EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of November 1, 2002, by
and between NEXTGEN COMMUNICATIONS CORPORATION, A DELAWARE CORPORATION (referred
to herein as "Nextgen" and also as "Buyer") and XXXX X. XXXXXX, an individual
(referred to herein as "Sellers").
RECITALS
A. Subject to the terms and conditions of this Agreement, Sellers desire to sell
and Buyer desires to purchase all of the outstanding capital stock ("the
Shares") of X. X. Xxxxxxxx, Inc., a California corporation (the "Company").
B. Buyer's common stock is publicly traded over the counter on the NASD Bulletin
Board.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"Acquired Companies"--the Company, and its Subsidiaries, collectively.
"Actual Knowledge" or "Actually Known" means that whenever a statement regarding
the existence or absence of facts on the part of a Person in this Agreement is
qualified by a phrase such as "to such Person's actual knowledge" or "actually
known by such Person," the parties intend that the information to be attributed
to such Person is information that is actually known to the officers and/or
directors of the Person on the date of this Agreement and as of the execution
thereof.
"Applicable Contract"--any material Contract (a) under which any Acquired
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by it is or may become
bound.
"Balance Sheet"--as defined in Section 3.4.
"Breach"--a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer Release" -- as defined in Section 2.4(b)(iv).
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually takes place.
"Consultant Contract" - as defined in Section 2.4 (a)(ii) of this Agreement.
"Company"--as defined in the Recitals of this Agreement.
"Consent"--any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"--as defined in Section 10.2.
"Encumbrance"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Facilities"--any real property, leaseholds, or other interests currently or
formerly owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired Company.
"GAAP"--generally accepted United States accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared.
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"Governmental Authorization"--any approval, consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other jurisdiction
of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"HSR Act"--the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Indemnified Persons" --as defined in Section 10.2.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
"Xxxxxxx" - means and refers to Xxxxx Xxxxxxx, an individual.
"Xxxxxxx Employment Agreement" -- as defined in Section 2.4(a)(iii).
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty in effect as
of the date of this Agreement.
"Nextgen" - as defined in the first paragraph of this Agreement.
"Nextgen Promissory Notes" - as defined in Section 2.2(f).
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"Order"--any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the board of directors of
such Person (or by any Person or group of Persons exercising similar authority);
and
(c) such action is similar in nature and magnitude to actions customarily taken,
without any authorization by the board of directors (or by any Person or group
of Persons exercising similar authority), in the ordinary course of the normal
day-to-day operations of other Persons that are in the same line of business as
such Person.
"Organizational Documents"--(a) the articles or certificate of incorporation and
the bylaws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (d) any charter
or similar document adopted or filed in connection with the creation, formation,
or organization of a Person; and (e) any amendment to any of the foregoing.
"Person"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Representative"--with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Sellers Release" -- as defined in Section 2.4(a)(iv).
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"Shares"--as defined in the Recitals of this Agreement.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or other
Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Tax"-any tax (including any income tax, capital gains tax, value-added tax,
sales tax, property tax, gift tax, or estate tax), levy, assessment, tariff,
duty (including any customs duty), deficiency, or other fee, and any related
charge or amount (including any fine, penalty, interest, or addition to tax),
imposed, assessed, or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other Contract
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency, or fee.
"Tax Return"--any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or payment of any Tax
or in connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made in
writing or any notice has been given in writing.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing, Sellers
shall sell and transfer the Shares to Buyer, and Buyer shall purchase the Shares
from Sellers.
