EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated as of July 1, 1999, is
by and among Seirios International, Inc., a Nevada corporation ("Buyer"), Staff
Sourcing Services, Inc., a Texas corporation ("Company"), and the Shareholders
listed on the signature pages of this Agreement ("Sellers" or "Shareholders").
WHEREAS, Sellers own all issued and outstanding shares of capital stock of
the Company ("Company Shares"), and Sellers desire to sell to Buyer, and Buyer
desires to purchase from Sellers, the Company Shares.
NOW, THEREFORE, for and in consideration of the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are acknowledged, and
upon the terms and subject to the conditions set forth herein, the parties do
agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase of Stock. On the Closing Date (defined below), Buyer agrees
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to purchase from Sellers, and Sellers shall sell to Buyer, all of the issued and
outstanding shares of common stock of the Company ("Company Shares") for a total
consideration of 2,500,000 shares ("Buyer Shares") of common stock of Buyer (the
"Consideration").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
The Company and the Sellers jointly and severally represent and warrant to
Buyer as follows:
2.1 Authorization of Sellers. This Agreement has been duly executed and
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delivered by each Seller and constitutes the valid and binding obligation of
such Seller, enforceable in accordance with its terms, except (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, (ii) the remedy of
specific performance and injunctive relief are subject to certain equitable
defenses and to the discretion of the court before which any proceedings may be
brought and (iii) rights to indemnification may be limited under applicable
securities laws.
2.2 Existence and Good Standing of the Company. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Texas with all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The Company does not have any subsidiaries. The Company is duly
qualified or licensed as a foreign corporation and in good standing in each
jurisdiction in which the character or location of the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so duly qualified or
licensed would not have a material adverse effect on the business, financial
condition, results of operations or prospects of the Company.
2.3 Capital Stock of the Company. The Company's authorized and outstanding
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capital stock is as set forth in the Disclosure Schedules. No other shares of
capital stock are issued or outstanding. All of the Company Shares have been
validly issued and are fully paid and nonassessable and no holder thereof is
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entitled to any preemptive rights. There are no outstanding conversion or
exchange rights, subscriptions, options, warrants or other arrangements or
commitments obligating the Company to issue any shares of capital stock or other
securities. As of the Closing, each of the Sellers (i) owns his Company Shares
as set forth on the Disclosure Schedules of record and beneficially and have
good and marketable title to the Company Shares, free and clear of any and all
liens, mortgages, security interests, encumbrances, pledges, charges, adverse
claims, options, rights or restrictions of any character whatsoever
(collectively, "Liens"), and (ii) has the right to vote the Company Shares on
any matters as to which any shares of the Company common stock are entitled to
be voted under the laws of the State of Texas and the Company's articles of
incorporation and bylaws, free of any right of any other person.
2.4 Company Authorization. The Company has full corporate power, capacity
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and authority to execute this Agreement and all other agreements and documents
contemplated hereby. The execution and delivery of this Agreement and such other
agreements and documents by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by the Company
and no other corporate action on the part of the Company is necessary to
authorize the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable in accordance with its terms, except that
(i) enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally, (ii) remedies
of specific performance and injunctive relief are subject to certain equitable
defenses and to the discretion of the court before which any proceedings may be
brought, and (iii) rights to indemnification may be limited under applicable
securities laws.
2.5 Financial Statements. (a) Sellers have previously furnished to Buyer
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the financial statements set forth on the Disclosure Schedules ("Financials") as
of the date indicated ("Financials Date"). The Financials present fairly the
financial position and results of operations of the Company as of the indicated
dates and for the indicated periods and have been prepared in accordance with
generally accepted accounting principles (GAAP) consistently applied. The
Company shall permit Buyer full access to the work papers pertaining to the
Financials, including those work papers in the possession of or prepared by any
independent accountants.
(b) Except to the extent (and not in excess of amounts) reflected in the
balance sheet included in the Financials, the Company has no liabilities or
obligations (including, without limitation, taxes payable and deferred taxes and
interest accrued since the Financials Date) required to be reflected in the
Financials (or notes thereto) in accordance with GAAP other than current
liabilities incurred in the ordinary course of business, consistent with past
practice, subsequent to the Financials Date.
2.6 Tax Matters. The Company has filed all income tax returns required to
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be filed by it and all returns of other Taxes required to be filed and has paid
or provided for all Taxes shown to be due on returns. No action or proceeding
for the assessment or collection of Taxes is pending against the Company; no
deficiency, assessment or other formal claim for any Taxes has been asserted or
made against the Company that has not been fully paid or finally settled; and no
issue has been formally raised by any taxing authority in connection with an
audit or examination of any return of Taxes. No federal or state income tax
returns of the Company have been examined, and there are no outstanding
agreements or waivers extending the applicable statutory periods of limitation
for such Taxes for any period. All Taxes that the Company has been required to
collect or withhold have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority. No Taxes will be
assessed on or after the Closing Date against the Company for any tax period
ending on or prior to the Closing Date, or for any period ending after the
Closing Date with respect to any portion of such tax period that includes or is
prior to the Closing Date. "Taxes" means taxes,
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charges, fees, levies or assessments including, without limitation, income,
excise, property, withholding, sales and franchise taxes, imposed by federal,
state, county, local or foreign government or subdivision or agency thereof, and
including any interest, penalties or additions.
2.7 Assets and Properties.
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(a) Real Property. The Company does not own any real property.
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(b) Personal Property. Except for inventory and supplies disposed of or
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consumed, and accounts receivable collected or written off, and cash utilized,
all in the ordinary course of business consistent with past practice, the
Company owns all of its inventory, equipment and other personal property (both
tangible and intangible) reflected on the latest balance sheet included in the
Financials or acquired since the Financials Date, free and clear of any Liens,
except for statutory Liens for current taxes, assessments or governmental
charges or levies on property not yet due and payable.
(c) Condition of Properties. The leasehold estates the subject of any Real
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Property Leases (defined below) and the tangible personal property owned or
leased by the Company are in good operating condition and repair, ordinary wear
and tear excepted; and none of the Company or Sellers has any knowledge of any
condition or defect, not disclosed herein, of any such leasehold estate that
would materially affect the fair market value, use or operation of the leasehold
estate or otherwise have a material adverse effect on the Company or its
business or operations.
(d) Compliance. To the knowledge of the Company and Sellers, the continued
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ownership, operation, use and occupancy of the leasehold estates the subject of
the Real Property Leases as currently operated, used and occupied will not
violate any zoning, building, health, flood control, fire or other law,
ordinance, order or regulation or any restrictive covenant. To the knowledge of
the Company and Sellers, there are no violations of any federal, state, county
or municipal law, ordinance, order, regulation or requirement affecting any
portion of the leasehold estates and no written notice of any such violation has
been issued by any governmental authority.
