STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of February 8, 2007 (this "Agreement"),
by and between Xxxxxx Xxxxx, an individual with an address at 000 Xxxx Xxx
Xxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the "Seller"), and Xxx Xx, an individual
with an address of X.X. Xxx 000-000,Xxxxxxx Xxxxx Xxxx, Xxxxxxxx Xxxx, X.X.
China(the "Purchaser").
BACKGROUND
The Seller is the owner of 15,000,000 shares of common stock of the
Company (the "Seller Shares"), which represent approximately 97.72% of the
issued and outstanding capital stock of the Company as of the date hereof
calculated on a fully-diluted basis. The Seller desires to sell, and the
Purchaser desires to purchase, all of the Seller Shares.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, the Company, the Seller and the Purchaser hereby
agree as follows:
1. Purchase and Sale.
The Seller shall sell, transfer, convey and deliver unto the Purchaser,
and the Purchaser shall acquire and purchase from the Seller, all of the Seller
Shares.
2. Purchase Price.
(a) General. The purchase price (the "Purchase Price") for the Seller
Shares and for the Note is FIVE HUNDRED NINETY SIX THOUSAND SEVEN HUNDRED FORTY
FIVE DOLLARS ($596,745.00 US) payable as specified in this Section 2, subject to
the other terms and conditions of this Agreement.
(b) Deposit. The Purchaser has deposited Fifty Thousand Dollars ($50,000)
of the Purchase Price into escrow (the "Deposit"), pursuant to the Escrow
Agreement, dated as of January 12, 2007, by and among Tree Anchor Law Firm,
PLLC, a Kentucky limited liability company (the "Escrow Agent"), the Seller and
the Purchaser (the "Escrow Agreement").
(c) Payment at Closing. At the Closing, the Purchaser shall pay to the
Seller the remainder of the Purchase Price in the amount of FIVE HUNDRED FORTY
SIX THOUSAND SEVEN HUNDRED FORTY FIVE DOLLARS ($546,745.00 US) (the "Closing
Payment") via wire transfer of immediately available funds, or certified check
3. The Closing.
(a) General. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place by exchange of documents among the
Parties by fax or courier, as appropriate, following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) not later than February
15, 2007 or such other date as the Purchaser and the Seller may mutually
determine in writing (the "Closing Date").
(b) Deliveries at the Closing. At the Closing: (i) the Seller shall
deliver to the Purchaser's attorney at Xxxxx & Xxx Xxxxxx, LLP, with offices at
0 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, the various certificates, instruments,
and documents referred to in Section 11(a), (ii) the Purchaser shall deliver to
the Seller the various certificates, instruments, and documents referred to in
Section 11(b), (iii) the Seller shall deliver to the Purchaser's attorney at
Xxxxx & Xxx Xxxxxx, LLP, with offices at 0 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, the Stock Certificates, endorsed in blank or accompanied by duly executed
assignment documents and including a Medallion Guarantee, and (iv) the Purchaser
shall deliver to the Seller the Closing Payment, subject to certain adjustments,
as set forth in Section 2.
4. Defined Terms.
The following terms used in this Agreement shall be construed to have the
meanings set forth or referenced below.
"Adverse Consequences" shall mean all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, taxes, Liens, losses, lost
value, expenses, and fees, including court costs and attorneys' fees and
expenses.
"Agreement" shall have the meaning set forth in the Caption.
"Affiliate" shall mean with respect to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with such Person, including, without limitation, any partner, officer, director,
or member of such Person and any venture capital fund now or hereafter existing
which is controlled by or under common control with one or more general partners
or shares the same management company with such Person.
"Certificates" shall have the meaning set forth in Section 3(b).
"Closing" shall have the meaning set forth in Section 3(a).
"Closing Date" shall have the meaning set forth in Section 3(a).
"Closing Payment" shall have the meaning set forth in Section 2(c).
"Common Stock" shall have the meaning set forth in Section 6(d).