2.2 CONSIDERATION
The consideration (the "Consideration") for the purchase of the Shares shall be
payable as follows:
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(a) The cash portion of the Consideration shall be the amount of One Million
Dollars ($1,000,000.00) (the "Cash Consideration") which shall be paid according
to wire transfer instructions given by Sellers to Buyer prior to the Closing;
(b) Buyer shall deliver to Sellers a promissory note in the principal amount of
One Million Five Hundred Thousand Dollars ($1,500,000.00) in the form of EXHIBIT
2.2(b)-1 (the "First Note") executed by Buyer;
(c) Buyer shall deliver to Sellers a promissory note in the principal amount of
One Million Dollars ($1,000,000.00) in the form of EXHIBIT 2.2(c)-1 (the "Second
Note") executed by Buyer and the payment of which is tied to the payment of thE
receivables listed in EXHIBIT 2.2(c)-2 (the "Second Note Receivables");
(d) Buyer shall deliver to Sellers a promissory note in the principal amount of
One Million Four Hundred Forty Four Thousand One Hundred Dollars ($1,444,100.00)
in the form of EXHIBIT 2.2(d) (the "Third Note") executed by Buyer;
(e) Buyer shall deliver to Sellers a secured promissory note in the principal
amount of Five Million Two Hundred Thousand Dollars ($5,200,000.00) in the form
of EXHIBIT 2.2(e)-1 (the "Secured Note") executed by Buyer and secured by a
Pledge and Escrow Agreement in the form of EXHIBIT 2.2(e)-2 (the "Security
Agreement") providing for a security interest in certain shares of stock of
Buyer (the "Nextgen Shares") executed by certain shareholders of Buyer (the
"Nextgen Shareholders");
(f) Buyer shall deliver and assign to Sellers certain promissory notes due to
Buyer, copies of which are attached here to as EXHIBIT 2.2(f)-1 (the "Nextgen
Promissory Notes"), which shall be assigned by Buyer according to the Assignment
in the form of EXHIBIT 2.2(f)-2 (the "Nextgen Assignment"), provided, that
Sellers' acceptance of the Nextgen Assignment is conditioned upon the receipt by
Sellers of an opinion from Sellers' tax counsel that the receipt of such
assignment shall not create a tax liability to Sellers until cash, if any, is
received from the collection of proceeds of the Nextgen Promissory Notes; and,
(g) Buyer shall deliver to Sellers a warrant agreement for the purchase of two
hundred ninety-three thousand four hundred twelve (293,412) shares of common
stock of Buyer, the terms and restrictions of which are contained in the Warrant
Agreement attached hereto as EXHIBIT 2.2(g).
2.3 CLOSING
On September 30, 2002, and upon satisfaction of the conditions set forth in
Article 7, there shall be a Closing conference (the "Closing"). At the Closing,
the parties shall execute and deliver this Agreement and the Company and any
other documents to be delivered as conditions to the Closing. There shall be a
final closing conference at which
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time the Consideration shall be delivered to the Sellers ("Effective Date") (the
Closing Date and the Effective Date shall sometimes be referred to collectively
as the "Closing Dates") upon such date as the parties agree, which in no event
shall be later than November 15, 2002.
2.4 CLOSING OBLIGATIONS
On the Closing Dates:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed or accompanied by duly
executed stock powers, for transfer to Buyer:
(ii) the Consultant Contract executed by Sellers in the form of EXHIBIT 2.4
(a)(ii) attached hereto (the "Consultant Contract");
(iii) the Employment Agreement executed by Xxxxxxx in the form of EXHIBIT 2.4
(a)(III) attached hereto (the "Xxxxxxx Employment Agreement");
(iv) the Sellers Release executed by Sellers in the form of EXHIBIT 2.4(a)(IV)
attached hereto;
(v) the minute book of the Company, containing the stock transfer records; and,
(vi) a certificate executed by Sellers representing and warranting to Buyer that
each of Sellers' representations and warranties in this Agreement was accurate
in all respects as of the date of this Agreement and is accurate in all respects
as of the Closing Dates as if made on the Closing Dates.
(b) Buyer will deliver to Sellers:
(i) the Cash Consideration according to Sellers' wire transfer instructions, the
First Note executed by Buyer, the Second Note executed by Buyer, the Third Note
executed by Buyer, the Secured Note executed by Buyer, the Security Agreement
executed by the Nextgen Shareholders, the Nextgen Promissory Notes, Nextgen
Assignment executed by Buyer and the Warrant Agreement executed by Buyer;
(ii) the Consultant Contract executed by the Company and/or Buyer;
(iii) the Xxxxxxx Employment Agreement executed by the Company and/or Buyer;
(iv) the Buyer Release executed by Buyer in the form of EXHIBIT 2.4(b)(IV)
attached hereto;
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(v) an opinion of counsel dated the Closing Date in the form of EXHIBIT
2.4(b)(v) attached hereto opining as to the matters described in Sections 4.1,
4.2, 4.4, 4.6 and 4.7; and,
(vi) a certificate executed by Buyer to the effect that each of Buyer's
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Dates as if made on the Closing Dates.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, and to own or use the properties and assets that it purports to own
or use. A Certificate of Good Standing issued by the California Secretary of
State is attached as EXHIBIT 3.1. The Company is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each state or
other jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business or properties of the Company.
(b) Sellers have delivered to Buyer copies of the Organizational Documents of
each Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Sellers, enforceable against Sellers in accordance with its terms. Upon the
execution and delivery by Sellers of this Agreement and all documents to be
executed herewith (collectively, the "Sellers' Closing Documents"), the Sellers'
Closing Documents will constitute the legal, valid, and binding obligation of
Sellers, enforceable against Sellers in accordance with their respective terms.
Sellers have the absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and the Sellers' Closing Documents and to
perform their obligations under this Agreement and the Sellers' Closing
Documents.