2.8 Real Property Leases; Options. The Disclosure Schedules set forth a
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list of (i) all leases and subleases under which the Company is lessor or lessee
or sublessor or sublessee of any real property, together with all amendments,
supplements, nondisturbance agreements, brokerage and commission agreements and
other agreements pertaining thereto ("Real Property Leases"); (ii) all material
options held by the Company or contractual obligations on the part of the
Company to purchase or acquire any interest in real property; and (iii) all
options granted by the Company or contractual obligations on the part of the
Company to sell or dispose of any material interest in real property. Copies of
all Real Property Leases and such options and contractual obligations have been
delivered to Buyer. The Company has not assigned any Real Property Lease or
such options or obligations. There are no Liens on the Company's interest in
the Real Property Leases, subject only to (i) Liens for taxes and assessments
not yet due and payable and (ii) matters set forth on the Disclosure Schedules.
The Real Property Leases and options and contractual obligations listed on the
Disclosure Schedules are in full force and effect and constitute binding
obligations of the Company and the other parties thereto, and (x) there are no
defaults thereunder and (y) no event has occurred that with notice, lapse of
time or both would constitute a default by the Company or, to the best knowledge
of the Company and Sellers, by any other party.
2.9 Environmental Laws and Regulations.
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(a)(i) The ownership and operations of the "Subject Property" and any use,
storage, treatment, disposal, or transportation of "Hazardous Substances" that
has occurred in or on the Subject Property prior to the date of this Agreement
have been in compliance with "Environmental Requirements"; (ii) during the
ownership, occupancy and operation of the Subject Property by the Company, or,
to the best knowledge of the Company and Sellers, prior to its ownership,
occupancy or operation, no release, leak, discharge, spill, disposal or emission
of Hazardous Substances has occurred in, on or under the Subject Property in a
quantity or manner that violates or requires further investigation or
remediation under Environmental Requirements; (iii) the Subject Property is free
of Hazardous Substances as of the date of this Agreement, except for the
presence of small quantities of Hazardous Substances utilized by the Company or
other tenants of the Subject Property in the ordinary course of their business;
(iv) there is no pending or threatened litigation or administrative
investigation or proceeding concerning the Subject Property involving Hazardous
Substances or Environmental Requirements; (v) there is no ACM (as defined
below), within the Subject Property, whether friable or non-friable, and there
are no above-ground or underground storage tank systems located at the Subject
Property; and (vi) the Company has never owned, operated, or leased any real
property other than the Subject Property. As used in this Agreement, the
following terms shall have the following meanings: "Environmental Requirements"
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means all laws, statutes, rules, regulations, ordinances, guidance documents,
judgments, decrees, orders, agreements and other restrictions and requirements
(whether now or hereafter in effect) of any governmental authority, including,
without limitation, federal, state and local authorities, relating to the
regulation or protection of human health and safety, natural resources,
conservation, the environment, or the storage, treatment, disposal,
transportation, handling or other management of industrial or solid waste,
hazardous waste, hazardous or toxic substances or chemicals, or pollutants.
"Hazardous Substance" means (i) any "hazardous substance" as defined in (S)
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101(14) of the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended from time to time (42 U.S.C. (S)(S) 9601 et
seq.)("CERCLA") or any regulations promulgated thereunder; (ii) petroleum and
petroleum by-products; (iii) asbestos or asbestos-containing material ("ACM");
or (iv) any additional substances or materials that have been or are currently
classified or considered to be pollutants, hazardous or toxic under
Environmental Requirements. "Subject Property" means all property subject to
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the Real Property Leases.
2.10 Contracts. The Disclosure Schedules set forth a list of all material
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contracts, arrangements and commitments (whether oral or written) to which the
Company is a party or by which the Company's assets or business are bound
including, without limitation, contracts, arrangements or commitments that
relate to (i) the sale, lease or other disposition by the Company of all or any
substantial part of the business or assets of the Company (otherwise than in the
ordinary course of business), (ii) the purchase or lease by the Company of a
substantial amount of assets (otherwise than in the ordinary course of
business), (iii) the supply by the Company of any customer's requirements for
any item or the purchase by the Company of its requirements for any item or of a
vendor's output of any item, (iv) lending or advancing funds by the Company, (v)
borrowing of funds or guarantying the borrowing of funds by any other person,
whether under an indenture, note, loan agreement or otherwise, (vi) any
transaction or matter with any Affiliate of the Company, (vii) noncompetition or
employment, (viii) licenses and grants to or from the Company relating to any
intangible property listed on the Disclosure Schedules, (ix) the acquisition by
the Company of any operating business or the capital stock of any person since
January 1, 1998, or (x) any other matter that is material to the business,
assets or operations of the Company ("Contracts"). Each Contract is in full
force and effect on the date hereof, the Company is not in default under any
Contract, the Company has not given or received notice of any default under any
Contract, and, to the knowledge of the Company and Sellers, no other party to
any Contract is in default thereunder.
2.11 No Violations. The execution, delivery and performance of this
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Agreement and the other
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agreements and documents contemplated hereby by the Company and Sellers and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of the articles of incorporation or bylaws of the Company, (ii)
violate any statute, rule, regulation, order or decree of any public body or
authority by which the Company or a Seller or its respective properties or
assets are bound, or (iii) result in a violation or breach of, or constitute a
default under, or result in the creation of any encumbrance upon, or create any
rights of termination, cancellation or acceleration in any person with respect
to any Contract or any material license, franchise or permit of the Company or
any other agreement, contract, indenture, mortgage or instrument to which the
Company is a party or by which any of its properties or assets is bound.
2.12 Consents. No consent, approval or other authorization of any
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governmental authority or under any Contract or other material agreement or
commitment to which the Company or a Seller is a party or by which its
respective assets are bound is required as a result of or in connection with the
execution or delivery of this Agreement and the other agreements and documents
to be executed by the Company and Sellers or the consummation by the Company and
Sellers of the transactions contemplated hereby.
2.13 Litigation and Related Matters. There are no actions, suits,
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proceedings, investigations or grievances pending against the Company or, to the
best knowledge of the Company and Sellers, threatened against the Company, the
Company's business or any property or rights of the Company, at law or in
equity, before or by any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign ("Agencies"). The Company is not subject to any continuing
court or Agency order, writ, injunction or decree applicable specifically to the
business, operations or assets of the Company or employees of the Company, nor
in default with respect to any order, writ, injunction or decree of any court or
Agency with respect to its assets, business, operations or employees. The
Company is not subject to any worker's compensation claims outstanding against
the Company as of the date hereof.
