Exhibit 10.1
EXECUTION COPY
PURCHASE AGREEMENT
BETWEEN
ALTERNATIVE CONSTRUCTION COMPANY, INC.
A FLORIDA CORPORATION,
AND
ALTERNATIVE CONSTRUCTION TECHNOLOGIES CORP.
A TENNESSEE CORPORATION
DATED:
DECEMBER 15, 2004
TABLE OF CONTENTS
1. Definitions...............................................................1
2. Purchase and Sale of Business.............................................4
2.1 Purchase and Sale................................................4
2.2 Purchased Assets.................................................4
2.3 Excluded Assets..................................................4
2.4 Assumption of Certain Liabilities................................5
2.5 Excluded Liabilities.............................................5
3. Purchase Price and Payment................................................5
3.1 Purchase Price...................................................5
3.2 Tax and Accounting Consequences..................................6
3.3 Price Reduction Upon Certain Events..............................6
4. Pre-Closing Matters.......................................................6
4.1 Operation of Purchased Assets....................................6
4.2 Consents.........................................................7
4.3 Notification of Certain Events...................................7
4.4 Access to Information............................................8
4.5 Public Announcements.............................................8
5. Conditions to Closing.....................................................8
5.1 Transferor's Conditions..........................................8
5.2 Acquiror's Conditions............................................9
6. Closing..................................................................10
6.1 Time and Place of Closing.......................................10
6.2 Closing Deliveries..............................................10
6.3 Closing Cost....................................................11
6.4 Possession......................................................11
6.5 Bridge Loan.....................................................11
7. Representations and Warranties...........................................11
7.1 Transferor's Representations and Warranties.....................11
7.2 Acquiror's Representations and Warranties.......................19
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8. Additional Covenants.....................................................20
8.1 Covenants by Each Party.........................................20
8.2 Indemnification.................................................20
8.3 Retention of and Access to Books and Records....................21
9. Termination..............................................................21
9.1 Termination Events...............................................21
9.2 Effect of Termination............................................21
10. Default; Remedies........................................................21
10.1 Time of Essence.................................................21
10.2 Remedies........................................................21
11. Survival of Representations and Warranties; Escrow.......................22
11.1 Survival of Representations and Warranties......................22
11.2 Stockholder Escrow Arrangements.................................22
12. Escrow Agent's Duties....................................................26
13. Limitation on Liability..................................................27
14. Construction and Interpretation..........................................27
15. Miscellaneous Provisions.................................................28
15.1 Survival of Covenants...........................................28
15.2 Expenses........................................................28
15.3 Binding Effect..................................................28
15.4 Assignment......................................................28
15.5 Notices.........................................................28
15.6 Waiver..........................................................29
15.7 Amendment.......................................................29
15.8 Severability....................................................29
15.9 Integration.....................................................29
15.10 Governing Law...................................................29
15.11 Arbitration.....................................................30
15.12 Execution.......................................................30
15.13 Waiver of Conflicts.............................................30
15.14 Incorporation of Recitals, Exhibits, and Schedules..............30
15.15 Further Assurances..............................................30
15.16 No Third Party Beneficiaries....................................30
15.17 Bulk Sales......................................................30
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made and entered into
this 14th day of December with effect as of January 15, 2005 (the "Effective
Date") by and between Alternative Construction Technologies Corp., a Tennessee
corporation ("Transferor") and Alternative Construction Company, Inc., a Florida
corporation ("ACC" or "Acquiror").
RECITALS
A. Transferor is in the business of producing, marketing and
distributing proprietary wall panels for the construction industry (the
"Business").
B. Transferor wishes to sell to Acquiror certain assets as described in
Section 2.2 associated with Transferor's Business and Acquiror wishes to
purchase such assets from Transferor, in each case on the terms and conditions
set forth in this Agreement (this term and all other capitalized terms used
herein having the respective meanings set forth in this Agreement).
AGREEMENTS
In consideration of the foregoing, the mutual covenants of the parties
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
1. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:
"Agreement" shall mean this Purchase Agreement.
"Acquiror" shall have the meaning set forth in the preamble to this
Agreement.
"Acquiror's Knowledge" shall mean that any of the officers or
directors of Acquiror are actually aware of a particular fact or other matter.
"Assumed Liabilities" shall have the meaning set forth in Section
2.4.
"Best Efforts" shall mean the efforts that a prudent Person who
wishes to achieve a result would use in similar circumstances to achieve such
result as expeditiously as reasonably possible.
"Xxxx of Sale" shall mean the document described in Section
6.2.1(a).
"Books and Records" shall mean all books and records of Transferor
that are necessary to conduct the Business, the ownership, use, and operation of
the Purchased Assets, or the payment or performance of the Assumed Liabilities,
including any such records maintained on computer and all related computer
software.
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"Breach" shall mean any material inaccuracy in or material breach
of, or any material failure to perform or comply with, any representation,
warranty, covenant, obligation, or other provision of this Agreement or any
document delivered pursuant to this Agreement.
"Business" shall have the meaning set forth in the Recitals.
"Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Seattle, Washington are authorized or
required by applicable Legal Requirements to be closed.
"Closing" shall mean the closing of this transaction, at which the
events set forth in Section 6.2 shall occur.
"Closing Date" shall mean the date on which the Closing occurs.
"Preferred Stock" shall have the meaning set forth in Section 3.1.
"Consent" shall mean any approval, consent, ratification, waiver, or
other authorization, including any Governmental Authorization.
"Contract" shall mean any agreement, contract, lease, obligation,
promise, or understanding, whether written or oral and whether express or
implied, that is legally binding.
"Damages" shall have the meaning set forth in Section 8.2.
"Effective Date" shall have the meaning set forth in the preamble to
this Agreement.
"Excluded Assets" shall have the meaning set forth in Section 2.3.
"Governmental Authority" shall mean any national, federal, state,
provincial, county, municipal, or local government, foreign or domestic, or the
government of any political subdivision of the any of the foregoing, or any
entity, authority, agency, ministry, or other similar body exercising executive,
legislative, judicial, regulatory, or administrative authority or functions of
or pertaining to the government, including any quasi-governmental entity
established to perform any such functions.
"Governmental Authorization" shall mean any Consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement.
"Intellectual Property" shall mean (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptation, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation) and (g) all
other proprietary rights.
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"Legal Requirement" shall mean any federal, state, local, municipal,
foreign, international, multinational, or other administrative Order,
constitution, law, ordinance, principle of common law, regulation, rule,
statute, or treaty.
"Lien" shall mean a monetary encumbrance against a Purchased Asset.
"Ordinary Course of Business" shall mean any action taken by a
Person if, and only if, such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person.
"Organizational Documents" shall mean (i) the articles or
certificate of incorporation and the bylaws of a corporation, (ii) the
partnership agreement and any statement of partnership of a general partnership,
(iii) the limited partnership agreement and certificate of limited partnership
of a limited partnership, (iv) any charter, operating agreement, or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person, and (v) any amendment to any of the foregoing.
"Patents" shall mean those patents used in the Business and listed
on Exhibit A hereto.
"Permitted Encumbrances" shall mean those encumbrances incurred in
the ordinary course of business or otherwise in existence as of the Closing
Date.
"Person" shall mean an individual, partnership, corporation, limited
liability company, joint stock company, trust, unincorporated organization or
association, joint venture, or other organization, whether or not a legal
entity, or a Governmental Authority.
"Possession Date" shall mean 12:01 a.m., on the day following the
Closing Date.
"Proceeding" shall mean any action, arbitration, audit, hearing,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Authority, arbitrator, or mediator.
"Purchase Price" shall have the meaning set forth in Section 3.1.
"Purchased Assets" shall have the meaning set forth in Section 2.2.
"Release Agreement" shall mean the Agreement described in Section
8.1.1.
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"Representative" shall mean, with respect to a particular Person,
any director, officer, employee, agent, consultant, advisor, or other
representative of or to such Person, including such Person's attorneys,
accountants, and financial advisors.
"Transferor" shall have the meaning set forth in the preamble to
this Agreement.
"Transferor Shareholders" shall have the meaning set forth in
Section 3.2.
"Transferor's Knowledge" shall mean that any of the officers or
directors of Transferor are actually aware of a particular fact or other matter.
"Tax" shall mean any tax (including any income tax, capital gains
tax, value-added tax, sales tax, excise tax, property tax, gift tax, or estate
tax), levy, assessment, tariff, duty (including any customs duty), deficiency,
or other fee, and any related charge or amount (including any fine, penalty,
interest, or addition to tax), imposed, assessed, or collected by or under the
authority of any Governmental Authority or payable pursuant to any tax-sharing
agreement or other Contract relating to the sharing or payment of any such tax,
levy, assessment, tariff, duty, deficiency, or fee
2. Purchase and Sale of Assets.
2.1 Purchase and Sale. Transferor agrees to transfer and sell the
Business to Acquiror, and Acquiror agrees to acquire the Busines from
Transferor, in each case for the price and on the terms and conditions set forth
in this Agreement. Upon payment of the Purchase Price as described in Section 3
hereof and the satisfaction of the other terms of this Agreement, Transferor
shall sell, transfer, assign and deliver all assets constituting the Business to
Acquiror on the Closing Date free and clear of any and all liens, encumbrances,
security interests or obligations, except for Permitted Encumbrances.
2.2 Purchased Assets. The assets to be sold by Transferor to
Acquiror pursuant to this Agreement (the "Purchased Assets") shall be all of
Transferor's assets used in and constituting the Business, with the exception of
the Excluded Assets described in Section 2.3.
2.3 Excluded Assets. All assets of Transferor not specifically
included in the Purchased Assets (the "Excluded Assets") shall not be acquired
by Acquiror pursuant to this Agreement.
2.4 Assumption of Certain Liabilities. Acquiror shall at Closing
assume certain liabilities of Transferor described on Exhibit B (the "Assumed
Liabilities"), but excluding any other liabilities of Transferor whatsoever.
