STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of the 2nd day
of July, 2007 by and among BEDMINSTER NATIONAL CORP. , a Nevada
corporation (“Buyer”), METROPOLITAN COMPUTING CORPORATION, a
New Jersey corporation (the “Corporation”) and XXXXXXX XXXXX,
an adult individual (“Xxxxxxx”or “Seller”), being the owner of record of all of
the issued and outstanding capital stock of the Corporation
BACKGROUND
WHEREAS,
the Corporation is engaged in the production and sale
of instrumentation, data acquisition systems, high-speed production
tablet press replication and tablet press control systems for the pharmaceutical
industry (the “Business”);
WHEREAS,
Seller own all of the issued and outstanding capital stock of the Corporation,
consisting of 100 shares of common stock, no par value (the “Stock”);
and
WHEREAS,
Buyer has had the opportunity to conduct due diligence on the Corporation,
and
Seller has had the opportunity to conduct due diligence on the Buyer;
and
WHEREAS,
Seller desire to sell, and Buyer desires to purchase, 80 shares of
the Stock (the “Acquisition Shares”) on the following terms and
conditions.
NOW,
THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth in this Agreement, and intending to be
legally bound, the parties agree as follows:
1. DEFINITIONS
1.1 Certain
Defined Terms.
As
used
in this Agreement, the following terms have the meanings set forth
below:
“Assets”
means all of the assets of the Corporation used in connection with, or necessary
to the operation of, the Business, other than the Excluded Assets.
“Balance
Sheet” means the audited balance sheet of the Corporation as of December 31,
2006.
“Business
Documents” means all of the Corporation’s rights in, to and under all
agreements, contracts, licenses, permits and manufacturers’ warranties,
including all leases of equipment which involve payments in excess of $500.00
annually, telephone book listing agreements and noncompetition and nondisclosure
agreements, in each case to which the Corporation is a party.
“Buyer
Promissory Note” means the non-recourse Promissory note described in
Section 2.2 (b)(ii) below having a term of 3 years and bearing interest at
the
rate of 8% per annum, secured by a pledge of forty (40) Acquisition
Shares, and in the form set forth in Schedule
2.2(b)(ii).
“Code”
means the Internal Revenue Code of 1986, as amended.
“Corporation
Material Adverse Effect” means a material adverse effect on the Business, the
Assets, the financial condition or results of operations of the Corporation
and
shall include any increase in the liabilities of the Corporation,
after December 31, 2006, individually or in the aggregate,
greater than 10% when compared to the Balance Sheet, and shall exclude adverse
changes (a) resulting from general political, economic or market conditions
that
affect generally the industry and market in which the Corporation operates;
and
(b) in relationships with customers, suppliers and employees that directly
result from the announcement of the proposed acquisition of the Acquisition
Shares by Buyer and/or any of the transactions contemplated hereby.
“Employment
Agreement” means the agreement between Seller and Corporation, entered into at
Closing having a (5) year term and setting forth mutually agreed
salary and benefits and other standard provisions including a non-compete
clause
all in the form set forth in Schedule 2.3(c).
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Excluded
Assets” means the personal property of Seller listed on Schedule 1.1
hereto.
“GAAP”
means U.S. generally accepted accounting principles, consistently
applied.
“Liens”
means liens, claims, charges, encumbrances, leases, pledges, security interests,
mortgages, defects in title, equities, covenants and other restrictions of
any
nature whatsoever.
“Line
of
Credit Agreement” means the Agreement described in Section 2.3 (b) below, in the
form set forth in Schedule 2.3(a).
“Permitted
Encumbrances” means (a) Liens for taxes not yet due and payable; (b) Liens that
do not interfere with the use or enjoyment by the Corporation of its Assets
or
that are otherwise not material to the Corporation; and (c) Liens set forth
on
Schedule 3.7.
-2-
“Person”
means an individual, partnership, corporation, limited liability company,
joint
stock company, unincorporated organization or association, trust or joint
venture, or a governmental agency or political subdivision thereof.
“Plans”
means all pension, savings, profit sharing, retirement, deferred compensation,
employment, welfare, fringe benefit, insurance, short and long term disability,
incentive, bonus, stock, vacation pay, severance pay and similar plans, programs
or arrangements, including all employee benefit plans as defined in
Section 3(3) of ERISA.
“Put
and
Call Agreement” has the meaning set forth in section 2.3(c) below, in the form
set forth in Schedule 2.3(b).
2. PURCHASE
PRICE AND CLOSING
2.1 Agreement
to Purchase and Sell.
Upon
the
terms and subject to the conditions of this Agreement, Seller agree to sell,
transfer, assign and deliver to Buyer, and Buyer agrees to purchase from
Seller,
at the Closing, all of the Stock.
2.2 Purchase
Price.
(a) The
purchase price for the Acquisition Shares is Eight Hundred
Thousand Dollars ($800,000.00) plus 1,000,000 shares of the Class A
Common Stock of Buyer, (the “Purchase Price”); provided, however, that
the Purchase Price will be adjusted in accordance with the terms
hereof.
(b) Buyer
shall pay the Purchase Price to Seller as follows:
(i) Three
Hundred Thousand and 00/100 Dollars ($300,000.00) (the “Cash Payment”)
shall be paid at Closing by federal funds wire transfer or other form of
immediately available funds in accordance with Seller’s written instructions,
and
(ii) Three
Hundred Thousand and 00/100 Dollars ($300,000.00) shall be paid by the Buyer
Promissory Note which shall be delivered at the Closing, and
(iii)
An
aggregate of Two Hundred Thousand and 00/100 Dollars and 1,000,000 shares
of the
Class A Common Stock of Buyer to be earned by Seller and paid by Buyer, as
follows:
Seller
shall earn $20,000 and 100,000 shares of the Class A Common Stock of Buyer
for
each $100,000 of pre-tax income (Pre-tax income is understood to be earnings
before interest and taxes or “EBIT” calculated in accordance with Generally
Accepted Accounting Principles) earned by the Corporation, over $50,000,
and
after payment of employee compensation and bonuses, but
before payment of any management service fees; and before any
distributions or dividends to shareholders. Pre-tax income for
purposes of this calculation shall be determined each year not later than
March
31 following the applicable calendar year (provided that if Buyer has not
received its annual audit report for such calendar year, the calculation
shall
be made thereafter upon receipt of such audit report). Payment will
be made within 30 days of receipt of the Buyer’s annual audit report.
By way of example and not by way of limitation:
Year
1: Corporation earns $250,000 in pre-tax income. Seller
earns $40,000 and 200,000 shares of the Class A Common Stock of
Buyer.
-3-
|
Calculation:
|
$250,000
– $50,000 = $200,000
|
|
|
$200,000
÷ 100,000 = 2
|
|
2
X
$20,000 = $40,000
|
|
|
2
X
100,000 shares = 200,000 shares
|
Year
2: Corporation
earns $175,000 in pre-tax income. Seller earns $25,000 and 125,000
shares of the Class A Common Stock of Buyer.
|
Calculation:
|
$175,000
– $50,000 = $125,000
|
|
|
$125,000
÷ 100,000 = 1.25
|
|
1.25
X $20,000 = $25,000
|
|
|
1.25
X 100,000 shares = 125,000 shares
|
Pre
tax
earnings shall be calculated and payments made following the close of
each calendar year after Closing until the earlier of (I) earning by
and payment to Seller of an aggregate of $200,000 and 1,000,000 shares
of the Class A Common Stock of Buyer, or (II) the determination of
pre tax income and payment of any amounts earned in respect of the fifth
(5th) full
calendar
year after Closing. Pre tax earnings will be pro-rated for Calendar Year
2007,
from the date of Closing to December 31, 2007.
(c) Buyer
agrees to reserve for issuance hereunder 1,000,000 authorized but unissued
Class
A Shares.
2.3 Closing
and Post Closing Arrangements.
