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Exhibit 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
PLACEMENT 0000.XXX, INC.,
AMERICAN VANTAGE COMPANIES,
AND
XXXXXXX XXXXXXXX
_____________________________
DATED AS OF DECEMBER 1, 1999
_____________________________
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TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE............................................... -1-
SECTION 1.1 Agreement to Sell and Purchase Capital Stock;
Consideration..................................... -1-
SECTION 1.2 Closing................................................ -2-
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND PRINCIPAL STOCKHOLDER..................................... -2-
SECTION 2.1 Right to Issue Shares.................................. -2-
SECTION 2.2 Due Authorization...................................... -2-
SECTION 2.3 No Conflicts; Consents and Approvals................... -3-
SECTION 2.4 Corporate Existence and Power; Capitalization.......... -3-
SECTION 2.5 Charter Documents and Corporate Records................ -4-
SECTION 2.6 Financial Information.................................. -4-
SECTION 2.7 Liabilities............................................ -4-
SECTION 2.8 Receivables............................................ -5-
SECTION 2.9 Inventories............................................ -5-
SECTION 2.10 Absence of Certain Changes............................ -5-
SECTION 2.11 Properties; Title..................................... -6-
SECTION 2.12 Material Contracts.................................... -6-
SECTION 2.13 Intangible Property and Warranties.................... -6-
SECTION 2.14 Claims and Proceedings................................ -7-
SECTION 2.15 Taxes................................................. -7-
SECTION 2.16 Employee Benefit Plans................................ -9-
SECTION 2.17 Employee-Related Matters.............................. -10-
SECTION 2.18 Insurance............................................. -11-
SECTION 2.19 Compliance with Laws.................................. -11-
SECTION 2.20 Permits and Licenses.................................. -11-
SECTION 2.21 Environmental Matters................................. -11-
SECTION 2.22 Finders' Fees......................................... -12-
SECTION 2.23 Depositories; Powers of Attorney, Etc................. -12-
SECTION 2.24 Disclosure; Schedules................................. -12-
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.................... -12-
SECTION 3.1 Authority Relative to This Agreement................... -12-
SECTION 3.2 No Conflicts; Consents................................. -13-
SECTION 3.3 Corporate Existence and Power.......................... -13-
SECTION 3.4 Finders' Fees.......................................... -13-
SECTION 3.5 Investment............................................. -13-
SECTION 3.6 Tax Returns............................................ -13-
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ARTICLE IV COVENANTS AND AGREEMENTS PRIOR TO AND SUBSEQUENT TO CLOSING -14-
SECTION 4.1 Corporate Examinations and Investigations.............. -14-
SECTION 4.2 Consents, Filings and Authorizations; Efforts to
Consummate........................................ -14-
SECTION 4.3 Negotiations With Others............................... -14-
SECTION 4.4 Notices of Certain Events.............................. -15-
SECTION 4.5 Public Announcements................................... -15-
SECTION 4.6 Confidentiality........................................ -15-
SECTION 4.7 Expenses............................................... -17-
SECTION 4.8 Disclosure Schedules and Exhibits...................... -17-
SECTION 4.9 Further Assurances..................................... -18-
SECTION 4.10 Tax Matters............................................ -18-
ARTICLE V CONDITIONS TO CLOSING........................................... -18-
SECTION 5.1 Conditions to the Obligations of Seller and Purchaser.. -18-
SECTION 5.2 Conditions to the Obligations of Seller................ -18-
SECTION 5.3 Conditions to the Obligations of Purchaser............. -19-
ARTICLE VI TERMINATION.................................................... -21-
SECTION 6.1 Termination............................................ -21-
SECTION 6.2 Effect of Termination; Right to Proceed................ -21-
ARTICLE VII INDEMNIFICATION............................................... -22-
SECTION 7.1 Survival of Representations and Warranties............. -22-
SECTION 7.2 Obligation of Seller to Indemnify...................... -22-
SECTION 7.3 Obligation of Purchaser to Indemnify................... -23-
SECTION 7.4 Notice and Opportunity to Defend Third Party Claims.... -23-
SECTION 7.5 Limitation on Indemnification; Payment of
Indemnification Amounts........................... -24-
SECTION 7.6 Other Remedies......................................... -25-
ARTICLE VIII MISCELLANEOUS................................................ -25-
SECTION 8.1 Notices................................................ -25-
SECTION 8.2 Entire Agreement....................................... -26-
SECTION 8.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies.......................... -26-
SECTION 8.4 Governing Law.......................................... -26-
SECTION 8.5 Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial.............................. -27-
SECTION 8.6 Binding Effect; No Assignment.......................... -28-
SECTION 8.7 Exhibits............................................... -28-
SECTION 8.8 Severability........................................... -28-
SECTION 8.9 Counterparts........................................... -28-
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ARTICLE IX DEFINITIONS.................................................... -28-
SECTION 9.1 Definitions............................................ -28-
SECTION 9.2 Interpretation......................................... -31-
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EXHIBITS
Exhibit A - Opinion of Seller's Counsel
Exhibit B - Employment Agreement between the Principal Stockholder and
the Purchaser
Exhibit C - Non-Competition Agreement between the Purchaser, the
Seller and the Principal Stockholder
Exhibit D - Escrow Agreement between the Seller, the Purchaser
and the Escrow Agent
Exhibit E - Option Agreement between the Purchaser and the
Principal Stockholder
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SCHEDULES
Schedule 2.3 - Required Consents
Schedule 2.4 - Capitalization
Schedule 2.7 - Liabilities
Schedule 2.8 - Receivables
Schedule 2.9 - Inventories
Schedule 2.10 - Adverse Changes
Schedule 2.11 - Properties
Schedule 2.12 - Material Contracts
Schedule 2.13 - Intellectual Property
Schedule 2.14 - Litigation
Schedule 2.15 - Taxes
Schedule 2.16 - Employee Benefit Plans
Schedule 2.17 - Employee-Related Matters
Schedule 2.18 - Insurance
Schedule 2.20 - Permits and Licenses
Schedule 2.21 - Environmental Matters
Schedule 2.23 - Broker
Schedule 2.24 - Powers of Attorney
Schedule 3.2 - Consents
Schedule 4.6 - Confidential Information
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of December 1,
1999, among PLACEMENT 0000.XXX, INC., a Delaware corporation (the "Seller"),
AMERICAN VANTAGE COMPANIES, a Nevada corporation (the "Purchaser") and Xxxxxxx
Xxxxxxxx, the principal stockholder of the Seller (the "Principal Stockholder").
W I T N E S S E T H :
WHEREAS, the Seller provides online services for information technology
professionals, companies, and recruiters; and
WHEREAS, the Purchaser has indicated an interest in purchasing 80.0% of
the capital stock of the Seller; and
WHEREAS, the board of directors of the Seller has determined that the
disposition of the capital stock of the Seller pursuant to the terms and
conditions of this Agreement are in the best interests of the Seller and its
stockholders; and
WHEREAS, the Seller desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase and acquire from the Seller, a number of shares of
the Seller"s common stock which will be equal to 80.0% of the total number of
shares of the Seller's common stock outstanding after such issuance and sale
(the "Acquisition"); and
WHEREAS, in furtherance of the consummation of the Acquisition, the
parties hereto desire to enter into this Agreement (certain capitalized terms
used herein have the respective meanings set forth in Article IX).
NOW, THEREFORE, in consideration of the foregoing premises, the promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby expressly acknowledged, the parties hereto agree
as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 AGREEMENT TO SELL AND PURCHASE CAPITAL STOCK; CONSIDERATION.
(a) Subject to the terms and conditions of this Agreement, at the Closing
the Seller agrees to issue, sell and deliver to the Purchaser, and the Purchaser
agrees to purchase, acquire and take delivery of newly issued and outstanding
shares of capital stock of the Seller aggregating 80.0% of the total outstanding
common stock of the Seller, on a pro rated basis, after the issuance of the
capital stock of the Seller to the Purchaser (the "Purchased Shares"). The
parties hereto agree that in consideration of the Purchased Shares the Purchaser
will pay, or cause to be paid, to
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the Seller a purchase price of: (x) $1,000,000 in cash, to be used for the
general corporate purposes of the Seller, and (y) an aggregate of $2,000,000 in
cash, $500,000 of which will be held in escrow, to be used for the general
corporate purposes of the Seller, to be released to the Seller on the date the
Seller's resume data base: (i) contains 175,000 or more resumes; (ii) allows
users to conduct searches in real time; and (iii) has received a minimum of five
total subscriptions among the Seller's annual, semi-annual, quarterly or monthly
subscription programs; and the balance to be paid to the Seller, to be used for
the general corporate purposes of the Seller, as follows: (i) $500,000 upon the
Seller's business achieving $1,000,000 or more in Earnings Before Interest,
Taxes, Depreciation and Amortization ("EBITDA") for any four consecutive
quarterly periods; (ii) $500,000 upon the Seller's business achieving $1,500,000
or more in EBITDA for any four consecutive quarterly periods; and (iii) $500,000
upon the Seller's achieving $2,000,000 or more in EBITDA for any four
consecutive quarterly periods (the "Purchase Price"). Upon the occurrence of any
of the following: (i) the consent of a majority of the remaining holders of the
Seller other than the Purchaser; (ii) the consent of the Seller's designees to
the Board of Directors of the Seller; (iii) the Seller failing to achieve
$250,000 in EBITDA for the year ending December 31, 2000; or (iv) the Seller
failing to achieve $750,000 in EBITDA for the year ending December 31, 2001, the
Purchaser may request the return of all or any portion of the Purchase Price
remaining in escrow pursuant to the terms of the Escrow Agreement executed in
connection with this Agreement and attached hereto as Exhibit D.