2.5 Excluded Liabilities. Acquiror shall not assume any of the
liabilities of Transferor not identified in Section 2.4 above. Without limiting
the generality of the foregoing, Acquiror shall not assume any liabilities:
(a) attributable to any of the Excluded Assets;
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(b) liabilities for any income, gain, profit or similar Tax
arising out of or resulting from the sale, conveyance, transfer,
assignment and delivery of the Purchased Assets provided for in this
Agreement;
(c) all Taxes imposed on or with respect to the Business for all
Pre-Closing Periods;
(d) liabilities for any sales, exercise, transfer or other tax
on or arising out of the sale, conveyance, transfer, assignment or
delivery of the Purchased Assets;
(e) liabilities and obligations pursuant to any agreements
relating to the employment of any individual in connection with
Transferor's business, including, but not limited to liabilities for
any option, warrant, bonus, performance, golden parachute,
consulting, or similar liability;
(f) liabilities and obligations (whether fixed or contingent)
with respect to the Employee Benefit Plans; and
(g) all liabilities and obligations arising out of the Excluded
Assets.
(h) liability for any contract not assigned to Acquiror;
(i) liability for any employee or stockholder loan;
(j) liability for any pending lawsuits, including those listed
on Schedule 7.1.15; and
(k) liability for Transferor's costs, fees, and expenses of this
transaction.
3. Purchase Price and Payment.
3.1 Purchase Price. In consideration of (i) the sale, transfer and
conveyance to Acquiror of the Business, Acquiror shall, at the Closing, transfer
to Transferor Five Hundred Thousand Dollars ($500,000.00) and Seven Hundred
Fifty Thousand (750,000) shares of ACC Series B Preferred Stock (the "Preferred
Stock") to be issued by Acquiror (the "Shares") and as more fully described on
Exhibit E hereto. The number of Shares to be transferred to Transferor shall be
appropriately adjusted to reflect the effect of any stock split, reverse split,
stock dividend, reorganization, recapitalization or other like change with
respect to Transferor's Preferred Stock occurring after the Effective Date and
prior to Closing, so as to provide Transferor the same economic effect as
contemplated by this Agreement prior to such stock split, reverse split, stock
dividend, reorganization, recapitalization, or like change. The consideration
described in this Section 3.1 is herein referred to as the "Purchase Price."
3.2 Tax and Accounting Consequences. As a result of the transfer of
the Shares to Transferor, in accordance with the terms and conditions set forth
in this Agreement, there may be certain Tax and accounting consequences to the
shareholders of the Transferor (the "Transferor Shareholders"), who will be the
ultimate recipients of the Shares.
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ACQUIROR MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, NOR ARE ANY
INTENDED OR SHOULD ANY BE INFERRED, REGARDING THE ECONOMIC RETURN OR THE TAX
CONSEQUENCES TO THE TRANSFEROR SHAREHOLDERS WHO WILL ACQUIRE THE SHARES.
ACQUIROR, THEREFORE, RECOMMENDS THAT THE TRANSFEROR SHAREHOLDERS CONSULT THEIR
OWN ATTORNEYS, ACCOUNTANTS AND FINANCIAL ADVISORS ABOUT THE LEGAL AND TAX
CONSEQUENCES AND THE FINANCIAL RISKS AND MERITS OF RECEIVING THE SHARES.
3.3 Price Reduction Upon Certain Events. In the event of any damage,
loss, destruction or condemnation of any of the assets constituting the Business
(excluding damage or destruction caused by Acquiror or any of its affiliates),
or any taking of any of the assets constituting the Business by eminent domain,
between the Effective Date and the Closing Date, Acquiror shall have the right,
by notice given to Transferor within ten (10) days of such event (but in any
case prior to the Closing Date), to terminate this Agreement. If Acquiror does
not elect to terminate this Agreement, the Purchase Price shall be reduced by an
amount equal to the resulting reduction in the value of the Purchased Assets,
which shall be attributed to the Transferor whose respective Purchased Assets
were so damaged, lost, destroyed or condemned. Transferor shall be entitled to
retain any insurance proceeds or condemnation awards paid or payable on account
of such damage or destruction or such taking. Transferor and Acquiror agree to
negotiate in good faith regarding the reduction in value resulting from any
damage to or destruction or condemnation of the Purchased Assets.
4. Pre-Closing Matters.
4.1 Operation of Business. Between the Effective Date and the
Closing Date, Transferor shall:
4.1.1 Continue to conduct the Business and operate and maintain
the assets used in the Business in the Ordinary Course of Business;
4.1.2 Not sell, lease, or otherwise transfer or dispose of any
assets used in the Business, or any interest therein, other than transfers and
dispositions made in the Ordinary Course of Business or transfers and
dispositions otherwise authorized by its President;
4.1.3 Not permit or allow any assets used in thee Business to
become subject to any additional Lien (other than Permitted Encumbrances);
4.1.4 Maintain the levels of Inventories and supplies in the
Business at customary levels; and
4.1.5 Use its Best Efforts to maintain the relations and
goodwill with suppliers, customers, and others having business relationships
with Transferor in connection with the Business.
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4.2 Consents.
4.2.1 Acquiror and Transferor shall use their respective Best
Efforts, each at its own expense, to obtain all such Consents as soon as
practicable after the Effective Date required to transfer to Business to
Acquiror. In the event any such Consent is not obtained by the Closing Date,
Transferor agrees to continue to use its Best Efforts thereafter, in cooperation
with Acquiror, to obtain such Consent as soon as practicable.
4.2.2 Acquiror shall provide all cooperation reasonably
requested by Transferor in connection with obtaining the Consents, including the
provision of any information relating to Acquiror that may be requested by the
Person from whom any such Consent is required.
4.3 Notification of Certain Events.
4.3.1 By Transferor. Between the Effective Date and the Closing
Date, Transferor shall give prompt notice to Acquiror in the event Transferor
becomes aware of (i) any fact or condition that causes or constitutes a Breach
of any representation or warranty of Transferor set forth herein as of the
Effective Date, (ii) any fact or condition that would cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition, (iii) the occurrence of any Breach of any covenant of Transferor in
this Agreement, or (iv) the occurrence of any event that Transferor believes
will make the satisfaction of any of the conditions set forth in Section 5
impossible or unlikely. In the event that any fact or condition of the type
described in the foregoing clause (i) or (ii) would have required any change in
any of the Schedules or Exhibits to this Agreement if such fact or condition had
occurred or been known as of the Effective Date, Transferor shall promptly
deliver to Acquiror a supplement to such Schedule or Exhibit specifying the
necessary change.
4.3.2 By Acquiror. Between the Effective Date and the Closing
Date, Acquiror shall give prompt notice to Transferor in the event Acquiror
becomes aware of (i) any fact or condition that causes or constitutes a Breach
of any representation or warranty of Acquiror set forth herein as of the
Effective Date, (ii) any fact or condition that would cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition, (iii) the occurrence of any Breach of any covenant of Acquiror in
this Agreement, or (iv) the occurrence of any event that Acquiror believes will
make the satisfaction of any of the conditions set forth in Section 5 impossible
or unlikely. In the event that any fact or condition of the type described in
the foregoing clause (i) or (ii) would have required any change in any of the
Schedules or Exhibits to this Agreement if such fact or condition had occurred
or been known as of the Effective Date, Acquiror shall promptly deliver to
Transferor a supplement to such Schedule or Exhibit specifying the necessary
change.
4.3.3 No Effect on Remedies. The delivery of a notice or
supplement pursuant to Sections 4.3.1 and 4.3.2 shall have no effect on the
remedies of any party hereunder.
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4.4 Access to Information. Between the Effective Date and the
Closing Date, Transferor shall, upon reasonable notice from Acquiror, (i) give
Acquiror and its representatives access (during normal business hours), in a
manner so as not to interfere with Transferor's normal operations and subject to
reasonable restrictions imposed by any such representative, to all key employees
employed in the Business and to all the Books and Records relating thereto, and
(ii) cause its representatives to make available to Acquiror for the purpose of
making copies thereof such financial and operating data and other information
with respect to the Business as Acquiror may reasonably request.
4.5 Public Announcements. Except as otherwise required by applicable
Legal Requirements, any public announcement or similar publicity with respect to
this Agreement or this transaction shall be issued, if at all, only with such
contents, at such time and in such manner as the parties may agree. If a party
believes that it is required by applicable Legal Requirements to make any such
public announcement, it shall first provide to the other party the content of
the proposed announcement, the reasons such announcement is required to be made,
and the time and place that the announcement will be made.
5. Conditions to Closing.
5.1 Transferor's Conditions. Transferor's obligation to close this
transaction shall be subject to and contingent upon the satisfaction (or waiver
by Transferor in writing in its sole discretion) of each of the following
conditions:
5.1.1 All representations and warranties of Acquiror set forth
in this Agreement and each such representation and warranty shall have been
accurate in all respects as of the Effective Date and shall be accurate in all
respects as of the Closing Date, as if made on the Closing Date.
5.1.2 (i) All of the covenants and obligations that Acquiror is
obligated to perform or comply with pursuant to this Agreement prior to or at
the Closing and each such covenant and obligation (considered individually)
shall have been performed and complied with in all respects; and (ii) Acquiror
shall have made the deliveries of documents required to be made pursuant to
Section 6.2.2; provided, however, that with respect to the covenants and
obligations described in this Section 5.1.2, a failure of the foregoing
condition shall not be deemed to have occurred unless (a) Transferor has given
Acquiror notice specifying the nature of any Breach of such covenants or
obligations in reasonable detail, and (b) either (y) Acquiror has failed to cure
such Breach within ten (10) business days after such notice is given, or (z) if
such Breach cannot be cured solely by the payment of money and cannot reasonably
be cured within ten (10) business days despite the exercise of Best Efforts,
Acquiror has failed to commence curative action within ten (10) Business Days
after such notice is given or thereafter fails to complete the cure of such
Breach as soon as practicable.
5.2 Acquiror's Conditions. Acquiror's obligation to close this
transaction shall be subject to and contingent upon the satisfaction (or waiver
by Acquiror in its sole discretion) of each of the following conditions:
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5.2.1 All representations and warranties of Transferor set forth
in this Agreement shall have been accurate as of the Effective Date and shall be
accurate as of the Closing Date, as if made on the Closing Date.
5.2.2 All of the covenants and obligations that Transferor are
obligated to perform or comply with pursuant to this Agreement prior to or at
the Closing shall have been performed and complied with; and (ii) Transferor
shall have made the deliveries of documents required to be made pursuant to
Section 6.2.1.
5.2.3 To the extent, if any, that Acquiror is required to obtain
any Governmental Authorizations that relate to the Business or the ownership,
use, and operation of the assets used in the Business, Acquiror shall have
obtained such Governmental Authorizations and such Governmental Authorizations
shall be in full force and effect as of the Closing Date or subject to issuance
to Acquiror upon consummation of this transaction.
