EXHIBIT 2.1
EXECUTION
COPY
STOCK PURCHASE AGREEMENT
by and among
FORTUNE DIVERSIFIED INDUSTRIES, INC.;
CARTER FORTUNE;
XXXXX XXXXXXXX
AND
XXXX XXXXXX
EXECUTION
COPY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into
effective the 30th day of April 2004 ("Effective Date") by and among Xxxxx
Xxxxxxxx and Xxxx Xxxxxx (collectively "the Sellers"), Fortune Diversified
Industries, Inc., a Delaware corporation ("the Buyer") and Carter Fortune
("Fortune").
BACKGROUND
Innovative Telecommunications Consultants, Inc. ("the Company") is in
the business of upgrading and maintaining wireless facilities (including, but
not limited to cell towers and switching stations) (the "Business").
The parties hereto desire to provide for the acquisition by the Buyer
of the Company through the sale by the Sellers to the Buyer of all the
outstanding shares of capital stock of the Company, which are owned beneficially
and of record by the Sellers, all on the terms and conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
SECTION 1. ACQUISITION OF SHARES.
1.1 Sale and Purchase of Shares of the Company. Subject to the terms
and conditions of this Agreement, at the Closing (as herein defined), the
Sellers shall sell, transfer and deliver to the Buyer 200 shares of the common
stock, no par value, of the Company, constituting all of the outstanding shares
of the Company's capital stock (the "Shares"), and the Buyer shall purchase the
Shares for the consideration set forth in Section 1.2.
1.2 Purchase Price. Subject to Section 1.4, the purchase price (the
"Purchase Price") for the Shares shall be $1,000,000 in cash of which $500,000
shall be paid by wire transfer pursuant to instructions previously given by the
Sellers to the Buyer for that purpose at Closing. Subject to the following
contingencies, the Buyer shall pay to the Sellers the remaining amount of
$500,000 (the "Post-Closing Payment") on or before July 1, 2006. The payment of
$300,000 of the Post-Closing Payment is contingent upon the Company attaining a
cumulative EBITDA of at least $250,000 at any time during the period May 1, 2004
to April 30, 2006 ("Test Period"). If the Company does not attain a cumulative
EBITDA at any time during the Test Period of at least $250,000, the Sellers
shall forfeit the Post-Closing Payment. If the Company does attain a cumulative
EBITDA at any time during the Test Period of at least $250,000, the Buyer shall
pay $300,000 of the Post-Closing Payment to the Sellers. The payment of the
remaining $200,000 of the Post-Closing Payment is contingent upon the Company
attaining a cumulative EBITDA of at least $500,000 during the Test Period.
If the Company attains a cumulative EBITDA during the Test Period of at
least $250,000, the Buyer shall pay $.80 to the Sellers for each $1.00 of
cumulative EBITDA in excess of $250,000 but less than $500,000 during the Test
Period (i.e., maximum payment of $200,000). If the Company does not attain a
cumulative EBITDA during the Test Period of at least $250,000, the Sellers shall
forfeit all of the remaining $200,000 of the Post-Closing Payment.
The Buyer shall pay to the Sellers the Post-Closing Payment within
twenty (20) days of the final EBITDA determinations. If the Sellers qualify for
and are paid $300,000 of the Post-Closing Payment, such amount shall be
non-refundable by Sellers.
EBITDA shall be defined as accrued earnings before any interest
relating to the acquisition, income taxes, depreciation and amortization. In
calculating accrued earnings and EBITDA, Buyer shall not allocate any corporate
overhead to Company in excess of two percent (2%) of sales. The Buyer shall
cause its outside accountant to calculate EBITDA at any time reasonably
requested by the Sellers during the Test Period and shall provide a written
explanation of such calculation to the Sellers within sixty (60) days of such
request. The Buyer's calculation of EBITDA shall be final and binding upon the
parties unless the Sellers object to such calculation within fifteen (15) days
of the receipt thereof, in which case the Buyer and the Sellers shall exercise
their respective best efforts to resolve such dispute within fifteen (15) days
of the Sellers' objection. If the Buyer and the Sellers are unable to agree on a
final calculation of EBITDA within this fifteen (15) day period, then the
parties shall select a neutral accounting firm (the "Arbitrating Accounting
Firm") which shall make a final determination. In such case, each of the Buyer
and the Sellers shall inform the Arbitrating Accounting Firm of their respective
calculations of EBITDA, and each shall be granted the opportunity to provide to
the Arbitrating Accounting Firm verbal and written explanations of their
respective calculations. The Arbitrating Accounting Firm shall be instructed to
complete its calculations within thirty (30) days of its engagement. The
determination of the Arbitrating Accounting Firm shall be final and binding upon
the parties. The fees of the Arbitrating Accounting Firm shall be paid by the
non-prevailing party in any such dispute, as determined by the Arbitrating
Accounting Firm. Any deposit required by the Arbitrating Accounting Firm shall
be paid initially by the Buyer, but if the Buyer prevails in such dispute, the
Sellers shall reimburse the Buyer for the deposit.
1.3 Stock in Lieu of Cash. Each of the Sellers may elect, in his sole
discretion, to receive one share of the common stock of the Buyer ("FDI Stock")
in lieu of each dollar of cash, he may be entitled to receive as part of the
payment due at Closing or the Post-Closing Payment. Each of the Sellers shall
notify the Buyer, in writing, concerning his election prior to Closing or within
ten (10) days of the final EBITDA determinations, as applicable.
1.4 Put Option. Subject to the limitations and restrictions described
below and applicable securities laws, each of the Sellers may, in his sole
discretion, sell any or all of his FDI Stock received by him at Closing (i.e.,
not part of the Post-Closing Payment) to Fortune and Fortune shall purchase any
of the Sellers' shares of FDI Stock offered by Sellers. The put price per share
shall be $1.00. Sellers may only exercise this put option during the period May
1, 2004 to May 1, 2006. Any closing on a sale of any or all of the shares of FDI
Stock to Fortune shall occur within ninety (90) days of Fortune's receipt of
written notice from any of the Sellers requesting exercise of his put option.
