest, deed of trust, mortgage, pledge, lien, charge, claim,
or
other similar interest or right, except for (a) liens for taxes, assessments,
governmental charges, or claims that are being contested in good faith by
appropriate Actions promptly instituted and diligently conducted and only to
the
extent that a reserve or other appropriate provision, if any, has been made
on
the face of the Financial Statements (or UFEN Financial Statements, as
applicable) in an amount equal to the Liability for which the lien is asserted,
(b) statutory liens of landlords and warehousemen’s, carriers’, mechanics’,
suppliers’, materialmen’s, repairmen’s, or other like liens (including
Contractual landlords’ liens) arising in the Ordinary Course of Business and
with respect to amounts not yet delinquent and being contested in good faith
by
appropriate proceedings, only to the extent that a reserve or other appropriate
provision, if any, has been made on the face of the Financial Statements (or
UFEN Financial Statements, as applicable) in an amount equal to the Liability
for which the lien is asserted; and (c) liens incurred or deposits made in
the
Ordinary Course of Business in connection with workers’ compensation,
unemployment insurance and other similar types of social security.
7
“Shares”
means
130,717 shares of common stock, no par value per share, of CFS.
“Share
Purchase
Price”
is
defined in Section
2.2.
“Southern”
means
Southern Counties Oil Co., a California limited partnership.
“Specified
Consents”
is
defined in Section
6.15.
“Stock”
means
the Common Stock and the Preferred Stock.
“Stockholders
Agreement” the
Contract by and among UFEN, certain holders of the UFEN Common Stock and Greinke
Parties, in substantially the form of Exhibit
D.
“Subsidiary”
means,
with respect to any Person: (a) any corporation of which more than 50% of the
total voting power of all classes of the Equity Interests entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors is owned by such Person directly or through one or more other
Subsidiaries of such Person and (b) any Person other than a corporation of
which
at least a majority of the Equity Interest (however designated) entitled
(without regard to the occurrence of any contingency) to vote in the election
of
the governing body, partners, managers or others that will control the
management of such entity is owned by such Person directly or through one or
more other Subsidiaries of such Person.
“Tax”
means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A), customs, ad valorem,
duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
“Tax
Return”
means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes required to be filed with any Governmental Body,
including any schedule or attachment thereto, and including any amendment
thereof.
“Termination
Date”
means
the earlier to occur of (a) the Expiration Date and (b) the date on which this
Agreement is terminated pursuant to Section
9.1
(other
than Section
9.1(b)).
“Threatened”
means a
demand or statement has been made (orally or in writing) or a notice has been
given (orally or in writing), or any other event has occurred or any other
circumstances exist that would lead a prudent Person to conclude that a cause
of
Action or other matter is likely to be asserted, commenced, taken, or otherwise
initiated.
8
“Threatened
Release”
means
any event that has occurred or other circumstances that exist that could lead
a
prudent Person to conclude that any Release whether intentional or
unintentional, is reasonably
likely
to occur now or in the future.
“Trademark
License and Supply Agreement”
means
the license and supply Contract between UFEN and Southern, in substantially
the
form of Exhibit
B.
“Transaction
Documents”
means
this Agreement and the Ancillary Agreements.
“Transactions”
means
(a) the sale of the Shares by Trust to UFEN and UFEN’s delivery of the Purchase
Price therefor; (b) the execution, delivery, and performance of all of the
documents, instruments and agreements to be executed, delivered, and performed
in connection herewith,
including each Ancillary Agreement;
and (c)
the performance by UFEN and Greinke Parties of their respective covenants and
obligations (pre- and post-Closing) under this Agreement.
“Treas.
Reg.”
means
the proposed, temporary and final regulations promulgated under the
Code.
“Trust”
defined
in the preamble to this Agreement.
“UFEN”
is
defined in the preamble to this Agreement.
“UFEN
Balance Sheet”
means
the
balance sheet contained within the UFEN Financial Statements.
“UFEN
Balance Sheet Date”
means
March 31, 2007.
“UFEN
Common Stock”
is
defined in Section
2.2.
“UFEN
Entities”
is
defined in Section
5.1.
“UFEN
Financial Statements”
is
defined in Section
5.8.
“UFEN
Indemnified Parties”
means
Greinke and Trust and their respective Affiliates.
“UFEN
Indemnified Parties Threshold Amount” is defined in Section
10.5(b)(ii).
“UFEN
SEC Documents”
is
defined in Section
5.8.
“Year
End Balance Sheet” means
the
balance sheet contained within the Financial Statements for the Most Recent
Year
End.
9
ARTICLE
2
PURCHASE
AND SALE OF SHARES
2.1 Purchase
and Sale of Shares.
On
and
subject to the terms and conditions of this Agreement, UFEN agrees to purchase
from Trust, and Trust agrees to sell to UFEN, all of the Shares (as described
on
Exhibit
F)
for the
consideration specified in Section
2.2.
2.2 Purchase
Price.
The
purchase price for the Shares is $36,961,915 (the “Share
Purchase
Price”),
which
is an amount equal to five (5)
times
the trailing twelve month EBITDA of CFS as of June 30, 2007,
payable
in that number of shares of Common Stock equal to the quotient obtained by
dividing the Share Purchase Price by $1.50 (the “UFEN
Common Stock”).
2.3 The
Closing.
The
closing of the purchase and sale of the Shares (the “Closing”)
will
take place at the offices of Akin
Gump
Xxxxxxx Xxxxx & Xxxx LLP
in San
Antonio, Texas commencing at 9:00 a.m., local time, on the second
business
day following the satisfaction or waiver of all conditions to the obligations
of
the Parties to consummate the purchase and sale of the Shares (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as UFEN and Trust may mutually determine
(the
“Closing
Date”).
2.4 Deliveries
at the Closing.
At
the
Closing:
(a) Trust
will deliver to UFEN:
(i) Certificates
representing the Shares, duly endorsed (or accompanied by duly executed stock
powers).
(ii) An
Officers’ certificate, substantially in the form of Exhibit
G,
duly
executed on behalf of CFS, as to whether each condition specified in
Sections
8.1(a)-8.1(d)
has been
satisfied in all respects.
(iii) A
Secretary’s certificate, substantially in the form of Exhibit
H,
duly
executed on behalf of CFS.
(iv) The
resignation, effective as of the Closing, of the directors and officers of
CFS.
(v) The
Stockholders Agreement, duly executed by Greinke Parties.
(vi) The
Registration Rights Agreement, duly executed by Trust.
10
(vii) The
Trademark License and Supply Agreement, duly executed by Southern.
(viii) Other
documents as appropriate.
(b) UFEN
will
deliver to Trust:
(i) Certificates
representing the UFEN Common Stock.
(ii) An
Officers’ certificate, substantially in the form of Exhibit
J,
duly
executed on UFEN’s behalf, as to whether each condition specified in
Section
8.2(a)-8.2(d)
has been
satisfied in all respects.
(iii) A
Secretary’s certificate, substantially in the form of Exhibit
K,
duly
executed on UFEN’s behalf.
(iv) The
Employment Agreement, duly executed by UFEN and Xxxxxxx XxXxxxxx.
(v) The
Registration Rights Agreement, duly executed by UFEN.
(vi) The
Trademark License and Supply Agreement, duly executed by UFEN.
(vii) The
Stockholders Agreement, duly executed by UFEN and certain holders of capital
stock of UFEN (other than Greinke).
(viii) Other
documents as appropriate.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
CONCERNING
THE TRANSACTION
Each
of
Greinke and Trust, jointly and severally, represents and warrants to UFEN that
the statements contained in this ARTICLE
3
are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then, except as expressly
provided in a representation or warranty, and as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE
3).
3.1 Power
and Authority; Enforceability.
Each
of
Greinke and Trust has the requisite competence and authority to execute and
deliver each Transaction Document to which he or it is a party, and to perform
and to consummate the Transactions. Each of Greinke and Trust has taken all
actions necessary to authorize the execution and delivery of each Transaction
Document to which he or it is party, the performance of his or its obligations
thereunder, and the consummation of the Transactions. Each Transaction Document
has been duly authorized, executed, and delivered by, and is Enforceable
against, Greinke
and
Trust, as the case may be.
11
3.2 No
Violation.
The
execution and the delivery of the Transaction Documents by Greinke and Trust
and
the performance and consummation of the Transactions by him and it will not
(a)
Breach any Law or Order to which he or it is subject, (b) Breach any Contract,
Order, or Permit to which Greinke or Trust is a party or by which he or it
is
bound or to which any of his or its assets are subject, or (c) require any
Consent, except
(i) any SEC and other filings required to be made by UFEN, and (ii) any
notifications or filings to relevant state or federal regulatory
agencies.
Neither
Greinke nor Trust has Breached any Contract to which CFS is a party or by which
CFS is bound or any of its assets are subject.
3.3 Brokers’
Fees.
No
Greinke Party has any Liability to pay any compensation to any broker, finder,
or agent with respect to the Transactions for which UFEN or CFS could become
directly or indirectly Liable.
3.4 Shares;
Greinke Information.
Trust
holds of record and owns beneficially the Shares as described in Exhibit
F,
free
and clear of any Encumbrances (other than any restrictions under the Securities
Act and state securities Laws). The Shares held by Trust are the sole and
separate property of Greinke and as such are not subject a community interest
claim from any spouse of Greinke. Exhibit
F
also
sets forth the address, state of residence and social security number of Trust
as of the date hereof. Neither Greinke nor Trust is a party to any Contract
that
could require him or it to sell, transfer, or otherwise dispose of any capital
stock of CFS (other than this Agreement). Neither Greinke nor Trust is a party
to any other Contract with respect to any capital stock of CFS.
3.5 Investment.
(a)
Each
of Greinke and Trust understands that the shares of UFEN
Common Stock
have not
been, and will not be, registered under the Securities Act, or under any state
securities Laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (b) Trust
is acquiring the UFEN
Common Stock
solely
for its own account for investment purposes, and not with a view to the
distribution thereof, (c) each of Greinke and Trust is a sophisticated investor
with knowledge and experience in business and financial matters, (d) each of
Greinke and Trust has received certain information concerning UFEN and has
had
the opportunity to obtain additional information as desired to evaluate the
merits and the risks inherent in holding the UFEN
Common Stock,
(e)
each of Greinke and Trust is able to bear the economic risk and lack of
liquidity inherent in holding the UFEN
Common Stock,
and (f)
each of Greinke and Trust is an “accredited
investor”
as
defined in Regulation D promulgated under the Securities Act.
3.6 UFEN
Review.
Each
of
Greinke and Trust:
12
(a) Has
such
knowledge and experience in financial and business matters that it is capable
of
evaluating the merits and risks of his investment in the UFEN Common
Stock contemplated
hereby, and that each is able to bear the economic risk of such investment
indefinitely.
(b) Has
(i)
had the opportunity to meet with representative officers and other
representatives of UFEN to discuss its business, assets, liabilities, financial
condition, cash flow, and operations, and (ii) received all materials, documents
and other information that he or it deems necessary or advisable to evaluate
the
UFEN Common
Stock and
the
Transactions.
(c) Has
made
his or its own independent examination, investigation, analysis and evaluation
of the UFEN Common
Stock,
including his or its own estimate of the value of the UFEN Common
Stock.
(d) Has
undertaken such due diligence (including a review of UFEN’s assets, properties,
liabilities, books, records, and contracts) as he or it deems adequate,
including that described above.
Nothing
in this Section
3.6
will
preclude Greinke and Trust from relying on the representations, warranties,
covenants, and agreements of UFEN herein or from pursuing his remedies with
respect to a Breach thereof.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES
CONCERNING
CFS
Each
Greinke Party, jointly and severally, represents and warrants to UFEN that
the
statements contained in this ARTICLE
4
are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and, except as expressly
provided in a representation or warranty, as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE
4),
except
as set forth in the Schedules the Greinke Parties have delivered to UFEN on
or
prior to the Closing Date.
4.1 Entity
Status.
CFS
is a
corporation duly incorporated, validly existing, and in good standing under
the
Laws of the State of California. CFS is duly authorized to conduct its business
and is in good standing under the laws of each jurisdiction where such
qualification is required. CFS has the requisite power and authority necessary
to own or lease its properties and to carry on its businesses as currently
conducted and
any
businesses in which it currently proposes to engage.
Schedule
4.1
lists
the directors and officers of CFS. Greinke has delivered to UFEN correct and
complete copies of the Organizational Documents of CFS, as amended to date.
CFS
is not in Breach of any provision of its Organizational Documents. There is
no
pending or Threatened Action (or Basis therefor) for the dissolution,
liquidation, insolvency, or rehabilitation of CFS.
13
4.2 Power
and Authority; Enforceability.
CFS
has
the corporate power and authority necessary to execute and deliver each
Transaction Document to which it is a party and to perform and consummate the
Transactions. CFS has taken all action necessary to authorize the execution
and
delivery of each Transaction Document to which it is a party, the performance
of
its obligations thereunder, and the consummation of the Transactions. Each
Transaction Document to which CFS is party has been duly authorized, executed,
and delivered by, and is Enforceable against, CFS.
4.3 No
Violation.
Except
as
listed on Schedule
4.3,
the
execution and the delivery of the applicable Transaction Documents by CFS and
the performance of its respective obligations hereunder and thereunder, and
consummation of the Transactions by CFS will not (a) Breach any Law or Order
to
which CFS is subject or any provision of the Organizational Documents of CFS;
(b) Breach any Contract, Order, or Permit to which CFS is a party or by which
it
is bound or to which any of its assets is subject (or result in the imposition
of any Encumbrance upon any of its assets); (c) require any Consent,
except
any notifications or filings to relevant state or federal regulatory
agencies;
(d)
trigger any rights of first refusal, preferential purchase, or similar rights;
or (e) cause the recognition of gain or loss for Tax purposes with respect
to
CFS or subject CFS or its assets to any Tax.
4.4 Brokers’
Fees.
CFS
does
not have any Liability to pay any compensation to any broker, finder, or agent
with respect to the Transactions for which UFEN or CFS could become directly
or
indirectly Liable.
4.5 Capitalization.
The
authorized Equity Interests of CFS consist of 1,000,000 shares of common stock,
of which the Shares are issued and outstanding and no shares of common stock
of
CFS are held in treasury. All of the issued and outstanding Shares: (a) have
been duly authorized and are validly issued, fully paid, and nonassessable,
(b)
were issued in compliance with all applicable state and federal securities
Laws,
(c) were not issued in Breach of any Commitments, and (d) are held of record
by
Trust and
owned
beneficially
by
Greinke as set forth in Exhibit
F.
CFS
has no
Commitments with respect to any Equity Interest of CFS.
No
additional Commitments will arise in connection with the Transactions. There
are
no Contracts with respect to the voting or transfer of the Equity Interests
of
CFS. CFS is not obligated to redeem or otherwise acquire any of its outstanding
Equity Interests.
4.6 Records.
The
copies of the Organizational Documents of CFS that were provided to UFEN are
accurate and complete and reflect all amendments made through the date hereof.
The minute books and other records of CFS made available to UFEN for review
were
correct and complete as of the date of such review, no further entries have
been
made through the date of this Agreement, such minute books and records contain
the true signatures of the persons purporting to have signed them, and such
minute books and records contain an accurate record of all actions of the
stockholders, directors, or other such representatives of CFS taken by written
consent, at a meeting, or otherwise since formation.
14
4.7 Subsidiaries.
CFS
has
no Subsidiaries. Set forth on Schedule
4.7
for each
Person that CFS has a direct or indirect Equity Interest is (a) its name and
jurisdiction of creation, formation, or organization, (b) if such Person is
a
corporation, (i) the number of authorized Equity Interests of each class of
its
Equity Interests, (ii) the number of issued and outstanding Equity Interests
of
each class of its Equity Interests held by CFS, and (iii) the number of Equity
Interests held in treasury, and (c) if such Person is not a corporation, (i)
the
class of Equity Interests created under such Person’s Organizational Documents
and (ii) the amount of such Equity Interests held by CFS. CFS holds of record
and owns beneficially the Equity Interests as represented on Schedule
4.7
(“Affiliate
Interests”),
free
and clear of any Encumbrances (other than restrictions under the Securities
Act
and state securities Laws). No Commitments exist or are authorized with respect
to any Affiliate Interests and no such Commitments will arise in connection
with
the Transactions. CFS does not control, directly or indirectly, or have any
direct or indirect Equity Interest in any Person except as set forth on
Schedule
4.7.