(b) Neither the execution and delivery of this Agreement nor the consummation or
performance of any of the transactions contemplated thereby will, directly or
indirectly (with or without notice or lapse of time):
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(i) contravene, conflict with, or result in a violation of (A) any provision of
the Organizational Documents of the Acquired Companies, or (B) any resolution
adopted by the board of directors or the stockholders of any Acquired Company;
(ii) to the actual knowledge of Sellers, contravene, conflict with, or result in
a violation of, or give any Governmental Body or other Person the right to
challenge this Agreement or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which any Acquired Company or either
Seller, or any of the assets owned or used by any Acquired Company, may be
subject;
(iii) to the actual knowledge of Sellers, contravene, conflict with, or result
in a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract;
provided, however, that no warranty or representation is given regarding the
rights of Union Bank of California to accelerate the payment of the obligations
of the Company upon the Closing of this Agreement; or
(iv) to the actual knowledge of Sellers, result in the imposition or creation of
any Encumbrance upon or with respect to any of the assets owned or used by any
Acquired Company.
No Seller or Acquired Company is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution, delivery
and performance of this Agreement.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of 100,000 shares of
common stock, no par value, of which 100 shares are issued and outstanding and
constitute the Shares. Sellers are and will be on the Closing Date the record
and beneficial owners and holders of the Shares, free and clear of all
Encumbrances. With the exception of the Shares (which are owned by Sellers), all
of the outstanding equity securities and other securities of each Acquired
Company are owned of record and beneficially by one or more of the Acquired
Companies, free and clear of all Encumbrances. No legend or other reference to
any purported Encumbrance appears upon any certificate representing equity
securities of any Acquired Company. All of the outstanding equity securities of
each Acquired Company have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the issuance, sale,
or transfer of any equity securities or other securities of any Acquired
Company. None of the outstanding equity securities or other securities of any
Acquired Company was issued in violation of the Securities Act or any other
Legal Requirement. No Acquired Company owns, or has any Contract to acquire, any
equity securities or other securities of any Person (other than
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Acquired Companies) or any direct or indirect equity or ownership interest in
any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer audited balance sheets (the "Balance Sheets"),
of the Company as of December 31, 2001 and 2000 and the related statements of
income and retained earnings, and cash flow for the fiscal year then ended,
together with the report thereon of Xxxxxx & Xxxxx, independent certified public
accountants, a copy of which is attached hereto as SCHEDULE 3.4. Such financial
statements and notes fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Company as at
the date of and for the period referred to in such financial statements, all in
accordance with GAAP.
3.5 TITLE TO PROPERTIES; ENCUMBRANCES
To the actual knowledge of Sellers, the Company owns all the properties and
assets (whether real, personal, or mixed and whether tangible or intangible)
that it purports to own located in the facilities owned or operated by the
Company or reflected as owned in the books and records of the Company, including
all of the properties and assets reflected in the Balance Sheet (except for
assets held under leases disclosed on SCHEDULE 3.5-1 attached hereto and
personal property sold since the date of the Balance Sheet in the Ordinary
Course of Business), and all of the properties and assets purchased or otherwise
acquired by the Company since the date of the Balance Sheet (except for personal
property acquired and sold since the date of the Balance Sheet in the Ordinary
Course of Business). All material properties and assets reflected in the Balance
Sheet are free and clear of all Encumbrances except, (a) mortgages or security
interests shown on the Balance Sheet or on SCHEDULE 3.5-2 attached hereto (b)
mortgages or security interests incurred after the date of the Balance Sheet in
the Ordinary Course of Business and (c) liens for current taxes not yet due.
SCHEDULE 3.5-3 is a list of all equipment, vehicles and furniture owned by the
Company as of September 30, 2002.
3.6 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected on the Balance Sheet
or on the accounting records of the Company as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Sellers warrant that such amounts are
collectable within 180 days except as to the amount of the allowance for
doubtful accounts.
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3.7 NO UNDISCLOSED LIABILITIES
Except as disclosed on SCHEDULE 3.7 attached hereto, to the actual knowledge of
Sellers, the Acquired Companies have no liabilities or obligations of the type
required to be reflected as liabilities on a balance sheet prepared in
accordance with GAAP except for liabilities or obligations reflected or reserved
against in the Balance Sheet, and current liabilities incurred in the Ordinary
Course of Business since the date thereof.
3.8 TAXES
To the actual knowledge of Sellers, the Acquired Companies have filed or caused
to be filed all Tax Returns that are or were required to be filed by or with
respect to any of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. To the actual knowledge
of Sellers, the Acquired Companies have paid, or made provision for the payment
of, all Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by Sellers or any Acquired
Company. To the actual knowledge of Sellers, all Tax Returns filed by (or that
include on a consolidated basis) any Acquired Company are true, correct, and
complete.