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1.5 Target Net Worth. If on the Effective Date, the Company's assets
(excluding goodwill) do not exceed the Company's liabilities by at least
$350,000 ("Target Net Worth"), the Sellers shall apply post-closing earnings to
make-up the difference between the Target Net Worth and the actual difference
between assets and liabilities. An example of this calculation is attached as
Exhibit A. Assets and liabilities shall be determined pursuant to generally
accepted accounting principles (GAAP) consistently applied. Within thirty (30)
days after the Closing, the Buyer and the Sellers shall reconcile and agree upon
the assets and the liabilities that existed on the Effective Date. If upon
reconciliation the Sellers apply post-closing earnings to make-up the
deficiency, the earnings applied shall not be included as part of EBITDA during
the Test Period.
If the Buyer and the Sellers are unable to agree on a final calculation
of the difference between assets and liabilities on or before the deadline
specified in the foregoing paragraph, then the Arbitrating Accounting Firm shall
make a final determination thereof. In such case, each of the Buyer and the
Sellers shall inform the Arbitrating Accounting Firm of their respective
calculations of the amounts at issue, and each shall be granted the opportunity
to provide to the Arbitrating Accounting Firm verbal and written explanations of
their respective calculations. The Arbitrating Accounting Firm shall be
instructed to complete its calculations within thirty (30) days of its
engagement. The determination of the Arbitrating Accounting Firm shall be final
and binding upon the parties. The fees of the Arbitrating Accounting Firm shall
be paid by the non-prevailing Party in any such dispute, as determined by the
Arbitrating Accounting Firm. Any deposit required by the Arbitrating Accounting
Firm shall be paid initially by the Buyer, but if the Buyer prevails in such
dispute, the Sellers shall reimburse the Buyer for the deposit.
SECTION 2. REPRESENTATIONS AND WARRANTIES REGARDING SELLERS.
Each of the Sellers hereby jointly and severally represents and
warrants to the Buyer as follows:
2.1 Power and Authorization. Each of the Sellers has full capacity,
legal right, power and authority to enter into and perform the Sellers'
obligations under this Agreement and under the other agreements and documents
(the "the Sellers Transaction Documents") required to be executed and delivered
by the Sellers prior to or at the Closing. This Agreement has been duly and
validly executed and delivered by each of the Sellers and constitutes the legal,
valid and binding obligation of each of the Sellers enforceable against each of
the Sellers in accordance with its terms except as the same may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other laws affecting the enforcement of creditor's rights in general, and except
that the enforceability of this Agreement is subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or law) and of public policy. When executed and delivered as
contemplated herein, and assuming enforceability thereof against all other
parties, each of the Sellers Transaction Documents shall constitute the legal,
valid and binding obligation of each of the Sellers, enforceable against each of
the Sellers in accordance with its terms except as the same may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other laws affecting the enforcement of creditor's rights in general, and except
that the enforceability of the Sellers Transaction Documents is subject to
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general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or law) and of public policy.
2.2 No Conflicts.
(a) The execution, delivery and performance of this Agreement
and the Sellers Transaction Documents do not and will not (with or
without the passage of time or the giving of notice):
(i) violate or conflict with any law binding upon the
Sellers;
(ii) violate or conflict with, result in a breach of,
or constitute a default or otherwise cause any loss of benefit
under any material agreement or other material obligation to
which any of the Sellers is a party or by which any of the
Sellers or any of the Sellers' assets are bound, or give to
others any rights (including rights of termination,
foreclosure, cancellation or acceleration), in or with respect
to any of the Sellers or any of his/its assets, including,
without limitation, any of the Shares; or
(iii) result in, require or permit the creation or
imposition of any restriction, mortgage, deed of trust,
pledge, lien, security interest or other charge, claim or
encumbrance of any nature upon or with respect to the Shares.
(b) Each consent or approval of, or registration,
notification, filing and/or declaration with, any court, government or
governmental agency or instrumentality, creditor, lessor or other
person required to be given or made by any of the Sellers in connection
with the execution, delivery and performance of this Agreement and the
other agreements and instruments contemplated herein, which are to be
obtained or made in order for transfer of the Shares to be effective as
contemplated herein, has been obtained or made, or will be obtained or
made prior to the Closing.
(c) There are no judicial, administrative or other
governmental actions, proceedings or investigations pending or, to the
actual knowledge of any of the Sellers, threatened, that question any
of the transactions contemplated by, or the validity of, this Agreement
or any of the Sellers Transaction Documents or which, if adversely
determined, would effect the ability of any of the Sellers to enter
into or perform his/its obligations under this Agreement or any of the
Sellers Transaction Documents. None of the Sellers has received any
request from any governmental agency or instrumentality for information
with respect to the transactions contemplated hereby.
2.3 Ownership of the Shares. Each of the Sellers own the Shares
beneficially and of record, free and clear of any restriction, mortgage, deed of
trust, pledge, lien, security interest or other charge, claim or encumbrance.
Except for a buy-sell agreement between the Sellers which will be terminated
prior to the Closing, there are no shareholder or other agreements affecting the
right of any of the Sellers to convey the Shares to the Buyer or any other right
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of any of the Sellers with respect to the Shares, and each of the Sellers have
the right, authority, power and capacity to sell, assign and transfer the Shares
to the Buyer free and clear of any restriction, mortgage, deed of trust, pledge,
lien, security interest or other charge, claim or encumbrance (except for
restrictions imposed generally by applicable securities laws). Upon delivery to
the Buyer of the certificates for the Shares at the Closing, each of the Sellers
will transfer good, valid and marketable title to the Shares, free and clear of
any restriction, mortgage, deed of trust, pledge, lien, security interest or
other charge, claim or encumbrance.
2.4 Brokers. No person acting on behalf of any of the Sellers or under
the authority of any of the Sellers is or will be entitled to any brokers' or
finders' fee or any other commission or similar fee, directly or indirectly,
from any of such parties in connection with any of the transactions contemplated
by this Agreement.
2.5 Full Disclosure. All documents and other papers (or copies thereof)
delivered by or on behalf of the Sellers in connection with the transactions
contemplated by this Agreement are in the same form as they were maintained by
the Sellers, without alteration and are accurate and complete as to items in the
custody of the Sellers.
2.6 Investment Representations and Covenants.
(a) Each of the Sellers understands that the FDI Stock will
not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws on the grounds that the
issuance of the FDI Stock is exempt from registration pursuant to
Section 4(2) of the Securities Act or Regulation D promulgated under
the Securities Act and applicable state securities laws, and that the
reliance of the Buyer on such exemptions is predicated in part on each
of the Sellers' representations, warranties, covenants and
acknowledgments set forth in this Section 2.6.
