EXHIBIT 10(e)
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of March 18,
2003, by and among GREENLAND CORPORATION, a Nevada corporation ("GRLC"); IMAGING
TECHNOLOGIES CORPORATION, a Delaware corporation ("IMTO"); EXPERTHR OKLAHOMA
INC, a newly formed Oklahoma corporation (the "Company") and the shareholders
of the Company as identified on the attached Schedule A (the "Shareholders").
RECITALS
WHEREAS, the Shareholders own or will own of record and beneficially all of
the issued and outstanding shares of capital stock of the Company (the
"Shares");
WHEREAS, Company is a newly-formed corporation duly organized and existing
under the laws of the State of Oklahoma with authorized capital stock of 1,000
shares of common stock, $.01 par value.; all of which will be acquired by GRLC
WHEREAS, the boards of directors of GRLC, IMTO the Company have adopted
resolutions declaring advisable the proposed purchase of all the Shares of the
Company upon the terms and conditions of this Agreement;;
WHEREAS, the parties intend the transactions contemplated herein to
constitute reorganization within the meaning of section 368(a) of the Internal
Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the covenants and mutual agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in reliance upon the
representations and warranties contained herein, the parties do hereby agree as
follows:
1. THE PURCHASE
1.1 General. Subject to the terms and conditions set forth herein, and
in accordance with applicable provisions of the corporate laws of Nevada,
Delaware and Oklahoma (the "Corporate Laws"), GRLC shall acquire the Shares
from Company and Company shall continue as a surviving corporation, wholly
owned by GRLC.
1.2 Effect of the Merger. At the Effective Date, the Company shall continue
its corporate existence under the Laws of Oklahoma .
2. THE COMPANY
2.1 Certificate. The articles of incorporation of Company as in effect
immediately prior to the Effective Date shall remain the articles of
incorporation of the Company until and unless thereafter amended in accordance
with applicable Law and such articles of incorporation.
2.2 Bylaws. The bylaws of Company as in effect immediately prior to
the Effective Date shall remain the bylaws of the Company until and unless
thereafter amended in accordance with applicable Law, the articles of
incorporation of such bylaws.
2.3 Board of Directors. The directors of the Company immediately prior
to the Effective Date shall be the initial board of directors of the Company,
each of such persons to serve until his or her successor, if there is to be one,
is duly elected and qualified and/or as agreed to with GRLC.
2.4 Officers. The officers of the Company immediately prior to the
Effective Date shall be the initial officers of the Company, each of such
officers to serve until his or her successor, if there is to be one, is duly
qualified and/or as appointed by the Board of Directors.
3. PURCHASE CONSIDERATION; EXCHANGE
3.1 Exchange of the Shares. By virtue of the Purchase, and without any
action on the part of the Shareholders, each Share issued and outstanding
immediately prior to the Effective Date shall be assigned and delivered to GRLC
and shall have the right to receive a pro rata portion of the shares of
Convertible Preferred Stock of GRLC (the "Preferred Stock") at the Closing (such
shares referred to as the "Purchase Consideration"). Each share of Capital
Stock, if any that is held as treasury stock of the Company shall be canceled
and retired and no Purchase Consideration will be paid or delivered for such
share. The number of shares of Preferred Stock and the face value of each share
shall reflect the purchase price paid by GRLC, which shall be an amount equal to
one and one-half times gross profit of the Company's operations for the quarter
ending March 31, 2003 multiplied by four as stated in an audit report to be
performed (the "Purchase Price") (See Section 4.7(a)). The Parties estimate that
the purchase price will be approximately $1,250,000. Provided, however that
Company, may at its sole and exclusive option, request that up to 50% of the
Purchase Price be paid by IMTO issuing shares of its common stock to Company as
per the formula set forth below.
3.2 Rights of the Preferred Stock. The Preferred Stock shall have no
rights, other than voting rights or rights required by law, entitling holders of
the Preferred Stock to vote as if they were holders of the number of preferred
shares issued in connection with the Purchase Price (example; face value of
preferred stock certificate with be $1,000, therefore if purchase price is
$1,250,000, voting rights will be as if 1,250 shares of Common Stock of GRLC,)
other than the right to convert into shares of Common Stock of GRLC.