(b) Subject to the terms and conditions of this Agreement, at the Closing
the Purchaser will grant to the Principal Stockholder or his designees a
five-year option (the "Option") to purchase up to 333,334 shares of the common
stock of the Purchaser exercisable at a purchase price equal to the closing bid
price of the Purchaser's common stock at the Closing. The Option will vest as
follows: (i) 66,667 shares at the Closing, (ii) 200,000 shares upon the Seller's
business achieving $1,000,000 or more EBITDA for any four consecutive quarterly
periods; and (iii) 66,667 shares upon the Seller's business achieving $2,250,000
or more EBITDA for any four consecutive quarterly periods.
SECTION 1.2 CLOSING. The closing (the "Closing") of the Acquisition shall
take place at the offices of Snow Xxxxxx Xxxxxx P.C., 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 10:00AM, local time, on December 1, 1999, or at such
other time or place as the parties hereto shall agree. The date of the Closing
is hereinafter called the "Closing Date." All events which shall occur at the
Closing shall be deemed to occur simultaneously.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PRINCIPAL STOCKHOLDER
The Seller and the Principal Stockholder each hereby represents and
warrants to the Purchaser, as of the date hereof and as of the Closing Date (as
if each such representation and warranty was remade on the Closing Date), that:
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SECTION 2.1 RIGHT TO ISSUE SHARES. The Seller has a right to issue all of
the Purchased Shares, free and clear of any and all Liens.
SECTION 2.2 DUE AUTHORIZATION. The Seller has full corporate power and
authority to execute and deliver this Agreement and each other Transaction
Document to which it is a party and to consummate the Acquisition. The
execution, delivery and performance by the Seller of this Agreement and the
consummation by it of the Acquisition have been duly and validly authorized and
approved by the Seller's board of directors and no other corporate proceedings
on the part of the Seller are necessary to authorize the execution and delivery
by or on behalf of the Seller of this Agreement or the other Transaction
Documents to which it is a party or the consummation of the Acquisition. This
Agreement and each other Transaction Document to which the Seller is a party has
been duly and validly executed and delivered by the Seller, and (assuming the
valid execution and delivery thereof by the other parties hereto) constitutes
the legal, valid and binding agreement of the Seller, enforceable against the
Seller in accordance with its terms, except as such obligations and their
enforceability may be limited by applicable bankruptcy and other similar Laws
(as defined herein) affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefor may be brought (whether at law
or in equity).
SECTION 2.3 NO CONFLICTS; CONSENTS AND APPROVALS. Except as set forth in
Schedule 2.3 attached hereto (the "Required Consents"), neither the execution,
delivery and performance by the Seller of this Agreement and each other
Transaction Document to which it is a party, nor the consummation of the
Acquisition, (i) violates any provision of the Certificate of Incorporation or
by-laws (or comparable charter documents) of the Seller; (ii) requires the
Seller to obtain any consent, approval, Permit (as defined in Section 2.20) or
action of or waiver from, or make any filing with, or give any notice to, any
Governmental Body (as defined in Section 2.19) or any other Person; (iii)
violates, conflicts with or results in a breach or default under (after the
giving of notice or the passage of time or both), or permits the termination of,
any Contract, right, other obligation or restriction relating to or which
affects the Purchased Shares or the Seller to which the Seller is a party or by
which either of them or its Assets or the Business may be bound or subject, or
results in the creation of any Lien upon the Purchased Shares or upon any of the
Assets of the Seller pursuant to the terms of any such Contract; (iv) violates
or conflicts with any Law or Order of any Governmental Body against, or binding
upon, the Seller or upon their respective Assets or the Business or the
Purchased Shares; or (v) violates or results in the revocation or suspension of
any Permit.
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SECTION 2.4 CORPORATE EXISTENCE AND POWER; CAPITALIZATION. (a) The Seller
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has all requisite power and
all material Permits required to own, lease and operate its respective
properties and to conduct the Business as currently conducted. Except in any
such jurisdiction where failure to so qualify would not have a Material Adverse
Effect, the Seller is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary.
(b) The entire authorized capital stock of the Seller consists of
20,000,000 shares of common stock, $.001 par value per share (the "Common
Stock"), and 10,000,000 shares of "blank check" preferred stock, $.001 par value
per share (the "Preferred Stock"). Of such authorized shares, 2,773,500 shares
of Common Stock are issued and outstanding and no shares of Preferred Stock have
been issued. All of the outstanding shares of capital stock of the Seller are
validly issued, fully paid and nonassessable, and no shares were issued in
violation of the preemptive rights of any stockholder. At the Closing, the
aggregate number of Purchased Shares shall represent 80.0% of all of the
outstanding shares of the capital stock of the Seller.
(c) Except as set forth in Schedule 2.4 attached hereto, there are
no options, warrants, rights, convertible securities or other agreements or
commitments obligating the Seller to issue, transfer or sell, or cause the
issuance, transfer or sale of, any shares of capital stock of the Seller or to
make any payments in respect of the value of any shares the Seller.
SECTION 2.5 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Seller shall
deliver to Purchaser at the Closing true and complete copies of the Certificate
of Incorporation and by-laws (or comparable charter documents) of the Seller, as
in effect on the date hereof. The stock and transfer books (or comparable
documents) of the Seller shall be made available to the Purchaser for its
inspection prior to the Closing and shall be true and complete.
SECTION 2.6 FINANCIAL INFORMATION. The Seller has furnished, or will
furnish prior to the Closing Date, to the Purchaser true and complete copies of
(i) the unaudited, consolidated financial statements of the Seller at and for
the six (6) months ended September 30, 1999 (the "Interim Statements"), and (ii)
the unaudited monthly balance sheet and statements of revenues and expenses of
the Seller for the six months ended September 30, 1999 (the "Financial
Statements"). The Interim Statements have been prepared in accordance with GAAP
consistently applied. The Interim Statements present fairly, in all material
respects, the consolidated financial position of the Seller as of its date, and
its earnings and cash flows for the periods then ended, except that there is no
statement of stockholders' equity for the Interim Statements. Each balance sheet
fully sets forth on a consolidated basis all Assets and Liabilities of the
Seller existing as of its date which, under GAAP, should be set forth therein,
and each statement of earnings contained therein sets forth the items of income
and expense of the Seller which should appear therein under GAAP.
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The Interim Statements have been prepared in accordance with GAAP (except that
notes have not been included) in a manner consistent with the Seller's past
practices and present fairly, in all material respects, the consolidated
financial position of the Seller as of its date and results of operations for
the period then ended, subject to normal year-end adjustments and accruals. The
Seller makes no representations or warranties regarding the Financial Statements
except that they are consistent with the Assumptions made in the Pro Forma
Financial Statements prepared on a consistent basis with the Interim Financial
Statements.
SECTION 2.7 LIABILITIES. Except as described in Schedule 2.7 attached
hereto and as and to the extent reflected in the Interim Statements at September
30, 1999 (the "Latest Balance Sheet Date"), the Seller did not have, as of the
Latest Balance Sheet Date, any Liabilities (other than obligations of continued
performance under Contracts and other commitments and arrangements entered into
in the ordinary course of the Business); and except as described in Schedule 2.7
attached hereto, the Seller has not incurred any Liabilities since the Latest
Balance Sheet Date, except (i) current Liabilities for trade or business
obligations incurred in the ordinary course of the Business and consistent with
past practice, (ii) Liabilities in respect of this Agreement, (iii) Liabilities
that are otherwise disclosed pursuant to any other representation herein and (v)
any other Liability which would not have a Material Adverse Effect.
SECTION 2.8 RECEIVABLES. Except to the extent of the amount of reserves
for doubtful accounts reflected in the Interim Statements or as set forth in
Schedule 2.8 attached hereto, all the Receivables of the Seller reflected in the
Interim Statements and all Receivables that have arisen since the Latest Balance
Sheet Date (except Receivables that have been collected since such date) are
valid and enforceable claims, and constitute bona fide Receivables resulting
from the sale of goods and services in the ordinary course of the Business.
Schedule 2.8 attached hereto sets forth a true and complete list of all
Receivables that are due and owing at the date hereof, or that will become due
and owing within 60 days after the Closing Date.
SECTION 2.9 INVENTORIES. All Inventory is free and clear of all Liens,
except for the Liens described in Schedule 2.9 attached hereto.
SECTION 2.10 ABSENCE OF CERTAIN CHANGES. Since the Latest Balance Sheet
Date, except as set forth in this Agreement or disclosed in Schedule 2.10
attached hereto, the Seller has conducted the Business in the ordinary course
consistent with past practices and there has not been:
(a) Except for material changes in general economic or industry
conditions, the Assets of the Seller, or the financial condition or the results
of operations of the Seller (collectively, the "Condition of the Business")
which would have a Material Adverse Effect, or, to the knowledge of the Seller,
any event, occurrence or circumstance that would have a Material Adverse Effect;
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(b) Any transaction or Contract involving a total commitment by or
to the Seller of at least $10,000 or, together with all other such transactions
or contracts, $25,000 in the aggregate with respect to the purchase,
acquisition, lease, disposition or transfer of any Assets or any capital
expenditure (in each case, other than in the ordinary course of the Business) or
creation of any Lien on any Asset;
(c) Any declaration, setting aside or payment of any dividend or
other distribution with respect to any interest in the Seller;
(d) Any damage, destruction or other casualty loss (whether or not
covered by insurance), condemnation or other taking of the Assets of the Seller
with a book value exceeding, in the aggregate, $50,000;
(e) Any change in any method of accounting or accounting practice by
the Seller;
(f) Other than in the ordinary course of the Business with respect
to employees of the Seller whose annual compensation is more than $100,000, any
increase in the compensation payable or to become payable to any officer, sales
representative or employee of the Seller, or any material alteration in the
benefits payable to any thereof;
(g) Except for any changes made in the ordinary course of the
Business, any change in any of the Seller's business policies which would have a
Material Adverse Effect;
(h) Any material modification, termination, amendment or other
alteration or change in the terms or provisions of any Contract.