5.2.4 As of the Closing Date, there shall not be in effect any
legal requirement or any injunction or other order that prohibits the transfer
of any portion of the Purchased Assets by Transferor to Acquiror.
5.2.5 Between the Effective Date and the Closing Date, there
shall have been no damage to or destruction of any of the assets used in the
Business (excluding damage or destruction (i) caused by Acquiror or any of its
affiliates; or (ii) that does not have a material adverse effect on the
Businesses), nor any taking of any material portion of the assets used in the
Business by eminent domain.
5.2.6 Since the Effective Date, there shall not have been
commenced or threatened against Acquiror or Transferor or any related person of
Acquiror or Transferor any proceeding (i) seeking damages or other relief in
connection with, any aspect of this transaction, or (ii) that could reasonably
be expected to have the effect of preventing this transaction or making this
transaction illegal.
5.2.7 Transferor shall have executed a Release Agreement, on
terms and conditions acceptable to Acquiror.
5.2.8 Transferor shall have executed all documents necessary to
transfer and assign any of the Transferor's Intellectual Property which is being
transferred pursuant to this Agreement.
5.2.9 The Shareholders of Transferor shall have approved the
transaction.
5.2.10 The Closing of the Acquisition by Acquiror of Quality
Metal Systems, LLC ("QMC") and the transfer of the patents to Acquiror shall
have occurred simultaneously with the Closing of this transaction.
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6. Closing.
6.1 Time and Place of Closing. The Closing shall take place at the
offices of QMC or at such other location as the parties may mutually agree.
Subject to the provisions of Section 7, the Closing shall take place commencing
at 2:00 p.m. (Eastern Standard Time) on January 15, 2005, unless Transferor, in
its sole discretion, determines that shareholder approval of the transactions
contemplated by this Agreement is necessary or desirable, in which case Closing
shall take place on January 15, 2005 or, in either case, on such other date as
is mutually acceptable to the parties.
6.2 Closing Deliveries.
6.2.1 At the Closing, Transferor shall deliver, or cause to be
delivered, to Acquiror:
(a) A fully executed Xxxx of Sale and Assignment and Assumption
in the form of Exhibit C to this Agreement (the "Xxxx of Sale")
conveying to Acquiror all personal property to be acquired by
Acquiror pursuant to this Agreement and providing for (i) the
assignment to Acquiror of the contract rights, and all other
intangible personal property included in the assets used in the
Business and (ii) Acquiror's assumption of the Assumed Liabilities;
(b) A Certificate of an officer of Transferor (i) certifying to
the attached resolutions of the board of directors and shareholders,
if the board of directors deems it necessary, of Transferor
authorizing this transaction, and (ii) attesting to the incumbency
of the authorized officers of Transferor executing this Agreement
and the Transferor's closing documents;
(c) A duly authorized and executed Release Agreement required by
Section 8.1.1;
(d) A Certificate of an authorized officer of the Transferor
certifying as to the accuracy of the Transferor's representations
and warranties under Section 7.1;
(e) All Consents necessary to permit Transferor to transfer the
Purchased Assets to Acquiror; and
(f) All necessary documents to transfer and assign any
Intellectual Property which is being transferred pursuant to this
Agreement; and
(g) all of the books and records of Transferor.
6.2.2 At the Closing, Acquiror shall deliver, or cause to be
delivered, to Transferor:
(a) A counterpart copy of the Xxxx of Sale, executed by
Acquiror;
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(b) A Certificate of an authorized officer of Acquiror (i)
certifying attached resolutions of the boards of directors and
shareholders of Acquiror authorizing this transaction, and (ii)
attesting to the incumbency of the authorized officer of Acquiror
executing this Agreement and the Acquiror's closing documents;
(c) A duly authorized and executed Release Agreement as required
by Section 8.1.1;
(d) A Certificate of an authorized officer of the Acquiror
certifying as to the accuracy of the Acquiror's representations and
warranties under Section 7.2;
(e) A Certificate of an authorized officer of the Acquiror
certifying the number of shares that Transferor shall be entitled to
in accordance with the terms and conditions of this Agreement; and
(f) A counterpart copy of necessary documents to transfer and
assign any Intellectual Property which is being transferred pursuant
to this Agreement.
6.3 Closing Costs. Transferor and Acquiror shall each pay one-half
(1/2) of the following costs associated with the Closing: (i) recording fees
with respect to the assignment of any Intellectual Property and (ii) all sales
and excise taxes due in connection with this transaction.
6.4 Possession. Acquiror shall be entitled to possession of the
Purchased Assets on the Possession Date as that term is defined in Section 1.
7. Representations and Warranties.
7.1 Transferor's Representations and Warranties. Transferor
represents and warrants to Acquiror as follows:
7.1.1 Organization and Good Standing. Transferor is a
corporation, duly formed, validly existing and in good standing under the laws
of the State of Tennessee. Transferor has the corporate power to own its
properties and to carry on its business as now being conducted. Transferor is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the failure to be so qualified would have a
material adverse effect on the business, assets (including intangible assets),
prospects, financial condition or results of operations of Transferor
(hereinafter referred to as a "MATERIAL ADVERSE EFFECT"). Transferor has
delivered a true and correct copy of its Articles of Incorporation and By-laws,
each as amended to date, to Acquiror.
7.1.2 Title to Assets. Transferor has good and marketable title
to the assets used in the Business, free and clear of all mortgages, pledges,
liens, encumbrances, security interests, equities, charges and restrictions of
any nature whatsoever, except such Permitted Encumbrances, as that term is
defined in Section 1. By virtue of the deliveries made at the Closing, Acquiror
will obtain good and marketable title to the Purchased Assets, free and clear of
all liens, mortgages, pledges, encumbrances, security interests, equities,
charges and restrictions of any nature whatsoever, except any Permitted
Encumbrances.
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7.1.3 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Transferor, enforceable against Transferor in
accordance with its terms. Upon its execution and delivery by
Transferor at the Closing, the Transferor's closing documents will
constitute the legal, valid, and binding obligations of Transferor,
enforceable against Transferor in accordance with its respective
terms. Transferor has full corporate power, authority, and capacity
to execute and deliver this Agreement and Transferor's closing
documents and to perform its obligations hereunder and thereunder.
Without limiting the generality of the foregoing, the Boards of
Directors, and shareholders, if the Boards of Directors deems it
necessary, of Transferor has approved this Agreement and the
transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement, nor
the performance of any of Transferor's obligations hereunder, nor
the consummation of the transactions contemplated by this Agreement
will, directly or indirectly (with or without notice, lapse of time,
or both), (i) contravene, conflict with or result in a violation of
any provision of Transferor's Organizational Documents or any
resolution adopted by the Boards of Directors or shareholders of
Transferor; (ii) contravene, conflict with, or result in a violation
of, or give any Governmental Authority or other person the right to
challenge this transaction or to exercise any remedy or obtain any
relief under, any legal requirement or any order to which Transferor
or any of the assets used in the Business is subject; (iii)
contravene, conflict with, or result in a violation of any of the
terms or requirements of any governmental authorization; (iv)
contravene, conflict with, or result in a violation or breach of any
provision of, or give any person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Contract; or
(v) result in the imposition or creation of any lien upon or with
respect to any of the assets used in the Business; except, in the
case of clauses (i), (ii) and (iii) above, for contraventions,
conflicts or violations which do not have a material adverse effect
on the ability of Transferor
(c) to consummate the transactions contemplated hereby.
(d) Transferor represents and warrants that it is not and will
not be required to give any notice to, make any filing with, or
obtain any material Consent from any person in connection with the
execution and delivery of this Agreement, the performance of its
obligations hereunder, or the consummation of this transaction,
other than the Consents described on Schedule 4.2.1. except, for
Consents, the failure of which to obtain would not have a material
adverse effect on the ability of the Transferor to consummate the
transactions contemplated hereby.
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7.1.4 Books and Records. The Books and Records are complete and
correct in all material respects and have been maintained in accordance with
sound business practices.
7.1.5 Possession of Assets. The assets used in the Business are
assets of the Transferor as of the Effective Date and are in Transferor's
possession as of the Effective Date, and that Transferor has all requisite title
or license to convey the Purchased Assets to Acquiror as contemplated by the
Agreement.
7.1.6 No Material Adverse Changes. There have been no material
adverse changes to the Business, operations or financial condition other than as
disclosed to Acquiror.
7.1.7 Certain Proceedings. No proceeding is pending or, to
Transferor's Knowledge, has been threatened against Transferor that challenges,
or could reasonably be expected to have the effect of preventing, making
illegal, or otherwise materially interfering with, this transaction.
7.1.8 Transferor Financial Statements. (a) Transferor has
heretofore furnished Acquiror with financial statements in respect of the
Business for the fiscal years ending June 30, 2004, 2003, and 2002 (the
"Financial Statements"), (b) The Financial Statements were prepared in
accordance with generally accepted accounting terms as utilized in the United
States, consistently applied, and accurately present the financial condition of
the Transferor for the periods presented.
7.1.9 To the Knowledge of Transferor, since June 30, 2004, (i)
there has been no material adverse change in the Condition of the Business, (ii)
the Business has, in all material respects, been conducted in the ordinary
course of business consistent with past practice, (iii) there has not been any
material obligation or liability (contingent or otherwise) incurred by
Transferor with respect to the Business other than obligations and liabilities
incurred in the ordinary course of business, (iv) there has not been any
purchase, sale or other disposition, or any agreement or other arrangement, oral
or written, for the purchase, sale or other disposition, of any properties or
assets having a value in excess of $5,000 in any case other than in the ordinary
course of business, and (v) none of the assets of Transferor have been used to
reduce liabilities which are not being assumed by Acquiror.
7.1.10 No Undisclosed Liabilities. Except as set forth on the
Balance Sheet, included in the Financial Statements, Transferor does not have
any liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, in excess of $5,000 individually or $10,000 in the
aggregate, whether accrued, absolute, contingent, matured, unmatured or other
(whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles).
7.1.11 Tax and Other Returns and Reports.
(a) Definition of Taxes. For the purposes of this Agreement,
"TAX" or, collectively, "TAXES," shall have the meaning set forth in
Article 1 hereof.
