PURCHASE AGREEMENT
THIS
PURCHASE AGREEMENT dated as of June 13, 2007("Agreement"), by and between
Conihasset Capital Partners, Inc., a Delaware corporation ("Conihasset"), Xxxxxx
X. Xxxxxx of _______________________________________(“Melina”).
WITNESSETH:
WHEREAS,
Conihasset wishes to buy from Melina, and Melina wishes to sell to Conihasset,
100 Membership Units of MRO Integrated Solutions, LLC, a Connecticut limited
liability company (“Company”), which represents one hundred (100%) percent of
the outstanding membership interest in the Company at the time of the Closing
(as hereinafter defined), as evidenced by that certain Limited Liability Company
Operating Agreement of MRO Integrated Solutions, LLC dated as of June 1, 2007,
by Melina with the Company, attached hereto as Exhibit A (“Operating
Agreement”);
NOW,
THEREFORE, in consideration of the premises and of the representations and
warranties, covenants and agreements hereinafter made, the parties hereto have
agreed and do hereby agree in manner and form as hereinafter set
forth:
1
1. AGREEMENT
TO BUY AND SELL MEMBERSHIP UNITS.
1.1 Sale
of Membership Units.
Melina
agrees that he will sell, convey, transfer, assign and deliver to Conihasset
at
the Closing provided for in Article 3, free and clear of all claims, liens,
pledges, encumbrances, mortgages, charges, security interests, options, rights
of first refusal, restrictions on transfer, rights or other interests, equities
or imperfections of title whatsoever, 100 Membership Units of the Company (the
"Membership Units"), which represent one hundred (100%) percent of the
outstanding membership interests of the Company at the time of the
Closing.
1.2 Consideration
for Sale and Transfer of the Membership Units.
Subject
to the terms and conditions of this Agreement and in reliance upon the
representations, warranties, covenants and agreements of Melina herein
contained, and in full consideration of such sale, conveyance, transfer,
assignment and delivery to Conihasset of the 100 Membership Units, Conihasset
agrees to pay and deliver to Melina, in the manner as hereinafter set forth,
a
purchase price equivalent to $1,500,000 in the form of the issuance to Melina
of
300,000 shares of common stock, $0.001 par value per share, of Conihasset (the
“Conihasset Stock”) at a price of $5.00 per share.
2. INTENTIONALLY
OMITTED
3. CLOSING.
3.1 Closing.
Subject
to the satisfaction or waiver of the conditions precedent of Conihasset and
Melina set forth in Article 9 and Article 10 hereof, the closing of the
transactions contemplated hereby (the "Closing") shall be held at the offices
of
Xxxxx Xxxxxxx & Xxxxxxx P.C., Xxx Xxxxxxxx Xxxxx, 0xx
Xxxxx,
Xxxxxxxxxx, Xxxxx Xxxxxx at 10:00 A.M. on the date hereof. The time and date
of
the Closing is herein called the "Closing Date".
3.2 Payment
for Sale and Transfer of Membership Units.
At the
Closing, Conihasset shall issue to Melina, against transfer of title to the
100
Membership Units acquired from Melina, 300,000 shares of Conihasset Stock.
3.3 Transfer
of Membership Units.
At the
Closing, Melina shall transfer to Conihasset or its nominee all right, title
and
interest in the 100 Membership Units as provided in Article 1. Said transfer
shall be effected by delivery to Conihasset of an assignment executed by Melina
in favor of Conihasset, or its nominee, in a form reasonably satisfactory to
Conihasset.
3.4 Operating
Agreement.
In
order to evidence the acquisition by Conihasset of the 100 Membership Units
from
Melina (the “Acquired Membership Interest”), which represents one hundred (100%)
percent of the outstanding membership interests of the Company at the time
of
the Closing, Conihasset, Melina and the Company shall execute and deliver at
the
time of the Closing the First Amendment to Operating Agreement in the form
attached hereto as Exhibit B
(the
“First Amendment to Operating Agreement”) and the Company shall file with the
Secretary of State of Connecticut an Amendment to the Articles of Organization
of the Company in a form satisfactory to Conihasset to evidence such transfer
of
the acquired Membership Interest.
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4. REPRESENTATIONS
AND WARRANTIES OF MELINA.
Melina
represents, warrants and agrees to Conihasset as of the date hereof as
follows:
4.1 Organization
and Qualification of the Company.
(a)
The
Company is a limited liability company duly organized, validly existing and
in
good standing under the laws of the State of Connecticut. The Company has the
requisite limited liability company power and authority to own or lease all
of
its properties and assets and to conduct its business in the manner and in
the
places where such properties are owned or leased or such business is now
conducted or contemplated to be conducted by it. The Company is duly qualified,
licensed and authorized to do business as a foreign limited liability company
and is in good standing as a foreign corporation in the jurisdictions, if any,
shown on the Schedule
of Jurisdictions
attached
hereto as Schedule
4.1
and is
not required to be so licensed, qualified or authorized to conduct its business
or own its property in any other jurisdiction.
(b)
The
Operating Agreement is the only operating agreement or its equivalent in effect,
or that has ever been in effect, for the Company.
4.2 Authority
of Melina and the Company.
This
Agreement and each of the other agreements and other documents and instruments
delivered or to be delivered to Conihasset pursuant to or in contemplation
of
this Agreement will constitute, when so delivered, the valid and binding
obligations of such of the Company and Melina as are parties thereto and shall
be enforceable in accordance with their respective terms. The execution,
delivery and performance of this Agreement and each of the other agreements
and
other documents and instruments delivered or to be delivered to Conihasset
by
the Company and Melina have been duly authorized by all necessary limited
liability company or other action of the Company and Melina and are within
the
Company's and Melina’s powers.
The
execution, delivery and performance of this Agreement or any such other
agreement, document or instrument by the Company or Melina, except as
specifically identified on the Schedule
of Breaches, Defaults and Required Consents
attached
hereto as Schedule
4.2,
does
not and will not with the passage of time or the giving of notice or
both:
(a)
result in a breach of or constitute a default by Melina or the Company or result
in any right of termination or other effect adverse to the Company or Melina
under any indenture or loan or credit agreement of Melina or the Company, or
any
other agreement, lease or instrument to which Melina or the Company is a party
or by which the property of the Company or Melina is bound or
affected;
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(b)
result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance or claim
of any nature whatsoever on the assets of the Company or on the Acquired
Membership Interests;
(c)
result in a violation of or default under any law, rule, or regulation, or
any
order, writ, judgment, injunction, decree, determination or award, now in effect
having applicability to Melina, the Company or the Acquired Membership
Interests;
(d)
violate any provisions of the Articles of Organization, or equivalent, or any
operating agreement of the Company, as amended; or
(e)
require any approval, consent or waiver of, or filing with, any person, and
are
not in contravention of any applicable law or regulation.
All
requisite consents, authorizations, licenses, permits, orders, certificates
and
approvals of all governmental authorities or other persons necessary for Melina
and the Company to consummate the transactions contemplated by this Agreement
will be obtained as of the time of Closing.
4.3 Subsidiaries.
The
Company has no subsidiaries and, except as specifically disclosed on the
Schedule
of Investments
attached
hereto as Schedule
4.3,
does
not own any securities issued by any other individual, corporation, partnership,
joint venture, trust, association, estate, joint stock company or organization,
except temporary investments in the ordinary course of business.
4.4 Capitalization.
)
Melina is the record and beneficial owner of all the outstanding membership
interests in the Company. Melina owns all of the membership interests in the
Company free and clear of any and all claims, liens, pledges, charges,
encumbrances, mortgages, security interests, options, restrictions on transfer,
rights of first refusal, preemptive or other rights or other interests or
equities or imperfections of title whatsoever. There are no other equity or
debt
securities of the Company authorized or outstanding on the date hereof and
there
are no existing warrants, preemptive or other rights, options, calls,
commitments, conversion privileges, or other agreements obligating the Company
to issue any membership interests, or any security convertible into and/or
exchangeable for membership interests of the Company other than that certain
Convertible Promissory Note dated November 15, 2006, issued by the Company
to
Conihasset in the original principal amount of $1,000.000 and that certain
Convertible Promissory Note dated May ___, 2007, issued by the Company to
Conihasset in the original principal amount of $500,000.
4.5 Valid
Title to the Acquired Membership Interests.
Conihasset will receive at the Closing valid and marketable title to the 100
Membership Units, which represents one hundred (100%) percent of the outstanding
Membership Interests in the Company, free and clear of any claims, liens,
pledges, charges, encumbrances, mortgages, security interests, options,
restrictions on transfer, rights of first refusal, preemptive or other rights
or
other agreements, interests or equities or any other imperfections of title
whatsoever.
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4.6 Assets.
(a)
Except for assets disposed of on commercially reasonable terms since the Interim
Date (as hereinafter defined in Section 4.10 hereof) in the ordinary course
of
business, the Company owns, or has enforceable rights to use under valid and
binding leases with third parties, all assets included in the Interim Date
Balance Sheet (as hereinafter defined in Section 4.10 hereof), and such assets
constitute all assets associated with, used in and necessary to the business
and
operations of the Company. Except as set forth on the Schedule
of Machinery and Equipment
attached
hereto as Schedule
4.6(a),
the
machinery and equipment owned or leased by the Company (i) is in a good state
of
operating condition and repair; (ii) has been maintained in accordance with
a
regular preventive maintenance program; (iii) is adequate for the Company's
needs and the Company's current and currently projected production levels;
and
(iv) conforms with all applicable laws, ordinances and regulations.
(b)
Except as listed on the Schedule
of Liens and Encumbrances
attached
hereto as Schedule
4.6(b)
and
except for assets disposed of on commercially reasonable terms since the Interim
Date in the ordinary course of business, the Company has good and marketable
title to all of its assets (including, without limitation, those reflected
in
the Interim Date Balance Sheet), free and clear of all claims, liens, pledges,
charges, mortgages, security interests, encumbrances, equities or other
imperfections of title of any nature whatsoever, except for liens for current
taxes and assessments not yet due and payable.
(c)
The
inventories of the Company reflected on the Interim Date Balance Sheet and
the
inventories of the Company existing on the date hereof and on the Closing Date
are of a quality and quantity saleable in the ordinary course of the Company's
business at prevailing market prices, are valued at the lower of cost (FIFO)
or
market and reflect write-downs to realizable values in the case of items which
have become obsolete, unusable or unsaleable (except at prices less than cost)
through regular distribution channels in the Company's business. Subject to
write-downs complying with the preceding sentence, the values of the inventories
stated in the Interim Date Balance Sheet reflect the Company's normal inventory
valuation policies and were determined in accordance with GAAP, practices and
methods consistently applied. Purchase commitments for raw materials and
inventory are not, individually or in the aggregate, in excess of normal
requirements and none are at prices in excess of the lowest prices reasonably
available in the current market. Sales commitments for finished goods are all
at
prices in excess of prices used in valuing inventory items or of estimated
costs
of manufacture of items not in inventory after allowing for selling expenses
and
a normal profit margin except in instances of sale promotions or product
introductions consistent with past practices. Since the Interim Date, no
inventory items have been sold or disposed of except through sales in the
ordinary course of business.