3.9 COMPLIANCE WITH LEGAL REQUIREMENTS
To the actual knowledge of Sellers, each Acquired Company is in full compliance
with each material Legal Requirement that is applicable to it or to the conduct
or operation of its business or the ownership or use of any of its assets.
3.10 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in SCHEDULE 3.10 attached hereto, there is no pending
Proceeding: (i) that has been commenced by or against any Acquired Company; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the transactions
contemplated by this Agreement and to the actual knowledge of Sellers, no such
Proceeding has been Threatened.
(b) There is no Order to which any of the Acquired Companies, or any of the
assets owned or used by any Acquired Company, is subject.
3.11 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of the Balance Sheet, to the actual knowledge of Sellers, the
Acquired Companies have conducted their businesses only in the Ordinary Course
of Business and there has not been any change or development or combination of
changes or developments, which has had or is likely to have a materially adverse
effect upon the business, properties, financial condition or results of
operations of any of the Acquired
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Companies, taken as a whole, or the ability of the Sellers to consummate the
transactions contemplated hereby.
3.12 CONTRACTS
SCHEDULE 3.12 attached hereto contains a complete and accurate list, and Sellers
have delivered to Buyer true and complete copies, of each material lease, rental
or occupancy agreement, license, installment and conditional sale agreement, and
other Applicable Contracts affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $10,000 and with terms of
less than one year).
3.13 DISCLOSURE
No representation or warranty of Sellers in this Agreement omits to state a
material fact necessary to make the statements herein, in light of the
circumstances in which they were made, not misleading.
3.14 BROKERS OR FINDERS
Sellers and their agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer, represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, with full corporate power and authority
to conduct its business as it is now being conducted, and to own or use the
properties and assets that it purports to own or use. Buyer is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which the failure to be so qualified would
have a material adverse effect on its business or properties. Buyer has
delivered to Sellers copies of its Organizational Documents currently in effect.
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4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against it in accordance with its terms. Upon the execution
and delivery by Buyer of this Agreement and all documents to be delivered
herewith (collectively, the "Buyer's Closing Documents"), the Buyer's Closing
Documents will constitute the legal, valid, and binding obligations of Buyer,
enforceable against it in accordance with their respective terms. Buyer has the
absolute and unrestricted right, power, and authority to execute and deliver
this Agreement and the Buyer's Closing Documents and to perform its obligations
under this Agreement and the Buyer's Closing Documents.
(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the transactions contemplated herein will
give any Person the right to prevent, delay, or otherwise interfere with any of
the transactions contemplated herein pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the stockholders of
Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject; or
(iv) any Contract to which Buyer is a party or by which they may be bound.
The consummation of the transactions contemplated by this Agreement and the
execution and delivery of this Agreement and Buyer's Closing Documents have been
duly and validly authorized by all necessary corporate action on the part of
Buyer. Buyer is not and will not be required to obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the contemplated transactions.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CAPITALIZATION
(a) The authorized equity securities of Buyer consists of 50,000,000 shares of
common stock, $.001 par value, of which 9,423,397 shares are issued and
outstanding; the Nextgen Shareholders will be on the Closing Dates the record
and beneficial owners and holders of the Nextgen Shares, free and clear of all
Encumbrances, except for the Security Agreement; no legend or other reference to
any purported Encumbrance shall appear upon any certificate representing the
Nextgen Shares; the Nextgen Shares shall be
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lawfully subject to transfer to Sellers according to the terms of the Security
Agreement; all of the outstanding equity securities of Buyer have been duly
authorized and validly issued and are fully paid and nonassessable; there are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of Buyer, except as disclosed on SCHEDULE 4.4(a) attached
hereto; none of the outstanding equity securities or other securities of Buyer
was issued in violation of the Securities Act or any other Legal Requirement;
(b) The grant of the security interest in and potential transfer of the Nextgen
Shares to Sellers, to the extent required, are subject to an exemption from or
will have been qualified with the California Commissioner of Corporations in
accordance with the California Corporate Securities Law and the Commissioner's
Rules and Regulations. In the event of transfer of the Nextgen Shares to Sellers
pursuant to the terms of the Security Agreement, the Sellers will be the record
and beneficial owners and holders of the Nextgen Shares free and clear of all
Encumbrances and the Nextgen Shares shall be freely tradable by Sellers under
the Securities Act and the blue sky laws of California and New York.
4.5 COMPLIANCE WITH LEGAL REQUIREMENTS
To the actual knowledge of Buyer, Buyer is in full compliance with each material
Legal Requirement that is applicable to it or to the conduct or operation of its
businesses or the ownership or use of any of its assets.
4.6 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in SCHEDULE 4.6 attached hereto, there is no pending
Proceeding: (i) that has been commenced by or against Buyer; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated by this
Agreement. To the actual knowledge of Buyer, no such Proceeding has been
Threatened.