(b) Each of the Sellers represents and warrants that the FDI
Stock to be acquired by him/it upon consummation of the transactions
contemplated herein will be acquired by him/it for his/its own account,
not as a nominee or agent, and without a view to resale or other
distribution within the meaning of the Securities Act and the rules and
regulations thereunder other than as contemplated by this Agreement,
and that he/it will not distribute all or any portion of the FDI Stock
in violation of the Securities Act.
(c) Each of the Sellers acknowledges that the shares of FDI
Stock are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under
the Securities Act, only in certain limited circumstances.
(d) Each of the Sellers represents and warrants that he/it has
such knowledge and experience in financial and business matters such
that he/it is capable of evaluating the merits and risks of his/its
investment in the FDI Stock.
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(e) Each of the Sellers is in a financial position to afford
to hold the FDI Stock indefinitely, each of the Sellers' financial
condition being such that he/it is not presently under (and does not
contemplate any future) necessity or constraint to dispose of the FDI
Stock to satisfy any existing or contemplated debt or undertaking. Each
of the Sellers recognizes that it may not be possible for him/it to
liquidate his/its investment in the FDI Stock and, accordingly, he/it
may have to hold the FDI Stock, and bear the economic risk of this
investment, indefinitely.
(f) Each of the Sellers understands that neither the
Securities and Exchange Commission nor any other federal or state
agency has recommended, approved or endorsed the purchase of the FDI
Stock as an investment.
(g) Each of the Sellers confirms that the FDI Stock was not
offered to him/it by any means of general solicitation or general
advertising, and that he/it has received no representations or
warranties with respect to the FDI Stock other than those contained or
described in this Agreement or in the Buyer's public filings.
(h) Each of the Sellers acknowledges that he/it has been
provided or that the Buyer has made available to him/it copies of the
Buyer's most recent Form 10-KSB, Form 10-QSB and any Form 8-KS and Form
4s filed since the most recent Form 10-QSB was filed. A description of
the FDI Stock is attached hereto as Exhibit B.
(i) Each of the Sellers acknowledges that the Buyer has given
him/it a reasonable opportunity to ask questions and receive answers
concerning his/its receipt of FDI Stock and to obtain any additional
information which the Buyer possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy
of information.
SECTION 3. Representations and Warranties Regarding the
Company
Each of the Sellers hereby jointly and severally represents and
warrants to the Buyer as follows:
3.1 Organization and Good Standing. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware and has
all necessary corporate power and authority to carry on its business, to own and
lease the assets which it owns and leases, and to perform all of its
obligations. The Company is duly qualified to do business and is in good
standing (if and to the extent the concept of good standing is recognized) under
the laws of Virginia and South Carolina.
3.2 No Conflicts.
(a) The execution, delivery and performance of this Agreement
and the Company Transaction Documents do not and will not (with or
without the passage of time or the giving of notice):
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(i) violate or conflict with the Articles of
Incorporation or Bylaws (or other organizational documents) of
the Company or any law binding upon the Company;
(ii) violate or conflict with, result in a breach of,
or constitute a default or otherwise cause any loss of benefit
under any material agreement or other material obligation to
which the Company is a party or by which it or its assets are
bound, or give to others any right (including rights of
termination, foreclosure, cancellation or acceleration), in or
with respect to the Company or any of its assets; or
(iii) result in, require or permit the creation or
imposition of any restriction, mortgage, deed of trust,
pledge, lien, security interest or other charge, claim or
encumbrance of any nature upon or with respect to the Shares
or, upon or with respect to the Company or any of the
Company's assets.
(b) Each consent or approval of, or registration,
notification, filing and/or declaration with, any court, government or
governmental agency or instrumentality, creditor, lessor or other
person required to be given or made by the Company in connection with
the execution, delivery and performance of this Agreement and the
Company Transaction Documents has been made or will be obtained or made
prior to the Closing. There are no such consents, approvals,
registrations, notifications, filings or declarations which have been
obtained or made involving payment of premium or penalty by, or loss of
benefit to, the Company, and upon consummation of the transactions
contemplated by this Agreement, the Company will be entitled to
continue to use all of the assets and properties now used by it in the
same manner such assets and properties were used prior to Closing.
(c) There are no judicial, administrative or other
governmental actions, proceedings or investigations pending or, to the
actual knowledge of any of the Sellers, threatened that question any of
the transactions contemplated by, or the validity of, this Agreement or
any of the Company Transaction Documents or which, if adversely
determined, would materially interfere with the Company's ability to
enter into or perform its obligations under this Agreement or any of
the Company Transaction Documents. The Company has not received any
request from any governmental agency or instrumentality for information
with respect to the transactions contemplated hereby at any office
located outside of Indiana.
3.3 Capitalization. Schedule 3.3 fully and accurately describes the
authorized, issued and outstanding capital stock and other securities of the
Company. No person has any preemptive or other right with respect to any such
equity interests or other securities. There are no offers, options, warrants,
rights, agreements or commitments of any kind (contingent or otherwise) relating
to the issuance, conversion, registration, voting, sale or transfer of any
equity interests or other securities of the Company (including, without
limitation, the Shares) or obligating the Company or any other person to
purchase or redeem any such equity interests or other securities. The Shares
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constitute all of the issued and outstanding shares of capital stock of the
Company and have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and have been issued in compliance with applicable
securities and other laws.
3.4 Investments and Subsidiaries. The business of the Company is and
has been conducted solely by and through the Company and no other person. The
Company does not directly or indirectly own, control or have any investment or
other interest in any corporation, partnership, joint venture, business trust or
other entity.
3.5 Compliance with Laws. To the actual knowledge of the Sellers, the
Company has complied in all material respects with all applicable domestic and
foreign laws; and the Company or any of the Sellers has not received any written
notice, order or other written communication from any governmental agency or
instrumentality of any alleged, actual or potential violation of or failure to
comply with any law. To the actual knowledge of Sellers, all federal, foreign,
state, local and other governmental consents, licenses, permits, franchises,
grants and authorizations (collectively, "Authorizations") required for the
operation of the Business as currently conducted, are in full force and effect
without any default or violation thereunder by the Company or by any other party
thereto. The Company has not received any notice of any claim or charge that the
Company is in violation of or in default under any such Authorization. No
proceeding is pending or, to the actual knowledge of any of the Sellers,
threatened by any person to revoke or deny the renewal of any Authorization of
the Company or the Sellers. The Company or any of the Sellers has not been
notified that any such Authorization may not in the ordinary course be renewed
upon its expiration or that by virtue of the transactions contemplated hereby
any such Authorization may not be granted or renewed.