(d)
All
of the personal property leased by the Company is listed on the Schedule
of Personal Property Leases
attached
hereto as Schedule
4.6(d),
and
true and complete copies of all of the lease documents have been delivered
to
Conihasset. All such lease documents are unmodified and in full force and
effect, and there are no other agreements, written or oral, between the Company
and any third parties claiming an interest in the Company's interest in any
leased property or otherwise relating to the Company's use and occupancy
thereof, and all covenants, conditions, restrictions, easements and similar
matters affecting the leased property have been complied with by the
Company.
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(e)
Except for the assets located at the premises described on the Schedule
of Assets at Other Locations
attached
hereto as Schedule
4.6(e),
all of
the assets of the Company are located on the Real Property (as defined in
Section 4.7 hereof), and all the assets located on such other premises are
owned
or leased by the Company.
4.7 Real
Property.
(a)
With
the exception of the real estate and building and improvements thereon which
the
Company leases at 000X Xxxxxx Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx, the Company
does not own, lease or otherwise use, and never has owned, leased or otherwise
used, any real estate in the conduct of its business. (Such real property owned,
leased or otherwise used by the Company, together with the buildings and
improvements thereon, is herein referred to as the "Real Property"; and, solely
for purposes of this Section 4.7 hereof and Articles 11 and 12 hereof, the
term
"Real Property" shall also include any other Real Property previously owned,
operated or leased by the Company or its predecessors.) The legal description
of
the Real Property is set forth on the Schedule
of Real Property
attached
hereto as Schedule
4.7.
(b)
Except as otherwise specifically disclosed on Schedule
4.7:
(i) the
Real Property, and the operations thereon and the uses made thereof, are in
compliance with all, and are not in violation of any, Environmental Laws (as
hereinafter defined); (ii) there has been no generation, use, treatment,
handling, storage or disposal, or arrangement for the use, treatment, handling,
storage or disposal, of Hazardous Materials on, or release or transportation
of
Hazardous Materials to or from, the Real Property by any person (including,
without limitation, the Company and the past and present officers, employees
and
agents of the Company and all past and present owners, operators and lessees
of
the Real Property) at any time except in full compliance with all Environmental
Laws; (iii) the Real Property has not been used at any time by any person in
such a manner as to cause a violation of any Environmental Law or to potentially
give rise to any liability or obligation for the remediation or restoration
of
the Real Property or for the treatment, storage, removal, disposal, release,
arrangement for removal or disposal or transportation of any Hazardous
Materials; (iv) no such violation, liability or obligation has been created
by
the removal, disposal or transportation by any person at any time of any
Hazardous Materials to or from the Real Property; (v) neither the Company nor
Melina has received notice of, and no circumstances exist that could form the
basis of, an Environmental Action (as hereinafter defined) arising out of or
relating to the Real Property or the generation, use, treatment, handling,
storage or disposal, or arrangement for the use, treatment, handling, storage
or
disposal, of Hazardous Materials thereon, or the release or transportation
of
Hazardous Materials thereto or therefrom; (vi) the Real Property is not listed
or proposed for listing on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
or
on the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the Environmental Protection Agency or any
analogous state list of sites requiring investigation or clean-up and is not
adjacent to any such property; (vii) none of the buildings and improvements
included within the Real Property contain asbestos, and there are no underground
storage tanks or polychlorinated biphenyl (PCBs) located on or at the Real
Property; (viii) the Company
has
obtained all permits, approvals, identification numbers, licenses and other
authorizations, and renewals thereof, required under Environmental Laws; all
of
the same are currently effective; and the Company is complying in all respects
therewith; (ix) no employees of the Company or its predecessors or any past
owner, operator or lessee of the Real Property have been exposed to Hazardous
Materials; and (x) Melina has delivered to Conihasset true, complete and correct
copies or results of any and all reports, studies or tests in the possession
of
or initiated by Melina or the Company pertaining to the existence of Hazardous
Materials and other environmental concerns on any part of the Real Property
or
concerning compliance with or liability under Environmental Laws in the
operation of the business of the Company or as conducted by any prior owner,
operator or lessee of the Real Property.
6
As
used
in this Section 4.7 and elsewhere in this Agreement: (1) "Environmental
Action"
means
any action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, including, without limitation
(a)
any claim by any governmental or regulatory authority for enforcement, clean-up,
removal, response, remedial or other actions or damages pursuant to any
Environmental Law and (b) any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials or arising from alleged injury or threat
of
injury to the environment; (2) "Environmental
Laws"
and
"Environmental
Law"
means
any federal, state or local law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award relating to the environment or
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, the Hazardous Materials Transportation Act,
the
Clean Water Act, the Toxic Substances Control Act, the Clean Air Act, the Safe
Drinking Water Act, the Atomic Energy Act and the Federal Insecticide, Fungicide
and Rodenticide Act, in each case, as amended from time to time; and (3)
"Hazardous
Materials"
means
(a) petroleum or petroleum products, natural or synthetic gas, asbestos in
any
form that is or could become friable, urea formaldehyde foam insulation and
radon gas, (b) any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials" "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants" "contaminants" or "pollutants" or words of any similar import,
under
any Environmental Law and (c) any other substance exposure to which is regulated
under any Environmental Law.
(c)
The
Real Property, and the operations thereon and the uses made thereof, are in
compliance with all fire, building and zoning laws, statutes, ordinances, codes,
rules, regulations and decrees.
(d)
No
notice of violation of any applicable federal, state, or local statute,
ordinance, order, requirement, law, rule, regulation (including, without
limitation, any Environmental Law), or of any covenant, condition, restriction
or easement affecting the Real Property with respect to the use or occupancy
of
the Real Property has been given to Melina or the Company by any person having
jurisdiction over the Real Property or by any other person entitled to enforce
the same, or by any private citizen or citizen action group and, to the best
of
Melina’s knowledge, no such notice has been given to any other
person.
7
(e)
To
the best of Melina’s knowledge, there is no plan, study or effort by any
governmental authority or any other person which may prevent or hinder the
continued use of the Real Property as heretofore used in the conduct of the
business by the Company.
(f)
There
is not (i) to the best of Melina’s knowledge, any intended or proposed federal,
state, or local statute, ordinance, order, requirement, law, rule or regulation
(including, but not limited to, zoning changes) which may prevent or hinder
the
continued use of the Real Property as heretofore used in the conduct of the
business by the Company or (ii) any suit, action, claim or legal,
administrative, arbitration or other proceeding or governmental investigation
(other than Environmental Actions) pending or, to the best of Melina’s
knowledge, threatened or contemplated against or affecting either the Real
Property or the use thereof.
(g)
There
is no existing or, to the best of Melina’s knowledge, proposed or contemplated
eminent domain proceeding that would or could result in the taking of all or
any
part of the Real Property that would prevent or hinder the continued use of
the
Real Property as heretofore used in the conduct of the business by the
Company.
(h)
Except as set forth on Schedule
4.2,
neither
this Agreement nor anything provided to be done under this Agreement violates
or
shall violate any contract, document, understanding, agreement, arrangement
or
instrument affecting the Real Property.
(i) The
buildings and improvements included among the Real Property are structurally
sound and in a good state of condition, maintenance and repair.
4.8 Conduct
of the Business.
Neither
Melina nor the Company is a party to, or subject to or bound by, nor are any
of
their assets subject to or bound by, any agreement, oral or written, or any
judgment, law, rule, regulation, order, writ, injunction or decree of any court
or governmental or administrative body which prohibits or adversely affects
or
upon the consummation of the transactions contemplated hereby would prohibit
or
adversely affect: (i) the use of any or all of the assets and property of the
Company necessary for its operation in the ordinary course of business; or
(ii)
the conduct of the business and operations of the Company, in each case, in
all
respects in the same manner as such business has heretofore been conducted
by
it. On consummation of this Agreement at the Closing, the Company will own
all
properties and rights necessary to conduct the Company's business and operations
in all respects in the same manner as has been conducted by the Company prior
to
the Closing. Melina has no reason to believe that business relations currently
maintained with the suppliers, customers and persons having business relations
with the Company will not be similarly maintained in all respects after the
date
hereof and the date of the Closing. Without limiting the generality of the
foregoing, no supplier, distributor or customer of the Company has notified
the
Company or Melina that it intends to discontinue its relationship with the
Company.
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4.9 Permits
and Licenses.
Except
as set forth on the Schedule
of Regulatory Licenses, Consents, Permits and Authorizations
attached
hereto as Schedule
4.9,
the
Company is not required by any person, entity or governmental authority, foreign
or domestic, federal, state or local, to obtain or maintain any consents,
authorizations, licenses, permits, orders, certificates, registrations, security
and other clearances, and qualifications for the conduct of its business
(including, without limitation, qualifications to transact business as a foreign
corporation in various states). Except as set forth on Schedule
4.9,
the
Company has obtained all such consents, authorizations, licenses, permits,
orders, certificates, registrations, security and other clearances, and
qualifications for the conduct of its business; the same are valid and
subsisting; and the consummation of this Agreement will not invalidate the
same.
The Company is not required to have any form of security clearance from any
governmental agency in order to conduct its business and operations in the
manner it is presently conducted.
4.10 Financial
Statements and Undisclosed Liabilities.
(a)
The
Company has delivered to Conihasset the unaudited balance sheets of the Company
as of December 31, 2005, December 31, 2006 and May 31, 2007 and unaudited
statements of income and retained earnings and cash flows of the Company for
each of the fiscal years or interim periods then ended, including, in each
case,
the related notes (all of which financial statements and notes are collectively
referred to as the "Financial Statements"), copies of which are attached hereto
as Exhibit
C.
The
balance sheet of the Company as of May 31, 2007, is hereinbefore and hereinafter
referred to as the "Interim Date Balance Sheet", and May 31, 2007, is
hereinbefore and hereinafter referred to as the "Interim Date".
(b)
All
of the Financial Statements: (i) are true, complete and correct and present
fairly the financial position of the Company as of the dates thereof and the
results of operations and changes in financial position for the respective
periods covered by such statements; (ii) are consistent with the books and
records of the Company; and (iii) have been prepared in accordance with GAAP
applied on a consistent basis except, with respect to interim statements, normal
year-end adjustments.
(c)
The
Company, as of the Interim Date and the Closing Date, has no indebtedness,
liability, claim or obligation of any nature, fixed or contingent, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured or otherwise of
any
kind or nature whatsoever, except: (i) liabilities specifically described and
reflected dollar for dollar on the Interim Date Balance Sheet; (ii) fixed
liabilities incurred in the ordinary course of business on commercially
reasonable terms since the Interim Date, in kind and amounts consistent with
past practices; (iii) fixed commercial obligations to perform pursuant to
executory contracts entered into in the ordinary course of business on
commercially reasonable terms, consistent with past practices, and not in
default, as disclosed pursuant to Section 4.13; and (iv) liabilities
specifically disclosed and reflected dollar for dollar on the Schedule
of Liabilities
attached
hereto as Schedule
4.10(c).
There
is no existing condition, situation or set of circumstances which will result
in
any such liabilities except for the liabilities identified in clauses (i)
through (iv) of this Section
4.10(c).