2.14 Product Liability and Warranty Proceedings. No product liability or
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warranty actions, suits or proceedings arising from the manufacture or sale of
goods by Company have been asserted against Company.
2.15 Compliance with Laws. The Company (a) is in compliance with all
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applicable laws, regulations (including federal, state and local procurement
regulations), orders, judgments and decrees except where the failure to so
comply would not have a material adverse effect on the business, prospects,
financial condition or results of operation or prospects of the Company and (b)
possesses all necessary licenses, franchises, permits and governmental
authorizations to conduct its business in the manner in which and in the
jurisdictions and places where such business is now conducted. Set forth on the
Disclosure Schedules is a list of all material licenses, franchises, permits and
governmental authorizations and all applications pending before any agency or
authority for the issuance of any licenses, franchises, permits or governmental
authorizations or the renewal thereof.
2.16 Patents, Trademarks, Etc. The Disclosure Schedules list the patents,
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patent applications and licenses, software licenses, trade names, trademarks,
service marks, trademark registrations and applications, service xxxx
registrations and applications, and copyright registrations and applications
owned by the Company or used in the operation of the Company's business
(collectively, "Intellectual Property"), and indicate (i) the term and
exclusivity of its rights with respect to the Intellectual Property and (ii)
whether each item of Intellectual Property is owned or licensed by the Company,
and if licensed, the licensor and the license fees therefor. The Company has the
right to use and license the Intellectual Property, and consummation of the
transactions contemplated hereby will not result in the loss or material
impairment of
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any rights of the Company in the Intellectual Property. There are no pending
proceedings or adverse claims made or, to the best knowledge of the Company and
Sellers, threatened against the Company with respect to the Intellectual
Property; there has been no litigation commenced or threatened in writing within
the past five (5) years with respect to the Intellectual Property or the rights
of the Company therein; and the Company and Sellers have no knowledge that (i)
the Intellectual Property or the use thereof by the Company conflicts with any
patents, patent applications, patent licenses, trade names, trademarks, service
marks, trademark or service xxxx registrations or applications or copyright
registrations or applications of others, or (ii) such third party Intellectual
Property or its use by others or any other conduct of a third party conflicts
with or infringes upon the Intellectual Property or its use by the Company.
2.17 Employee Benefit Plans. The Company does not have any employee
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benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained or contributed to
by the Company or any of its Group Members (defined below) (collectively, the
"Plans"). Neither the execution and delivery of this Agreement by the Company
or the consummation of the transactions contemplated hereby will (i) entitle any
current or former employee of the Company to severance pay, unemployment
compensation or any similar payment, (ii) accelerate the time of payment or
vesting, or increase the amount of, any compensation due to any such employee or
former employee, or (iii) directly or indirectly result in any payment made or
to be made to or on behalf of any person to constitute a "parachute payment"
(within the meaning of Section 280G of the Code). For purposes of this
Agreement, "Group Member" shall mean any member of any "affiliated service
group" as defined in Section 414(m) of the Code that includes the Company, any
member of any "controlled group of corporations" as defined in Section 1563 of
the Code that includes the Company, or any member of any group of "trades or
businesses under common control" as defined by Section 414(c) of the Code that
includes the Company.
2.18 Employees; Employee Relations. (a) The Disclosure Schedules set forth
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the name and current annual salary and other compensation (including, without
limitation, bonus, profit-sharing and other compensation) payable by the Company
to each employee whose current total annual compensation or estimated
compensation is $50,000 or more, any increase to become effective after the
date of this Agreement in the total compensation payable by Company to each such
person, any increase to become payable after the date of this Agreement by the
Company to employees, all presently outstanding loans and advances (other than
routine travel advances to be repaid or formally accounted for within sixty (60)
days) made by the Company to, or made to the Company by, any director, officer
or employee, all other transactions between the Company and any director,
officer or employee of the Company since January 1, 1998, and all accrued but
unpaid vacation pay owing to any officer or employee that is not disclosed on
the Financials. The Company is not a party to nor bound by the terms of any
collective bargaining agreement and the Company has not experienced any material
labor difficulties during the last five years. There are no labor disputes
existing, or to the best knowledge of Company and Sellers, threatened involving,
by way of example, strikes, work stoppages, slowdowns, picketing, or any other
interference with work or production, or any other concerted action by
employees. No charges or proceedings before the National Labor Relations Board
or similar agency exist, or to the best knowledge of the Company and Sellers,
are threatened. The Company's relationship with its employees is good and
Company and Sellers have no knowledge of any facts that would indicate that the
Company's employees will not continue in its employ following the Closing on a
basis similar to that existing on the date of this Agreement. The Company is not
a party to any employment contract with any individual or employee, either
express or implied. No legal proceedings, charges, complaints, or similar
actions exist under any federal, state or local laws or regulations affecting
the employment relationship; and to the best knowledge of Company and Sellers,
no proceedings, charges, or complaints are threatened under any such laws or
regulations and no facts or circumstances exist that would give rise to any such
proceedings, charges, complaints, or claims, whether valid or not. The Company
is not
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subject to any settlement or consent decree with any present or former employee,
employee representative or any government or Agency relating to claims of
discrimination or other claims in respect to employment practices and policies;
and no government or Agency has issued a judgment, order, decree or finding with
respect to the labor and employment practices (including practices relating to
discrimination) of Company. Since January 1, 1998, Company has not incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act or similar state laws. The Company has not laid off more than ten percent
(10%) of its employees at any single site of employment in any ninety (90) day
period during the twelve (12) month period ending January 1, 1998. It shall be
the obligation of Company and Sellers to provide any notice required by said Act
by reason of the provisions, execution or operation of this Agreement. The
Company is in full compliance with the Americans with Disabilities Act (the
"ADA").
2.19 Insurance. The Disclosure Schedules contain a list of the policies
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and contracts (including insurer, named insured, type of coverage, limits of
insurance, required deductibles or co-payments, annual premiums and expiration
date) for fire, casualty, liability and other forms of insurance maintained by,
or for the benefit of, the Company. All such policies are in full force and
effect and are adequate for the business in which the Company engages. Neither
the Company nor either Seller has received any notice of cancellation or non-
renewal or of significant premium increases with respect to any such policy. No
pending claims made by or on behalf of the Company under such policies have been
denied or are being defended against third parties under a reservation of rights
by an insurer of the Company. All premiums due prior to the date hereof for
periods prior to the date hereof with respect to such policies have been timely
paid, and all premiums due before the Closing Date for periods between the date
hereof and the Closing Date will be timely paid.