3.6 Litigation. Except as set forth in Schedule 3.6: (a) there are no
claims, actions, suits, proceedings (arbitration or otherwise) or, to the actual
knowledge of any of the Sellers, investigations involving or affecting the
Company or their businesses or assets, or their directors, officers or
shareholders in their capacities as such, before or by any court or governmental
agency or instrumentality, or before an arbitrator of any kind; (b) no pending
claim, action, suit, proceeding or investigation, if determined adversely, would
either individually or in the aggregate have a material adverse effect on the
Company; (c) to the knowledge of any of the Sellers, no such claim, action,
suit, proceeding or investigation is presently threatened or contemplated; and
(d) there are no unsatisfied judgments, penalties or awards against or affecting
the Company or any of their businesses, properties or assets.
3.7 Financial Statements.
(a) Schedule 3.7(a) includes the federal income tax return of
the Company as of December 31, 2003 the "Company Tax Return"). The
Company Tax Return accurately and fairly presents the financial
condition and results of the operations of the Company as of the date
thereof and for the period referred to.
(b) Prior to Closing, the Company delivered to the Buyer a
briefing book ("Briefing Book") describing the Company (including but
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not limited to tax returns and other financial information). To the
actual knowledge of the Sellers, the Briefing Book accurately and
fairly presents the financial condition and results of the operations
of the Company as of the date thereof and for the period referred to.
Except as set forth in Schedule 3.7(b), as of the date of Closing, the
Company will not have any material liability or material obligation of
any nature that is not reflected in the Briefing Book other than
current liabilities arising in the ordinary course of business
consistent with past practice.
3.8 Directors and Officers. All agreements with its directors and
officers are terminable at will by the Company and there are no contracts,
arrangements or agreements in place with any director or officer which would
require the payment of any severance or change of control payment.
3.9 Affiliate Agreements. There are no agreements, arrangements or
understandings between the Company on the one hand and any of the Sellers or any
present or former director, shareholder or officer of the Company or any member
of the immediate family of or any person or entity controlling or controlled by
any of such persons (a "Related Party"). All agreements and arrangements between
the Company and all Related Parties are terminable by the Company upon written
notice, without payment of penalty or premium of any kind. None of the Sellers
has any claim or right against the Company.
3.10 Corporate Books. The copies of the Articles of Incorporation of
the Company, as certified by the Secretary of State of its jurisdiction of
incorporation, and of its By-Laws (or of its other comparable organizational
documents), as certified by its secretary, which have been delivered to the
Buyer, are true, complete and correct and are in full force and effect as of the
date hereof. The stock records of the Company fairly and accurately reflect the
record ownership of all of its outstanding shares of capital stock. The minute
books of the Company contain materially complete and accurate records of all
meetings held of, and corporate action taken by, the shareholders, the board of
directors and each committee of the board of directors of the Company. Complete
and accurate copies, as of the date hereof, of all such minute books and stock
records have been made available to the Buyer.
3.11 Material Adverse Change. Since December 31, 2003, there has been
no material change in the business, assets, prospects, condition (financial or
otherwise) or results of operations of the Company, except as reflected in the
Briefing Book. The Company, for itself, has not omitted or failed to disclose
any material fact or contingency.
3.12 Taxes. The Company has filed, or caused to be filed, all United
States Federal tax returns and all other tax returns required to be filed and
has paid all taxes due pursuant to said returns or pursuant to any assessment
against the Company, except such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided and as to which no
mortgage, pledge, security interest, hypothecation, assignment, encumbrance or
preference, priority or other security agreement, preferential arrangement,
lien, charge or deposit arrangement of any kind or nature whatsoever (a "Lien")
exists (other than potential liens for taxes not yet due). No tax liens have
been filed and no claims are being asserted with respect to any such taxes.
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3.13 Employee Benefits. Schedule 3.13 contains a complete and correct
list of all benefit plans, arrangements, commitments and payroll practices,
(whether or not employee benefit plans ("Employee Benefit Plans") as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), including, without limitation, sick leave, vacation pay, severance
pay, salary continuation for disability, consulting or other compensation
arrangements, retirement, deferred compensation, bonus, incentive compensation,
stock purchase, stock option, health including hospitalization, medical and
dental, life insurance, xxxxxxx'x compensation insurance and scholarship
programs maintained for the benefit of any present or former employees of the
Company (including but not limited to the employees of each of the Company's
clients or customers) or to which the Company has contributed or is or was
within the last three years obligated to make payments.
3.14 Accuracy of Information. No information, exhibit or report
furnished by the Sellers for themselves or on behalf of the Company to the Buyer
in connection with the negotiation of, or compliance with, this Agreement, the
Sellers Transaction Documents and the Company Transaction Documents contained
any material misstatement of fact or omitted to state a material fact or any
material fact necessary to make the statements contained therein not misleading.
3.15 Material Agreements. The Company is not a party to any agreement
or instrument or subject to any charter or other corporate restriction which is
reasonably expected to have a material adverse effect on the Company. The
Company is not in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in (a) any agreement to
which it is a party which default could reasonably be expected to have a
material adverse effect on the Company, or (b) any agreement or instrument
evidencing or governing indebtedness.
3.16 Ownership of Properties. Except as disclosed on Schedule 3.16,
("Permitted Liens") on the date of this Agreement, the Company has good title,
free and clear of all liens other than Permitted Liens, to all of their
respective assets.
3.17 Indebtedness. Except as described in the Briefing Book and trade
debt incurred in the ordinary course of business, the Company does not have any
indebtedness.
3.18 Intellectual Property.
(a) The Company has exclusive ownership of, or valid license
or authority to use, all United States and foreign patents, patent
applications, copyrights, licenses, trademarks, trademark applications
and registrations, service marks, trade or product names, company names
and logos (collectively, "Intellectual Property") used in the Business
as presently conducted. Schedule 3.18(a) contains a correct and
complete list of the Company's United States and foreign patent,
trademarks and copyrights, both registered and pending.
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(b) All licenses or other agreements under which the Company
is granted rights in any of the Intellectual Property are in full force
and effect and there is no material default by any party thereto.
(c) The Company's use of any Intellectual Property does not
infringe on any rights of any other person and the Company is not
making unauthorized use of any confidential information or trade
secrets of any person, including without limitation any former employer
or any past or present employee of the Company.