(d)
All
receivables of the Company including accounts receivable, contracts receivable,
loans receivable, notes receivable and advances shown on the Interim Date
Balance Sheet or those acquired after the Interim Date and, in either case,
not
collected prior to the Closing (collectively, the "Accounts") arose from bona
fide transactions in the ordinary course of business, represent accounts validly
due for goods sold or services rendered or validly incurred indebtedness on
the
part of those obligated thereon, and are fully collectible dollar for dollar
in
the normal course of business in the aggregate face amounts thereof without
offset, counterclaim or resort to litigation. There has not been asserted nor
does there exist any counterclaim or claim for offset against any of the
Accounts. None of the Accounts have been outstanding for more than ninety (90)
days.
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(e)
Since
the Interim Date, there have been no reserves taken or reversed or assets
written down or written up except as set forth on the Schedule
of Reserves Taken and Assets Written Down or Up
attached
hereto as Schedule
4.10(e).
4.11 Compliance
with Laws.
Except
as set forth on the Schedule
of Noncompliance with Laws
attached
hereto as Schedule
4.11,
the
Company has been and is, and its business has been and is being conducted and
operated, in compliance with all
requirement
of all applicable statutes, laws, ordinances, regulations, rules, codes or
decrees, whether foreign or domestic, federal, state or local, which affect
the
Company or its business or to which the Company is subject, including, without
limitation, those relating to fair labor practices and standards; equal
employment practices; occupational safety and health; export/import licenses
or
controls; foreign exchange controls; restraint of trade and unfair competition;
immigration; federal procurement; and Environmental Laws. Except as set forth
on
Schedule
4.11,
neither
the Company nor Melina has received any notice or other communication from
any
person with respect to an alleged, actual or potential violation and/or failure
to comply with any of the foregoing.
4.12 Patents,
Trade Names, Trademarks and Copyrights.
All
patents, patent applications, trade names, registered or common law trademarks,
trademark applications, registered copyrights, unregistered copyrights and
copyright applications owned by or licensed to or used by the Company are listed
on the Schedule
of Patents, Trademarks and Copyrights
attached
hereto as Schedule 4.12
and have
been duly registered in, filed in or issued by the United States Patent and
Trademark Office, the United States Register of Copyrights or the corresponding
offices of other countries, states or other jurisdictions to the extent set
forth on said Schedule 4.12,
and
have been properly maintained and renewed in accordance with all applicable
provisions of law and administrative regulations in the United States and each
such country, state or other jurisdiction. Except as set forth in said
Schedule 4.12,
the
Company's use of said patents, trade names, trademarks or copyrights does not
require the consent of any third party and the same are freely transferable
and
are owned exclusively by the Company free and clear of any attachments, liens,
royalties, encumbrances, adverse claims, licenses or any other ownership or
other interest of any other person whatsoever. Except as described in
Schedule
4.12,
no
person has a license to use any of such patents, trade names, trademarks or
copyrights or applications therefore. No order, decree, judgment or stipulation
has ordered, decreed, adjudged, stipulated, found or determined that the Company
or Melina has infringed any adversely held patent, trade name, trademark or
copyright; and no claim or proceeding charging the Company or Melina with
infringement of any adversely held patent, trade name, trademark or copyright,
has been asserted or served upon the Company or Melina at any time during the
six (6) year period prior to and ending upon the Closing Date or, to the best
of
Melina’s knowledge, is threatened to be asserted or filed; and the conduct of
the business of the Company, as heretofore conducted by the Company, does not
infringe any patents, patent applications, trade names, trademarks, copyrights
or other rights owned by or owed to any third person. Except as set forth on
Schedule
4.12,
to the
best of Melina’s knowledge after a review of the current files of the Company,
no person is infringing upon the patents, trade names, trademarks or copyrights
or applications therefore set forth on Schedule 4.12.
Except
as specifically disclosed on Schedule 4.12,
the
Company has not used any patent, trade name, trademark or copyright in order
to
conduct its business as presently being conducted.
10
The
Company owns and has the right to use, free and clear of any claims or rights
of
any other person, including without limitation, Melina or any of his affiliates,
all trade secrets, customer lists, manufacturing processes, secret processes,
technology, know-how and any other confidential information (collectively,
the
"Trade Secrets") required for or used in the manufacture or marketing of all
products either being, or proposed to be, sold or manufactured by the Company,
including, without limitation, any products licensed by the Company from others.
No person or entity is now infringing upon or misappropriating, or has in the
past infringed upon or misappropriated, any of the Trade Secrets. The Company
is
not in any way making any unlawful or wrongful use of any trade secrets,
customer lists, manufacturing processes, secret processes, know-how or any
other
confidential information of any other person, including, without limitation,
any
former employer of any present or past employee of the Company. All
manufacturing processes, secret processes, know-how, and any other intellectual
property and confidential information resulting from the development activities
engaged in by any employees of the Company is the property of the Company.
Neither the Company nor any officer, director or key employee of the Company
is
a party to any non-competition agreement, non-disclosure agreement, or similar
agreement with any other person.
4.13 List
of Contracts.
Except
for the contracts, commitments, plans, agreements, leases and licenses described
in the Schedule
of Contracts, Commitments and Intercompany Transactions
attached
hereto as Schedule
4.13,
the
Company is not a party to nor is it or any of its properties or assets or the
membership interests in the Company subject to or otherwise bound by any oral
or
written contract, commitment, plan, agreement, lease or license of any
kind.
All
the
contracts, commitments, plans, agreements, leases and licenses listed in said
Schedule
4.13
are
valid and binding obligations of the Company and of the other parties thereto
in
accordance with their respective terms and conditions.
There
has
been no uncured breach or default of any provision of any such contract,
commitment, lease or other agreement by the Company, or to the knowledge of
Melina, any other party thereto, and nothing has occurred which with lapse
of
time or the giving of notice or both would constitute a breach or default by
the
Company, or to the knowledge of Melina, by any other party thereto with respect
to any such contract or commitment or which would cause acceleration of any
obligation of any party thereto or the creation of any lien, encumbrance,
security interest in or upon the assets of the Company or the membership
interests in the Company. Conihasset has been furnished with true and complete
copies of all scheduled contracts and commitments marked for
identification.
11
Except
for the contracts and transactions described on Schedule
4.13,
(i) the Company is not a party to nor is it or any of its properties or
assets or the membership interests in the Company subject to or otherwise bound
by any existing contracts, whether oral or written, between the Company, on
the
one hand, and Melina or any of Melina’s or the Company's affiliates, on the
other hand, (ii) during the past three (3) years the Company has not
engaged in any transactions with Melina or any of Melina’s or the Company's
affiliates, whether or not reflected in the books and records of the Company
and
whether or not occurring in the ordinary course of business, (iii) the
Company has no obligations to, or asserted or unasserted claims against, Melina
or any of Melina’s or the Company's affiliates, and (iv) neither Melina nor
any of Melina’s or the Company's affiliates has any obligations to, or asserted
or unasserted claims against, the Company.
4.14 Litigation.
Except
as set forth on the Schedule
of Litigation
attached
hereto as Schedule
4.14,
there
is no action, suit, investigation (whether formal or informal), subpoena or
proceeding pending against the Company, and, to the best of Melina’s knowledge,
there is no threatened action, suit, investigation (whether formal or informal),
subpoena or proceeding against the Company or any basis therefore, nor have
Melina or the Company received any actual written or oral notice of any such
action, suit, investigation, subpoena or proceeding. Except as set forth on
Schedule
4.14,
no
subpoena, order, writ, injunction or decree has been issued by, or requested
of
any court or governmental agency, foreign or domestic, federal, state or local,
which pertains to the Company or which might result in an adverse change in
the
business, property or assets or in the condition, financial or otherwise, of
the
Company or which questions or might adversely affect the transactions
contemplated by this Agreement. Neither the Company nor Melina has ever been
subject to or a party to any bankruptcy or other insolvency
proceedings.
4.15 Absence
of Changes.
Since
the Interim Date, the Company has conducted its business only in the ordinary
course, and, except as set forth in this Agreement and on the Schedule
of Changes
attached
hereto as Schedule
4.15,
the
Company has not, as of the date of the Closing, either directly or indirectly
since the Interim Date:
(a)
suffered any change in the condition (financial or otherwise), properties,
assets, liabilities, business, operations, affairs or prospects of the Company,
whether or not arising in the ordinary course of business, which change by
itself or in conjunction with any or all other such changes has been or may
be
adverse with respect to the condition (financial or otherwise), properties,
assets, liabilities, business, operations, affairs or prospects of the
Company;
(b)
incurred any obligation or liability (absolute, accrued, contingent or
otherwise), other than liabilities permitted by Section
4.10(c);
(c)
mortgaged, pledged or subjected to lien, charge or any encumbrance or other
imperfections of title any of its assets, tangible or intangible;
12
(d)
written up or down the value of any inventory or other assets or written off
as
uncollectible any notes or accounts receivable or any portion thereof, except
in
amounts which, in the aggregate, are not in excess of pre-existing reserves
therefore or taken or set aside any reserves or charges in its books against
earnings or assets or reversed any reserves;
(e)
purchased, sold, assigned, transferred, abandoned or otherwise disposed of
any
assets other than on commercially reasonable terms in the ordinary and normal
course of its business, or cancelled any debts or claims, other than in the
ordinary and normal course of business on commercially reasonable terms and
in
amounts which in the aggregate are not in excess of US $5,000;
(f)
experienced any adverse change in its financial position, assets, liabilities
or
business;
(g)
entered into any transaction or agreement other than in the ordinary and normal
course of business consistent with past practice on commercially reasonable
terms;
(h)
issued any membership interests, bonds, convertible securities or other
securities, or become obligated to issue any such securities or granted any
stock options, warrants, calls, conversion privileges, commitments or rights
with respect to such securities;
(i)
entered into any compromise or settlement of any litigation, proceeding or
governmental investigation relating to the Company or its assets, properties,
rights or business or the Stock;
(j)
declared, set aside or paid any dividend on, or any other distribution made
in
respect of, the membership interests of the Company or made any direct or
indirect redemption, purchase or other acquisition by the Company of its own
membership interests (or entered into any agreement under which the Company
has
become obligated to do any of the foregoing);
(k)
except for the Operating Agreement, changed or amended its Articles of
Organization, or equivalent, or any operating agreement;
(l)
failed to pay, satisfy, perform or otherwise discharge any debt, lien,
obligation or liability shown on the Interim Date Balance Sheet or incurred
thereafter as the same may have become due and payable unless such debt, lien,
obligation or liability was or is being contested in good faith and is disclosed
on Schedule
4.15
attached
hereto;
(m)
suffered any damage, destruction or loss whether or not covered by insurance
which might adversely affect the condition (financial or otherwise), properties,
assets, liabilities, business, operations, affairs or prospects of the
Company;
13
(n)
made
or suffered any amendment, modification or termination of any contract or
agreement which might adversely affect the condition (financial or otherwise),
properties, assets, liabilities, business, operations, affairs or prospects
of
the Company;
(o)
received notice or acquired knowledge of any labor trouble, difficulty, dispute
or organizing effort involving employees of the Company;
(p)
made
any loans (other than travel expense advances) to any stockholders, directors,
officers or employees of the Company;
(q)
changed the number or kind of membership units authorized, issued or
outstanding;
(r)
formed any subsidiaries or merged or consolidated, or obligated itself to do
so,
with or into any other person;
(s)
repaid any loans or other advances from members of the Company or repaid any
indebtedness of the Company for which any member was a guarantor or was
otherwise directly or indirectly liable;
(t)
waived any rights, contractual or otherwise, whether or not in the ordinary
course of business;
(u)
changed the compensation payable or to become payable by the Company to any
of
its officers, directors, employees or agents other than normal merit increases
and bonuses made in accordance with (and consistent in amount with) its usual
practices which in the aggregate are not material in amount;
(v)
paid
or discharged a lien or liability of the Company which was not shown on the
Interim Date Balance Sheet or incurred in the ordinary course of business
thereafter;
(w)
incurred any obligation or liability on behalf of the Company to any of its
officers, managers, employees or members (including, without limitation, any
increase in compensation or bonuses payable to such officers, directors,
employees or members earning more than $30,000 per year) or any loans or
advances made by the Company to any of its officers, employees or members except
normal compensation and expense allowances payable to such persons in the
ordinary course of business consistent with past practice;
(x)
entered into any lease or sublease, pledge or hypothecation of real or personal
property or of the assets of the Company;
(y)
forgiven or cancelled any debts or claims, or waived any rights, except in
the
ordinary course of business; or
(z)
suffered any loss of employees, suppliers or customers.