-4-
(a) At
Closing, Corporation shall enter into a Line of Credit Agreement
providing for a Line of Credit from Buyer, in favor of the
Corporation, of Four Hundred Thousand
dollars ($400,000) having normal and customary terms and
conditions. The proceeds of the Line of Credit will be used first to
pay off any Corporation institutional financing in existence at the time
of the
Closing. In addition, Buyer will use commercially reasonable efforts
to arrange for another institution to make available to Corporation
up to an additional $100,000 in credit (the “Additional Credit”). In the event
that, by the first anniversary of the Closing, less than $100,000 in Additional
Credit has been made available to Corporation, Buyer shall make available
to
Corporation an amount equal to the difference between the Additional Credit
and
$100,000. If no Additional Credit has been made available, then Buyer
shall make available the full $100,000. If Buyer fails to arrange for or
make
available the Additional Credit by the first anniversary of the Closing,
Buyer
shall treat $100,000 of the outstanding principal advanced to the Corporation
under the Line of Credit as a capital contribution, and Corporation’s maximum
liability for repayment of principal under the Line of Credit shall be
$300,000. Notwithstanding such conversion, however, the Corporation
shall remain liable for interest on all amounts drawn under the Line of Credit
until the same are repaid or converted to a capital contribution, as
appropriate. The amounts drawn down under Buyer’s line of credit shall bear
interest at the rate of 8%, and all amounts drawn down and the
interest accrued thereon shall be repaid one year from the date of the first
Anniversary of the Closing.
(b)
At
Closing, Seller and Buyer shall execute and deliver the Put and Call Agreement
in the form of Schedule 2.3(b)..
(c) At
Closing, Seller will execute the Employment Agreement with the Corporation
in
the form of Schedule 2.3(c).
(d) At
Closing, Corporation and Buyer will execute Management Services Agreement
in the
form annexed hereto as Schedule 2.3(d), providing for, among other things,
a
management fee equal to 3% of the Corporation’s gross revenues .
(e) At
Closing, without limiting Buyer’s rights as a majority shareholder of the
Corporation, Buyer shall have the right to elect up to two additional Directors
to the Board of Directors of the Corporation.
(f) No
dividends or distributions shall be paid to Buyer or Seller until all payments
due to Seller have been earned and paid and the line or lines of credit
described in Section 2.3 (a) have been repaid in full.
(g) Following
Closing, and for so long as the Put and Call Agreement remains in effect
and
unexercised, Buyer agrees that it will not with respect to the Corporation,
directly or indirectly, issue or cause to be issued shares of stock of any
class
or series or other security issued as a new issue, stock-split or dividend,
whether such shares be now authorized or not, such that the equity in the
Corporation, represented by the Retained Shares as defined in the Put and
Call
Agreement, shall be diluted below 20%. This covenant of Buyer does
not extend to the capital stock or any other security of Buyer or any affiliate
of Buyer other than the Corporation.
-5-
2.4 Closing
Date.
The
consummation of the transfer and delivery of the Acquisition Shares to Buyer
and
the receipt of the consideration therefor by Seller will constitute the
“Closing.” The Closing will occur on or before July 2, 2007,
the exact date to be mutually agreed upon by the parties, provided all
conditions precedent to Buyer’s and Seller’s obligations to consummate these
transactions have been satisfied on or before such date, which date will
constitute the “Closing Date”.
3. REPRESENTATIONS,
WARRANTIES AND COVENANTS OF SELLER AND
CORPORATION
As
an
inducement to Buyer to enter into this Agreement and to consummate these
transactions, the Seller and Corporation represent, warrant and covenant
to
Buyer with respect to the Corporation and Seller, as follows:
3.1 Organization
and Corporate Documents.
(a) The
Corporation is a corporation duly incorporated and organized, validly existing
and in good standing under the laws of the State of New Jersey and has the
requisite corporate power and authority to own or lease all of the Assets,
to
own and operate the Business and to carry on the Business as now
conducted. The Corporation has no subsidiaries, except for MCC
Marketing, L.L.C. which will be dissolved. Seller will deliver at
Closing a duly filed Certificate of Cancellation for MCC Marketing
L.L.C.
(b) Except
as
set forth on Schedule 3.1 (b), the Corporation has not, within the past six
(6) years, changed its corporate name, been the surviving entity of a merger
or
consolidation, or acquired all or substantially all of the assets of any
person
or entity. Schedule 3.1(b) also sets forth all of the fictitious
names under which the Corporation or such predecessors have conducted
business.
(c) The
Certificate of Incorporation of the Corporation and all amendments thereto,
as
certified by the New Jersey Division of Revenue, Certification and Status
Unit,
and the Bylaws of the Corporation, as amended to date, as certified by the
Secretary of the Corporation, as attached to Schedule 3.1(c), are true, complete
and correct, and the minute books of the Corporation, all of which have been
made available to Buyer, correctly reflect all corporate actions taken at
the
meetings reported therein and correctly record all resolutions adopted at
those
meetings.
3.2 Capitalization.
The
authorized capital stock of the Corporation consists solely of 2500 shares
of
common stock, no par value, of which 100 shares are issued and
outstanding. All of the issued and outstanding shares of the
Corporation’s common stock are validly issued, fully paid and
nonassessable. 100 shares of the Corporation’s common stock are owned
by Seller. There are no outstanding subscriptions, options, rights,
warrants, conversion rights, agreements or commitments of any kind outstanding
obligating the Corporation to issue, acquire or transfer any shares of its
capital stock.
-6-
3.3 Ownership
and Transfer of Stock.
Seller
owns all of the Stock, including the Acquisition Shares beneficially
and of record, free and clear of all liens, encumbrances, pledges, options,
warrants, rights of first refusal, claims, charges and restrictions of any
nature, including but not limited to any claims of Xxxx
Xxxxxx. Seller has the full right and power to transfer the Acquisition Shares to Buyer
without obtaining the consent of any other person or governmental
authority.
3.4 Authority
of Seller.
Seller
has full power and authority to enter into this Agreement, to consummate
the
transactions described in this Agreement and to comply with the terms,
conditions and provisions hereof. This Agreement has been duly
executed and delivered by Seller and is, and each other agreement or instrument
of Seller contemplated by it will be, when executed and delivered by Seller,
the
legal, valid and binding agreement of Seller, enforceable against Seller
in
accordance with its respective terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors’
rights generally or by general equitable principles (the “Bankruptcy
Exception”). The execution, delivery and performance of this
Agreement, and the other agreements of Seller described in this Agreement,
do
not require the consent of or notice to any third-party, except as set forth
on
Schedule 3.4 and except for consents of, or notices to, any third-party
which if not obtained prior to or on the Closing Date would not have a
Corporation Material Adverse Effect. Neither the execution and
delivery of this Agreement, nor the consummation of these transactions, will
conflict with or result in any violation of or constitute a default under
any
term of the Certificate of Incorporation or Bylaws of the Corporation, or
any
agreement, mortgage, debt instrument, indenture, or other instrument, judgment,
decree, order, award, law or regulation by which either Seller or the
Corporation is bound, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the Assets (other than a Permitted
Encumbrance), or result in the cancellation, modification, revocation or
suspension of any material license, certificate, permit or authorization
held by
Seller or the Corporation, excluding, in each case, any conflict or default
which would not have a Corporation Material Adverse Effect.
3.5 Locations
of Business.
(a) The
Corporation owns no real property.
(b) All
of
the real property used by the Corporation under lease is described on
Schedule 3.5 (b). The Corporation has valid and subsisting
leases for such real property. Except as disclosed on
Schedule 3.4, no such leases contain change of control provisions (or
similar provisions) requiring the Corporation to obtain the consent of another
party in order for such leases to remain in full force and effect after the
consummation of the transactions contemplated in this
Agreement. True, correct, and complete copies of such leases and all
amendments, assignments and consents thereto have been furnished by Seller
to
Buyer.
-7-
3.6 Absence
of Undisclosed Liabilities.
As
of
December 31, 2006, to the knowledge of Seller and the Corporation, the
Corporation had no liabilities of any nature, whether accrued, absolute,
contingent or otherwise (including liabilities as guarantor or otherwise
with
respect to obligations of others or liabilities for taxes due or then accrued
or
to become due), required to be reflected or disclosed in the Balance Sheet
(or
the notes thereto) that were not adequately reflected or reserved against
on the
Balance Sheet. The Corporation has no liabilities of any nature,
whether accrued, absolute, contingent or otherwise, other than liabilities:
(a) adequately reflected or reserved against on the Balance Sheet;
(b) described on Schedule 3.6; or (c) incurred since December 31,
2006 in the ordinary course of business and which are not likely, individually
or in the aggregate, to result in a Corporation Material Adverse
Effect.
3.7 Title
to Property.