4.8 Financial
Statements.
Set
forth
on Schedule
4.8
are the
following financial statements (collectively the “Financial
Statements”):
(a) unaudited
condensed balance sheets and statements of income, changes in shareholders’
equity, and cash flow as of and for the fiscal years ended September 30, 2004,
September 30, 2005, and September 30, 2006 (the “Most
Recent Year End”)
for
CFS; and
(b) unaudited
condensed balance sheets and statements of income, changes in shareholders’
equity, and cash flow (the “Interim
Financial Statements”)
as of
and for the nine months ended June 30, 2007 (the “Balance
Sheet Date”)
for
CFS.
The
Financial Statements have been prepared in accordance with GAAP applied on
a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of CFS as of such dates and the results of operations of
CFS
for such periods, are correct and complete, and are consistent with the books
and records of CFS;
provided,
however,
that
the Interim Financial Statements are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and lack footnotes
and other presentation items.
Since
the Balance Sheet Date, CFS has not effected any change in any method of
accounting or accounting practice, except for any such change required because
of a concurrent change in GAAP.
4.9 Subsequent
Events.
Except
as
set forth in Schedule
4.9,
since
the Balance Sheet Date, CFS has operated in the Ordinary Course of Business
and,
as of
the date hereof,
there
have been no events, series of events or the lack of occurrence thereof which,
singularly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect on CFS. Without limiting the foregoing, except as set forth
on
Schedule
4.9,
since
that date, none of the following has occurred:
15
(a) CFS
has
not sold, leased, transferred, or assigned any assets other than for a fair
consideration in the Ordinary Course of Business and sales of assets have not
exceeded $250,000 singularly or $500,000 in the aggregate.
(b) CFS
has
not entered into any Contract (or series of related Contracts) either involving
more than $250,000 or outside the Ordinary Course of Business.
(c) No
Encumbrance has been imposed upon any assets of CFS.
(d) CFS
has
made any capital expenditure (or series of related capital expenditures) outside
the Ordinary Course of Business.
(e) CFS
has
not made any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person outside the Ordinary Course of
Business.
(f) CFS
has
not issued any note, bond, or other debt security or created, incurred, assumed,
or guaranteed any Liability for borrowed money or capitalized lease Contract
either involving more than $100,000 individually or $250,000 in the
aggregate.
(g) CFS
has
not delayed or postponed the payment of accounts payable or other Liabilities
either involving more than $500,000 (individually or in the aggregate) or
outside the Ordinary Course of Business.
(h) CFS
has
not canceled, compromised, waived, or released any Action (or series of related
Actions) either involving more than $250,000 or outside the Ordinary Course
of
Business.
(i) CFS
has
not granted any Contracts or any rights under or with respect to any
Intellectual Property.
(j) There
has
been no change made or authorized to be made to the Organizational Documents
of
CFS.
(k) CFS
has
not issued, sold, or otherwise disposed of any of its Equity
Interests.
(l) CFS
has
not declared, set aside, or paid any dividend or made any distribution with
respect to its Equity Interests (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its Equity Interests.
(m) CFS
has
not experienced any damage, destruction, or loss involving more than $100,000
(whether or not covered by insurance) to its properties.
16
(n) CFS
has
not made any loan to, or entered into any other transaction with, any of its
directors, officers, or employees.
(o) CFS
has
not entered into any employment, collective bargaining, or similar Contract
or
modified the terms of any existing such Contract.
(p) CFS
has
not committed to pay any bonus or granted any increase in the base compensation
outside of the Ordinary Course of Business to any of its directors, officers,
or
other employees.
(q) CFS
has
not adopted, amended, modified, or terminated any bonus, profit-sharing,
incentive, severance, or similar Contract for the benefit of any of its
directors, officers, or employees (or taken any such action with respect to
any
other Employee Benefit Plan)
outside
the Ordinary Course of Business.
(r) CFS
has
not made any other change in employment terms for (i) any officer or employee
thereof that is an Affiliate of Greinke, or (ii) outside of the Ordinary Course
of Business, any of its other directors, officers, or employees.
(s) CFS
has
not made or pledged to make any charitable or other capital contribution either
involving more than $100,000 (individually or in the aggregate) or outside
the
Ordinary Course of Business.
(t) There
has
not been any other occurrence, event, incident, action, failure to act, or
transaction with respect to CFS either involving more than $250,000
(individually or in the aggregate) and outside the Ordinary Course of Business;
and CFS has not committed to any of the foregoing.
4.10 Liabilities.
CFS
does
not have any Liability (and
there is no Basis for any present or future Action or Order against it giving
rise to any Liability),
except
for (a) Liabilities quantified on the face of the Interim Financial Statements
(rather than in any notes thereto) and not heretofore paid or discharged, and
(b) Liabilities that have arisen after the Balance Sheet Date in the Ordinary
Course of Business which, individually or in the aggregate, are not material
and
are of the same character and nature as the Liabilities quantified on the face
of the Interim Financial Statements (rather than any notes thereto) and
none
of
which results from or relates to any Breach of Contract, Breach of warranty,
tort, infringement, or Breach of Law, or arose out of any Action or
Order.
4.11 Legal
Compliance.
CFS
has
complied with all applicable Laws, and no Action is pending or Threatened (and
there is no Basis therefor) against it alleging any failure to so comply. No
material expenditures are, or based on applicable Law, will be required of
CFS
for it and its business and operations to remain in compliance with applicable
Law.
17
4.12 Tax
Matters.
CFS
is
not subject to any Liabilities for Taxes, including Taxes relating to prior
periods, other than those set forth or adequately reserved against in the
Interim Financial Statements or those incurred since the Balance Sheet Date
in
the Ordinary Course of Business. CFS has duly filed when due all Tax reports
and
returns in connection with and in respect of its business, assets and employees,
and has timely paid and discharged all amounts shown as due thereon. CFS has
made available to UFEN accurate and complete copies of all of its Tax reports
and returns for all periods, except those periods for which returns are not
yet
due. CFS has not received any notice of any Tax deficiency outstanding, proposed
or assessed against or allocable to it, and has not executed any waiver of
any
statute of limitations on the assessment or collection of any Tax or executed
or
filed with any Governmental Body any Contract now in effect extending the period
for assessment or collection of any Taxes against it. There are no Encumbrances
for Taxes upon, pending against or Threatened against, any asset of CFS. CFS
is
not subject to any Tax allocation or sharing Contract. CFS (i) has not been
a
member of an Affiliated Group filing a consolidated federal income Tax Return
or
(ii) does not have any Liability for the Taxes of any Person under Treas. Reg.
Section 1.1502-6 or similar Law, as a transferee or successor, by Contract,
or
otherwise.
4.13 Title
to and Condition of Assets.
CFS
has
good, marketable,
and
indefeasible title to, or a valid leasehold interest in, all buildings,
machinery, equipment, and other tangible assets (a) located on their premises,
shown on the Interim Balance
Sheet, or acquired after the Balance Sheet Date and (b) necessary for the
conduct of its business as currently conducted and
as
currently proposed to be conducted,
in each
case free and clear of all Encumbrances, except for properties and assets
disposed of in the Ordinary Course of Business since the Balance Sheet Date.
Each such tangible asset is free from defects (patent and latent), has been
maintained in accordance with normal industry practice, is in good operating
condition (subject to normal wear and tear), and is suitable for the purposes
for which it is currently used and
currently is proposed to be used.
4.14 Real
Property.
(a) CFS
does
not own any real property.
(b) Schedule
4.14(b)
lists
and describes briefly all real property leased or subleased to CFS. Greinke
has
delivered to UFEN correct and complete copies of the lease and sublease
Contracts (as amended to date) listed in Schedule
4.14(b).
With
respect to each lease and sublease Contract required to be listed in
Schedule
4.14(b):
(i) the
Contract is Enforceable;
(ii) except
as
set forth on Schedule
4.14(b),
the
Contract will continue to be Enforceable on identical terms following the
consummation of the Transactions;
18
(iii) CFS
(and
to
the
Greinke Parties’ Knowledge, no
counter-party) is in Breach of such Contract, and no event has occurred which,
with notice or lapse of time, would constitute a Breach by
CFS
thereunder;
(iv) no
party
to the Contract has repudiated any provision thereof;
(v) there
are
no Actions, Orders, or forbearances in effect as to the Contract;
(vi) with
respect to each sublease Contract, the representations and warranties set forth
in Sections
4.14(b)(i) - (v)
are true
and correct with respect to the underlying lease Contract;
(vii) CFS
has
not granted or suffered to exist any Encumbrance in the leasehold or
subleasehold Contract;
(viii) all
facilities leased or subleased under the Contract have received all Permits
required in connection with the operation thereof and have been operated and
maintained in accordance with applicable Laws;
(ix) all
facilities leased or subleased under the Contract are supplied with utilities
and other services necessary for the operation of said facilities;
and
(x) the
owner
of the facility leased or subleased under the Contract has good, marketable,
and
indefeasible title to the parcel of real property, free and clear of any
Security Interest, except for installments of special easements not yet
delinquent and recorded easements, covenants, and other restrictions which
do
not impair the current use, occupancy, or value, or the marketability of title,
of the property subject thereto.
4.15 Intellectual
Property.
Except
as
set forth in Schedule
4.15,
CFS
owns, or possesses adequate rights to use, all Intellectual Property used in
its
business as currently, or as currently proposed to be, conducted. No Consent
of
any Person is required for the interest of CFS in such Intellectual Property
to
continue to be Enforceable by CFS following the Transactions. The use of such
Intellectual Property of CFS in its business as currently conducted (and the
operation of its business) does not and the use of such Intellectual Property
by
CFS and its Affiliates after Closing will not, infringe upon any rights any
other Person owns or holds.
4.16 Inventory.
The
inventory of CFS, whether reflected on the Financial Statements or not, consists
of raw materials and supplies, manufactured and processed parts, goods in
process, and finished goods, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and, except as has been
written down on the face of the Interim Balance
Sheet (rather than the notes thereto), none of which is slow-moving, obsolete,
damaged, or defective. Any inventory that has been written down has either
been
written off or written down to its net realizable value. There has been no
change in inventory valuation standards or methods with respect to the inventory
in the prior three years. The quantities of any kind of inventory are reasonable
in the current (and the currently foreseeable) circumstances of CFS. CFS does
not hold any items of inventory on consignment from other Persons and no other
Person holds any items of inventory on consignment from CFS.
19
4.17 Contracts.
Except
as
otherwise disclosed in Schedules
4.14, 4.15, 4.20, and 4.25,
Schedule
4.17
lists
the following Contracts to which CFS is a party:
(a) Any
Contract (or group of related Contracts) for the lease of personal property
to
or from any Person providing for lease payments in excess of $250,000 per
annum.
(b) Any
Contract (or group of related Contracts) for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property, or
for
the furnishing or receipt of services, the performance of which will extend
over
a period of more than one year, result in a material loss
to
CFS, or involve consideration in excess of $250,000.
(c) Any
Contract concerning a limited liability company, partnership, joint venture
or
similar arrangement.
(d) Any
Contract (or group of related Contracts) under which it has created, incurred,
assumed, or guaranteed any Liability for borrowed money or any capitalized
lease
in excess of $250,000, or under which it has imposed or suffered to exist an
Encumbrance on any of its assets.
(e) Any
Contract concerning noncompetition.
(f) Any
Contract with Greinke or any Affiliates of Greinke other than CFS.
(g) Any
profit sharing, stock option, stock purchase, stock appreciation, deferred
compensation, severance, or other similar Contract for the benefit of its
current or former directors, officers, and employees.
(h) Any
collective bargaining Contract.
(i) Any
Contract for the employment of any individual on a full-time, part-time,
consulting, or other basis providing annual compensation in excess of $100,000
or providing severance benefits.
(j) Any
Contract under which it has advanced or loaned any amount to any of its
directors or officers or Greinke or Affiliate of Greinke or, outside the
Ordinary Course of Business, to its employees that are not Greinke or Affiliates
of Greinke.
20
(k) Any
other
Contract (or group of related Contracts) the performance of which involves
receipt or payment of consideration in excess of $250,000.
Greinke
has delivered to UFEN a correct and complete copy of each written Contract
(as
amended to date) listed in Schedule
4.17
and a
written summary setting forth the terms and conditions of each oral Contract
referred to in Schedule
4.17.
With
respect to each such Contract:
(i) the
Contract is Enforceable;
(ii) the
Contract will continue to be Enforceable on identical terms following the
consummation of the Transactions;
(iii) CFS
(and
to
the
Greinke Parties’ Knowledge, no
counter-party) is not in Breach of such Contract, and no event has occurred
that, with notice or lapse of time, would constitute a Breach under the
Contract; and
(iv) no
party
to the Contract has repudiated any provision of the Contract.
4.18 Receivables.
All
of
the Receivables of CFS are Enforceable, represent bona fide transactions, and
arose in the Ordinary Course of Business of CFS, and are reflected properly
in
its books and records. All of the Receivables of CFS are good and collectible
receivables, except as set forth on Schedule
4.18
are
current, and will be collected in accordance with past practice and the terms
of
such Receivables (and in any event within six months following the Closing
Date), without set off or counterclaims,
subject
only to the reserve for bad debts set forth on the face of the Interim Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the Ordinary Course of Business
of
CFS, consistent with GAAP.
No
customer or supplier of CFS has any Basis to believe that it has or would be
entitled to any payment terms other than terms in the Ordinary Course of
Business, including any prior course of conduct.
4.19 Powers
of Attorney.
Except
as
set forth on Schedule
4.19,
there
are no outstanding powers of attorney executed on behalf of CFS.
4.20 Insurance.
Schedule
4.20
(i)
lists all insurance policies currently carried by CFS, and (ii) lists all
insurance loss runs or workers’ compensation claims received for the past three
policy years, copies of which insurance policies currently in effect have been
provided to UFEN. Such insurance policies evidence all of the insurance that
to
the Knowledge of CFS is required to carry pursuant to their Contracts and Law.
Such insurance policies are currently in full force and effect. Within the
last
five (5) years, no insurance that CFS has ever carried during that period has
been canceled nor has any such cancellation been Threatened. CFS has never
been
denied coverage nor has any such denial been Threatened.
21
4.21 Litigation.
Schedule
4.21
sets
forth each instance in which CFS (a) is subject to any outstanding Order or
(b)
is a party, the subject of, or is Threatened to be made a party to or the
subject of any Action. No Action required to be set forth in Schedule
4.21
questions the Enforceability of this Agreement or the Transactions, or could
result in any Material
Adverse Change
with
respect to CFS, and the Greinke Parties have no Basis to believe that any such
Action may be brought or Threatened against CFS. Notwithstanding
the foregoing, no representation or warranty is made in this Section
4.21
with
respect to Environmental, Health, and Safety Requirements, which are covered
exclusively in Section
4.26.
4.22 Intentionally
omitted.
4.23 Product
Liability.
CFS
does
not have any Liability (and there is no Basis for any present or future Action
against any of them giving rise to any Liability) arising out of any injury
to
individuals or property as a result of the ownership, possession, or use of
any
product designed, manufactured, sold, leased, or delivered by CFS.
4.24 Labor;
Employees.
To
each
Greinke Party’s Knowledge, no executive, key employee, or group of employees has
any plans to terminate employment with CFS. CFS is not a party to or bound
by
any collective bargaining Contract, nor has CFS experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. CFS has not committed any unfair labor practice (as determined under
any Law). No Greinke Party has any Knowledge of any organizational effort
currently being made or Threatened by or on behalf of any labor union with
respect to the employees of CFS.
4.25 Employee
Benefits.
Schedule
4.25
lists
each non-qualified deferred compensation plan, qualified defined contribution
retirement plan, qualified defined benefit retirement plan or other material
fringe benefit plan or program that CFS maintains or to which CFS contributes.