14
4.16 Insurance.
The
physical properties, business, operations and assets of the Company are and
have
been, since the formation of the Company, insured by such insurers, under such
policies, against such risks, in such amounts, and upon such other terms and
conditions as are disclosed in the Schedule
of Insurance
attached
hereto as Schedule
4.16,
and all
other insurance policies and similar arrangements of the Company are disclosed
in said Schedule. Said insurance policies and arrangements are in full force
and
effect as of the date of the Closing and are adequate and customary for the
business engaged in by the Company. Except as specifically identified and
disclosed dollar for dollar on the Interim Date Balance Sheet, the Company
has
no liability, whether fixed or contingent or otherwise, under any workers'
compensation or other insurance policy, in respect of the current policy periods
or prior periods, for premiums, retrospective rating adjustments or additional
premiums which may arise out of subsequent audits of such policy periods or
otherwise.
4.17 Insider
Indebtedness.
No
officer, director or stockholder of the Company is indebted to the Company
or
otherwise owes the Company any money, and the Company is not indebted to any
officer, manager or member of the Company except for amounts due as normal
salaries, wages and bonuses and in reimbursement of ordinary expenses on a
current basis.
4.18 Employee
Benefit Plans.
The
Schedule
of Employee Benefit Plans
attached
hereto as Schedule
4.18
sets
forth a complete and accurate description of all employee benefit plans,
agreements, policies, arrangements and understandings (whether or not written)
and all collective bargaining agreements relating to employee benefits with
respect to which the Company has, or may incur, any past, current, future or
contingent obligations, including, without limitation, all plans, agreements,
arrangements, policies or understandings relating to sick pay, vacation pay
or
severance pay, deferred compensation, pensions, profit sharing, retirement
income or other benefits, option plans, bonuses, severance arrangements, health
benefits, disability benefits, insurance benefits and all other employee
benefits or fringe benefits, including any employee welfare benefit plans and
employee pension benefit plans within the meaning of Sections 3(1) and 3(2)
of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(individually referred to as a "Plan" and collectively referred to as the
"Plans"). Except as set forth in Schedule
4.18:
(a)
True,
correct and complete copies of each such Plan (or in the case of any unwritten
Plan, a description thereof), the most recent actuarial reports and trustee's
reports relating thereto (if applicable), the most recent annual report on
Form
5500 filed with the Internal Revenue Service for any Plan (if applicable),
the
most recent summary plan description for each Plan for which a summary plan
description is required by law, and each trust agreement, insurance contract
or
other funding vehicle relating to any Plan, have been furnished to
Conihasset;
(b)
Each
Plan has been administered and operated in accordance with its terms and
applicable law, and to the extent applicable, each Plan is "qualified" within
the meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code") and each related trust is exempt from tax under Section 501(a)
of
the Code. No Plan which is so qualified has been amended since the date of
its
most recent determination letter in any respect that would adversely affect
its
qualification or materially increase its costs. No liability under ERISA or
otherwise has been incurred or, based upon existing facts, may be expected
to be
incurred with respect to any Plan;
15
(c)
All
reports and disclosures relating to such Plans required to be filed or
distributed as of the Closing Date have been filed or distributed in compliance
with applicable law;
(d)
None
of such Plans, any trusts related thereto, any trustee or administrator thereof,
any "party in interest" or any "disqualified person" with respect thereto has
engaged in any nonexempted "prohibited transaction" under section 4975 of the
Code or section 406 of ERISA with respect to such Plans or has acted or failed
to act in a manner that could subject the Company or any Plan to any liability
for breach of fiduciary duty under ERISA or any other applicable
law;
(e)
No
liability to the Pension Benefit Guaranty Corporation ("PBGC") has been or
is
expected to be incurred with respect to any Plan by the Company and PBGC has
not
instituted proceedings to terminate any Plan. No reportable event within the
meaning of Section 4043(b) of ERISA has occurred with respect to any Plan.
There
exists no condition or set of circumstances which presents a risk of the
termination or partial termination of any Plan;
(f)
The
Company has received determination letters from the Internal Revenue Service
that each of such Plans is qualified under section 401(a) of the Code (if
applicable) and such determination letters are in effect, and the Company does
not know of any fact which would adversely affect the qualified status of any
such Plan;
(g)
Full
payment has been made of all amounts which the Company was required under the
terms of any of the Plans to have paid as contributions to such Plans on or
prior to the date hereof, and no accumulated funding deficiencies (as defined
in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, exist
with respect to any such Plan;
(h)
Other
than for claims in the ordinary course for benefits under the Plans, there
are
no actions, suits, claims or proceedings, pending or, to the best of Melina’s
knowledge, threatened, nor, to the best of Melina’s knowledge does there exist
any basis therefore, which would result in any liability with respect to any
Plan of the Company;
(i)
The
current value of vested accrued benefits under each Plan which is subject to
Title IV of ERISA does not exceed the current value of all of the assets of
such
Plan allocable to such vested accrued benefits. For purposes of the
representations in the preceding sentences, the terms "current value" and
"accrued benefit" have the meanings specified in Section 3 of
ERISA;
(j)
The
Company is not a participant in any Multiemployer Plan within the meaning of
Section 3(37) of ERISA. The Company has not, with respect to any Multiemployer
Plan, suffered or otherwise caused a "complete withdrawal" or "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205
of
ERISA. In the event that the Company were to withdraw from any of such
Multiemployer Plans set forth on Schedule 4.18 as of the Closing Date, there
would be no withdrawal liability, so-called, or any corresponding obligation
to
post a bond, letter of credit or other collateral to secure future payment
obligations. To the knowledge of the Company after making reasonable inquiry
of
the Plan Administrator and the Plan Investment Manager(s), if any, each such
Multiemployer Plan was determined to be a "qualified plan" under Code Section
401(a), a determination letter having been issued by the Internal Revenue
Service to such effect and no fact or circumstance which should have been known
by the Company, including those discoverable by reasonable inquiry, exists
which
would affect the status of the Plan as a "qualified plan" or which would subject
the Plans to "excise taxes";
16
(k)
There
are no accrued liabilities under any Plans, programs or practices maintained
on
behalf of the employees of the Company which are not provided for on their
books
or financial statements or which have not been fully provided for by
contributions to such Plans, programs, or practices;
(l)
The
Company does not maintain any employee welfare benefit plans, as defined in
Section 3(1) of ERISA, which provide post-retirement benefits to
employees;
(m)
The
Company has complied with the health care coverage continuation requirements
of
the Consolidated Omnibus Budget Reconciliation Act of 1985;
(n)
All
accrued liabilities of the Company as of the Interim Date with respect to sick
pay, vacation pay, severance pay, deferred compensation, or other obligations
for the benefit of any personnel of the Company including pension benefits
(vested or unvested) have been reflected dollar for dollar in accordance with
GAAP on the Financial Statements as of the Interim Date; and
(o)
Each
Plan (including any Plan covering retirees or former employees) may be amended
or terminated at any time after the Closing Date without liability to the
Company.
4.19 Governmental
and Other Approvals.
Under
existing law, neither Melina nor the Company are required to obtain or make
any
approval, license, permit or other action by or filing with, any foreign or
domestic, federal, state, municipal or other governmental body, commission,
board, department or agency in order to execute this Agreement and/or consummate
the transactions contemplated hereby in accordance with applicable laws and
regulations.
4.20 Brokerage.
Neither
Melina nor the Company have dealt with any broker or finder in connection with
the transactions contemplated herein, and Melina agree to indemnify and hold
Conihasset harmless in connection with any claims for commissions or other
compensation made by any broker or finder claiming to have been employed by
or
on behalf of Melina or the Company in connection with the transactions
contemplated herein.
4.21 Employees
and Labor
Relations.
17
(a) Schedule
4.21 lists all employees of the Company (“Business Employees”), their terms of
employment, compensation history (including but not limited to bonus, if any),
benefits and accrued vacation and other amounts payable to each employee. The
Company is not delinquent in any payments to any Business Employees for wages,
salaries, commissions, bonuses or other direct compensation for any services
performed by them to date, or other amounts required to be paid to such
employees to date. The Company has withheld all amounts required by law from
the
wages, salaries, commissions and other payments to Business Employees and former
employees of the Company, and is not liable for any arrears of wages or taxes.
The Company is not subject to, not a party to and has not been threatened with
any dispute, grievance, arbitration, investigation, charge or lawsuit relating
to labor or employment matters involving any employees or former employees,
including matters involving occupational safety, employee privacy rights, wage
payment and overtime, affirmative action, unfair labor practices or
discrimination.
(b) There
is
no unfair labor practice complaint against the Company pending or, to the best
of Melina’s knowledge, threatened. There are no proceedings pending or, to the
best of Melina’s knowledge, threatened before the National Labor Relations Board
with respect to the Company. There is no labor strike or similar dispute pending
or, to the best of Melina’s knowledge, threatened against or involving the
Company. There is no pending or past representation question involving an
attempt to organize a bargaining unit including any employees of the Company
and
no labor grievance has been filed within the past 12 months with the Company.
The Company is not a party to or bound by any collective bargaining agreement.
No collective bargaining agreement is currently being negotiated by the Company
with respect to employees of the Company.
4.22 Discrimination
Charges.
There
are no discrimination charges (relating to sex, age, race, national origin,
handicap or veteran status) pending or, to the best of Melina’s knowledge,
threatened against the Company, or involving the Company, before any federal,
state, county or local agency, board, commission, authority or other subdivision
thereof.
4.23 Related
Transactions.