3.3 Conversion Procedures and Formula. Subject to the provisions hereof,
the Preferred Stock must be converted on an annual basis, in two equal
installments, commencing one year and one day from the Effective Date (the
"Conversion Commencement Period") and concluding two years and one day from the
Effective Date, (the "Conversion Period") by presentation and surrender hereof
to the Issuer at the address which, is then effective for notices to the Issuer,
with the Notice to Convert Form annexed hereto, duly executed for the number of
shares of Common Stock (the "Conversion Common Shares") specified in such form.
As the Preferred Stock is exercised in part during the Conversion Period, the
Issuer shall, upon surrender of the Preferred Stock Certificate, shall execute
and deliver a new Preferred Stock Certificate evidencing the rights of the
Holder to convert the balance of the Preferred Stock (the "Preferred Stock
Balance"). GRLC shall maintain at its principal place of business a register
for the registration of the Preferred Stock and registration of exercise of the
Preferred Stock. The Preferred Stock shall be convertible into a dollar amount
equal to the Purchase Price, of GRLC Common Stock at a conversion price
determined as follows: (i) at the end of each one year period subsequent to the
Conversion Commencement Period, (each one year period shall be referred to as
the "Conversion Year") the Company shall forward to GRLC the Notice to Convert
Form evidencing the Company's intent to convert 50% of the shares of the
Convertible Preferred Stock of GRLC Corporation into shares of Common Stock of
GRLC with a value of equal to 50% of the Purchase Price (ii) the conversion
price shall be the average closing price, of the GRLC Common Stock for 90
trading days prior to the last day of the applicable Conversion Year (the
"Conversion Price"). PROVIDED, HOWEVER, THAT GRLC MAY AT ITS OPTION PAY ALL OR
ANY PORTION OF THE PURCHASE PRICE IN CASH, IN LIEU OF ALL OR A PORTION OF THE
CONVERSION OF THE PREFERRED STOCK INTO SHARES OF COMMON STOCK. IF GRLC INTENDS
TO PAY IN CASH, IT MUST NOTIFY COMPANY IN WRITING AT LEAST NINETY (90) DAYS
PRIOR TO THE APPLICABLE CONVERSION DATE.
Provided, further that Company may at its sole and exclusive option elect to
accept up to 50% of the Purchase Price in each Conversion Year, to be paid with
shares of common stock of IMTO. The Company can so elect by stating in the
Notice to Convert Form that it has elected to accept shares of common stock of
IMTO ("IMTO Shares") in lieu of converting all the Preferred Stock into
Conversion Common Shares. The Company shall state the dollar amount it wishes to
convert into IMTO Shares. IMTO shares shall be valued in the same manner set
forth above: average closing price of the IMTO common stock for 90 days prior to
the last day of the applicable Conversion Year.
Certificates representing Preferred Stock, certificates representing the
Conversion Common Shares and certificates representing IMTO Shares shall bear
the following restrictive legend: "THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SE-CURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED UNLESS (A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURI-TIES ACT OF 1933, AS AMENDED, OR (B) THE COMPANY HAS BEEN
FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO THE EFFECT
THAT NO REGISTRATION IS LEGALLY REQUIRED FOR SUCH TRANSFER."
3.4 Reservation of Common Stock. GRLC and IMTO hereby agree, at the
appropriate time, that there shall be reserved for issuance and/or delivery
upon the conversion of the Preferred Stock, such number of Conversion Common
Shares as shall be required for issuance or delivery upon conversion of the
Preferred Stock. After the Conversion Period, no shares of Common Stock shall
be subject to reservation in respect of the Preferred Stock. GRLC and IMTO
further agree (a) that they will not, by amendment of its Articles of
Incorporation or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to avoid the
observation or performance of any of the covenants, stipulations, or conditions
to be observed or performed hereunder by GRLC and IMTO , and (b) promptly to
take such action as may be required of GRLC and IMTO to permit the Company to
convert the Preferred Stock and GRLC and IMTO duly and effectively to issue
shares of its Common Stock upon the exercise hereof.