(b) There is no Order to which the Buyer or any of its assets is subject.
4.7 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions contemplated herein. To
Buyer's actual knowledge, no such Proceeding has been Threatened.
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4.8 FINANCIAL STATEMENTS
Buyer has delivered to Sellers audited balance sheets (the "Buyer's Balance
Sheets") as of December 31, 2001 and the related statements of income and
retained earnings, and cash flow for the fiscal year then ended, together with
the report thereon of Xxxxxxxxx, Xxxxxxxx Xxxxx and Xxxxx, independent certified
public accountants. Such financial statements and notes fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of Buyer as at the date of and for the period referred to
in such financial statements, all in accordance with GAAP. To the actual
knowledge of Buyer, Buyer has no liabilities or obligations of the type required
to be reflected as liabilities on a balance sheet prepared in accordance with
GAAP except for liabilities or obligations reflected or reserved against in
Buyer's Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the date thereof.
4.9 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of the Buyer's Balance Sheet, to the actual knowledge of Buyer,
Buyer has conducted its businesses only in the Ordinary Course of Business and
there has not been any change or development or combination of changes or
developments, which has had or is likely to have a materially adverse effect
upon the business, properties, financial condition or results of operations of
Buyer, or the ability of Buyer to consummate the transactions contemplated
hereby.
4.10 BROKERS OR FINDERS
Other than the Broker fees included in EXHIBIT 4.10, each of Buyer and its
officers and agents have incurred no other obligation or liability, contingent
or otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement and will indemnify and hold
Sellers harmless from any such payment alleged to be due by or through Buyer as
a result of the action of Buyer or its officers or agents.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause each Acquired Company and its Representatives to, (a) afford Buyer and its
Representatives and prospective lenders and their Representatives (collectively,
"Buyer's Advisors") full and free access to each Acquired Company's personnel,
properties (including subsurface testing), contracts, books and records, and
other documents and data, (b) furnish Buyer and Buyer's Advisors with copies of
all such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c)
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furnish Buyer and Buyer's Advisors with such additional financial, operating,
and other data and information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause each Acquired Company to conduct the business of such Acquired Company
only in the Ordinary Course of Business; use their Best Efforts to preserve
intact the current business organization of such Acquired Company; use their
Best Efforts to keep available the services of the current key officers,
employees, and agents of such Acquired Company; and use their Best Efforts to
maintain the relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with such
Acquired Company.
5.3 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will, and
will cause each Acquired Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the contemplated
transactions. Between the date of this Agreement and the Closing Date, Sellers
will, and will cause each Acquired Company to, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the contemplated transactions, and (b)
cooperate with Buyer in obtaining all necessary consents (including taking all
actions requested by Buyer to cause early termination of any applicable waiting
period under the HSR Act).
5.4 NOTIFICATION
Between the date of this Agreement and the Closing Date, Sellers will promptly
notify Buyer in writing if Sellers or any Acquired Company becomes aware of any
fact or condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or if Sellers
or any Acquired Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that would (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in this Agreement, if this Agreement were dated the
date of the occurrence or discovery of any such fact or condition, Sellers will
promptly deliver to Buyer a supplement to this Agreement specifying such change.
During the same period, Sellers will promptly notify Buyer of the occurrence of
any Breach of any covenant of Sellers in this Section 5 or of the occurrence of
any event that may make the satisfaction of the conditions in Section 7
impossible or unlikely.
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5.5 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to Section 9,
Sellers will not, and will cause each Acquired Company and each of their
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of any Acquired Company, or any of the capital stock of any
Acquired Company, or any merger, consolidation, business combination, or similar
transaction involving any Acquired Company.
5.6 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers will use their
Best Efforts to cause the conditions in Sections 7 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will, and
will cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Closing Date, Buyer will, and will cause each Related Person to,
cooperate with Sellers with respect to all filings that Sellers are required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(ii) cooperate with Sellers in obtaining all necessary consents; provided that
this Agreement will not require Buyer to dispose of or make any change in any
portion of its business or to incur any other burden to obtain a Governmental
Authorization.
6.2 NOTIFICATION
Between the date of this Agreement and the Closing Date, Buyer will promptly
notify Seller in writing if Buyer becomes aware of any fact or condition that
causes or constitutes a Breach of any of Buyer's representations and warranties
as of the date of this Agreement, or if Buyer becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in this Agreement, if this Agreement
were dated the date of the occurrence or discovery of any such fact or
condition, Buyer will promptly deliver to Sellers a supplement to this
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Agreement specifying such change. During the same period, Buyer will promptly
notify Sellers of the occurrence of any Breach of any covenant of Buyer in this
Section 6 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 7 impossible or unlikely.