With respect to any employee benefit plan, within the meaning of Section 3(3)
of
ERISA, which is subject to ERISA and which is sponsored, maintained or
contributed to, or has been sponsored, maintained or contributed to, within
six
years prior to the Closing Date, by CFS or any ERISA Affiliate, (a) no
withdrawal Liability, within the meaning of Section 4201 of ERISA, has been
incurred, which withdrawal Liability has not been satisfied, (b) no Liability
to
the PBGC has been incurred by CFS or any ERISA Affiliate, which Liability has
not been satisfied, (c) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or Section 412 of the Code
has been incurred, and (d) all contributions (including installments) to such
plan required by Section 302 of ERISA and Section 412 of the Code have been
timely made. With respect to any kind of employee benefit plan, such plan has
been funded and maintained in compliance with all Laws applicable thereto and
the requirements of such plan’s governing documents.
22
4.26 Environmental,
Health, and Safety Matters.
(a) Except
as
set forth in Schedule
4.26(a)
which
lists sites with on-going remediation activities, CFS has complied and is in
compliance with all Environmental, Health, and Safety Requirements.
(b) CFS
has
obtained, has complied with, and is in compliance with all Permits that are
required pursuant to Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business. Except as set
forth in Schedule
4.26(b),
such
Permits are in full force and effect, free from Breach, and the Transactions
will not adversely affect them.
(c) Except
as
set forth in Schedule
4.26(a) or (c),
no
Greinke Party has received any written or to the Knowledge of the Greinke
Parties oral notice, report or other information regarding any actual or alleged
violation of Environmental, Health, and Safety Requirements or any Liabilities,
including any investigatory, remedial or corrective Liabilities, relating to
CFS
or its facilities arising under Environmental, Health, and Safety Requirements
within the past five (5) years.
(d) CFS
has
not treated, recycled, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or Released any substance, including any
Hazardous Materials, or owned or operated any property or facility (and no
such
property or facility is contaminated by any such substance) in a manner that
has
given or would give rise to any Damages, including any Damages for response
costs, corrective action costs, personal injury, property damage or natural
resources damages, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Solid Waste Disposal
Act, as amended, or any other Environmental, Health, and Safety Requirements.
For this section “Hazardous
Materials”
means
any substance, pollutant, contaminant, material, or waste, or combination
thereof, whether solid, liquid, or gaseous in nature, subject to regulation,
investigation, control, or remediation under any Environmental, Health, and
Safety Requirement, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Solid Waste Disposal Act, and the
Resource Conservation and Recovery Act.
(e) The
Transactions as they relate to CFS will not result in any Liabilities for site
investigation or cleanup, or require the Consent of any Person, pursuant to
any
Environmental, Health, and Safety Requirements, including any so-called
“transaction-triggered”
or
“responsible
property transfer”
requirements.
(f) Except
as
set forth on Schedule
4.26(f),
CFS has
not, either expressly or by operation of Law, assumed or undertaken any
Liability, including any obligation for corrective or remedial action, of any
other Person relating to Environmental, Health, and Safety
Requirements.
23
(g) No
facts,
events or conditions relating to the past or present facilities, properties
or
operations of CFS will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to any Damages or
any
other Liabilities under Environmental, Health, and Safety
Requirements.
4.27 Customers
and Suppliers.
Schedule
4.27
lists
the (a) ten (10) largest customers of CFS in terms of sales during the 12-month
period ended as of the Balance Sheet Date and states the approximate total
sales
by CFS to each such customer during such periods, respectively, and (b)
ten (10)
largest suppliers during the 12-month period ended as of the Balance Sheet
Date
of CFS. Except as set forth in Schedule
4.27,
no
Greinke Party has received notice of termination or an intention to terminate
the relationship with CFS from any customer or supplier.
4.28 Permits.
CFS
possesses all Permits required to be obtained for its business and operations.
Except as set forth in Schedule
4.28,
with
respect to each such Permit:
(a) it
is
valid, subsisting and in full force and effect;
(b) there
are
no violations of such Permit that would result in a termination of such
Permit;
(c) CFS
has
not received written
notice
that such Permit will not be renewed; and
(d) the
Transactions will not adversely affect the validity of such Permit or cause
a
cancellation of or otherwise adversely affect such Permit.
Notwithstanding
the foregoing, no representation or warranty is made in this Section
4.28
with
respect to Environmental, Health, and Safety Requirements, which are covered
exclusively in Section
4.26.
4.29 Foreign
Corrupt Practices Act Compliance.
No
Greinke Party has, directly or indirectly, in connection with the business
of
CFS, made or agreed to make any payment to any Person connected with or related
to any Governmental Body, except payments or contributions required or allowed
by applicable Law. The internal accounting controls and procedures of CFS are
sufficient to cause CFS to comply with the Foreign Corrupt Practices
Act.
4.30 Certain
Business Relationships with CFS.
Except
as
set forth on Schedule
4.30,
none of
Greinke or his Affiliates have been involved in any business arrangement or
relationship with CFS within
the past twelve (12) months,
and
none of Greinke or his Affiliates owns any asset that is used in the business
of
CFS.
24
4.31 Accuracy
of Information Furnished.
No
representation, statement, or information contained in this Agreement (including
the Schedules) contains or will contain any untrue statement of a material
fact
or omits or will omit any material fact necessary to make the information
contained therein not misleading. The Greinke Parties have provided UFEN
with
correct and complete copies of all documents listed or described in the
Schedules. Notwithstanding
the foregoing, (a) UFEN may only rely on the most recent version of any
information the Greinke Parties furnish to UFEN that supersedes previous
information provided to UFEN and (b) subject to the next sentence, no Greinke
Party will be Liable with respect to financial projections or estimates of
the
future performance projections or estimates of future performance of
CFS.
All
projections and estimates that have been provided to UFEN, at the time of
creation, were reasonably made in good faith based on reasonable assumptions,
given the circumstances at the time such assumptions were made.
4.32 Representations
Complete.
Except
as
and to the extent set forth in this Agreement, no Greinke Party makes any
representations or warranties whatsoever (INCLUDING ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY
TO
MODELS OR SAMPLES OF MATERIALS) to UFEN and each of them hereby disclaims
all
Liability and responsibility for any representation, warranty, statement,
or
information not included herein that was made, communicated, or furnished
(orally or in writing) to UFEN or its representatives (including any opinion,
information, projection, or advice that may have been or may be provided
to UFEN
by any director, officer, employee, agent, consultant, or representative
of any
Greinke Party).
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES
CONCERNING
UFEN
UFEN
represents and warrants to Greinke Parties that the statements contained
in this
ARTICLE
5
are
correct and complete as of the date of this Agreement and will be correct
and
complete as of the Closing Date (as though made then and, except as expressly
provided in a representation or warranty, as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE
5),
except
as set forth in the Schedules UFEN has delivered to Greinke Parties on or
prior
to the Closing Date.
5.1 Entity
Status.
Each
of
UFEN and its Subsidiaries (each a “UFEN
Entity”
and
collectively, the “UFEN
Entities”)
is an
entity duly created, formed or organized, validly existing, and in good standing
under the Laws of the jurisdiction of its creation, formation, or organization.
Each UFEN Entity is duly authorized to conduct its business and is in good
standing under the laws of each jurisdiction where such qualification is
required. Each UFEN Entity has the requisite power and authority necessary
to
own or lease its properties and to carry on its businesses as currently
conducted and
any
businesses in which it currently proposes to engage.
Schedule
5.1
lists
each UFEN Entity’s directors and officers. UFEN has delivered to Greinke correct
and complete copies of each UFEN Entity’s Organizational Documents, as amended
to date. No UFEN Entity is in Breach of any provision of its Organizational
Documents. There is no pending or Threatened Action (or Basis therefor) for
the
dissolution, liquidation, insolvency, or rehabilitation of any UFEN
Entity.
25
5.2 Power
and Authority; Enforceability.
Except
as
set forth in Schedule
5.2,
UFEN
has the corporate power and authority necessary to execute and deliver each
Transaction Document to which it is a party and to perform and consummate
the
Transactions. Except as set forth in Schedule
5.2,
UFEN
has taken all action necessary to authorize the execution and delivery of
each
Transaction Document to which it is a party, the performance of UFEN’s
obligations thereunder, and the consummation of the Transactions. Except
as set
forth in Schedule
5.2,
each
Transaction Document to which UFEN is party has been duly authorized, executed,
and delivered by, and is Enforceable against, UFEN.
5.3 No
Violation.
Except
as
listed on Schedule
5.3,
the
execution and the delivery of the applicable Transaction Documents by UFEN
and
the performance of its obligations hereunder and thereunder, and consummation
of
the Transactions by UFEN will not (a) Breach any Law or Order to which a
UFEN
Entity is subject or any provision of the Organizational Documents of any
UFEN
Entity; (b) Breach any Contract, Order, or Permit to which any UFEN Entity
is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Encumbrance upon any of its assets); (c)
require
any Consent, except
any notifications or filings to relevant state or federal regulatory
agencies;
(d)
trigger any rights of first refusal, preferential purchase, or similar rights;
or (e) cause the recognition of gain or loss for Tax purposes with respect
to
any UFEN Entity or subject any UFEN Entity or its assets to any
Tax.
5.4 Brokers’
Fees.
No
UFEN
Entity has any Liability to pay any compensation to any broker, finder, or
agent
with respect to the Transactions for which Greinke could become directly
or
indirectly Liable.
5.5 Capitalization.
UFEN’s
authorized Equity Interests consist of (a) 100,000,000 shares of Common Stock,
of which 14,794,021 shares are issued and outstanding (of which no shares
are
held in treasury), and (b) 5,000,000 shares of Preferred Stock, of which
12,600
shares are issued and outstanding (of which no shares are held in treasury).
All
of the issued and outstanding Stock: (a) has been duly authorized and is
validly
issued, fully paid, and nonassessable, (b) was issued in compliance with
all
applicable state and federal securities Laws, and (c) was not issued in Breach
of any Commitments. Schedule
5.5
lists
(x) all Commitments with respect to any Equity Interest of UFEN, (y) the
exercise price of such Commitments, and (z) the termination date of such
Commitments.
No
additional Commitments will arise in connection with the Transactions. There
are
no Contracts with respect to the voting or transfer of UFEN’s Equity Interests.
Except with respect to its outstanding Preferred Stock, UFEN is not obligated
to
redeem or otherwise acquire any of its outstanding Equity
Interests.
26
5.6 Records.
The
copies of the UFEN Entities’ Organizational Documents that were provided to
Greinke are accurate and complete and reflect all amendments made through
the
date hereof. Except as set forth in Schedule
5.6,
the
UFEN Entities’ minute books and other records made available to Greinke for
review were correct and complete as of the date of such review, no further
entries have been made through the date of this Agreement, such minute books
and
records contain the true signatures of the persons purporting to have signed
them, and such minute books and records contain an accurate record of all
actions of the stockholders, directors, members, managers, or other such
representatives of the UFEN Entities taken by written consent, at a meeting,
or
otherwise since formation.
5.7 Subsidiaries.
Set
forth
on Schedule
5.7
for each
Subsidiary of UFEN is (a) its name and jurisdiction of creation, formation,
or
organization, (b) if such Subsidiary is a corporation, (i) the number of
authorized Equity Interests of each class of its Equity Interests, (ii) the
number of issued and outstanding Equity Interests of each class of its Equity
Interests, the names of the holders thereof, and the number of Equity Interests
held by each such holder, and (iii) the number of Equity Interests held in
treasury, and (c) if such Subsidiary is not a corporation, (i) the class
of
Equity Interests created under such Subsidiary’s Organizational Documents and
(ii) the holder(s) of such Equity Interests. All of the issued and outstanding
Equity Interests of each Subsidiary of UFEN (A) that is a corporation have
been
duly authorized and are validly issued, fully paid, and nonassessable and
(B)
that is not a corporation have (i) been duly created pursuant to the Laws
of the
jurisdiction of such Subsidiary, (ii) have been issued and paid for in
accordance with the Organizational Documents governing such Subsidiary, and
(iii) are fully paid and non-assessable and require no further capital
contribution, loans, or credit support. The UFEN Entities hold of record
and own
beneficially all of the outstanding Equity Interests of the Subsidiaries
of
UFEN, free and clear of any Encumbrances (other than restrictions under the
Securities Act and state securities Laws). No Commitments exist or are
authorized with respect to any Subsidiaries of UFEN or their Equity Interests
and no such Commitments will arise in connection with the Transactions. No
Subsidiary of UFEN is obligated to redeem or otherwise acquire any of its
Equity
Interests.
5.8 UFEN’s
Securities Filings and Financial Statements.
UFEN
has
furnished or made available to Greinke true and complete copies of all reports
or registration statements it has filed with the Securities and Exchange
Commission (the “SEC”)
under
the Securities Act and the Exchange Act, for all periods subsequent to December
31, 2005, all in the form so filed (collectively the “UFEN
SEC Documents”).
Except
as set forth in Schedule
5.8,
as of
their respective filing dates, the UFEN SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as
applicable, and none of the UFEN SEC Documents filed under the Exchange Act
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected by a subsequently filed document with the
SEC.
Except as set forth in Schedule
5.8,
none of
the UFEN SEC Documents filed under the Securities Act contained an untrue
statement of material fact or omitted to state a material fact required to
be
stated therein or necessary to make the statements therein not misleading
at the
time such UFEN SEC Documents became effective under the Securities Act. Except
as set forth in Schedule
5.8,
UFEN’s
financial statements, including the notes thereto, included in the UFEN SEC
Documents (the “UFEN
Financial Statements”)
comply
as to form in all material respects with applicable accounting requirements
and
with the published rules and regulations of the SEC with respect thereto,
have
been prepared in accordance with GAAP consistently applied (except as may
be
indicated in the notes thereto) and present fairly UFEN’s consolidated financial
position at the dates thereof and of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
audit adjustments). Since the date of the most recent UFEN SEC Document,
UFEN
has not effected any change in any method of accounting or accounting practice,
except for any such change required because of a concurrent change in
GAAP.
27
5.9 Subsequent
Events.
Except
as
set forth in Schedule
5.9,
since
the date of the most recent UFEN SEC Document the UFEN Entities have operated
in
the Ordinary Course of Business and,
as of
the date hereof,
there
have been no events, series of events or the lack of occurrence thereof which,
singularly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect on any UFEN Entity. Without limiting the foregoing, since
that
date, none of the following has occurred:
(a) No
UFEN
Entity has sold, leased, transferred, or assigned any assets other than for
a
fair consideration in the Ordinary Course of Business and sales of assets
have
not exceeded $250,000 singularly or $500,000 in the aggregate.
(b) No
UFEN
Entity has entered into any Contract (or series of related Contracts) either
involving more than $250,000 or outside the Ordinary Course of
Business.
(c) No
Encumbrance has been imposed upon any assets of any UFEN Entity.
(d) No
UFEN
Entity has made any capital expenditure (or series of related capital
expenditures) outside the Ordinary Course of Business.
(e) No
UFEN
Entity has made any capital investment in, any loan to, or any acquisition
of
the securities or assets of, any other Person outside the Ordinary Course
of
Business.
(f) No
UFEN
Entity has issued any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any Liability for borrowed money or capitalized lease
Contract either involving more than $100,000 individually or $250,000 in
the
aggregate.
(g) No
UFEN
Entity has delayed or postponed the payment of accounts payable or other
Liabilities either involving more than $500,000 (individually or in the
aggregate) or outside the Ordinary Course of Business.
28
(h) No
UFEN
Entity has canceled, compromised, waived, or released any Action (or series
of
related Actions) either involving more than $250,000 or outside the Ordinary
Course of Business.
(i) No
UFEN
Entity has granted any Contracts or any rights under or with respect to any
Intellectual Property.
(j) There
has
been no change made or authorized to be made to the Organizational Documents
of
any UFEN Entity.
(k) No
UFEN
Entity has issued, sold, or otherwise disposed of any of its Equity
Interests.
(l) No
UFEN
Entity has declared, set aside, or paid any dividend or made any distribution
with respect to its Equity Interests (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its Equity Interests (other than
dividends and other transactions solely among the UFEN Entities).
(m) No
UFEN
Entity has experienced any damage, destruction, or loss involving more than
$100,000 (whether or not covered by insurance) to its properties.
(n) No
UFEN
Entity has made any loan to, or entered into any other transaction with,
any of
its directors, officers, or employees.