Except
as
set forth on Schedule 3.7, to the knowledge of Seller
and the
Corporation, the Corporation has good and marketable title to (or valid
leasehold or contractual interests in) all of the Assets, free and clear
of all
Liens (other than Permitted Encumbrances). The parties agree that the Company’s
debt to Xxxxxxx Xxxxx which is secured by a Lien against the Assets of the
Company, will be paid off at closing from the proceeds and the parties will
cooperate to have such Lien will be released. The Assets include all
tangible property located or stored at the Corporation’s premises, except for
tangible property which is personally owned by one or more of Seller, and
is
described on Schedule 3.7, and which shall remain the property of such Seller(s)
after the Closing.
3.8 Compliance
with Laws; Litigation.
(a) Seller
and the Corporation, to the knowledge of Seller and the
Corporation, have complied, in all material respects, with all laws,
regulations, rules, writs, injunctions, ordinances, decrees or orders of
any
federal or state court or of any municipal or governmental department,
commission, board, bureau, agency or instrumentality which are applicable
to the
Stock, the Assets or the Business.
(b) Except
as
set forth on Schedule 3.8, there are no lawsuits, claims, suits,
proceedings or, to Seller’s knowledge, investigations, pending or, to Seller’s
knowledge, threatened against the Corporation or Seller, in which the
Corporation or Seller are a party, nor are there any lawsuits, claims, suits
or
proceedings pending in which the Corporation or Seller is the plaintiff or
claimant that relate to the Stock, the Assets or the Business and which could
reasonably be expected to result in any judgment, order, award or other decision
that would materially impair the ability of Seller to perform his obligations
under this Agreement, or which would result in a Corporation Material Adverse
Effect.
-8-
(c) Schedule
3.8 lists all existing disputes, to the knowledge of Seller and the
Corporation,, with customers of the Business relating to amounts invoiced
by the
Corporation to such customers or amounts to be invoiced to such customers
under
the Customer Contracts and which involve disputed amounts in excess of
$500.00.
3.9 Condition
of Assets; Insurance.
(a) The
equipment, furniture, leasehold improvements, fixtures, vehicles, any related
capitalized items and other tangible property material to the operation of
the
Business (collectively, the “Tangible Assets”) to the knowledge of Seller and
the Corporation, are in good operating condition and repair, ordinary wear
and
tear excepted. The Tangible Assets are available for immediate use in
the Business. All of the Tangible Assets and the state of maintenance
thereof to the knowledge of Seller and the Corporation, are in compliance
in all
material respects with all applicable statutes, ordinances, rules and
regulations. The Assets include all such assets and properties that
are necessary to conduct the Business as it is now being conducted.
(b) Schedule 3.9
sets forth a true and complete list of all insurance policies held by
Corporation or Seller insuring any of the Assets or relating to the
Business. Except as set forth on Schedule 3.9, all such policies are
on (and for the applicable statute of limitations period plus 1 year have
been
on) an “occurrence basis,” which means, for example, that if a claim arose after
the Closing Date for an event which occurred prior to the Closing Date, the
Corporation’s applicable insurance policies in existence on the date such event
occurred would cover such claim. All such policies are in full force
and effect and the Corporation has not received any written (or, to Seller’s
knowledge, oral) notice of cancellation with respect thereto. During
the past five (5) years, no application by the Corporation for insurance
with
respect to the Assets or the Business has been denied for any
reason. Seller has delivered to Buyer a copy of the Corporation’s
insurance claims history for the past five (5) years.
3.10 Absence
of Adverse Changes or Other Events.
Except
as
set forth on Schedule 3.10, since December 31, 2006, to the knowledge of
Seller
and the Corporation, the Corporation has not: (a) created or incurred any
liability (absolute or contingent) except in the ordinary course of business
and
which are not likely, individually or in the aggregate, to result in a
Corporation Material Adverse Effect; (b) loaned any money or otherwise
pledged its credit, or mortgaged, pledged or been subjected to any Lien (other
than a Permitted Encumbrance); (c) suffered any material loss, damage or
destruction not covered by insurance, or waived any rights of material value;
(d) made any capital expenditures or capital additions or improvements
which in the aggregate exceed $10,000; (e) declared or paid any dividends
or made any other distribution on or in respect of, or directly or indirectly
purchased, retired, redeemed or otherwise acquired any shares of, its capital
stock; (f) suffered any labor disputes or organizational activity by its
employees; (g) issued or sold any shares of its capital stock or rights,
options or warrants to purchase its capital stock, or any securities convertible
into its capital stock; (h) become bound by or entered into any contract,
commitment or transaction other than in the ordinary course of business;
or
(i) entered into any contract or agreement to do or perform any of the
foregoing actions.
-9-
3.11 Financial
Statements.
Schedule
3.11 contains copies of the financial statements of the Corporation (balance
sheet, income statement and cash flow statement) at December 31, 2006 (the
“Year
End Financial Statements”) and unaudited revenue reports and income statements
of the Corporation for each month during the period January 1, 2007 through
May
31, 2007 (the “Financial Statements”). The Financial Statements to
the knowledge of Seller and the Corporation, are true, complete and correct,
in
all material respects, and fairly present the financial condition of the
Business as of the respective dates thereof, subject, with respect to only
those
Financial Statements which are not Year End Financial Statements, to normal
year-end adjustments. The Financial Statements accurately reflect all
of the income, expenses, equity, liabilities and assets of the Business in
existence at the respective dates thereof and the operation of the Business
as
of such dates. The Assets include all of the assets reflected in such
Financial Statements and all assets acquired by the Corporation since the
date
of such Financial Statements, excepting only such assets as have been consumed
in the normal course of business.
3.12 Tax
Returns and Payments.
(a) Except
as
set forth on Schedule 3.12, to the knowledge of Seller and the Corporation,
the
Corporation: (i) has timely and properly filed or caused to be
filed, all tax returns which it is or has been required to file, by any
jurisdiction in which it is or has been subject to taxation, all such tax
returns being true, correct and complete; (ii) has timely paid or caused to
be paid in full all taxes which are or were due and payable to any taxing
authorities; (iii) has made or caused to be made all withholdings of taxes
required to be made, and such withholdings have either been paid to the
appropriate governmental agency or set aside in accounts for such purpose;
and
(iv) has otherwise satisfied all legal requirements applicable with respect
to such obligations to all taxing jurisdictions.
(b) The
Corporation to the knowledge of Seller and the Corporation, has properly
accrued
and reflected on the Financial Statements all liabilities for taxes and
assessments, all such accruals being in the aggregate sufficient for payment
of
all such taxes and assessments. Seller will timely and properly cause
to be filed all tax returns required to be filed by the
Corporation for all tax
periods ending on or
before the Closing Date, which tax returns shall be true, correct and
complete. Seller will pay or cause to be paid when due all taxes, if
any, which have become due pursuant to such returns or reports or forms,
or
pursuant to assessments received by the Corporation. The costs and
expenses related to the preparation of such returns will be borne solely
by
Seller.
(c) Except
as
set forth on Schedule 3.12, the federal income tax returns of the Corporation
have not been audited by the Internal Revenue Service, nor is Seller aware
of
any pending or threatened audit, investigation or review of the Corporation
by
the Internal Revenue Service or a reasonable basis therefor.
(d) Except
as
set forth on Schedule 3.12, the state income tax returns of the Corporation
have
not been audited by the State of New Jersey, nor is Seller aware of any pending
or threatened audit, investigation or review of the Corporation by the State
of
New Jersey or a reasonable basis therefor.
-10-
(e) Except
as
set forth on Schedule 3.12, to the knowledge of Seller and the Corporation,
there are no unassessed tax deficiencies proposed or threatened against the
Corporation, nor are there any agreements, waivers, or other arrangements
providing for extension of time with respect to the assessment or collection
of
any tax against the Corporation or any actions, suits, claims, proceedings,
or,
to Seller’s knowledge, investigations now pending against the Corporation with
respect to any tax.
(f) The
Corporation has made a valid and effective election under Section 1362 of
the
Internal Revenue Code of 1986, as amended (the “Code”) and any corresponding
state or local provisions to be an S corporation within the meaning of Section
1361 of the Code for all taxable years (or portions thereof) since July 21,
2006, and such S election has not been terminated (whether voluntarily,
involuntarily or inadvertently, including, without limitation, by taking
any
action defined in Section 1362(d) of the Code) since such time. The
election of the Corporation to be taxed under subchapter S of the Code is
valid,
in full force and effect and is in compliance with all applicable tax and
legal
requirements.