SECTION 2.11 PROPERTIES; TITLE. (a) The Seller does not own any real
property. Schedule 2.11 attached hereto is a correct and complete list of all
material leases under which the Seller is a lessee (the "Leased Property"), true
and complete copies of which have been delivered to the Purchaser.
(b) To the knowledge of the Seller, all structures and buildings of
the Business are in good operating condition (subject to normal wear and tear).
(c) Except as disclosed in Schedule 2.11 attached hereto, or as
reflected on the Interim Statements, the Seller has good, valid, marketable,
legal and beneficial title to (or valid leasehold interest in) all of its Assets
and is the lawful owner of its Assets, free and clear of all Liens. The
machinery, equipment and other tangible personal property constituting part of
the Assets of the Seller (whether owned or leased) have been maintained in a
commercially reasonable manner, are in generally good condition and repair
(subject to normal wear and tear). There are no outstanding options, warrants,
commitments, agreements or any other rights of any character, entitling any
Person to acquire any interest in all, or any part of, the Assets. Schedule 2.11
attached hereto contains a list and description of all (i) equipment, and (ii)
other tangible personal
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property of the Seller with a book value (before depreciation) of $50,000 or
more, in each case, excluding Inventory.
SECTION 2.12 MATERIAL CONTRACTS. Schedule 2.12 attached hereto sets forth
an accurate and complete list of all material Contracts relating to the Business
involving $10,000 or more in any year. The Seller has heretofore delivered to
the Purchaser true, correct and complete copies of all of the material Contracts
to which the Seller is a party, in each case involving payments in any year in
excess of $10,000.
SECTION 2.13 INTANGIBLE PROPERTY AND WARRANTIES. (a) Schedule 2.13
attached hereto sets forth a true, correct and complete list of all material
patents, registered trademarks, registered copyrights, registered service marks
or registered trade names (and all applications for any of the foregoing),
Permits, license agreements, grants and licenses running to or from, or used by,
the Seller in the conduct of the Business, and there are no other material
patents, trademarks, material copyrights, material service marks, material trade
names or other material intangible assets, properties or rights that are used in
the Business (the "Intellectual Property Rights").
(b) Except as disclosed in Schedule 2.13 attached hereto:
(i) the Seller owns the entire United States right, title and
interest in and to the respective Intellectual Property Rights;
(ii) the Seller has no knowledge that the Intellectual
Property Rights are either invalid or unenforceable;
(iii) the Seller has no knowledge that the Seller's business
activities has infringed or conflicts with, or does infringe or conflict with,
patent or any other intellectual property rights of any third party;
(iv) the Seller has never granted any license or permission to
any third party to use the Intellectual Property Rights; and
(v) the Acquisition will not adversely affect any right of the
Purchaser to enjoy as owner all of the Intellectual Property Rights in the same
manner thereof as if the Purchaser were the Seller.
SECTION 2.14 CLAIMS AND PROCEEDINGS. Except as set forth in Schedule 2.14
attached hereto, there are no outstanding Orders of any Governmental Body
against or directly involving by name the Seller, the Assets of the Seller, or
the Business. Except as set forth in Schedule 2.14 attached hereto, there are no
actions, suits, asserted claims or counterclaims or legal, administrative or
arbitral proceedings or, to the Seller's knowledge, investigations
(collectively, "Claims") (whether or not the defense thereof or Liabilities in
respect thereof are covered by
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insurance), pending or, to the knowledge of the Seller, threatened on the date
hereof, against or involving the Seller, the Purchased Shares, the Assets or the
Business. Schedule 2.14 attached hereto also indicates those Claims the defense
thereof or Liabilities in respect thereof are covered by insurance. Except as
set forth on Schedule 2.14 attached hereto, on the date hereof there are no
Claims pending or, to the knowledge of the Seller, threatened, other than Claims
that would not have a Material Adverse Effect. There are no Claims pending or,
to the knowledge of the Seller, threatened that would give rise to any right of
indemnification on the part of any director or officer of the Seller or the
heirs, executors or administrators of such director or officer, against the
Seller.
SECTION 2.15 TAXES. (a) Except as set forth in Schedule 2.15 attached
hereto:
(i) the Seller has timely filed or, if not yet due, will
timely file, all federal, state or foreign Tax Returns required to be filed by
it for all taxable periods ending on or before the Closing Date and all such Tax
Returns are, or will be when filed, true, correct and complete in all material
respects. Copies of all such Tax Returns have been given to the Purchaser;
(ii) the Seller has paid or, if payment is not yet due, has
established, in accordance with GAAP and consistent with past practice, accruals
that are reflected on the Interim Statement for the payment of, all Taxes
imposed on the Seller or for which the Seller is liable, whether to taxing
authorities or to other Persons (pursuant to a tax sharing agreement or
otherwise);
(iii) no extension of time has been requested or granted for
the Seller to file any Tax Return that has not yet been filed or to pay any Tax
that has not yet been paid;
(iv) the Seller has not received notice of a determination by
a Tax Authority that Taxes are owed by the Seller (such determination to be
referred to as a "Tax Deficiency") and, to the knowledge of the Seller, no Tax
Deficiency is proposed or threatened;
(v) no issue has been raised in any examination,
investigation, audit, suit, action, claim or proceeding relating to Taxes (a
"Tax Audit") which, by application of similar principles to any past, present or
future period, would result in a Tax Deficiency for such period;
(vi) there are no pending or, to the knowledge of the Seller,
threatened, Tax Audits of the Seller;
(b) The Seller has no (i) income reportable for a period ending
after the Closing Date, but attributable to a transaction (e.g., installment
sale) or a change in accounting method occurring in or made for a period ending
on or prior to the Closing Date which resulted in a deferred reporting on income
from such transaction or from such change in accounting method (other than a
deferred intercompany transaction), or (ii) a deferred gain or loss arising out
of any
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deferred intercompany transaction, which income, gain or loss has been reflected
on the Interim Statements in accordance with GAAP, but for which no Tax
liability accrual has been reflected on the Interim Statement.
(c) Schedule 2.15 attached hereto contains (i) a schedule of the
filing dates of all Tax Returns required to be filed by the Seller, (ii) a
description of all past Tax Audits involving the Seller, (iii) a list of the
states, territories and jurisdictions (whether foreign or domestic) to which any
Tax is properly payable by the Seller. Except as set forth in Schedule 2.15
attached hereto, the Seller has retained all supporting and backup papers,
receipts, spreadsheets and other information necessary for (i) the preparation
of all Tax Returns that have not yet been filed, and (ii) the defense of all Tax
Audits involving taxable periods either ending on or during the four (4) years
prior to the Closing Date or from which there are unutilized net operating loss,
capital loss or investment tax credit carryovers.
(d) Except for sales, use and similar Taxes which do not exceed
$10,000, the Seller has collected and remitted to the appropriate Tax Authority
all sales and use or similar Taxes required to have been collected, including
any interest and any penalty, addition to tax or additional amount unpaid, and
has been furnished properly completed exemption certificates for all exempt
transactions. To the knowledge of the Seller, the Seller has collected and/or
remitted to the appropriate Tax Authority all withholding, payroll, employment,
property, customs duty, fee, assessment or charge of any kind whatsoever
(including Taxes assessed to real property and water and sewer rents relating
thereto), including any interest and any penalty, addition to tax or additional
amount unpaid.
SECTION 2.16 EMPLOYEE BENEFIT PLANS. (a) Set forth in Schedule 2.16
attached hereto is a list of each employee benefit plan (within the meaning of
Section 3(3) of ERISA), current, accurate and complete copies of each to be
delivered to Purchaser at the Closing, written or oral employment or consulting
agreement, severance pay plan or agreement, employee relations policy (or
practice, agreement or arrangement), agreements with respect to leased or
temporary employees, vacation plan or arrangement, sick pay plan, stock purchase
plan, stock option plan, fringe benefit plan, incentive plan, bonus plan,
cafeteria or flexible spending account plan and any deferred compensation
agreement (or plan, program, or arrangement) covering any present or former
employee of the Seller and which is, or at any time during the last two (2)
years was, sponsored or maintained by (or to which contributions are required to
be, were during the last two (2) years or were required to have been during the
last two (2) years) the Seller. Each and every such plan, program, policy,
practice, arrangement and agreement included on the list set forth in Schedule
2.16 attached hereto is hereinafter referred to as an "Employee Benefit Plan".
(b) With respect to any employee benefit plan (within the meaning of
Section 3(3) of ERISA), stock purchase plan, stock option plan, fringe benefit
plan, bonus plan or any deferred compensation agreement, plan or program
(whether or not any such plan, program or agreement is currently in effect):
there are no actions, suits or claims (other than routine claims
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for benefits in the ordinary course) pending or, to the knowledge of the Seller,
threatened, and the Seller has no knowledge of any facts which could reasonably
give rise to any such actions, suits or claims (other than routine claims for
benefits in the ordinary course), which could subject the Seller to any
liability.
