STOCK PURCHASE AGREEMENT AMONG TITAN GLOBAL HOLDINGS, INC., CRESCENT FUELS, INC. AND PHILLIP NEAR Dated: Effective 12:01 a.m., October 1, 2008
AMONG
CRESCENT
FUELS, INC.
AND
XXXXXXX
NEAR
Dated:
Effective 12:01 a.m., October 1, 2008
THIS
STOCK PURCHASE AGREEMENT is made effective as of 12:01 a.m., October 1, 2008
(the “Agreement”), among Titan Global Holdings, Inc., a corporation existing
under the laws of Utah (the “Purchaser”), Crescent Fuels, Inc. (the “Company” of
“CFI”) and Xxxxxxx Near (the “Seller”), a shareholder in the
Company.
W
I T
N E S S E T H:
WHEREAS,
the Seller owns an aggregate of 5,244 shares of common stock, $0.01 par value,
of the Company (the “Shares”) which Shares constitute 52.44% of the issued and
outstanding shares of the common stock of the Company; and
WHEREAS,
the Seller desires to sell to Purchaser, and the Purchaser desires to purchase
from the Seller, the Shares for the purchase price and upon the terms and
conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE
I
SALE
AND
PURCHASE OF SHARES
1.1 Sale
and Purchase of Shares. Effective
as of 12:01 a.m., October 1, 2008 (the “Effective Time”) and upon the terms and
subject to the conditions contained herein, on the closing date of the
transactions contemplated herein (the “Closing Date”), the Seller shall sell,
assign, transfer, convey and deliver to the Purchaser, and the Purchaser
shall
purchase from the Seller, all Shares of the Company owned by the Seller (the
“Closing”).
ARTICLE
II
PURCHASE
PRICE AND OTHER CONSIDERATION
2.1 Purchase
Price.
The
purchase price for the common stock shall be an aggregate of $980,244,
consisting of (i) $1.00 in cash per share ($5,244 in the aggregate), plus
325,000 shares of the common stock of Purchaser, which Purchaser values at
$975,000 ($3.00 per share), together with the additional consideration set
forth
in Section 2.2, below.
2.2 Additional
Consideration.
As
additional consideration for the Shares, Purchaser agrees to pay, perform
and
cause the following:
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(a)
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Seller
shall be released and discharged from liability with respect to
that
certain Note Receivable of the Company in the amount of $1,357,228.71,
which Note was previously issued and from time to time amended,
restated
and reissued in connection with Seller’s acquisition of the
Shares;
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(b)
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Purchaser
shall acquire and/or cause Greystone Business Credit to acquire
from M
& I Xxxxxxxx & Xxxxxx Bank (“M&I Bank”) all of the
indebtedness owed by the Company’s subsidiaries, Crescent Oil Company,
Inc. and Crescent Stores, Inc. (save and except a certain equipment
lease
due M & I Equipment Finance which shall remain due and owing).
Seller’s personal guarantee of such indebtedness shall be modified as
provided in (c), below, and all suits, claims and causes of action
whatsoever in favor of said Bank arising from, or in any way relating
to
such indebtedness, shall be deemed as of closing released and discharged
as against Seller and as against the officers, directors, stockholders
and
employees of the Company and its subsidiaries. If such indebtedness
is
acquired by Greystone Business Credit, Purchaser shall cause Greystone
to
issue written confirmation of the modification, release and discharge
of
the obligations set forth herein. The foregoing notwithstanding,
Purchaser
may arrange interim or bridge financing through M&I Bank, partial or
complete, in which event Seller’s personal guarantee shall be reduced to
the amount of the interim or bridge financing provided to Purchaser
(and
Crescent Oil Company, Inc. and Crescent Stores, Inc.) by M & I Bank in
accordance with loan purchase and financing agreement between Purchaser
and M & I Bank. At such time, and to the extent, Purchaser secures
financing through Greystone Business Credit, the guarantee provisions
of
subparagraph (c), below, shall become applicable but with Seller’s
personal guarantee amount reduced dollar for dollar for any continuing
debt obligations due M & I Bank for which Seller has continuing
personal liability until such time as the obligations due M & I Bank
are paid and discharged.
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(c)
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Seller’s
personal guarantee of the Bank indebtedness to be acquired pursuant
to
(c), above, shall be modified and reduced to the maximum sum of
$16,000,000, and shall be further reduced dollar for dollar for,
and with
respect to, each of the following economic benefits to be derived
(directly or indirectly) by Purchaser from future business events,
to
wit:
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(i) Receipt
by Crescent Oil Company, Inc. of $6,675,000 in MSA Cash Out and
up
front BIP payments from ConocoPhillips;
(ii) Receipt
by Crescent Oil Company, Inc. of any other upfront incentive payments
from branded oil company suppliers including those planned for the
Wichita market development program;
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(iii)
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Receipt
of Appalachian Oil Company of upfront incentive payments from branded
oil
company suppliers;
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(iv)
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EBITDA
(“Earnings Before Interest Taxes Depreciation and Amortization” computed
in accordance with generally accepted accounting principles, consistently
applied) of Crescent Oil Company, Inc., but excluding from EBITDA
the
effects of the items set forth in (c)(i) and (c)(ii), above;
and/or,
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(v)
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Payments,
from whatever source, in permanent reduction of the guaranteed
indebtedness.
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until
such time as the maximum sum of the personal guarantee is reduced to zero.
Purchaser shall procure the written consent of Greystone Business Credit
to this
arrangement for reduction of the personal guarantee, pursuant to which the
reduction shall be contingent upon Greystone’s receipt in debt reduction (or in
reduction of required credit advances) of the items described in (c)(i) and
(c)(ii) above, all as may be more fully provided by the instrument pursuant
to
which Greystone’s consent is granted. In the event the holder of the Seller’s
personal guarantee should demand payment thereunder by reason of Purchaser’s
default in payment or performance of its obligations, Seller shall have and
be
entitled to exercise all rights of subrogation and indemnification as against
Purchaser as are available under the common law.
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(d)
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Purchaser
shall enter into, perform and simultaneously close at Closing a
Stock
Purchase Agreement with the owners of all remaining issued and
outstanding
shares of the capital stock of the Company, upon such terms and
conditions
as may be mutually satisfactory.
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(e)
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Purchaser,
the Company, and each subsidiary of the Company, shall be deemed
at
Closing to have released and discharged Seller in his capacity
as a
director, officer, stockholder and employee of the Company and its
subsidiaries as to any and all suits, claims and causes of action
whatsoever arising from or any way relating to Seller’s prior service in
those offices and capacities. Provided, however, if it shall be
determined
that the Company or its subsidiaries shall have suffered any damages
by
any “bad acts” (theft, misappropriation or fraudulent representation
adversely affecting the financial condition of the Company) then
the
foregoing release shall not be operative with respect to such bad
acts and
resulting damages. It is specifically agreed that “bad acts” shall not
include: (i) any matter disclosed to Purchaser in the Related Party
Table
appearing at Subfolder I.21 at xxx://xxx:xxxxxxxx@xxxxxxxxxxx.xxx
(the
“Datasite”); (ii) Compensation, bonuses or benefits previously paid by the
Company or its subsidiaries; or (iii) Seller’s personal use of Company
apartments, vehicles or services of
employees.
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(f)
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Purchaser,
the Company, and each subsidiary of the Company shall be deemed
at Closing
to have released and discharged each director, officer, stockholder
and
employee (other than Near, whose release and continuing liability
is as
set forth in (e), above) from any and all suits, claims or causes
of
action whatsoever arising from or relating to such persons prior
services
in those capacities.
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(g)
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The
corporate indemnification policies of the Company and the subsidiaries
as
set forth in the Articles of Incorporation and/or Operating Agreements
and
Bylaws shall remain in full force and effect with respect to matters
arising or relating to periods of time preceding the
Closing.
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(h)
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Purchaser
and the Company shall in good faith attempt to secure release of
all of
Seller’s personal guarantees for corporate debts and obligations on or
before 9/30/11, except with respect to the guaranteed indebtedness
due
Greystone Business Credit, the reduction of Seller’s liability upon
personal guarantee shall proceed in accordance with 2.2(c),
above.
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(i)
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At
or before Closing, Seller and Purchaser shall cause settlement
of the
informal retirement plan program between Partners Plus, Inc. and
employee
Xxxxxx Xxxx by payment of the sum of
$15,000.
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(j)
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On
or before 9/30/09, Seller and Purchaser shall cause the Company
to acquire
the outstanding membership interests in CBC Realty, LLC held by
certain
key employees of the Company for the amounts stated as follows:
Xxxxx
Xxxxxxxx ($17,000); Xxxxxx Xxxx ($10,500); and Xxx Xxxxx ($10,500).
Further the Company shall assume and cause such employees to be
released
from liability on mortgage indebtedness due from CBC Realty, LLC
with
respect to the real estate at 0000 X. 00xx
Xxxxxx, Xxxxxxxxxxx, Xxxxxx.
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(k)
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In
the event Purchaser elects to change or replace the Company’s Health
Insurance Plan, any waiting period applicable to existing employees
shall
be waived by the insurer. In the event Purchaser elects to terminate,
change or consolidate the Company’s 401K Plan, existing employees shall be
credited for prior years of service and for hours of service in
the
current year, and employee contributions shall be deemed 100%
vested.
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(l)
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Seller
has disclosed to Purchaser the existence of certain related party
transactions or relationships, including Seller’s participation in Landco
Holdings, Xxxxxxx X. Enterprises and the real estate holdings of
Sharper
Images. The parties shall negotiate in good faith for Purchaser’s
acquisition of Seller’s interest in such business so as to eliminate any
business conflict. In the event the parties are unable to reach
agreement
for such acquisition within 60 days after Closing, such related
party
contracts and obligations shall be either continued on their existing
terms or terminated at Purchaser’s
option.
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ARTICLE
III
CLOSING
AND TERMINATION
3.1 Closing
Date. Subject
to the satisfaction of the conditions set forth in Sections 7.1 and 7.2 hereof
(or the waiver thereof by the party entitled to waive that condition), the
Closing of the sale and purchase of the Shares provided for in Section 1.1
hereof (the "Closing") shall take place at 116 W. Myrtle, Independence, Kansas
(or at such other place as the parties may designate in writing) on such
date as
the Seller and the Purchaser may designate.