"Company" shall mean Industrial Electric Services, Inc. a Florida
corporation incorporated on August 5, 2005.
"Company SEC Documents" shall have the meaning set forth in Section 6(i).
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"Deposit" shall have the meaning set forth in Section 2(b).
"Effective Date" shall have the meaning set forth in Section 11(a)(vii).
"Escrow Agent" shall have the meaning set forth in Section 2(b).
"Escrow Agreement" shall have the meaning set forth in Section 2(b).
"Exchange Act" shall mean the Exchange Act of 1934, as amended.
"GAAP" shall have the meaning set forth in Section 6(i).
"Indemnified Party" shall have the meaning set forth in Section 12(d)(i).
"Indemnifying Party" shall have the meaning set forth in Section 12(d)(i).
"INEL LLC" shall mean Industrial Electric Services, LLC, a Kentucky
limited liability company formed on December 10, 2003, a wholly-owned subsidiary
of the Company.
"Liabilities" shall mean any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"Liens" shall have the meaning set forth in Section 5(d).
"Note" shall mean that certain convertible note of the Company evidencing
the Company's indebtedness to International Machinery Movers, Inc., a copy of
which is attached hereto as Exhibit B.
"Parties" shall have the meaning of Purchaser and Seller.
"Party" shall have the meaning of either the Purchaser or Seller.
"Person" means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, governmental body or other entity.
"Purchaser" shall have the meaning set forth in the Caption to this
Agreement.
"Purchase Price" shall have the meaning set forth in Section 2(a).
"SEC" shall have the meaning set forth in Section 6(i).
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Seller" shall have the meaning set forth in the Caption to this
Agreement.
"Seller Shares" shall have the meaning set forth in the recitals to this
Agreement.
"SOX Certifications" shall have the meaning set forth in Section 6(i).
"Third Party Claim" shall have the meaning set forth in Section 12(d)(i).
5. Representations and Warranties of the Sellers.
The Seller represents and warrants to the Purchaser that the statements
contained in this Section 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 as though the Closing Date were substituted for the date of this
Agreement throughout this Section 5).
(a) The Seller has the power and authority to execute, deliver and perform
the Seller's obligations under this Agreement and to sell, assign, transfer and
deliver to the Purchaser the Seller Shares as contemplated hereby. No permit,
consent, approval or authorization of, or declaration, filing or registration
with any governmental or regulatory authority or consent of any third party is
required in connection with the execution and delivery by the Seller of this
Agreement and the consummation of the transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby or compliance with the
terms and conditions hereof by the Seller will violate or result in a breach of
any term or provision of any agreement to which the Seller is bound or is a
party, or be in conflict with or constitute a default under, or cause the
acceleration of the maturity of any obligation of the Seller under any existing
agreement or violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Seller or any properties or assets of the Seller.
(c) This Agreement has been duly and validly executed by the Seller and
constitutes the valid and binding obligation of the Seller and the Company,
enforceable against the Seller and the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other laws
affecting creditors' rights generally or by limitations on the availability of
equitable remedies.
(d) The Seller Shares are owned beneficially and of record by the Seller
and are validly issued and outstanding, fully paid for and non-assessable with
no personal liability attaching to the ownership thereof. The Seller owns the
Seller Shares free and clear of all liens, charges, security interests,
encumbrances, claims of others, options, warrants, purchase rights, contracts,
commitments, equities or other claims or demands of any kind (collectively,
"Liens"), and upon delivery of the Seller Shares to the Purchaser, the Purchaser
will acquire good, valid and marketable title thereto free and clear of all
Liens. The Seller is not a party to any option, warrant, purchase right, or
other contract or commitment that could require the Seller to sell, transfer, or
otherwise dispose of any capital stock of the Company (other than pursuant to
this Agreement). The Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock of
the Company. The Company was formed on August 5, 2005 to acquire all the
interests of INEL LLC, which was acquired from the Seller and other parties in
exchange for the issuance of the Seller Shares. At the time of such acquisition
and issuance, INEL LLC had such assets and operations as are reflected in the
Company SEC Documents.