2.20 Accounts Receivable. The accounts receivable set forth in the
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Financials and those accounts receivable accruing through the Closing Date
represent valid and bona fide sales to third parties incurred in the ordinary
course of business, collectible in accordance with their terms, subject to no
defenses, set-offs or counterclaims, except to the extent of any reserves for
doubtful accounts reflected in the balance sheet included in the Prior Years
Financials.
2.21 Interests in Customers, Suppliers, Etc. No shareholder, officer,
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director or Affiliate of the Company possesses, directly or indirectly, any
financial interest in, or is a director, officer, employee or Affiliate of, any
corporation, firm, association or business organization that is a client,
supplier, customer, lessor, lessee or competitor of the Company, other than the
officer, director and affiliate status of Xxxxxx X. Xxxxxxxx in Buyer.
Ownership of securities of a corporation whose securities are registered under
the 1934 Act not in excess of five percent (5%) of any class of such securities
shall not be deemed to be a financial interest for purposes of this Section
2.21.
2.22 Business Relations. The Disclosure Schedules contain an accurate list
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of all significant customers of the Company (i.e., those customers representing
5% or more of the Company's revenues for the 12 months ended June 30, 1999 or
who have paid to the Company $50,000 or more over any four consecutive fiscal
quarters in the two years ended June 30, 1999). To the best knowledge of the
Company and Sellers, no customer or supplier of the Company will cease to do
business with the Company after the consummation of the transactions
contemplated hereby, which cessation would have a material adverse effect on the
business, operations or financial condition of the Company. Since January 1,
1998, the Company has not experienced any difficulties in obtaining any
inventory items necessary to the operation of its business, and, to the best
knowledge of the Company and Sellers, no such shortage of supply of inventory
items is threatened or pending. The Company is not required to provide any
bonding or other financial security arrangements in any material amount in
connection with any transactions with any of its customers
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or suppliers.
2.23 Officers and Directors. The Disclosure Schedules set forth a list of
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officers and directors of the Company.
2.24 Bank Accounts and Powers of Attorney. The Disclosure Schedules set
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forth each bank, savings institution and other financial institution with which
the Company has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto. Each person holding a
power of attorney or similar grant of authority on behalf of the Company is
identified on the Disclosure Schedules. Except as disclosed on such Disclosure
Schedules, the Company has not given any revocable or irrevocable powers of
attorney to any person, firm, corporation or organization relating to its
business for any purpose whatsoever.
2.25 Accuracy of Information Furnished. Any information furnished to Buyer
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by the Company or Sellers prior to, at or after the date of this Agreement, in
the Disclosure Schedules hereto, or otherwise is, or when furnished will be,
true and correct in all material respects. Such information states, or when
furnished will state, all material facts required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements are made, not misleading.
2.26 Availability of Documents. The Company has made available for
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inspection by Buyer and its representatives true, correct, and complete copies
of the articles of incorporation and bylaws of the Company, all written
agreements, arrangements, commitments, and documents referred to in the
Disclosure Schedules attached hereto, and the corporate minute books of the
Company. Such corporate minute books contain the minutes of all of the meetings
of shareholders, board of directors, and any committees of the Company that have
been held preceding the date hereof and all written consents to action executed
in lieu thereof.
2.27 Brokerage, Financial Advisor or Finder Fees. No agent, advisor,
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broker, person or firm acting on behalf of the Company or Sellers is, or will
be, entitled to any commission or broker's, advisor's or finder's fees from any
of the parties hereto, or from any of their respective Affiliates in connection
with any of the transactions contemplated hereby.
2.28 Absence of Certain Changes or Events. Except as contemplated by this
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Agreement, since January 1, 1998, there has not been (a) any damage, destruction
or casualty loss to the physical properties of the Company (whether or not
covered by insurance), materially and adversely affecting the business,
operations, prospects or financial condition of the Company, (b) any material
adverse change in the business, operations, financial condition or results of
operations or prospects of the Company, (c) any entry into any transaction,
commitment or agreement (including, without limitation, any borrowing) material
to the Company, except transactions, commitments or agreements in the ordinary
course of business consistent with past practice, and which, if occurring after
the date hereof, would be in compliance with Section 4.1, (d) any declaration,
setting aside or payment of any dividend or other distribution in cash, stock or
property with respect to the Company's capital stock or other securities, any
repurchase, redemption or other acquisition by the Company of any capital stock
or other securities, or any agreement, arrangement or commitment by the Company
to do so, (e) any increase that is material in the compensation payable or to
become payable by the Company to its directors, officers, employee or agents or
any increase in the rate or terms of any bonus, or other employee benefit plan,
payment or arrangement made to, for or with any such directors, officers,
employees or agents, (f) any sale, transfer or other disposition of, or the
creation of any Lien upon, any part of the Company's assets, tangible or
intangible, except for sales of inventory and use of supplies and
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collections of accounts receivables in the ordinary course of business
consistent with past practice, or any cancellation or forgiveness of any debts
or claims by the Company, (g) any change in the relations of the Company with or
loss of its customers or suppliers, of any loss of business or increase in the
cost of inventory items or change in the terms offered to customers, which would
materially and adversely affect the business, operations or financial condition
of the Company, or (i) any capital expenditure (including any capital leases) or
commitment therefor by the Company in excess of $50,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
3.1 Organization and Authorization. Buyer is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Nevada with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Buyer has all requisite corporate power, capacity and authority to execute and
deliver this Agreement and all other agreements and documents contemplated
hereby. The execution and delivery of this Agreement and such other agreements
and documents by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by Buyer and no other corporate
action on the part of Buyer is necessary to authorize the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Buyer and constitutes the valid and binding obligation of Buyer, enforceable in
accordance with its terms except (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, (ii) the remedy of specific performance and
injunctive relief are subject to certain equitable defenses and to the
discretion of the court before which any proceedings may be brought, and (iii)
rights to indemnification may be limited under applicable securities laws.
3.2 No Violations. The execution and delivery of this Agreement and other
-------------
agreements and documents contemplated hereby by Buyer and the consummation of
the transactions contemplated hereby will not (a) violate any provision of the
certificate of incorporation or bylaws of Buyer, (b) violate any statute, rule,
regulation, order or decree of any public body or authority by which Buyer or
its properties or assets are bound, or (c) result in a violation or breach of,
or constitute a default under or result in the creation of any encumbrance upon,
or create any rights of termination, cancellation or acceleration in any person
with respect to any agreement, contract, indenture, mortgage or instrument to
which Buyer is a party or any of its properties or assets is bound.
3.3 Consents. No consent, approval or other authorization of any
--------
governmental authority or third party is required as a result of or in
connection with the execution and delivery of this Agreement and the other
agreements and documents to be executed by Buyer or the consummation by Buyer of
the transactions contemplated hereby.