3.2 Termination
of Agreement. This
Agreement may be terminated prior to the Closing as follows:
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(a)
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At
the election of the Seller or the Purchaser on or after October
31, 2008,
if the Closing shall not have occurred by the close of business
on such
date, provided that the terminating party is not in default of
any of its
obligations hereunder;
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(b) by
mutual
written consent of the Seller and the Purchaser; or
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(c)
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by
the Seller or the Purchaser if there shall be in effect a final
nonappealable order of a governmental body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation
of the
transactions contemplated hereby; it being agreed that the parties
hereto
shall promptly appeal any adverse determination which is not nonappealable
(and pursue such appeal with reasonable
diligence).
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3.3 Procedure
Upon Termination. In
the
event of termination and abandonment by the Purchaser or the Seller, or both,
pursuant to Section 3.2 hereof, written notice thereof shall forthwith be
given
to the other party or parties, and this Agreement shall terminate, and the
purchase of the Shares hereunder shall be abandoned, without further action
by
the Purchaser or the Seller. If this Agreement is terminated as provided
herein,
each party shall redeliver all documents, work papers and other material
of any
other party relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to the party furnishing the
same.
3.4 Effect
of Termination. In
the
event that this Agreement is validly terminated as provided herein, then
each of
the parties shall be relieved of their duties and obligations arising under
this
Agreement after the date of such termination and such termination shall be
without liability to the Purchaser, the Company or the Seller; provided,
further, however, that nothing in this Section 3.4 shall relieve the Purchaser
or the Seller of any liability for a breach of this Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE SELLERS
When
used
in this Article IV, any representation given with respect to the Company
shall
be a representation with respect to the Company and its subsidiaries. The
Seller
hereby represents and warrants to the Purchaser that:
4.1 Organization
and Good Standing of the Company.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation in Schedule 4.6.
The
Company
is
not
presently required to be qualified to transact business in any other
jurisdiction where the failure to so qualify would have an adverse effect
on the
business of the Company.
4.2 Authority.
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(a)
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The
Company
presently has
full power and authority (corporate and otherwise) to carry on
its
business and has all permits and licenses that are necessary to
the
conduct of its business or to the ownership, lease or operation
of its
properties and assets, except where the failure to have such permits
and
licenses would not have a material adverse effect on the Company’s
business
or operations (“Material Adverse
Effect”).
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(b)
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The
execution of this Agreement and the delivery hereof to the Purchaser
and
the sale contemplated herein have been, or will be prior to Closing,
duly
authorized by the CFI’s
Board of Directors and by CFI’s stockholders having full power and
authority to authorize such
actions.
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(c)
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Subject
to any consents required under Section 4.7 below, the Seller and
the
Company
have
the full legal right, power and authority to execute, deliver and carry
out the terms and provisions of this Agreement; and this Agreement
has
been duly and validly executed and delivered on behalf of Seller
and the
Company
and
constitutes a valid and binding obligation of the Seller and the
Company
enforceable
in accordance with its terms.
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(d)
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Except
as set forth in Section 4.2, neither the execution and delivery
of this
Agreement, the consummation of the transactions herein contemplated,
nor
compliance with the terms of this Agreement will violate, conflict
with,
result in a breach of, or constitute a default under any statute,
regulation, indenture, mortgage, loan agreement, or other agreement
or
instrument to which the Company
or
the Seller is a party or by which it or any of them is bound, any
charter,
regulation, or bylaw provision of the Company,
or any decree, order, or rule of any court or governmental authority
or
arbitrator that is binding on the Company
or
the Seller in any way, except where such would not have a Material
Adverse
Effect, except potential for breach of covenant is asserted by
Xxxxx Fargo
with respect to real estate mortgage loan, and except any covenants
as may
be contained in the M & I Bank Loan
documents.
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4.3 Shares.
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(a)
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The
Company’s authorized and issued capital stock consists of: (i) 10,000
shares of Common Stock, $1.00 par value per share, of which 5,244
shares
have been issued to the Seller; and (ii) 1,250 preferred shares,
par value
of $1,000 shares. All of the Shares are duly authorized, validly
issued,
fully paid and non-assessable.
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(b)
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The
Seller is the lawful record and beneficial owner of all the Shares,
free
and clear of any liens, pledges, encumbrances, charges, claims
or
restrictions of any kind, except as set forth in Section 4.3, and
have, or
will have on the Closing Date, the absolute, unilateral right,
power,
authority and capacity to enter into and perform this Agreement
without
any other or further authorization, action or proceeding, except
as
specified herein.
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(c)
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There
are no authorized or outstanding subscriptions, options, warrants,
calls,
contracts, demands, commitments, convertible securities or other
agreements or arrangements of any character or nature whatever
under which
any Seller or the Company
are or may become obligated to issue, assign or transfer any shares
of
capital stock of the Company, except: (i) share purchase option
in favor
of Xxxxxxx Enterprises of Kansas, LLC; and (ii) conversion privilege
of
the holders of the preferred shares. Upon the delivery to Purchaser
on the
Closing Date of the certificate(s) representing the Shares, Purchaser
will
have good, legal, valid, marketable and indefeasible title to the
Shares,
free and clear of any liens, pledges, encumbrances, charges, agreements,
options, claims or other arrangements or restrictions of any
kind.
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4.4 Basic
Corporate Records.
The
copies of the Articles of Incorporation of the Company
certified
by the Secretary of State or other authorized official of the jurisdiction
of
incorporation), and the Bylaws of the Company (certified as of the date of
this
Agreement as true, correct and complete by the Company’s
secretary
or assistant secretary), all of which have been delivered to the Purchaser,
are
true, correct and complete as of the date of this Agreement.
4.5 Minute
Books.
The
minute books of the Company,
which
shall be exhibited to the Purchaser between the date hereof and the Closing
Date, each contain true, correct and complete minutes and records of all
meetings, proceedings and other actions of the shareholders, Boards of Directors
and committees of such Boards of Directors of the Company,
if any,
except where such would not have a Material Adverse Effect and, on the Closing
Date, will, to the best of Seller’s knowledge, contain true, correct and
complete minutes and records of any meetings, proceedings and other actions
of
the shareholders, Boards of Directors and committees of such Boards of Directors
of the Company.
4.6 Subsidiaries
and affiliates.
Except
as set forth in Schedule 4.6, the Company
does
not
have any ownership, voting or profit and loss sharing percentage interest
in any
other corporations, partnerships, businesses, entities, enterprises or
organizations.
4.7 Consents.
No
consents or approvals of any public body or authority and no consents or
waivers
from other parties to leases, licenses, franchises, permits, indentures,
agreements or other instruments are (i) required for the lawful
consummation of the transactions contemplated hereby, or (ii) necessary in
order that the business currently conducted by the Company
can
be
conducted by the Purchaser in the same manner after the Closing as heretofore
conducted by the Company,
nor
will the consummation of the transactions contemplated hereby result in
creating, accelerating or increasing any liability of the Company,
except
where the failure of any of the foregoing would not have a Material Adverse
Effect.
4.8 Financial
Statements.
The
Seller has delivered, or will deliver prior to Closing, to the Purchaser
copies
of the following financial statements (which include all existing notes and
schedules attached thereto), all of which are true, complete and correct,
have
been prepared from the books and records of the Company
in
accordance with generally accepted accounting principles (“GAAP”) consistently
applied with past practice and fairly present the financial condition, assets,
liabilities and results of operations of the Company
as
of the
dates thereof and for the periods covered thereby:
the
unaudited balance sheet of the Company
as
of
12/31/05 and 12/31/06, and the related statements of operations, and of cash
flows the Company
for
the
periods then ended, together with the unaudited balance sheet of the Company
and
the related statements of operations of Company
for
the
periods ended 12/31/07 and 9/30/08 (such statements, including the related
notes
and schedules thereto, are referred to herein as the “Financial Statements.”)
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The
foregoing notwithstanding: (i) Seller has disclosed to Purchaser that Xxxxx
Xxxxxxxx has withdrawn its opinion relative to the 12/31/06 financial statements
due to reservations concerning accounting with respect to Variable Interest
Entities (in particular, Crescent Stores Corporation and other subsidiaries
of
the Company) and current recognition of income from certain capital asset
sale
transactions (potentially subject to treatment as deferred gain); (ii) the
Company has not had professional (CPA) assistance with the internally prepared
financial statements and Seller discloses that departures from GAAP may exist;
(iii) GAAP and related Financial Accounting Standard Board rules are complex
and
subject to varying interpretations, assumptions and applications, and Seller
makes no representations or warranties with respect to any such technical
matters; and (iv) Seller and Purchaser acknowledge and agree that given the
facts and circumstances under which this acquisition is made, substantial
restatement and adjustment of the Financial Statements are likely to be made
to
account for fair value in a purchase type transaction, with associated write
down of impaired assets and increase in reserves and contingencies, and Seller
has no technical knowledge, and makes no affirmative representations or
warranties, as to the consequences of such restatement and
adjustments.
For
the
purposes hereof, the balance sheet of the Company
as
of
September 30, 2008 is referred to as the “Balance Sheet” and September 30, 2008
is referred to as the “Balance Sheet Date”.
4.9 Records
and Books of Account.
The
records and books of account of the Company
reflect
all material items of income and expense and all material assets, liabilities
and accruals, have been, and to the Closing Date will be, regularly kept
and
maintained in conformity with GAAP applied on a consistent basis with preceding
years subject to the limitations and disclaimers set forth in 4.8,
above.
4.10 Absence
of Undisclosed Liabilities.
Except
as and to the extent reflected or reserved against in the Company’s
Financial
Statements, there are no liabilities or obligations of the Company of any
kind
whatsoever, whether accrued, fixed, absolute, contingent, determined or
determinable, and including without limitation (i) liabilities to former,
retired or active employees of the Company
under
any
pension, health and welfare benefit plan, vacation plan or other plan of
the
Company,
(ii) tax liabilities incurred in respect of or measured by income for any
period prior to the close of business on the Balance Sheet Date, or arising
out
of transactions entered into, or any state of facts existing, on or prior
to
said date, and (iii) contingent liabilities in the nature of an
endorsement, guarantee, indemnity or warranty, and there is no condition,
situation or circumstance existing or which has existed that could reasonably
be
expected to result in any liability of the Company,
other
than liabilities and contingent liabilities incurred in the ordinary course
of
business since the Balance Sheet Date consistent with the Company’s
recent
customary business practice, none of which is materially adverse to the
Company.