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6. Representations and Warranties of the Seller concerning the Company.
The Seller represents and warrants to the Purchaser that the statements
contained in this Section 6 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 as though the Closing Date were substituted for the date of this
Agreement throughout this Section 6).
(a) The Company is a corporation in good standing duly incorporated in the
State of Florida. The Company is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required. The Company has full corporate power and authority and all licenses,
permits, and authorizations necessary to carry on its business. As INEL LLC has
been dissolved, the Company has no subsidiaries and does not control any other
subsidiaries, directly or indirectly, or have any direct or indirect equity
participation in any other entity.
(b) The Company's authorized capital stock, as of the date of this
Agreement and as of the Closing, consists of 1,000,000,000 shares of common
stock, no par value per share ("Common Stock"), of which 15,350,000 shares are
issued and outstanding, and 20,000,000 shares of preferred stock, no par value
per share, none of which is issued and outstanding. The Company has not reserved
any shares of its Common Stock for issuance upon the exercise of options,
warrants or any other securities that are exercisable or exchangeable for, or
convertible into, Common Stock. All of the issued and outstanding shares of
Common Stock are validly issued, fully paid and non-assessable and have been
issued in compliance with applicable laws, including, without limitation,
applicable federal and state securities laws. There are no outstanding options,
warrants or other rights of any kind to acquire any additional shares of capital
stock of the Company or securities exercisable or exchangeable for, or
convertible into, capital stock of the Company, nor is the Company committed to
issue any such option, warrant, right or security. There are no agreements
relating to the voting, purchase or sale of capital stock (i) between or among
the Company and any of its stockholders, (ii) between or among the Seller and
any third party, or (iii) to the best knowledge of the Seller, between or among
any of the Company's stockholders. The Company is not a party to any agreement
granting any stockholder of the Company the right to cause the Company to
register shares of the capital stock of the Company held by such stockholder
under the Securities Act. The stockholder list provided to the Purchaser is a
current stockholder list generated by its transfer agent, and such list
accurately reflects all of the issued and outstanding shares of the Company's
Common Stock.
(c) The Company does not have any restrictions in place relative to its
ability to implement any reverse split of its Common Stock, except as such
restrictions may be imposed under the laws of the state of Florida.
(d) As of the date hereof, the Company has no Liabilities.
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(e) There is no legal, administrative, investigatory, regulatory or
similar action, suit, claim or proceeding which is pending or, to the Seller's
knowledge, threatened against the Company or INEL LLC.
(f) The Company has, to the best of its information and belief, one market
maker for its Common Stock.
(g) During the period from its inception through September 30, 2006, the
Company has filed or furnished (i) all reports, schedules, forms, statements,
prospectuses and other documents required to be filed with, or furnished to, the
U.S. Securities and Exchange Commission (the "SEC") by the Company (all such
documents, as amended or supplemented, are referred to collectively as the
"Company SEC Documents") and (ii) all certifications and statements required by
(A) Rule 13a-14 or 15d-14 under the Exchange Act, or (B) 18 U.S.C. ss.1350
(Section 906 of the Xxxxxxxx-Xxxxx act of 2002) with respect to any applicable
Company SEC Document (collectively, the "SOX Certifications"). The Company has
made available to the Purchaser all SOX Certifications and comment letters
received by the Company from the staff of the SEC and all responses to such
comment letters by or on behalf of the Company. Through September 30, 2006, the
Company complied in all respects with its SEC filing obligations under the
Exchange Act and the Securities Act. Each of the audited financial statements
and related schedules and notes thereto and unaudited interim financial
statements of the Company contained in the Company SEC Documents (or
incorporated therein by reference) were prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
("GAAP") (except in the case of interim unaudited financial statements) except
as noted therein, and fairly present in all respects the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations, cash flows and changes
in stockholders' equity for the periods then ended, subject (in the case of
interim unaudited financial statements) to normal year-end audit adjustments
(the effect of which will not, individually or in the aggregate, be adverse)
and, such financial statements complied as to form as of their respective dates
in all respects with applicable rules and regulations of the SEC. The financial
statements referred to herein reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements. No financial statements of any Person
not already included in such financial statements are required by GAAP to be
included in the consolidated financial statements of the Company. Neither the
Company nor, to the Company's knowledge, any of its officers, has received
notice from the SEC or any other governmental authority questioning or
challenging the accuracy, completeness, content, form or manner of filing or
furnishing of the SOX Certifications.