3.19 Force Majeure. The business nor the assets of the Company are
presently affected by any fire, explosion, accident, strike, lockout or other
labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the
public enemy or other casualty.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Sellers as follows:
4.1 Organization and Good Standing. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power and authority to carry on its
business as presently conducted, to own and lease the assets which it owns and
leases and to perform all its obligations under each agreement and instrument by
which it is bound.
4.2 Power and Authorization. The Buyer has full capacity, legal right,
power and authority to enter into and perform its obligations under this
Agreement and under the other agreements and documents (the "the Buyer
Transaction Documents") required to be executed and delivered by it prior to or
at the Closing. The execution, delivery and performance by the Buyer of this
Agreement and the Buyer Transaction Documents have been duly authorized by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered by the Buyer and constitutes the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting the
enforcement of creditor's rights in general, and except that the enforceability
of the Buyer Transaction Documents is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or law) and of public policy. When executed and delivered as contemplated
herein, and assuming enforceability thereof against all other parties, each of
the Buyer Transaction Documents shall constitute the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting the
enforcement of creditor's rights in general, and except that the enforceability
of the Buyer Transaction Documents is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or law) and of public policy.
4.3 No Conflicts.
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(a) The execution, delivery and performance of this Agreement
and the Buyer Transaction Documents do not and will not (with or
without the passage of time or the giving of notice):
(i) violate or conflict with the Buyer's Certificate
of Incorporation, or Bylaws of the Buyer or any law binding
upon the Buyer;
(ii) violate or conflict with, result in a breach of,
or constitute a default or otherwise cause any loss of benefit
under any material agreement or other material obligation to
which the Buyer is a party or by which it or its assets are
bound, or give to others any right (including rights of
termination, foreclosure, cancellation or acceleration), in or
with respect to the Buyer, its assets or any of its
Affiliates' assets; or
(iii) violate any resolution adopted by the board of
directors or stockholders of the Buyer.
(b) Each consent or approval of, or registration,
notification, filing and/or declaration with, any court, government or
governmental agency or instrumentality, creditor, lessor or other
person required to be given or made by the Buyer in connection with the
execution, delivery and performance of this Agreement and the other
agreements and instruments contemplated herein has been obtained or
made, or will be obtained or made prior to the Closing. (c) There are
no judicial, administrative or other governmental actions, proceedings
or investigations pending or, to the knowledge of the Buyer,
threatened, that question any of the transactions contemplated by, or
the validity of, this Agreement or any of the other agreements or
instruments contemplated hereby or which, if adversely determined,
would have a material adverse effect upon the ability of the Buyer to
enter into or perform its obligations under this Agreement or any such
other agreements or instruments. The Buyer has not received any request
from any governmental agency or instrumentality for information with
respect to the transactions contemplated hereby.
4.4 Accuracy of Filings. All publicly-available filings made by the
Buyer with the Securities and Exchange Commission since September 1, 2000 are
true and complete in all material respects, do not contain any untrue statement
of material fact and do not omit to state a material fact necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
4.5 Compliance With Securities Law. The shares of FDI Stock, if any, to
be issued to the Sellers will be fully issued, non-assessable, valid and
outstanding as of the Closing, and will be validly issued in reliance upon an
exemption from registration under, and in material compliance with, applicable
federal and state securities laws, including without limitation the Securities
Act of 1933, as amended, and the Securities and Exchange Act of 1934, as
amended.
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4.6 Brokers. No person acting on behalf of the Buyer or any of its
affiliates or under the authority of any of the foregoing is or will be entitled
to any brokers' or finders' fee or any other commission or similar fee, directly
or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement.
4.7 Full Disclosure. All documents and other papers (or copies thereof)
delivered by or on behalf of the Buyer in connection with the transactions
contemplated by this Agreement are in the same form as maintained by the Buyer
internally, without alteration, and are accurate and complete as to items in the
custody of the Buyer in all material respects.
SECTION 5. CLOSING.
5.1 Time and Place of Closing. The closing of the exchange of the
Shares (the "Closing") pursuant to this Agreement shall take place on May 11,
2004, at the offices of Xxxxxx Xxxxxxx Xxxxx & Vornehm, LLP, 0000 Xxxxxxxx
Xxxxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, XX 00000, commencing at 10:00 a.m. local
time or at such other date, time or place as may be agreed to by the Buyer and
the Sellers (the "Closing Date"). The Closing shall be effective on the
Effective Date except as otherwise specified in this Agreement.
5.2 Deliveries at the Closing. At the Closing, in addition to the other
actions contemplated elsewhere herein:
(a) the Sellers shall deliver, or shall cause to be delivered,
to the Buyer the following:
(i) certificates representing all of the Shares, duly
endorsed for transfer or with stock powers affixed thereto,
executed in blank in proper form for transfer;
(ii) such other documents and instruments as the
Buyer may reasonably request to effectuate or evidence the
transactions contemplated by this Agreement.
(iii) the Company's Articles of Incorporation
certified as of a recent date by the Secretary of State of
Delaware and by the Secretary of the Company, and the
Company's By-laws (or similar document in foreign
jurisdictions) certified by the Secretary of the Company, each
including any and all amendments to date;
(iv) a Certificate of Existence (or similar document
in Delaware) of a recent date for the Company, certified by
the appropriate governmental agency;
(v) the original corporate minute books and stock
transfer and record books of the Company as they exist on the
Closing and such of its files, books and records as the Buyer
may reasonably request; and
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(vi) a counterpart, duly executed by each of the
Sellers, of the Employment Agreements between the Company and
each of the Sellers, in substantially the form of that
attached hereto as Exhibit C;
(vii) such other documents and instruments as the
Buyer may reasonably request to effectuate or evidence the
transactions contemplated by this Agreement.
(b) the Buyer shall deliver, or shall cause to be delivered,
to the Sellers the items described below:
(i) a wire transfer of immediately available funds in
the amount of $250,000.00 to the accounts specified by each of
the Sellers ($500,000 total) (unless a Seller elects to
receive some stock pursuant to Section 1.3);
(ii) a copy of the resolutions of the Board of
Directors of the Buyer authorizing the execution, delivery and
performance by the Buyer of this Agreement and the other
agreements and instruments referred to herein, certified as of
the Closing by the Secretary or an Assistant Secretary of the
Buyer;
(iii) a Certificate of Good Standing of a recent date
for the Buyer, certified by the Secretary of State of the
State of Delaware;
(iv) a counterpart, duly executed by the Company, of
the Employment Agreements between the Company and each of the
Sellers, in substantially the form of that attached hereto as
ExhibitC; and
(v) such other documents and instruments as the
Sellers may reasonably request to effectuate or evidence the
transactions contemplated by this Agreement.