The
foregoing notwithstanding, Seller has disclosed to Purchaser (and this
representation and warranty is hereby limited with respect to) the following:
(i) the Company and its subsidiaries have multiple outstanding motor fuel
procurement and supply agreements, together with related incentive, branding
and
purchasing contracts and commitments, pursuant to which the Company and
subsidiaries have substantial contingent liabilities; and (ii) the Company
is
engaged in an environmentally risky business (motor fuel handling, storage,
sale
and distribution) which entails some existing and known contingent liabilities
(as disclosed at the Datasite) and significant risk of yet unknown and future
liability.
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4.11 Taxes.
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(a)
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For
purposes of this Agreement, “Tax” or “Taxes” refers to: (i) any and all
federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating
to
taxes, including taxes based upon or measured by gross receipts,
income,
profits, sales, use and occupation, and value added, ad valorem,
transfer,
franchise, withholding, payroll, recapture, employment, excise
and
property taxes and escheatment payments, together with all interest,
penalties and additions imposed with respect to such amounts and
any
obligations under any agreements or arrangements with any other
person
with respect to such amounts and including any liability for taxes
of a
predecessor entity; and (ii) any liability for the payment of any
amounts
of the type described in clause (i) as a result of any express
or implied
obligation to indemnify any other person or as a result of any
obligations
under any agreements or arrangements with any other person with
respect to
such amounts and including any liability for taxes of a predecessor
entity.
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(b) (i)
The
Company
has
timely filed all federal, state, local and foreign returns, estimates,
information statements and reports (“Returns”) relating to Taxes required to be
filed by the Company with any Tax authority effective through the Closing
Date.
All such Returns are true, correct and complete in all respects, except for
immaterial amounts where such would not have a Material Adverse Effect. The
Company has paid all Taxes shown to be due on such Returns. The Company is
not
currently the beneficiary of any extensions of time within which to file
any
Returns. The Seller and the Company have furnished and made available to
the
Purchaser complete and accurate copies of all income and other Tax Returns
and
any amendments thereto filed by the Company in the last three (3)
years.
(ii) The
Company, as of the Closing Date, will have withheld and accrued or paid to
the
proper authority all Taxes required to have been withheld and accrued or
paid,
except for immaterial amounts where such would not have a Material Adverse
Effect.
(iii) The
Company has not been delinquent in the payment of any Tax nor is there any
Tax
deficiency outstanding or assessed against such company. The Company has
not
executed any unexpired waiver of any statute of limitations on or extending
the
period for the assessment or collection of any Tax.
(iv) There
is
no dispute, claim, or proposed adjustment concerning any Tax liability of
the
Company either (A) claimed or raised by any Tax authority in writing or
(B) based upon personal contact with any agent of such Tax authority, and
there is no claim for assessment, deficiency, or collection of Taxes, or
proposed assessment, deficiency or collection from the Internal Revenue Service
or any other governmental authority against the Company which has not been
satisfied. The Company is not a party to nor has it been notified in writing
that it is the subject of any pending, proposed, or threatened action,
investigation, proceeding, audit, claim or assessment by or before the Internal
Revenue Service or any other governmental authority, nor does the Company
have
any reason to believe that any such notice will be received in the future.
Neither the Internal Revenue Service nor any state or local taxation authority
has audited any income tax return of the Company within the last 5 years.
The
Company has not filed any requests for rulings with the Internal Revenue
Service. Except as provided to the Company’s respective accountants, no power of
attorney has been granted by the Company with respect to any matter relating
to
Taxes of such company. There are no Tax liens of any kind upon any property
or
assets of the Company, except for inchoate liens for Taxes not yet due and
payable.
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(v) Except
for immaterial amounts which would not have a Material Adverse Effect, the
Company has no liability for any unpaid Taxes which has not been paid or
accrued
for or reserved on the Financial Statements in accordance with GAAP, whether
asserted or unasserted, contingent or otherwise.
(vi) There
is
no contract, agreement, plan or arrangement to which the Company is a party
as
of the date of this Agreement, including but not limited to the provisions
of
this Agreement, covering any employee or former employee of the Company that,
individually or collectively, would reasonably be expected to give rise to
the
payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”). There is no contract, agreement, plan or arrangement to
which the Company is a party or by which it is bound to compensate any
individual for excise taxes paid pursuant to Section 4999 of the
Code.
(vii) The
Company has not filed any consent agreement under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition
of
a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned
by
the Company.
(viii) The
Company is not a party to, nor has any obligation under any tax-sharing,
tax
indemnity or tax allocation agreement or arrangement (except among its existing
subsidiary corporations, which is an informal arrangement).
(ix) None
of
the Company’s assets are tax exempt use property within the meaning of
Section 168(h) of the Code.
4.12 Accounts
Receivable.
The
accounts receivable of the Company shown on the Balance Sheet Date, and those
to
be shown in the Financial Statements, are, and will be, actual bona fide
receivables from transactions in the ordinary course of business representing
valid and binding obligations of others for the total dollar amount shown
thereon, and as of the Balance Sheet Date were not (and presently are not)
subject to any recoupments, set-offs, or counterclaims which would be material
in amount. All such accounts receivable are and will be actual bona fide
receivables from transactions in the ordinary course of business.
4.13 Inventory.
The
inventories of the Company are located at the locations disclosed in Schedule
3.3 of the Security
Agreement by and among CFI, Crescent Corporation, Crescent Realty, Inc.,
Crescent Holdings, Inc., Crescent Business Development Corp., Partners Plus,
Inc., and Greystone Business Credit II, L.L.C. (“Security
Agreement”).
The
inventories of the Company shown on its Balance Sheet (net of reserves) are
carried at values which reflect the normal inventory valuation policy of
the
Company of stating the items of inventory at average cost in accordance with
generally accepted accounting principles consistently applied. Inventory
acquired since the Balance Sheet Date has been acquired in the ordinary course
of business and valued as set forth above. The Company will maintain the
inventory in the normal and ordinary course of business from the date hereof
through the Closing Date. Notwithstanding the foregoing, the Company is using
commercially reasonable best efforts to sell slow moving inventory prior
to the
Closing Date.
10
4.14 Machinery
and Equipment.
All
Fixed Assets owned, used or held by the Company are situated at its several
business premises and are currently used in its business. Substantially all
Fixed Assets of the Company are set forth on Schedule 3.3 to the Security
Agreement.
4.15. Real
Property Matters.
[RESERVED]
4.16 Leases.
All
leases of real and personal property of the Company are listed in the Security
Agreement and are in full force and effect and constitute legal, valid and
binding obligations of the respective parties thereto enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting generally the enforcement
of
creditor’s rights, and have not been assigned or encumbered. The Company has
performed in all material respects the obligations required to be performed
by
it under all such leases to date and it is not in default in any material
respect under any of said leases, except as set forth in Schedule 4.16, nor
has
it made any leasehold improvements required to be removed at the termination
of
any lease, except signs. No other party to any such lease is in material
default
thereunder. None of the leases listed thereon require the consent of a third
party in connection with the transfer of the Shares.
4.17 Patents,
Software, Trademarks, Etc.
The
Company owns, or possesses adequate licenses or other rights to use, all
patents, software, trademarks, service marks, trade names and copyrights,
trade
secrets, and web sites, if any, necessary to conduct its business as now
operated by it. The patents, software, trademarks, service marks, copyrights,
trade names and trade secrets, web sites, if any, registered in the name
of or
owned or used by or licensed to the Company and applications for any thereof
(hereinafter the “Intangibles”) have been disclosed to the Purchaser. Seller
hereby specifically acknowledge that all right, title and interest in and
to all
Intangibles owned by the Company shall be transferred as part of the Company
to
Purchaser as part of the transaction contemplated hereby. No officer, director,
shareholder or employee of the Company or any relative or spouse of any such
person owns any patents or patent applications or any inventions, software,
secret formulae or processes, trade secrets or other similar rights, nor
is any
of them a party to any license agreement, used by or useful to the Company
or
related to its business. All of said Intangibles are valid and in good standing
to the best of Seller’s knowledge, and are free and clear of all liens, security
interests, charges, restrictions and encumbrances of any kind whatsoever,
and
have not been licensed to any third party. The Company have not been charged
with, nor have they infringed, nor to the Seller’s knowledge is either
threatened to be charged with infringement of, any patent, proprietary rights
or
trade secrets of others in the conduct of its business, and, to the date
hereof,
neither the Seller nor the Company has received any notice of conflict with
or
violation of the asserted rights in intangibles or trade secrets of others.
The
Company is not now manufacturing any goods under a present permit, franchise
or
license. The consummation of the transactions contemplated hereby will not
alter
or impair any rights of the Company in any such Intangibles or in any such
permit, franchise or license. The Intangibles and other like information
and
data are in such form and of such quality and will be maintained in such
a
manner that the Company can, following the Closing, sell the products and
provide the services heretofore provided by it so that such products and
services meet applicable specifications and conform with the standards of
quality and cost of production standards heretofore met by it. The Company
has
the sole and exclusive right to use its corporate and trade names in the
jurisdictions where it transacts business. The foregoing notwithstanding,
the
limitations on use and availability of the “Jump Start” service xxxx are as
disclosed at the Datasite.
11
4.18 Insurance
Policies.
All
insurance premiums in respect of insurance coverages held by the Company
have
been, and to the Closing Date will be, paid in full, if due and owing. All
claims, if any, made against the Company which are covered by such policies
have
been, or are being, settled or defended by the insurance companies that have
issued such policies. Up to the Closing Date, all insurance coverage will
be
maintained in full force and effect and will not be cancelled, modified or
changed without the express written consent of the Purchaser, except to the
extent the maturity dates of any such insurance policies expiring prior to
the
Closing Date. No insurance policies have been cancelled by the issuer thereof,
and, to the knowledge of the Seller and CFI, between the date hereof and
the
Closing Date, there shall be no increase in the premiums with respect to
any
such insurance policy caused by any action or omission of the Seller or of
the
Company.
4.19 Banking
Lists.