(o) No
UFEN
Entity has entered into any employment, collective bargaining, or similar
Contract or modified the terms of any existing such Contract.
(p) No
UFEN
Entity has committed to pay any bonus or granted any increase in the base
compensation (i) of any director or officer, or (ii) outside of the Ordinary
Course of Business, of any of its other employees.
(q) No
UFEN
Entity has adopted, amended, modified, or terminated any bonus, profit-sharing,
incentive, severance, or similar Contract for the benefit of any of its
directors, officers, or employees (or taken any such action with respect
to any
other Employee Benefit Plan)
outside
of the Ordinary Course of Business.
(r) No
UFEN
Entity has made any other change in employment terms for any of its other
directors, officers, or employees outside of the Ordinary Course of
Business.
(s) No
UFEN
Entity has made or pledged to make any charitable or other capital contribution
either involving more than $100,000 (individually or in the aggregate) or
outside the Ordinary Course of Business.
(t) There
has
not been any other occurrence, event, incident, action, failure to act, or
transaction with respect to the UFEN Entities either involving more than
$250,000 (individually or in the aggregate) and outside the Ordinary Course
of
Business; and no UFEN Entity has committed to any of the foregoing.
29
5.10 Liabilities.
No
UFEN
Entity has any Liability (and,
to
the UFEN’s Knowledge, there is no Basis for any present or future Action or
Order against any of them giving rise to any Liability),
except
for (a) Liabilities quantified on the face of the UFEN Balance Sheet (rather
than in any notes thereto) and not heretofore paid or discharged, and (b)
Liabilities that have arisen after the UFEN Balance Sheet Date in the Ordinary
Course of Business which, individually or in the aggregate, are not material
and
are of the same character and nature as the Liabilities quantified on the
face
of the UFEN Balance Sheet (rather than any notes thereto) and none
of
which results from or relates to any Breach of Contract, Breach of warranty,
tort, infringement, or Breach of Law, or arose out of any Action or
Order.
5.11 Legal
Compliance.
Each
UFEN
Entity has complied with all applicable Laws, and no Action is pending or
Threatened (and there is no Basis therefor) against it alleging any failure
to
so comply. No material expenditures are, or based on applicable Law, will
be
required of any UFEN Entity for it and its business and operations to remain
in
compliance with applicable Law.
5.12 Tax
Matters.
No
UFEN
Entity is subject to any Liabilities for Taxes, including Taxes relating
to
prior periods, other than those set forth or adequately reserved against
in the
UFEN Financial Statements or those incurred since the UFEN Balance Sheet
Date in
the Ordinary Course of Business. Each UFEN Entity has duly filed when due
all
Tax reports and returns in connection with and in respect of its business,
assets and employees, and has timely paid and discharged all amounts shown
as
due thereon. Each UFEN Entity has made available to Greinke accurate and
complete copies of all of its Tax reports and returns for all periods, except
those periods for which returns are not yet due. No UFEN Entity has received
any
notice of any Tax deficiency outstanding, proposed or assessed against or
allocable to it, and has not executed any waiver of any statute of limitations
on the assessment or collection of any Tax or executed or filed with any
Governmental Body any Contract now in effect extending the period for assessment
or collection of any Taxes against it. There are no Encumbrances for Taxes
upon,
pending against or Threatened against, any asset of any UFEN Entity. No UFEN
Entity is subject to any Tax allocation or sharing Contract. No UFEN Entity
(i)
has been a member of an Affiliated Group filing a consolidated federal income
Tax Return (other than a group the common parent of which was UFEN) or (ii)
has
any Liability for the Taxes of any Person (other than each UFEN Entity) under
Treas. Reg. Section 1.1502-6 or similar Law, as a transferee or successor,
by
Contract, or otherwise.
5.13 Title
to and Condition of Assets.
The
UFEN
Entities have good, marketable,
and
indefeasible title to, or a valid leasehold interest in, all buildings,
machinery, equipment, and other tangible assets (a) located on their premises,
shown on the UFEN Balance
Sheet, or acquired after the UFEN Balance Sheet Date and (b) necessary for
the
conduct of their business as currently conducted and
as
currently proposed to be conducted,
in each
case free and clear of all Encumbrances, except for properties and assets
disposed of in the Ordinary Course of Business since the UFEN Balance Sheet
Date. Each such tangible asset is free from defects (patent and latent),
has
been maintained in accordance with normal industry practice, is in good
operating condition (subject to normal wear and tear), and is suitable for
the
purposes for which it is currently used and
currently is proposed to be used.
30
5.14 Real
Property.
(a) Schedule
5.14(a)
lists
and describes briefly all real property each UFEN Entity owns. With respect
to
each parcel of owned real property required to be listed:
(i) the
identified owner has good,
marketable,
and
indefeasible fee simple title to the parcel of real property, free and clear
of
any Encumbrance except for special assessments not yet delinquent and recorded
easements or covenants which do not impair the current use, occupancy, value,
or
the marketability of title of the property subject thereto;
(ii) there
are
no pending or Threatened Actions (or any Basis therefor) relating to the
property or other matters affecting materially
and
adversely the current use, occupancy, or value thereof;
(iii) the
legal
description for the parcel contained in the deed thereof describes such parcel
fully and adequately, the buildings and improvements are located within the
boundary lines of the described parcels of land, are not in violation of
applicable setback requirements or zoning Laws (and no property or building
or
improvement thereon is subject to “permitted non-conforming use” or “permitted
non-conforming structure” classifications), and do not encroach on or violate
any easement or Encumbrance which may burden the land, and the land does
not
serve any adjoining property for any purpose inconsistent with the use of
the
land, and the property is not located within any flood plain or subject to
any
similar type restriction for which any Permits necessary to use it have not
been
obtained;
(iv) all
facilities have received all Permits required in connection with the ownership
or operation thereof and have been operated and maintained in accordance
with
applicable Laws;
(v) there
are
no Contracts granting to any Person the right of use or occupancy of any
portion
of the parcel of real property;
(vi) there
are
no Contracts to purchase the parcel of real property, or any portion thereof,
or
interest therein;
(vii) there
are
no Persons (other than the UFEN Entities) in possession of the parcel of
such
real property, other than tenants under any leases disclosed in Schedule
5.14(a)(vii);
31
(viii) all
facilities located on the parcel of real property are supplied with utilities
and other services necessary for the operation of such facilities, including
gas, electricity, water, telephone, sanitary sewer, and storm sewer, all
of
which services are adequate in accordance with all applicable Laws and are
provided via public roads or via permanent, irrevocable, appurtenant easements
benefiting the parcel of real property; and
(ix) each
parcel of real property abuts on and has direct vehicular access to a public
road, or has access to a public road via a permanent, irrevocable, appurtenant
easement benefiting the parcel of real property, and access to the property
is
provided by paved public right-of-way with adequate curb cuts available.
(b) Schedule
5.14(b)
lists
and describes briefly all real property leased or subleased to each UFEN
Entity.
UFEN has delivered to Greinke correct and complete copies of the lease and
sublease Contracts (as amended to date) listed in Schedule
5.14(b).
With
respect to each lease and sublease Contract required to be listed in
Schedule
5.14(b):
(i) the
Contract is Enforceable;
(ii) the
Contract will continue to be Enforceable on identical terms following the
consummation of the Transactions;
(iii) no
UFEN
Entity (and to
UFEN’s
Knowledge, no
counter-party) is in Breach of such Contract, and no event has occurred which,
with notice or lapse of time, would constitute a Breach by
an
UFEN Entity
thereunder;
(iv) no
party
to the Contract has repudiated any provision thereof;
(v) there
are
no Actions, Orders, or forbearances in effect as to the Contract;
(vi) with
respect to each sublease Contract, the representations and warranties set
forth
in Sections
5.14(b)(i) - (v)
are true
and correct with respect to the underlying lease Contract;
(vii) no
UFEN
Entity has granted or suffered to exist any Encumbrance in the leasehold
or
subleasehold Contract;
(viii) all
facilities leased or subleased under the Contract have received all Permits
required in connection with the operation thereof and have been operated
and
maintained in accordance with applicable Laws;
(ix) all
facilities leased or subleased under the Contract are supplied with utilities
and other services necessary for the operation of said facilities;
and
32
(x) the
owner
of the facility leased or subleased under the Contract has good, marketable,
and
indefeasible title to the parcel of real property, free and clear of any
Security Interest, except for installments of special easements not yet
delinquent and recorded easements, covenants, and other restrictions which
do
not impair the current use, occupancy, or value, or the marketability of
title,
of the property subject thereto.
5.15 Intellectual
Property.
Except
as
set forth in Schedule
5.15,
each
UFEN Entity owns, or possesses adequate rights to use, all Intellectual Property
used in its business as currently, or as currently proposed to be, conducted.
No
Consent of any Person is required for any UFEN Entity’s interest in such
Intellectual Property to continue to be Enforceable by the UFEN Entities
following the Transactions. Each UFEN Entity’s use of such Intellectual Property
in its business as currently conducted (and the operation of its business)
does
not and the use of such Intellectual Property by such UFEN Entity and its
Affiliates after Closing will not, infringe upon any rights any other Person
owns or holds.
5.16 Inventory.
The
UFEN
Entities’ inventory, whether reflected on the UFEN Financial Statements or not,
consists of raw materials and supplies, manufactured and processed parts,
goods
in process, and finished goods, all of which is merchantable and fit for
the
purpose for which it was procured or manufactured, and, except as has been
written down on the face of the UFEN Balance Sheet (rather than the notes
thereto), none of which is slow-moving, obsolete, damaged, or defective.
Any
inventory that has been written down has either been written off or written
down
to its net realizable value. There has been no change in inventory valuation
standards or methods with respect to the inventory in the prior three (3)
years.
The quantities of any kind of inventory are reasonable in the current (and
the
currently foreseeable) circumstances of the UFEN Entities. No UFEN Entity
holds
any items of inventory on consignment from other Persons and no other Person
holds any items of inventory on consignment from any UFEN Entity.
5.17 Contracts.
Except
as
otherwise disclosed in Schedules
5.14, 5.15, 5.20, and 5.25,
Schedule
5.17
lists
the following Contracts to which any UFEN Entity is a party:
(a) Any
Contract (or group of related Contracts) for the lease of personal property
to
or from any Person providing for lease payments in excess of $250,000 per
annum.
(b) Any
Contract (or group of related Contracts) for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property, or
for
the furnishing or receipt of services, the performance of which will extend
over
a period of more than one year, result in a material loss
to
each UFEN Entity, or involve consideration in excess of $250,000.
33
(c) Any
Contract concerning a limited liability company, partnership, joint venture
or
similar arrangement.
(d) Any
Contract (or group of related Contracts) under which it has created, incurred,
assumed, or guaranteed any Liability for borrowed money or any capitalized
lease
in excess of $250,000, or under which it has imposed or suffered to exist
an
Encumbrance on any of its assets.
(e) Any
Contract concerning noncompetition.
(f) Any
Contract with any Affiliates of UFEN other than the UFEN Entities.
(g) Any
profit sharing, stock option, stock purchase, stock appreciation, deferred
compensation, severance, or other similar Contract for the benefit of its
current or former directors, officers, and employees.
(h) Any
collective bargaining Contract.
(i) Any
Contract for the employment of any individual on a full-time, part-time,
consulting, or other basis providing annual compensation in excess of $100,000
or providing severance benefits.
(j) Any
Contract under which it has advanced or loaned any amount to any of its
directors or officers or, outside the Ordinary Course of Business, to its
employees.
(k) Any
other
Contract (or group of related Contracts) the performance of which involves
receipt or payment of consideration in excess of $250,000.
UFEN
has
delivered to Greinke a correct and complete copy of each written Contract
(as
amended to date) listed in Schedule
4.17
and a
written summary setting forth the terms and conditions of each oral Contract
referred to in Schedule
4.17.
With
respect to each such Contract:
(i) the
Contract is Enforceable;
(ii) the
Contract will continue to be Enforceable on identical terms following the
consummation of the Transactions;
(iii) no
UFEN
Entity (and to
UFEN’s
Knowledge, no
counter-party) is in Breach of such Contract, and no event has occurred that,
with notice or lapse of time, would constitute a Breach under the Contract;
and
(iv) no
party
to the Contract has repudiated any provision of the Contract.
34
5.18 Receivables.
All
of
the Receivables of the UFEN Entities are Enforceable, represent bona fide
transactions, and arose in the Ordinary Course of Business of the UFEN Entities,
and are reflected properly in their books and records. All of the Receivables
of
the UFEN Entities are good and collectible receivables, are current, and
will be
collected in accordance with past practice and the terms of such Receivables
(and in any event within six months following the Closing Date), without
set off
or counterclaims,
subject
only to the reserve for bad debts set forth on the face of the Interim Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the Ordinary Course of Business
of
the UFEN Entities, consistent with GAAP.
No
customer or supplier of any UFEN Entity has any Basis to believe that it
has or
would be entitled to any payment terms other than terms in the Ordinary Course
of Business, including any prior course of conduct.
5.19 Powers
of Attorney.
There
are
no outstanding powers of attorney executed on behalf of any UFEN
Entity.
5.20 Insurance.
Schedule
5.20
contains
accurate and complete, (a) lists all insurance policies currently carried
by the
UFEN Entities, and (b) lists of all insurance loss runs or workers’ compensation
claims received for the past three policy years, copies of which insurance
policies currently in effect have been provided to CFS. Such insurance policies
evidence all of the insurance that the UFEN Entities are required to carry
pursuant to their Contracts and Law. Such insurance policies are currently
in
full force and effect and will remain in full force and effect through their
current terms. No insurance that any UFEN Entity has ever carried has been
canceled nor has any such cancellation been Threatened. No UFEN Entity has
ever
been denied coverage nor has any such denial been Threatened.
5.21 Litigation.
Schedule
5.21
sets
forth each instance in which any UFEN Entity (a) is subject to any outstanding
Order or (b) is a party, the subject of, or is Threatened to be made a party
to
or the subject of any Action. No Action required to be set forth in Schedule
5.21
questions the Enforceability of this Agreement or the Transactions, or could
result in any Material
Adverse Change
with
respect to any UFEN Entity, and UFEN has no Basis to believe that any such
Action may be brought or Threatened against any UFEN Entity. Notwithstanding
the foregoing, no representation or warranty is made in this Section
5.21
with
respect to Environmental, Health, and Safety Requirements, which are covered
exclusively in Section
5.26.
5.22 Intentionally
omitted.
5.23 Product
Liability.
No
UFEN
Entity has any Liability (and there is no Basis for any present or future
Action
against any of them giving rise to any Liability) arising out of any injury
to
individuals or property as a result of the ownership, possession, or use
of any
product designed, manufactured, sold, leased, or delivered by any UFEN
Entity.
35
5.24 Labor;
Employees.
To
UFEN’s
Knowledge, no executive, key employee, or group of employees has any plans
to
terminate employment with any UFEN Entity. Except
as
set forth on Schedule
5.17,
no UFEN
Entity is a party to or bound by any collective bargaining Contract, nor
has any
of them experienced any strikes, grievances, claims of unfair labor practices,
or other collective bargaining disputes. No UFEN Entity has committed any
unfair
labor practice (as determined under any Law). UFEN does not have any Knowledge
of any organizational effort currently being made or Threatened by or on
behalf
of any labor union with respect to any UFEN Entity’s employees.
5.25 Employee
Benefits.
Schedule
5.25
lists
each non-qualified deferred compensation plan, qualified defined contribution
retirement plan, qualified defined benefit retirement plan or other material
fringe benefit plan or program that any UFEN Entity maintains or to which
any
UFEN Entity contributes. With respect to any employee benefit plan, within
the
meaning of Section 3(3) of ERISA, which is subject to ERISA and which is
sponsored, maintained or contributed to, or has been sponsored, maintained
or
contributed to, within six years prior to the Closing Date, by any UFEN Entity
or any ERISA Affiliate, (a) no withdrawal Liability, within the meaning of
Section 4201 of ERISA, has been incurred, which withdrawal Liability has
not
been satisfied, (b) no Liability to the PBGC has been incurred by any UFEN
Entity or any ERISA Affiliate, which Liability has not been satisfied, (c)
no
accumulated funding deficiency, whether or not waived, within the meaning
of
Section 302 of ERISA or Section 412 of the Code has been incurred, and (d)
all
contributions (including installments) to such plan required by Section 302
of
ERISA and Section 412 of the Code have been timely made. With respect to
any
kind of employee benefit plan, such plan has been funded and maintained in
compliance with all Laws applicable thereto and the requirements of such
plan’s
governing documents.