3.4 Brokerage, Financial Advisor or Finder Fees. No agent, advisor,
-------------------------------------------
broker, person or firm acting on behalf of Buyer is, or will be, entitled to any
commission or broker's, advisor's or finder's fees from any of the parties
hereto, or from any of their respective Affiliates, in connection with any of
the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF THE PARTIES
-9-
4.1 Course of Conduct by the Company. From the date hereof through the
--------------------------------
Closing Date, except as approved in writing by Buyer or as permitted or
contemplated by this Agreement, the Company's business shall be conducted in the
ordinary course of business consistent with past practice, and Sellers shall
cause the Company to comply with the following covenants:
(a) Capital Expenditures. The Company shall not make capital expenditures
--------------------
or commitments which, when combined with capital expenditures or commitments
after January 1, 1999, would exceed $50,000.
(b) Organizational Documents. The Company shall not make any change in
------------------------
its articles or bylaws.
(c) Stock Issuance; Redemptions; Reorganizations. The Company shall not
--------------------------------------------
(i) issue, grant or dispose of, or make any agreement, arrangement or commitment
obligating the Company to issue, grant or dispose of any capital shares or other
securities of the Company, (ii) redeem or acquire, or make any agreement,
arrangement or commitment obligating the Company to redeem or acquire, any
shares of capital stock or other securities of the Company, or (iii) authorize
or effect or make any agreement, arrangement or commitment obligating the
Company to effect, any reorganization, recapitalization or split-up of such
capital stock of the Company.
(d) Employee Matters. The Company shall not (i) make any material
----------------
increase in the compensation payable or to become payable to any of the
officers, employees, or agents of the Company, or (ii) make, amend or enter into
any employment contract or any bonus, incentive, stock option, profit sharing,
pension, retirement, stock purchase, hospitalization, medical reimbursement,
insurance, severance benefit or other similar plan or arrangement or make any
voluntary contribution to any such plan or arrangement.
(e) Insurance Coverage. The Company shall maintain insurance coverage for
------------------
the benefit of the Company on the same basis as, or on a substantially
equivalent basis to, the current insurance coverage.
(f) Business Organization. The Company shall use commercially reasonable
---------------------
efforts to preserve intact its business organization and to keep available the
services of its present officers and employees as a group.
(g) Maintenance of Property. The Company shall maintain its property,
-----------------------
equipment and other tangible personal property in its present operating
condition and repair, ordinary wear and tear excepted. The Company will fully
perform and pay for all maintenance, painting, repairs, alterations and other
work required to be performed by the Company as lessee under the Real Property
Leases listed on the Disclosure Schedules.
(h) Relations with Suppliers, Customers, Etc. The Company will use
-----------------------------------------
commercially reasonable efforts to preserve its relationships with its material
customers and others having material business dealings with it and shall not
change or modify or commit to change or modify any terms offered to customers.
The Company promptly shall notify Buyer if the Company is informed by any of its
customers or suppliers that such customer or supplier will or may cease to do
business with the Company either prior to or following the Closing.
(i) Incurrence of Debt. The Company will not voluntarily incur or assume,
------------------
whether directly or
-00-
xx xxx xx xxxxxxxx or otherwise, any material obligation or liability, except
obligations and liabilities incurred in the ordinary course of business,
consistent with past practice.
(j) Liens. The Company will not mortgage, pledge, encumber, create or
-----
allow any Liens not existing on the date hereof upon any of its properties or
assets, tangible or intangible, except Liens created in the ordinary course of
business, consistent with past practice.
(k) Disposition of Assets. The Company will not sell, transfer or
---------------------
otherwise dispose of any of its tangible or intangible property or assets,
except for inventory and supplies sold, disposed of or consumed and accounts
receivable collected or written off in the ordinary course of business,
consistent with past practice. The Company will not cancel or forgive any debts
or claims except or in the ordinary course of business, consistent with past
practice.
(l) Agreements, Leases and Licenses. The Company will not amend,
-------------------------------
terminate, or allow to lapse any material agreement, lease, license or permit to
which it is a party or of which it is the holder.
(m) Accounting Practices. The Company will not make any material changes
--------------------
in its accounting methods, principles or practices, except as required by GAAP.
(n) Changes in Business Practice. The Company will not take any action,
----------------------------
the purpose or effect of which is to shift income from post-closing periods to
the pre-closing period or defer expenses from the pre-closing period to post-
closing periods, which action is not in the ordinary course of business,
consistent with past practice.
(o) Transactions with Affiliates. The Company will not enter into any
----------------------------
agreement, arrangement or transaction with, or make any payment, distribution,
loan or advance to, any Affiliate of the Company or any officer, director or
shareholder of the Company, except for salaries and travel advances consistent
with past practices or as otherwise specifically permitted by this Agreement.
(p) Material Transactions. The Company will not enter into any other
---------------------
agreement, course of action or transaction material to it, except in the
ordinary course of business, consistent with past practice.
4.2 Approvals and Consents. The Company and Sellers shall use their
----------------------
respective best efforts (i) to cause all conditions to the obligations of Buyer
under this Agreement over which they are able to exercise influence or control
to be satisfied prior to the Closing Date and (ii) to obtain promptly and to
comply with all requisite statutory, regulatory or court approvals, third party
releases and consents, and other requirements necessary for the valid and legal
consummation of the transactions contemplated hereby.
4.3 Investigations. The Company shall provide Buyer and its
--------------
representatives and agents such access to the books and records of the Company
and furnish to Buyer such financial and operating data and other information
with respect to the businesses and property of the Company as it may reasonably
request from time to time, and permit Buyer and its respective representatives
and agents to make such inspections of the Company's real and personal
properties as they may reasonably request. Sellers shall promptly arrange for
Buyer and its representatives and agents to meet with such directors, officers,
employees and agents of the Company as requested.
4.4 Records Pertaining to the Company. At the Closing, Sellers will
---------------------------------
deliver or cause to be delivered to the Company any records (i) in the
possession of Sellers, (ii) applicable primarily to the
-11-
Company, and (iii) of which the Company does not already have copies. Sellers
shall, for a period of seven years (except in the case of any sales invoices,
which shall be for three years) after the Closing Date, neither dispose of nor
destroy any of the business records or files of Sellers that pertain in part to
the Company without first offering to turn over possession of copies thereof to
the Company at the Company's expense, by written notice to the Company, at least
thirty (30) days prior to the proposed date of such disposition or destruction.