3.5 Fractional Shares. No fractional shares of GRLC and IMTO Stock shall be
issued. Fractional shares of such stock shall be rounded to the nearest whole
share.
3.7 Other Shares. Each share of common stock of the Company issued and
outstanding immediately prior to the Effective Date shall be assigned and
delivered to GRLC and remain outstanding after the Effective Date and shall
continue to be owned by GRLC.
3.7 Dissenting Shares. Notwithstanding any other provision of this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Date and that are held by Shareholders who did not vote
in favor of the Purchase (the "Dissenting Shares"), and the holders of which
comply with all of the applicable provisions of the Corporate Laws (the
"Dissenting Shareholders"), shall not be converted into or be exchangeable for
the right to receive the Purchase Consideration, unless and until such holders
shall have failed to perfect or shall have effectively withdrawn or lost their
dissenters' rights under the Corporate Laws. If any Dissenting Shareholder
shall have failed to perfect or shall have effectively withdrawn or lost the
right to dissent, such holder's Shares shall thereupon be treated as though such
Shares had been converted, as of the Effective Date, into the right to receive
the Purchase Consideration pursuant to this Agreement. The Company shall give
GRLC (i) prompt notice of any written demands for appraisal of any Shares,
attempted withdrawals of such demands, and any other instruments served pursuant
to the Corporate Laws and received by the Company relating to Shareholders'
rights of appraisal, and (ii) the opportunity to direct all negotiations and
proceedings in respect of demands for appraisal under the Corporate Laws. The
Company shall not , except with the prior written consent of GRLC, voluntarily
make any payment in respect of, or settle or offer to settle, any such demand
for payment.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHARE-HOLDERS
To induce GRLC to enter into this Agreement and to consummate the
transactions contemplated hereby, Company Shareholders jointly represent and
warrant to GRLC as follows:
4.1 Company Disclosure Schedules. Company have heretofore delivered to
GRLC certain schedules containing information regarding Company, the Shares and
Company's business as indicated at various places in this Agreement (the
"Company Disclosure Schedules"). All information set forth in the Company
Disclosure Schedules is true, correct, complete and set forth in a manner that
is not materially misleading as of the date of this Agreement. Information in
the Company Disclosure Schedules specifically refers to the article and section
of this Agreement to which such information is responsive and such information
shall not be deemed to have been disclosed with respect to any other article or
section of this Agreement or for any other purposes unless otherwise noted.
Unless otherwise indicated, all capitalized terms used in the Company Disclosure
Schedules shall have the same meanings as used in this Agreement. The Company
represents that Xxxxx Xxxxxxxx and his spouse owns 56% of the shares of common
stock of the Company.
4.2 Organization, Qualification and Authority.
(a) Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Oklahoma. Company has its
principal offices and places of business at the locations specified in Schedule
4.2. Company has all requisite corporate power, and all requisite franchises,
licenses, permits and authority necessary to own or lease its assets and to
carry on the Company's business as, and in all places where, such business is
now conducted and such properties are owned or leased. Company is duly
licensed, qualified or domesticated as a foreign corporation in the
jurisdictions listed in Schedule 4.2, which are all jurisdictions where the
character of the property owned by Company or the nature of the business
transacted by it makes such license, qualification or domestication necessary.
(b) Company has the full corporate power to enter into, execute
and perform this Agreement. This Agreement has been duly and validly executed
and delivered by Company and constitutes the valid and legally binding
obligations of Company, subject to general equity principles, enforceable in
accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or similar Laws affecting the rights of
creditors generally.
4.3 Ownership of Shares; Subsidiaries.
(a) The total authorized Capital Stock of Company is as set forth
in Schedule 4.3(a). All of the issued and outstanding Shares are owned of
record and beneficially (excluding community property rights under applicable
California law) by the Shareholders as set forth in Schedule 4.3(a).