5.26 Environmental,
Health, and Safety Matters.
(a) Except
as
set forth in Schedule
5.26(a),
each
UFEN Entity has complied and is in compliance with all Environmental, Health,
and Safety Requirements.
(b) Each
UFEN
Entity has obtained, has complied with, and is in compliance with all Permits
that are required pursuant to Environmental, Health, and Safety Requirements
for
the occupation of its facilities and the operation of its business. Except
as
set forth in Schedule
5.26(b),
such
Permits are in full force and effect, free from Breach, and the Transactions
will not adversely affect them.
(c) Except
as
set forth in Schedule
5.26(c),
no UFEN
Entity has received any written or UFEN’s Knowledge oral notice, report or other
information regarding any actual or alleged violation of Environmental, Health,
and Safety Requirements or any Liabilities, including any investigatory,
remedial or corrective Liabilities, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements during the past
five (5) years.
36
(d) No
UFEN
Entity has treated, recycled, stored, disposed of, arranged for or permitted
the
disposal of, transported, handled, or Released any substance, including any
Hazardous Materials, or owned or operated any property or facility (and no
such
property or facility is contaminated by any such substance) in a manner that
has
given or would give rise to any Damages, including any Damages for response
costs, corrective action costs, personal injury, property damage or natural
resources damages, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Solid Waste Disposal
Act, as amended, or any other Environmental, Health, and Safety Requirements.
For this section “Hazardous
Materials”
means
any substance, pollutant, contaminant, material, or waste, or combination
thereof, whether solid, liquid, or gaseous in nature, subject to regulation,
investigation, control, or remediation under any Environmental, Health, and
Safety Requirement, including the Comprehensive Environmental Response,
Compensation and Liability Act, the Solid Waste Disposal Act, and the Resource
Conservation and Recovery Act.
(e) The
Transactions will not result in any Liabilities for site investigation or
cleanup, or require the Consent of any Person, pursuant to any Environmental,
Health, and Safety Requirements, including any so-called “transaction-triggered”
or “responsible property transfer” requirements.
(f) No
UFEN
Entity has, either expressly or by operation of Law, assumed or undertaken
any
Liability, including any obligation for corrective or remedial action, of
any
other Person relating to Environmental, Health, and Safety
Requirements.
(g) No
facts,
events or conditions relating to the past or present facilities, properties
or
operations of the UFEN Entities, nor any of their respective predecessors
or
Affiliates, will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to any Damages
or any
other Liabilities under Environmental, Health, and Safety
Requirements.
5.27 Customers
and Suppliers.
Schedule
5.27
lists
the UFEN Entities’ (a) ten (10) largest customers in terms of sales during
(i)
the year
ended December 31, 2006 and states the approximate total sales by the UFEN
Entities to each such customer during such period, respectively and (b)
ten (10)
largest suppliers during the year ended December 31, 2006. Except as set
forth
in Schedule
5.27,
no UFEN
Entity has received notice of termination or an intention to terminate the
relationship with the UFEN Entities from any customer or supplier.
5.28 Permits.
The
UFEN
Entities possess all Permits required to be obtained for their businesses
and
operations. Except as set forth in Schedule
5.28,
with
respect to each such Permit:
(a) it
is
valid, subsisting and in full force and effect;
37
(b) there
are
no violations of such Permit that would result in a termination of such
Permit;
(c) no
UFEN
Entity has received written
notice
that such Permit will not be renewed; and
(d) the
Transactions will not adversely affect the validity of such Permit or cause
a
cancellation of or otherwise adversely affect such Permit.
(e) Notwithstanding
the foregoing, no representation or warranty is made in this Section
5.28
with
respect to Environmental, Health, and Safety Requirements, which are covered
exclusively in Section
5.26.
5.29 Foreign
Corrupt Practices Act Compliance.
UFEN
has
not, directly or indirectly, in connection with the UFEN Entities’ business,
made or agreed to make any payment to any Person connected with or related
to
any Governmental Body, except payments or contributions required or allowed
by
applicable Law. The internal accounting controls and procedures of the UFEN
Entities are sufficient to cause the UFEN Entities to comply with the Foreign
Corrupt Practices Act.
5.30 Accuracy
of Information Furnished.
No
representation, statement, or information contained in this Agreement (including
the Schedules) contains or will contain any untrue statement of a material
fact
or omits or will omit any material fact necessary to make the information
contained therein not misleading. UFEN has
provided
Greinke with correct and complete copies of all documents listed or described
in
the Schedules. Notwithstanding
the foregoing, (a) Greinke may only rely on the most recent version of any
information UFEN furnishes to Greinke that supersedes previous information
provided to Greinke and (b) subject to the next sentence, UFEN will not be
Liable with respect to financial projections or estimates of the UFEN Entities’
future performance projections or estimates of the UFEN Entities future
performance. All projections and estimates that have been provided to Greinke,
at the time of creation, were reasonably made in good faith based on reasonable
assumptions, given the circumstances at the time such assumptions were
made.
5.31 CFS
Review.
UFEN:
(a) Has
such
knowledge and experience in financial and business matters that it is capable
of
evaluating the merits and risks of its investment in the Shares contemplated
hereby, and that UFEN is able to bear the economic risk of such investment
indefinitely.
(b) Has
(A)
had the opportunity to meet with representative officers and other
representatives of CFS to discuss its business, assets, liabilities, financial
condition, cash flow, and operations, and (B) received all materials, documents
and other information that it deems necessary or advisable to evaluate the
Shares and the Transactions.
38
(c) Has
made
its own independent examination, investigation, analysis and evaluation of
the
Shares, including its own estimate of the value of the Shares.
(d) Has
undertaken such due diligence (including a review of the assets, properties,
liabilities, books, records, and contracts of CFS) as it deems adequate,
including that described above.
Nothing
in this Section
5.31
will
preclude UFEN from relying on the representations, warranties, covenants,
and
agreements of the Greinke Parties herein or from pursuing their remedies
with
respect to a Breach thereof.
5.32 Representations
Complete.
Except
as
and to the extent set forth in this Agreement, UFEN makes no representations
or
warranties whatsoever (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO MODELS
OR
SAMPLES OF MATERIALS) to any Greinke Party and hereby disclaims all Liability
and responsibility for any representation, warranty, statement, or information
not included herein that was made, communicated, or furnished (orally or
in
writing) to any Greinke Party or its representatives (including any opinion,
information, projection, or advice that may have been or may be provided
to any
Greinke Party by any director, officer, employee, agent, consultant, or
representative of UFEN or Affiliate thereof).
ARTICLE
6
PRE-CLOSING
COVENANTS
The
Parties agree as follows with respect to the period between the execution
of
this Agreement and the earlier of the Closing and the Termination
Date:
6.1 General.
Each
Party will use its Best Efforts to take all actions and to do all things
necessary to consummate, make effective, and comply with all of the terms
of
this Agreement and the Transactions applicable to it (including satisfaction,
but not waiver, of the Closing conditions for which it is responsible or
otherwise in control, as set forth in ARTICLE
7).
6.2 Notices
and Consents.
(a) Each
Greinke Party will give any notices to third parties, and will use its Best
Efforts to obtain any third party Consents listed on Schedule
4.3,
or that
UFEN reasonably may
otherwise request in connection with the matters referred to in Sections
3.2 and 4.3.
Each
Greinke Party will give any notices to, make any filings with, and use its
Best
Efforts to obtain any Consents of Governmental Bodies, if any, required or
reasonably deemed advisable by UFEN pursuant to any applicable Law in connection
with the Transactions including in connection with the matters referred to
in
Sections
3.2 and 4.3.
39
(b) UFEN
will
give any notices to third parties, and will use its Best Efforts to obtain
any
third party Consents listed on Schedule
5.3,
that
CFS reasonably
may
otherwise request in connection with the matters referred to in Section
5.3.
UFEN
will give any notices to, make any filings with, and use its Best Efforts
to
obtain any Consents of Governmental Bodies, if any, required or reasonably
deemed advisable by CFS pursuant to any applicable Law in connection with
the
Transactions including in connection with the matters referred to in
Section
5.3.
(c) Each
Party will cooperate and use its Best Efforts to agree jointly on a method
to
overcome any objections by any Governmental Body to the Transactions. Without
limiting the foregoing, each Party (i) if requested by UFEN, will use its
Best
Efforts to obtain an early termination of the applicable waiting period,
and
(ii) and will make any further filings pursuant thereto that may be
necessary,
proper,
or advisable
in
connection therewith.
(d) Nothing
in this Section
6.2
will
require that (i) UFEN or its Affiliates divest, sell, or hold separately
any of
its assets or properties, or (ii) UFEN, its Affiliates, or CFS (the
determination with respect to which UFEN will make) take any actions that
could
affect the normal and regular operations of UFEN, its Affiliates, or CFS
after
the Closing.
6.3 Operation
of Business.
Neither
Party will engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business or engage in any practice,
take any action, or enter into any transaction of the sort described in
Section
4.9 or Section 5.9, as the case may be.
Subject
to compliance with applicable Law, from the date hereof until the earlier
to
occur of the Closing or the Termination Date, each Party will confer on a
regular and frequent basis with the other Parties to report on operational
matters and the general status of such Party’s ongoing business, operations and
finances and will promptly provide to the other Parties or its respective
representatives copies of all material
filings
it makes with any Governmental Body during such period.
6.4 Preservation
of Business.
Each
Party will keep its business and properties substantially intact, including
its
present operations, physical facilities, and working conditions, and
relationships with lessors, licensors, suppliers, customers, and
employees.
6.5 Full
Access.
(a) CFS
will
permit representatives of UFEN (including financing providers) to have full
access at
all
reasonable times, and in a manner so as not to interfere with the normal
business operations of CFS,
to all
premises, properties, personnel, books, records, Contracts and documents
pertaining to CFS and will furnish copies of all such books, records, Contracts
and documents and all financial, operating and other data, and other information
as UFEN may reasonably request; provided,
however,
that no
investigation pursuant to this Section
6.5(a)
will
affect any representations or warranties made herein or the conditions to
the
Parties’ obligations to consummate the Transactions.
40
(b) UFEN
will
permit representatives of Greinke
(including financing providers) to have full access at
all
reasonable times, and in a manner so as not to interfere with the normal
business operations of UFEN,
to all
premises, properties, personnel, books, records, Contracts and documents
pertaining to UFEN and will furnish copies of all such books, records, Contracts
and documents and all financial, operating and other data, and other information
as Greinke may reasonably request; provided,
however,
that no
investigation pursuant to this Section
6.5(b)
will
affect any representations or warranties made herein or the conditions to
the
Parties’ obligations to consummate the Transactions.
6.6 Notice
of Developments.
The
Greinke Parties will give prompt written notice to UFEN of any development
occurring after the date of this Agreement, which
causes or reasonably could be expected to cause a Breach of any of the
representations and warranties in ARTICLE
3
or
ARTICLE
4.
UFEN
will give prompt written notice to Greinke of any development occurring after
the date of this Agreement, which causes or reasonably could be expected
to
cause a Breach of any of the representations and warranties in
ARTICLE 5.
Except
as set forth in Section
9.2(a)
or
Section
9.3(a),
no
disclosure by any Party pursuant to this Section
6.6
will be
deemed to amend or supplement the Schedules or to prevent or cure any
misrepresentation or Breach of any representation, warranty, or
covenant.
6.7 Exclusivity.
No
Greinke Party will (a) solicit, initiate, or encourage the submission of
any
proposal or offer from any Person relating to the acquisition of any Equity
Interests or any substantial portion of the assets of CFS (including any
acquisition structured as a merger, consolidation, or share exchange) or
(b)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. Trust will not vote its Shares in favor of any such transaction.
The
Greinke Parties will notify UFEN immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing and the terms
of
any such proposal, offer, inquiry, or contact.
41
6.8 Confidentiality;
Publicity.
Except
as
may be required by Law, stock exchange or as otherwise expressly contemplated
herein, no Party or their respective Affiliates, employees, agents, and
representatives will disclose to any third party the existence of this
Agreement, the subject matter or terms hereof or any Confidential Information
concerning the business or affairs of any other Party that it may have acquired
from such Party in the course of pursuing the Transactions without the prior
written consent of CFS or UFEN, as the case may be; provided,
however,
any
Party may disclose any such Confidential Information as follows: (a) to such
Party’s Affiliates and its or its Affiliates’ employees, lenders, counsel, or
accountants, the actions for which the applicable Party will be responsible;
(b)
to comply with any applicable Law or Order, provided that prior to making
any
such disclosure the Party making the disclosure notifies the other Party
of any
Action of which it is aware which may result in disclosure and uses its Best
Efforts to limit or prevent such disclosure; (c) to the extent that the
Confidential Information is or becomes generally available to the public
through
no fault of the Party or its Affiliates making such disclosure; (d) to the
extent that the same information is in the possession (on a non-confidential
basis) of the Party making such disclosure prior to receipt of such Confidential
Information; (e) to the extent that the Party that received the Confidential
Information independently develops the same information without in any way
relying on any Confidential Information; or (f) to the extent that the same
information becomes available to the Party making such disclosure on a
nonconfidential basis from a source other than a Party or its Affiliates,
which
source, to the disclosing Party’s Knowledge, is not prohibited from disclosing
such information by a legal, Contractual, or fiduciary obligation to the
other
Party. If
the
Transactions are not consummated, each Party will return or destroy as much
of
the Confidential Information concerning the other Party as the Parties that
have
provided such information may reasonably request.
Notwithstanding the foregoing, UFEN may make such public disclosure of the
existence of this Agreement, the principal economic terms thereof, and the
status with respect to achieving the Closing as it desires; provided,
that
UFEN will consult with Greinke prior to releasing any such public disclosure
so
that Greinke may notify the employees of CFS of the Transactions. No Greinke
Party or any of its Affiliates will issue any press release or other public
announcement related to this Agreement or the Transactions without UFEN’s prior
written approval.
6.9 Affiliated
Transactions.
Except
as
set forth on Schedule
6.9,
the
Greinke Parties will cause all Contracts and transactions by and between
Greinke
or any Affiliate of Greinke, on the one hand, and CFS, on the other hand,
to be
terminated effective as of the Closing, without any cost or continuing
obligation to CFS or UFEN, and will deliver to UFEN evidence of such
terminations that is reasonably acceptable to UFEN.
6.10 Charges,
Fees, and Prepayment Obligations.
Greinke
will, prior to the Closing, take such steps as are necessary to ensure that
(a)
no sums are owed or payable by CFS to any Person in the nature of a transfer
charge or processing fee with respect to any Contracts of CFS, and (b) no
sums
are owed or payable as a prepayment penalty if UFEN or CFS elect to repay
any
Liability of CFS that is outstanding as of the Closing Date.
6.11 Repayment
of Certain Liabilities from Greinke.
At
or
prior to the Closing, Greinke (or his Affiliates (other than CFS)) will satisfy,
pay in full, or discharge all Liabilities they may have to CFS, including
the
notes receivable described on Schedule
6.11.
Greinke
will provide evidence to UFEN of such repayment, discharge, or forgiveness
in
form and substance reasonably acceptable to UFEN.
42
6.12 Site
Inspections.
Subject
to compliance with applicable Law and applicable Environmental, Health, and
Safety Requirements, each Party may undertake (at such Party’s sole cost and
expense) an environmental assessment or assessments of the operations, business
and/or properties of the other Party. Such assessment may include a review
of
Permits, files and records, as well as visual and physical inspections and
testing. Each Party will cooperate in good faith with the other Party’s effort
to conduct such an assessment.
6.13 Consents.
(a) Schedule
4.3
includes
a list of all consents and rights having similar effect that would be applicable
to the Transactions and the Persons holding such rights (the “Specified
Consents”)
that
are required for the Greinke Parties to satisfy their closing
conditions.