The
Seller or the Company will deliver to the Purchaser prior to the Closing
Date
the following accurate lists and summary descriptions relating to the Company
the name of each bank in which the Company has an account or safe deposit
box
and the names of all persons authorized to draw thereon or have access
thereto.
4.20 Lists
of Contracts, Etc.
The
Company or the Seller has provided a list of the following items (whether
written or oral) relating to the Company, which list identifies and fairly
summarizes each item:
(i) All
collective bargaining and other labor union agreements (if any); all employment
agreements with any officer, director, employee or consultant; and all employee
pension, health and welfare benefit plans, group insurance, bonus, profit
sharing, severance, vacation, hospitalization, and retirement plans,
post-retirement medical benefit plans, and any other plans, arrangements
or
custom requiring payments or benefits to current or retiring
employees.
(ii) All
joint
venture contracts of the Company relating to the Business;
(iii) All
contracts of the Company relating to (a) obligations for borrowed money,
(b) obligations evidenced by bonds, debentures, notes or other similar
instruments, (c) obligations to pay the deferred purchase price of property
or services, except trade accounts payable arising in the ordinary course
of
business, (d) obligations under capital leases, (e) debt of others
secured by a lien on any asset of the Company, and (f) debts of others
guaranteed by the Company.
(iv) All
agreements of the Company relating to the supply of raw materials for and
the
distribution of the products of its business, including without limitation
all
sales agreements, manufacturer’s representative agreements and distribution
agreements of whatever magnitude and nature, and any commitments
therefor;
12
(v) All
contracts that individually provide for aggregate future payments to or from
the
Company of $25,000 or more, to the extent not included in (i) through (iv)
above;
(vi) All
contracts of the Company that have a term exceeding one year and that may
not be
cancelled without any liability, penalty or premium, to the extent not included
in (i) through (v) above;
(vii) A
complete list of all outstanding powers of attorney granted by the Company;
and
(viii) All
other
contracts of the Company material to the business, assets, liabilities,
financial condition, results of operations or prospects of the Business taken
as
a whole to the extent not included above.
All
material contracts, agreements and commitments of the Company described above
are valid, binding and in full force and effect, and (ii) neither the
Company nor, to the best of Seller’s knowledge, any other party to any such
contract, agreement, or commitment has materially breached any provision
thereof
or is in default thereunder. The sale of the Shares by the Seller in accordance
with this Agreement will not result in the termination of any material contract,
agreement or commitment of the Company, and immediately after the Closing,
each
such material contracts, agreements and commitments will continue in full
force
and effect without the imposition or acceleration of any burdensome condition
or
other obligation on the Company resulting from the sale of the Shares by
the
Seller. True and complete copies of the contracts, leases, licenses and other
documents will be delivered to the Purchaser, certified by the Secretary
or
Assistant Secretary of the Company as true, correct and complete copies,
not
later than the Closing Date.
There
are
no pending disputes with customers or vendors of the Company regarding quality
or return of goods involving amounts in dispute with any one customer or
vendor,
whether for related or unrelated claims, in excess of $50,000, all of which
will
be resolved to the reasonable satisfaction of Purchaser prior to the Closing
Date. To the best knowledge of Seller and CFI, there has not been any event,
happening, threat or fact that would lead them to believe that any of said
customers or vendors will terminate or materially alter their business
relationship with either of the Company after completion of the transactions
contemplated by this Agreement.
4.21 Compliance
With the Law.
Neither
of the Seller or Company is in violation of any applicable federal, state,
local
or foreign law, regulation or order or any other, decree or requirement of
any
governmental, regulatory or administrative agency or authority or court or
other
tribunal (including, but not limited to, any law, regulation order or
requirement relating to securities, properties, business, products,
manufacturing processes, advertising, sales or employment practices, terms
and
conditions of employment, occupational safety, health and welfare, conditions
of
occupied premises, product safety and liability, civil rights, or environmental
protection, including, but not limited to, those related to waste management,
air pollution control, waste water treatment or noise abatement), except
where
such would not have a Material Adverse Effect. The Company has not been and
is
not now charged with, or to the best knowledge of the Seller or CFI, been
under
investigation with respect to, any violation of any applicable law, regulation,
order or requirement relating to any of the foregoing, nor, to the best
knowledge of the Seller or CFI after due inquiry, are there any circumstances
that would or might give rise to any such violation. The Company has filed
all
reports required to be filed with any governmental, regulatory or administrative
agency or authority. The foregoing notwithstanding: (i) Seller has disclosed
that the Company routinely experiences minor infractions associated with
environmental, weight and measure, alcohol and tobacco, and other laws,
statutes, rules and regulations, none of which are individually known to
be
material in amount, except as herein stated; (ii) Seller has disclosed to
Purchaser the pending need to remove and replace underground storage tanks
and
lines at its Ft. Xxxxx, Arkansas, location to accommodate environmental
remediation by the Arkansas environmental regulatory agency.
13
4.22 Litigation;
Pending Labor Disputes.
To the
best knowledge of the Seller:
(i) There
are
no legal, administrative, arbitration or other proceedings or governmental
investigations pending or, to the best knowledge of Seller or CFI, threatened,
against the Seller or the Company, relating to its business or the Company
or
its properties (including leased property), or the transactions contemplated
by
this Agreement, nor is there any basis known to either CFI or the Seller
for any
such action, except as set forth in the Litigation Summary appearing at the
Date
Site.
(ii) There
are
no judgments, decrees or orders of any court, or any governmental department,
commission, board, agency or instrumentality binding upon Seller or the Company
relating to its business or the Company the effect of which is to prohibit
any
business practice or the acquisition of any property or the conduct of any
business by the Company or which limit or control or otherwise adversely
affect
its method or manner of doing business.
(iii) No
work
stoppage has occurred and is continuing or, to the knowledge of Seller or
CFI,
is threatened affecting its business, and to the best of Seller’s knowledge, no
question involving recognition of a collective bargaining agent exists in
respect of any employees of the Company.
(iv) There
are
no pending labor negotiations or, to the best of Seller’s knowledge, union
organization efforts relating to employees of the Company.
(v) There
are
no charges of discrimination (relating to sex, age, race, national origin,
handicap or veteran status) or unfair labor practices pending or, to the
best
knowledge of the Seller or CFI, threatened before any governmental or regulatory
agency or authority or any court relating to employees of the Company, which
would have a material adverse effect.
4.23 Absence
of Certain Changes or Events.
The
Company has not, since its respective Balance Sheet Date, and except in the
ordinary course of business consistent with past practice:
14
(i) Incurred
any material obligation or liability (absolute, accrued, contingent or
otherwise), except in the ordinary course of its business consistent with
past
practice or in connection with the performance of this Agreement, and any
such
obligation or liability incurred in the ordinary course is not materially
adverse, except for claims, if any, that are adequately covered by insurance,
and except (i) settlements of lawsuits per Litigation Summary appearing at
the
Datasite; (ii) “Intent” commitment to Xxxxxxx Xxxxx for blender
dispensers;
(ii) Discharged
or satisfied any lien or encumbrance, or paid or satisfied any obligations
or
liability (absolute, accrued, contingent or otherwise) other than
(a) liabilities shown or reflected on the Balance Sheet;
(b) liabilities incurred since the Balance Sheet Date in the ordinary
course of business that were not materially adverse; and (c) settlements
of
lawsuits per Litigation Summary appearing in the Datasite;
(iii) Increased
or established any reserve or accrual for taxes or other liability on its
books
or otherwise provided therefor, except (a) as disclosed on the Balance
Sheet, or (b) as may have been required under generally accepted accounting
principles due to income earned or expense accrued since the Balance Sheet
Date
and as disclosed to the Purchaser in writing;
(iv) Mortgaged,
pledged or subjected to any lien, charge or other encumbrance any of its
assets,
tangible or intangible, except mortgage by Crescent Business Development
Corporation titled assets to extend ConocoPhillips credit line and to secure
payment of MSA “cash out”;
(v) Sold
or
transferred any of its assets or cancelled any debts or claims or waived
any
rights, except in the ordinary course of business and which has not been
materially adverse;
(vi) Disposed
of or permitted to lapse any patents or trademarks or any patent or trademark
applications material to the operation of its business;
(vii) Incurred
any significant labor trouble or granted any general or uniform increase
in
salary or wages payable or to become payable by it to any director, officer,
employee or agent, or by means of any bonus or pension plan, contract or
other
commitment increased the compensation of any director, officer, employee
or
agent;
(viii) Authorized
any capital expenditure for real estate or leasehold improvements, machinery,
equipment or molds in excess of $100,000.00 in the aggregate;
(ix) Except
for this Agreement or as otherwise disclosed herein or in any schedule to
this
Agreement, entered into any material transaction;
15
(x) Issued
any stocks, bonds, or other securities, or made any declaration or payment
of
any dividend or any distribution in respect of its capital stock;
or
(xi) Experienced
damage, destruction or loss (whether or not covered by insurance) individually
or in the aggregate materially and adversely affecting any of its properties,
assets or business, or experienced any other material adverse change or changes
individually or in the aggregate affecting its financial condition, assets,
liabilities or business.
4.24 Employee
Benefit Plans.
To
the
best knowledge of the Seller:
|
(a)
|
There
has not been any failure of any party to comply with any laws applicable
with respect to any Employee Program that has been maintained by
the
Company, except where such would not have a Material Adverse Effect.
With
respect to any Employee Programs now or heretofore maintained by
the
Company, there has occurred no breach of any duty under the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) or other
applicable law which could result, directly or indirectly in any
taxes,
penalties or other liability to the Purchaser, the Company or any
affiliate (as defined below), except for immaterial exceptions
which would
not have a Material Adverse Effect. No litigation, arbitration,
or
governmental administrative proceeding (or investigation) or other
proceeding (other than those relating to routine claims for benefits)
is
pending or, to the best knowledge of the Seller, threatened with
respect
to any such Employee Program.
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|
(b)
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Neither
of the Company nor any affiliate has ever (i) provided health care or
any other non-pension benefits to any employees after their employment
was
terminated (other than as required by Part 6 of Subtitle B of
Title I of ERISA) or has ever promised to provide such
post-termination benefits or (ii) maintained an Employee Program
provided to such employees subject to Title IV of ERISA, Section
401(a) or Section 412 of Code, including, without limitation, any
Multiemployer Plan. The foregoing notwithstanding, members of the
Xxxxxxx
Family participate in the Health Insurance
Program.