Sellers shall allow the Company and its representatives access to all business
records and files of Sellers that pertain in part to the Company, during normal
working hours at the principal place of business of Sellers, or at any location
where such records are stored, and the Company shall have the right, at its own
expense, to make copies of any such records and files. From and after the
Closing Date, Sellers shall make available to Buyer, upon written request, (i)
personnel of Sellers to assist Buyer in locating and obtaining records and files
maintained by Sellers, and (ii) any of the personnel of Sellers, whose
assistance or participation is reasonably required by Buyer in anticipation of,
or preparation for, any existing or future third party actions, Tax or other
matters in which the Company or any of its past, present or future Affiliates is
involved and which relate to the business of the Company. Sellers shall use
their respective best efforts (including, without limitation, furnishing any
certificates reasonably requested, and complying with other reasonable requests
as a prerequisite to availability) to cause any independent accounting firm that
has reviewed or prepared a report on any financial statements of the Company or
any consolidated financial statements for any consolidated group which included
the Company with respect to any financial accounting period and to make
available to Buyer for inspection and copying, at Buyer's expense and upon its
written request therefor, such accounting firm's work papers with respect to any
such financial statements and shall take all such actions as required by any
such accounting firm in connection with such request.
4.5 Tax Elections. No new elections with respect to Taxes or any changes
-------------
in current elections with respect to Taxes affecting the Company shall be made
after the date of this Agreement without prior written consent of Buyer.
4.6 Public Announcements. Prior to the Closing, no party shall make any
--------------------
press release or public announcement with respect to the transactions
contemplated by this Agreement without the prior written consent of the Buyer
and the Company, which consent shall not be unreasonably withheld.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Company Shares, and to cause the
transactions contemplated hereby to occur at Closing, shall be subject to
satisfaction of the following conditions at or prior to Closing:
5.1 Representations and Warranties. Each representation and warranty of
------------------------------
the Company and Sellers contained in this Agreement and in any Disclosure
Schedules or other disclosure in writing from the Company or Sellers shall be
true and correct when made, and shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representation and warranty had been made on and as of the Closing Date.
5.2 Covenants of Sellers and Company. All of the covenants and agreements
--------------------------------
herein on the part of Sellers and the Company to be complied with or performed
on or before the Closing Date shall have been fully complied with and performed.
5.3 Absence of Litigation. No inquiry, action, suit or proceeding shall
---------------------
have been asserted, threatened or instituted (i) in which it is sought to
restrain or prohibit the carrying out of the transactions
-12-
contemplated by this Agreement or to challenge the validity of such transactions
or any part thereof, (ii) which could, if adversely determined, result in any
material adverse change in the business, operations or assets or the condition,
financial or otherwise, or results of operations or prospects of the Company, or
(iii) which could, if adversely determined, have a material adverse effect on
the right or ability of the Company to carry on its business as now conducted.
5.4 Consents and Approvals. All material authorizations, consents,
----------------------
approvals, waivers and releases, if any, necessary for Sellers and the Company
to consummate the transactions contemplated hereby shall have been obtained and
copies thereof shall be delivered to Buyer.
5.5 Certificates. The Company and Sellers shall have delivered to Buyer
------------
(i) certificates of the appropriate governmental authorities, dated as of a date
not more than fifteen (15) days prior to the Closing Date, attesting to the
existence and good standing of the Company in the State of California; (ii) a
copy, certified by the Secretary of State of Texas as of a date not more than
fifteen (15) days prior to the Closing Date, of the charter and all amendments
thereto of the Company; (iii) a copy certified by the Secretary of the Company,
dated the Closing Date, of the bylaws of the Company; and (iv) certificates,
dated the Closing Date, of the Secretary of the Company, relating to the
incumbency and corporate proceedings in connection with the consummation of the
transactions contemplated hereby.
5.8 Estoppel Certificates. Sellers shall have delivered to Buyer duly
---------------------
executed estoppel certificates in form and substance satisfactory to Buyer from
the lessors under the Real Property Leases.
5.9 No Material Adverse Change. There shall not have been any material
--------------------------
adverse change since January 1, 1998 in respect of the financial condition,
results of operations, business, assets or prospects of the Company and the
Company shall not have suffered any loss (whether or not insured) by reason of
physical damage caused by fire, earthquake, flood, accident or other calamity
which could have a material adverse effect on the condition, financial or
otherwise, results of operations or business, assets or prospects of the
Company.
5.10 No Transfers to Affiliates. Except as otherwise expressly
--------------------------
contemplated by this Agreement, the Company shall not have distributed or
transferred any of its assets or properties, or made any payments, to or for the
benefit of any of its Affiliates.
5.11 Due Diligence Review. The due diligence review of the Company
--------------------
(including, without limitation, legal, financial, and operational matters) to be
conducted by or on behalf of Buyer shall have been completed in a manner
satisfactory to Buyer and shall not reveal or produce adverse facts with respect
to the Company, its premises, business, operations, financial condition or
prospects which are not otherwise disclosed in this Agreement or any Disclosure
Schedules attached. No condition shall exist that was not disclosed in writing
to Buyer prior to the date hereof that would have a material adverse effect on
the business, operations, financial condition or prospects of the Company.
5.12 Nonforeign Affidavit. Sellers shall have furnished to Buyer an
--------------------
affidavit, stating, under penalty of perjury, that the indicated number is the
transferor's United States taxpayer identification number and that the
transferor is not a foreign person, pursuant to Section 1445(b)(2) of the Code.
5.13 Employment Agreements. Xxxx X. Xxxxxxx shall have executed and
---------------------
delivered to Buyer an employment agreement in form and substance satisfactory to
the Buyer (the "Employment Agreement").
-13-
5.14 Certificates. Sellers shall have tendered certificates representing
------------
the Company Shares, duly endorsed in blank or accompanied by appropriate stock
powers, in proper form for transfer, with all transfer taxes paid.
5.15 Resignations and Releases of Directors and Officers. Buyer shall have
---------------------------------------------------
received the resignations of and releases from each director and officer of the
Company if so requested by the Buyer, effective as of the Closing.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers to sell the Company Shares and to cause the
other transactions contemplated hereby to occur at the Closing shall be subject,
except as Sellers may waive in writing, to the satisfaction of each of the
following conditions at or prior to the Closing:
6.1 Representations and Warranties. Each representation and warranty of
------------------------------
Buyer contained in this Agreement and in any Disclosure Schedules or other
disclosure in writing from Buyer shall be true and correct when made, and shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representation and warranty had been made on and
as of the Closing Date.
6.2 Covenants of Buyer. All of the covenants and agreements herein on the
------------------
part of Buyer to be complied with or performed on or before the Closing Date
shall have been fully complied with and performed.