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(b) Tax Returns And Audits. Except as set forth in
Schedule 7.1.11:
(i) Transferor as of the Closing Date will have prepared and
filed all required federal, state, local and foreign returns,
estimates, information statements and reports ("RETURNS") relating
to any and all Taxes concerning or attributable to Transferor, its
operations and the Business and such Returns will be true and
correct in all material respects and will have been completed in
accordance with applicable law in all material respects.
(ii) Transferor as of the Closing Date: (A) will have paid or
accrued all material Taxes it is required to pay or accrue and (B)
will have withheld with respect to its employees all federal and
state income taxes, FICA, FUTA and other Taxes required to be
withheld.
(iii) Transferor has not been adjudicated delinquent by any Tax
Authority in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against Transferor, nor has
Transferor executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of Transferor
is presently in progress, nor has Transferor been notified of any
request for such an audit or other examination.
(v) Transferor does not have any material liabilities for unpaid
federal, state, local and foreign Taxes which have not been accrued
or reserved against on the current Balance Sheet, whether asserted
or unasserted, contingent or otherwise, and Transferor has no
knowledge of any basis for the assertion of any such liability
attributable to Transferor, its assets or operations.
(vi) Transferor has provided to Acquiror copies of all federal
and state income and all state sales and use Tax Returns filed for
fiscal years 2001, 2002, 2003 and 2004.
(vii) There are (and as of immediately following the Closing
there will be) no liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS") on the assets
of Transferor relating to or attributable to Taxes.
(viii) Transferor has no knowledge of any basis for the
assertion of any claim relating or attributable to Taxes, which if
adversely determined, would result in any Lien on the assets of
Transferor.
(ix) None of Transferor's assets are treated as "tax- exempt use
property" within the meaning of Section 168(h) of the Code.
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(x) As of the Closing Date, Transferor will not be a party to
any contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee
or former employee of Transferor that could obligate Transferor to
pay any amount that would not be deductible pursuant to Section 280G
of the Code.
(xi) Transferor has not filed any consent agreement under
Section 341(f) of the Code nor agreed to have Section 341 (f)(2) of
the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Transferor.
(xii) Transferor is not a party to a tax sharing or allocation
agreement nor does Transferor owe any amount under any such
agreement.
(xiii) Transferor is not, and has not been at any time, a
"United States real property holding corporation" within the meaning
of Section 897(c)(2) of the Code.
(xiv) Transferor's tax basis in its assets for purposes of
determining its future amortization, depreciation and other federal
income tax deductions is accurately reflected on Transferor's tax
books and records in all material respects.
7.1.12 Agreements, Contracts And Commitments. Except as set
forth on Schedule 7.1.12, Transferor does not have, is not a party to nor is it
bound by:
(i) any collective bargaining agreements,
(ii) any agreements or arrangements that contain any severance
pay or post-employment liabilities or obligations,
(iii) any bonus, deferred compensation, pension, profit sharing
or retirement plans, or any other employee benefit plans or
arrangements,
(iv) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson
or consulting or sales agreement, contract or commitment with a firm
or other organization,
(v) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting
of benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of
any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement,
(vi) any fidelity or surety bond or completion bond,
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(vii) any lease of personal property having a value individually
in excess of $5,000,
(viii) any agreement of indemnification or guaranty,
(ix) any agreement, contract or commitment containing any
covenant limiting the freedom of Transferor to engage in any line of
business or to compete with any person,
(x) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $5,000,
(xi) any agreement, contract or commitment relating to the
disposition or acquisition of material assets or any interest in any
business enterprise outside the ordinary course of the Business,
(xii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit, including guaranties
referred to in clause (viii) hereof,
(xiii) any purchase order or contract for the purchase of raw
materials involving $10,000 or more other than purchases in the
ordinary course of business,
(xiv) any construction contracts,
(xv) any distribution, joint marketing or development agreement,
or
(xvi) any other agreement, contract or commitment that involves
$5,000 or more and is not cancelable without penalty within thirty
(30) days.
(xvii) Except for such alleged breaches, violations and
defaults, and events that would constitute a breach, violation or
default with the lapse of time, giving of notice, or both, all as
noted in Schedule 7.1.12, Transferor has not breached, violated or
defaulted under, or received notice that it has breached, violated
or defaulted under, any of the terms or conditions of any agreement,
contract or commitment to which it is a party or by which it is
bound and which are required to be set forth in Schedule 7.1.12 (any
such agreement, contract or commitment, a "CONTRACT") except for
breaches, violations or defaults that will not have a Material
Adverse Effect. Each agreement, contract or commitment set forth in
any of Transferor Schedules is in full force and effect and, except
as otherwise disclosed in Schedule 3.12(b), is not subject to any
default thereunder of which Transferor has knowledge by any party
obligated to Transferor pursuant thereto.
7.1.13 Interested Party Transactions. Except as set forth on
Schedule 7.1.13, to the knowledge of Transferor, no director, officer or
stockholder of Transferor (nor to the knowledge of Transferor any ancestor,
sibling, descendant or spouse of any of such persons, or any trust, partnership
or corporation in which any of such persons has an interest), has, directly or
indirectly, (i) a direct interest in any entity which finished or sold, or
finishes or sells, services or products that Transferor finishes or sells, or
proposes to finish or sell, or (ii) a direct interest in any entity that
purchases from or sells or finishes to, Transferor, any goods or services or
(iii) a beneficial interest in any contract or agreement set forth in Schedule
7.1.15; PROVIDED, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation shall not be deemed an
"interest in any entity" for purposes of this Section 3.13.
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7.1.14 Governmental Authorization. Schedule 3.14 accurately
lists each material consent, license, permit, grant or other authorization
issued to Transferor by a governmental entity (i) pursuant to which Transferor
currently operates or holds any interest in any of its properties or (ii) which
is required for the operation of its business or the holding of any such
interest (herein collectively called "TRANSFEROR AUTHORIZATIONS"), which
Transferor Authorizations are in full force and effect and constitute all
Transferor Authorizations required to permit Transferor to operate or conduct
its business substantially as it is currently and has been conducted or hold any
interest in its properties or assets.
7.1.15 Litigation. Except as set forth in Schedule 7.1.15, there
is no action, suit, claim or proceeding of any nature pending or, to the
knowledge of Transferor, threatened against Transferor, its properties or any of
its officers or directors in their capacity as such, nor, to the knowledge of
Transferor, is there any basis therefore. Except as set forth in Schedule
7.1.15, there is no investigation pending or to the knowledge of Transferor,
threatened against Transferor, its properties or any of its officers or
directors (nor, to the Knowledge of Transferor, is there any basis therefore) by
or before any governmental entity. Schedule 7.1.15 sets forth, with respect to
any pending or threatened action, suit, proceeding or investigation, the forum,
the parties thereto, the subject matter thereof and the amount of damages
claimed or other remedy requested. Except as set forth in Schedule 7.1.15, no
governmental entity has at any time challenged or questioned the legal right of
Transferor to manufacture, offer or sell any of its products in the present
manner or style thereof. Neither Transferor nor any of the Purchased Assets is
subject to any material order, writ, injunction, judgment or decree of any court
or other governmental agency or authority.
7.1.16 Accounts Receivable. There are no Accounts Receivable
except as shown on the Financial Statements.
7.1.17 Minute Books. The minutes of corporate proceedings and
consents of Transferor and Subsidiary made available to counsel for Acquiror are
the only minute books of Transferor and Subsidiaries and contain a reasonably
accurate summary of the meetings of directors (or committees thereof) referred
to therein.
7.1.18 Environmental Matters.
(a) Hazardous Material. No underground storage tanks and no
amount of any substance that has been designated by any Governmental
Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation
and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, (a "HAZARDOUS MATERIAL"), but
excluding office and janitorial supplies or similar items, are
present in any material quantities, as a result of the deliberate
actions of Transferor, or, to Transferor's knowledge, as a result of
any actions of any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and
surface water thereof, that Transferor has at any time owned,
operated, occupied or leased, except for such presence as will not
have a Material Adverse Effect.
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(b) Hazardous Materials Activities. Transferor has not
transported, stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials in violation
of any law in effect on or before the Closing Date, nor has
Transferor disposed of, transported, sold, or manufactured any
product containing a Hazardous Material (collectively "HAZARDOUS
MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to
or as of the date hereof to prohibit, regulate or control Hazardous
Materials or any Hazardous Material Activity, except for such
Hazardous Material Activity as would not have a Material Adverse
Effect.
(c) Permits. Transferor currently holds all environmental
approvals, permits, licenses, clearances and consents (the
"ENVIRONMENTAL PERMITS") necessary for the conduct of Transferor's
Hazardous Material Activities and other businesses of Transferor as
such activities and businesses are currently being conducted.
(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or
claim is pending, or to Transferor's knowledge, threatened
concerning any Environmental Permit, Hazardous Material or any
Hazardous Materials Activity of Transferor. Transferor is not aware
of any fact or circumstance which could involve Transferor in any
material environmental litigation or impose upon Transferor any
material environmental liability.
(e) Capital Expenditures. Transferor is not aware of any
material capital expenditures which are required in order for it to
comply with Environmental Laws.
7.2 Acquiror's Representations and Warranties. Acquiror represents
and warrants to Transferor as follows:
7.2.1 Organization and Good Standing. Acquiror is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida.
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7.2.2 Authority; No Conflict.
( ) This Agreement constitutes the legal, valid, and binding
obligation of Acquiror, enforceable against Acquiror in accordance
with its terms. Upon their execution and delivery by Acquiror at the
Closing, the Acquiror's closing documents will constitute the legal,
valid, and binding obligations of Acquiror, enforceable against
Acquiror in accordance with their respective terms. Acquiror has
full corporate power, authority, and capacity to execute and deliver
this Agreement and the Acquiror's closing documents and to perform
its obligations hereunder and thereunder. Without limiting the
generality of the foregoing, the Board of Directors of the Acquiror
has approved this Agreement and the transactions contemplated
hereby.
(a) Neither the execution and delivery of this Agreement, nor
the performance of any of Acquiror's obligations hereunder, nor the
consummation of this transaction will, directly or indirectly (with
or without notice, lapse of time, or both), (i) contravene, conflict
with, or result in a violation of any provision of Acquiror's
Organizational Documents or any resolution adopted by the Board of
Directors or the shareholders of Acquiror; or (ii) give any Person
the right to prevent or otherwise interfere with this transaction
pursuant to any legal requirement or order to which Acquiror is
subject or any Contract to which Acquiror is a party or by which it
or any of its assets is bound.