Except
as specifically disclosed on the Schedule
of Affiliation
attached
hereto as Schedule
4.23
or on
Schedule
4.13,
except
for payment by the Company of normal compensation to regular employees of the
Company in the ordinary course of business, consistent with past practices,
and
except for payments to officers, directors, employees and shareholders of the
Company, or any of their affiliates, in any one year period having an aggregate
value less than US $30,000, no current or former director, officer, employee
or
shareholder of the Company, or any of their affiliates or any other person
in
which any of them has any beneficial interest (other than an investment in
a
publicly held corporation not exceeding 1% of the outstanding capital stock
of
such corporation), is, or since the formation of the Company has been: (i)
a
party to any transaction with the Company or its affiliates (including but
not
limited to any contract, agreement, commitment or other arrangement providing
for the furnishing of services by or to, or rental of real or personal property
to or from, or otherwise requiring payments to or from, any such director,
officer, employee or shareholder of the Company or any of their affiliates
or
any other person in which any of them has any beneficial interest (other than
an
investment in a publicly held corporation not exceeding 1% of the outstanding
capital stock of such corporation)); (ii) entitled to receive any fee or other
payment of consideration in connection with this Agreement and/or the
consummation of the transactions contemplated herein; (iii) the direct or
indirect owner of any interest in any corporation, firm, association or business
organization which is a present or potential competitor of, customer of or
supplier of products and/or services to the Company or its affiliates, or (iv)
the recipient of income from any source other than the Company which relates
to
the business of, or should properly accrue to, the Company.
18
4.24 Taxes.
(a)
The
amounts set up as accruals for Taxes (as hereinafter defined) on the Interim
Date Balance Sheet will be sufficient to cover in full the payment of all unpaid
Taxes (including, without limitation, income, excise, sales, use, property,
franchise, withholding, unemployment and FICA taxes, and any interest and
penalties thereon) of Company accrued for or applicable to the periods ended
on
the Closing Date and all years and periods prior thereto, including, without
limitation, taxes arising out of the consummation of the transactions
contemplated hereby.
(b)
The
Company has filed all federal, state, county, local and foreign income, excise,
property, franchise, sales, use, withholding, unemployment and other Tax Returns
or information which are required to be filed by it in all countries, states,
cities and towns and other jurisdictions in which it is incorporated or is
required to be qualified to do business as a foreign corporation or otherwise
transacts business up to and including the Closing Date, and has paid all such
Taxes which are required to be paid, whether or not shown on such returns,
or
which have become due pursuant to such returns or to any assessment which has
been received by it and will continue to do so up to the Closing Date. Such
returns are true, complete and correct in all respects and copies of the same
for all years since the formation of the Company have been delivered to
Conihasset.
(c)
All
deficiencies asserted as a result of such examinations have been paid and no
extension of time for the assessment of deficiencies for any such year is in
effect. There is no current audit of any of the Company's Tax Returns. The
Company has not given nor been requested to give waivers of any statutes of
limitations relating to the payment of taxes of the Company for taxable periods
for which the applicable statutes of limitations have not expired. The
provisions for Taxes reflected in the above-mentioned Financial Statements
are
adequate to cover any and all Tax liabilities of the Company in respect of
its
business, property and operations. Neither the Internal Revenue Service nor
any
other taxing authority is now asserting or threatening to assert against the
Company any deficiency or claim for additional Taxes or interest thereon or
penalties in connection therewith. The Company has made adequate provisions
for
all current Taxes, and there will not be any additional assessments for any
fiscal periods prior to and including the date hereof and the Closing Date
in
excess of the amounts reserved therefore.
(d) The
Company has elected, and has never elected otherwise, to be treated as a
“partnership” for federal and state income tax purposes. Melina acknowledges and
understands that he shall be responsible for the federal and state taxes accrued
on the taxable income attributable to the Company for all the periods or
portions of the periods prior to the Closing Date.
19
(e) For
purposes of this Agreement, except as otherwise expressly provided, unless
the
context otherwise requires:
The
term
“Taxes” shall mean all taxes of any kind, levies or other like assessments,
customs, duties, imposts, charges or, including without limitation, income,
gross receipts, ad valorem, value-added, excise, real or personal property,
asset, sales, use license, payroll, transaction, capital, net worth, franchise
taxes (if not based on income), estimated taxes, withholding, employment, social
security, workers’ compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes
or
other governmental taxes imposed or payable to the United States, or any state,
county, local or other foreign government or subdivision or agency thereof,
and
in each instance such term shall include any interest, penalties or additions
to
tax attributable to any such Tax. “Tax Returns” shall mean all returns,
declarations, reports and information returns and statements of any person
required to be filed or sent by or with respect to it in respect of any
Taxes.
4.25 Product
Warranties.
Set
forth on the Schedule
of Product Warranties
attached
hereto as Schedule
4.25
are the
standard forms of product warranties and guarantees used by the Company in
the
conduct of its business. Except as specifically disclosed on said Schedule
4.25,
the
Company has not given, used or made any product warranties or guarantees. Except
as specifically described on Schedules
4.25,
no
product warranty or similar claims have been made against the Company except
routine claims as to which, in the aggregate, losses and expenses in respect
of
repair or replacement of merchandise do not and will not exceed the warranty
reserve to be reflected on the Interim Date Balance Sheet. The aggregate loss
and expense attributable to all product warranty and similar claims now pending
or hereafter asserted with respect to products manufactured on or prior to
the
Closing Date will not exceed the warranty reserve to be reflected on the Interim
Date Balance Sheet. No person or party (including, but not limited to,
governmental agencies of any kind) has any claim, or basis for any action or
proceeding, against the Company under any U.S. federal, state or local law
or
foreign law applicable to product warranties or guarantees used by the
Company.
4.26 Product
Liability Claims.
Except
as described on the Schedule
of Product Liability Claims
attached
hereto as Schedule
4.26,
the
Company has not received notice or information as to any claim or allegation
of
personal injury, death, or property or economic damages, any claim for punitive
or exemplary damages, any claim for contribution or indemnification, or any
claim for injunctive relief in connection with any product manufactured, sold
or
distributed by or in connection with any service provided by the
Company.
4.27 Product
Safety Authorities.
No
person has been required to file any notification or other report with or
provide information to any governmental agency or product safety standards
group
concerning actual or potential defects or hazards with respect to any product
manufactured, sold or distributed by the Company, and there exists no grounds
for the recall of any products of the Company.
20
4.28 Investment
Representation.
Melina:
(A) is acquiring the Conihasset Stock hereunder for his own account, for
investment only, and not with a view to, or for sale in connection with, any
distribution in violation of the Securities Act of 1933, as amended (the
“Securities Act”) or any rule or regulation under the Securities Act, (B) is a
sophisticated investor and has sufficient knowledge and experience in financial
and business matters to be able to evaluate the merits and risks of its
investment in the Conihasset Stock, (C) acknowledges that Conihasset has made
available to Melina (i) the opportunity to ask questions of (and to receive
answers from) the officers and directors of Conihasset relating to Conihasset
and the Conihasset Stock, and (ii) the opportunity to acquire all information
about Conihasset as Melina has requested to evaluate the merits and risks of
investment in the Conihasset Stock, (D) understands that the Conihasset Stock
(i) has not been registered under the Securities Act or under any state
securities law; (ii) is being sold to Melina in reliance on exemptions from
the
registration requirements of the Securities Act and such state securities laws;
(iii) are “restricted securities” within the meaning of Rule 144 under the
Securities Act; and (iv) may not be sold, transferred or otherwise disposed
of
unless subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from registration is then available,
(E)
is able to bear the economic risk and lack of liquidity inherent in holding
the
Conihasset Stock, and (F) is an “accredited investor” within the meaning of
Regulation D under the Securities Act.
4.29 Disclosure.
No
representation or warranty in this Article 4, and no statement contained
elsewhere in this Agreement or in any Schedule, Exhibit, Certificate or other
agreement or document furnished or to be furnished to pursuant hereto or in
connection with the transactions contemplated under this Agreement contains
or
will contain any untrue statement of a material fact or omits or will omit
to
state a material fact or any fact necessary to make the statements contained
therein not misleading. There is no fact which adversely affects or may in
the
future (so far as can now be reasonably foreseen) adversely affect the condition
(financial or otherwise), properties, assets, liabilities, business, operations,
affairs or prospects of the Company which has not been specifically described
herein or in one of the Schedules to this Agreement. With respect to any
representation and warranty herein which is made "to the best of Melina’s
knowledge", Melina shall be deemed to have knowledge of any matter or fact:
(a)
if Melina has actual personal knowledge of such matter or fact, (b) if Melina
has information from which a person of reasonable intelligence or of the
superior intelligence of Melina would infer that the matter or fact in question
exists, (c) if Melina would or should have ascertained such matter or fact
in
the performance of any duty he may have as Manager or employee of the Company,
or (d) if any of the Company's senior management has actual personal knowledge
of such matter or fact.
5. REPRESENTATIONS
AND WARRANTIES OF CONIHASSET.
As
of the
date hereof and as of the Closing Date, Conihasset represents and warrants
to
Melina as follows:
5.1 Organization
of Conihasset.
Conihasset is duly organized, validly existing and in good standing under the
laws of the State of Delaware. Conihasset has full corporate power and authority
to own or lease all of its properties and to conduct its business in the manner
and in the places where such properties are owned and leased or such business
is
now conducted.
21
5.2 Authority
of Conihasset.
This
Agreement and each of the agreements and other documents and instruments
delivered or to be delivered by Conihasset pursuant to or in contemplation
of
this Agreement will constitute, when so delivered, the valid and binding
obligation of Conihasset and shall be enforceable in accordance with their
respective terms. The execution, delivery and performance of this Agreement
and
each such other agreement, document and instrument has been duly authorized
by
all necessary corporate action of Conihasset and is within Conihasset’s
corporate powers. The execution, delivery and performance of any such agreement,
document or instrument by Conihasset and the execution, delivery and performance
of this Agreement by Conihasset does not and will not with the passage of time
or the giving of notice or both violate any provisions of the Certificate of
Incorporation or By-Laws of Conihasset.
5.3 Governmental
Approvals.
Under
existing law, Conihasset is not required to obtain or make any approval,
license, permit or other action by or filing with any foreign or domestic,
federal, state, municipal or other governmental body, commission, board,
department,
or
agency
in order to execute this Agreement and/or consummate the transactions
contemplated hereby in accordance with applicable laws and
regulations.
5.4 Form
10-K Disclosures.
Except
as set forth on Schedule
of Conihasset Exceptions
attached
hereto as Schedule
5.4,
all of
the statements set forth in the Form 10-K for Conihasset filed with the
Securities and Exchange Commission on April 2, 2007 for the period ending
December 31, 2006 are true and correct in all material respects as of the
Closing Date. Except as set forth on Schedule 5.4 or disclosed in Conihasset’s
Definitive Proxy Statement, Schedule 14A, filed pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 with the Securities and Exchange Commission
on
April 6, 2007, there has been no material adverse change in the condition
(financial or otherwise), properties, assets, liabilities, business, operations
or affairs of Conihasset since December 31, 2006.