(c) (i) except as set forth in Schedule 2.16 attached hereto, the
Seller is not subject to any legal, contractual, equitable or other obligation
to (1) establish as of any date any employee benefit plan of any nature,
including any pension, profit sharing, welfare, post-retirement welfare, stock
option, stock or cash award, non-qualified deferred compensation or executive
compensation plan, policy or practice, or (2) continue any employee benefit plan
of any nature, including any Employee Benefit Plan or any other pension, profit
sharing, welfare or post-retirement welfare plan, or any stock option, stock or
cash award, non-qualified deferred compensation or executive compensation plan,
policy or practice (or to continue their participation in any such benefit plan,
policy or practice) on or after the date hereof;
(ii) the Seller may, in any manner, subject to the limitations
imposed by applicable law, and without the consent of any employee, beneficiary
or other Person, prospectively terminate, modify or amend any such Employee
Benefit Plan or any other plan, program or practice (or its participation in
such Employee Benefit Plan or any other plan, program or practice) effective as
of any date on or after the date hereof; and
(iii) except as set forth in Schedule 2.16 attached hereto, to
the knowledge of the Seller, no representations or communications (directly or
indirectly, orally, in writing or otherwise) with respect to participation,
eligibility for benefits, vesting, benefit accrual coverage or other material
terms of any Employee Benefit Plan have been made to any employee, beneficiary
or other Person other than those which are in accordance with the terms and
provisions of each such Plan as in effect immediately prior to the date hereof
and the Closing Date.
SECTION 2.17 EMPLOYEE-RELATED MATTERS. (a) Schedule 2.17 attached hereto
contains a true and correct list of each officer and employee of the Seller,
including any agreement, whether oral or written, relating thereto, and a
general description of the rate and nature of all compensation and benefits
payable by the Seller to each such Person. Schedule 2.17 attached hereto also
contains a general description of all existing severance, accrued vacation
obligations or retiree benefits of any current or former director, officer or
employee (to the extent not included in Schedule 2.17 attached hereto)
including, but not limited to, stay-in-place bonuses to those employees listed
on Schedule 2.17 whom Buyer has agreed to continue to employ. Except as set
forth in such Schedule 2.17 attached hereto, the employment or contractual
arrangement of all such Persons is terminable at will without additional or
further economic obligation on the part of the Seller.
(b) Except as set forth in Schedule 2.17 attached hereto, (i) the
Seller is not a party to any Contract with any labor organization or other
representative of its employees; (ii) there is no unfair labor practice charge
or complaint pending or, to the knowledge of the Seller,
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threatened against the Seller, nor has any been pending or threatened within the
past three (3) years; (iii) the Seller has not experienced any labor strike,
picketing, hand billing, slowdown, work stoppage or similar labor controversy
within the past three (3) years; (iv) no representation question is pending or
has been raised respecting any of the employees of the Seller working within the
past three (3) years, nor, to the knowledge of the Seller, are there any
campaigns being conducted to solicit authorization from the employees of the
Seller to be represented by any labor organization; (v) no Claim before any
Governmental Body brought by or on behalf of or relating to any employee,
prospective employee, former employee, retiree, labor organization or other
representative of the employees of the Seller or relating to their employment
practices, is pending or, to the knowledge of the Seller, threatened against the
Seller; (vi) the Seller is not a party to, or otherwise bound by, any Order
relating to its employees or employment practices; and (vii) the Seller has paid
in full to all of its employees all wages, salaries, commissions, bonuses,
benefits and other compensation due and payable to such employees consistent
with past practices (except for disputed amounts).
SECTION 2.18 INSURANCE. Schedule 2.18 attached hereto sets forth a list of
all insurance policies, fidelity and surety bonds and fiduciary liability
policies (the "Insurance Policies") covering the Assets, the Business,
operations, employees, officers and directors of the Seller and true and
complete copies of all such Insurance Policies have been delivered to the
Purchaser. Schedule 2.18 attached hereto also sets forth a true and complete
list of Claims made in respect of Insurance Policies during the two (2) years
prior to the date hereof (other than under health or other employee benefit
policies). All Insurance Policies are in full force and effect and will remain
in effect up to the Closing and thereupon terminate. To the knowledge of the
Seller, there is not any threatened termination of, premium increase with
respect to, or uncompleted requirements under, any material Insurance Policy.
SECTION 2.19 COMPLIANCE WITH LAWS. To the knowledge of the Seller, the
Seller is not in violation of any order, judgment, injunction, award, citation,
decree, consent decree or writ (collectively, "Orders"), or any law, statute,
code, ordinance, rule, regulation or other requirement (collectively, "Laws"),
of any government or political subdivision thereof, whether federal, state,
local or foreign, or any agency or instrumentality of any such government or
political subdivision, or any court or arbitrator (collectively, "Governmental
Bodies") affecting its Assets or the Business, except where any such violation
would not have a Material Adverse Effect.
SECTION 2.20 PERMITS AND LICENSES. The Seller has obtained all licenses,
permits (including environmental permits), certificates, certificates of
occupancy, orders, authorizations and approvals (collectively, "Permits"), and
has made all required registrations and filings with, any Governmental Body that
are required for the conduct of the Business. All Permits that are required for
the conduct of the Business (the "Required Permits") are listed in Schedule 2.20
attached hereto and are in full force and effect; no violations are or have been
recorded in respect of any Permit; and no proceeding is pending or threatened to
revoke or limit any Required Permit. Except as listed in Schedule 2.20 attached
hereto, no Permit will terminate by reason of the
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Acquisition. To the knowledge of the Seller, this Agreement and the Acquisition
will not invalidate, revoke or otherwise adversely affect the validity of any
such Permit.
SECTION 2.21 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 2.21
attached hereto:
(i) to the best knowledge of the Seller, the Seller is in
material compliance with all Environmental Laws;
(ii) to the best knowledge of the Seller, there have been no
Releases of Hazardous Substances by the Seller or violations of Environmental
Laws by the Seller;
(iii) the Seller has not received oral or written notice of a
violation or of a claim of potential or actual liability by any Governmental
Body or third-party against the Seller under Environmental Laws, nor are any
such potential claims known to the Seller;
SECTION 2.22 FINDERS' FEES. Except as set forth in Schedule 2.22 attached
hereto, there is no investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of the Seller who
might be entitled to any fee or commission from the Purchaser or the Seller upon
consummation of the Acquisition.
SECTION 2.23 DEPOSITORIES; POWERS OF ATTORNEY, ETC. Schedule 2.23 attached
hereto sets forth (i)the name of each bank or similar entity in which the Seller
has an account, lock box or safe deposit box and the names of all Persons
authorized to draw thereon or to have access thereto, and (ii) the name of each
Person holding a general or special power of attorney from the Seller and a
description of the terms thereof.
SECTION 2.24 DISCLOSURE; SCHEDULES. Neither this Agreement nor the
Schedules, nor any audited or unaudited financial statements, documents or
certificates furnished or to be furnished to the Purchaser or any of its Agents
or Affiliates by or on behalf of the Seller pursuant to this Agreement or in
connection with the Acquisition contain or will contain any untrue statement of
a material fact or omit or will omit a material fact necessary in order to make
the statements contained herein or therein not misleading. All representations
and warranties made by the Seller will be deemed to have been relied on by the
Purchaser (notwithstanding any investigation by the Purchaser). The Seller will
deliver to the Purchaser complete and correct schedules, in form and substance
reasonably acceptable to the Buyer, prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Seller as of the date of this
Agreement and as of the Closing Date (as if each such representation and
warranty was made on the Closing Date), that:
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SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. The Purchaser has full
corporate power and authority to execute and deliver this Agreement and each
other Transaction Document to which it is a party and to consummate the
Acquisition. The execution, delivery and performance by the Purchaser of this
Agreement and the other Transaction Documents to which it is a party and the
consummation by it of the Acquisition have been duly and validly authorized and
approved by the Purchaser's board of directors, and no other corporate
proceedings on the part of the Purchaser is necessary to authorize the execution
and delivery by the Purchaser of this Agreement or the other Transaction
Documents to which the Purchaser is a party or the consummation of the
Acquisition to which the Purchaser is a party. This Agreement has been duly and
validly executed and delivered by the Purchaser and (assuming the valid
execution and delivery of this Agreement by the other parties hereto)
constitutes the legal, valid and binding agreement of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such obligations
and their enforceability may be limited by applicable bankruptcy and other
similar laws affecting the enforcement of creditors' rights generally and except
that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefor may be brought (whether at law or in
equity).
SECTION 3.2 NO CONFLICTS; CONSENTS. Except as set forth in Schedule 3.2
attached hereto, neither the execution, delivery and performance by the
Purchaser of this Agreement and each other Transaction Document to which it is a
party nor the consummation of the Acquisition to which the Purchaser is a party
(i) violates any provision of the Certificate of Incorporation or by-laws (or
comparable charter documents) of the Purchaser; (ii) requires the Purchaser to
obtain any consent, approval or action of or waiver from, or make any filing
with, or give any notice to, any Governmental Body or any other Person; (iii)
violates, conflicts with or results in the breach or default under (after the
giving of notice or the passage of time), or permits the termination of, any
material Contract to which the Purchaser is a party or by which any of them or
any of their respective assets may be bound or subject; or (iv) violates any Law
or Order of any Governmental Body against, or binding upon, the Purchaser or
upon its assets or businesses.
SECTION 3.3 CORPORATE EXISTENCE AND POWER. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has all requisite powers and all material Permits required
to own, lease and operate its properties and to conduct its business as
currently conducted. The Purchaser is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by the Purchaser or the nature of its activities,
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not have a material adverse effect on the
business, assets, financial condition or the results of operations of the
Purchaser.
SECTION 3.4 FINDERS' FEES. Except as set forth in Schedule 3.4 attached
hereto, there is no investment banker, broker, finder or other intermediary
which has been retained by or is
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authorized to act on behalf of the Purchaser who might be entitled to any fee or
commission from the Seller upon consummation of the Acquisition.