7.2.3 Certain Proceedings. No proceeding is pending or, to
Acquiror's Knowledge, has been threatened against Acquiror that challenges, or
could reasonably be expected to have the effect of preventing, making illegal,
or otherwise materially interfering with, this transaction.
7.2.4 Title to Shares. The Shares are duly authorized and, when
issued, upon the consummation of the transactions set forth herein, Transferor
will own the Shares free and clear of all liens and encumbrances whatsoever.
8. Additional Covenants.
8.1 Covenants by Each Party.
8.1.1 Release of Acquiror and Transferor. At Closing, Acquiror
and Transferor shall enter into a release agreement (the "Release Agreement") in
the form of Exhibit D attached hereto.
8.1.2 Cooperation. Each of the parties hereto shall cooperate
with the other parties in every reasonable way in carrying out the transactions
contemplated herein, and in delivering all documents and instruments deemed
reasonably necessary or useful by counsel for each party hereto.
8.1.3 Expenses. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
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8.1.4 Further Assurances. From time to time after the Closing,
Transferor will, at its own expense, execute and deliver, or cause to be
executed and delivered, such documents to Acquiror as Acquiror may reasonably
request in order more effectively to vest in Acquiror good title to the
Purchased Assets and otherwise to consummate the transactions contemplated by
this Agreement, and from time to time after the Closing, Acquiror will, at its
own expense, execute and deliver such documents to Transferor as Transferor may
reasonably request in order more effectively to consummate the assumption of the
Assumed Liabilities by Acquiror and otherwise to consummate the transactions
contemplated by this Agreement.
8.2 Indemnification.
8.2.1 By Acquiror. In the event the Acquiror (i) breaches or is
deemed to have breached any of the representations and warranties contained in
this Agreement or (ii) fails to perform or comply with any of the covenants and
agreements set forth in this Agreement, then the Acquiror shall hold harmless,
indemnify and defend Transferor, and each of its directors, officers,
shareholders, attorneys, representatives and agents, from and against any
Damages incurred or paid by Transferor to the extent such Damages arise or
result from a breach by the Acquiror of any such representations and warranties
or a violation of any covenant in this Agreement.
8.2.2 By Transferor. In the event Transferor (i) breaches or is
deemed to have breached any of the representations and warranties contained in
this Agreement or (ii) fails to perform or comply with any of the covenants and
agreements set forth in this Agreement, Transferor shall hold harmless,
indemnify and defend Acquiror, and each of its directors, officers,
shareholders, attorneys, representatives and agents, from and against any
Damages incurred or paid by the acquirer to the extent such Damages arise or
result from a breach by Transferor of any such representations or warranties or
a violation of any covenant in this Agreement. For purposes of this Section 8.2,
"Damages" shall mean any and all costs, losses, damages, liabilities, demands,
claims, suits, actions, judgments, causes of action, assessments or expenses,
including interest, penalties, fines and attorneys' fees and expenses incident
thereto, incurred in connection with any claim for indemnification arising out
of this Agreement, and any and all amounts paid in settlement of any such claim.
8.3 Retention of and Access to Books and Records. Transferor agree
to retain the Books and Records for a period of five (5) years after the Closing
Date and to make them available to Acquiror for the purpose of making copies
thereof at Acquiror's expense of.
9. Termination.
9.1 Termination Events. Except as otherwise provided for, this
Agreement may, by notice given prior to or at the Closing (which notice shall
specify the grounds for termination), be terminated by mutual written agreement
of both Transferor and Acquiror.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination shall not constitute an
election of remedies. If this Agreement is terminated pursuant to Section 9.1,
all further obligations of the parties under this Agreement shall thereupon
terminate, except that Sections 10 and 12 shall survive; provided, however, that
if this Agreement is terminated by a party because of a material Breach of this
Agreement by any of the parties or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of any party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies shall
survive such termination unimpaired.
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10. Default; Remedies.
10.1 Time of Essence. Time is of the essence of the parties'
obligations under this Agreement.
10.2 Remedies. If any party fails to perform its obligations under
this Agreement, the other party shall be entitled to pursue all remedies
available at law or in equity, including, in the case of a failure to consummate
this transaction following satisfaction (or waiver) of the conditions set forth
in Section 6.1 or 6.2, as applicable, the remedy of specific performance;
provided, however, that except with respect to a failure to close this
transaction as provided herein, a party shall not be in default hereunder unless
(i) the non-Breaching party has given the Breaching party notice specifying the
nature of the Breach in reasonable detail, and (ii) the Breaching party either
(a) has failed to cure such Breach within ten (10) Business Days after such
notice is given, or (b) if such Breach cannot be cured solely by the payment of
money and cannot reasonably be cured within ten (10) Business Days despite the
exercise of Best Efforts, has failed to commence curative action within ten (10)
Business Days after such notice is given or thereafter fails to complete the
cure of such Breach as soon as practicable.
11. Survival of Representations and Warranties; Escrow
11.1 Survival Of Representations And Warranties. The representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing and continue until December 31, 2007.
11.2 Stockholder Escrow Arrangements.
(a) Escrow Funds. At the Closing, 25% of the Acquiror's
Preferred Stock to be issued to Transferor ("Escrow Amount") will be
deposited into an escrow account with Xxxxxx Xxxx, Esq. (the "ESCROW
AGENT"), such deposit to constitute an escrow fund (the "ESCROW
FUND"). The terms upon which the Escrow Agent will serve in such
capacity shall be as provided in an Escrow Agreement to be mutually
agreed upon by Acquiror and Transferor, and which will be consistent
with the provisions of Section 8.2 and Article 11 (the "ESCROW
AGREEMENT"). The Escrow Fund is to be governed by the terms set
forth in the Escrow Agreement and maintained at Acquiror's sole cost
and expense (the "STOCKHOLDER ESCROW").
(b) Purpose. The Escrow Fund shall be available to compensate
Transferor and its affiliates for any claim, loss, expense,
liability or other damage, including reasonable attorneys' fees, to
the extent of the amount of such claim, loss, expense, liability or
other damage (collectively "LOSSES") that Acquiror or any of its
affiliates has incurred or reasonably anticipates incurring (in the
case of an extension of the Stockholder Escrow period pursuant to
Section 11.2(c)) by reason of the breach by Transferor of any
representation, warranty, covenant or agreement of Transferor
contained herein, including the indemnities provided for in Section
8.2 hereof and the covenants contained in Section 8.1 hereof. Losses
shall not include amounts recovered from insurance. Acquiror shall
undertake commercially reasonable efforts to claim and collect
insurance to which it is entitled with respect to any Losses.
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(c) Termination And Distribution Of Escrow Fund. The Escrow
shall terminate on December 31, 2005; PROVIDED HOWEVER, that such
portion of the Stockholder Escrow, which, in the reasonable judgment
of Acquiror, subject to the objection of the Transferor and the
subsequent arbitration of the matter in the manner provided in
Section 11.2(i) hereof, is necessary to satisfy any identified but
unsatisfied Losses specified in any Officer's Certificate
theretofore delivered to the Escrow Agent prior to termination of
the Stockholder Escrow, shall remain in the Stockholder Escrow (and
the Stockholder Escrow shall remain in existence) until the earlier
of (i) the expiration of the statute of limitations applicable to
such claims or (ii) the resolution of such claims. As soon as all
such claims have been resolved or the statute of limitations has
expired, the Escrow Agent shall deliver to the appropriate security
holders of Transferor the remaining portion of the Stockholder
Escrow not required to satisfy such claims. Deliveries of Escrow
Amounts to the Transferor's stockholders pursuant to this Section
11.2(c) shall be made according to each stockholder's Proportionate
Escrow Interest as certified to the Escrow Agent by the Transferor
Stockholder Agent.
(d) Protection Of Escrow Fund. The Escrow Agent shall hold and
safeguard the Escrow Funds during their existence, shall treat such
fund as a trust fund in accordance with the terms of this Agreement
and not as the property of Acquiror and shall hold and dispose of
the Escrow Funds only in accordance with the terms hereof.
(e) Claims Upon Escrow Fund. In the event Acquiror incurs or
becomes aware of any Losses or potential Losses for which it is
entitled to indemnity under Article 8.2 and this Article 11, it
shall deliver to the Escrow Agent and the Transferor Stockholder
Agent a certificate signed by any officer of Acquiror (an "OFFICER'S
CERTIFICATE"): (A) stating that Acquiror has (i) incurred or (ii)
for purposes of extending the Escrow pursuant to Section 11.2(c)
above, reasonably anticipates that it will have to incur Losses, (B)
specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid
or properly incurred, or the basis for such anticipated liability,
and either the nature of the misrepresentation, breach of warranty
or claim or the litigation matter to which such item is related.
Upon the receipt of a certificate pursuant to clause (A)(i) above
and after compliance with the provisions of Sections 11.2(f), (g)
and (h) hereof, and if there is no written objection by Transferor
as further provided in subsection (g) hereof, the Escrow Agent shall
deliver to Acquiror out of the Escrow Fund, as promptly as
practicable, such amounts held in the Escrow Fund equal to such
Losses incurred. In determining the number of shares of Acquiror
Common Stock to be paid out by the Escrow Agent pursuant to this
Article V, such shares shall be valued by the Escrow Agent at the
value of $1.00 per share.
22
(f) Acquiror shall not be entitled to receive any disbursement
or cause any amount to be retained in Escrow with respect to any
Losses arising in respect of any individual occurrence or
circumstance unless the aggregate amount of all Losses shall exceed
$10,000; provided that in the event the aggregate amount of such
Losses of Acquiror shall exceed $10,000, then Acquiror shall be
entitled to recover from the Escrow Fund only Losses in excess of
$10,000.
(g) Objections To Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such
certificate shall be delivered to the Transferor Stockholder Agent
(as defined in Section 11.2(i)). The Escrow Agent shall make no
delivery to Acquiror of any amounts out of the Escrow Fund, pursuant
to Section 11.2(e)(A)(i) hereof, unless and until the Escrow Agent
shall have received written authorization from the Transferor
Stockholder Agent to make such delivery or unless the claim shall
have been resolved pursuant to Section 11.2(h). If the Transferor
Stockholder Agent shall object to the claim made in the Officer's
Certificate, the Transferor Stockholder Agent shall do so in a
written statement to such effect delivered to the Escrow Agent. The
Transferor Stockholder Agent shall approve or object to any such
claim within a reasonable time after actual receipt of the Officer's
Certificate.