(b) All of the outstanding Shares are duly authorized, validly
issued, fully paid and non-assessable and were authorized, offered, issued and
sold in accordance with all applicable securities and other Laws and all rights
of Company's current or former shareholders and other Persons. No Person has
any preemptive rights with respect to the Shares. There are no outstanding
securities convertible into the Capital Stock of Company or rights to subscribe
for or to purchase, or any options for the purchase of, or any agreements or
arrangements providing for the issuance (contingent or otherwise) of, or any
Actions relating to, the Capital Stock of Company. There are no voting trusts,
proxies or other agreements or understandings with respect to the voting of the
Capital Stock of Company. Company is not subject to any obligation to
repurchase or otherwise acquire or retire any of its Capital Stock, and Company
has no Liability for dividends declared or accrued, but unpaid, with respect to
its Capital Stock. Company has not purchased or redeemed any of its Capital
Stock, and, except as set forth in the Company Disclosure Schedules, has not
paid any dividend or made any other payment to the Shareholders or other Related
Parties within the past two (2) years.
(c) Company does not own or have an interest, direct or indirect,
or any commitment to purchase or otherwise acquire, any Capital Stock or other
equity interest, direct or indirect, in any other Person, except as set forth in
Schedule 4.3(c), free and clear of any and all Liens. All such interests so set
forth are owned of record and beneficially by Company as set forth in Schedule
4.3(c) and are duly authorized, validly issued, fully paid and non-assessable,
and were authorized, offered, issued and sold in accordance with all applicable
securities and other Laws.
(d) Each Shareholder is the legal and beneficial owner of the
Shares as set forth on Schedule 4.3(a), free and clear of any and all Liens
(other than community property rights under applicable Oklahoma law). There are
no outstanding contracts, demands, commitments or other agreements or
arrangements under which the Shareholders (or any of them) or Company are or may
become obligated to sell, transfer or assign any of the Shares or items listed
on Schedule 4.3(c).
4.4 Capacity; No Inconsistent Obligations.
(a) Each Shareholder has the full right, power and legal capacity to execute,
deliver and perform his or her obligations under this Agreement. This Agreement
has been duly and validly executed and delivered by such Shareholder and
constitutes the valid and legally binding obligation of such Shareholder,
subject to general equity principles, enforceable in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency or
similar Laws affecting the rights of creditors generally.
(b) The execution, delivery or performance of this Agreement will
not result in a violation or breach of, or constitute a default under (i) the
articles of incorporation or bylaws of Company, (ii) any term or provision of
any indenture, note, mortgage, bond, security agreement, loan agreement,
guaranty, pledge, or other instrument, contract, agreement or Order to which
Company or any Shareholder is a party or by which any is subject or bound; nor
will such actions result in (a) the creation of any Lien on any of the Shares or
any of Company's assets or properties, (b) the acceleration or creation of any
Liability of Company, (c) the forfeiture of any material right or privilege of
Company, or (d) the forfeiture of any material right or privilege of any
Shareholder which may affect the Shareholders' ability to perform under this
Agreement.
4.5 Consents. The execution, delivery and performance of this
Agreement does not (a) require the consent, approval or action of, or any filing
with, or notice to, any Person, or (b) impose any other term, condition or
restriction on Company pursuant to any business combination or takeover Law
except as noted in Exhibit C.
4.6 No Violation; Compliance with Laws. Company is not in default
under or in violation of (a) its articles of incorporation or bylaws, or (b) any
Order. The operations of Company and its predecessors have been conducted in
all material respects in compliance with all applicable Laws. (For purposes of
this paragraph, any violation of applicable Law that could result in imposition
of a fine or other monetary penalty in excess of $500 upon Company shall be
deemed to be a material non-compliance). Neither Company nor any Shareholder
has received any notification of any asserted past or present failure by Company
to comply with any applicable Law.