(h) Each of the Company and INEL LLC has properly filed all federal, state
and local tax returns and has paid all taxes, assessments and penalties due and
payable. All such tax returns were complete and correct in all respects as
filed, and no claims have been assessed with respect to such returns. There are
no present, pending, or threatened audit, investigations, assessments or
disputes as to taxes of any nature payable by the Company or any of its
subsidiaries, nor any tax liens whether existing or inchoate on any of the
assets of the Company or any of its subsidiaries, except for current year taxes
not presently due and payable. No Internal Revenue Service or foreign, state,
county or local tax audit is currently in progress. Neither the Company nor any
of its subsidiaries has waived the expiration of the statute of limitations with
respect to any taxes. There are no outstanding requests by the Company or any of
its subsidiaries for any extension of time within which to file any tax return
or to pay taxes shown to be due on any tax return.
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(i) The Company does not have any ongoing operations and does not employ
any employees and does not maintain any employee benefit or stock option plans.
(j) Since September 30, 2006, there has not been any event or condition of
any character which has adversely affected, or may be expected to adversely
affect, the Company's business or prospects, including, but not limited to any
adverse change in the condition, assets, Liabilities (existing or contingent) or
business of the Company from that shown in the financial statements of the
Company included in its quarterly report on Form 10-QSB filed for the quarter
ended September 30, 2006.
(k) Each of the Company and INEL LLC has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of all
governmental authorities, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against the Company or INEL LLC alleging any failure to so comply. To
the knowledge of the Seller, neither the Company or INEL LLC, nor any officer,
director, employee, consultant or agent of the Company or INEL LLC, has made,
directly or indirectly, any payment or promise to pay, or gift or promise to
give or authorized such a promise or gift, of any money or anything of value,
directly or indirectly, to any governmental official, customer or supplier for
the purpose of influencing any official act or decision of such official,
customer or supplier or inducing him, her or it to use his, her or its influence
to affect any act or decision of a governmental authority or customer, under
circumstances which could subject the Company or INEL LLC or any officers,
directors, employees or consultants of the Company or INEL LLC to administrative
or criminal penalties or sanctions.
(l) No representation or warranty by the Company in this Agreement, nor in
any certificate, schedule or exhibit delivered or to be delivered pursuant to
this Agreement, contains or will contain, at the time such statement was or is
made, any untrue statement of material fact, or omits or will omit to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they were or are made, not misleading.
7. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Seller that the statements
contained in this Section 7 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 as though the Closing Date were substituted for the date of this
Agreement throughout this Section 7).
(a) The Purchaser has full power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby. This Agreement
has been duly and validly executed by the Purchaser and constitutes the valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting creditors' rights generally or by
limitations on the availability of equitable remedies.
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(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by the
Purchaser with any of the provisions hereof will: violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the properties or assets of, the
Purchaser under any of the terms, conditions or provisions of any material note,
bond, indenture, mortgage, deed or trust, license, lease, agreement or other
instrument or obligation to which it is a party or by which it or any of its
properties or assets may be bound or affected, except for such violations,
conflicts, breaches or defaults as do not have, in the aggregate, any material
adverse effect; or violate any material order, writ, injunction, decree,
statute, rule or regulation applicable to the Purchaser or any of its properties
or assets, except for such violations which do not have, in the aggregate, any
material adverse effect.