5.5 Brokerage.
Conihasset has not dealt with any broker or finder in connection with the
transaction contemplated herein and agrees to indemnify and hold Melina harmless
in connection with any claims or commissions or other compensation made by
any
broker or finder claiming to have been employed by or on behalf of Conihasset
in
connection with the transactions contemplated herein.
5.6 Litigation.
There
is no action, suit, investigation (whether formal or informal), subpoena or
proceeding pending, or to the best of Conihasset’s knowledge, threatened against
Conihasset, nor has any order, writ, injunction, subpoena or decree been issued
by any court or governmental agency to Conihasset which, in either case,
prohibits or seeks to enjoin the transactions contemplated by this
Agreement.
6. POST-CLOSING
COVENANTS.
6.1 Regulatory
Filings.
Each of
the parties hereto will furnish to the other party hereto such necessary
information and reasonable assistance as such other party may reasonably request
in connection with its preparation of filings or submissions to any governmental
agency required in connection with this Agreement and the transactions
contemplated hereby after the Closing.
22
7.
INTENTIONALLY
OMITTED.
8. INTENTIONALLY
OMITTED.
9. CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF CONIHASSET TO CLOSE.
The
obligation of Conihasset to acquire the Acquired Membership Interest as
contemplated hereby, and to perform its other obligations hereunder to be
performed on or after the Closing, shall be subject to the fulfillment, which
Melina and the Company agree to use their best efforts to fulfill, on or prior
to the Closing Date, unless otherwise waived in writing by Conihasset, of the
following conditions:
9.1 Representations
and Warranties.
The
representations and warranties of Melina set forth in Article 4 hereof shall
be
true and correct in all material respects on the Closing Date.
9.2 Performance
of Covenants.
Melina
and the Company shall have performed in all material respects all of their
obligations contained in this Agreement to be performed on or prior to the
Closing Date.
9.3 Threatened
or Pending Proceedings.
No
proceedings shall have been initiated or threatened by any person seeking to
enjoin or otherwise restrain or to obtain an award for damages in connection
with the consummation of the transactions contemplated hereby.
9.4 Delivery
of Certificates and Documents to Conihasset.
Melina
and the Company shall have delivered, or cause to be delivered, to Conihasset
the certificates as to the legal existence and corporate and tax good standing
of the Company, if available, and copies of its Articles of Organization, or
equivalent, as amended, issued or certified by the appropriate governmental
official of the state of its formation and the states where its property is
located.
9.5 First
Amendment to Operating
Agreement.
Melina
and the Company shall have executed and delivered to Conihasset the First
Amendment to Operating Agreement.
9.6 Registration
Rights Agreement.
Melina
shall have executed and delivered to Conihasset the Registration Rights
Agreement in the form attached hereto as Exhibit
D
(“Registration Rights Agreement”).
9.7 Limited
Liability Company Action.
All
limited liability company action to authorize (i) the execution, delivery and
performance by the Company of this Agreement and any other agreements or
instruments contemplated hereby to which the Company is a party; and (ii) the
consummation of the transactions contemplated hereby and thereby, shall have
been duly and validly taken by the Company, and Conihasset shall have been
furnished with copies of all applicable resolutions adopted by Melina, as the
sole member of the Company, along with a copy of the Operating Agreement,
certified by the Member or Manager of the Company member.
23
9.8 Minute
Books.
Melina
shall have delivered to Conihasset all minute books for the
Company.
9.9 Consents.
Conihasset, Melina and the Company shall have obtained the approvals, consents
and authorizations of all third persons and governmental agencies necessary
for
the consummation of the transactions contemplated hereby in accordance with
the
requirements of applicable laws and agreements.
9.10 Damage
or Destruction.
The
Company shall not have suffered prior to the Closing Date any loss on account
of
fire, flood, accident or any other calamity to an extent that would interfere
with the conduct of its business or impair the value of the Company as a going
concern, regardless of whether any such loss or losses have been insured
against.
9.11 Receipt
of Acquired Membership Interests.
All of
the Acquired Membership Interests shall have been delivered to Conihasset in
the
manner required by Article 3 hereof.
9.12 Accrued
Interest.
All
accrued and unpaid interest under the Note shall, as of the Closing Date, have
been paid to Conihasset.
9.13 Release.
David
Melina and Xxxxx Xxxxxxxx shall have executed and delivered a document in a
form
satisfactory to Conihasset acknowledging that they have no membership interests
in the Company and releasing all claims they may have against the Company or
Melina with respect thereto.
9.14 Qualification
to Transact Business.
The
Company shall have qualified to transact business as a foreign limited liability
company in the Commonwealth of Massachusetts.
10. CONDITIONS
PRECEDENT TO OBLIGATIONS OF MELINA AND THE COMPANY
TO CLOSE.
The
obligation of Melina and the Company to provide to Conihasset the Acquired
Membership Interest as contemplated hereby, and to perform their other
obligations hereunder to be performed on or after the Closing, shall be subject
to the fulfillment, which Conihasset agrees to use its best efforts to fulfill,
on or prior to the Closing Date, unless otherwise waived in writing by Melina,
of the following conditions:
10.1 Representations
and Warranties.
The
representations and warranties of Conihasset set forth in Article 5 hereof
shall
be true and correct in all material respects on the Closing Date.
24
10.2 Performance
of Covenants.
Conihasset shall have performed in all material respects all of its obligations
contained in this Agreement to be performed on or prior to the Closing
Date.
10.3 Corporate
Action.
All
corporate action necessary to authorize (i) the execution, delivery and
performance by Conihasset of this Agreement and any other agreements or
instruments contemplated hereby to which Conihasset is a party; and (ii) the
consummation of the transactions contemplated hereby and thereby, shall have
been duly and validly taken by Conihasset, and Melina shall have been furnished
with copies of all applicable resolutions adopted by the Board of Directors
of
Conihasset, together with a copy of the By-laws of Conihasset, certified by
the
Secretary or Assistant Secretary of Conihasset.
10.4 Pending
Proceedings.
No
proceedings shall have been initiated or threatened by any person seeking to
enjoin or otherwise restrain or to obtain an award for damages in connection
with the consummation of the transactions contemplated hereby.
10.5 Delivery
of Certificates and Documents to Melina.
Conihasset shall have delivered, or cause to be delivered, to Melina
certificates as to the legal existence and corporate good standing of
Conihasset, and certified copy of the Certificate of Incorporation of
Conihasset, issued by the appropriate governmental official of the state of
its
incorporation.
10.6 First
Amendment to Operating
Agreement.
Conihasset shall have executed and delivered to Melina the First Amendment
to
Operating Agreement.
10.7 Registration
of Rights Agreement.
Conihasset shall have executed and delivered to Melina the Registration Rights
Agreement.
10.8 Delivery
of Conihasset Stock.
Melina
shall have received the 300,000 shares of Conihasset Stock as contemplated
by
Article 3 hereof.
10.9 Consents.
Conihasset, the Company and Melina shall have obtained the approvals, consents
and authorizations of all third persons and governmental agencies necessary
for
the consummation of the transactions contemplated hereby in accordance with
the
requirements of applicable laws and agreements.
11. CERTAIN
RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
11.1 Survival
of Representations, Warranties, Agreements, Covenants and
Obligations.
All
representations and warranties contained in Sections 4.1 through 4.29 hereof,
inclusive, and in Sections 5.1 through 5.6 hereof, inclusive, and all agreements
and covenants contained anywhere else in this Agreement or in any other
agreement delivered by either party to the other party incident to the
transactions contemplated hereby, shall be deemed to have been relied upon
by
the other party, shall survive the execution and delivery of this Agreement,
any
investigation made by any party hereto, and the sale and purchase of the
Acquired Membership Interest and payment therefore; provided,
however,
that
(a) the representations and warranties of Melina contained in Section 4.7(a)
and
4.7(b) (with respect to, among other things, the Real Property and compliance
with Environmental Laws) shall expire and terminate on the fifth (5th)
anniversary of the Closing Date, (b) all of the other representations and
warranties made by Melina in Sections 4.1 through 4.29 hereof, inclusive, (with
the exception of the representations and warranties of Melina contained in
Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6,4.18 and 4.26 which shall survive
indefinitely) shall expire and terminate on the second (2nd) anniversary of
the
Closing Date, and (c) all of the representations and warranties made by
Conihasset in Sections 5.1 through 5.6 hereof, inclusive, (with the exception
of
the representations and warranties of Conihasset contained in Sections 5.1
and
5.2 which shall survive indefinitely) shall expire and terminate on the second
(2nd) anniversary of the Closing Date.
25
12. INDEMNIFICATION.
12.1 Indemnification
by Melina.
Melina
agrees to defend, indemnify and hold Conihasset, the Company and their
respective officers, directors, affiliates, employees and agents, harmless
from
and against any claims by third persons (including, without limitation, the
Environmental Protection Agency or any other federal, state or local government
agency, board, department or body having jurisdiction over environmental matters
or Environmental Laws), damages, liabilities, losses and expenses (including,
without limitation, reasonable attorney's fees incurred in seeking
indemnification hereunder or defending any claim by a third person, amounts
paid
in settlement of any claim or suit and costs of clean-up, restoration,
remediation and removal), taxes, fines, penalties and interest, of any kind
or
nature whatsoever which may be sustained or suffered by Conihasset or the
Company or their respective officers, directors, affiliates, employees or
agents, arising out of, based upon, or by reason of: (a) a breach of any
representation or warranty made by Melina in Sections 4.1 through 4.29 hereof,
inclusive, or a failure to perform any agreement or covenant made by Melina
anywhere else in this Agreement or in any other agreement delivered hereunder,
(b) any claim, action or proceeding asserted or instituted growing out of any
matter or thing covered by such breached representation, warranty, agreement
or
covenant, (c) the matters, if any, set forth on the Schedule
of Specifically Indemnified Matters
attached
hereto as Schedule
12.1,
(d) any
claim made by any person which relates to or arises out of any transaction,
event, occurrence, act or omission of or by the Company or its officers,
directors, shareholders, employees or agents prior to the Closing Date and
which
is not adequately and fully accrued dollar for dollar on the Financial
Statements or specifically disclosed in the Schedule
of Liabilities
attached
as Schedule
4.10(c) to
this
Agreement and (e) any claim made by any person to, for or in respect of
membership interests of the Company or any interest therein or payment therefor;
provided,
however,
that
(A) no indemnification shall be payable by Melina with respect to any claim
for
breach of any representation or warranty made by Melina in Sections 4.1 through
4.29 hereof, inclusive, asserted by Conihasset after the expiration or
termination date, if any, prescribed for such representation or warranty in
the
proviso of the first sentence of Section 11.1 hereof, provided that once notice
of any claim has been timely given, additional related claims arising out of
substantially the same circumstances may be made at any time prior to the final
resolution of such claim (by means of a final, non-appealable judgment of a
court of competent jurisdiction, a binding arbitration decision or a settlement
approved by the parties involved) even if such resolution occurs after the
expiration or termination date, if any, prescribed for such representation
or
warranty in the proviso of the first sentence of Section 11.1 hereof, and (B)
no
indemnification shall be payable by Melina with respect to any claim for breach
of any representation or warranty made by Melina in Sections 4.1 through 4.29
hereof, inclusive (with the exception, however, of the matters, if any, set
forth on Schedule
12.1),
until
the total of such claims for indemnification shall exceed US $25,000 (the
"Threshold") (such amount being a threshold amount versus a deductible), in
which event Conihasset shall be entitled to recover the full amount of such
claims, including all amounts under and over the Threshold and (C) the aggregate
liability of Melina for indemnification payable hereunder with respect to any
and all claims by Conihasset for breach of the representations and warranties
made by Melina in Sections 4.1 through 4.29 hereof, inclusive (with the
exception, however, of the matters, if any, set forth on Schedule
12.1),
shall
not exceed US $3,000,000. Any indemnification due from Melina to Conihasset
shall be paid in United States dollars.