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|
(c)
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For
purposes of this Section 4.24:
|
(i) “Employee
Program”
means (A) all employee benefit plans within the meaning of ERISA
Section 3(3), including, but not limited to, multiple employer welfare
arrangements (within the meaning of ERISA Section 3(40)), plans to which
more than one unaffiliated employer contributes and employee benefit plans (such
as foreign or excess benefit plans) which are not subject to ERISA; and
(B) all stock option plans, bonus or incentive award plans, severance pay
policies or agreements, deferred compensation agreements, supplemental income
arrangements, vacation plans, and all other employee benefit plans, agreements,
and arrangements not described in (A) above. In the case of an Employee
Program funded through an organization described in Code Section 501(c)(9),
each
reference to such Employee Program shall include a reference to such
organization;
16
(ii) An
entity
“maintains” an Employee Program if such entity sponsors, contributes to, or
provides (or has promised to provide) benefits under such Employee Program,
or
has any obligation (by agreement or under applicable law) to contribute to
or
provide benefits under such Employee Program, or if such Employee Program
provides benefits to or otherwise covers employees of such entity (or their
spouses, dependents, or beneficiaries);
(iii) An
entity
is an “affiliate” of the Company for purposes of this Section 3.24 if it
would have ever been considered a single employer with the Company under
ERISA
Section 4001(b) or part of the same “controlled group” as the Company for
purposes of ERISA Section 302(d)(8)(C); and
(iv) “Multiemployer
Plan” means a (pension or non-pension) employee benefit plan to which more than
one employer contributes and which is maintained pursuant to one or more
collective bargaining agreements.
4.25 Product
Warranties and Product Liabilities.
The
Company has not paid in the aggregate, or allowed as credits against purchases,
or received claims for more than one percent (1%) per year of gross sales,
as
determined in accordance with GAAP consistently applied, during the past
three
years pursuant to obligations under any warranty or any product liability
claim
with respect to goods manufactured, assembled or furnished by the Company.
The
future cost of performing all such obligations and paying all such product
liability claims with respect to goods manufactured, assembled or furnished
prior to the Closing Date will not exceed the average annual cost thereof
for
said past three year period.
4.26 Assets.
The
assets of the Company are included in the Financial Statements. The assets
of
the Company are, and together with the additional assets to be acquired or
otherwise received by the Company prior to the Closing, will at the Closing
Date
be, sufficient in all material respects to carry on the operations of the
business as now conducted by the Company, except forward product volume
commitments as disclosed by the Company.
4.27 Absence
of Certain Commercial Practices.
Neither
of the Company nor the Seller has made any payment (directly or by secret
commissions, discounts, compensation or other payments) or given any gifts
to
another business concern, to an agent or employee of another business concern
or
of any governmental entity (domestic or foreign) or to a political party
or
candidate for political office (domestic or foreign), to obtain or retain
business for the Company or to receive favorable or preferential treatment,
except for gifts and entertainment given to representatives of customers
or
potential customers of sufficiently limited value and in a form (other than
cash) that would not be construed as a bribe or payoff.
17
4.28 Licenses,
Permits, Consents and Approvals.
The
Company has, and at the Closing Date will have, all licenses, permits or
other
authorizations of governmental, regulatory or administrative agencies or
authorities (collectively, “Licenses”) required to conduct the Business, except
for any failures of such which would not have a Material Adverse Effect.
All
Licenses of the Company are listed on the Datasite. At the Closing, the Company
will have all such Licenses which are material to the conduct of the Business
and will have renewed all Licenses which would have expired in the interim.
Except as listed in the Datasite, no registration, filing, application, notice,
transfer, consent, approval, order, qualification, waiver or other action
of any
kind (collectively, a “Filing”) will be required as a result of the sale of the
Shares by Seller in accordance with this Agreement (a) to avoid the loss of
any License or the violation, breach or termination of, or any default under,
or
the creation of any lien on any asset of the Company pursuant to the terms
of,
any law, regulation, order or other requirement or any contract binding upon
the
Company or to which any such asset may be subject, or (b) to enable
Purchaser (directly or through any designee) to continue the operation of
the
Company and the Business substantially as conducted prior to the Closing
Date.
All such Filings will be duly filed, given, obtained or taken on or prior
to the
Closing Date and will be in full force and effect on the Closing
Date.
4.29 Environmental
Matters.
To the
best knowledge of the Seller:
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(a)
|
The
operations of the
Company to
the best knowledge of Seller, are in compliance with all applicable
Laws
promulgated by any governmental entity which prohibit, regulate
or control
any hazardous material or any hazardous material activity (“Environmental
Laws”) and all permits issued pursuant to Environmental Laws or otherwise
except for where noncompliance or the absence of such permits would
not,
individually or in the aggregate, have a Material Adverse Effect,
except
as disclosed at the Datasite;
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|
(b)
|
The
Company has
obtained all permits required under all applicable Environmental
Laws
necessary to operate its business, except for any failures of such
which
would not have a Material Adverse
Effect;
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|
(c)
|
The
Company is
not the subject of any outstanding written order or Contract with
any
governmental authority or person respecting Environmental Laws
or any
violation or potential violations thereof, except as would not
have a
Material Adverse Effect; and,
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|
(d)
|
The
Company has
not received any written communication alleging that it may be
in
violation of any Environmental Law, or any permit issued pursuant
to
Environmental Law, or may have any liability under any Environmental
Law,
except as would not have a Material Adverse Effect and except in
connection with Ft. Xxxxx, Arkansas, tank replacement.
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4.30 Broker.
Neither
the Company nor the Seller has retained any broker in connection with any
transaction contemplated by this Agreement. Purchaser and the Company shall
not
be obligated to pay any fee or commission associated with the retention or
engagement by the Company or Seller of any broker in connection with any
transaction contemplated by this Agreement.
4.31 Related
Party Transactions.
No
portion of the sales or other on-going business relationships of the Company
is
dependent upon the friendship or the personal relationships (other than those
customary within business generally) of the Seller. During the past five
years,
the Company has not forgiven or cancelled, without receiving full consideration,
any indebtedness owing to it by the Seller.
18
4.32 Patriot
Act.
CFI and
the Seller certify that the Company has not been designated, and is not owned
or
controlled, by a “suspected terrorist” as defined in Executive Order 13224. CFI
and the Seller hereby acknowledge that the Purchaser seeks to comply with
all
applicable laws concerning money laundering and related activities. In
furtherance of those efforts, CFI and the Seller hereby represent, warrant
and
agree that: (i) none of the cash or property that the Seller have contributed
or
paid or will contribute and pay to the Company has been or shall be derived
from, or related to, any activity that is deemed criminal under United States
law; and (ii) no contribution or payment by the Company to the Purchaser,
to the
extent that they are within the Company’s control shall cause the Purchaser to
be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act
of
2001. The Seller shall promptly notify the Purchaser if any of these
representations ceases to be true and accurate regarding the Seller or the
Company. The Seller agrees to provide the Purchaser any additional information
regarding the Company that the Purchaser reasonably requests to ensure
compliance with all applicable laws concerning money laundering and similar
activities.
4.33 Disclosure.
All
statements contained in any schedule, certificate, opinion, instrument, or
other
document delivered by or on behalf of the Seller or the Company pursuant
hereto
or in connection with the transactions contemplated hereby shall be deemed
representations and warranties by the Seller and the Company herein. No
statement, representation or warranty by the Seller or the Company in this
Agreement or in any schedule, certificate, opinion, instrument, or other
document furnished or to be furnished to the Purchaser pursuant hereto or
in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading or necessary in order to provide a prospective
purchaser of the business of the Company with full and fair disclosure
concerning the Company, their business, and the Company’s affairs.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
5.1 Organization
and Good Standing. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation.
5.2 Authority.
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(a)
|
The
execution and delivery of this Agreement and the consummation of
the
transactions contemplated herein have been, or will prior to Closing
be,
duly and validly approved and acknowledged by all necessary corporate
action on the part of the
Purchaser.
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19
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(b)
|
The
execution of this Agreement and the delivery hereof to the Seller
and the
purchase contemplated herein have been, or will be prior to Closing,
duly
authorized by the Purchaser’s Board of Directors having full power and
authority to authorize such
actions.
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5.3 Conflicts;
Consents of Third Parties.
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(a)
|
The
execution and delivery of this Agreement, the acquisition of the
Shares by
Purchaser and the consummation of the transactions herein contemplated,
and the compliance with the provisions and terms of this Agreement,
are
not prohibited by the Articles of Incorporation or Bylaws of the
Purchaser
and will not violate, conflict with or result in a breach of any
of the
terms or provisions of, or constitute a default under, any court
order,
indenture, mortgage, loan agreement, or other agreement or instrument
to
which the Purchaser is a party or by which it is
bound.
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(b)
|
No
consent, waiver, approval, order, permit or authorization of, or
declaration or filing with, or notification to, any person or governmental
body is required on the part of the Purchaser in connection with
the
execution and delivery of this Agreement or the Purchaser Documents
or the
compliance by Purchaser with any of the provisions hereof or
thereof.
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5.4 Litigation. There
are
no legal proceedings pending or, to the best knowledge of the Purchaser,
threatened that are reasonably likely to prohibit or restrain the ability
of the
Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.
5.5 Investment
Intention. The
Purchaser is acquiring the Shares for its own account, for investment purposes
only and not with a view to the distribution (as such term is used in Section
2(11) of the Securities Act) thereof. Purchaser understands that the Shares
have
not been registered under the Securities Act and cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available.
5.6 Broker.
The
Purchaser has not retained any broker in connection with any transaction
contemplated by this Agreement. Seller shall not be obligated to pay any
fee or
commission associated with the retention or engagement by the Purchaser of
any
broker in connection with any transaction contemplated by this
Agreement.
ARTICLE
VI
COVENANTS
6.1 Access
to Information. The
Seller and the
Company agree
that, prior to the Closing Date, the Purchaser shall be entitled, through
its
officers, employees and representatives (including, without limitation, its
legal advisors and accountants), to make such investigation of the properties,
businesses and operations of the
Company and
its
Subsidiaries and such examination of the books, records and financial condition
of the
Company and
its
Subsidiaries as it reasonably requests and to make extracts and copies of
such
books and records. Any such investigation and examination shall be conducted
during regular business hours and under reasonable circumstances, and the
Seller
shall cooperate, and shall cause the Company to cooperate, fully therein.