(c) The Purchaser is acquiring the Seller Shares for his own account for
investment and not for the account of any other person and not with a view to or
for distribution, assignment or resale in connection with any distribution
within the meaning of the Securities Act. The Purchaser is an Accredited
Investor as set forth in SEC Regulation D and as such the Purchaser has
knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of acquiring the Seller Shares. The
Purchaser acknowledges that the Shares have not been registered under the
Securities Act, that such registration is required for any subsequent
distribution, assignment or resale of the Shares unless there is an applicable
exemption and that any such registration shall be the sole responsibility and
expense of the Purchaser.
(d) No permit, consent, approval or authorization of, or declaration,
filing or registration with any governmental or regulatory authority or the
consent of any third party is required in connection with the execution and
delivery by the Purchaser of this Agreement and the consummation of the
transactions contemplated hereby.
(e) No representation or warranty by the Purchaser in this Agreement, nor
in any certificate, schedule or exhibit delivered or to be delivered pursuant to
this Agreement, contains or will contain, at the time such statement was or is
made, any untrue statement of material fact, or omits or will omit to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances under which they were or are made, not misleading.
(f) No Brokers or Finders. No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Company for any commission, fee or other compensation as a finder or broker, or
in any similar capacity, and the Seller will indemnify and hold the Buyer
harmless against any liability or expense arising out of, or in connection with,
any such claim.
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9. Pre-Closing Covenants.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 11 below).
(b) Form 8-K Filing; Notices and Consents. Concurrent with the Closing of
this Agreement, the Purchaser shall prepare, sign and be solely responsible for
all fees and expenses concerning the Company's concurrent filing a Form 8-K with
the SEC containing all of the information required in Form 8-K in connection
with this Agreement and all transactions or agreements contemplated herein. The
Seller will cause the Company to give any notices to third parties, and will
cause the Company to use its best efforts to obtain any third party consents,
that the Purchaser may reasonably request. Each of the Parties will (and the
Purchaser will cause and pay any and all fees and costs of the Company to) give
any notices to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governmental authorities necessary in
order to consummate the transactions contemplated hereby. The parties
acknowledge that, if required, the Purchaser will be preparing under SEC Rule
14f-1 under the Exchange Act an information statement containing certain
specified disclosures and causing the same to be filed with the SEC and mailed
to the Company's shareholders at least 10 days before any person designated by
the Purchaser can become a director of the Company. The Purchaser and the Seller
agree to cooperate fully with the Company in the preparation and filing of such
information statement and to provide all information therefor respectively
needed from them in a timely manner, so as not to cause undue delay in the
filing of the information statement or any amendment thereto. Purchaser shall
pay all fees and expenses associated with such filing. Otherwise, neither the
Company nor the Seller nor the Purchaser is aware of any third party consent nor
other filing or notice to third parties that is necessary in respect of this
Agreement.
(c) Operation of Business. The Seller will not cause or permit the Company
to engage in any practice, take any action, or enter into any transaction except
for ministerial matters necessary to maintain the Company in good standing and
to arrange for the filing of all necessary reports required under the Exchange
Act to make the Company a reporting company. Without limiting the generality of
the foregoing, the Seller will not cause or permit the Company to (i) declare,
set aside, or pay any dividend or make any distribution with respect to its
capital stock or redeem, purchase, or otherwise acquire any of its capital stock
except as otherwise expressly specified herein, (ii) issue, sell, or otherwise
dispose of any of its capital stock, or grant any options, warrants, preemptive
or other rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock, (iii) make any capital expenditures, loans,
or incur any other obligations or Liabilities, (iv) enter into any agreements
involving expenditures individually, or in the aggregate, of more than $1,000
(other than agreements for professional services which will be paid in full at
or prior to the Closing), (v) enter into any agreement or incur any other
commitment, or (vi) otherwise engage in any practice, take any action, or enter
into any transaction that is inconsistent with the transactions contemplated
hereby.