(g) For
purposes of this Agreement, “tax” and “taxes” will include all income, gross
receipts, franchise, excise, transfer, severance, value added, sales, use,
wage,
payroll, workmen’s compensation, employment, occupation, and real and personal
property taxes; taxes measured by or imposed on capital; levies, imposts,
duties, licenses, legislation fees; other taxes imposed by a federal, state,
municipal, local, foreign or other governmental authority or agency, including
assessments in the nature of taxes; including interest, penalties, fines,
assessments and deficiencies relating to any tax or taxes; and including
any
transferee or secondary liability for taxes and any liability in respect
of
taxes as a result of being a member of any affiliated, consolidated, combined
or
unitary group or any liability in respect of taxes under a tax sharing, tax
allocation, tax indemnity or other agreement.
(h) For
purposes of this Agreement, “tax return” or “tax returns” includes all reports,
estimates, information, statements, schedules, declarations, and
returns relating to or required to be filed in connection with any taxes
pursuant to the statutes, rules or regulations of any federal, state, local
or
foreign government taxing authority.
3.13 Agreements
with Employees.
(a) Except
as
set forth on Schedule 3.13, to the knowledge of Seller and the Corporation,
the
Corporation is not a party to any employment or consulting agreement, written
or
oral, which it cannot terminate at will. The names, titles and rates
of compensation (including all compensation increases granted since January
1,
2006) of all of the employees of the Corporation are listed on
Schedule 3.13. Except as set forth on Schedule 3.13, none of the
Corporation’s employees has indicated any intention to terminate his or her
employment with the Corporation.
-11-
(b) None
of
the employees of the Corporation are parties to any collective bargaining
agreement. There are no grievances, disputes or controversies with
any union or any other organization of the Corporation’s employees, nor are
there any threats of strikes, work stoppages or any pending demands for
collective bargaining by any union or organization. The Corporation
has not engaged in any unfair labor practices.
(c) The
Corporation to the knowledge of Seller and the Corporation, has no liability
or
obligation to Xxxx Xxxxxx under Appendix B to the Employment Agreement dated
June 18, 2001, said Appendix B having been executed by the Corporation and
Xxxx
Xxxxxx on June 19, 2001.
3.14 Intellectual
Property Rights.
Schedule
3.14 sets forth all of the patents (including all reissues, divisions,
continuations and extensions thereof), applications for patents, patent
disclosures docketed, trademark registrations, trademark applications, trade
names copyright registrations and domain names owned by the Corporation,
and all
licenses, franchises, permits, authorizations, agreements and arrangements
pursuant to which the Corporation has the right to use any intellectual property
(other than commercially available, off-the-shelf software) that is owned
by
others and used by the Corporation in connection with the
Business. True, correct and complete copies of all such licenses,
franchises, permits, authorizations, agreements and arrangements have been
delivered by Seller to Buyer. Seller has no knowledge of, and the
Corporation has not received any written or oral notice of, any unresolved
conflict with the asserted rights of others with respect to any of these
intellectual property rights, or any other intellectual property rights used
in
connection with the Business. The Corporation to the knowledge of Seller
and the
Corporation, owns, is licensee of or otherwise has the right to use all
rights to all patents, patent applications, inventions, improvements,
trademarks, trademark applications, trade names, copyrights, domain names,
websites and email addresses necessary to conduct the Business as presently
conducted.
3.15 Business
Documents.
Except
for any contract described on Schedule 3.15, to the knowledge of Seller and
the
Corporation, the Corporation is not a party to any presently existing written
or
oral contract, agreement, lease, permit, consent, license or commitment
affecting or relating to the Business which involves the payment by or to
the
Corporation of more than $5,000.00 per calendar year. Except as
described on Schedule 3.15 hereto, each of the Business Documents (i) is
valid
and enforceable and in full force and effect in accordance with its terms;
and
(ii) the purchase of the Acquisition Shares by Buyer hereunder will not result
in a breach of such contract by the Corporation. Without limiting the
foregoing, to Seller’s knowledge, the Business and all equipment used in
connection with it are now being utilized, operated and maintained in conformity
with the Business Documents, with all applicable laws and regulations (including
zoning regulations), and with the orders, rules and regulations of any
government or governmental agency or authority having jurisdiction with respect
thereto, except to the extent that the failure to be in such conformity would
not have a Corporation Material Adverse Effect. The Corporation has
performed all the obligations required to be performed by it to date pursuant
to
the Business Documents, and the Corporation is not nor, to Seller’s knowledge,
is any other party in default under any Business Document.
-12-
3.16 Accounts
Receivable.
Subject
to any reserve set forth on the Balance Sheet for doubtful accounts, all
accounts receivable reflected on the Balance Sheet and all accounts receivable
arising subsequent to December
31, 2006, to the knowledge
of Seller and the Corporation, have arisen in the ordinary course of
business of the Corporation, represent valid and enforceable obligations
due to
the Corporation, have not been and are not subject to any set-off, counter-claim
or claim of overpayment that has been asserted or, to Seller’s knowledge,
threatened.
3.17 Broker
or Finder.
Neither
the Corporation nor Seller, nor any party acting on their behalf, has paid
or
become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of these transactions except for The Oxford
Capital Group, Inc. Seller will satisfy any obligation to The Oxford Capital
Group, Inc. arising from this transaction.
3.18 Labor
and Employment Matters.
(a) The
Corporation is not a party to or obligated to contribute to any employee
benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974 (“ERISA”) (an “Employee Benefit Plan”), guaranteed annual income
plan, fund or arrangement, or any incentive, bonus, profit-sharing, deferred
compensation, stock option or purchase plan or agreement or arrangement,
or any
non-competition agreement, or any severance or termination pay plans or
policies, any hospitalization, disability or other insurance plans, or any
other
employee fringe benefit plans, or any collective bargaining agreement, whether
written or oral, except those set forth in Schedule 3.18
attached. True, correct and complete copies of all of the written
plans (including multiemployer plans) and agreements have heretofore been
delivered by Seller to Buyers.
(b) With
respect to any non-multiemployer Employee Benefit Plan which covers employees
of
the Corporation: (i) except as set forth on Schedule 3.18,
neither such Employee Benefit Plan nor, to Seller’s knowledge, any plan
fiduciary has engaged in a prohibited transaction as defined in Section 406
of ERISA (for which no individual or class exemption exists under
Section 408 of ERISA) or any prohibited transaction as defined in
Section 4975 of the IRC (for which no individual or class exemption exists
under Section 4975 of the IRC); (ii) all filings and reports as to
such Employee Benefit Plan required to have been made on or before the Closing
Date to the IRS, to the United States Department of Labor or, if applicable,
to
the Pension Benefit Guaranty Corporation, have been or will be duly made
on or
before that date; (iii) all material disclosures to employees relating to
such Employee Benefit Plan required by ERISA to have been made on or before
the
Closing Date have been or will be duly made on or before that date;
(iv) there is no litigation, disputed claim (other than routine claims for
benefits), governmental proceeding or investigation pending or, to Seller’s
knowledge, threatened with respect to any such Employee Benefit Plan, its
related trust, or any fiduciary, administrator or sponsor of such Employee
Benefit Plan, nor have any notices been received by Seller or the Corporation
that might give rise to any of the foregoing; (v) such Employee Benefit
Plan has been established, maintained, funded and administered in all material
respects in accordance with its governing documents, and any applicable
provisions of ERISA, the IRC and all regulations and rulings promulgated
thereunder.
-13-
(c) With
respect to any non-multiemployer employee pension benefit plan within the
meaning of Section 3(2) of ERISA (an “Employee Pension Benefit Plan”) which
covers employees of Corporation: (i) such Employee Pension
Benefit Plan is qualified under Section 401(a) of the IRC; favorable
determination letters as to qualification of such Employee Pension Benefit
Plan
under IRC Section 401(a) have been issued by the IRS; and such Employee
Pension Benefit Plan has been administered in all material respects in
accordance with its governing documents, ERISA, the IRC and all regulations
and
rulings promulgated thereunder; (ii) such Employee Pension Benefit Plan has
been funded in accordance with its governing documents, ERISA and the IRC,
and
there has been no accumulated funding deficiency, whether or not waived,
at any
time; (iii) there has been no Reportable Event within the meaning of
Section 4043(b) of ERISA; and (iv) all filings, premium payments,
reports and notices as to each Employee Pension Benefit Plan required to
have
been made on or before the Closing Date to the Pension Benefit Guaranty
Corporation have (“PBGC”) been or will be duly made on or before that
date.