SECTION 3.5 INVESTMENT. The Purchaser is not acquiring the Purchased
Shares with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act of 1933, as amended.
SECTION 3.6 TAX RETURNS. The Purchaser shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Seller for all
periods ending on or prior to the Closing Date which are to be filed after the
Closing Date.
ARTICLE IV
COVENANTS AND AGREEMENTS PRIOR TO
AND SUBSEQUENT TO CLOSING
SECTION 4.1 CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the
Closing Date, the Seller agrees that the Purchaser shall be entitled, through
its directors, officers, Affiliates, employees, attorneys, accountants,
representatives, lenders, consultants and other agents (collectively, the
"Agents") to make such investigation of the Business and the Assets and
operations of the Seller, and such examination of the books, records and
financial condition of the Seller, as the Purchaser shall deem necessary or
appropriate. Any such investigation and examination shall be conducted at
reasonable times, under reasonable circumstances and upon reasonable notice, and
the Seller shall cooperate fully therein. In that connection, the Seller shall
make available to the Agents during such period, without however causing any
unreasonable interruption in the operations of the Business, all such
information and copies of such documents and records concerning the affairs of
the Seller as the Agents may reasonably request, shall permit the Agents access
to the Assets of the Seller and all parts thereof and to the Seller's Agents,
customers, suppliers and others, and shall cause the Seller's Agents to
cooperate fully in connection with such review and examination. No investigation
by the Purchaser shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Seller contained in this Agreement.
SECTION 4.2 CONSENTS, FILINGS AND AUTHORIZATIONS; EFFORTS TO CONSUMMATE.
As promptly as practicable after the date hereof, the Purchaser and the Seller
shall make all filings and submissions under such Laws as are applicable to
them, as may be required for them to consummate the Acquisition in accordance
with the terms of this Agreement and shall furnish copies thereof to each other
party prior to such filing and shall not make any such filing or submission to
which the Seller or the Purchaser, as the case may be, reasonably objects in
writing. All such filings shall comply in form and content in all material
respects with applicable Law. Subject to the terms and conditions herein, each
party hereto, without payment or further consideration, shall use its best
efforts to take or cause to be taken all action and to do or cause to be done
all things necessary, proper or advisable under applicable Laws, Permits and
Orders, to consummate and make effective, as soon as reasonably practicable, the
Acquisition, including
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the obtaining of all Required Consents and Permits or consents of any third
party, whether private or governmental, required in connection with such party's
performance of such transactions and each party hereto shall cooperate with the
other in all of the foregoing.
SECTION 4.3 NEGOTIATIONS WITH OTHERS. From and after the date hereof
unless and until this Agreement shall have been terminated in accordance with
its terms, the Seller and the Principal Stockholder hereby agree that (i) the
Seller, the Principal Stockholder and their Agents shall immediately cease any
existing discussions or negotiations with any parties conducted heretofore with
respect to any sale of the Seller, or any substantial portion of the Business or
the Assets of the Seller or the Seller's capital stock, directly or by merger or
consolidation; and (ii) the Seller, the Principal Stockholder and their Agents
will not solicit, initiate, encourage, continue or enter into negotiations or
discussions of any type, directly or indirectly, with, or furnish any
information or data to, any Person relating to any such sale, including any
Person with whom the Seller, the Principal Stockholder or their Agents are
currently negotiating, other than the Purchaser, with respect to an offer for
the sale of the Seller, or any substantial portion of the Business, the Seller's
Assets, or the Seller's capital stock, directly or by merger or consolidation.
SECTION 4.4 NOTICES OF CERTAIN EVENTS. Prior to the Closing Date, the
Seller and the Purchaser shall promptly notify each other of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Acquisition;
(b) any notice or other communication from any Governmental Body in
connection with the Acquisition; and
(c) any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
any representation or warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
SECTION 4.5 PUBLIC ANNOUNCEMENTS. The Seller and the Purchaser will
consult with each other before issuing any press release or otherwise making any
public statement with respect to the Acquisition and will not issue any such
press release or make any such public statement without the prior approval of
the Seller or the Purchaser, as the case may be, except as may be required by
applicable Law in which event the other party shall have the right to review and
comment upon (but not approve) any such press release or public statement prior
to its issuance.
SECTION 4.6 CONFIDENTIALITY. (a) The Purchaser shall hold in strict
confidence, and shall use its best efforts to cause all of its Agents to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process, or by other requirements of Law, all Confidential Information (defined
below) concerning the Seller which any of them has obtained
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from the Seller or their Agents prior to, on or after the date hereof, in
connection with the Acquisition, and the Purchaser shall not use or disclose to
others, or permit the use of or disclosure of, any such Confidential Information
so obtained, and will not release or disclose such information to any other
Person, except the Agents who need to know such information in connection with
this Agreement (and who shall be advised of the provisions of this Section 4.6).
The foregoing provisions shall not apply to any such information to the extent
(i) known by Purchaser prior to the date such information was provided to
Purchaser by or on behalf of the Seller in connection with the Acquisition, (ii)
made known to the Purchaser from a third party, to the knowledge of the
Purchaser, not in breach of any confidentiality requirement, or (iii) made
public through no fault of the Purchaser or any of its Agents.
(b) If this Agreement is terminated as provided herein and the
Acquisition is not consummated and if requested by the Seller, the Purchaser
shall return to the Seller all tangible evidence of such information regarding
the Seller, or provide, at the Purchaser's option, a certificate to the Seller
stating that such information has been destroyed.
(c) The term "Confidential Information" shall mean all written
information provided to the Purchaser by, for or on behalf of the Seller or
their Agents and will also include, without limitation, any Confidential
Information obtained through due diligence activities, as well as all notes,
compilations and analyses derived therefrom and all copies, summaries, notes and
other written materials so provided.
(d) In the event that the Purchaser or any of its Agents are
requested in any legal or governmental proceeding to disclosure any of the
Confidential Information, the Purchaser or such Agents, as the case may be,
shall give the Seller prompt written notice of such request so that the Seller
may seek an appropriate order or decree restricting such disclosure. If, in the
absence of such an order or decree, the Purchaser or its Agents are nonetheless
compelled to disclose any Confidential Information, the Purchaser or such Agent,
as the case may be, may disclose such information in such proceeding without
liability hereunder provided that the Purchaser or such Agent gives the Seller
written notice of the Confidential Information to be disclosed as far in advance
of its disclosure as is practicable and, upon the Seller's request and at its
expense, the Purchaser or such Agent shall use its reasonable commercial efforts
to assist the Seller to obtain assurances that confidential treatment will be
accorded to such information.
(e) The Confidential Information will be kept confidential by the
Purchaser and will not be photocopied, distributed or disclosed to any person
other than their Agents for the sole purpose of the Acquisition. Each Agent of
the Purchaser shall be advised of this Agreement by the Purchaser and shall
agree to be bound by the terms of this Agreement and shall not disclose such
information to any other individual or entity other than to another Agent or to
the Purchaser or as permitted by Section 4.6(a). The Purchaser agrees to be
responsible for the breach of this Section 4.6 by its Agents.
(f) For a period of two years from the date hereof, without the
prior written
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consent of the Seller, the Purchaser will not, and will direct its Agents not to
hire or solicit the employment of any employees of the Seller listed in Schedule
4.6 attached hereto.
(g) The Purchaser understands and acknowledges the economic and
competitive value and the confidential nature of the Confidential Information
and each further agrees that the breach of this Section 4.6 by it or its Agents
will result in irreparable harm to the Seller and that remedies at law, alone,
will be inadequate to remedy any breach of this Agreement and, therefore, the
Purchaser (i) consents to the issuance of injunctive or other equitable relief
against it and its Agents to prevent or end any violation of this Agreement in
such event and (ii) waives the requirement of the posting of any bond or other
security by the Seller in connection therewith.
SECTION 4.7 EXPENSES. Except as otherwise specifically provided in this
Agreement, the parties hereto shall bear their respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Acquisition, including all fees and expenses of their respective Agents.
SECTION 4.8 DISCLOSURE SCHEDULES AND EXHIBITS.
(a) The parties each acknowledge and agree that as of the date this
Agreement is executed and delivered, none of the Schedules or Exhibits to this
Agreement have been prepared, delivered, reviewed, or approved by the parties or
their respective counsel. In addition to and without in any way limiting, any
other express and implied condition precedent to the obligations of any of the
parties under this Agreement, the obligations of each of the parties under this
Agreement are hereby made subject to and contingent upon the following:
(i) The preparation, delivery, and approval by the
parties of all of the Schedules described in this Agreement;
(ii) The preparation, delivery, and approval by the parties of
all of the Exhibits to this Agreement; and
(iii) All other express and implied conditions precedent to
the obligations of the parties under this Agreement shall have been
satisfied or waived at or prior to the Closing.
(b) In addition, notwithstanding any other term, condition, covenant, or
provision of this Agreement or of any Other Agreement, the parties have not
made, and shall not be deemed to have made by their execution and delivery of
this Agreement, any representation or warranty with respect to any:
(i) Schedule described in this Agreement;
(ii) Exhibit to this Agreement;
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(iii) Document or state of facts pertaining to any Schedule or
Exhibit to this Agreement; or
(iv) The intended contents to any document or state of facts
pertaining to any Schedule or Exhibit to this Agreement.
Any representations or warranties with respect to those matters or items
shall be made (unless waived or amended) only as of the Closing Date, and only
with respect to the Schedules and Exhibits attached to this Agreement as of the
Closing Date.