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(d) Preservation of Business. The Seller will cause the Company to keep
its business and properties substantially intact. INEL LLC shall have no assets,
Liabilities, employees or consultants and shall have no operations or
contractual obligations.
(e) Notice of Developments. The Seller will give prompt written notice to
the Purchaser of any material adverse development causing a breach of any of the
representations and warranties in Section 5. The Purchaser will give prompt
written notice to the Seller of any material adverse development causing a
breach of any of the representations and warranties in Section 7. No disclosure
by any Party pursuant to this Section 9, however, shall be deemed to amend or
supplement the disclosures contained in any schedules hereto or to prevent or
cure any misrepresentation, breach of warranty, or breach of covenant.
10. Post-Closing Covenants.
The Parties agree as follows with respect to the period following the
Closing.
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 12). The
Seller acknowledges and agrees that from and after the Closing the Purchaser
will be entitled to possession of all documents, books, records (including tax
records), agreements, and financial data of any sort relating to the Company.
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, the other Party will cooperate with him or it and his or
its counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefor under Section 12)
(c) Cooperation. The Seller acknowledges and agrees to cooperate with the
Purchaser in connection with the filing of the Company's Annual Report on Form
10-KSB with the SEC for the fiscal year ended December 31, 2006. The Seller
agrees to assist and will cause the Company's current auditor to assist the
Purchaser in the performance of any action necessary or desirable to effect such
filing as the Purchaser may reasonably request, at the sole cost and expense of
the Xxxxxxxxx.
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00. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to consummate the transactions to be performed by the Purchaser in
connection with the Closing are subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in Sections 5 and 6
shall be true and correct in all material respects at and as of the Closing
Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) the Company shall have procured all of the third party
consents required in order to effect the Closing;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of the Purchaser to own
the Seller Shares and to control the Company, or (D) affect adversely the right
of the Company to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Purchaser a certificate
to the effect that (A) each of the conditions specified above in Section
11(a)(i)-(iv) is satisfied in all respects, and (B) as of the Closing, the
Company has no Liabilities, except for those that are being paid from the
proceeds of the sale of the Seller Shares at Closing, in accordance with the
Funds Flow Memo;
(vi) the Purchaser shall have received (A) the resignation of the
sole director of the Company, effective as of the Closing, or if the Company
files a Schedule 14f-1 information statement, as of the tenth (10th) day
following the filing by the Company of such information statement with the SEC
and transmittal thereof to all holders of record of securities of the Company
who would be entitled to vote at a meeting for the election of directors (the
"Effective Date") and (B) the resignation, effective as of the Closing, of the
sole officer of the Company;
(vii) the designees specified by the Purchaser shall have been
appointed as officers of the Company and any designees of the Purchaser who may
be lawfully appointed to the Board of Directors of the Company as of the
Effective Date shall have been appointed;
(viii) except for the dissolution of INEL LLC, there shall not have
been any occurrence, event, incident, action, failure to act, or transaction
since September 30, 2006 which has had or is reasonably likely to cause a
material adverse effect on the business, assets, properties, financial
condition, results of operations or prospects of the Company;
11
(ix) the Purchaser shall have received a certificate from the
President of the Company, dated as of the Closing Date, which shall certify to
the truth, correctness and completeness of a copy of the Company's Articles of
Incorporation and By-Laws, as amended to the Closing Date, and a copy of
resolutions adopted by the Board of Directors of the Company authorizing this
Agreement and the transactions contemplated hereby;
(x) the Company shall have maintained prior to and at the Closing
its status as a company whose Common Stock is qualified for quotation on the OTB
Bulletin Board; and
(xi) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby shall be satisfactory in form and substance to the
Purchaser.
(xii) The Purchaser shall have received General Release dated as of
the Closing Date from the Seller, the form of which is attached hereto as
Exhibit A.
The Purchaser may waive any condition specified in this Section
11(a) at or prior to the Closing in writing executed by the Purchaser.