6.3 CANCELLATION OF GUARANTY
Sellers shall cause the personal guarantees given by Sellers and Xxxxxx X.
Xxxxxx of obligations of the Company to Union Bank of California to continue
until February 28, 2003, at which time Buyer shall cause such personal
guarantees to be cancelled, extinguished and of no further force or effect;
provided, however, that if such personal guarantees are not so extinguished,
Buyer agrees to pay to Sellers consideration at the rate of .50% per month
accruing as of September 30, 2002, on the average daily unpaid balance of such
guaranteed obligations as it may change from time to time with payments
commencing on February 28, 2003, and continuing monthly thereafter.
6.4 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyer will use its Best Efforts to cause the
conditions in Sections 7 to be satisfied.
7. CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to consummate the merger and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing Dates, of each of the following conditions (any of which
may be waived by Buyer, in whole or in part):
(a) All of Sellers' representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing Dates as if made on the Closing Dates.
(b) All of the covenants and obligations that Sellers are required to perform or
to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material
respects.
(c) Seller must have delivered each of the documents and certificates required
to be delivered by Seller pursuant to Section 2.4.
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(d) Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with this Agreement, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with this Agreement.
(e) There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Acquired Companies,
or (b) is entitled to all or any portion of the Consideration.
7.2. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions required to
be taken by Sellers at the Closing is subject to the satisfaction, at or prior
to the Closing Dates, of each of the following conditions (any of which may be
waived by Sellers, in whole or in part):
(a) All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Dates as if made on the Closing Dates.
(b) All of the covenants and obligations that Buyer are required to perform or
to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.
(c) Buyer must have delivered each of the documents and certificates required to
be delivered by Buyer pursuant to Section 2.4.
(d) There must not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the merger, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
(e) Since the date of this Agreement, there must not have been commenced or
Threatened against Sellers, or against any Person affiliated with Sellers, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with this Agreement, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with this Agreement.
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(f) There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Acquired Companies,
or (b) is entitled to all or any portion of the Consideration.
(g) Sellers must have received the Cancellation of Subscription Agreement and
Release executed by Xxxxxxx in the form of EXHIBIT 7.2(g).
8. COVENANTS OF BUYER FOLLOWING THE CLOSING DATE
Buyer covenants and agrees that Buyer shall take all actions necessary,
including, but not limited to obtaining sufficient voting proxies, (a) to cause
one (1) director designated by Sellers to be elected to or appointed to the
board of directors of Buyer effective as of the Closing Date for a term of three
(3) years following the Closing Date, and (b) to cause one (1) additional
director designated by Sellers to be elected to or appointed to the board of
directors of Buyer effective as of the date that Buyer is accepted on the
American Stock Exchange for a term ending three (3) years following the Closing
Date .
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any provision of this
Agreement has been committed by the other party and such Breach has not been
waived;
(b) (i) by Buyer if any of the conditions in Section 7.1 has not been satisfied
as of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the conditions in Section
7.2 has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before November 15, 2002,
or such later date as the parties may agree upon.
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9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Sections 11.1 and
11.3 will survive; provided, however, that if this Agreement is terminated by a
party because of the Breach of the Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL
All representations, warranties, covenants, and obligations in this Agreement
and the certificates delivered pursuant to Section 2.4, and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers will indemnify and hold harmless Buyer, the Acquired Companies, and
their respective Representatives, stockholders, controlling persons, and
affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage or expense
(including costs of investigation and defense and reasonable attorneys' fees),
whether or not involving a third-party claim (collectively, "Damages"), arising,
directly or indirectly, from or in connection with: (a) any Breach of any
representation or warranty made by Sellers in this Agreement or in any
certificate delivered by Sellers pursuant to this Agreement; (b) any Breach by
Sellers of any covenant or obligation of Sellers in this Agreement; (c) the
litigation and claims listed on SCHEDULE 10.2(c) attached hereto; and, (d) any
claim by any Person for brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by
any such Person with Sellers or any Acquired Company (or any Person acting on
their behalf) in connection herewith. Except as provided in Section 10.8 below,
the remedies provided in this Section 10.2 will not be exclusive of or limit any
other remedies that may be available to Buyer or the other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and its Representatives,
stockholders, controlling persons, and affiliates (collectively, the "Sellers
Indemnified Persons") for,
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and will pay to Sellers Indemnified Persons the amount of any Damages arising,
directly or indirectly, from or in connection with (a) any Breach of any
representation or warranty made by Buyer in this Agreement or in any certificate
delivered by Buyer pursuant to this Agreement, (b) any Breach by Buyer of any
covenant or obligation of Buyer in this Agreement, (c) any liability under the
Note given by Spruce XxxXxxxxx Holding Corp., a Nevada corporation, dated
September 29, 2000, in the original principal amount of $1,550,000.00 payable to
U.S. Industrial Services, Inc., a Delaware corporation, predecessor to Buyer
(the "SMHC Note") and any guarantee, security or other obligation given in
connection with the SMHC Note, (d) any liability under the Commercial Promissory
Notes given by the Company dated January 31, 2002 in the original principal
amounts of One Million One Hundred Thousand Dollars ($1,100,000.00), Five
Hundred Thousand Dollars ($500,000.00) and Two Hundred Thousand Dollars
($200,000.00), respectively, payable to Union Bank of California and any
guarantee, security or other obligation given in connection therewith, including
but not limited to the guaranty described under Section 6.3 hereof, or (e) any
claim by any Person for brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding alleged to have been made by
such Person with Buyer (or any Person acting on their behalf) in connection
herewith. The remedies provided in this Section 10.3 will not be exclusive of or
limit any other remedies that may be available to Sellers or the other Sellers
Indemnified Persons.