4.7 Financial Statements. Prior to the date hereof, Company has
delivered to GRLC copies of its Pro Forma unaudited balance sheets as of March
31, 2003 and statements of income and retained earnings and statements of cash
flows for the fiscal years then ended. ("Company's Balance Sheet") (the
"Company's Reference Date"), and unaudited statements of operations for the year
then ended. Except as disclosed in Schedule 4.7, all of such balance sheets and
income statements (including any related notes and schedules thereto) are true
and correct, have been prepared from the books and records of Company in
accordance with GAAP with the exceptions noted on Schedule 4.7, and present
fairly the financial condition of Company as of the date thereof and the results
of its operations for the period then ended (except that unaudited statements
may not contain footnote disclosure and the Company's Balance Sheet and
unaudited statements of operations may be subject to normal year-end
adjustments).
4.7(a) Purchase Price and Audit. The Company acknowledges that GRLC and
IMTO will be required to make certain filings with the Securities and Exchange
Commission including audited financial statements of Company and Company agrees
that it will commence immediately upon execution of this Agreement an audit of
its operations to comply with the applicable Rules and Regulations of the
Securities Act of 1933 and/or the Securities Exchange Act of 1934, at its sole
cost and expense (the "Audit"). GRLC shall have the right to select an auditor
and the Company shall have the right to approve the auditor's fee. The Company
shall cooperate fully and completely in the preparation of said audited
financial statements and/or other filing requirements. The Purchase Price shall
be an amount equal to one and one-half times gross profits for quarter ended
March 31, 2003 as reflected by the audited financial statement ( NOTE: may need
to review debt of Company for possible adjustment)
4.8 Liabilities. Company has no Liability except (i) those reflected
on the Company's Balance Sheet, (ii) Liabilities incurred in the ordinary course
of business since the Company's Reference Date, or (iii) as specifically
disclosed in Schedule 4.8.
4.9 Title to Properties. Company has good and marketable title to all
assets reflected in the Company's Balance Sheet, except inventories and other
immaterial assets which have been disposed of in the ordinary course of business
since the Company's Reference Date, and all other assets necessary to conduct
the Company's business as currently being conducted and as conducted during the
periods covered by the financial statements referenced in Section 4.7 (other
than any leased property), free and clear of Liens, except for Liens expressly
set forth in Schedule 4.9 (with respect to which no default exists), landlord's
Liens imposed by operation of Law, liens for taxes which are not yet due and
payable and minor imperfections of title and encumbrances, if any, the curing or
removal of which would not materially detract from the value of the assets or
materially impair the operations of the Company's business ("Permitted
Encumbrances"). Schedule 4.9 identifies all personal property, which is leased.
4.10 Receivables. Except as set forth in Schedule 4.10, all notes and
accounts receivable shown on Company's Balance Sheet and all such receivables
now held by Company are valid and collectible obligations and were not and are
not subject to any offset or counterclaim, except for amounts reserved against
such receivables which are reflected on the Company's Balance Sheet and, with
respect to notes and accounts receivable arising after the Company's Reference
Date and now outstanding, except for a percentage thereof equal to the
percentage which said reserved amounts on the Company's Balance Sheet
constituted of the aggregate of notes and accounts receivable on the Company's
Reference Date.
4.11 Personal Property. GRLC and Company acknowledge the Company does
not own machinery, equipment, vehicles, and other items of tangible personal
property. Machinery, equipment, vehicles, and other items of tangible personal
property leased by Company are in good operating condition and repair and free
from any defects (except ordinary wear and tear and such minor defects as do not
interfere with the use thereof in the conduct of the normal operations), have
been maintained consistent with the standards generally followed in the industry
and are sufficient to carry on the Company's business as conducted by Company
during the preceding twelve (12) months.
4.12 Inventories. Except as set forth on Schedule 4.12, all
inventories are usable and saleable at the current prices thereof in the
ordinary course of business consistent with past practice and industry
standards; all inventories are recorded on Company's books at the lower of cost
or market value determined in accordance with GAAP with the exceptions noted on
Schedule 4.7 consistent with past practice and industry standards; and no
material write-down in inventory has been made or should have been made pursuant
to GAAP with the exceptions noted on Schedule 4.7 during the past two years
consistent with past practice and industry standards.