(b) Conditions to Obligation of the Seller. The obligations of the Seller
to consummate the transactions to be performed by it in connection with the
Closing are subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 7 shall
be true and correct in all material respects at and as of the Closing Date;
(ii) the Purchaser shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(iv) the Purchaser shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in Section
11(b)(i)-(iii) is satisfied in all respects;
(v) the Purchaser shall have caused to be prepared the Company's
required filing on Form 8-K and, if required, a Schedule 14f-1 information
statement, the costs of which shall be at the sole expense of the Purchaser; and
(vi) all actions to be taken by the Purchaser in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby shall be satisfactory in form and substance to the Seller.
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The Seller may waive any condition specified in this Section 11(b)
at or prior to the Closing in writing executed by the Seller.
12. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations, warranties and covenants of the Parties shall survive the
Closing hereunder (even if a Party knew or had reason to know of any
misrepresentation or breach of warranty by another Party at the time of Closing)
and continue in full force and effect for a period of twenty four (24) months
thereafter.
(b) Indemnification Provisions for Benefit of the Purchasers.
(i) In the event the Seller breaches (or in the event any third
party alleges facts that, if true, would mean the Seller has breached) any of
its representations, warranties, and covenants contained herein, and, if there
is an applicable survival period pursuant to Section 12(a), provided that the
Purchaser makes a written claim for indemnification against the Seller within
such survival period, then the Seller shall indemnify the Purchaser from and
against the entirety of any Adverse Consequences the Purchaser may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Purchaser may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach).
(ii) The Seller shall indemnify the Purchaser from and against the
entirety of any Adverse Consequences the Purchaser may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability of the
Company (whether or not accrued or otherwise disclosed) (A) for any taxes of the
Company with respect to any tax year or portion thereof ending on or before the
Closing Date (or for any tax year beginning before and ending after the Closing
Date to the extent allocable to the portion of such period beginning before and
ending on the Closing Date) and (B) for the unpaid taxes of any Person (other
than the Company) under Section 1.1502-6 of the Regulations adopted under the
Internal Revenue Code of 1986, as amended (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or otherwise.
(iii) The Seller shall indemnify the Purchaser from and against the
entirety of any Liabilities arising out of the ownership of the Seller Shares or
operation of the Company prior to the Closing.
(iv) The Seller shall indemnify the Purchaser from and against the
entirety of any Adverse Consequences the Purchaser may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any indebtedness or
other Liabilities of the Company existing as of the Closing Date.
(c) Indemnification Provisions for Benefit of the Seller. In the event the
Purchaser breaches (or in the event any third party alleges facts that, if true,
would mean the Purchaser has breached) any of its representations, warranties,
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and covenants contained herein, and, if there is an applicable survival period
pursuant to Section 12(a), provided that the Seller makes a written claim for
indemnification against the Purchaser within such survival period, then the
Purchaser shall indemnify the Seller from and against the entirety of any
Adverse Consequences the Seller may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Seller may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 12, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 10 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (D) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 12(d)(ii), (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 12(d)(ii) is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
14
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 12.
(v) Other Indemnification Provisions. The Seller hereby indemnifies
the Company against any and all claims that may be filed by a current or former
officer, director or employee of the Seller by reason of the fact that such
person was a director, officer, employee, or agent of the Company or was serving
the Company at the request of the Seller or the Company as a partner, trustee,
director, officer, employee, or agent of another entity, whether such claim is
for accrued salary, compensation, indemnification, judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought against the Company (whether such action,
suit, proceeding, complaint, claim, or demand is pursuant to an agreement,
applicable law, or otherwise).
13. Miscellaneous.
(a) Facsimile Execution and Delivery. Facsimile execution and delivery of
this Agreement is legal, valid and binding execution and delivery for all
purposes.