SECTION 4.9 FURTHER ASSURANCES. The Seller hereby agrees, without further
consideration, to execute and deliver, or to cause to be executed and delivered
on its behalf, following the Closing such other instruments of transfer and take
such other action as the Purchaser may reasonably request in order to put the
Purchaser in possession of, and to vest in the Purchaser, good, valid, and
unencumbered title to the Purchased Shares in accordance with this Agreement and
to consummate the Acquisition. The Purchaser hereby agrees, without further
consideration, to take such other action following the Closing and execute and
deliver such other documents as the Seller may reasonably request in order to
consummate the Acquisition in accordance with this Agreement.
SECTION 4.10 TAX MATTERS. All sales Taxes (including any penalties and
interest) incurred in connection with the transfer of the Purchased Shares or
the consummation of the Acquisition shall be borne and paid by the Seller when
due, and the Seller will, at its own expense, file all necessary Tax Returns and
other documentation with respect to all such Taxes and fees.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 CONDITIONS TO THE OBLIGATIONS OF SELLER AND PURCHASER. The
obligations of the Seller and the Purchaser to consummate the Acquisition are
subject to the satisfaction of the following conditions on or prior to the
Closing Date:
(a) No Injunction. No provision of any applicable Law and no
Order shall prohibit the consummation of the Acquisition.
(b) No Proceeding or Litigation. No Claim instituted by any Person
shall have been commenced or pending against the Seller or the Purchaser or any
of their respective Affiliates, officers or directors which Claim seeks to
restrain, prevent, change or delay in any material respect the Acquisition or
seeks to challenge any of the material terms or provisions of this Agreement or
seeks material damages in connection with any of such transactions, except as
would not have a Material Adverse Effect.
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SECTION 5.2 CONDITIONS TO THE OBLIGATIONS OF SELLER. All obligations of
the Seller to consummate the Acquisition and the Other Contemplated Transactions
are subject to the fulfillment (or waiver by the Seller) on or prior to the
Closing Date of each of the following further conditions:
(a) Performance. The Purchaser shall have performed and complied
with all agreements, obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
(b) Representations and Warranties. The representations and
warranties of the Purchaser contained in this Agreement and in any certificate
or other writing delivered by the Purchaser pursuant hereto shall be true in all
material respects at and as of the Closing Date as if made at and as of such
time.
(c) Purchase Price. The Purchase Price shall have been paid by the
Purchaser in accordance with Section 1.1 on the Closing Date.
SECTION 5.3 CONDITIONS TO THE OBLIGATIONS OF PURCHASER. All obligations of
the Purchaser to consummate the Acquisition hereunder are subject to the
fulfillment (or waiver by the Purchaser) on or prior to the Closing of each of
the following further conditions:
(a) Performance. The Seller shall have performed and complied with
all agreements, obligations and covenants required by this Agreement to be
performed or complied with by them on or prior to the Closing Date; provided,
however, that this condition shall be deemed to have not been fulfilled if the
failure to perform and comply with such agreements, obligations and covenants
causes a Material Adverse Effect.
(b) Representations and Warranties of the Seller and the Principal
Stockholder. The representations and warranties of the Seller and the Principal
Stockholder contained in this Agreement and in any certificate or other writing
delivered by the Seller pursuant hereto shall be true at and as of the Closing
Date as if made at and as of such time, except for such inaccuracies that do not
have a Material Adverse Effect; provided, however, that those representations
and warranties which are qualified by references to "material", "Material
Adverse Effect" or "to the knowledge of the Seller" shall be deemed not to
include such qualifications.
(c) No Adverse Change. Except for material changes in general
economic or industry conditions during the period from the Latest Balance Sheet
Date to the Closing Date, there shall not have been (x) any change in the
Condition of the Business; (y) any damage, destruction, casualty, determination
or other event to or affecting the Assets of the Seller; or (z) any Claims or
Liens filed or threatened against or affecting the Seller or its Assets which in
the case of (x), (y) and (z) above would have a Material Adverse Effect.
(d) Required Consents. The Seller shall deliver written evidence
that all
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Required Consents shall have been obtained.
(e) Required Permits. All Required Permits shall be in full force
and effect.
(f) Documentation. There shall have been delivered to the Purchaser
the following:
(i) A certificate, dated the Closing Date, of the Seller and
the Seller confirming the matters set forth in Sections 5.3(a) and (b);
(ii) A certificate, dated the Closing Date, of the Seller
certifying that attached to such certificate (A) is a true and correct copy of
the Certificate of Incorporation and by-laws (or comparable instruments) of the
Seller and all amendments, if any, thereto as of the date thereof; (B) are the
names of the directors and officers of the Seller; (C) is a true copy of all
corporate actions taken by the board of directors of the Seller (which actions
shall have been taken prior to the date of entering into this Agreement) to
authorize the Acquisition; and (D) are the names and signatures of the duly
elected or appointed officers of the Seller who are authorized to execute and
deliver this Agreement, the other Transaction Documents to which the Seller is a
party and any certificate, document or other instrument in connection herewith;
(iii) True, correct and complete copies of all the Required
Consents and Permits;
(iv) The resignation of all officers and directors of the
Seller as may have been requested by the Purchaser;
(v) Good standing certificates of the Seller from the
Secretary of State (or comparable authority) of each jurisdiction in which the
Seller is organized;
(vi) A signed opinion of Seller's counsel, dated the Closing
Date, addressed to the Purchaser, substantially in the form and to the effect of
Exhibit A attached hereto;
(vii) true, correct and complete copies of monthly financial
statements of the Seller;
(viii) executed copy of a Employment Agreement between the
Principal Stockholder and the Purchaser, in the form attached hereto as Exhibit
B;
(ix) executed copy of a Non-Competition Agreement between the
Purchaser, Seller and the Principal Stockholder, in the form attached hereto as
Exhibit C;
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(x) executed copy of a Escrow Agreement between the Seller and
the Purchaser, in the form attached hereto as Exhibit D; and
(xi) executed copy of a Option Agreement between the Principal
Stockholder and the Purchaser, in the form attached hereto as Exhibit E.
ARTICLE VI
TERMINATION
SECTION 6.1 TERMINATION. This Agreement may be terminated and the
Acquisition may be abandoned at any time prior to the Closing:
(a) By mutual written consent of the parties hereto, and after
November 30, 1999, by any party hereto, if the Closing has not occurred by that
date and if failure to close is not the result of a breach of this Agreement or
a willful failure to complete closing conditions by the parties hereto.
(b) By the Seller, if (i) there has been a misrepresentation or
breach of warranty on the part of the Purchaser in the representations and
warranties contained herein and such misrepresentation or breach of warranty, if
curable, is not cured within thirty (30) days after written notice thereof from
the Seller, but in any event prior to the close of business on November 30,
1999, (ii) the Purchaser has committed a breach of any covenant imposed upon it
hereunder and fails to cure such breach within thirty (30) days after written
notice thereof from the Seller, but in any event prior to the close of business
on November 30, 1999, or (iii) any condition to Seller's obligations hereunder
becomes incapable of fulfillment through no fault of the Seller and is not
waived by the Seller.
(c) By the Purchaser if (i) there has been a misrepresentation or
breach of warranty on the part of the Seller in the representations and
warranties contained herein and such misrepresentation or breach of warranty, if
curable, is not cured within thirty (30) days after written notice thereof from
the Purchaser, but in any event prior to the close of business on November 30,
1999, (ii) the Seller has committed a breach of any covenant imposed upon it
hereunder and fails to cure such breach within thirty (30) days after written
notice thereof from the Purchaser, but in any event prior to the close of
business on November 30, 1999, or (iii) any condition to the Purchaser's
obligations hereunder becomes incapable of fulfillment through no fault of the
Purchaser and is not waived by the Purchaser.
(d) By the Purchaser, on the one hand, or by the Seller, on the
other hand, if there shall be any Law that makes consummation of the Acquisition
illegal or otherwise prohibited, or if any Order enjoining the Purchaser, on the
one hand, or the Seller, on the other hand, from consummating the Acquisition is
entered and such Order shall have become final and nonappealable.
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SECTION 6.2 EFFECT OF TERMINATION; RIGHT TO PROCEED. (a) In the event of
termination of this Agreement by the Seller, on the one hand, or the Purchaser,
on the other hand, as provided in Section 6.1, this Agreement forthwith shall
become null and void and there shall be no liability on the part of the Seller
or the Purchaser, except that upon termination of this Agreement pursuant to:
(i) Section 6.1(b), the Purchaser shall have no further
obligation to the Seller under this Agreement or otherwise, except with respect
to the agreements contained in Sections 4.6, 4.7 and 4.8; and
(ii) Section 6.1(c), the Seller shall remain liable to the
Purchaser for any misrepresentation or breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement of the Seller existing at the
time of such termination, and in such event the Purchaser may seek such
remedies, including Losses against the Seller with respect to any such breach as
are provided in this Agreement or as are otherwise available at Law or in equity
and, without limiting the generality of the foregoing, the Seller shall
reimburse the Purchaser for all costs and expenses resulting from any such
breach.
(b) The agreements contained in Sections 4.6, 4.7 and 4.8 shall
survive the termination of this Agreement.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. (a)
Notwithstanding any right of the Purchaser fully to investigate the affairs of
the Seller and any knowledge of facts determined or determinable by the
Purchaser pursuant to such investigation or right of investigation, the
Purchaser has the right to rely fully upon the representations, warranties,
covenants and agreements of the Seller and the Principal Stockholder contained
in this Agreement, or listed or disclosed on any Schedule attached hereto or in
any instrument delivered in connection with or pursuant to any of the foregoing.