SECTION 6. CONFIDENTIAL INFORMATION.
For purposes of this Agreement, "Confidential Information" shall be
deemed to include all information and materials with respect to the Business,
including, but not limited to, all proprietary information, specifications,
models, diagrams, flow charts, videotapes, audio tapes, forms, data structures,
graphics, other original works of authorship, product plans, technologies,
formulas, trade secrets, trade names or proposed trade names, knowhow, ideas,
marketing materials, lists of potential or actual customers, contracts, pricing
information, financial information, business plans and strategies, and other
financial and intellectual property with respect to the Business.
Except as authorized in writing by the Buyer, each of the Sellers shall
not disclose, communicate, publish or use for the benefit of himself or any
third party any Confidential Information received, acquired, or obtained with
respect to the Business. Each of the Sellers also agrees that: a) the
Confidential Information will be held in confidence by each of the Sellers using
the same degree of care, but no less than a reasonable degree of care, as each
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of the Sellers uses to protect his own confidential information of a like
nature; b) he will take such steps as may be reasonably necessary to prevent
disclosure of the Confidential Information to others; and c) in the event each
of the Sellers is legally required to disclose any portion of the Confidential
Information, each of the Sellers shall promptly notify the Buyer so that the
Buyer may take steps to protect its Confidential Information.
The obligations of this Section 6 shall terminate with respect to any
particular portion of Confidential Information which: a) is in the public
domain; b) entered the public domain through no fault of each of the Sellers; or
c) was rightfully communicated by a third party to each of the Sellers free of
any obligation of confidence.
In no event shall each of the Sellers be deemed by virtue hereof to
have acquired any right or interest in or to the Confidential Information. Each
of the Sellers agrees that for a period of five (5) years following the date of
this Agreement, he will use his best efforts to maintain the confidentiality of
the Confidential Information.
SECTION 7. NON-COMPETITION.
For a period commencing on the Closing Date and ending on the second
(2nd) anniversary of the Closing Date, without the prior written consent of the
Buyer (which consent may be withheld in the Buyer's sole and absolute
discretion) each of the Sellers shall not, directly or indirectly, for
himself/itself or for any other person, proprietorship, partnership, corporation
or trust, or any other entity, as an individual or as an owner, employee, agent,
officer, director, trustee, or in any other capacity:
(a) solicit, participate or aid in the solicitation of orders
for Restricted Products or Services, or perform or sell any Restricted
Products or Services to any of the Company's customers who were
serviced by any of the Sellers, solicited by any of the Sellers or who
became customers of the Company as a result of any actions taken by any
of the Sellers;
(b) solicit, participate or aid in the solicitation of, or
perform or sell any Restricted Products or Services to any of the
Company's customers who were customers, or had an ongoing business
relationship with the Company, at any time during the one (1) year
period preceding the Closing Date; or
(c) contact, or aid or participate in the contact, including
allowing the use of any of the Sellers' names in connection with the
contact of, any of the Company's customers who were customers, or had
an ongoing business relationship with the Company, at any time during
the one (1) year period preceding the Closing Date, for the purpose of
diverting their purchases of Restricted Products or Services from the
Company.
"Restricted Products and Services" shall be defined as any product
(including, but not limited to equipment and software) sold or service
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(including, but not limited to upgrading and maintenance) performed by the
Company during the one-year period prior to the date of this Agreement.
The Buyer and each of the Sellers agree that due to the nature of the
Company's business and its national scope of operations, and due to the nature
of each of the Sellers' position within the Company and his access to and
knowledge of Confidential Information of the Company, and in further
consideration of the Buyer's and the Company's legitimate protectible interests
in a highly competitive business environment, the covenants and restrictions,
placed on each of the Sellers' ability to engage in any activity competitive
with the Company, are required to be broad in scope and the parties acknowledge
that such breadth is reasonable. Each of the Sellers further acknowledges and
agrees that the breadth of such restrictions is reasonable because he has become
acquainted with the affairs of the Company, its officers and employees, its
services, products, business practices, business relationships, and the needs
and requirements of its customers and prospective customers, trade secrets,
intellectual property, Confidential Information, and other information
proprietary to the Company. Each of the Sellers acknowledges and agrees that the
Buyer and the Company have a need to protect, through the above restrictions,
each of the foregoing interests and the Company's goodwill, and to prevent
unfair competition and the inevitable use or disclosure of Confidential
Information or trade secrets.
The Buyer and each of the Sellers agree that in the event of a breach
of any of the covenants and prohibitions contained in Sections 6 or 7 by any of
the Sellers, the Buyer shall suffer immediate, immeasurable and irreparable harm
and damage, and accordingly, the parties agree as follows:
(a) These covenants shall be construed as agreements
independent of any other provision of this Agreement, and the existence
of any claim or cause of action by any of the Sellers against the
Buyer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement of these covenants by the
Buyer;
(b) In the event of a violation of any of these covenants, the
terms of all covenants shall be automatically extended for a period
equal to the violation, and the Buyer shall be entitled to recover
reasonable attorney's fees incurred in the enforcement of these
covenants;
(c) Each covenant is separate and distinct from every other
covenant, and in the event of the invalidity of any one covenant, the
remaining covenants shall be deemed independent and enforceable.
Further, although the parties agree that the scope and duration
restrictions herein are reasonable and necessary for the protection of
the Buyer, in the event a Court should consider the scope or duration
too extensive, the Court shall modify the provisions so as to be valid
and fully enforceable for the maximum scope and duration (but never for
a larger scope or longer period than set forth above) as the Court
shall find to be reasonable, necessary, valid and legally enforceable;
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(d) These covenants are reasonable and necessary for the
protection of the Buyer's business interests, that irreparable injury
will result to the Buyer if any of the Sellers breaches any of these
covenants, and that in the event of actual or threatened breach of any
of these covenants, the Buyer will have no adequate remedy at law. Each
of the Sellers accordingly agrees that in the event of any actual or
threatened breach by him of any of these covenants, the Buyer shall be
entitled to immediate temporary injunctive and other equitable relief,
subject to hearing as soon thereafter as possible. Nothing contained
herein shall be construed as prohibiting the Buyer from pursuing any
other remedies available to it for such breach or threatened breach,
including the recovery of any damages which it is able to prove; and
(e) The Buyer would not have entered into this Agreement but
for each of the Sellers' agreement to be bound by and comply with the
terms and conditions of this Agreement, including, without limitation,
Sections 6 and 7 hereof, and for each of the Sellers' agreement that
the scope and duration restrictions of these covenants are reasonable.