No
investigation by the Purchaser prior to or after the date of this Agreement
shall diminish or obviate any of the representations, warranties, covenants
or
agreements of the Seller contained in this Agreement or any other documents
delivered by the Company or the Seller (the “Seller Documents”). In order that
the Purchaser may have full opportunity to make such physical, business,
accounting and legal review, examination or investigation as it may reasonably
request of the affairs of the
Company,
the
Seller shall cause the officers, employees, consultants, agents, accountants,
attorneys and other representatives of the
Company to
cooperate fully with such representatives in connection with such review
and
examination.
20
6.2 Conduct
of the Business Pending the Closing.
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(a)
|
Except
as otherwise expressly contemplated by this Agreement or with the
prior
written consent of the Purchaser, the Seller shall, and shall cause
the
Company to:
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(i) Conduct
the businesses of the
Company only
in
the ordinary course consistent with past practice, but in accordance with
Purchaser’s wishes Seller has initiated MSA cash out by ConocoPhillips
Company;
(ii) Use
its
best efforts to (A) preserve its present business operations, organization
(including, without limitation, management and the sales force) and goodwill
of
the
Company
and (B)
preserve its present relationship with persons having business dealings with
the
Company;
(iii) Maintain
(A) all of the assets and properties of the
Company in
their
current condition, ordinary wear and tear excepted and (B) insurance upon
all of
the properties and assets of the
Company in
such
amounts and of such kinds com-parable to that in effect on the date of this
Agreement;
(iv) (A)
maintain the books, accounts and records of the
Company in
the
ordinary course of business consistent with past practices, (B) continue
to
collect accounts receivable and pay accounts payable utilizing normal procedures
and without discounting or accelerating payment of such accounts, and (C)
comply
with all contractual and other obligations applicable to the operation
the
Company;
and
(v) Comply
in
all material respects with applicable laws.
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(b)
|
Except
as otherwise expressly contemplated by this Agreement or with the
prior
written consent of the Purchaser, the Seller shall not, and shall
cause
the
Company not
to:
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(i) Declare,
set aside, make or pay any dividend or other distribution in respect of the
capital stock of the
Company or
repurchase, redeem or otherwise acquire any outstanding shares of the capital
stock or other securities of, or other ownership interests in, the
Company;
(ii) Transfer,
issue, sell or dispose of any shares of capital stock or other securities
of the
Company or grant options, warrants, calls or other rights to purchase or
otherwise acquire shares of the capital stock or other securities of
the
Company;
21
(iii) Effect
any recapitalization, reclassification, stock split or like change in the
capitalization of the
Company;
(iv) Amend
the
certificate of incorporation or by-laws of the
Company;
(v) (A)
materially increase the annual level of compensation of any employee of the
Company, (B) increase the annual level of compensation payable or to become
payable by the Company to any of its executive officers, (C) grant any unusual
or extraordinary bonus, benefit or other direct or indirect compensation
to any
employee, director or consultant, (D) increase the coverage or benefits
available under any (or create any new) severance pay, termination pay, vacation
pay, company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or
other
employee benefit plan or arrangement made to, for, or with any of the directors,
officers, employees, agents or representatives of the Company or otherwise
modify or amend or terminate any such plan or arrangement or (E) enter into
any
employment, deferred compensation, severance, consulting, non-competition
or
similar agreement (or amend any such agreement) to which the Company is a
party
or involving a director, officer or employee of e the Company in his or her
capacity as a director, officer or employee of the Company;
(vi) Except
for trade payables and for indebtedness for borrowed money incurred in the
ordinary course of business and consistent with past practice, borrow monies
for
any reason or draw down on any line of credit or debt obligation, or become
the
guarantor, surety, endorser or otherwise liable for any debt, obligation
or
liability (contingent or otherwise) of any other person, or change the terms
of
payables or receivables;
(vii) Subject
to any lien (except for leases that do not materially impair the use of the
property subject thereto in their respective businesses as presently conducted),
any of the properties or assets (whether tangible or intangible) of the Company,
except Mortgage of Crescent Business Development Corporation titled assets
to
ConocoPhillips;
(viii) Acquire
any material properties or assets or sell, assign, transfer, convey, lease
or
otherwise dispose of any of the material properties or assets (except for
fair
consideration in the ordinary course of business consistent with past practice)
of the Company except as previously consented to by the Purchaser;
(ix) Cancel
or
compromise any debt or claim or waive or release any material right of either
of
the Company except in the ordinary course of business consistent with past
practice;
(x) Enter
into any commitment for capital expenditures out of the ordinary course,
except
“intent” for 120 blender dispensers;
22
(xi) Permit
the Company to enter into any transaction or to make or enter into any Contract
which by reason of its size or otherwise is not in the ordinary course of
business consistent with past practice, except for settlement of lawsuits
as
described in Litigation Summary;
(xii) Permit
the Company to enter into or agree to enter into any merger or consolidation
with, any corporation or other entity, and not engage in any new business
or
invest in, make a loan, advance or capital contribution to, or otherwise
acquire
the securities of any other person;
(xiii) Except
for transfers of cash pursuant to normal cash management practices, permit
the
Company to make any investments in or loans to, or pay any fees or expenses
to,
or enter into or modify any Contract with, any Seller or any affiliate of
any
Seller; or
(xiv) Agree
to
do anything prohibited by this Section 6.2 or anything which would make any
of
the representations and warranties of the Seller in this Agreement or the
Seller
Documents untrue or incorrect in any material respect as of any time through
and
including the Effective Time.
6.3 Consents. The
Seller shall use their best efforts, and the Purchaser shall cooperate with
the
Seller, to obtain at the earliest practicable date all consents and approvals
required to consummate the transactions contemplated by this Agreement,
including, without limitation, the consents and approvals referred to in
Section
4.7 hereof; provided, however, that neither the Seller nor the Purchaser
shall
be obligated to pay any consideration therefor to any third party from whom
consent or approval is requested.
6.4 Other
Actions. Each
of
the Seller and the Purchaser shall use its best efforts to (i) take all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement and (ii) cause the fulfillment at the earliest practicable date
of all
of the conditions to their respective obligations to consummate the transactions
contemplated by this Agreement.
6.5 No
Solicitation. Until
the
Closing or the termination of this Agreement in accordance with the provisions
of Section 3.3, the Seller will not, and will not cause or permit the Company
or
any of the Company’s directors, officers, employees, representatives or agents
(collectively, the "Representatives") to, directly or indirectly, (i) discuss,
negotiate, undertake, authorize, recommend, propose or enter into, either
as the
proposed surviving, merged, acquiring or acquired corporation, any transaction
involving a merger, consolidation, business combination, purchase or disposition
of any amount of the assets or capital stock or other equity interest in
the
Company other than the transactions contemplated by this Agreement (an
"Acquisition Transaction"), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect
of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any person,
any information concerning the business, operations, properties or assets
of the
Company in connection with an Acquisition Transaction, or (iv) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the foregoing.
The Seller will inform the Purchaser in writing immediately following the
receipt by any Seller, the Company or any Representative of any proposal
or
inquiry in respect of any Acquisition Transaction.
23
6.6 Preservation
of Records. Subject
to Section 9.4(e) hereof (relating to the preservation of Tax records), the
Seller and the Purchaser agree that each of them shall preserve and keep
the
records held by it relating to the business of the Company for a period of
three
years from the Closing Date and shall make such records and personnel available
to the other as may be reasonably required by such party in connection with,
among other things, any insurance claims by, legal proceedings against or
governmental investigations of the Seller or the Purchaser or any of their
affiliates or in order to enable the Seller or the Purchaser to comply with
their respective obligations under this Agreement and each other agreement,
document or instrument contemplated hereby or thereby.
6.7 Publicity. None
of
the Seller or the Purchaser shall issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other party hereto, which approval
will not be unreasonably withheld or delayed; provided
that,
to the
extent required by applicable law, the party intending to make such release
shall use its best efforts consistent with such applicable law to consult
with
the other party with respect to the text thereof.
6.8 Use
of
Name. The
Seller hereby agrees that upon the consummation of the transactions contemplated
hereby, the Purchaser and the Company shall have the sole right to the use
of
the name "Crescent" and all derivations thereof and the Seller shall not,
and
shall not cause or permit any affiliate to, use such name or any variation
or
simulation thereof.
6.9 Board
of
Directors. The
Board
of Directors of the Company as of the Closing Date shall consist of members
appointed by the Purchaser.
6.10 Financial
Statements.
The
Seller will cooperate with the Purchaser to provide audited Financial Statements
to the Purchaser as soon as practicable, but in no event later than 74 days
after the Closing Date.
6.11 Tax
Election.
At the
sole discretion of the Purchaser, the Seller agrees to make a timely election
under Internal Revenue Code Section 338(h)(10) (“338(h)(10) election”), and
Purchaser shall indemnify and hold harmless the Seller from and against any
Tax
liabilities imposed on the Seller as a result of having made any such 338(h)(10)
election to the extent that such Tax liabilities exceed the Tax liabilities
that
the Seller would incur in the absence of such election (the “Purchaser Tax
Payments”). In the event that the Seller incur any Tax obligations as a result
of the 338(h)(10) election which are in excess of amounts due had the
transactions set forth herein been taxed as a stock sale, then the amount
that
the Purchaser shall be required to reimburse Seller under this paragraph
(1)
shall be grossed up to assure that the Seller does not incur any Tax cost
as a
result of the 338(h)(10) election and the reimbursement payments under this
paragraph and (2) shall take into account the highest marginal income tax
rate
applicable to payments of this type at the applicable times as applies to
the
Seller. Any Purchaser Tax Payments shall be treated by the parties as additional
Purchase Price and shall be paid to the Seller not less than seven (7) days
prior to the xxxx Xxxxxx is required to pay such amounts with a Federal tax
return or estimate.
24
6.12 Tax
Matters.
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(a)
|
Tax
Periods Ending on or Before the Closing Date.