(d) With
respect to any group health plan subject to the requirements of IRC
Section 162(k) and ERISA Title I, Part 6 (“COBRA”), all filings,
reports, premium payments (if any) and notices as to each such group health
plan
required to have been made on or before the Closing Date to government agencies,
participants and/or beneficiaries have been or will be duly made on or before
that date.
(e) Except
as
disclosed in Schedule 3.18, the Corporation has no reason to believe that
any
former employer of any of its employees is contemplating remedial action
of any
nature against that employee or the Corporation based on the employee having
terminated the former employment and having become an employee of the
Corporation.
3.19 Contracts.
(a) Except
for Business Documents listed on Schedules 3.15 and 3.15, and any other
agreement or contract listed on Schedule 3.19, and except as set forth in
Schedule 3. 19, the Corporation to the knowledge of Seller and the
Corporation, is not a party to or bound by any written or oral:
(a) agreement or understanding not made in the ordinary course of its
business; (b) employment contract or contract for personal services not
terminable at will; (c) contract or agreement with any labor union or other
collective bargaining group with respect to employees of the Corporation;
(d) continuing contract for the future purchase of materials, supplies,
machinery or other equipment in excess of the requirements of its business
now
booked or of normal operating requirements requiring payment in excess of
$2,500.00 in the aggregate for such contract; (e) contract or commitment
for capital expenditures in excess of $2,500.00 in the aggregate for each
such
contract; (f) contract or agreement with any director or officer of the
Corporation; (g) contract or agreement containing covenants by the
Corporation not to compete in any lines or business or with any person;
(h) dealership, commission or distributorship agreement, right or other
similar arrangement; (i) loan, credit or financing agreements, including
all agreements for any commitments for future loans, credit or financing;
or
(j) guarantee or suretyship agreement.
-14-
3.20 Environmental
Matters.
The
Corporation to the knowledge of Seller and the Corporation, (i) is
currently in compliance with all applicable environmental laws, and has obtained
all permits and other authorizations needed to operate its facilities, and
to
consummate this transaction; (ii) has not materially violated any
applicable environmental law, (iii) is unaware of any present requirements
of any applicable environmental law which is due to be imposed upon it which
will increase its cost of complying with the environmental laws. As
used in this Agreement, the term “environmental law” includes but are not
limited to any federal, state or local law, statute, charter or ordinance,
(including but not limited to the New Jersey Industrial Site Recovery
Act, N.J.S.A. 13:lK-6 et seq. (“ISRA”) ) and any rule, regulation,
binding interpretation, binding policy, permit, order, court order or consent
decree issued pursuant to any of the foregoing, which pertains to, governs
or
otherwise regulates any of the following activities: (a) the emission,
discharge, release or spilling or any substance into the air, surface water,
groundwater, soil or substrata; (b) the manufacturing, processing, sale,
generation, treatment, storage, disposal labeling or other management of
any
waste, hazardous substance or hazardous waste; (c) change of
ownership.
3.21 Banks,
Officers and Powers of Attorney.
Schedule 3.21
contains: (a) a list of all banks (with account numbers) in which the
Corporation has an account or safe deposit box and the names of all persons
authorized to draw thereon or have access thereto; (b) the names of all
incumbent directors and officers of the Corporation; and (c) the names of
all persons holding powers of attorney from the Corporation and copies
thereof.
3.22 Prepaid
Items and Deposits.
Attached
hereto as Schedule 3.22 to the
knowledge of Seller and the Corporation, is a true and correct
description of all prepaid items and deposits of the Corporation as of December 31, 2006.
3.23 Trade
Payables.
Attached
hereto as Schedule 3.23 is a true and correct listing to the knowledge of Seller
and the
Corporation, of all agreements to which the Corporation is a party and
which are for consideration other than cash, such as merchandise, services
or
promotional consideration (collectively, the “Trade Agreements”),
together with an itemized statement of the aggregate value of time owed pursuant
to each of the Trade Agreements (“Trade Payables”) and the aggregate
value of goods and services to be received pursuant to each of the Trade
Agreements (“Trade Receivables”), in each case, as of the date
hereof. Three (3) business days before the Closing Date, Seller shall
deliver to Buyer a report, as of the Closing Date (the “Closing Date Trade
Report”), which report shall list all Trade Agreements and the end date for
each Trade Agreement together with an itemized statement of the aggregate
value
of the Trade Payables and Trade Receivables pursuant to each of the Trade
Agreements.
-15-
3.24 Disclosure.
No
representation or warranty by Seller in this Agreement (or the disclosure
schedules hereto) to the knowledge of Seller and the Corporation, contains
or
will contain any untrue statement of a material fact, or omits or will omit
to
state a material fact required to be stated herein or therein or necessary
to
make the statements contained herein (or therein) not misleading.
3.25 Interpretation.
Any
representation or warranty of
Seller or Corporation based upon the “knowledge” or similar words means a state
of facts which is (a) within the actual knowledge of
Seller or Corporation, as applicable, or (b) of which Seller or Corporation,
as
applicable, reasonably should have known with due inquiry.
4. REPRESENTATIONS,
WARRANTIES AND COVENANTS OF BUYER
As
an
inducement to Seller to enter into this Agreement and to consummate these
transactions, Buyer represents, warrants and covenants to Seller as
follows:
4.1 Authority
of Buyer.
Buyer
is
a corporation, duly organized, validly existing and in good standing under
the
laws of the State of Nevada. Buyer has full corporate power and
authority to enter into this Agreement, to consummate these transactions
and to
comply with its terms, conditions and provisions. This Agreement has
been duly authorized, executed and delivered by Buyer and is, and each other
agreement or instrument of Buyer contemplated by it will be, the legal, valid
and binding agreement of Buyer, enforceable against Buyer in accordance with
its
terms, subject to the Bankruptcy Exception. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
by it will conflict with or result in any violation of or constitute a default
under any term of any agreement, mortgage, debt instrument, indenture or
other
instrument, judgment, decree, order, award, law or regulation by which Buyer
is
bound.
4.2 Litigation.
There
is
no action, suit or preceding pending or, to Buyer’s knowledge, threatened which
questions the legality or propriety of these transactions.
-16-
4.3 Broker
or Finder.
Neither
Buyer, nor any party acting on its behalf, has paid or become obligated to
pay
any fee or commission to any broker, finder or intermediary for or on account
of
these transactions.
4.4 Financing.
As
of the
scheduled Closing Date, Buyer shall have secured all funding necessary to
consummate the purchase of the Acquisition Shares in accordance
with the terms of this Agreement and to pay all amounts required hereunder
to be
paid at the Closing.
4.5 Investment
Intent.
Buyer
is
acquiring the Stock for its own account for investment and not with a view
toward public distribution. Buyer understands that none of the Stock
has been registered under the Securities Act of 1933, as amended, or any
other
applicable securities laws, and, therefore, cannot be resold unless subsequently
registered under such act and other applicable securities laws or unless
an
exemption from such registration is available.
5. ACTIONS
PRIOR TO AND AFTER THE CLOSING DATE
The
parties covenant and agree to take the following actions prior to the Closing
Date:
5.1 Investigation.
Seller
has caused the Corporation to provide, Buyer and its representatives
have had reasonable access during normal business hours to the employees,
properties, facilities, equipment, and books and records of the
Corporation. Seller acknowledges that Buyer has had the opportunity
to contact certain vendors, customers, subsidiaries (including making telephone
inquiries and local on-site visits) and suppliers of the
Corporation. Seller agrees to reasonably cooperate with Buyer in
making such contact, in order that Buyer will have full opportunity to effect
a
smooth transition of the Corporation from Seller to Buyer on the Closing
Date.
5.2 Lien
Searches.
Buyer
will have obtained at Buyer’s expense, at least ten (10) days prior to the
Closing Date, lien searches performed against the Corporation, any entity
acquired by the Corporation and any fictitious names used by the Corporation,
showing all the UCC-1 financing statements, federal, state or local tax liens,
recorded mortgages, unsatisfied judgments, and pending litigation filed against
such entities.