SECTION 8. INDEMNIFICATION
8.1 Indemnification by the Sellers. Subject to Section 8.5, each of the
Sellers shall, jointly and severally, indemnify and hold the Buyer and its
officers, directors and shareholders harmless against and in respect of any and
all losses, costs, expenses, claims, damages, obligations and liabilities,
including interest, penalties and reasonable attorneys' fees and disbursements
("Damages"), which the Buyer or any such indemnitee may suffer, incur or become
subject to arising out of, based upon or otherwise in respect of: (a) any
inaccuracy in or breach of any representation or warranty of any of the Sellers
made in or pursuant to this Agreement or any Transaction Document; or (b) any
breach or nonfulfillment of any covenant or obligation of any of the Sellers
contained in this Agreement or any Transaction Document.
8.2 Indemnification by the Buyer. The Buyer shall indemnify and hold
the Sellers and each of their successors, heirs and assigns harmless against and
in respect of any and all Damages which the Sellers or any such indemnitee may
suffer, incur or become subject to arising out of, based upon or otherwise in
respect of: (a) any inaccuracy in or breach of any representation or warranty of
the Buyer made in or pursuant to this Agreement or any Transaction Document; or
(b) any breach or nonfulfillment of any covenant or obligation of the Buyer
contained in this Agreement or any Transaction Document.
8.3 Inter-Party Claims. Any party seeking indemnification pursuant to
this Section (the "Indemnified Party") shall promptly notify in writing the
other party or parties from whom such indemnification is sought (the
"Indemnifying Party") of the Indemnified Party's assertion of such claim for
indemnification, specifying the basis of such claim. The Indemnified Party shall
thereupon give the Indemnifying Party reasonable access to the books, records
and assets of the Indemnified Party which evidence or support such claim or the
act, omission or occurrence giving rise to such claim and the right, upon prior
notice during normal business hours, to interview any appropriate personnel of
the Indemnified Party related thereto.
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8.4 Third Party Claims.
(a) Each Indemnified Party shall promptly notify the
Indemnifying Party of the assertion by any third party of any claim
with respect to which the indemnification set forth in this Section
relates. The Indemnifying Party shall have the right, upon notice to
the Indemnified Party within twenty (20) business days after the
receipt of any such notice, to undertake the defense of such claim with
counsel reasonably acceptable to the Indemnified Party, or, with the
consent of the Indemnified Party (which consent shall not unreasonably
be withheld), to settle or compromise such claim. The failure of the
Indemnifying Party to give such notice and to undertake the defense of
or to settle or compromise such a claim shall constitute a waiver of
the Indemnifying Party's rights under this Section 8.4(a) and shall
preclude the Indemnifying Party from disputing the manner in which the
Indemnified Party may conduct the defense of such claim or the
reasonableness of any amount paid by the Indemnified Party in
satisfaction of such claim.
(b) The election by the Indemnifying Party, pursuant to
Section 8.4(a), to undertake the defense of a third-party claim shall
not preclude the party against which such claim has been made also from
participating or continuing to participate in such defense, so long as
such party bears its own legal fees and expenses for so doing.
(c) Except as expressly provided herein, the Sellers shall
have no rights, hereunder or otherwise, to indemnification or
contribution from the Company with respect to any matter arising prior
to the date of this Agreement, including, without limitation, any
inaccuracy in or breach of any representation or warranty of the
Company made in or pursuant to this Agreement or any Transaction
Document, or any breach or nonfulfillment of any covenant or obligation
of the Company contained in this Agreement or any Transaction Document,
and the Sellers hereby irrevocably releases the Company from any
liability for any such claim.
(d) The indemnification obligations of the parties contained
herein are not intended to waive or preclude any other claims, rights
or remedies which may exist at law (whether statutory or otherwise) or
in equity with respect to the matters covered by the indemnifications.
8.5 Limitations and Requirements.
(a) Sellers shall have no obligation to indemnify the Company
or the Buyer or any other indemnitee hereunder against Damages pursuant
to Section 8.1 of this Agreement in excess of the Purchase Price
actually paid to Sellers (whether cash or FDI Stock) in the aggregate.
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(b) Except as may otherwise expressly be provided in this
Agreement, no claim arising out of or based upon any inaccuracy in or
breach of any representation or warranty contained in this Agreement or
any Transaction Document shall be made unless a claim arises and
written notice pursuant to Section 8.4 is delivered to the Indemnifying
Party within two (2) years after the Closing Date.
SECTION 9. TAX RETURNS
The Buyer and the Sellers shall cooperate fully, as and to the extent
required by any other party, in connection with the preparation and filing of
the Short-Year Return (for the period January 1, 2004 to the Effective Date),
and in connection with any audit, litigation or other proceeding with respect to
the Short-Year Return.
SECTION 10. MISCELLANEOUS.
10.1 Survival of Representations and Warranties. The representations
and warranties made by the parties in this Agreement and in the certificates,
documents and schedules delivered pursuant hereto shall survive the consummation
of the transactions herein contemplated.
10.2 Further Assurances. Each party hereto shall, from time to time and
without further consideration, either before or after the Closing, execute such
further instruments and take such other actions as any other party hereto shall
reasonably request in order to fulfill its obligations under this Agreement and
to effectuate the purposes of this Agreement and to provide for the orderly and
efficient transition of the ownership of the Company to the Buyer.
10.3 Costs and Expenses. Except as otherwise expressly provided herein,
each party shall bear its own expenses in connection herewith. Any and all legal
and accounting fees, transfer, sales, use, documentary and similar taxes and
recording and filing fees, incurred in connection with the transactions
contemplated herein on behalf of the Sellers or the Company prior to Closing
shall be paid by the Sellers and not by the Company.
10.4 Notices. All notices or other communications permitted or required
under this Agreement shall be in writing and shall be sufficiently given if and
when hand delivered to the persons set forth below or if sent by documented
overnight delivery service or registered or certified mail, postage prepaid,
return receipt requested, or by facsimile, receipt acknowledged, addressed as
set forth below or to such other person or persons and/or at such other address
or addresses as shall be furnished in writing by any party hereto to the others.