(b) Promptly
after the date hereof, the Greinke Parties will meet with UFEN to determine
the
form and content of all notices to be sent to the holders of the Specified
Consents. If there is a disagreement regarding when or whether to send a
notice,
the form or content of any notice to be sent, or any issues arising out of
any
such notice, UFEN’s reasonable, good faith decision will be final and will
control. CFS will request consents to the Transactions from the holders of
Specified Consents in each such notice.
(c) Subject
to the obligations arising from Section
4.3,
CFS
will not have any obligation hereunder other than to attempt to identify
such
requirements for Specified Consents and to exercise its Best Efforts to obtain
such Consents.
6.14 Shareholder
Approval.
UFEN
shall, in accordance with applicable law and its Articles of Incorporation
and
Bylaws use its Best Efforts to obtain the approval of the
holders of not less than 66-2/3%
of the
outstanding shares of UFEN’s Series A Preferred Stock approving and adopting
this Agreement and the issuance of UFEN Common Stock pursuant to Section
2.2
hereof.
UFEN agrees to use its Best Efforts to obtain such approval within thirty
(30)
days following the date this Agreement is executed by all the parties hereto.
6.15 CFS
Audit.
(a) CFS
shall
use its Best Efforts to provide UFEN at or prior to the Closing with (i)
audited
financial statements prepared pursuant to Regulation S-X promulgated under
the
Exchange Act for the periods specified in Rule 3-05(b) of Regulation S-X;
and
(ii) a manually signed unqualified accountant’s
report pursuant to Rule 2-02 of Regulation S-X from Xxxxx Xxxxxxxx LLP with
respect to such audited financial statements without any exceptions identified
therein;
and
(b) CFS
shall
give
prompt written notice to UFEN of any development occurring after the date
of
this Agreement, which
causes or reasonably could be expected to cause Xxxxx Xxxxxxxx LLP to be
unable
to provide at or prior to the Closing an unqualified accountant’s report
pursuant to Rule 2-02 of Regulation S-X with respect to the audited financial
statements of CFS without any exceptions identified therein.
43
6.16 UFEN
Restatement.
(a) UFEN
shall use its Best Efforts to provide CFS at or prior to the Closing with
(i)
restated audited financial statements prepared pursuant to Regulation S-X
promulgated under the Exchange Act for the fiscal year ended December 31,
2006;
(ii) a manually signed unqualified accountant’s report pursuant to Rule 2-02 of
Regulation S-X from Xxxxxxx Xxxxxx & Co, CPA’s PC (“Xxxxxxx Xxxxxx”) with
respect to such restated audited financial statements without any exceptions
identified therein; (iii) restated unaudited financial statements prepared
pursuant to Regulation S-X for the three months ended March 31, 2007; and
(iv)
unaudited financial statements prepared pursuant to Regulation S-X for the
three
and six months ended June 30, 2007.
(b) UFEN
shall give
prompt written notice to CFS of any development occurring after the date
of this
Agreement, which
causes or reasonably could be expected to cause Xxxxxxx Xxxxxx to be unable
to
provide at or prior to the Closing an unqualified accountant’s report pursuant
to Rule 2-02 of Regulation S-X with respect to the audited financial statements
of CFS without any exceptions identified therein
ARTICLE
7
POST-CLOSING
COVENANTS
The
Parties agree as follows with respect to the period following the
Closing:
7.1 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 Party will take such further action
(including executing and delivering such further instruments and documents)
as
any other Party reasonably
may
request, all at the requesting Party’s sole cost and expense (unless the
requesting Party is entitled to indemnification therefor under ARTICLE
9).
After
the Closing UFEN will be entitled to possession of all documents, books,
records, agreements, and financial data of any sort relating to
CFS.
7.2 Litigation
Support.
So
long
as any Party actively is contesting or defending against any Action in
connection with (a) the Transactions or (b) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
CFS, each other Party will cooperate with such Party and such Party’s counsel in
the contest or defense, make available their personnel, and provide such
testimony and access to their books and records as will be necessary in
connection with the contest or defense, at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party or
one
of its Affiliates is entitled to indemnification therefor under ARTICLE
9).
44
7.3 Transition.
Neither
Party will take any action that is designed or intended to have the effect
of
discouraging any lessor, licensor, customer, supplier, or other business
associate of any of the other Parties from maintaining at least as favorable
business relationships with the such other Parties after the Closing as it
maintained with such other Parties prior to the Closing.
7.4 Confidentiality.
Greinke
will treat and hold as such all of the Confidential Information, refrain
from
using any of the Confidential Information except in connection with this
Agreement, and deliver promptly to UFEN or destroy, at the request and option
of
UFEN, all tangible embodiments (and all copies) of the Confidential Information
which are in Greinke’s possession in each case, forever. If Greinke is ever
requested or required (by oral question or request for information or documents
in any Action) to disclose any Confidential Information, he will notify UFEN
promptly of the request or requirement so that UFEN may seek an appropriate
protective Order or waive compliance with this Section
7.4.
If
Greinke, in the absence of a protective Order or the receipt of a waiver
hereunder, on the written advice of counsel, is compelled to disclose any
Confidential Information to any Governmental Body, arbitrator, or mediator
or
else stand Liable for contempt, he may disclose the Confidential Information
to
the Governmental Body, arbitrator, or mediator; provided,
however;
that
Greinke will use his Best Efforts to obtain, at the reasonable
request
of UFEN, an Order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as UFEN may designate.
7.5 Restrictive
Covenants.
To
assure
that UFEN and CFS will realize the benefits of the Transactions, Greinke
hereby
agrees with UFEN and CFS not to:
(a) From
the
Closing Date until the earlier of (i) four (4) years after the Closing Date
and
(ii) a Change in Control of UFEN, directly or indirectly, alone or as a partner,
joint venturer, officer, director, member, employee, consultant, agent,
independent contractor or Equity Interest holder of, or lender to, any Person
or
business, engage in the Relevant Business within
the Restricted Territory.
(b) From
the
Closing Date until the earlier of (i) four (4) years after the Closing Date
and
(ii) a Change in Control of UFEN, directly or indirectly (A) induce any Person
that is a customer of UFEN, CFS, or any of their Affiliates to enter into
any
Contract with or otherwise patronize any business directly or indirectly
in
competition with the Relevant
Business
conducted by UFEN, CFS, or any of their Affiliates within the Restricted
Territory; (B) canvass, solicit, or accept from any Person who is a customer
of
UFEN, CFS, or any of their Affiliates, any such Relevant
Business
within
the Restricted Territory; or (C) request or advise any Person who is a customer,
vendor, or lessor of UFEN, CFS or any of their Affiliates, to withdraw, curtail,
or cancel any such customer’s, vendor’s, or lessor’s business with such
Person;
provided,
however,
that a
general solicitation or advertisement originating outside of, and not
specifically targeted to or reasonably expected to target, the Restricted
Territory will not be deemed in and of itself to violate the prohibitions
of (A)
or (B) of this subparagraph.
45
Notwithstanding
the foregoing, the beneficial ownership of less than 5% of the Equity Interests
of any Person having a class of Equity Interest actively traded on a national
securities exchange or over-the-counter market will not be deemed, in and
of
itself, to Breach the prohibitions of this Section
7.5.
Greinke
agrees and acknowledges that the restrictions in this Section
7.5
are
reasonable in scope and duration and are necessary to protect UFEN and CFS
after
the Closing. If
Greinke is found to have Breached this Section
7.5,
then,
in addition to all other remedies that may be available to the applicable
Person, an amount of time equal to the period Greinke was found to be in
Breach
of this Section
7.5
will be
added to the time periods contemplated by this Section
7.5.
If any
provision of this Section
7.5,
as
applied to any Party or to any circumstance, is adjudged by a Governmental
Body,
arbitrator, or mediator not to be enforceable in accordance with its terms,
the
same will in no way affect any other circumstance or the enforceability of
the
remainder of this Agreement. If any such provision, or any part thereof,
is held
not to be enforceable in accordance with its terms because of the duration
of
such provision, the area covered thereby, or the scope of the activities
covered, the Parties agree that the Governmental Body, arbitrator, or mediator
making such determination will have the power to reduce the duration, area,
and/or scope of activities of such provision, and/or to delete specific words
or
phrases, and in its reduced form, such provision will then be enforceable
in
accordance with its terms and will be enforced. The Parties agree and
acknowledge that the Breach of this Section
7.5
will
cause irreparable Damage to UFEN and CFS and upon Breach of any provision
of
this Section
7.5,
UFEN
and/or CFS will be entitled to injunctive relief, specific performance, or
other
equitable relief without bond or other security; provided,
however,
that
the foregoing remedies will in no way limit any other remedies which UFEN
and/or
CFS may have.
7.6 Release.
Greinke,
on behalf of himself and each of Greinke’s heirs, representatives, successors,
and assigns, hereby releases and forever discharges UFEN and each of its
officers, directors, managers, employees, agents, stockholders, controlling
persons, representatives, Affiliates, successors, assigns, and CFS
(individually, a “Releasee”
and
collectively, “Releasees”)
from
any and all Actions, Orders, Damages, Liabilities, and, except as expressly
contemplated by this Agreement, Contracts whatsoever, whether known or unknown,
suspected or unsuspected, both at Law and in equity, which Greinke or any
of his
heirs, representatives, successors or assigns now has, have ever had or may
hereafter have against the respective Releasees arising contemporaneously
with
or prior to the Closing Date or on account of or arising out of any matter,
cause, or event occurring contemporaneously with or prior to the Closing
Date
including any rights to indemnification or reimbursement from CFS, whether
pursuant to their respective Organizational Documents, Contract or otherwise
and
whether or not relating to Actions pending on, or asserted after, the Closing
Date; provided,
however,
that
nothing contained herein will operate to release any obligations of UFEN
arising
under this Agreement.
Greinke
hereby irrevocably covenants to refrain from, directly or indirectly, asserting
any cause of Action, or commencing, instituting or causing to be commenced,
any
Action, of any kind against any Releasee, based upon any matter purported
to be
released hereby.
46
7.7 UFEN
Stock Certificates.
Each
stock certificate delivered by UFEN to Trust will be imprinted with legends
substantially in the following form:
The
shares this certificate represents have not been registered under the Securities
Act. Such
shares have been acquired for investment purposes and may not be offered
for
sale, sold, delivered after sale, transferred, pledged, or hypothecated in
the
absence of an effective Registration Statement filed by the issuer with the
Securities and Exchange Commission covering such shares under the Securities
Act
or an opinion of counsel satisfactory to the issuer that such registration
is
not required.
The
shares represented by this certificate were issued in connection with a
transaction to which Rule 145 promulgated under the Securities Act applies.
These shares may only be transferred in accordance with the terms of such
Rule.
Each
holder desiring to transfer such shares first must furnish the issuer with
(a) a
written opinion reasonably
satisfactory to the issuer in form and substance from counsel reasonably satisfactory
to the issuer under the Securities Act and (b) a written undertaking executed
by
the desired transferee reasonably satisfactory
to the issuer in form and substance agreeing to be bound by the restrictions
on
transfer contained herein. The shares may be pledged by the holder as collateral
for the repayment of any indebtedness only in accordance with the terms of
the
Securities Act and conditions set forth in the Stockholders
Agreement.
7.8 CFS
Employee Matters.
As
of the
Closing Date, UFEN shall offer employment to the those Persons who were
employees of CFS immediately preceding the Closing. Such offer of employment
shall be on substantially similar terms and conditions as similarly situated
Persons employed by UFEN. UFEN shall give such CFS employees credit for service
with CFS for the purpose of determining (i) eligibility to participate in
and
vesting, but not for purpose of benefit accrual, under UFEN’s employee benefit
plans, and (ii) vacation pay and accrual.
7.9 Board
Matters; Chairman; Vice Chairman.
(a) UFEN
shall take such action as shall be required to cause UFEN’s Board of Directors
immediately as of the Closing to appoint Greinke as a member of UFEN’s Board of
Directors. Greinke hereby consents to serve as a director of UFEN upon the
Closing.
(b) Immediately
subsequent to the Closing, Greinke shall be appointed Chairman of the Board
of
UFEN until the earlier of his resignation or removal or until his successor
is
duly elected and qualified, as the case may be.
(c) Immediately
subsequent to the Closing, Xxxxxx X. Xxxxx shall be appointed Vice Chairman
of
the Board of UFEN until the earlier of his resignation or removal or until
his
successor is duly elected and qualified, as the case may be.
47
7.10 Discharge
of Certain Liabilities to Greinke.
Within
five (5) days after the Closing, CFS will satisfy, pay in full or discharge
all
Liabilities it may have to Greinke (or his Affiliates (other than CFS)),
which
Liabilities consist solely of the note payable described on Schedule
7.10.
ARTICLE
8
CLOSING
CONDITIONS
8.1 Conditions
Precedent to Obligation of UFEN.
UFEN’s
obligation to consummate the Transactions contemplated to occur in connection
with the Closing and thereafter is subject to the satisfaction of each condition
precedent listed below. Unless expressly waived pursuant to this Agreement,
no
representation, warranty, covenant, right or remedy available to UFEN in
connection with the Transactions will be deemed waived by any of the following
actions or inactions by or on behalf of UFEN (regardless of whether Greinke
Parties are given notice of any such matter): (i) consummation by UFEN of
the
Transactions, (ii) any inspection or investigation, if any, of CFS or Greinke
Parties, (iii) the awareness of any fact or matter acquired (or capable or
reasonably capable of being acquired) with respect to CFS or Greinke Parties,
or
(iv) any other action, in each case at any time, whether before, on, or after
the Closing Date.
(a) Accuracy
of Representations and Warranties.
Each
representation and warranty set forth in ARTICLE
3 and
ARTICLE
4
must
have been accurate and complete in
all
material respects (except with respect to any provisions including the word
“material” or words of similar import, and except with respect to materiality,
as reflected under GAAP, in the representations in Section
4.8
related
to the Financial Statements, with respect to which such representations and
warranties must have been accurate and complete)
as of
the date of this Agreement, and must be accurate and complete in
all
material respects (except with respect to any provisions including the word
“material” or words of similar import and except with respect to materiality, as
reflected under GAAP, in the representations in Section
4.8
related
to the Financial Statements, with respect to which such representations and
warranties must have been accurate and complete)
as of
the Closing Date, as if made on the Closing Date, without giving effect to
any
supplements to the Schedules; provided, however, that the
representations and warranties set
forth
in ARTICLE
3 and
ARTICLE
4
shall
not be deemed false or misleading or deemed to contain untrue statements
of
material fact or to have omitted to state material facts solely because of
the
absence of any disclosure schedules as of the time of execution of this
Agreement.
(b) Compliance
with Obligations.
Each
Greinke Party must have performed and complied with all of its covenants
to be
performed or complied with at or prior to Closing (singularly
and in the aggregate) in
all
material respects.
(c) No
Material Adverse Change or Destruction of Property.
Since
the date hereof there must have been no event, series of events or the lack
of
occurrence thereof which, singularly or in the aggregate, could reasonably
be
expected to have a Material Adverse Effect on CFS. Without limiting the
foregoing, (i) there must have been no Material Adverse Change to CFS, (ii)
there must not have been any action or inaction by a Governmental Body,
arbitrator, or mediator which could reasonably be expected to cause a Material
Adverse Change to CFS, and (iii) there must not have been any fire, flood,
casualty, act of God or the public enemy or other cause (regardless of insurance
coverage for such damage) which event could reasonably be expected to have
a
Material Adverse Effect on CFS.
48
(d) No
Adverse Litigation.
There
must not be pending or Threatened any Action by or before any Governmental
Body,
arbitrator, or mediator which will seek to restrain, prohibit, invalidate,
or
collect Damages arising out of the Transactions, or which, in the reasonable
judgment
of UFEN, makes it inadvisable to proceed with the Transactions.
(e) Consents.
The
Greinke Parties and UFEN must have received Consents to the Transactions
and
waivers of rights to terminate or modify any rights or obligations of any
Greinke Party from any Person (i) from whom such Consent is required, including
under any Contract listed or required to be listed in Schedules
4.14, 4.15, 4.17, 4.20, and 4.25
or under
the Law, or who (ii) as a result of the Transactions, would have such rights
to
terminate or modify such Contracts, either by their terms or as a matter
of
Law.
(f) Liabilities.