(h) Resolution Of Conflicts; Arbitration.
(i) In case the Transferor shall so object in writing to any
claim or claims made in any Officer's Certificate, the
Transferor and Acquiror shall attempt in good faith to agree
upon the rights of the respective parties with respect to each
of such claims. If the Transferor and Acquiror should so agree,
a memorandum setting forth such agreement shall be prepared and
signed by both parties and shall be furnished to the Escrow
Agent. The Escrow Agent shall be entitled to rely on any such
memorandum and distribute amounts from the Escrow Funds in
accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, the matter shall be arbitrated before the American
Arbitration Association. Either Acquiror or the Transferor may
demand arbitration of the matter unless the amount of the damage
or loss is at issue in pending litigation with a third party, in
which event arbitration shall not be commenced until such amount
is ascertained upon the conclusion of such litigation or both
parties agree to arbitration, and in either such event the
matter shall be settled by binding arbitration conducted by
three arbitrators. Acquiror and the Transferor shall each select
one arbitrator, and the two arbitrators so selected shall select
a third arbitrator. The arbitrators shall set a limited time
period and establish procedures designed to reduce the cost and
time for discovery while allowing the parties an opportunity,
adequate in the sole judgment of the arbitrators, to discover
relevant information from the opposing parties about the subject
matter of the dispute. The arbitrators shall rule upon motions
to compel or limit discovery and shall have the authority to
impose sanctions, including attorneys' fees and costs, to the
same extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without
substantial justification or that discovery was refused or
objected to without substantial justification. The decision of
the arbitrators as to the validity and amount of any claim in
such Officer's Certificate shall be binding and conclusive upon
the parties to this Agreement, and notwithstanding anything in
this Section 11.2(h); the Escrow Agent shall be entitled to act
in accordance with such decision and make or withhold payments
out of the Escrow Fund in accordance therewith. Such decision
shall be written and shall be supported by written findings of
fact and conclusions of law, which shall set forth the award,
decree or order of the arbitrators.
23
(iii) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such
arbitration shall be held at the discretion of Acquiror in
Naples or Tampa Florida, under the rules then in effect of the
American Arbitration Association.
(i) Agent Of Transferor's Stockholders; Power Of Attorney.
(i) Upon execution and delivery of this Agreement, without
further act of any stockholder of Transferor, Xxxx Xxxxxxxx
shall be appointed as agent and attorney-in-fact (the
"TRANSFEROR STOCKHOLDER AGENT") for each stockholder of
Transferor on whose behalf any Acquiror Common Stock was
deposited into the Escrow Fund for and on behalf of stockholders
of Transferor, to give and receive notices and communications,
to authorize delivery to Acquiror of Acquiror Common Stock from
the Escrow Fund in satisfaction of claims by Acquiror, to object
to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with
respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Transferor Stockholder Agent
for the accomplishment of the foregoing. Such agency may be
changed by the stockholders of Transferor from time to time upon
not less than thirty (30) days prior written notice to Acquiror;
provided that the Transferor Stockholder Agent may not be
removed unless holders of a two-thirds interest of the Escrow
Funds agree to such removal and to the identity of the
substituted agent. No bond shall be required of the Transferor
Stockholder Agent, and the Transferor Stockholder Agent shall
not receive compensation for his services. Notices or
communications to or from the Transferor Stockholder Agent shall
constitute notice to or from each of the stockholders of
Transferor.
24
(ii) The Transferor Stockholder Agent shall not be liable
for any act done or omitted hereunder as Agent while acting in
good faith and in the exercise of reasonable judgment. The
stockholders of Transferor on whose behalf the amounts were
contributed to the Escrow Funds shall severally indemnify the
Transferor Stockholder Agent and hold the Transferor Stockholder
Agent harmless against any loss, liability or expense incurred
without negligence or bad faith on the part of the Transferor
Stockholder Agent and arising out of or in connection with the
acceptance or administration of the Transferor Stockholder
Agent's duties hereunder, including the reasonable fees and
expenses of any legal counsel retained by the Transferor
Stockholder Agent.
(j) Actions Of The Transferor's Stockholder Agent. A decision,
act, consent or instruction of the Transferor Stockholder Agent
shall constitute a decision of all the stockholders for whom a
portion of the amounts otherwise issuable to them are deposited in
the Escrow Funds and shall be final, binding and conclusive upon
each of such stockholders, and the Escrow Agent and Acquiror may
rely upon any such decision, act, consent or instruction of the
Transferor's Stockholder Agent as being the decision, act, consent
or instruction of each and every such stockholder of Transferor. The
Escrow Agent and Acquiror are hereby relieved from any liability to
any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Transferor Stockholder
Agent.
(k) Third-Party Claims. If during The Escrow Period, a
third-party asserts a claim which gives rise to a claim to The
Escrow supported by an Officer's Certificate, Acquiror shall have
the right in its sole discretion to defend and to settle such
third-party claim, provided, however, that any counsel retained to
defend a third-party claim to be satisfied from the Escrow Fund
shall be reasonably acceptable to the Transferor Stockholder Agent
and Acquiror shall not settle any such third party claim without the
prior consent of the Transferor Stockholder Agent, which consent
shall not be unreasonably withheld.
12. Escrow Agent's Duties.
(a) The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow
Agent may receive after the date of this Agreement which are signed
by an officer of Acquiror and the Transferor Stockholder Agent, and
may rely and shall be protected in relying or refraining from acting
on any instrument reasonably believed to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent
shall not be liable for any act done or omitted hereunder as Escrow
Agent while acting in good faith and in the exercise of reasonable
judgment, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith
25
(b) The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any
other person, excepting only orders or process of courts of law, and
is hereby expressly authorized to comply with and obey orders,
judgments or decrees of any court. In case the Escrow Agent obeys or
complies with any such order, judgment or decree of any court, the
Escrow Agent shall not be liable to any of the parties hereto or to
any other person by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
(c) The Escrow Agent shall not be liable in any respect on
account of the rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or
papers deposited or called for hereunder.
(d) The Escrow Agent shall not be liable for the expiration of
any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(e) The Escrow Agent may resign at any time upon giving at least
thirty (30) days written notice to Acquiror and the Transferor
Stockholder Agent to this Agreement; PROVIDED, HOWEVER, that no such
resignation shall become effective until the appointment of a
successor escrow agent which shall be accomplished as follows:
Acquiror and the Transferor Stockholder Agent shall use their best
efforts to mutually agree upon a successor agent within thirty (30)
days after receiving such notice. If the parties fail to agree upon
a successor escrow agent within such time, Acquiror shall have the
right to appoint a successor escrow agent. The successor escrow
agent selected in the preceding manner shall execute and deliver an
instrument accepting such appointment and it shall thereupon be
deemed the Escrow Agent hereunder and it shall without further acts
be vested with all the estates, properties, rights, powers, and
duties of the predecessor Escrow Agent as if originally named as
Escrow Agent. Thereafter, the predecessor Escrow Agent shall be
discharged from any further duties and liabilities under this
Agreement.
13. Limitation On Liability. Notwithstanding any other provision of
this Agreement to the contrary, absent fraud or bad faith, the liability of
Transferor with respect to any claim for a breach of any representation,
warranty, covenant or agreement contained in this Agreement shall be limited to
the assets of the Escrow Fund, and no Principal Stockholder shall have any
liability to Acquiror or arising from any breach after the termination of the
Escrow other than with respect to claims made prior to such termination under
Section 11.2(c) (and liability with such claims shall be limited to the amount
held in the Escrow as a result thereof).
26
14. Construction and Interpretation..
14.1 The headings or titles of the sections of this Agreement are
intended for ease of reference only and shall have no effect whatsoever on the
construction or interpretation of any provision of this Agreement. References
herein to sections are to sections of this Agreement unless otherwise specified.
14.2 Meanings of defined terms used in this Agreement are equally
applicable to singular and plural forms of the defined terms. The masculine
gender shall also include the feminine and neutral genders and vice versa.
14.3 As used herein, (i) the term "party" refers to a party to this
Agreement, unless otherwise specified, (ii) the terms "hereof," "herein,"
"hereunder," and similar terms refer to this Agreement as a whole and not to any
particular provision of this Agreement, (iii) the term "this transaction" refers
to the transaction contemplated by this Agreement, (iv) the term "including" is
not limiting and means "including without limitation," (v) the term "documents"
includes all instruments, documents, agreements, certificates, indentures,
notices, and other writings, however evidenced, and (vi) the term "property"
includes any kind of property or asset, real, personal, or mixed, tangible or
intangible.
14.4 In the event any period of time specified in this Agreement
ends on a day other than a Business Day, such period shall be extended to the
next following Business Day. In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding," and the
word "through" means "to and including."
14.5 This Agreement is the product of arm's length negotiations
among, and has been reviewed by counsel to the parties and is the product of all
the parties. Accordingly, this Agreement shall not be construed for or against
any party by reason of the authorship or alleged authorship of any provision
hereof.
15. Miscellaneous Provisions.
15.1 Survival of Covenants. Each covenant or agreement of the
parties set forth in this Agreement which by its terms expressly provides for
performance after the Closing Date shall survive the Closing and be fully
enforceable thereafter.
15.2 Expenses. Except as otherwise provided, each party shall bear
its own expenses incurred in connection with the preparation, execution, and
performance of this Agreement and this transaction, including all fees and
expenses of its own Representatives or any other similar payment in connection
with this transaction.
15.3 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties and, subject to the
restrictions on assignment set forth herein, their respective successors and
assigns.
27
15.4 Assignment. Neither party shall assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party. No assignment of this Agreement shall release the assigning party from
its obligations under this Agreement.
15.5 Notices. All notices under this Agreement shall be in writing.
Notices may be (i) delivered personally, (ii) transmitted by facsimile, (iii)
delivered by a recognized national overnight delivery service, or (iv) mailed by
certified United States mail, postage prepaid and return receipt requested.