Any such notice or communication shall be deemed to have been given as of the
date received, in the case of personal delivery, or on the date shown on the
receipt or confirmation therefor in all other cases.
To the Sellers:
--------------
00000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
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With a copy to:
Xxxxxx Xxxxx
Xxxxxxxx & XxXxxxxx PC
100 Shockoe Slip Xxxxxxxx,
Xxxxxxxx 00000 Fax No.: 000-000-0000
To the Buyer:
------------
Fortune Diversified Industries, Inc.
Attention: Carter Fortune
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Fax No.: 000-000-0000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx Xxxxx & Vornehm, LLP
0000 Xxxxxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
10.5 Assignment and Benefit.
(a) The Buyer may assign this Agreement in whole or in part to
any subsidiary or to any person which becomes a successor in interest
(by purchase of assets or membership interests, or by merger, or
otherwise) to the Buyer; provided, however, that, notwithstanding any
such assignment, the Buyer shall remain liable for its obligations
hereunder. The Sellers shall not assign this Agreement or any rights
hereunder, or delegate any obligations hereunder, without prior written
consent of the Buyer. Subject to the foregoing, this Agreement and the
rights and obligations set forth herein shall inure to the benefit of,
and be binding upon, the parties hereto, and each of their respective
successors, heirs and assigns.
(b) This Agreement shall not be construed as giving any
person, other than the parties hereto and their permitted successors,
heirs and assigns, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any of the provisions herein
contained, this Agreement and all provisions and conditions hereof
being intended to be, and being, for the sole and exclusive benefit of
such parties, and permitted successors, heirs and assigns and for the
benefit of no other person or entity.
10.6 Arbitration.
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(a) All disputes arising out of or relating to this Agreement,
the Company Transaction Documents, the Sellers Transaction Documents,
or the Buyer Transaction Documents which cannot be settled by the
parties shall promptly be submitted to and determined by binding
arbitration in Indianapolis, Indiana by three (3) arbitrators (one
selected by the Sellers, one selected by the Buyer and one selected by
the two previously selected arbitrators), in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in
effect on the date that the demand for arbitration is given; provided
that nothing herein shall preclude either party from seeking, in any
court of competent jurisdiction, injunctive relief or other equitable
remedies in the case of any breach or threatened breach by the Sellers
of Sections 6 or 7 hereof. The decision of the arbitrators shall be
final and binding upon the parties and judgment upon such decision may
be entered in any court of competent jurisdiction; provided, however,
that errors of law may be appealed to a court of competent jurisdiction
for review.
(b) Any demand for arbitration shall include detail sufficient
to establish the nature of the dispute (including claims asserted and
the material issues with respect thereto) and shall be delivered to the
other party concurrently with delivery to AAA. Discovery shall be
allowed pursuant to the United States Federal Rules of Civil Procedure
and as the arbitrators determine appropriate under the circumstances.
(c) The arbitrators' decision shall be in writing, and shall
describe in detail the legal reasoning adopted by the arbitrator in
support of the decision. In rendering a decision, the arbitrators shall
follow the substantive law of the State of Indiana, and shall not use
equitable or other principles which would permit the arbitrators to
ignore this Agreement, the Company Transaction Documents, the Sellers
Transaction Documents, the Buyer Transaction Documents or the law of
the State of Indiana. Any award by the arbitrators shall be subject to
all dollar and other limitations set forth in this Agreement. The
arbitrators shall have no authority to award treble, exemplary or
punitive damages of any type under any circumstances.
10.7 Amendment, Modification and Waiver. The parties may amend or
modify this Agreement in any respect. Any such amendment, modification,
extension or waiver shall be in writing and signed by all parties hereto. The
waiver by a party of any breach of any provision of this Agreement shall not
constitute or operate as a waiver of any other breach of such provision or of
any other provision hereof, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof.
10.8 Governing Law. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the State of Indiana (and
United States federal law, to the extent applicable), irrespective of the
principal place of business, residence or domicile of the parties hereto, and
without giving effect to otherwise applicable principles of conflicts of law.
Nothing contained herein or in the Company Transaction Documents, the Sellers
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Transaction Documents, or the Buyer Transaction Document shall prevent or delay
any party from seeking, in any court of competent jurisdiction, specific
performance or other equitable remedies in the event of any breach or intended
breach by any other party of any of its obligations hereunder.
10.9 Section Headings and Defined Terms. The section headings contained
herein are for reference purposes only and shall not in any way affect the
meaning and interpretation of this Agreement. The terms defined herein and in
any agreement executed in connection herewith include the plural as well as the
singular and the singular as well as the plural, and the use of masculine
pronouns shall include the feminine and neuter. Except as otherwise indicated,
all agreements defined herein refer to the same as from time to time amended or
supplemented or the terms thereof waived or modified in accordance herewith and
therewith.
10.10 Severability. The invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions or
parts were omitted.
10.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original; and any person may
become a party hereto by executing a counterpart hereof, but all of such
counterparts together shall be deemed to be one and the same instrument.
10.12 Entire Agreement. This Agreement, together with the agreements,
exhibits, schedules and certificates referred to herein or delivered pursuant
hereto, constitute the entire agreement between the parties hereto with respect
to the purchase and sale of the Shares and supersede all prior agreements and
understandings. The submission of a draft of this Agreement or portions or
summaries thereof does not constitute an offer to purchase or sell the Shares,
it being understood and agreed that neither the Buyer or the Sellers shall be
legally obligated with respect to such a purchase or sale or to any other terms
or conditions set forth in such draft or portion or summary unless and until
this Agreement has been duly executed and delivered by all parties.
10.13 Exhibits and Schedules. The Exhibits and Schedules identified in
this Agreement are incorporated herein by reference and made a part hereof. Any
information disclosed in any Schedule shall be deemed disclosed in all other
applicable Schedules, even though not expressly set forth in such other
Schedules, provided that it is reasonably apparent that such disclosure is
applicable to the other Schedules.
[Signature Page Follows.]
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement, under seal, all as of the date first above written.
FORTUNE DIVERSIFIED, INDUSTRIES, INC.
By:
-----------------------------------
Carter Fortune, CEO
---------------------------------------
Carter Fortune
---------------------------------------
Xxxxx Xxxxxxxx
---------------------------------------
Xxxx Xxxxxx
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