(b) Confidentiality; Press Releases and Public Announcements. Except as
and to the extent required by law, no Party will disclose or use and will direct
its representatives not to disclose or use any information with respect to the
transaction which is the subject of this Agreement, without the consent of the
other Parties. Neither the Seller nor the Company shall issue any press release
or make any public announcement relating to the subject matter of this Agreement
without the prior written approval of the Purchaser; provided, however, that the
Company may without notice or approval make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the Seller and the
Company will use their best efforts to advise the other Parties prior to making
the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
15
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Purchaser and the Seller; provided, however, that the Purchaser
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates, and (ii) designate one or more of its Affiliates to perform
its obligations hereunder, but no such assignment shall operate to release
Purchaser or a successor from any obligation hereunder unless and only to the
extent that Seller agrees in writing.
(f) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
(g) Headings. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
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 the Seller:
Xxxxxx Xxxxx
000 Xxxx Xxx Xxxxxxx
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser:
Xxxxxxx Xxxxxx, Esq.
Xxxxx & Xxx Xxxxxx, LLP
0 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 shall 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.
16
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(j) Dispute Resolution. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be determined by
arbitration in accordance with the governing law provisions of Section 13(i) and
the then existing commercial arbitration rules of the American Arbitration
Association before a panel of three (3) arbitrators in New York, New York,
selected within thirty (30) days of the commencement of such arbitration, with
each participant selecting one arbitrator and the two so selected selecting the
third (or the third being selected by the American Arbitration Association if
agreement on a third is not reached within thirty (30) days); and the Parties
agree that any judgment or award rendered by such arbitrators shall be a final
and binding determination as to such matter or matters and may be entered in any
court having jurisdiction thereof. The arbitrators shall award fees and expenses
(including reasonable attorney fees and expenses) to the prevailing party or, if
they determine there is no prevailing party, as they may otherwise determine..
(k) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Seller or their respective representatives. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall 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 by virtue of any prior or
subsequent such occurrence.
(l) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(m) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Purchaser shall pay 100%
of the costs and expenses of the escrow, as provided in the Escrow Agreement.
(n) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties intend that
each representation, warranty, and covenant contained herein shall 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 shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
17
(o) Incorporation of Exhibits and Schedules. Any exhibits and schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(p) Specific Performance. Each of the Parties acknowledges and agrees that
the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 13(j)),
in addition to any other remedy to which they may be entitled, at law or in
equity.
(q) Seller Acknowledgements. The Seller acknowledges that he: (i) has read
this Agreement; (ii) has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of his own choice and that this
Agreement has been prepared by Purchaser's counsel; (iii) understands the terms
and consequences of the this Agreement; (iv) is fully aware of the legal and
binding effect of this Agreement; and (v) understands that Tree Anchor Law Firm,
PLLC is acting as counsel to the Company and the Seller in connection with the
transactions contemplated by this Agreement and that the law firm of Xxxxx & Xxx
Xxxxxx, LLP is acting as counsel to the Purchaser in connection with the
transactions contemplated by this Agreement and that. Tree Anchor Law Firm, PLLC
is not acting as counsel for the Purchaser
(r) Purchaser Acknowledgements. The Purchaser acknowledges that it: (i)
has read this Agreement; (ii) has been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of its own choice
and that this Agreement has been prepared by counsel of its choice; (iii)
understands the terms and consequences of the this Agreement; (iv) is fully
aware of the legal and binding effect of this Agreement; and (v) understands
that Tree Anchor Law Firm, PLLC is acting as counsel to the Company in
connection with the transactions contemplated by this Agreement and that the law
firm of Xxxxx & Xxx Xxxxxx, LLP is acting as counsel to the Purchaser in
connection with the transactions contemplated by this Agreement, and that. Tree
Anchor Law Firm, PLLC is not acting as counsel for the Purchaser.
Exhibit A: General Release From Seller
Exhibit B: Note
[Signature Pages Follow]
18
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement the
date first above written.
PURCHASER:
--------------------------------
Xxx Xx:
SELLER:
--------------------------------
Xxxxxx Xxxxx