Notices to any party shall be directed to its address set forth below, or to
such other or additional address as any party may specify by notice to the other
party. Any notice delivered in accordance with this Section 13.5 shall be deemed
given when actually received or, if earlier, (a) in the case of any notice
transmitted by facsimile, on the date on which the transmitting party receives
confirmation of receipt by facsimile transmission, telephone, or otherwise, if
sent during the recipient's normal business hours or, if not, on the next
Business Day, (b) in the case of any notice delivered by a recognized national
overnight delivery service, on the next Business Day after delivery to the
service or, if different, on the day designated for delivery, or (c) in the case
of any notice mailed by certified U.S. mail, two (2) Business Days after deposit
therein.
If to TRANSFEROR: Alternative Construction Technologies
Corp.
000 Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
With a copy to: ___________, Esq.
_________________
_________________
__________________
If to ACQUIROR: Alternative Construction Company, Inc.
0000 X. Xxxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
With a copy to: Xxxxxx Xxxx, Esq.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
15.6 Waiver. Any party's failure to exercise any right or remedy
under this Agreement, delay in exercising any such right or remedy, or partial
exercise of any such right or remedy shall not constitute a waiver of that or
any other right or remedy hereunder. A waiver of any Breach of any provision of
this Agreement shall not constitute a waiver of any succeeding Breach of such
provision or a waiver of such provision itself. No waiver of any provision of
this Agreement shall be binding on a party unless it is set forth in writing and
signed by such party.
28
15.7 Amendment. This Agreement may not be modified or amended
except by the written agreement of the parties.
15.8 Severability. If any provision of this Agreement is held
invalid, illegal, or unenforceable, then (i) such provision shall be enforceable
to the fullest extent permitted by applicable law, and (ii) the validity and
enforceability of the other provisions of this Agreement shall not be affected
and all such provisions shall remain in full force and effect.
15.9 Integration. This Agreement, including the Exhibits and
Schedules hereto, contains the entire agreement and understanding of the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements with respect thereto. The parties acknowledge and
agree that there are no agreements or representations relating to the subject
matter of this Agreement, either written or oral, express or implied, that are
not set forth in this Agreement, in the Exhibits and Schedules to this
Agreement.
15.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida (without regard to
the principles thereof relating to conflicts of laws).
15.11 Arbitration. All disputes or claims arising out of or
relating to this Agreement, or the breach hereof, including disputes as to the
validity and/or enforceability of this Agreement or any portion thereof, and any
claims for indemnification under the provisions of this Agreement, shall be
resolved by binding arbitration conducted in Sarasota, Florida. Any arbitration
pursuant to this Section 12.11 shall be conducted, upon the request of any
party, before a single arbitrator selected by the parties or, failing agreement
on the choice of an arbitrator within thirty (30) days of service of written
demand for arbitration, by an arbitrator designated by the Presiding Judge of
the Superior Court for Xxxxxxx County, Florida. The arbitrator shall be a
practicing attorney licensed to practice in one or more of the fifty (50)
states, with substantial experience in commercial and/or commercial litigation
matters, who has been in active practice for at least ten (10) years. Such
arbitration shall be conducted in accordance with the laws of the State of
Florida and pursuant to the commercial arbitration rules of the American
Arbitration Association (although not under the auspices of the American
Arbitration Association) and such of the federal rules of civil procedure as the
arbitrator may determine. The arbitration shall be conducted within forty-five
(45) days of the selection of the arbitrator and the arbitrator shall render his
or her decision within twenty (20) days after conclusion of the arbitration. The
prevailing party in the arbitration shall be entitled as a part of the
arbitration award to the costs and expenses (including reasonable attorneys'
fees and the fees of the arbitrator) of investigating, preparing, and pursuing
or defending the arbitration claim as such costs and expenses are awarded by the
arbitrator. The duty to arbitrate shall survive a termination or cancellation of
this Agreement and shall be specifically enforceable under applicable federal
law and the prevailing arbitration law of the State of Florida. The decision of
the arbitrator shall be final and binding upon the parties and enforceable in
any court of competent jurisdiction.
15.12 Execution. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one and the same agreement.
Each party may rely upon the signature of each other party on this Agreement
that is transmitted by facsimile as constituting a duly authorized, irrevocable,
actual, current delivery of this Agreement with the original ink signature of
the transmitting party.
29
15.13 Waiver of Conflicts The parties acknowledge that certain of
the principals of QMC may have independent agreements with ACC providing for
their employment after the Closing. The terms and conditions of these agreements
have been negotiated in good faith and at arms-length. Any conflict of interest,
whether real or implied resulting from these prior agreements are deemed by the
parties hereto to be waived.
15.14 Incorporation of Recitals, Exhibits, and Schedules. The
Recitals to this Agreement and all Exhibits and Schedules to this Agreement are
incorporated herein by this reference.
15.15 Further Assurances. Each party agrees to execute and deliver
such additional documents and instruments as may reasonably be required to
effect this transaction fully, so long as the terms thereof are consistent with
the terms of this Agreement.
15.16 No Third Party Beneficiaries. This Agreement is made and
entered into for the sole protection and legal benefit of Transferor and
Acquiror, and, subject to the restrictions on assignment set forth herein, their
respective successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement.
15.17 Bulk Sales Acquiror hereby waives compliance by transferor
with the provisions of any applicable bulk sales law (including the applicable
sections of the Uniform Commercial Code of any state, and transferor hereby
agrees to indemnify and hold Acquiror harmless for any liability, cost and
expenses resulting from any such non-compliance.
30
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
TRANSFEROR: ALTERNATIVE CONSTRUCTION TECHNOLOGIES CORP.
A Tennessee corporation
By:____________________________________________
Name: _________________________________________
Its:____________________________________________
ACC: ALTERNATIVE CONSTRUCTION COMPANY, INC,
a Florida corporation
By:______________________________________________
Name: ___________________________________________
Its: ______________________________________________
31
EXHIBIT A
---------
The following are the assets used in the Business:
PATENTS
-------
U.S PATENT NO. DATE ISSUED INVENTORS
-------------- ----------- ---------
6,438,906 Xxxxxx 00, 0000 Xxxxxxxxxxx, Xxxxx,
Xxxxxx, Xxxx
5,373,678 December 20, 1994 Xxxxxxx X. Xxxxxx,
Al Demopolis
5,827,458 October 27, 1998 Xxxxx X. Xxxxxxx
ACCOUNTS RECEIVABLE
-------------------
Xxxxxx $86,780.86
Xxxxx 1,054.21
Wilshire 41,329.94
Xxxxxx 1,809.26
Crown 8,024.17
Daedalus 11,073.29
Xxxx 19,377.94
Xxxxxxx 15,339.82
Aih 30,990.55
Xxxxxx 18,629.50
Xxxx 49,677.40
FIXED ASSETS
------------
ITEMS COST ACCUM DEPREC BOOK VALUE
----- ---- ------------ ----------
Furniture/Fixtures 10,597.09 9,392.90 1,204.19
Computer Equipment 37,678.47 36,070.93 1,245.34
Machinery Equipment 170,696.77 101,588.54 69,108.23
Building Upgrades 31,693.79 11,976.10 19,717.69
1
EXHIBIT B
---------
ASSUMED LIABILITIES
-------------------
The only assumed liabilities of Transferor pursuant to the terms and
conditions of this Agreement shall be:
Invoice from Linden Industries, Inc., Invoice #6083, dated October 5,
2004 in the amount of $234,956.68. This invoice is for final payment and
installation of the following:
One (1) Pentane Bulk Storage System and Penta-Meter Pentane
Metering Machine Per Confirmation of Order No. 2818-1.
1
EXHIBIT C
---------
XXXX OF SALE
AND
ASSIGNMENT AND ASSUMPTION
This Xxxx of Sale and Assignment and Assumption Agreement (this "Xxxx
of Sale"), dated as of January 15, 2005 (the "Effective Date") by and between
Alternative Construction Technologies Corp., a Florida corporation
("Transferor"), and Alternative Construction Company, Inc., a Florida
corporation ("ACC" or "Acquiror").
RECITALS:
---------
A. TRANSFEROR and ACC entered into that certain Purchase Agreement,
December 14, 2004 (the "Agreement"), which provides, on the terms and conditions
set forth therein, for the transfer by Transferor and purchase by Acquiror of
the Business of Transferor as set forth in the Agreement. Capitalized terms used
herein without definition shall have the meanings ascribed to them in the
Agreement.
B. The assets being sold by Transferor and purchased by Acquiror
include, but are not limited to, all of Transferor's tangible and intangible
property used in the Business (the "Purchased Assets") as set forth in the
Agreement.
C. Acquiror desires to obtain all right, title and interest in and to
any and all of the Purchased Assets.
D. This Xxxx of Sale is being executed and delivered in order to effect
the transfer of the Purchased Assets to Acquiror, as provided in the Agreement.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Transferor agree as follows:
1. Assignment. Transferor hereby sells, grants, conveys, bargains,
transfers, assigns and delivers to Acquiror, and to Acquiror's successors and
assigns, all of Transferor's rights, titles and interests, legal and equitable,
throughout the world, in and to the Purchased Assets, to have and to hold the
same forever. This is a transfer and conveyance by Transferor to Acquiror of
good and marketable title to the Purchased Assets, free and clear of all
encumbrances except as provided in the Agreement or on the Schedules thereto.
Subject to the conditions and limitations contained in the Agreement, Transferor
hereby covenants and agrees to warrant and defend title to the Purchased Assets
against any and all claims whatsoever to the extent represented and warranted to
in the Agreement.
2
2. Assumption. Acquiror, in consideration of the assignment, hereby
assumes and undertakes to discharge, as appropriate in accordance with their
terms, all of the Assumed Liabilities except as otherwise set forth in the
Agreement. Except as provided for in this Xxxxxxxxx 0, Xxxxxxxx is not hereby
assuming, and the Acquiror shall not assume or otherwise be obligated to pay,
perform, satisfy or discharge, any liabilities or obligations of Transferor or
the Business.
3. Further Assurances. Transferor agrees that it will, at Acquiror's
request at any time and from time to time after the date hereof and without
further consideration, do, execute, acknowledge and deliver or will cause to be
done, executed, acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and other instruments
and assurances as may be considered by Acquiror, its successors and assigns, to
be necessary or proper to better effect the sale, conveyance, transfer,
assignment, assurance, confirmation and delivery of ownership of the Purchased
Assets to Acquiror, or to aid and assist in collecting and reducing to the
possession of Acquiror, any and all Purchased Assets.