The Purchaser shall prepare or cause to be prepared and file or
cause to
be filed all Tax Returns for the Company for all periods ending
on or
prior to the Closing Date which are filed after the Closing Date
as soon
as practicable and prior to the date due (including any proper
extensions
thereof). The Purchaser shall permit the Company and the Seller
to review
and provide comments, if any, on each such Return described in
the
preceding sentence prior to filing. Unless the Seller or the Company
provides comments to the Purchaser, the Company shall deliver to
the
Seller each such Return signed by the appropriate officer(s) of
the
Company for filing within ten (10) days following the Purchaser’s delivery
to the Company and the Purchaser of any such Return. The Purchaser
shall
deliver to the Company promptly after filing each such Return a
copy of
the filed Return and evidence of its filing. The Purchaser shall
pay the
costs and expenses incurred in the preparation and filing of the
Tax
Returns on or before the date such costs and expenses are
due.
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If
the
Company provides comments to the Purchaser and at the end of such ten (10)
day
period the Company and the Seller has failed to reach written agreement with
respect to all of such disputed items, the parties shall submit the unresolved
items to arbitration for final determination. Promptly, but no later than
thirty
(30) days after its acceptance of its appointment as arbitrator, the arbitrator
shall render an opinion as to the disputed items. The determination of the
arbitrator shall be conclusive and binding upon the parties. The Company
filing
the Return and the Seller (as a group) shall each pay one half of the fees,
costs and expenses of the arbitrator. The prevailing party may be entitled
to an
award of pre- and post-award interest as well as reasonable attorneys’ fees
incurred in connection with the arbitration and any judicial proceedings
related
thereto as determined by the arbitrator.
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(b)
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Tax
Periods Beginning Before and Ending After the Closing Date.
The Company or the Purchaser shall prepare or cause to be prepared
and
file or cause to be filed any Returns of the Company for Tax periods
that
begin before the Closing Date and end after the Closing Date. To
the
extent such Taxes are not fully reserved for in the Company’s financial
statements, the Seller shall pay to the respective company an amount
equal
to the unreserved portion of such Taxes that relates to the portion
of the
Tax period ending on the Closing Date. Such payment, if any, shall
be paid
by the Seller within fifteen (15) days after receipt of written
notice
from the Company or the Purchaser that such Taxes were paid by
the Company
or the Purchaser for a period beginning prior to the Closing Date.
For
purposes of this Section, in the case of any Taxes that are imposed
on a
periodic basis and are payable for a Taxable period that includes
(but
does not end on) the Closing Date, the portion of such Tax that
relates to
the portion of such Tax period ending on the Closing Date shall
(i) in the
case of any Taxes other than Taxes based upon or related to income
or
receipts, be deemed to be the amount of such Tax for the entire
Tax period
multiplied by a fraction the numerator of which is the number of
days in
the Tax period ending on the Closing Date and the denominator of
which is
the number of days in the entire Tax period (the “Pro Rata Amount”), and
(ii) in the case of any Tax based upon or related to income or
receipts,
be deemed equal to the amount that would be payable if the relevant
Tax
period ended on the Closing Date. The Seller shall pay to the Company
with
the payment of any taxes due hereunder, the Seller’s Pro Rata Amount of
the costs and expenses incurred by the Purchaser in the preparation
and
filing of the Tax Returns. Any net operating losses or credits
relating to
a Tax period that begins before and ends after the Closing Date
shall be
taken into account as though the relevant Tax period ended on the
Closing
Date. All determinations necessary to give effect to the foregoing
allocations shall be made in a reasonable manner as agreed to by
the
parties.
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25
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(c)
|
Refunds
and Tax Benefits.
Any Tax refunds that are received after the Closing Date by the
Seller
(other than tax refunds received in connection with such Seller’s
individual tax Returns), the Purchaser or the Company, and any
amounts
credited against Tax to which the Seller, the Purchaser or the
Company
become entitled, shall be for the account of the Company, and the
Seller
shall pay over to the Company any such refund or the amount of
any such
credit within fifteen (15) days after receipt or entitlement thereto.
In
addition, to the extent that a claim for refund or a proceeding
results in
a payment or credit against Tax by a taxing authority to the Seller,
the
Seller shall pay such amount to the Company within fifteen (15)
days after
receipt or entitlement thereto.
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(d) Cooperation
on Tax Matters.
(i) The
Purchaser, the Company and the Seller shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the filing
of
any Returns pursuant to this Section and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
The
Company and the Seller agrees (A) to retain all books and records with respect
to Tax matters pertinent to the Company relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations
(and,
to the extent notified by the Purchaser or the Seller, any extensions thereof)
of the respective tax periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding
any
such books and records and, if the other party so requests, the Company or
the
Seller, as the case may be, shall allow the other party to take possession
of
such books and records.
(ii) The
Purchaser and the Seller further agree, upon request, to use their commercially
reasonable best efforts to obtain any certificate or other document from
any
governmental authority or any other person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
26
(iii) The
Purchaser and the Seller further agree, upon request, to provide the other
party
with all information that either party may be required to report pursuant
to
§6043 of the Code and all Treasury Department Regulations promulgated
thereunder.
6.13 Non-Competition.
The
Non-Competition provisions of the Employment Agreement between Seller and
Purchaser are incorporated herein by reference.
ARTICLE
VII
CONDITIONS
TO CLOSING
7.1 Conditions
Precedent to Obligations of the Purchaser. The
obligation of the Purchaser to consummate the transactions contemplated by
this
Agreement is subject to the fulfillment, on or prior to the Closing Date,
of
each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable
law):
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(a)
|
the
Purchaser shall have reached an agreement in principle to purchase
from
M&I Bank the loans made by M&I Bank to Crescent Oil Company, Inc.
and Crescent Stores Corporation;
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(b)
|
all
representations and warranties of the Seller contained herein shall
be
true and correct as of the date
hereof;
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(c)
|
all
representations and warranties of the Seller contained herein qualified
as
to materiality shall be true and correct, and the representations
and
warranties of the Seller contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of
the
Closing Date with the same effect as though those representations
and
warranties had been made again at and as of that
time;
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|
(d)
|
the
Seller shall have performed and complied in all material respects
with all
obligations and covenants required by this Agreement to be performed
or
complied with by them on or prior to the Closing
Date;
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(e)
|
the
Purchaser shall have been furnished with certificates (dated the
Closing
Date and in form and substance reasonably satisfactory to the Purchaser)
executed by the Seller certifying as to the fulfillment of the
conditions
specified in Sections 7.1(a), 7.1(b) and 7.1(c)
hereof;
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|
(f)
|
Certificates
representing the Shares shall have been, or shall at the Closing
be,
validly delivered and transferred to the Purchaser, free and clear
of any
and all Liens;
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(g)
|
there
shall not have been or occurred any material adverse change in
the
Business;
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27
|
(h)
|
the
Seller shall have obtained all consents and waivers referred to
in Section
4.7 hereof, in a form reasonably satisfactory to the Purchaser,
with
respect to the transactions contemplated by this Agreement;
and
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(i)
|
no
Legal Proceedings shall have been instituted or threatened or claim
or
demand made against the Seller, the Company, or the Purchaser seeking
to
restrain or prohibit or to obtain substantial damages with respect
to the
consummation of the transactions contemplated hereby, and there
shall not
be in effect any order by a governmental body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation
of the
transactions contemplated hereby.
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7.2 Conditions
Precedent to Obligations of the Seller. The
obligations of the Seller to consummate the transactions contemplated by
this
Agreement are subject to the fulfillment, prior to or on the Closing Date,
of
each of the following conditions (any or all of which may be waived by the
Seller in whole or in part to the extent permitted by applicable
law):
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(a)
|
all
representations and warranties of the Purchaser contained herein
shall be
true and correct as of the date
hereof;
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(b)
|
all
representations and warranties of the Purchaser contained herein
qualified
as to materiality shall be true and correct, and all representations
and
warranties of the Purchaser contained herein not qualified as to
materiality shall be true and correct in all material respects,
at and as
of the Closing Date with the same effect as though those representations
and warranties had been made again at and as of that
date;
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(c)
|
the
Purchaser shall have performed and complied in all material respects
with
all obligations and covenants required by this Agreement to be
performed
or complied with by Purchaser on or prior to the Closing
Date;
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(d)
|
the
Seller shall have been furnished with certificates (dated the Closing
Date
and in form and substance reasonably satisfactory to the Seller)
executed
by the Chief Executive Officer of the Purchaser certifying as to
the
fulfillment of the conditions specified in Sections 7.2(a), 7.2(b)
and
7.2(c); and
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|
(e)
|
no
Legal Proceedings shall have been instituted or threatened or claim
or
demand made against the Seller, the Company, or the Purchaser seeking
to
restrain or prohibit or to obtain substantial damages with respect
to the
consummation of the transactions contemplated hereby, and there
shall not
be in effect any Order by a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation
of the
transactions contemplated hereby.
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ARTICLE
VIII
DOCUMENTS
TO BE DELIVERED
8.1 Documents
to be Delivered by the Seller. At
the
Closing, the Seller shall deliver, or cause to be delivered, to the Purchaser
the following:
28
|
(a)
|
stock
certificates representing the Shares, duly endorsed in blank or
accompanied by stock transfer powers and with all requisite stock
transfer
tax stamps attached;
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|
(b)
|
the
certificates referred to in Section 7.1(d) and 7.1(e)
hereof;
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|
(c)
|
copies
of all consents and waivers referred to in Section 7.1(g) hereof;
and
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|
(d)
|
such
other documents as the Purchaser shall reasonably
request.
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8.2 Documents
to be Delivered by the Purchaser. At
the
Closing, the Purchaser shall deliver to the Seller the following:
(a) the
Purchase Price;
(b) the
certificates referred to in Section 7.2(d) hereof; and
(c) such
other documents as the Seller shall reasonably request.