-17-
5.3 Maintenance
of Business.
Unless
Buyer consents in writing to the contrary: (a) the Corporation will continue
to
operate the Business, will maintain the Assets and will keep all of its business
books, records and files all in the ordinary course of business in accordance
with past practices consistently applied; (b) the Corporation will continue
to
perform its obligations under all of the Business Documents in the ordinary
course of business; (c) the Corporation will not sell, transfer, assign or
permit the creation of any lien, charge or encumbrance on any of the Assets,
except for Permitted Liens; (d) the Corporation will not agree to amend or
cancel any of the Business Documents to which it is a party; (e) the Corporation
will not enter into any contract or commitment nor incur any indebtedness
or
other liability or obligation of any kind relating to the Business that is
not
in the ordinary course of business, except those commitments that are necessary
to consummate the Closing; (f) the Corporation will not enter into any
compromise or settlement of any litigation, proceeding or governmental
investigation relating to its properties or business; (g) the Corporation
will
not acquire any material accounts or any material assets from any third-party;
(h) the Corporation will not lend money or otherwise pledge its credit; and
(i)
the Corporation will not enter into or modify, any employment or consulting
agreement, or award, or amend the terms of, any bonus, equity incentive,
or
other compensation or severance program or arrangement of the
Corporation.
5.4 Organization
and Transition.
The
Corporation will use commercially reasonable efforts consistent with sound
business judgment to preserve intact its present business or organization,
to
retain the services of its present employees, to preserve its relationships
with
customers, subscribers, advertisers, sponsors, suppliers and others having
business relationships with it and to maintain the goodwill enjoyed within
the
markets served by the Business. Seller agrees to cause the
Corporation to deliver to Buyer all information reasonably requested by Buyer
with respect to the Corporation, except to the extent that it may be restricted
from doing so by applicable law.
5.5 Corporate
Matters.
(a) Without
the prior written consent of Buyer, Seller will not permit the Corporation
to:
(a) amend its Certificate of Incorporation or Bylaws; (b) issue any
additional shares of its capital stock; (c) issue or create any warrants,
obligations, subscriptions, options, convertible securities or other commitments
for the issuance of transfer of shares of its capital stock; (d) declare or
pay any dividend on or make any distribution in respect of its capital stock,;
(e) directly or indirectly purchase, redeem, or otherwise acquire any
shares of its capital stock; (f) enter into any new Trade Agreements; or
(g) agree to do any of the foregoing acts.
5.6 Further
Assurances.
From
time
to time following the Closing Date and without further consideration, Seller
will: (a) immediately deliver to the Corporation any cash or other property
that Seller may receive in respect of the Business or on behalf of the
Corporation (whether attributable to periods before or after the Closing
Date)
to which Seller would not be personally entitled hereunder; and (b) at the
request of Buyer, execute and deliver to Buyer such other instruments of
conveyance and transfer as Buyer may reasonably request or as may be otherwise
necessary to more effectively convey and transfer to, and vest in, Buyer
and put
Buyer in possession of, any part of the Acquisition Shares or the
Assets. In the case of any agreement, contract, lease, easement or
other commitment which cannot be transferred effectively without the consent
of
a third-party, whose consent has not been obtained prior to Closing, Seller
will
cooperate with Buyer at Buyer’s request in trying to promptly obtain such
consent.
-18-
5.7 338(h)(10)
Election.
Upon
Buyer’s request, Buyer and Seller agree to make a timely election under Section
338(h)(10) of the Code and the regulations promulgated thereunder with respect
to the transactions contemplated hereunder. As such, the parties
agree to take all necessary and reasonable actions to assist each other in
making the 338(h)(10) election. The allocation of the Purchase Price
as set forth on IRS Form 8023 shall be consistent with the allocation of
the
Purchase Price described in Schedule 5.7, as may be adjusted at the
Closing Date.
5.8 Counsel
Fees.
The
fees
and expenses of counsel incurred by the Corporation and/or Seller in connection
with this Agreement and the transactions contemplated herein will be paid
by the
Corporation on or prior to the Closing Date.
5.9 Cooperation
Concerning Tax Matters.
Buyer
shall not, without Seller’s prior written consent, file any amended
tax returns or otherwise take any position with the Internal Revenue Service,
the State of New Jersey or any other taxing authority on behalf of the
Corporation that is adverse to Seller with respect to any tax period ending
on
or before the Closing Date, unless Buyer reasonably believes that such amended
tax return or position is required under applicable law. Buyer and
Seller shall cooperate fully, and Buyer and Seller shall cause the Corporation
to cooperate fully, as and to the extent reasonably requested by the other
party
hereto, in connection with the filing of the Corporation’s tax returns and any
audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the other party’s reasonable
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis (which does interfere with the Corporation’s
normal business operations) to provide additional information and explanation
of
any material provided hereunder. Buyer and Seller agree to retain all
books and records with respect to tax matters pertinent to the Corporation
relating to any tax period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Buyer
or Seller, any extensions thereof) of the respective tax periods, and to
abide
by all record retention agreements entered into with any taxing
authority.
5.10 Covenants
of Buyer.
(a) So
long as Buyer controls the Corporation, Buyer shall cause the Corporation
to
maintain, for six (6) years after the Closing Date, the rights of officers
and
directors to indemnification for acts and omissions occurring prior to the
Closing substantially as they existed prior to Closing (absent any changes
in
applicable laws).
-19-
(b) Prior
to the Closing, neither Buyer nor any affiliate of Buyer shall take any action
or omit to take any action that is designed to prevent Buyer from consummating
the transactions contemplated by this Agreement.
(c) Prior
to the Closing, Buyer shall promptly notify Seller in the event of any material
and adverse development with respect to Buyer’s ability to finance the
transactions contemplated herein.
5.11 Supplementing
Disclosure Schedules.
From
time
to time before the Closing Date, as necessary, Seller may, with the consent
of
Buyer, supplement or amend any schedules provided for in this Agreement (i)
to
the extent that any matter arose after the date hereof which, if existing
or
occurring at or prior to the date of this Agreement, would have been required
to
be set forth or described in any such schedule, or (ii) if it becomes necessary
to correct any information in any such schedules which has become inaccurate
in
any material respect.
5.12 Consents
and Assignments.
Seller
and Buyer shall each use
commercially reasonable efforts to secure, prior to the Closing, the consents
referenced on Schedule 3.4 attached hereto.
6. CONDITIONS
PRECEDENT TO OBLIGATIONS OF BUYER
On
or
prior to the Closing Date, Seller will have satisfied each of the following
conditions (unless Buyer waives any such condition at the Closing):
6.1 Covenants
and Warranties.
Each
of
the representations and warranties of Seller set forth in this Agreement
that is
qualified by materiality shall be true and correct at and as of the Closing
Date, and each of such representations and warranties that is not so qualified
shall be true and correct in all material respects at and as of the Closing
Date, as if made at and as of the Closing Date, in each case except as
contemplated by this Agreement, and Seller shall have duly performed or complied
with, in all material respects, all of the covenants, obligations and conditions
to be performed or complied with by them under the terms of this Agreement
on or
prior to or at the Closing.
6.2 No
Restraint or Litigation.
No
action, suit or proceeding will be pending or, to Seller’s knowledge, threatened
by any third-party (excluding Buyer and any affiliate of Buyer) or governmental
or regulatory agency to restrain, prohibit or otherwise challenge the legality
or validity of these transactions or the transfer of the Acquisition Shares.
-20-
6.3 Adverse
Change.
A
Corporation Material Adverse Effect has not occurred since December 31,
2006.
6.4 Documents,
Certificates and Other Items.
Seller
will have delivered or caused to be delivered to Buyer:
(a) duly
issued certificates for all of the Acquisition Shares, together with any
required transfer stamps or taxes paid and attached thereto;
(b) a
certificate of the Secretary of the Corporation, dated as of the Closing
Date,
certifying as to: (i) the copy of the Certificate of Incorporation of the
Corporation, as in effect immediately prior to the Closing Date, certified
by
the New Jersey Division of Revenue, Certification and Status Unit; and
(ii) the bylaws of the Corporation, as in effect on the Closing
Date;
(c) minute
books, stock certificate and transfer books, corporate seal and other corporate
records of the Corporation;
(d) the
Line
of Credit Agreement, the Put and Call Agreement, and Employment Agreement,
each
duly executed;
(e) evidence
reasonably acceptable to Buyer that there are no tax liens of record against
the
Corporation;
(f) omitted;
(g) all
other
documents and instruments required under this Agreement; and
(h) all
other
documents and instruments reasonably requested by Buyer in connection with
the
consummation of these transactions.