(b) All representations, warranties, covenants and agreements shall
survive the execution and delivery of this Agreement and the Closing hereunder
for a period of two (2) years following the Closing Date; provided, however,
that the representations and warranties contained in Section 2.1 (Right to Issue
Shares) shall survive in perpetuity and the representations and warranties
contained in Sections 2.15 (Taxes), 2.16 (Employee Benefit Plans) and 2.21
(Environmental Matters) shall survive for any applicable statute of limitations.
SECTION 7.2 OBLIGATION OF SELLER TO INDEMNIFY. Subject to the limitations
set forth in Section 7.5, the Seller and the Principal Stockholder hereby agree
to indemnify, defend and hold harmless the Purchaser (and their directors,
officers, employees, Affiliates, successors, assigns and
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Agents) from and against all Claims, losses, liabilities, damages, deficiencies,
judgments, settlements, costs of investigation or other expenses (including
interest, penalties and reasonable attorneys' fees and disbursements and
expenses incurred in enforcing this indemnification or in any litigation between
the parties or with third parties) (collectively, the "Losses") suffered or
incurred by the Purchaser or any of the foregoing Persons arising out of (a) any
breach of the representations, warranties, covenants and agreements of the
Seller, the Principal Stockholder or contained in this Agreement, the Schedules
attached hereto or any other Transaction Document, or (b) any Claim, including
any Claim arising out of or relating to Environmental Laws, whether made before
or after the date of this Agreement, or any litigation, proceeding or
governmental investigation, including any Claim arising out of or relating to
Environmental Laws, whether commenced before or after the date of this
Agreement, arising out of the Business, or otherwise relating to the Seller,
prior to the Closing, or otherwise arising out of any act or occurrence prior
to, or any state or facts existing as of the Closing.
SECTION 7.3 OBLIGATION OF PURCHASER TO INDEMNIFY. Subject to the
limitations set forth in Section 7.5, the Purchaser hereby agrees, to indemnify,
defend and hold harmless the Seller from and against any Losses suffered by the
Seller by reason of any breach of the representations and warranties of the
Purchaser or of the covenants and agreements of the Purchaser contained in this
Agreement, the Schedules attached hereto or any other Transaction Document.
SECTION 7.4 NOTICE AND OPPORTUNITY TO DEFEND THIRD PARTY CLAIMS.
(a) Promptly after receipt by any party hereto (the "Indemnitee") of
notice of any demand, claim, circumstance or Tax Audit which would or might give
rise to a claim or the commencement (or threatened commencement) of any action,
proceeding or investigation (an "Asserted Liability") that may result in a Loss,
the Indemnitee shall give prompt notice thereof (the "Claims Notice") to the
party or parties obligated to provide indemnification pursuant to Section 7.2 or
7.3 (the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail and shall indicate the amount (estimated, if
necessary, and to the extent feasible) of the Loss that has been or may be
suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend, at its own expense
and with its own counsel satisfactory to Indemnitee, any Asserted Liability,
unless (i) the Asserted Liability seeks an Order, injunction or other equitable
or declaratory relief against the Indemnitee, or (ii) the Indemnitee shall have
reasonably concluded that (x) there is a conflict of interest between the
Indemnitee and the Indemnifying Party in the conduct of such defense, or (y) the
Indemnitee shall have one or more defenses not available to the Indemnifying
Party; provided, however, that the Indemnifying Party shall not be permitted to
make such election if the Indemnifying Party fails to provide Indemnitee with
evidence reasonably acceptable to Indemnitee that the Indemnifying Party will
have the financial resources to defend against the Asserted Liability and
fulfill its indemnification obligations hereunder. If the Indemnifying Party
elects to defend such Asserted Liability, it shall within thirty (30) calendar
days (or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
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expense of the Indemnifying Party, in the defense of such Asserted Liability. If
the Indemnifying Party assumes the defense against any Asserted Liability it
will be conclusively established for purposes of this Agreement that such
Asserted Liability is within the scope of, and subject to, indemnification. If
the Indemnifying Party elects not to defend the Asserted Liability, is not
permitted to defend the Asserted Liability by reason of the first sentence of
this Section 7.4(b), fails to notify the Indemnitee of its election as herein
provided or contests its obligation to indemnify under this Agreement with
respect to such Asserted Liability, the Indemnitee may pay, compromise or defend
such Asserted Liability at the sole cost and expense of the Indemnifying Party.
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any claim over the reasonable written objection of the
other, provided, however, that the Indemnitee may settle or compromise any claim
as to which the Indemnifying Party has failed to notify the Indemnitee of its
election as herein provided or is contesting its indemnification obligations
hereunder. In any event, the Indemnitee and the Indemnifying Party may
participate, at their own expense, in the defense of such Asserted Liability. If
the Indemnifying Party chooses to defend any Asserted Liability, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Any expenses of any Indemnitee for which indemnification is available hereunder
shall be paid upon written demand therefor.
SECTION 7.5 LIMITATION ON INDEMNIFICATION; PAYMENT OF INDEMNIFICATION
AMOUNTS.
(a) The Sellers' liability for indemnifiable damages pursuant to
this Article VII shall accrue but shall not be payable until the amount of
Losses suffered or incurred by the Purchaser (and their directors, officers,
employees, Affiliates, successors, assigns and other Agents) exceeds in the
aggregate $100,000 (the "Basket Amount"), and then the Seller shall be
responsible for the payment of the full amount of such Losses; provided,
however, that all Losses arising as a result of an inaccuracy or breach of the
representations and warranties contained in Sections 2.1 (Title to Shares) and
2.15 (Taxes) shall become immediately due and payable without giving effect to
the Basket Amount.
(b) The parties hereto will act in good faith so that any amounts
payable by an Indemnifying Party to an Indemnitee pursuant to this Article VII
shall be treated, for Tax purposes, as an adjustment to the Purchase Price,
unless a Final Determination with respect to an Indemnitee or any of its
Affiliates causes any such payment not to be treated as an adjustment to
Purchase Price for United States federal income tax purposes. If such payment
cannot be treated as an adjustment to the Purchase Price for Tax purposes, then
such indemnification payment shall be increased to take account of any net Tax
cost incurred by the Indemnitee as a result of the receipt or accrual of such
payments.
(c) The Purchaser will not be entitled to indemnification:
(i) with respect to punitive damages, except where such
damages are
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incurred by or awarded to a third party making a claim against such an
indemnitee;
(ii) with respect to any claim by or liability to any employee
employed by the Seller arising as the result of the termination of such
employee's employment subsequent to the Closing Date or any action by the
Purchaser subsequent to the Closing Date (except with respect to any
misrepresentation or breach of a warranty or covenant by the Seller);
(iii) to the extent of any reserves, accruals or amounts
recorded as of the Closing Date with respect to any obligation, liability or
matter for which reserves or accruals are reflected in the Interim Statements;
and
(iv) with respect to any obligation, liability or matter,
including environmental remediation and clean-up, arising under Laws that arise
or are promulgated or announced after the Closing Date.
(d) Any amounts payable under this Article VII shall be calculated
after giving effect to any net proceeds actually received from insurance
policies covering the damage, loss, liability or expense that is the subject to
the claim for indemnity.
SECTION 7.6 OTHER REMEDIES. The provisions of this Article VII shall not
restrict or otherwise limit the legal remedies that a party to this Agreement
may seek under applicable law or otherwise for any breaches of the
representations, warranties, covenants or agreements contained herein.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
If to the Purchaser, one copy to:
American Vantage Companies
0000 Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
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with a simultaneous copy to:
Snow Xxxxxx Xxxxxx P.C.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
If to the Seller and/or the Principal Stockholder one
copy to:
Placement 0000.Xxx, Inc.
000 Xxxx Xxxxxx, Xxxx 0000
Xxx Xxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with a simultaneous copy to:
Xx. Xxxxxxx Xxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxx. 00-X
Xxx Xxxx, XX 00000
with a simultaneous copy to:
Xxxxx & Schloss LLP
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(b) Each such notice or other communication shall be effective (i)
if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in Section 8.1(a) (with confirmation of transmission), or (ii)
if given by any other means, when received at the address specified in Section
8.1(a). Any party by notice given in accordance with this Section 8.1 to the
other party may designate another address (or telecopier number) or Person for
receipt of notices hereunder. Notices by a party may be given by counsel to such
party.
SECTION 8.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) and the collateral agreements executed in connection with the
consummation of the Acquisition contain the entire agreement between the parties
with respect to the subject matter hereof and related transactions and supersede
all prior agreements, written or oral, with respect thereto.
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SECTION 8.3 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES; PRESERVATION
OF REMEDIES. This Agreement may be amended, superseded, canceled, renewed or
extended only by a written instrument signed by the parties hereto. The
provisions hereof may be waived in writing by the parties hereto. No delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. Except as otherwise
provided herein, the rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party may otherwise have at law
or in equity.
SECTION 8.4 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without regard to the
conflict of laws rules thereof.