26
12.2 Indemnification
by Conihasset.
Conihasset agrees to defend, indemnify and hold Melina harmless from and against
any claims by third persons, damages, liabilities, losses and expenses
(including, without limitation, reasonable attorneys' fees incurred in seeking
indemnification hereunder or defending any claim by a third person, and amounts
paid in settlement of any claim or suit) of any kind or nature whatsoever which
may be sustained or suffered by Melina, arising out of, based upon, or by reason
of: (a) a breach of any representation or warranty made by Conihasset in
Sections 5.1 through 5.6 hereof, inclusive, or a failure to perform any
agreement or covenant made by Conihasset anywhere else in this Agreement or
in
any other agreement delivered hereunder and (b) any claim, action or proceeding
asserted or instituted growing out of any matter or thing covered by such
breached representation, warranty, agreement or covenant; provided,
however,
that
(A) no indemnification shall be payable by Conihasset with respect to any claim
for breach of any representation or warranty made by Conihasset in Sections
5.1
through 5.6 hereof, inclusive, asserted by Melina after the expiration or
termination date, if any, prescribed for such representation or warranty in
the
proviso of the first sentence of Section 11.1 hereof, provided that once notice
of any claim has been timely given, additional related claims arising out of
substantially the same circumstances may be made at any time prior to the final
resolution of such claim (by means of a final, non-appealable judgment of a
court of competent jurisdiction, a binding arbitration decision or a settlement
approved by the parties involved) even if such resolution occurs after the
expiration or termination date, if any, prescribed for such representation
or
warranty in the proviso of the first sentence of Section 11.1 hereof, (B) no
indemnification shall be payable by Conihasset with respect to any claim for
breach of any representation or warranty made by Conihasset in Sections 5.1
through 5.6 hereof, inclusive, until the total of such claims for
indemnification shall exceed the Threshold, in which event Melina shall be
entitled to recover the full amount of such claims, including all amounts under
and over the Threshold and (C) the aggregate liability of Conihasset for
indemnification payable hereunder with respect to claims by Melina for breach
of
the representations and warranties made by Conihasset in Sections 5.1 through
5.6 hereof, inclusive, shall not exceed US $1,500,000.
Any
indemnification payments due from Cineaste to Melina shall be paid in United
States dollars.
12.3 Notice,
Defense of Claims.
Each
party to this Agreement shall give prompt written notice to the other party
to
this Agreement of each claim for indemnification hereunder specifying the amount
and nature of the claim, and of any matter which is likely to give rise to
an
indemnification claim. Failure to give timely notice of a matter which may
give
rise to an indemnification claim shall not affect the rights of the indemnified
party to collect such claim from the indemnifying party except to the extent
that failure to so notify materially adversely affects the indemnifying party's
ability to defend such claim against a third party. In any case in which a
claim
for indemnification involves a claim brought by a third party, the indemnified
party shall have the right (but not the obligation) to assume and control the
defense of any such matter or its settlement at the indemnifying party's
expense, provided that the indemnifying party may participate in the defense
at
its own expense and provided, further, that the indemnified party will keep
the
indemnifying party informed as to the status of the defense and will not take
any significant action in the defense thereof or consent to entry of judgment
or
enter into any settlement thereof without the consent of the indemnifying party
which shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the indemnified party, having assumed the defense of any such matter,
may at any time thereafter tender the defense thereof to the indemnifying party,
and the indemnified party shall thereafter have the right to participate in
the
defense at its own expense. No indemnifying party, in the defense of any claim
or litigation, shall, except with the consent of the indemnified party, which
consent shall not be unreasonably withheld or delayed, consent to entry of
any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
27
12.4 No
Tax
Effect; Insurance Effect.
(a)
Indemnification for damages, liabilities, losses and expenses payable pursuant
to the indemnification provisions in this Article 12 shall be on a dollar for
dollar basis and shall be determined without regard to deductibility for tax
purposes or other tax benefits to the indemnified party or any other person
or
entity resulting therefrom.
(b)
The
indemnifying party shall make any indemnification payments determined to be
payable to the indemnified party hereunder promptly after such determination
is
made, without delay, and without regard to any expectation that the indemnified
party will recover insurance proceeds as a direct result of the matter giving
rise to the claim for which indemnification payments are to be made. The
indemnified party shall have no obligation whatsoever to seek to recover or
make
a claim for insurance proceeds as a result of any matter giving rise to an
indemnification claim of the indemnified party against the indemnifying party.
Notwithstanding the foregoing, (1) if the indemnified party receives any
insurance proceeds as a direct result of the matter giving rise to any
indemnification claim of the indemnified party against the indemnifying party
prior to the date upon which the indemnifying party is given notice of the
claim, the indemnifying party's indemnification obligation with respect to
such
claim shall be reduced by the amount of any such insurance proceeds actually
received by the indemnified party and (2) if the indemnified party receives
any
insurance proceeds as a direct result of the matter giving rise to any
indemnification claim of the indemnified party against the indemnifying party
after the indemnifying party has paid such indemnification claim to the
indemnified party, then the indemnified party shall promptly turn over any
such
insurance proceeds received to the indemnifying party to the extent of the
payments made by the indemnifying party to the indemnified party on the
claim.
12.5 Setoff.
Conihasset and Melina hereby agree that in the event of any claims, damages,
liabilities, losses and expenses of any kind or nature whatsoever which may
be
sustained or suffered by Conihasset or the Company arising out of, based upon
or
by reason of the breach of any representation or warranty, or any failure to
perform any agreement or covenant, made by Melina in this Agreement or any
other
document, instrument, agreement or other writing delivered hereunder or
thereunder by Melina, any payments or other compensation from time to time
due
and owing by Conihasset or the Company to Melina under this Agreement or any
other agreement or instrument shall, in the discretion of Conihasset or the
Company, and without prejudice to the rights of Conihasset or the Company under
this Agreement, be reduced by an aggregate amount equal to the amount of the
claim of Conihasset or the Company arising out of said breach or failure to
perform. Melina shall execute any and all documents reasonably requested by
Conihasset to evidence such reduction.
28
13. NON-COMPETITION
COVENANTS.
13.1 Non-Competition.
Melina
agrees and covenants with Conihasset and the Company that, for a period (the
"Restrictive Period") from the date hereof until the later of (i) the fifth
(5th) anniversary of the date hereof or (ii) the date Melina is no longer the
Manager of the Company, he and his affiliates will not, without the prior
written consent of Conihasset and Company, directly or indirectly, anywhere
within the world (the "Territory"): (a) form, acquire, finance, assist, support,
provide premises, facilities, goods or services to, represent as a distributor
or otherwise, or become associated in any capacity or to any extent, directly
or
indirectly with, an enterprise (a "Competing Business") which is similar to
or
otherwise competitive with the business of the Company or which manufactures
or
sells products like, similar to or competitive with the products sold by the
Company; (b) interfere with or attempt to interfere with any officers,
employees, representatives or agents of Conihasset or the Company, or any of
their affiliates, or induce or attempt to induce any of them to leave the employ
of Conihasset or the Company or any of their affiliates, or violate the terms
of
their contract with any of them; or (c) for the purpose of conducting or
engaging in a Competing Business, call upon, solicit, advise or otherwise do,
or
attempt to do, business with any clients, suppliers, customers or accounts
of
Conihasset or the Company or any of their affiliates or take away or interfere
or attempt to interfere with any custom, trade, business or patronage of
Conihasset or the Company or any of their affiliates.
13.2 Injunctive
Relief.
The
parties hereto acknowledge and agree that any breach by Melina or his affiliates
of the restrictive covenant contained in this Article 13 would cause irreparable
injury to Conihasset and/or the Company and that the remedy at law for any
such
breach would be inadequate, and Melina agrees and consents that, in addition
to
any other available remedy, temporary and permanent injunctive relief may be
granted in any proceeding which may be brought by Conihasset or the Company
to
enforce such restrictive covenant without necessity of proof that any other
remedy at law is inadequate.
13.3 Enforcement.
Conihasset and Melina intend that the covenants of Section 13.1 shall be
deemed to be a series of separate covenants, one for each county or province
of
each and every state, territory or jurisdiction of each country included within
the Territory and one for each month of the Restrictive Period. If, in any
judicial proceeding, a court shall refuse to enforce any of such covenants,
then
such unenforceable covenants shall be deemed eliminated from the provisions
hereof for the purpose of such proceeding to the extent necessary to permit
the
remaining separate covenants to be enforced in such proceeding. If, in any
judicial proceeding, a court shall refuse to enforce any one or more of such
separate covenants because the total time thereof is deemed to be excessive
or
unreasonable, then it is the intent of the parties hereto that such covenants,
which would otherwise be unenforceable due to such excessive or unreasonable
period of time, be in force for such lesser period of time as shall be deemed
reasonable and not excessive by such court.
29
14. NON-DISCLOSURE
COVENANT.
14.1 Non-Disclosure
of Confidential Information.
It is
understood that the business acquired in which Conihasset has a majority equity
interest hereunder is of a confidential nature. Prior to the date hereof the
Company may have revealed and on or after the date hereof the Company may reveal
to Melina Confidential Information (as hereinafter defined) concerning the
Company or any of its affiliates which, if known to competitors thereof, would
damage the business and operations of the Company. Melina agrees with Conihasset
and the Company that he will never divulge or appropriate to his own use, or
to
the use of any third person, any Confidential Information.
14.2 Definition
of Confidential Information.
As used
herein, the term "Confidential Information" means the following oral or written
information relating to the Company: know-how, technology, inventions, designs,
methodologies, trade secrets, patents, secret processes and formulae,
information and data relating to the development, research, testing,
manufacturing, marketing, sale, distribution and uses of products, sources
of
supplies, budgets and strategic plans, the identity and special needs of
customers, plants and other properties, and any other information which may
give
the Company an opportunity to obtain an advantage over its competitors who
do
not know or use such information, provided that the term "Confidential
Information" shall not include (i) any such information that, prior to its
use
or disclosure by Melina, can be shown to have been in the public domain or
generally known or available to customers, suppliers or competitors of the
Company through no breach of the provisions of this Article 14 or other
non-disclosure covenants; (ii) any such information that, prior to its
disclosure by Melina, was rightfully in the receiving third party's possession,
without violation of the provisions of this Article 14 or other non-disclosure
covenants; and (iii) any such information that, prior to its disclosure by
Melina, was independently developed by the receiving third party without
violation of the provisions of this Article 14 or other non-disclosure
covenants.