ARTICLE
IX
INDEMNIFICATION
9.1 Indemnification.
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(a)
|
Subject
to Section 9.2 hereof, the Seller hereby agrees to indemnify and
hold the
Purchaser and the Company, and their respective directors, officers,
employees, affiliates, agents, successors and assigns (collectively,
the
"Purchaser Indemnified Parties") harmless from and
against:
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(i) any
and
all liabilities of the Company of every kind, nature and description, absolute
or contingent, existing as against the Company prior to and including the
Closing Date or thereafter coming into being or arising by reason of any
state
of facts existing, or any transaction entered into, on or prior to the Closing
Date, except to the extent that the same have been fully provided for in
the
Balance Sheet, or disclosed in the notes thereto or were incurred in the
ordinary course of business between the Balance Sheet Date and the Closing
Date,
or are disclosed in the Litigation Summary contained in the Datasite, or
are
described in the last sentence of Section 4.10, above;
(ii) subject
to Section 10.3, any and all losses, liabilities, obligations, damages, costs
and expenses based upon, attributable to or resulting from the failure of
any
representation or warranty of the Seller set forth in Section 4 hereof, or
any
representation or warranty contained in any certificate delivered by or on
behalf of the Seller pursuant to this Agreement, to be true and correct in
all
respects as of the date made;
(iii) any
and
all losses, liabilities, obligations, damages, costs and expenses based upon,
attributable to or resulting from the breach of any covenant or other agreement
on the part of the Seller under this Agreement;
29
(iv) any
and
all notices, actions, suits, proceedings, claims, demands, assessments,
judgments, costs, penalties and expenses, including reasonable attorneys'
and
other professionals' fees and disbursements (collectively, "Expenses") incident
to any and all losses, liabilities, obligations, damages, costs and expenses
with respect to which indemnification is provided hereunder (collectively,
"Losses").
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(b)
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Subject
to Section 9.2, Purchaser hereby agrees to indemnify and hold the
Seller
and their respective affiliates, agents, successors and assigns
(collectively, the "Seller Indemnified Parties") harmless from
and
against:
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(i) any
and
all Losses based upon, attributable to or resulting from the failure of any
representation or warranty of the Purchaser set forth in Section 5 hereof,
or
any representation or warranty contained in any certificate delivered by
or on
behalf of the Purchaser pursuant to this Agreement, to be true and correct
as of
the date made;
(ii) any
and
all Losses based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Purchaser under this Agreement
or
arising from the ownership or operation of the Company from and after the
Closing Date; and
(iii) All
matters covered by the indemnification policies of the Company and its
subsidiaries as set forth in their Articles of Incorporation.
(iv) any
and
all Expenses incident to the foregoing.
9.2 Limitations
on Indemnification for Breaches of Representations and Warranties.
An
indemnifying party shall not have any liability under Section 9.1(a)(ii)
or
Section 9.1(b)(i) hereof unless the aggregate amount of Losses and Expenses
to
the indemnified parties finally determined to arise thereunder based upon,
attributable to or resulting from the failure of any representation or warranty
to be true and correct, other than the representations and warranties set
forth
in Sections 4.3, 4.11, 4.24 and 4.29 hereof, exceeds $5,000 (the “Basket”) and,
in such event, the indemnifying party shall be required to pay the entire
amount
of such Losses and Expenses in excess of $5,000 (the
“Deductible”).
30
9.3 Indemnification
Procedures.
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(a)
|
In
the event that any Legal Proceedings shall be instituted or that
any claim
or demand ("Claim") shall be asserted by any person in respect
of which
payment may be sought under Section 9.1 hereof (regardless of the
Basket
or the Deductible referred to above), the indemnified party shall
reasonably and promptly cause written notice of the assertion of
any Claim
of which it has knowledge which is covered by this indemnity to
be
forwarded to the indemnifying party. The indemnifying party shall
have the
right, at its sole option and expense, to be represented by counsel
of its
choice, which must be reasonably satisfactory to the indemnified
party,
and to defend against, negotiate, settle or otherwise deal with
any Claim
which relates to any Losses indemnified against hereunder. If the
indemnifying party elects to defend against, negotiate, settle
or
otherwise deal with any Claim which relates to any Losses indemnified
against hereunder, it shall within five (5) days (or sooner, if
the nature
of the Claim so requires) notify the indemnified party of its intent
to do
so. If the indemnifying party elects not to defend against, negotiate,
settle or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder, fails to notify the indemnified
party of
its election as herein provided or contests its obligation to indemnify
the indemnified party for such Losses under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise
deal
with such Claim. If the indemnified party defends any Claim, then
the
indemnifying party shall reimburse the indemnified party for the
Expenses
of defending such Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Claim, the indemnified
party may participate, at his or its own expense, in the defense
of such
Claim; provided, however, that such indemnified party shall be
entitled to
participate in any such defense with separate counsel at the expense
of
the indemnifying party if, (i) so requested by the indemnifying
party to
participate or (ii) in the reasonable opinion of counsel to the
indemnified party, a conflict or potential conflict exists between
the
indemnified party and the indemnifying party that would make such
separate
representation advisable; and provided, further, that the indemnifying
party shall not be required to pay for more than one such counsel
for all
indemnified parties in connection with any Claim. The parties hereto
agree
to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such
Claim.
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(b)
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After
any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction
and
the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the indemnified party and the indemnifying
party shall have arrived at a mutually binding agreement with respect
to a
Claim hereunder, the indemnified party shall forward to the indemnifying
party notice of any sums due and owing by the indemnifying party
pursuant
to this Agreement with respect to such matter and the indemnifying
party
shall be required to pay all of the sums so due and owing to the
indemnified party by wire transfer of immediately available funds
within
10 business days after the date of such
notice.
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(c)
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The
failure of the indemnified party to give reasonably prompt notice
of any
Claim shall not release, waive or otherwise affect the indemnifying
party's obligations with respect thereto except to the extent that
the
indemnifying party can demonstrate actual loss and prejudice as
a result
of such failure.
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9.4 Tax
Treatment of Indemnity Payments. The
Seller and the Purchaser agree to treat any indemnity payment made pursuant
to
this Article 9 as an adjustment to the Purchase Price for federal, state,
local
and foreign income tax purposes.
9.5 Totality
of Economic Effect.
The
liability of either party for an indemnity payment shall be calculated based
upon the totality of the economic effect of the matter giving rise to the
indemnity claims. To illustrate, an indemnified claim for tax liability shall
be
offset for any future tax credit or deduction related thereto.
31
ARTICLE
X
MISCELLANEOUS
10.1 Payment
of Sales, Use or Similar Taxes. All
sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne by the
Seller.
10.2 Survival
of Representations and Warranties. The
parties hereto hereby agree that the representations and warranties contained
in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto; provided, however, that any claims or actions with respect thereto
shall
terminate unless asserted by litigation within twenty four (24) months after
the
Closing Date.
10.3 Expenses. Except
as
otherwise provided in this Agreement, the Seller and the Purchaser shall
each
bear its own expenses incurred in connection with the negotiation and execution
of this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby
and thereby, it being understood that in no event shall the Company bear
any of
such costs and expenses.
10.4 Specific
Performance. The
Seller acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to the Purchaser and that the Purchaser will not have
an
adequate remedy at law. Therefore, the obligations of the Seller under this
Agreement, including, without limitation, the Seller’s obligation to sell the
Shares to the Purchaser, shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith.
Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement
or
otherwise.
10.5 Further
Assurances. The
Seller and the Purchaser each agrees to execute and deliver such other documents
or agreements and to take such other action as may be reasonably necessary
or
desirable for the implementation of this Agreement and the consummation of
the
transactions contemplated hereby.
10.6 Submission
to Jurisdiction; Consent to Service of Process.
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(a)
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The
parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
of any federal or state court located within the State of Kansas
over any
dispute arising out of or relating to this Agreement or any of
the
transactions contemplated hereby and each party hereby irrevocably
agrees
that all claims in respect of such dispute or any suit, action
proceeding
related thereto may be heard and determined in such courts. The
parties
hereby irrevocably waive, to the fullest extent permitted by applicable
law, any objection which they may now or hereafter have to the
laying of
venue of any such dispute brought in such court or any defense
of
inconvenient forum for the maintenance of such dispute. Each of
the
parties hereto agrees that a judgment in any such dispute may be
enforced
in other jurisdictions by suit on the judgment or in any other
manner
provided by law.
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32
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(b)
|
Each
of the parties hereto hereby consents to process being served by
any party
to this Agreement in any suit, action or proceeding by the mailing
of a
copy thereof in accordance with the provisions of Section
10.10.
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10.7 Entire
Agreement; Amendments and Waivers.
This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement
of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including without limitation, any investigation
by
or on behalf of any party, shall be deemed to constitute a waiver by the
party
taking such action of compliance with any representation, warranty, covenant
or
agreement contained herein. The waiver by any party hereto of a breach of
any
provision of this Agreement shall not operate or be construed as a further
or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or
remedy
by such party preclude any other or further exercise thereof or the exercise
of
any other right, power or remedy. All remedies hereunder are cumulative and
are
not exclusive of any other remedies provided by law.
10.8 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Kansas.
10.9 Table
of Contents and Headings. The
table
of contents and section headings of this Agreement are for reference purposes
only and are to be given no effect in the construction or interpretation
of this
Agreement.
10.10 Notices. All
notices and other communications under this Agreement shall be in writing
and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, or overnight mail courier to the parties (and shall
also be transmitted by facsimile to the persons receiving copies
thereof) at the following addresses (or to such other address as a party
may
have specified by notice given to the other party pursuant to this
provision):
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(a)
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Purchaser:
|
Titan
Global Holdings, Inc
0000
Xxx
Xxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxx Chance, CEO & President
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
33
Copy
to:
Xxxxxx
X.
Xxxx, Esq.
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
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(b)
|
Seller:
|
Xxxxxxx
Near
000
X.
Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Phone:
(000) 000-0000
Facsimile:
(000) 000-0000
10.11 Severability. If
any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
10.12 Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in
any
person or entity not a party to this Agreement except as provided below.
No
assignment of this Agreement or of any rights or obligations hereunder may
be
made by either the Seller or the Purchaser (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any
attempted assignment
without the required consents shall be void;
provided that the Purchaser shall be able to assign this Agreement to
Greystone
Business Credit or an entity that controls or is under common control with
Purchaser.
[INTENTIONALLY
BLANK]
34
IN
WITNESS WHEREOF,
the
undersigned have executed this Agreement as of the date first written
above.
By: /s/
Xxxxx
Chance
Xxxxx
Chance,
Chief
Executive Officer & President
CRESCENT
FUELS, INC.
By: /s/
Xxxxxxx
Near
Xxxxxxx
Near
President
XXXXXXX
NEAR
By: /s/
Xxxxxxx
Near
Xxxxxxx
Near
35