10.4 TIME LIMITATIONS
If the Closing occurs, Sellers will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before two (2) years following the Closing Date, Buyer notifies Sellers of
a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer; provided, a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with prior to the Closing Date, may be
made at any time. If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before two (2) years following the Closing Date, Sellers
notify Buyer of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Sellers; provided, a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time..
10.5 LIMITATIONS ON AMOUNT--SELLERS
Sellers will have no liability (for indemnification or otherwise) with respect
to the matters described in clause (a) or clause (b) of Section 10.2 until the
total of all Damages with respect to such matters exceeds Fifty Thousand Dollars
($50,000.00) (the "Threshold
22
Amount"), and then only for the amount by which such Damages exceed the
Threshold Amount. All Damages shall be reduced by the amount of (i) any tax
savings resulting from the indemnified matter to which such costs relate which
are actually realized by the Indemnified Person and (ii) any insurance proceeds
actually received by the Indemnified Person in respect of the indemnified matter
to which such costs relate. In no event shall the liability of Sellers hereunder
exceed the Consideration. However, Section 10.5 will not apply to any Breach of
any of Sellers' representations and warranties of which Sellers had Knowledge at
any time prior to the Closing Date. In the event that Sellers have an
indemnification obligation hereunder due to the non-collection of accounts
receivable in Breach of the provisions of Section 3.6 above, Buyer shall
transfer and assign such accounts receivable to Sellers for the amount of One
Dollar ($1.00).
10.6 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise) with respect to
the matters described in clause (a) or clause (b) of Section 10.3 until the
total of all Damages with respect to such matters exceeds the Threshold Amount
and then only for the amount by which such Damages exceed the Threshold Amount.
All Damages shall be reduced by the amount of (i) any tax savings resulting from
the indemnified matter to which such costs relate which are actually realized by
the Sellers Indemnified Person and (ii) any insurance proceeds actually received
by the Sellers Indemnified Person in respect of the indemnified matter to which
such costs relate. In no event shall the liability of Buyer hereunder exceed the
Consideration. However, Section 10.6 will not apply to any Breach of any of
Buyer's representations and warranties of which Buyer had Knowledge at any time
prior to the Closing Date.
10.7 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 10.2 or 10.3 of
notice of the commencement of any Proceeding against it, such indemnified party
will, if a claim is to be made against an indemnifying party under such Section,
give notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.7 (a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its
23
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), to assume the defense of such Proceeding with
counsel reasonably satisfactory to the indemnified party and, after notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) no compromise or settlement of such claims may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any other claims that may
be made against the indemnified party, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (ii) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent.
(c) Notwithstanding the foregoing, if an indemnified party determines in good
faith that there is a reasonable probability that a Proceeding may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(d) Sellers and Buyer hereby consent to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person or Sellers
Indemnified Person for purposes of any claim that an Indemnified Person or
Sellers Indemnified Person may have under this Agreement with respect to such
Proceeding or the matters alleged therein, and agree that process may be served
on it with respect to such a claim anywhere in the world.