14.3 Injunctive
Relief.
The
parties hereto acknowledge and agree that the breach by Melina of the
restrictive covenant contained in this Article 14 would cause irreparable injury
to Conihasset and/or the Company and that the remedy at law for any such breach
would be inadequate, and Melina agrees and consents that, in addition to any
other available remedy, temporary and permanent injunctive relief may be granted
in any proceeding which may be brought by Conihasset or the Company to enforce
such restrictive covenant without necessity of proof that any other remedy
at
law is inadequate.
15. MISCELLANEOUS.
30
15.1 Expenses.
Conihasset and Melina shall pay the fees and expenses of their respective
accountants and legal counsel incurred in connection with the transactions
contemplated by this Agreement.
15.2 Notices.
Any
notice or other communication required or permitted to be given to any party
hereunder shall be in writing and shall be given to such party at such party's
address set forth below or such other address as such party may hereafter
specify by notice in writing to the other party. Any such notice or other
communication shall be addressed as aforesaid and given by (1) certified mail,
return receipt requested, with first class postage prepaid, (2) hand delivery,
(3) reputable overnight courier or (4) facsimile transmission. Any notice or
other communication will be deemed to have been duly given (1) on the fifth
day
after mailing, provided receipt of delivery is confirmed, if mailed by certified
mail, return receipt requested, with first class postage prepaid, (2) on the
date of service if served personally, (3) on the business day after delivery
to
an overnight courier service, provided receipt of delivery has been confirmed
or
(4) on the date of transmission if sent via facsimile transmission, provided
confirmation of receipt is obtained promptly after completion of
transmission.
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To
Melina:
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MRO
Integrated Solutions, LLC
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000X
Xxxxxx Xxxxxxxx
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Xxxxxxxxxx,
XX 00000
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FAX:
(000) 000-0000
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With
a Copy to:
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Xxxxxx
& Xxxxxxxxxx LLP
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Xxxxx
Xxxxxx Xxxxx, 0xx
Xxxxx
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Xxxxxx,
Xxxxxxxxxxxxx 00000
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Attn:
Xxxx Xxxxxx, Esq.
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FAX:
(000) 000-0000
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To
Conihasset or Company:
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Xxx
Xxxxxxxxxxxxx Xxxxx, 00xx
Xxxxx
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Xxxxxx,
XX 00000
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Attn:
Xxxxxxx Xxxxxx,
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President
and CEO
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FAX:
(000) 000-0000
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With
copies to:
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Xxxxx
Xxxxxxx & Xxxxxxx P.C.
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Xxx
Xxxxxxxx Xxxxx, 0xx
Xxxxx
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Xxxxxxxxxx,
XX 00000
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Attn:
Xxxx X. Xxxxxxxxxx, Esq.
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Fax:
(000) 000-0000
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15.3 Waiver.
The
failure of any party hereto at any time or times hereafter to exercise any
right, power, privilege or remedy hereunder or to require strict performance
by
the other or another party of any of the provisions, terms or conditions
contained in this Agreement or in any other document, instrument or agreement
contemplated hereby or delivered in connection herewith shall not waive, affect,
or diminish any right, power, privilege or remedy of such party at any time
or
times thereafter to demand strict performance thereof; and no rights of any
party hereto shall be deemed to have been waived by any act or knowledge of
such
party, or any of its agents, officers or employees, unless such waiver is
contained in an instrument in writing, signed by such party. No waiver by any
party hereto of any of its rights on any one occasion shall operate as a waiver
of any other of its rights or any of its rights on a future
occasion.
31
15.4 Section
Headings.
The
section headings in this Agreement are for convenience of reference only and
shall not be deemed to be a part of this Agreement or to alter or affect any
provisions, terms or conditions contained herein.
15.5 Exhibits
and Schedules.
Any
exhibits and schedules referenced herein shall be deemed to be attached hereto
and made a part hereof. All references herein to this Agreement shall include
all such exhibits and schedules.
15.6 Severability.
Wherever possible, each provision of this Agreement shall be interpreted in
such
a manner as to be effective and valid under applicable law. If any portion
of
this Agreement is declared invalid for any reason in any jurisdiction, such
declaration shall have no effect upon the remaining portions of this Agreement
which shall continue in full force and effect as if this Agreement had been
executed with the invalid portions thereof deleted. Furthermore, the entirety
of
this Agreement shall continue in full force and effect in all other
jurisdictions.
15.7 Entire
Understanding.
This
Agreement sets forth the entire agreement and understanding between the parties
with respect to the subject matter hereof and merges any and all discussions,
negotiations, letters of intent or agreements in principle between them. Neither
of the parties shall be bound by any conditions, warranties, understandings
or
representations with respect to such subject matter other than as expressly
provided herein, or as duly set forth on or subsequent to the date hereof in
writing and signed by a duly authorized officer of the party to be bound
thereby.
15.8 Binding
Effect.
This
Agreement shall be binding upon and shall inure to the exclusive benefit of
the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, this Agreement is not intended to, nor shall it,
create any rights in
any
person other than the parties hereto and the Company.
15.9 Governing
Law.
This
Agreement is and shall be deemed to be a contract entered into and made pursuant
to the laws of the Commonwealth of Massachusetts and shall in all respects
be
governed, construed, applied and enforced in accordance with the laws of said
Commonwealth, without reference to its conflict of laws principles.
15.10 Assignability.
Neither
this Agreement nor any rights or obligations hereunder are assignable by Melina
without the prior written consent of Conihasset. Conihasset may at any time,
without Melina’s consent, assign all or any part of the rights and/or
obligations of Conihasset under this Agreement to any affiliate of Conihasset,
and any assignee of Conihasset shall succeed to and be possessed of the rights
of Conihasset hereunder to the extent of the assignment made, provided, however,
that any such assignment by Conihasset shall not relieve Conihasset of its
obligations hereunder. In addition, at any time after the Closing, Conihasset
may, without Melina’s consent, assign all or any part of its rights and/or
obligations under this Agreement to any person who acquires either the stock
of
Conihasset or the membership interests in the Company, or substantially all
of
the assets of the Company, by sale, merger or otherwise; provided, however,
that
any such assignment by Conihasset shall not relieve Conihasset of its
obligations hereunder.
32
15.11 Jurisdiction
and Venue.
Each of
the parties hereto agrees that the state
and
federal courts of the Commonwealth of Massachusetts shall have jurisdiction
to
hear and determine any claims or disputes between any of them pertaining
directly or indirectly to this Agreement, and all documents, instruments and
agreements executed pursuant hereto and thereto, or to any matter arising
herefrom (unless otherwise expressly provided for herein or therein). To the
extent permitted by law, each of the parties hereto expressly submits and
consents in advance to such jurisdiction in any such action or proceeding
commenced in any of such courts. Each of the parties waives any claim that
Massachusetts is an inconvenient forum or an improper forum based on lack of
venue. The choice of forum in this Section 20 shall not be deemed to preclude
the enforcement of any judgment obtained in such forum or the taking of any
action to enforce the same in any other appropriate jurisdiction.
15.12 Service
of Process.
To the
extent permitted by applicable law, each of the parties consents to service
of
process in any suit, action or proceeding by actual receipt of a copy thereof
by
registered or certified mail, postage prepaid, return receipt requested, to
the
address of such party specified in or designated pursuant to Section 15. Each
of
the parties agrees that such service (a) shall be deemed in every respect
effective service of process upon such party in any such suit, action or
proceeding and (b) shall, to the fullest extent permitted by law, be taken
and
held to be valid personal service upon and personal delivery to such
party.
15.13 Counterparts;
Delivery by Facsimile.
This
Agreement may be executed in counterparts and by each party hereto on a separate
counterpart, all of which when so executed shall be deemed to be an original
and
all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier or facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Agreement.
15.14 Certain
Definitions.
For the
purposes of this Agreement: (a) an "affiliate"
of any
specified person shall mean and include any person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such person, (b) an "affiliate"
of any
specified natural person shall mean and include not only any persons specified
in clause (a) above but also the members of such person's immediate family,
and
(c) a "person"
shall
mean and include any natural person, firm, partnership, association,
corporation, limited liability company, company, enterprise, unincorporated
organization, trust, public body or government or any department, board,
commission or agency thereof.
33
15.15 Pronouns
and Plurals.
All
pronouns used herein shall be deemed to refer to the masculine, feminine,
neuter, singular or plural as the identity of the person or persons may require
in the context, and the singular form of nouns, pronouns and verbs will include
the plural, and vice versa, whichever the context may require.
15.16 Public
Announcements.
No
announcement of the transactions contemplated hereby shall be made publicly
by
any party hereto without the advance written approval of Conihasset and Melina,
except such notice as is required by law. The context or text of such
announcement shall be agreed upon by Conihasset and Melina, except such notice
as is required by law where each party shall use its reasonable efforts to
obtain the prior consent of the other party.
34
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
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CONIHASSET
CAPITAL
PARTNERS, INC.
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| By: | /s/ Xxxxxxx X. Xxxxxx | |
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Xxxxxxx Xxxxxx, President and CEO |
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| Xxxxxx Xxxxxx | ||
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Xxxxxx Xxxxxx |
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35
SCHEDULES
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Schedule
4.1
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-
Schedule of Jurisdictions
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Schedule
4.2
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-
Schedule of Breaches, Defaults and Required Consents
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Schedule
4.3
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Schedule of Investments
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Schedule
4.6(a)
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Schedule of Machinery and Equipment
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Schedule
4.6(b)
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Schedule of Liens and Encumbrances
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Schedule
4.6(d)
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Schedule of Personal Property Leases
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Schedule
4.6(e)
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Schedule of Assets at Other Locations
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Schedule
4.7
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Schedule of Real Property
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Schedule
4.9
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Schedule of Regulatory Licenses, Consents, Permits and Authorizations
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Schedule
4.10(c)
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Schedule of Liabilities
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Schedule
4.10(e)
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Schedule of Reserves Taken and Assets Written Down or
Up
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Schedule
4.11
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Schedule of Noncompliance with Laws
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Schedule
4.12
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Schedule of Patents, Trademarks and Copyrights
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Schedule
4.13
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Schedule of Contracts, Commitments and Intercompany
Transactions
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Schedule
4.14
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Schedule of Litigation
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Schedule
4.15
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Schedule of Changes
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Schedule
4.16
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Schedule of Insurance
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Schedule
4.18
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Schedule of Employee Benefit Plans
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Schedule
4.21
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Schedule of Employees
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Schedule
4.23
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Schedule of Affiliation
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Schedule
4.25
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Schedule of Product Warranties
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Schedule
4.26
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Schedule of Product Liability Claims
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Schedule
5.4
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Schedule of Conihasset Exceptions
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Schedule
12.1
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-
Schedule of Specifically Indemnified
Matters
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EXHIBITS
|
Exhibit
A
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Operating Agreement
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Exhibit
B
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-
First Amendment to Operating Agreement
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Exhibit
C
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-
Financial Statements
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Exhibit
D
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-
Registration Rights
Agreement
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36