Prior to
the Closing, the Greinke Parties must have obtained and delivered to UFEN
full
satisfactions or releases of all Liabilities due to or from CFS which are
due to
be satisfied or released under this Agreement to or on behalf of (i) any
Affiliate of CFS or (ii) Greinke or any Affiliate of Greinke.
(g) Legal
Opinions.
The
Greinke Parties must have delivered to UFEN an opinion of (i) Xxxxx &
Xxxxxx, LLP
and
(ii) Xxxxx X. Xxxxxx Law Corporation,
each in
form and substance reasonably acceptable to UFEN, addressed to UFEN and dated
as
of the Closing Date.
(h) Fairness
Opinion.
UFEN
shall have received an opinion of a financial advisory firm, reasonably
acceptable to the Board of Directors of UFEN, addressed to the Board of
Directors of UFEN, that states that the Transactions are fair, from a financial
point of view, to the holders of the Common Stock.
(i) Completion
of Audit.
The
audit of CFS’s financial statements prepared pursuant to Regulation S-X
promulgated under the Exchange Act for the periods specified in Rule 3-05(b)
of
Regulation S-X, including a manually signed unqualified accountant’s report
pursuant to Rule 2-02 of Regulation S-X from Xxxxx Xxxxxxxx LLP with respect
to
such audited financial statements without any exceptions identified therein,
shall have been completed.
(j) Board
Approval.
The
approval of the board of directors of UFEN approving and adopting this Agreement
and the issuance of UFEN Common Stock pursuant to Section
2.2
hereof
shall have been obtained.
49
(k) Shareholder
Approval.
The
approval of the holders of not less than 66-2/3%
of the
outstanding shares of UFEN’s Series A Preferred Stock approving and adopting
this Agreement and the issuance of UFEN Common Stock pursuant to Section
2.2
hereof
shall have been obtained.
8.2 Conditions
Precedent to Obligation of Greinke Parties.
The
obligation of each Greinke Party to consummate the Transactions contemplated
to
occur in connection with the Closing and thereafter is subject to the
satisfaction of each condition precedent listed below. Unless expressly waived
pursuant to this Agreement, no representation, warranty, covenant, right,
or
remedy available to Greinke Parties in connection with the Transactions will
be
deemed waived by any of the following actions or inactions by or on behalf
of
Greinke Parties (regardless of whether UFEN is given notice of any such matter):
(i) consummation by Greinke Parties of the Transactions, (ii) any inspection
or
investigation, if any, of UFEN, (iii) the awareness of any fact or matter
acquired (or capable or reasonably capable of being acquired) with respect
to
UFEN, or (iv) any other action, in each case at any time, whether before,
on, or
after the Closing Date.
(a) Accuracy
of Representations and Warranties.
Each
representation and warranty set forth in ARTICLE
5
must
have been accurate and complete in
all
material respects (except with respect to any provisions including the word
“material”
or words
of similar import, with respect to which such representations and warranties
must have been accurate and complete)
as of
the date of this Agreement, and must be accurate and complete in
all
material respects (except with respect to any provisions including the word
“material”
or words
of similar import, with respect to which such representations and warranties
must have been accurate and complete) as
of the
Closing Date, as if made on the Closing Date; provided, however, that
the
representations and warranties set
forth
in ARTICLE
5 shall
not
be deemed false or misleading or deemed to contain untrue statements of material
fact or to have omitted to state material facts solely because of the absence
of
any disclosure schedules as of the time of execution of this
Agreement..
(b) Compliance
with Obligations.
UFEN
must have performed and complied with all its covenants and obligations required
by this Agreement to be performed or complied with at or prior to Closing
(singularly and in the aggregate) in
all
material respects.
(c) No
Material Adverse Change or Destruction of Property.
Since
the date hereof there must have been no event, series of events or the lack
of
occurrence thereof which, singularly or in the aggregate, could reasonably
be
expected to have a Material Adverse Effect on the UFEN Entities. Without
limiting the foregoing, (i) there must have been no Material Adverse Change
to
the UFEN Entities, (ii) there must not have been any action or inaction by
a
Governmental Body, arbitrator, or mediator which could reasonably be expected
to
cause a Material Adverse Change to CFS, and (iii) there must not have been
any
fire, flood, casualty, act of God or the public enemy or other cause (regardless
of insurance coverage for such damage) which event could reasonably be expected
to have a Material Adverse Effect on the UFEN Entities.
50
(d) No
Adverse Litigation.
There
must not be pending or Threatened any Action by or before any Governmental
Body,
arbitrator, or mediator which will seek to restrain, prohibit, invalidate,
or
collect Damages arising out of the Transactions, or which, in the reasonable
judgment
of Greinke Parties, makes it inadvisable to proceed with the
Transactions.
(e) Consents.
UFEN and
Greinke Parties must have received Consents to the Transactions and waivers
of
rights to terminate or modify any rights or obligations of any UFEN Entity
from
any Person (i) from whom such Consent is required, including under any Contract
listed or required to be listed in Schedules
4.14, 4.15, 4.17, 4.20, and 4.25
or under
the Law, or who (ii) as a result of the Transactions, would have such rights
to
terminate or modify such Contracts, either by their terms or as a matter
of
Law.
(f) Legal
Opinion.
UFEN
must have delivered to Greinke Parties an opinion of Akin
Gump Xxxxxxx Xxxxx & Xxxx LLP, or Xxxxxxxxxx Hyatt Xxxxxx Xxxxxxx,
P.C.,
in form
and substance reasonable acceptable to Greinke Parties, addressed to Greinke
Parties and dated as of the Closing Date.
(g) Restatement
of Financials.
UFEN
shall have completed the restatement of (i) its audited financial statements
prepared pursuant to Regulation S-X promulgated under the Exchange Act for
the
fiscal year ended December 31, 2006 (including the furnishing of a manually
signed unqualified accountant’s report pursuant to Rule 2-02 of Regulation S-X
from Xxxxxxx Xxxxxx with respect to such restated audited financial statements
without any exceptions identified therein), and (ii) its unaudited financial
statements prepared pursuant to Regulation S-X for the three months ended
March
31, 2007, as referred to in that certain Current Report on Form 8-K filed
with
the U.S. Securities and Exchange Commission on August 14, 2007. UFEN shall
have
filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange
Commission for the period ended June 30, 2007.
ARTICLE
9
TERMINATION
9.1 Termination
of Agreement.
The
Parties may terminate this Agreement as provided below:
(a) UFEN
and
Greinke may terminate this Agreement as to all Parties by mutual written
consent
at any time prior to the Closing.
(b) UFEN
or
Greinke Parties may terminate this Agreement upon delivery of notice if the
Closing has not occurred prior to the Expiration Date, provided that the
Party
delivering such notice (or in the case of a delivery by any Greinke Party,
each
Greinke Party) will not have caused such failure to close.
(c) UFEN
may
terminate this Agreement by giving written notice to Greinke at any time
prior
to the Closing if any Greinke Party has Breached any representation, warranty,
or covenant contained in this Agreement in any material respect (except with
respect to materiality for any provisions including the word “material”
or words
of similar import and except with respect to materiality, as reflected under
GAAP, in the representations in Section
4.8
related
to Financial Statements, in which case such termination rights will arise
upon
any Breach).
51
(d) UFEN
may
terminate this Agreement by giving written notice to Greinke at any time
prior
to the Closing if UFEN is not reasonably satisfied in its sole discretion
with
the results of, and its due diligence investigations with respect to, the
operations, affairs, prospects, properties, assets, existing and potential
liabilities, obligations, profits or condition (financial or otherwise) of
CFS
and each of the other Greinke Parties.
(e) Each
Greinke Party may terminate this Agreement by giving written notice to UFEN
at
any time prior to the Closing if such Greinke Party is not reasonably satisfied
in its sole discretion with the results of, and its due diligence investigations
with respect to, the operations, affairs, prospects, properties, assets,
existing and potential liabilities, obligations, profits or condition (financial
or otherwise) of UFEN.
(f) Each
Greinke Party may terminate this Agreement by giving notice to UFEN at any
time
prior to the Closing if UFEN has Breached any representation, warranty, or
covenant contained in this Agreement in any material respect (except with
respect to materiality for any provisions including the word “material”
or words
of similar import, in which case such termination rights will arise upon
any
Breach).
9.2 Effect
of Termination.
(a) Except
for the obligations under Section
6.8,
this
ARTICLE
9
and
ARTICLE
11,
if this
Agreement is terminated under Section
9.1,
then,
except as provided in this Section
9.2
all
further obligations of the Parties under this Agreement will
terminate.
(b) If
UFEN
or any Greinke Party terminates this Agreement pursuant to Section
9.1(c)
or
9.1(d),
as the
case may be, then the
rights of the non-breaching Party(ies) to pursue all legal remedies for Damages
such Party(ies) suffer will survive such termination unimpaired and no election
of remedies will have been deemed to have been made.
ARTICLE
10
INDEMNIFICATION
10.1 Survival
of Representations and Warranties.
(a) Each
representation and warranty of Greinke and Trust contained in ARTICLE
3
and any
certificate related to such representations and warranties will survive the
Closing and will continue in full force and effect forever. Each representation
and warranty of Greinke Parties contained in ARTICLE
4
and any
certificate related to such representations and warranties will survive the
Closing and continue in full force and effect for two (2) years thereafter,
except (i) the representations and warranties set forth in Sections
4.4, 4.12, 4.25, and 4.26,
which
will survive the Closing and continue in full force and effect until the
applicable statute of limitations expires (or for ten (10) years if there
is no
applicable statute of limitations) and (ii) the representations and warranties
set forth in Sections
4.1, 4.2, 4.5, and 4.7
which
will survive the Closing and will continue in full force and effect
forever.
52
(b) Each
representation and warranty of UFEN contained in ARTICLE
5
and any
certificate related to such representations and warranties will survive the
Closing and continue in full force and effect for two (2) years thereafter,
except (i) the representations and warranties set forth in Sections
5.4, 5.12, 5.25, and 5.26,
which
will survive the Closing and continue in full force and effect until the
applicable statute of limitations expires (or for ten (10) years if there
is no
applicable statute of limitations) and (ii) the representations and warranties
set forth in Sections
5.1, 5.2, 5.5, and 5.7
which
will survive the Closing and will continue in full force and effect
forever.
(c) Each
other provision in this Agreement or any certificate or document delivered
pursuant hereto will survive for the relevant statute of limitations period,
unless a different period is expressly contemplated herein or
thereby.
10.2 Indemnification
Provisions for UFEN’s Benefit.
Greinke
will indemnify and hold the Greinke Indemnified Parties harmless from and
pay
any and all Damages, directly or indirectly, resulting from, relating to,
arising out of, or attributable to any one of the following:
(a) Any
Breach of any representation or warranty any Greinke Party has made in this
Agreement as if such representation or warranty were made on and as of the
Closing Date without giving effect to any supplement to the Schedules, other
than (in the event the Transactions are consummated) any such Breach that
is
disclosed in a supplement to the Schedules delivered under Section
6.6,
as
having caused a condition specified in Section
8.1
not to
be satisfied.
(b) Any
Breach by any Greinke Party of any covenant or obligation of any Greinke
Party
in this Agreement.
(c) Any
product sold, shipped or manufactured or service provided by CFS prior to
the
Closing Date.
(d) Except
as
specifically indicated on the Schedules the Greinke Parties deliver under
this
Agreement, any
event
arising from the operation and ownership of, or conditions occurring with
respect to, CFS prior to 11:59 p.m. on the Closing Date.
10.3 Indemnification
Provisions for Greinke’s Benefit.
UFEN
will
indemnify and hold the UFEN Indemnified Parties harmless from and pay any
and
all Damages, directly or indirectly, resulting from, relating to, arising
out
of, or attributable to any of the following:
53
(a) Any
Breach of any representation or warranty UFEN has made in this Agreement
as if
such representation or warranty were made on and as of the Closing Date without
giving effect to any supplement to the Schedules, other than any such Breach
that is disclosed in a supplement to the Schedules delivered under Section
6.6,
as
having caused a condition specified in Section
8.2
not to
be satisfied.
(b) Any
Breach by UFEN of any covenant or obligation of UFEN in this
Agreement.
(c) Any
event
arising from the operation and ownership of, or conditions first occurring
with
respect to, CFS after 11:59 p.m. on the Closing Date.
10.4 Indemnification
Claim Procedures.
(a) If
any
Action is commenced in which any Indemnified Party is a party that may give
rise
to a claim for indemnification against any Indemnitor (an “Indemnification
Claim”)
then
such Indemnified Party will promptly give notice to the Indemnitor. Failure
to
notify the Indemnitor will not relieve the Indemnitor of any Liability that
it
may have to the Indemnified Party, except to the extent the defense of such
Action is materially and irrevocably prejudiced by the Indemnified Party’s
failure to give such notice.
(b) An
Indemnitor will have the right to defend against an Indemnification Claim,
other
than a Indemnification Claim related to Taxes, with counsel of its choice
reasonably satisfactory to the Indemnified Party if (i) within fifteen (15)
days
following the receipt of notice of the Indemnification Claim the Indemnitor
notifies the Indemnified Party in writing that the Indemnitor will indemnify
the
Indemnified Party from and against the entirety of any Damages the Indemnified
Party may suffer resulting from, relating to, arising out of, or attributable
to
the Indemnification Claim, (ii) the Indemnitor provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the Indemnitor
will have the financial resources to defend against the Indemnification Claim
and pay, in cash, all Damages the Indemnified Party may suffer resulting
from,
relating to, arising out of, or attributable to the Indemnification Claim,
(iii)
the Indemnification Claim involves only money Damages and does not seek an
injunction or other equitable relief, (iv) settlement of, or an adverse judgment
with respect to, the Indemnification Claim is not in the good faith judgment
of
the Indemnified Party likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the Indemnified
Party, and (v) the Indemnitor continuously conducts the defense of the
Indemnification Claim actively and diligently.
(c) So
long
as the Indemnitor is conducting the defense of the Indemnification Claim
in
accordance with Section
10.4(b),
(i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Indemnification Claim, (ii) the
Indemnified Party will not consent to the entry of any Order with respect
to the
Indemnification Claim without the prior written Consent of the Indemnitor
(not
to be withheld unreasonably), and (iii) the Indemnitor will not Consent to
the
entry of any Order with respect to the Indemnification Claim without the
prior
written Consent of the Indemnified Party (not to be withheld unreasonably,
provided that it will not be deemed to be unreasonable for an Indemnified
Party
to withhold its Consent (A) with respect to any finding of or admission (1)
of
any Breach of any Law, Order or Permit, (2) of any violation of the rights
of
any Person, or (3) which Indemnified Party believes could have a Material
Adverse Effect on any other Actions to which the Indemnified Party or its
Affiliates are party or to which Indemnified Party has a good faith belief
it
may become party, or (B) if any portion of such Order would not remain
sealed).
54
(d) In
connection with any Indemnification Claim for Taxes, or if any condition
in
Section
10.4(b)
is or
becomes unsatisfied, (i) the Indemnified Party may defend against, and consent
to the entry of any Order with respect to an Indemnification Claim in any
manner
it may deem appropriate, (ii) each Indemnitor will jointly and severally
be
obligated to reimburse the Indemnified Party promptly and periodically for
the
Damages relating to defending against the Indemnification Claim, and (iii)
each
Indemnitor will remain jointly and severally Liable for any Damages the
Indemnified Party may suffer relating to the Indemnification Claim to the
fullest extent provided in this ARTICLE
10.
(e) Each
Party hereby consents to the non-exclusive jurisdiction of any Governmental
Body, arbitrator, or mediator in which an Action is brought against any
Indemnified Party for purposes of any Indemnification Claim that an Indemnified
Party may have under this Agreement with respect to such Action or the matters
alleged therein, and agrees that process may be served on such Party with
respect to such claim anywhere in the world.
10.5 Limitations
on Indemnification Liability.
(a) With Respect to Claims by the Greinke Indemnified Parties.
Any
claims the Greinke Indemnified Parties make under this ARTICLE
10
will be
limited as follows:
(i) Ceiling.