10.8 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution,
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and performance of this Agreement, including all fees and expenses of agents,
representatives, counsel, and accountants. Buyer will pay any HSR Act filing
fee. In the event of termination of this Agreement, the obligation of each party
to pay its own expenses will be subject to any rights of such party arising from
a Breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement will
be issued, if at all, at such time and in such manner as Sellers and Buyer
mutually determine. Unless consented to by Buyer in advance or required by Legal
Requirements, prior to the Closing, Sellers shall, and shall cause the Acquired
Companies to, keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person. Sellers and Buyer will consult with
each other concerning the means by which the Acquired Companies' employees,
customers, and suppliers and others having dealings with the Acquired Companies
will be informed of the transactions, and Buyer will have the right to be
present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Acquired Companies to maintain in
confidence any written, oral, or other information obtained in confidence from
another party or an Acquired Company in connection with this Agreement, unless
(a) such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the transactions, or (c) the furnishing or use of such
information is required by legal proceedings. If the transactions are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
11.4 NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
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Sellers: Xxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile No.: 714/891-9807
With a copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Grant, Xxxxxxxx & Xxxxxxx, LLP
0000 Xxxx Xxxxxx, #0000
Xxxxxx, XX 00000
Facsimile No.: 949/660-6051
Buyer: Nextgen Communications Corporation
00000 Xxxxx Xxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, President
Facsimile No.: 713/465-9943
11.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of California, County of Orange and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
11.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such
26
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, which will not be unreasonably withheld,
except that Buyer may assign any of its rights under this Agreement to any
Subsidiary of Buyer. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
11.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.12 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number, as the circumstances
27
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of California without
regard to conflicts of laws principles.
11.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
11.16 ATTORNEY'S FEES
Should any litigation be commenced between the parties hereto or their personal
representatives concerning any provision of this Agreement or the rights and
duties of any person in relation thereto, the party prevailing in such
litigation shall be entitled to, in addition to such other relief that may be
granted, a reasonable sum as and for their or his or its attorney's fees in such
litigation.
11.17 DISPUTE RESOLUTION
Any and all disputes arising under or in connection with this Agreement shall be
resolved by submission to final and binding arbitration in accordance with the
then prevailing commercial Arbitration Rules ("Rules") of the American
Arbitration Association. A single arbitrator shall be chosen in accordance with
the Rules and the proceedings shall be conducted in Orange County, California.
In addition, the arbitrator shall base his award upon substantial evidence and
in accordance with California law, and shall award to the prevailing party all
of its reasonable costs and attorney's fees, expert witness fees, arbitration
fees (including any fees paid by the prevailing party to the arbitrator), but
shall have no power or jurisdiction to award any punitive or exemplary damages.
Judgment upon an arbitration award may be confirmed in the Orange County
Superior Court and may be corrected or vacated only in accordance with
California Code of Civil Procedure Section 1285, et seq.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
BUYER: SELLERS:
NEXTGEN COMMUNICATIONS CORPORATION,
A DELAWARE CORPORATION
By: /s/ Xxxxx Xxxxxxxx /s/ Xxxx X. Xxxxxx
---------------------------------- ------------------------------------
Xxxxx Xxxxxxxx, President Xxxx X. Xxxxxx
Date: November 15, 2002 Date: November 15, 2002
29
LIST OF EXHIBITS AND SCHEDULES:
EXHIBIT 2.2(b)-1 First Note
EXHIBIT 2.2(c)-1 Second Note
EXHIBIT 2.2(c)-2 Secured Receivables
EXHIBIT 2.2(d) Third Note
EXHIBIT 2.2(e)-1 Secured Note
EXHIBIT 2.2(e)-2 Security Agreement [Pledge & Escrow Agreement]
EXHIBIT 2.2(f)-1 Nextgen Promissory Notes
EXHIBIT 2.2(f)-2 Nextgen Assignment
EXHIBIT 2.2(g) Warrant Agreement
EXHIBIT 2.4(a)(II) Consultant Contact
EXHIBIT 2.4 (a)(III) Xxxxxxx Employment Agreement
EXHIBIT 2.4(a)(IV) Sellers Release
EXHIBIT 2.4(b)(IV) Buyer Release
EXHIBIT 2.4(b)(v) Opinion of counsel
EXHIBIT 3.1 Certificate of Good Standing of the Company
SCHEDULE 3.4 Audited Balance Sheets of the Company as of December 31,
2000 and December 31, 2001; related statements of income
and retained earnings and cash flow for the fiscal year
then ended; and report thereon of Xxxxxx & Xxxxx
SCHEDULE 3.5-1 List of assets held under leases of the Company
SCHEDULE 3.5-2 List of mortgages or security interests of the Company
30
[LIST OF EXHIBITS AND SCHEDULES - CONTINUED]
SCHEDULE 3.5-3 List of all equipment, vehicles and furniture owned by the
Company
SCHEDULE 3.7 List of undisclosed liabilities of the Acquired Companies
SCHEDULE 3.10 List of pending Proceedings regarding the Acquired Company
SCHEDULE 3.12 List of certain Applicable Contracts
SCHEDULE 4.4(a) List of Buyer's equity security Contracts
SCHEDULE 4.6 List of pending Proceedings regarding Buyer
SCHEDULE 4.10 Brokers Fees
SCHEDULE 7.2(g) Cancellation of Subscription Agreement and Release
SCHEDULE 10.2(c) Litigation and claims of Seller
31