4.13 Ability to Conduct Business; Intellectual Property Rights.
(a) Company has the means, rights, and Information required to offer and
sell the products now being offered and sold by Company and to perform the
services that are presently being performed by Company. In particular the
Company represents that it has the licensing rights to payroll processing
software and hardware for PEO payroll processing and that GRLC and its
affiliates shall have perpetual rights to it.
(b) The term "Company Intellectual Property Assets" includes:
(i) all business names, trading names, registered and unregistered
trademarks, service marks, and applications owned, used, or licensed by Company
as licensee or licensor (collectively, "Company Marks");
(ii) all patents owned, used, or licensed by Company as licensee or
licensor, patent applications of Company, and inventions and discoveries that
may be patentable by Company (collectively, "Company Patents");
(iii) all versions of all works owned, used, or licensed by Company as
licensee or licensor in connection with the Company's business whether published
or unpublished (collectively, "Company Copyrighted Works");
(iv) all rights in mask works owned, used, or licensed by Company as
licensee or licensor (collectively, "Company Rights in Mask Works"); and
(v) all Company know-how, trade secrets, confidential Information, customer
lists, software, technical Information, data, process technology, plans,
drawings, and blue prints that are not commonly known by or available to the
public and which derive economic value from not being generally known to, and
not being readily ascertainable by proper means by, other Persons who can obtain
economic value from its disclosure or use and are the subject of efforts that
are reasonable under the circumstances to maintain its secrecy (collectively,
"Company Trade Secrets").
(c) Schedule 4.13(c) contains a complete and accurate list, including any
royalties paid or received by Company, of all contracts relating to the Company
Intellectual Property Assets to which Company is a party or by which Company is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $1,000 under which Company is the licensee. There are no outstanding and,
to Company's and the Management Shareholders' knowledge, no threatened disputes
or disagreements with respect to any such contract.
(d) Know-How Necessary for the Business
(i) The Company Intellectual Property Assets are all the intellectual
property necessary for the operation of Company's business as currently
conducted. Company is the owner of all right, title, and interest in and to
each of the Company Intellectual Property Assets except as set forth in Schedule
4.13(d), free and clear of all Liens and has the right to use without payment to
a third party (except as set forth in Schedule 4.13(d)) all of the Company
Intellectual Property Assets.
(e) Trademarks
(i) Schedule 4.13(e) contains a complete and accurate list of all Company
Marks. Except as set forth on Schedule 4.13(c), Company is the owner of all
right, title, and interest in and to each of the Company Marks, free and clear
of all Liens.
(ii) All Company Marks that have been registered with the United States
Patent and Trademark Office are currently in compliance with all formal legal
requirements (including the timely post-registration filing of affidavits of use
and incontestability and renewal applications), are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
(iii) No Company Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and, to Company's knowledge, no such action is
threatened with respect to any of the Company Marks.
(iv) To Company's knowledge, there is no trademark or trademark application
of any third party potentially interfering with any Company Xxxx.
(v) Except as described on Schedule 4.13(e), to Company's knowledge, no
Company Xxxx is infringed or has been challenged or threatened in any way. None
of the Company Marks infringes or is alleged to infringe any trade name,
trademark, or service xxxx of any third party.
(vi) All Company products and materials containing a Company Xxxx xxxx the
proper federal registration notice where permitted by law.
(f) Copyrights
(i) Schedule 4.13(f) contains a complete and accurate list of all Company
Copyrighted Works that are currently published and in use. Except as set forth
on Schedule 4.13(c), Company is the owner of all right, title, and interest in
and to each of the Company Copyrighted Works, free and clear of all Liens.
(ii) None of the Company Copyrighted Works has been registered.
(iii) To Company's knowledge, none of the Company Copyrighted Works is
infringed or has been challenged or threatened in any way. No portion of any of
the Company Copyrighted Works infringes or is alleged to infringe any copyright
of any third party or is a derivative work based on the work of a third party.