Greinke’s aggregate Liability for money Damages under this Agreement related to
Breaches of the representations, warranties, and covenants herein will not
exceed an amount equal to the
Purchase Price,
provided that the limitation contemplated hereby will not be applicable with
respect to (A) Breaches of Sections
3.1, 3.4, 4.1, 4.2, or 4.5
or (B)
instances of actual
(rather than constructive)
fraud by
a Greinke Party.
(ii) Basket/Threshold.
Greinke
will have no Liability for money Damages related to Breaches of the
representations and warranties in ARTICLE
4
(other
than under Sections
4.9(f), 4.9(l), 4.9(m), or 4.9(o)),
unless
and until the aggregate Damages claimed under Section
10.2
exceeds
1%
of the Share Purchase Price
(the
“Greinke
Indemnified Parties Threshold
Amount”);
provided,
however,
once
such
amount exceeds the Greinke Indemnified Parties Threshold Amount, the Greinke
Indemnified Parties will be entitled to recover all amounts to which they
are
entitled in excess of the Threshold Amount.
55
(b) With
Respect to Claims by the UFEN Indemnified Parties.
Any
claims the UFEN Indemnified Parties make under this ARTICLE
10 will
be
limited as follows:
(i) Ceiling.
UFEN’s
aggregate Liability for money Damages under this Agreement related to Breaches
of the representations, warranties, and covenants herein will not exceed
the
Purchase Price, provided that the limitation contemplated hereby will not
be
applicable with respect to Breaches of Sections
5.1,
5.2, or 5.5
or
instances of actual
(rather than constructive)
fraud by
UFEN.
(ii) Basket/Threshold.
UFEN
will have no Liability for money Damages related to Breaches of the
representations and warranties in ARTICLE
4
unless
and until the aggregate of such Damages claimed under Section
10.3
exceeds
1%
of the
Purchase Price
(the
“UFEN
Indemnified Parties Threshold Amount”);
provided,
however,
once
such
amount exceeds the UFEN Indemnified Parties Threshold Amount, the UFEN
Indemnified Parties will be entitled to recover all amounts to which they
are
entitled in excess of the UFEN Indemnified Parties Threshold Amount.
(c) With
Respect to Claims by any Indemnified Party.
Any
claims any Indemnified Party makes under this ARTICLE
10
will be
limited as follows:
(i) Reduction
for Insurance Claims.
The
amount of Damages required to be paid for Damages will be reduced to the
extent
of any amounts an Indemnified Party actually receives pursuant to the terms
of
the insurance policies (if any) covering such Indemnification
Claim.
(ii) Exclusion
of Certain Types of Damages.
All
indemnification obligations will be limited to actual Damages and will exclude
incidental, consequential, lost profits, indirect, punitive, or exemplary
Damages.
(iii) Materiality
Qualifiers.
In
determining whether a representation, warranty or covenant in this Agreement
has
been breached where such representation, warranty or covenant is modified
by the
words “material,” “Material
Adverse Effect,” “Material
Adverse Change,”
or other
words of similar import, such words or cases will be deemed to refer to an
event
or status (or series of related events or status) causing Damages in excess
of
$500,000 for each such event or status, or related events or status, except
that
“materiality”
with
respect to the representations in Section
4.8 or
Section
5.8
relating
to the relevant Financial Statements shall be determined by GAAP as applied
in
the preparation of such Financial Statements.
(iv) Interest.
In
determining the amount of “Damages”
payable,
the Parties will take into account the time value of money.
56
10.6 Indemnification
if Negligence of Indemnitee.
THE
INDEMNIFICATION PROVIDED IN THIS ARTICLE
10
WILL BE
APPLICABLE WHETHER OR NOT THE SOLE, JOINT, OR CONTRIBUTORY NEGLIGENCE OF
THE
INDEMNIFIED PARTY IS ALLEGED OR PROVEN. THE PARTIES AGREE THE PRECEDING SENTENCE
IS COMMERCIALLY CONSPICUOUS.
Each
Indemnified Party’s rights and remedies set forth in this Agreement will survive
the Closing and will not be deemed waived by such Indemnified Party’s
consummation of the Transactions and will be effective regardless of any
inspection or investigation conducted, or the awareness of any matters acquired
(or capable or reasonably capable of being acquired), by or on behalf of
such
Indemnified Party or by its directors, officers, employees or representatives
or
at any time (regardless of whether notice of such knowledge has been given
to
Indemnitor), whether before or after the date of this Agreement or the Closing
Date with respect to any circumstances constituting a condition under this
Agreement, unless any waiver specifically so states.
10.7 Other
Indemnification Provisions.
(a) The
foregoing indemnification provisions are in addition to, and not in derogation
of, any remedy at Law or in equity that any Party may have with respect to
the
Transactions.
(b) Any
Liability of CFS to any UFEN Indemnified Party under this Agreement will
terminate for all purposes upon Closing and have no further force or
effect.
(c) A
claim
for any matter not involving a third party may be asserted by notice to the
Party from whom indemnification is sought.
ARTICLE
11
MISCELLANEOUS
11.1 Schedules.
(a) The
Parties hereto acknowledge and agree that the Schedules relating to the
representations and warranties of UFEN and the Greinke Parties in this Agreement
are not required to be delivered as of the time of execution of this Agreement
by UFEN and the Greinke Parties, but are required to be delivered as soon
as
practicable after such execution and, in any event, a reasonable time prior
to
the Closing, to permit the parties to review, evaluate and approve the
disclosures made therein as a part of their due diligence
investigation.
(b) The
disclosures in the Schedules, and those in any supplement thereto, relate
only
to the representations and warranties in the Section or paragraph of the
Agreement to which they expressly relate and not to any other representation
or
warranty in this Agreement.
(c) If
there
is any inconsistency between the statements in the body of this Agreement
and
those in the Schedules (other than an exception expressly set forth as in
the
Schedules with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control.
57
(d) Nothing
in the Schedules will be deemed adequate to disclose an exception to a
representation or warranty made herein, unless the Schedules identify the
exception with reasonable
particularity and describes the relevant facts in reasonable detail.
(e) The
mere
listing (or inclusion of a copy) of a document or other item in a Schedule
will
not be deemed adequate to disclose an exception to a representation or warranty
made in this Agreement (unless the representation or warranty pertains to
the
existence of the document or other item itself).
11.2 Entire
Agreement.
This
Agreement, together with the Exhibits and Schedules hereto and the certificates,
documents, instruments and writings that are delivered pursuant hereto,
constitutes the entire agreement and understanding of the Parties in respect
of
its subject matters and supersedes all prior understandings, agreements,
or
representations by or among the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof or the Transactions,
including the letter of intent, dated June 5, 2007, between Greinke and
UFEN.
There
are no third party beneficiaries having rights under or with respect to this
Agreement.
11.3 Successors.
All
of
the terms, agreements, covenants, representations, warranties, and conditions
of
this Agreement are binding upon, and inure to the benefit of and are enforceable
by, the Parties and their respective successors.
11.4 Assignments.
No
Party
may assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of UFEN and each Greinke
Party.
11.5 Notices.
All
notices, requests, demands, claims and other communications hereunder will
be in
writing. Any notice, request, demand, claim or other communication hereunder
will be deemed duly given if (and then three business days after) it is sent
by
registered or certified mail, return receipt requested, postage prepaid,
and
addressed to the intended recipient as set forth below:
If
to
UFEN and after Closing to CFS:
Attn: Xxxxxxx
XxXxxxxx
000
Xxxxxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Tel: (000)
000-0000
Fax: (000)
000-0000
58
Copy
to
(which shall not constitute notice):
Akin
Gump
Xxxxxxx Xxxxx & Xxxx LLP
Attn: Will
Xxxxxxxx
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxx 00000
Tel: (000)
000-0000
Fax: (000)
000-0000
If
to
Greinke and before Closing to CFS:
Attn: Xxxxx
X.
Xxxxxxx
X.X.
Xxx
0000
Xxxxxx,
Xxxxxxxxxx 00000-0000
Copy
to
(which shall not constitute notice):
Xxxxxx
X.
Xxxxxx
General
Counsel
X.X.
Xxx
0000
Xxxxxx,
Xxxxxxxxxx 00000-0000
Tel: (000)
000-0000
Fax: (000)
000-0000
Xxxxx
& Xxxxxx, LLP
Attn: Xxxxx
X.
Xxxxxxx
000
Xxxxx
Xxxx., 00xx Xxxxx
Xxxxx
Xxxx, XX 00000-0000
Tel: (000)
000-0000
Fax: (000)
000-0000
Any
Party
may send any notice, request, demand, claim, or other communication hereunder
to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication will be deemed to have been duly given unless
and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties
notice
in the manner herein set forth.
11.6 Specific
Performance.
Each
Party acknowledges and agrees that the other Parties would be damaged
irreparably if any provision of this Agreement is not performed in accordance
with its specific terms or is otherwise Breached. Accordingly, each Party
agrees
that the other Parties will be entitled to an injunction or injunctions to
prevent Breaches of the provisions of this Agreement and to enforce specifically
this Agreement and its terms and provisions in any Action instituted in
any
court
of the United States or any state thereof having
jurisdiction over the Parties and the matter,
subject
to Sections
11.7
and
11.11,
in
addition to any other remedy to which they may be entitled, at Law or in
equity.
59
11.7 Submission
to Jurisdiction; Process Agent; No Jury Trial.
(a) Submission to Jurisdiction.
Each
Party submits to the jurisdiction of any state or federal court in the State
of
Nevada, in any Action arising out of or relating to this Agreement and agrees
that all claims in respect of the Action may be heard and determined in any
such
court. Each
Party also agrees not to bring any Action arising out of or relating to this
Agreement in any other court.
Each
Party agrees that a final judgment in any Action so brought will be conclusive
and may be enforced by Action on the judgment or in any other manner provided
at
Law or in equity. Each Party waives any defense of inconvenient forum to
the
maintenance of any Action so brought and waives any bond, surety, or other
security that might be required of any other Party with respect
thereto.
(b) Waiver
of Jury Trial.
THE
PARTIES EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO JURY TRIAL
OF ANY
DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS
RELATING HERETO OR ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS.
The
scope of this waiver is intended to be all encompassing of any and all Actions
that may be filed in any court and that relate to the subject matter of the
Transactions, including, Contract claims, tort claims, breach of duty claims,
and all other common Law and statutory claims. The Parties each acknowledge
that
this waiver is a material inducement to enter into a business relationship
and
that they will continue to rely on the waiver in their related future dealings.
Each Party further represents and warrants that it has reviewed this waiver
with
its legal counsel, and that each knowingly and voluntarily waives its jury
trial
rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING
TO
THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE
MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of an Action, this
Agreement may be filed as a written consent to trial by a court.
11.8 Time.
Time
is
of the essence in the performance of this Agreement.
11.9 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which will
be
deemed an original but all of which together will constitute one and the
same
instrument.
11.10 Headings.
The
article and section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation
of
this Agreement.
60
11.11 Governing
Law.
This
Agreement and the performance of the Transactions and obligations of the
Parties
hereunder will be governed by and construed in accordance with the laws of
the
State of Nevada, without giving effect to any choice of Law
principles.
11.12 Amendments
and Waivers.
No
amendment, modification, replacement, termination or cancellation of any
provision of this Agreement will be valid, unless the same will be in writing
and signed by UFEN and each Greinke Party. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether
intentional or not, may be deemed to extend to any prior or subsequent default,
misrepresentation, or Breach of warranty or covenant hereunder or affect
in any
way any rights arising because of any prior or subsequent such
occurrence.
11.13 Severability.
The
provisions of this Agreement will be deemed severable and the invalidity
or
unenforceability of any provision will not affect the validity or enforceability
of the other provisions hereof; provided that if any provision of this
Agreement, as applied to any Party or to any circumstance, is adjudged by
a
Governmental Body, arbitrator, or mediator not to be enforceable in accordance
with its terms, the Parties agree that the Governmental Body, arbitrator,
or
mediator making such determination will have the power to modify the provision
in a manner consistent with its objectives such that it is enforceable, and/or
to delete specific words or phrases, and in its reduced form, such provision
will then be enforceable and will be enforced.
11.14 Expenses.
Except
as
otherwise expressly provided in this Agreement, each Party will bear its
own
costs and expenses incurred in connection with the preparation, execution
and
performance of this Agreement and the Transactions including all fees and
expenses of agents, representatives, financial advisors, legal counsel and
accountants. Greinke agrees that CFS has not borne nor will bear any costs
and
expenses (including any legal fees and expenses of any Greinke Party) in
connection with this Agreement or any of the Transactions.
11.15 Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises,
this
Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring any Party
because of the authorship of any provision of this Agreement. Any reference
to
any federal, state, local, or foreign Law will be deemed also to refer to
Law as
amended and all rules and regulations promulgated thereunder, unless the
context
requires otherwise, words “include,” “includes,”
and
“including”
will be
deemed to be followed by “without
limitation.”
Pronouns
in masculine, feminine, and neuter genders will be construed to include any
other gender, and words in the singular form will be construed to include
the
plural and vice versa, unless the context otherwise requires. The words
“this
Agreement,” “herein,” “hereof,” “hereby,” “hereunder,”
and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The Parties intend that
each
representation, warranty, and covenant contained herein will have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached will not detract from or mitigate the fact that the Party is in
breach
of the first representation, warranty, or covenant.
61
11.16 Incorporation
of Exhibits, Annexes, and Schedules.
The
Exhibits, Annexes, Schedules, and other attachments identified in this Agreement
are incorporated herein by reference and made a part hereof.
11.17 Joint
and Several Obligations.
Notwithstanding
anything to the contrary in this Agreement, the covenants and obligations
of,
and the representations and warranties made by or attributable to, any Greinke
Party pursuant to this Agreement will be deemed to be made by and attributable
to each Greinke Party, jointly and severally, and UFEN will have the right
to
pursue remedies against any one or more Greinke Party, without any obligation
to
give notice to or pursue all Greinke Parties or to give notice to or pursue
any
individual Greinke Party before pursuing any other Greinke Party.
11.18 Remedies.
Except
as
expressly provided herein, the rights, obligations and remedies created by
this
Agreement are cumulative and in addition to any other rights, obligations,
or
remedies otherwise available at Law or in equity. Except as expressly provided
herein, nothing herein will be considered an election of remedies.
11.19 Electronic
Signatures.
(a) Notwithstanding
the Electronic Signatures in Global and National Commerce Act (15 U.S.C.
Sec.
7001 et seq.),
the
Uniform Electronic Transactions Act, or any other Law relating to or enabling
the creation, execution, delivery, or recordation of any Contract or signature
by electronic means, and notwithstanding any course of conduct engaged in
by the
Parties, no Party will be deemed to have executed a Transaction Document
or
other document contemplated thereby (including any amendment or other change
thereto) unless and until such Party shall have executed such Transaction
Document or other document on paper by a handwritten original signature or
any
other symbol executed or adopted by a Party with current intention to
authenticate such Transaction Document or such other document
contemplated.
(b) Delivery
of a copy of a Transaction Document or such other document bearing an original
signature by facsimile transmission (whether directly from one facsimile
device
to another by means of a dial-up connection or whether mediated by the worldwide
web), by electronic mail in “portable document format” (“.pdf”)
form,
or by any other electronic means intended to preserve the original graphic
and
pictorial appearance of a document, will have the same effect as physical
delivery of the paper document bearing the original signature. “Originally
signed”
or
“original
signature”
means or
refers to a signature that has not been mechanically or electronically
reproduced.
62
IN
WITNESS WHEREOF, the Parties have executed this Agreement on
the date
first above written.
By:
|
/s/
Xxxxxxx XxXxxxxx
|
Xxxxxxx
XxXxxxxx
|
|
President
and Chief Executive Officer
|
|
CARDLOCK
FUELS SYSTEM, INC.
|
|
By:
|
/s/
Xxxxx X. Xxxxxxx
|
Xxxxx
X. Xxxxxxx
|
|
Chairman
and President
|
|
/s/
Xxxxx X. Xxxxxxx
|
|
XXXXX
X. XXXXXXX, an individual
|
|
XXXXX
X. XXXXXXX, AS TRUSTEE UNDER
THE
GREINKE BUSINESS LIVING TRUST
DATED
APRIL 20, 1999
|
|
Xxxxx
X. Xxxxxxx, Trustee
|
63