7. CONDITIONS
PRECEDENT TO OBLIGATIONS OF SELLER
On
or
prior to the Closing Date, Buyer will have satisfied each of the following
conditions (unless the Seller Representative waives any such condition at
the
Closing):
7.1 Covenants
and Warranties.
Each
of
the representations and warranties of Buyer set forth in this Agreement that
is
qualified by materiality shall be true and correct at and as of the Closing
Date, and each of such representations and warranties that is not so qualified
shall be true and correct in all material respects at and as of the Closing
Date, as if made at and as of the Closing Date, in each case except as
contemplated by this Agreement, and Buyer shall have duly performed or complied
with, in all material respects, all of the covenants, obligations and conditions
to be performed or complied with by it under the terms of this Agreement
on or
prior to or at the Closing.
-21-
7.2 Delivery
of Purchase Price.
Buyer
will have delivered at the Closing such portion of the Purchase Price (as
adjusted in accordance with the terms of this Agreement) as is required to
be
delivered at the Closing in accordance with the terms of this Agreement to
Seller.
7.3 Documents,
Certificates and Other Items.
Buyer
will have delivered or caused to be delivered to Seller:
(a) the
Line
of Credit Agreement, the Buyer Promissory Note, and the Put and Call Agreement,
each duly executed; and
(b) all
other
documents and instruments reasonably required by Seller in connection with
the
consummation of these transactions.
7.4 No
Restraint or Litigation.
No
action, suit or proceeding will be pending or, to Buyer’s knowledge, threatened
by any third-party (excluding Seller and any affiliate of Seller) or
governmental or regulatory agency to restrain, prohibit or otherwise challenge
the legality or validity of these transactions or the transfer of the
Stock.
8. INDEMNIFICATION
8.1 Indemnification
by Seller and Buyer.
(a) Seller
will indemnify, hold harmless, defend and bear all reasonable costs of defending
Buyer, together with its successors and permitted assigns, from, against
and
with respect to any and all damage, loss, deficiency, expense (including
any
reasonable fees and expenses of attorneys and other appropriate professionals),
action, suit, proceeding, demand, assessment or judgment (collectively,
“Damages”) to or against Buyer arising out of or in connection
with:
(i) all
Damages incurred by or accrued against Seller (with respect to the Business)
or
the Corporation on or prior to the Closing Date, or arising out of the business
activities of Seller (with respect to the Business) or the Corporation on
or
prior to the Closing Date, whether or not disclosed to Buyer in this Agreement
or the disclosure schedules attached hereto (collectively, “Pre-Closing
Claims”); and
(ii) any
breach or violation of, or nonperformance by, Seller of any of his or her
representations, warranties, covenants or agreements contained in this Agreement
or in any document, certificate or schedule incorporated by reference
herein.
-22-
(b) Buyer
will indemnify, hold harmless, defend and bear all reasonable costs of defending
Seller, together with their heirs and permitted assigns, from, against and
with
respect to any and all Damages to or against Seller arising out of or in
connection with:
(i) all
Damages incurred by or accrued against Buyer or the Corporation after the
Closing Date (other than Pre-Closing Claims); and
(ii) any
breach or violation of, or nonperformance by, Buyer of any of its
representations, warranties, covenants or agreements contained in this Agreement
or in any document, certificate or schedule required to be furnished pursuant
to
this Agreement.
8.2 Notice
of Claims.
If
any claim is made by or against a
party which, if sustained, would give rise to a liability of the other party
hereunder, that party (the “Claiming Party”)
will promptly cause notice of the
claim to be delivered to the other party (the “Indemnifying Party”)
and will afford the Indemnifying
Party and its counsel, at the Indemnifying Party’s sole expense, the opportunity
to defend or settle the claim (and, with respect to claims made by third
parties, the Claiming Party will have the right to participate with counsel
of
its choice and at its sole expense). Any notice of a claim will
state, with reasonable specification, the alleged basis for the claim and
the
amount of liability asserted by or against the other party by reason of the
claim. If such notice is not given, it will not release the Indemnifying
Party,
in whole or in part, from its obligations under this Article 8,
except to the extent that the
Indemnifying Party’s ability to defend against such claim is actually prejudiced
thereby. Alternatively, if notice is given and the Indemnifying Party
fails to assume the defense of the claim within ten (10) days thereof, the
claim
may be defended, compromised or settled by the Claiming Party without the
consent of the Indemnifying Party and the Indemnifying Party will remain
liable
under this Article
8. The
Claiming Party and the Indemnifying Party will render to each other such
assistance as may reasonably be required of each other in order to insure
proper
and adequate defense of any claim. The Claiming Party shall
provide the Indemnifying Party with reasonable access to its books and records
for the purpose of allowing the Indemnifying Party a reasonable opportunity
to
verify any such claim for Damages. The Claiming Party and the
Indemnifying Party shall negotiate in good faith regarding the resolution
of any
disputed claims for Damages. Promptly following the final
determination of the amount of any Damages claimed by the Claiming Party,
such
Damages shall be paid by the Indemnifying Party to the Claiming Party by
wire
transfer, check made payable to the order of the Claiming Party, or set off
by
the Claiming Party against obligations payable to the Indemnifying party,
in
each case, without interest, but subject to the limitations of liability
set
forth in Section 8.4.
8.3 Survival
of Obligations.
The
representations, warranties, covenants and agreements of Seller and Buyer
contained in this Agreement or in any exhibit, schedule, statement, report,
certificate or other document or instrument required to be delivered pursuant
to
this Agreement shall survive the Closing and all transactions consummated
hereunder (except with respect to the conditions precedent to the Closing
set
forth in Sections 5 and 6 above, each of which shall either be satisfied
in full or waived by the party entitled to the benefit thereof), but shall
expire and terminate six (6) months from the Closing Date, except for
(i) those representations, warranties, covenants and agreements contained
in
this Agreement relating to taxes and environmental matters, which shall continue
for the applicable statutes of limitations (collectively, “Tax and
Environmental Representations”); and (ii) those representations, warranties,
covenants and agreements relating to Seller’s title to, and ownership of, the
Acquisition Shares (including
but
not limited to representations as to obligations of the Corporation to Xxxx
Xxxxxx) which shall survive the Closing and never expire (collectively,
“Stock Ownership Representations”).
-23-
8.4 Limitations
of Liability.
(a) Except
for claims for indemnification made hereunder (“Claims”) relating to Tax
and Environmental Representations and/or Stock Ownership Representations,
Seller
shall not be liable for any amounts unless and until the total amount of
such
Claims exceeds $10,000.00 in the aggregate (the “Materiality Threshold”);
provided, however, that once the Materiality Threshold is reached, Buyer
shall
have recourse back to the first dollar of the Materiality
Threshold. Except for Claims arising from Tax and Environmental
Representations and Stock Ownership Representations, Seller’s aggregate
liability hereunder shall not exceed the Purchase Price actually paid to
Seller.
(b) With
respect to Claims that are covered by insurance, Buyer shall, before proceeding
against Seller for Damages, first use commercially reasonable efforts to
recover
such Damages by proceeding against the applicable insurance policy or
policies.
(c) The
provisions of this Article 8 shall constitute the sole and exclusive
remedy of any Indemnified Party for Damages arising out of, resulting from
or
incurred in connection with any inaccuracy in any representation or the breach
of any warranty made by Buyer or Seller in this Agreement.
9. TERMINATION
9.1 Termination.
This
Agreement may be terminated at any
time prior to the Closing as follows:
(a) by
mutual written
consent of Seller and Buyer;
(b) by
either Seller or
Buyer if the other party hereto shall breach in any material respect any
of its
representations, warranties or obligations contained in this Agreement;
provided, that such breach is not cured in all material respects within a
thirty-day period commencing on the date written notice of such breach is
received by the breaching party;
(c) by
Buyer, in the event
that the conditions to its obligations set forth in Article 6 hereof have
not been satisfied in all material respects or waived;
(d) by
Seller, in the event
that the conditions to its obligations set forth in Article 7 hereof have
not been satisfied in all material respects or waived; and
-24-
(e) by
either party if the
transactions contemplated by this Agreement shall not have been consummated
on
or before August 15, 2007 (or such later date as may be agreed upon in writing
by the parties hereto).