SECTION 8.5 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY
TRIAL. IN THE EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION,
PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY MATTERS DESCRIBED OR
CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS AGREEMENT HEREBY (A) AGREE
UNDER ALL CIRCUMSTANCES ABSOLUTELY AND IRREVOCABLY TO INSTITUTE ANY LITIGATION,
PROCEEDING OR OTHER LEGAL ACTION IN A COURT OF COMPETENT JURISDICTION LOCATED
WITHIN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK, WHETHER A STATE OR
FEDERAL COURT; (B) AGREE THAT IN THE EVENT OF ANY SUCH LITIGATION, PROCEEDING OR
ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO PERSONAL JURISDICTION IN ANY
SUCH COURT DESCRIBED IN CLAUSE (A) OF THIS SECTION AND TO SERVICE OF PROCESS
UPON THEM IN ACCORDANCE WITH THE RULES AND STATUTES GOVERNING SERVICE OF PROCESS
(IT BEING UNDERSTOOD THAT NOTHING IN THIS SECTION SHALL BE DEEMED TO PREVENT ANY
PARTY FROM SEEKING TO REMOVE ANY ACTION TO A FEDERAL COURT IN NEW YORK); (C)
AGREE TO WAIVE TO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION
IN ANY SUCH COURT OR THAT ANY SUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT
IN AN INCONVENIENT FORUM; (D) DESIGNATE, APPOINT AND DIRECT CORPORATION SERVICE
COMPANY AS ITS AUTHORIZED AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ANY AND ALL
PROCESS AND DOCUMENTS IN ANY LEGAL PROCEEDING IN THE STATE OF NEW YORK; (E)
AGREE TO NOTIFY THE OTHER PARTIES TO THIS AGREEMENT IMMEDIATELY IF SUCH AGENT
SHALL REFUSE TO ACT, OR BE PREVENTED FROM ACTING, AS AGENT AND, IN SUCH EVENT,
PROMPTLY TO DESIGNATE ANOTHER AGENT IN THE STATE OF NEW YORK, SATISFACTORY TO
SELLERS AND PURCHASER, TO SERVE IN PLACE OF SUCH AGENT AND DELIVER TO THE OTHER
PARTY WRITTEN EVIDENCE OF SUCH SUBSTITUTE AGENT'S ACCEPTANCE OF SUCH
DESIGNATION; (F) AGREE, AS AN ALTERNATIVE
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METHOD OF SERVICE OF PROCESS IN ANY LEGAL PROCEEDING, TO MAILING OF COPIES OF
SERVICE OF PROCESS TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SECTION 8.1 FOR
COMMUNICATIONS TO SUCH PARTY; (G) AGREE THAT ANY SERVICE MADE AS PROVIDED HEREIN
SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (H) AGREE THAT
NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT SERVICE OF PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW. EACH PARTY HERETO WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT,
ANY TRANSACTION DOCUMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR
THEREIN, AND AGREE TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT
SUCH WAIVER.
SECTION 8.6 BINDING EFFECT; NO ASSIGNMENT. This Agreement and all of its
provisions, rights and obligations shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs and legal
representatives. This Agreement may not be assigned (including by operation of
Law) by a party without the express written consent of the Purchaser (in the
case of assignment by the Seller) or the Seller (in the case of assignment by
the Purchaser) and any purported assignment, unless so consented to, shall be
void and without effect. Nothing herein express or implied is intended or shall
be construed to confer upon or to give anyone other than the parties hereto and
their respective heirs, legal representatives and successors any rights or
benefits under or by reason of this Agreement and no other party shall have any
right to enforce any of the provisions of this Agreement.
SECTION 8.7 EXHIBITS. All Exhibits and Schedules attached hereto are
hereby incorporated by reference into, and made a part of, this Agreement.
SECTION 8.8 SEVERABILITY. If any provision of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such illegal, invalid or unenforceable provision had never
been included herein.
SECTION 8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
ARTICLE IX
DEFINITIONS
SECTION 9.1 DEFINITIONS. (a) The following terms, as used herein, have the
following meanings:
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"Affiliate" of any Person means any other Person directly or indirectly
through one or more intermediary Persons, controlling, controlled by or under
common control with such Person.
"Agreement" or "this Agreement" means, and the words "herein", "hereof"
and "hereunder" and words of similar import refer to, this agreement as it from
time to time may be amended.
"Assets" means properties, rights, interests and assets of every kind,
real, personal or mixed, tangible and intangible, used or usable in the
Business.
The term "audit" or "audited" when used in regard to financial statements
means an examination of the financial statements by a firm of independent
certified public accountants in accordance with generally accepted auditing
standards for the purpose of expressing an opinion thereon.
"Business" means the business of the Seller as presently conducted.
"Certificate of Incorporation" means, in the case of any corporation, the
certificate of incorporation, articles of incorporation or charter of a
corporation, howsoever denominated under the laws of the jurisdiction of its
incorporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, agreement, indenture, note, bond, lease,
conditional sale contract, mortgage, license, franchise, instrument, commitment
or other binding arrangement, whether written or oral.
The term "control", with respect to any Person, means the power to direct
the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Environmental Laws" means any and all Laws (including common law),
Orders, Permits, agreements or any other requirement or restriction promulgated,
imposed, enacted or issued by any federal, state, local and/or foreign
Governmental Bodies relating to human health or the environment, including the
emission, discharge or Release of pollutants, contaminants, Hazardous Substances
or wastes into the environment (which includes ambient air, surface water,
ground water, or land), and the remediation thereof, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof, including the Clean Air
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Emergency Planning and Community Right To Know Act, the Federal Water
Pollution Control Act,
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the Oil Pollution Act of 1990, the Pollution Prevention Act of 1990, the
Resource Conservation and Recovery Act, the Safe Drinking Water Act, the
Endangered Species Act, the Toxic Substances Control Act, each as amended, any
state or local counterparts thereof and any state or local laws of a similar
nature for the protection of human health and welfare.
"Environmental Permits" with respect to any Subsidiaries means those
Permits, authorizations, approvals and permission required to be obtained by the
Seller under Environmental Laws in connection with the Business or the use and
operation of the Assets owned or leased by them.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means generally accepted accounting principles in effect on the
date hereof as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States.
"Hazardous Substances" means any dangerous, toxic, reactive, corrosive,
ignitable, radioactive, caustic or otherwise hazardous material, pollutant,
contaminant, chemical, waste or substance defined, listed or described as any of
such in or governed by any Environmental Law, including urea-formaldehyde,
solvents, acids, bases, heavy metals, polychlorinated biphenyls, asbestos or
asbestos-containing materials, radon, explosives, known carcinogens, petroleum
and its derivatives or petroleum products.
"Inventory" means, as of any date, collectively, all inventories of
merchandise and other products owned by the Seller and held for resale or for
distribution, together with packaging and samples thereof owned by the Seller as
of such date.
"IRS" means the Internal Revenue Service.
"knowledge of the Seller" shall mean actual knowledge, after performance
of the duties reasonably within the scope of each such person's responsibility
in the position held, of any officer of the Seller.
"Liability" means any direct or indirect indebtedness, liability,
assessment, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit, performance
credits or with respect to insurance loss accruals).
"Lien" means, with respect to any Asset, any mortgage, lien (including
mechanics, warehousemen, laborers and landlords liens), claim, pledge, charge,
security interest, preemptive
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right, right of first refusal, option, judgment, title defect or encumbrance of
any kind in respect of or affecting such Asset.
"Material Adverse Effect" shall mean an effect on the Condition of the
Business which is or would be materially adverse.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other
entity, including a government or political subdivision or an agency or
instrumentality thereof.
"Receivables" means as of any date any trade accounts receivable arising
in the ordinary course of business.
"Regulatory Actions" means any claim, demand, action, suit or proceeding
brought or instigated by any Governmental Body in connection with any
Environmental Law, including civil, criminal and/or administrative proceedings,
whether or not seeking costs, damages, penalties, expenses or injunctive relief.
"Release" means the intentional or unintentional, spilling, leaking,
disposing, discharging or disturbance of, or emitting, depositing, injecting,
leaching, escaping or any other release or threatened release, however defined,
of any Hazardous Substance.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") means (i) any net income, gross income, gross receipts, sales, use,
ad valorem, transfer, transfer gains, franchise, profits, license, withholding,
payroll, employment, social security (or similar), unemployment, disability,
excise, severance, stamp, rent, recording, registration, occupation, premium,
real or personal property, intangibles, environmental (including taxes under
Code Section 59A) or windfall profits tax, alternative or add-on minimum tax,
capital stock, customs duty or other tax, fee, duty, levy, impost, assessment or
charge of any kind whatsoever (including taxes assessed to real property and
water and sewer rents relating thereto), together with any interest and any
fine, penalty, addition to tax or additional amount or deductions imposed by any
Governmental Body (domestic or foreign) (a "Tax Authority") responsible for the
imposition of any such tax, whether disputed or not, including any liability
arising under any tax sharing agreement, with respect to the Seller, the
Business or the Assets (or the transfer thereof); (ii) any liability for the
payment of any amount of the type described in the immediately preceding clause
(i) as a result of the Seller being a member of an affiliated or combined group
with, or as a successor to or transferee from, any other corporation at any time
on or prior to the Closing Date; and (iii) any liability of the Seller for the
payment of any amounts of the type described in the immediately preceding clause
(i) as a result of a contractual obligation to indemnify any other person.
"Tax Return" means any return or report (including elections,
declarations, disclosures, schedules, attachments, estimates and information
returns) relating to Taxes required to be supplied to any Tax Authority, and
including any amendment thereof.
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"Transaction Documents" means, collectively, this Agreement and each of
the other agreements, instruments, certificates and other documents to be
executed and delivered by all or some of the parties hereto in connection with
the consummation of the Acquisition and the Other Contemplated Transactions.
SECTION 9.2 INTERPRETATION. Unless the context otherwise requires, the
terms defined in Section 9.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in Section 9.1,
and those accounting terms used in this Agreement not defined in Section 9.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections or Exhibits, such references shall be to a Section of
or Exhibit to this Agreement, unless otherwise indicated. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
AMERICAN VANTAGE COMPANIES
By: __________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: President
PLACEMENT 0000.XXX, INC.
By: __________________________________
Name: Xxxxxxx Xxxxxxxx
Title: President
________________________________________
Xxxxxxx Xxxxxxxx, individually
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