6.3 Absence of Litigation. No inquiry, action, suit or proceeding shall
---------------------
have been asserted, threatened or instituted in which it is sought to restrain
or prohibit the carrying out of the transactions contemplated by this Agreement
or to challenge the validity of such transactions or any part thereof.
6.4 Consents and Approvals. All material authorizations, consents,
----------------------
approvals, waivers and releases, if any, necessary for Buyer to consummate the
transactions contemplated hereby have been delivered to Sellers.
6.5 Transfer of Shares. Buyer shall have delivered to Sellers the Buyer
------------------
Shares specified in Section 7.3.
6.6 Employment Agreements. Buyer shall have executed and delivered to
---------------------
Xxxx X. Xxxxxxx the Employment Agreement.
ARTICLE VII
CLOSING
7.1 Closing. Unless this Agreement is terminated as provided in Section
------- -------
8.1, subject to the satisfaction or waiver of all the conditions set forth in
---
Articles V and VI, the closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of the Company or such other location
as agreed to by Buyer and Sellers, on (i) July 15, 1999, or (ii) such other date
as the parties may agree upon in writing (the "Closing Date").
7.2 Delivery of the Shares. At Closing, Sellers shall deliver or cause to
----------------------
be delivered to Buyer the
-14-
stock certificate(s) evidencing all of the Company Shares owned by them, duly
endorsed or accompanied by duly executed stock powers assigning the Company
Shares to Buyer and otherwise in good form for transfer.
7.3 Payment to Sellers. At Closing, Buyer shall deliver the Consideration
------------------
as designated by Sellers, with 1,666,667 of the Buyer Shares to be delivered to
Xxxxxx X. Xxxxxxxx, and 833,333 of the Buyer Shares to be delivered to Xxxx X.
Xxxxxxx.
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
8.1 Termination. (a) This Agreement may be terminated and abandoned at
-----------
any time prior to the Closing: (i) by the written mutual consent of Buyer and
Sellers; (ii) by Buyer on the Closing Date if any of the conditions set forth in
Article V shall not have been fulfilled on or prior to the Closing Date; (iii)
by Sellers on the Closing Date if any of the conditions set forth in Article VI
shall not have been fulfilled on or prior to the Closing Date; (iv) by either
Buyer or Sellers if the Closing shall not have occurred on or before December
31, 1999 (unless extended by the Buyer for an additional 30 days); and (v) by
Buyer, upon written notice to Sellers, if the examination of the Company,
including its assets, liabilities, operations, business and prospects, by Buyer
or its representatives or agents, discloses the existence or nonexistence of any
matters or things that, in the sole judgment of Buyer, would be reasonably
likely to result in a material loss or damage to Buyer or the Company or a
material diminution in value of the Company.
(b) Any termination pursuant to this Article VIII shall not affect
the obligations of the parties under Sections 4.8 and 10.16 hereof and shall be
without prejudice to the terminating party's rights and remedies under this
Agreement by reason of any violation of this Agreement occurring prior to such
termination. In the event of a termination pursuant to this Article VIII, each
party shall bear its own costs and expenses incurred with respect to the
transactions contemplated hereby.
ARTICLE IX
INDEMNIFICATION
9.1 Buyer's Losses. (a) Sellers jointly and severally agree to indemnify
--------------
and hold harmless Buyer and the Company and their respective directors,
officers, employees, representatives, agents and attorneys from, against and in
respect of any and all Buyer's Losses (as defined below) suffered, sustained,
incurred or required to be paid by any of them by reason of (i) any
representation or warranty made the Company or Sellers in or pursuant to this
Agreement being untrue or incorrect in any respect at the date of this Agreement
or at the Closing Date; (ii) any failure by the Company or Sellers to observe or
perform their covenants and agreements set forth in this Agreement or any other
agreement or document executed by them in connection with the transactions
contemplated hereby; or (iii) any liability for warranty claims arising from the
sale of goods or services by the Company through the Closing Date, except in any
instance to the extent Buyer's Losses result from Buyer's own gross negligence
or willful misconduct. This Section 9.1 is intended to indemnify Buyer, the
Company and their respective directors, officers, employees, representatives,
agents and attorneys from the results of their negligence.
(b) "Buyer's Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with Sellers' consent, which consent may
not be unreasonably withheld), losses, obligations, liabilities, liens,
deficiencies, costs (including, without limitation, reasonable attorneys' fees),
penalties, fines, interest, monetary sanctions and expenses, including, without
limitation, reasonable attorneys' fees and costs incurred to comply with
injunctions and other court and agency orders, and other costs and expenses
-15-
incident to any suit, action, investigation, claim or proceeding or to establish
or enforce Buyer's or such other persons' right to indemnification hereunder.
9.2 Sellers' Losses. (a) Buyer and the Company jointly and severally agree
---------------
to indemnify and hold harmless Sellers, and their respective directors,
officers, employees, representatives, agents and attorneys from, against, for
and in respect of any all Sellers' Losses (defined below) suffered, sustained,
incurred or required to be paid by either Seller by reason of (i) any
representation or warranty made by Buyer in or pursuant to this Agreement being
untrue or incorrect in any respect; (ii) any failure by Buyer to observe or
perform its covenants and agreements set forth in this Agreement or any other
agreement or document executed by it in connection with the transactions
contemplated hereby; or (iii) any liability for warranty claims arising from the
sale of goods or services by the Company subsequent to the Closing Date, except
in any instance to the extent Seller's Losses result from Sellers' own gross
negligence or willful misconduct. This Section 9.3 is intended to indemnify
Sellers and their directors, officers, employees, representatives, agents and
attorneys from the results of their negligence.
(b) "Sellers' Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with Buyer's consent, which consent may
not be reasonably withheld), losses, obligations, liabilities, claims,
deficiencies, costs (including, without limitation, reasonable attorneys' fees)
and expenses, including, without limitation, reasonable attorneys' fees and
costs incurred to comply with injunctions and other court and agency orders, and
other costs and expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce Sellers' or such other persons' right to
indemnification hereunder.
9.3 Notice of Loss. Except to the extent set forth in the next sentence,
--------------
Buyer and Sellers will not have any liability under the indemnity provisions of
this Agreement with respect to a particular matter unless a notice setting forth
in reasonable detail the breach or other matter which is asserted has been given
to the Indemnifying Party (defined below) and, in addition, if such matter
arises out of a suit, action, investigation, proceeding or claim, such notice is
given promptly, but in any event within thirty (30) days after the Indemnified
Party (defined below) is given notice of the claim or the commencement of the
suit, action, investigation or proceeding. Notwithstanding the preceding
sentence, failure of the Indemnified Party to give notice hereunder shall not
release the Indemnifying Party from its obligations under this Article, except
to the extent the Indemnifying Party is actually prejudiced by such failure to
give notice. With respect to Buyer's Losses, Sellers, jointly and severally,
shall be the Indemnifying Party and Buyer, the Company and their respective
directors, officers, employees, representatives, agents and attorneys shall be
Indemnified Parties. With respect to Sellers' Losses, Buyer shall be the
Indemnifying Party and Sellers and their respective directors, officers,
employees, representatives, agents and attorneys shall be the Indemnified Party.