9.2 Effect
of Termination. If this Agreement is terminated pursuant to
Section 9.1 hereof, all rights and obligations of Seller and Buyer hereunder
shall terminate and no party shall have any liability to the other party,
except
for obligations of the parties hereto in Sections 10.1 and 10.8, in each
case
which shall survive the termination of this Agreement, and except nothing
herein
will relieve any party from liability for any breach of any representation,
warranty, agreement or covenant contained herein prior to such
termination.
10. GENERAL
PROVISIONS
10.1 Confidentiality.
Buyer
and
Seller agree that they will treat in confidence all documents, materials
and
other information which they have obtained regarding the other party during
the
course of the negotiations leading to the consummation of these transactions,
the investigation provided for herein and the preparation of this Agreement
and
other related documents. In the event these transactions are not
consummated, all copies of non-public documents and material which have been
furnished in connection with these transactions will be promptly returned
to the
party furnishing such documents and material, will continue to be treated
as
confidential information and will not be used for the benefit of the party
who
returned such confidential information.
10.2 Governing
Law.
This
Agreement and all matters arising herefrom will be governed by, and construed
and enforced in accordance with, the laws of the State of
New Jersey, without regard to its conflicts of law
provisions.
10.3 Notices.
All
notices or other communications required or permitted hereunder will be in
writing and will be deemed given or delivered when delivered personally,
by
registered or certified mail, by legible facsimile transmission or by overnight
courier (fare prepaid) addressed as follows:
-25-
|
If
to Buyer, to:
00
Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx,
XX 00000
Attn:
Xxxx Xxxxxxxx, President
If
to Seller to:
Metropolitan
Computing Corporation.
0
Xxxxx Xxxxxx Xxxx
Xxxx
Xxxxxxx , Xxx Xxxxxx 00000
Attn:
Xxxxxxx Xxxxx
|
with
a copy to:
Xxxxxx
X Xxxxxxx
00
Xxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
With
a copy to:
Xxxxx
X. Xxxxxxxxx, Esq.
Xxxxxx
Xxxxxxxxx, P.A.
00
Xxxx Xxxxxx
Xxxx
Xxxxxx, XX 00000
|
Notice
will be deemed received the same day (when delivered personally), five (5)
days
after mailing (when sent by registered or certified mail) and the next business
day (when delivered by recognized overnight courier). Any party to
this Agreement may change its address to which all communications and notices
may be sent by addressing notices of such change in the manner
provided.
10.4 Assignment.
This
Agreement may not be assigned by Seller without the prior written consent
of
Buyer. Buyer will have the right to assign this Agreement and the
rights and obligations hereunder to its subsidiaries, affiliates, successors
and
assigns without the prior written consent of Seller; provided, however, that
(i)
Buyer notifies Seller in writing prior to any such assignment and (ii)
notwithstanding such assignment Buyer remains jointly and severally liable
for
the obligations of Buyer hereunder. This Agreement
is nonrecourse to the shareholders of Buyer.
10.5 Entire
Agreement; Amendments.
This
Agreement is an integrated document, contains the entire agreement between
the
parties, wholly cancels, terminates and supersedes any and all previous and/or
contemporaneous oral agreements, negotiations, commitments and writings of
the
parties with respect to such subject matter. The only representations
and warranties made by any party to this Agreement to the other(s) are those
representations and warranties contained in this Agreement. No
change, modification, extension, termination, notice of termination, discharge,
abandonment or waiver of this Agreement or any of its provisions, nor any
representation, promise or condition relating to this Agreement, will be
binding
upon any party unless made in writing and signed by such party.
-26-
10.6 Interpretation.
Article
titles and headings to Sections are inserted for convenience of reference
only
and are not intended to be a part of or to affect the meaning or interpretation
of any of the provisions of this Agreement. All references to
Sections and subsections contained in this Agreement refer to the Sections
and
subsections of this Agreement. All references to Schedules or
Exhibits contained in this Agreement are references to the Schedules or Exhibits
described on the list immediately following the signature page
hereto. All references to the words “include” or “including”
mean “including without limitation.” Any and all Schedules, Exhibits,
statements, reports, certificates or other documents or instruments referred
to
in or attached to this Agreement, including the “Background” portion of this
Agreement, are incorporated by reference as though fully set forth at the
point
referred to in this Agreement. There will be no presumption against
any party on the ground that such party was responsible for preparing this
Agreement or any part of it. Any representation or warranty of a
party based upon the “knowledge” or similar words meansthe actual knowledge of
such party after diligent inquiry. All pronouns and any variations
thereof will be deemed to refer to the masculine, feminine, neuter, singular
or
plural as the context may require.
10.7 Waivers.
Any
term
or provision of this Agreement may be waived, or the time for its performance
may be extended, by the party or parties entitled to the benefit thereof,
but
any such waiver must be in writing and must comply with the notice provisions
contained in Section 10.3. The failure of any party to enforce
at any time any provision of this Agreement will not be construed to be a
waiver
of such provision, nor in any way to affect the validity of this Agreement
or
any part of it or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement will be
held to constitute a waiver of any other or subsequent breach.
10.8 Expenses.
Except
as
otherwise provided herein, including but not limited to Section 5.8, Buyer
and
Seller will each pay all costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with
all
agreements and conditions on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and
accountants.
10.9 Partial
Invalidity.
Wherever
possible, each provision will be interpreted in such manner as to be effective
and valid under applicable law, but in case any one or more of these provisions
will, for any reason, be held to be invalid, illegal or unenforceable in
any
respect, such invalidity, illegality or unenforceability will not affect
any
other provisions of this Agreement, and this Agreement will be construed
as if
such invalid, illegal or unenforceable provision or provisions had never
been
contained herein, unless the deletion of such provision or provisions would
result in such a material change as to cause the completion of these
transactions to be unreasonable.
-27-
10.10 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will
be
considered an original instrument and all of which together will be considered
one and the same agreement, and will become effective when counterparts,
which
together contain the signatures of each party, will have been delivered to
Buyer
and Seller. Delivery of executed signature pages by facsimile
transmission will constitute effective and binding execution and delivery
of
this Agreement.
10.11 Third-Party
Beneficiaries.
This
Agreement will not confer any rights or remedies upon any person other than
the
parties to this Agreement and their respective successors and permitted
assigns.
10.12 Failure
to Close.
Should
Buyer improperly fail to close the sale and purchase of the Acquisition Shares
hereunder on the Closing Date, Seller may seek to recover actual damages
occasioned by Buyer’s breach. Should Seller improperly fail to close
the sale and purchase contemplated herein, Buyer, in its sole discretion,
may
(i) pursue consummation with Seller of the transactions contemplated herein
by
an action for specific performance, or (ii) elect not to pursue consummation
of
the transaction hereunder but seek to recover actual damages occasioned by
Seller’s breach.
10.13 Failure
of Conditions Precedent.
Neither
party shall be obligated to close the sale and purchase of the Stock hereunder
until such time as the conditions precedent to its obligations have
been fulfilled by the other parties hereto (or such conditions have been
waived
by the receiving party).
10.14 Public
Announcement.
Prior
to
the Closing, except as may be required by applicable law, neither Buyer nor
Seller shall issue any press release or otherwise publicly disclose this
Agreement or the transactions contemplated hereby or any dealings between
or
among the parties in connection with the subject matter hereof without the
prior
approval of the other. As part of the Closing, the Buyer and the
Seller Representative shall mutually agree upon the specific language of
a press
release or other public disclosure. No party shall disclose the
Purchase Price, whether prior to, on or after the Closing Date, except as
may be
required by applicable law.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK -
SIGNATURES
FOLLOW IMMEDIATELY]
-28-
[SIGNATURE
PAGE TO STOCK PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the
date first written above.
By: ____________________________________
Xxxx;
Xxxxxxxx, President
METROPOLITAN
COMPUTING CORPORATION
By:
___________________________________
Xxxxxxx Xxxxx, President
XXXXXXX
XXXXX
__________________________________
Individually