4. Amendment or Termination; Successors and Assigns. This Xxxx of Sale
may not be amended or terminated except by a written instrument duly signed by
each of the parties hereto. This Xxxx of Sale shall inure to the benefit of, and
be binding upon, each of the parties hereto and their respective successors and
assigns.
5. No Third Parties. Nothing in this Xxxx of Sale, expressed or
implied, is intended or shall be construed to confer upon or give to any person,
firm or corporation other than Acquiror and Transferor, their successors and
assigns, any remedy or claim under or by reason of this instrument or any term,
covenant or condition hereof, and all of the terms, covenants, conditions,
promises and agreements contained in this instrument shall be for the sole and
exclusive benefit of the Acquiror and Transferor, their successors and assigns.
6. Construction. This Xxxx of Sale, being further documentation of a
portion of the conveyances, transfers and assignments provided for in and by the
Agreement, neither supersedes, amends, or modifies any of the terms or
provisions of the Agreement nor does it expand upon or limit the rights,
obligations or warranties of the parties under the Agreement. In the event of a
conflict or ambiguity between the provisions of this Xxxx of Sale and the
Agreement, the provisions of the Agreement will be controlling.
7. Governing Law. The rights and obligations of the parties under this
Xxxx of Sale will be construed under and governed by the internal laws of the
State of Florida (regardless of its or any other jurisdiction's conflict-of-law
provisions).
8. Counterparts. This Xxxx of Sale may be executed by facsimile in one
or more counterparts and by facsimile, each of which shall be deemed an original
and all of which taken together shall constitute one and the same instrument.
3
IN WITNESS WHEREOF, the parties have executed this Xxxx of Sale as of
the Effective Date.
TRANSFEROR: ALTERNATIVE CONSTRUCTION
TECHNOLOGIES CORP.
a Tennessee corporation
By: __________________________
Name: __________________________
Its: __________________________
ACQUIROR: ALTERNATIVE CONSTRUCTION
COMPANY, INC.
a Florida corporation
By: ____________________________
Name: ____________________________
Its: ____________________________
4
EXHIBIT D
---------
MUTUAL RELEASE AGREEMENT
This Mutual Release Agreement (this "Release Agreement"), dated as of
January 15, 2004 (the "Effective Date"), by and between Alternative Construction
Technologies, Corp., a Tennessee corporation ("Transferor") and Alternative
Construction Company, Inc., a Delaware corporation ("ACC or Acquiror").
RECITALS
WHEREAS, Transferor and ACC are parties to that certain Purchase
Agreement, dated December 14, 2004 (the "Purchase Agreement"), and this Release
Agreement is that certain Release Agreement as that term is defined in the Asset
Purchase Agreement; and
WHEREAS, Transferor and ACC now wish to enter into this Release
Agreement with respect to the consummation of the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
1. Definitions. Any capitalized term used in this Release Agreement
without definition shall have the meaning given to such term in the Purchase
Agreement.
2. Release by Transferor. Transferor hereby fully, forever,
irrevocably, and unconditionally releases and discharges ACC, including, as
applicable, all past and present officers, directors, stockholders, affiliates
(including, but not limited to, parent, subsidiary and affiliated corporations),
agents, employees, representatives, lawyers, administrators, spouses, and all
persons acting by, through, under, or in concert with them, from any and all
claims, damages or other sums, including attorneys' fees and costs, which
Transferor may have against them, or any of them, which could have arisen out of
any act or omission occurring from the beginning of time to the effective date
of this Agreement, whether now known or unknown, and whether asserted or
unasserted.
3. Release by Aquiror. Aquiror hereby fully, forever, irrevocably, and
unconditionally releases and discharges Transferor, including, as applicable,
all past and present officers, directors, stockholders, affiliates (including,
but not limited to, parent, subsidiary and affiliated corporations), agents,
employees, representatives, lawyers, administrators, spouses, and all persons
acting by, through, under, or in concert with them, from any and all claims,
damages or other sums, including attorneys' fees and costs, which Aquiror may
have against them, or any of them, which could have arisen out of any act or
omission occurring from the beginning of time to the effective date of this
Agreement, whether now known or unknown, and whether asserted or unasserted.
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4. Miscellaneous.
4.1 Severability. The invalidity of all or any part of this Release
Agreement shall not render invalid the remainder of this Release Agreement. In
the event a court of competent jurisdiction should decline to enforce any
provision of this Release Agreement, such provision shall be reformed to the
extent necessary in the judgment of such court to make such provision
enforceable to the maximum extent that the court shall find enforceable.
4.2 Notices. Any notice hereunder shall be sufficient if in writing
and telefaxed to the party or sent by certified mail, return receipt requested
and addressed as follows:
If to TRANSFEROR ALTERNATIVE CONSTRUCTION TECHNOLOGIES CORP.
000 Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
With a copy to: __________, Esq.
______________
______________
______________
If to ACC: Alternative Construction Company, Inc.
0000 X. Xxxxxx Xxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, XX 00000
With a copy to: Xxxxxx Xxxx, Esq.
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
4.3 Governing Law. This Agreement is made and shall be construed and
performed in accordance with the laws of the State of Florida.
4.4 Waiver of Agreement. Any term or condition of this Release
Agreement may be waived at any time by the party that is entitled to the benefit
thereof, but no such waiver shall be effective unless set forth in a written
instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party of any term or condition of this Release
Agreement, in any one or more instance, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Release Agreement on
any future occasion. All remedies, either under this Release Agreement, by law
or otherwise, will be cumulative and not alternative.
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4.5 Headings. The headings of the sections of this Release Agreement
are for convenience and reference only and are not to be used to interpret or
define the provisions hereof.
4.6 Counterparts. This Release Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which shall constitute one (1) instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the parties has caused this Release
Agreement to be executed as of the Effective Date.
TRANSFEROR: ALTERNATIVE CONSTRUCTION
TECHNOLOGIES CORP.
A Tennessee corporation
By: __________________________
Name: __________________________
Its: __________________________
ACC: ALTERNATIVE CONSTRUCTION
COMPANY, INC.
a Florida corporation
By: ____________________________
Name: ____________________________
Its: ____________________________
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EXHIBIT E
---------
TERMS OF SERIES B PREFERRED STOCK
---------------------------------
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Preferred Stock" and the number of shares
constituting such series shall be five million (5,000,000). Such
number of shares may be increased or decreased by resolution of the
Board of Directors; provided, however, that no decrease shall
reduce the number of shares of Series B Preferred -------- -------
Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible
into Series B Preferred Stock.
Section 2. Voting Rights.
(A) The shares of Series B Preferred Stock shall be entitled to
that number of votes equal to the largest whole number of shares of
Common Stock into which the shares of Series B Preferred Stock may
be converted at the time of such vote.
(B) Except as otherwise provided herein, by law, or in any other
Certificate of Designation creating a series of preferred stock or
any similar stock, the holders of shares of Series B Preferred
Stock, the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section 3. Conversion
(A) Optional Conversion. Except when automatically converted
pursuant to Section 3(B) or when liquidated pursuant to Section 4,
the shares of Series B Preferred Stock upon issuance shall be
convertible at the option of the stockholder into shares of Common
Stock. Each share of the Series B Preferred Stock shall initially
be convertible into one share of Common Stock (the "Conversion
Ratio"). Upon conversion pursuant to this Section 3(A), any accrued
but unpaid cash dividends, on the shares of Series B Preferred
Stock being converted will be paid by the Corporation out of
lawfully available funds or an equivalent value, based on the then
fair market value of the Corporation, or additional shares of
Common Stock with the choice between cash or additional shares of
Common Stock being at the discretion of the converting stockholder,
which choice shall be set forth in such converting stockholder's
notice of conversion. If the Corporation and the converting
stockholder cannot agree upon the fair market value of the
Corporation then the converting stockholder shall receive any
accrued but unpaid cash dividends on the shares of Series B
Preferred Stock being converted in cash.
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(B) Automatic Conversion. The shares of Series B Preferred Stock
shall be automatically converted into shares of Common Stock upon
(i) a registration of any class of equity securities of the
Corporation with the U.S. Securities and Exchange Commission or
(ii) the approval of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the outstanding shares of Series B
Preferred Stock. Any accrued but unpaid cash dividends, on the
shares of Series B Preferred Stock being converted shall be paid
similarly as in Section 3(A).
Section 4. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of
Series B Preferred Stock shall have received $_______ per share,
(the "Series B Liquidation Preference"). Following the payment of
the full amount of the Series B Liquidation Preference, no
additional distributions shall be made to the holders of shares of
Series B Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received the Common Adjustment,
as defined by the Certificate of Designation, Preferences, and
Rights of Series A Preferred Stock of the Corporation. Following
the payment of the full amount of the Series B Liquidation
Preference and the Common Adjustment in respect of all outstanding
shares of Series A Preferred Stock and Common Stock, respectively,
holders of Series B Preferred Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed on an
as if converted basis.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B Liquidation
Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series B
Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their
respective liquidation preferences.
(C) Neither the consolidation, merger or other business combination
of the Corporation with or into any other entity, or the sale,
lease, exchange or conveyance of all or any part of the property,
assets or business of the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for
purposes of this Section 4.
Section 5. Consolidation, Merger, etc. In the event the Corporation shall
enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any event the shares of Series B Preferred Stock
shall at the same time be similarly exchanged or changed in an
amount per share equal to the Conversion Ratio times the aggregate
amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.
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Section 6. Adjustment of Conversion Ratio The Conversion Ratio shall be
adjusted for any pro rata non-cash distributions to holders of
shares of Common Stock, including without limitation, stock
dividends, stock splits and securities issued in a
recapitalization. In such event the Conversion Ratio shall be
adjusted by multiplying the Conversion Ratio by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. No Redemption. The shares of Series B Preferred Stock shall not be
redeemable.
Section 8. Priority. The Series B Preferred Stock shall rank senior to the
Corporation's Common Stock, and junior to the Series A Preferred
Share and all other series of the Corporation's preferred stock, as
to the payment of dividends and the distribution of assets unless
the terms of any such series shall provide otherwise.
Section 9. Amendment. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the
Series B Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the outstanding shares of Series B
Preferred Stock, voting together as a single class.
Section 10. Fractional Shares. Series B Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series B Preferred Stock.
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SCHEDULE 4.2.1
--------------
CONSENTS
--------
[INSERT AGREEMENTS WHICH ARE BEING ASSIGNED]
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