9.4 Right to Defend. Upon receipt of notice of any suit, action,
---------------
investigation, claim or proceeding ("Action") for which indemnification might be
claimed by an Indemnified Party, the Indemnifying Party shall be entitled to
defend, contest or otherwise protect against any such Action at its own cost and
expense, and the Indemnified Party must cooperate in any such defense or other
action. The Indemnified Party shall have the right, but not the obligation, to
participate at its own expense in defense thereof by counsel of its own
choosing, but the Indemnifying Party shall be entitled to control the defense
unless the Indemnified Party has relieved the Indemnifying Party from liability
with respect to the particular matter or the Indemnifying Party fails to assume
defense of the matter. In the event the Indemnifying Party shall fail to
defend, contest or otherwise protect in a timely manner against any such Action,
the Indemnified Party shall have the right, but not the obligation, thereafter
to defend, contest or otherwise protect against the same and make any compromise
or settlement thereof and recover the entire cost thereof from the
-16-
Indemnifying Party including, without limitation, reasonable attorneys' fees,
disbursements and all amounts paid as a result of such Action or the compromise
or settlement thereof; provided, however, that the Indemnified Party must send a
written notice to the Indemnifying Party of any such proposed settlement or
compromise, which settlement or compromise the Indemnifying Party may reject, in
its reasonable judgment, within thirty (30) days of receipt of such notice.
Failure to reject such notice within such thirty (30) day period shall be deemed
an acceptance of such settlement or compromise. The Indemnified Party shall have
the right to effect a settlement or compromise over the objection of the
Indemnifying Party; provided, that if (i) the Indemnifying Party is contesting
such claim in good faith or (ii) the Indemnifying Party has assumed the defense
from the Indemnified Party, the Indemnified Party waives any right to indemnity
therefor. If the Indemnifying Party undertakes the defense of such matters, the
Indemnified Party shall not, so long as the Indemnifying Party does not abandon
the defense thereof, be entitled to recover from the Indemnifying Party any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than the reasonable costs of
investigation undertaken by the Indemnified Party with the prior written consent
of the Indemnifying Party.
9.5 Cooperation. The Company, Buyer, Sellers and each of their Affiliates,
-----------
successors and assigns shall cooperate with each other in the defense of any
suit, action, investigation, proceeding or claim by a third party and, during
normal business hours, shall afford each other access to their books and records
and employees relating to such suit, action, investigation, proceeding or claim
and shall furnish each other all such further information that they have the
right and power to furnish as may reasonably be necessary to defend such suit,
action, investigation, proceeding or claim, including, without limitation,
reports, studies, correspondence and other documentation relating to EPA, OSHA,
and EEOC matters.
9.6 Waiver of Contribution and Indemnification. Sellers hereby waive and
------------------------------------------
release any rights of indemnification or contribution they may have against the
Company as a result of payments made under this Article.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. This Agreement (including the exhibits and
----------------
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no party shall be liable or bound
to the other in any manner by any representations or warranties not set forth
herein.
10.2 Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, interests, or obligations hereunder may be assigned by any party hereto
without the prior written consent of all other parties hereto, and any purported
assignment in violation of this Section 10.2 shall be null and void.
10.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
10.4 Headings. Headings of the articles and sections of this Agreement are
--------
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
-17-
10.5 Modification/Waiver. Any term or condition hereof may be waived in
-------------------
writing at any time by the party entitled to the benefits thereof, and this
Agreement may be modified or amended by a written instrument executed by Buyer,
the Company and each Seller. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by all of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
10.6 Disclosure Schedules, Etc. All exhibits and schedules annexed hereto
-------------------------
are expressly made a part of this Agreement as though fully set forth herein.
Buyer and Sellers acknowledge receipt under separate cover of all information
required under the Disclosure Schedules.
10.7 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
If to the Company or the Shareholders:
Staff Sourcing Services, Inc.
00000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxx Xxxxxxxx
If to the Buyer:
Seirios International, Inc.
00000 Xxxxxxx Xxxx
Xxxxx 000, XX 6
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx, President
10.8 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED, AND
-------------
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO ITS
CHOICE OF LAW PRINCIPLES).
10.9 Survival of Covenants, Agreements, Representations and Warranties.
-----------------------------------------------------------------
(a) Covenants and Agreements. All covenants and agreements made
------------------------
hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing and shall continue in full force
and effect thereafter according to their terms without limit as to duration.
(b) Representations and Warranties. All representations and warranties
------------------------------
contained herein shall survive the Closing and shall continue in full force and
effect thereafter.
10.50 Invalid Provisions. If any provision of this Agreement is held to be
------------------
illegal, invalid or
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unenforceable under present or future laws, such provision shall be fully
severable, this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement,
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Agreement.
10.6 Expenses. Sellers, on the one hand, and Buyer, on the other hand,
--------
shall be solely responsible for their respective costs and expenses incurred in
connection with the transactions contemplated hereby.
10.7 Third Party Beneficiaries. Except as otherwise specifically provided
-------------------------
in Article IX, no individual or firm, corporation, partnership or other entity
-----------
shall be a third-party beneficiary of the representations, warranties, covenants
and agreements made by any party hereto.
10.8 Number and Gender of Words. Whenever the singular number is used, the
--------------------------
same shall include the plural where appropriate, and words of any gender shall
include each other gender where appropriate.
10.9 Further Assurances. From time to time after the Closing, at the
------------------
request of any other party but at the expense of the requesting party, Buyer,
the Company or Sellers, as the case may be, will execute and deliver any such
other instruments of conveyance, assignment and transfer, and take such other
action as the other party may reasonably request in order to consummate or
evidence the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date above written.
BUYER:
SEIRIOS INTERNATIONAL, INC.
/s/ XXXXX XXXXXXX
By: __________________________
Xxxxx Xxxxxxx, President
COMPANY:
STAFF SOURCING SERVICES, INC.
By: ___________________________
Name:___________________________
Title: _________________________
THE SHAREHOLDERS
/s/ XXXXXX X. XXXXXXXX
____________________________
Xxxxxx X. Xxxxxxxx
/s/ XXXX X. XXXXXXX
____________________________
Xxxx X. Xxxxxxx
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