(iv) All copies of the Company Copyrighted Works have been marked with the
proper copyright notice.
(g) Trade Secrets
(i) With respect to each Company Trade Secret, any documentation relating to
such Company Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) Company and the Shareholders have taken reasonable precautions to
protect the secrecy, confidentiality, and value of the Company Trade Secrets.
(iii) Company has good title and the (but not necessarily exclusive) right
to use the Company Trade Secrets. To Company's knowledge, Company Trade Secrets
are not part of the public knowledge or literature and have not been used,
divulged, or appropriated either for the benefit of any Person (other than
Company) or to the detriment of Company. To Company's and the Shareholders'
knowledge, no Company Trade Secret is subject to any adverse claim or has been
challenged or threatened in any way.
4.14 Real Property.
Schedule 4.14 lists all real property owned and/or used in the
Company's business (the "Real Property"), and lists with respect to each parcel
the street address and, if leased, the lessor. The term "Real Property" does
not include common areas, parking space, or other parts of any real property
over which the Company has no control.
(a) There is no Real Property that is owned by the Company.
(a) Set forth in Schedule 4.14(a), is the Real Property, which is
subject to a written lease or sublease to which Company is a party as lessee or
sub-lessee.
(b) All of the Real Property is free from development, use or
occupancy restrictions, except those imposed by applicable Law, and from special
taxes or assessments, except those generally applicable to other properties in
the tax districts in which the Real Property is located or as otherwise
described in Schedule 4.14(c). To Company's and the Management Shareholders'
knowledge, no options have been granted to others to purchase, lease or
otherwise acquire any interest in the Real Property. Company has the exclusive
right of possession of each tract or parcel comprising its Real Property (other
than the lessor under certain circumstances such as default under a lease).
(c) To Company's knowledge, except as set forth in the Company
Disclosure Schedules, the present use, occupancy and operation of the Real
Property, and all aspects of the Improvements to the Real Property are in
compliance with all Laws and private restrictive covenants, and, to Company's
knowledge, there has not been any proposed change thereto that would affect any
of the Real Property or its use, occupancy or operation. The Company is not
involved in any conflict or dispute with any Person relating to any Real
Property or the activities thereon. No portion of the Real Property is subject
to any classification, designation or preliminary determination of any
Governmental Authority or pursuant to any Law, which would restrict its use,
development, occupancy or operation in connection with the Company's business.
Except as set forth in Schedule 4.14(d), all Improvements are in good condition
and repair, and are suited for the operation of the Company's business.
(d) Neither Company nor any other Person has caused any work or
improvements to be performed upon or made to any of the Real Property for which
there remains outstanding any payment obligation that would or might serve as
the basis for any Lien in favor of the Person who performed the work.
(e) All requisite certificates of occupancy and other permits and
approvals required with respect to the Real Property or the Improvements and the
use, occupancy and operation thereof have been obtained and paid for and are
currently in effect and free of restrictions.
4.15 Contracts.
(a) Schedule 4.15 sets forth a true, complete and correct list of (i) all
customers of Company accounting for 5% or more of Company's revenue in 2002 and
(ii) all non-customer contracts, contractual rights, leases, purchase orders and
sales orders, written or oral, involving payments in excess of $1,000 or that
may not be terminated by Company within thirty (30) days without any adverse
consequence to Company ((i) and (ii) collectively, "Contracts"). Company has
heretofore delivered or made available to GRLC a true, correct and complete copy
of each of the written Contracts (including all exhibits, amendments or
modifications thereto), and a complete and accurate summary of each oral
Contract. All of the Contracts have been entered into in the ordinary course of
the Company's business, and are valid and effective in accordance with their
terms. Company has performed in all material respects all obligations to be
performed by it as of the date of this Agreement under all Contracts, and
Company is not in material default or in arrears under any of the terms thereof.
No condition exists or has occurred which, with the giving of notice or the
lapse of time, or both, would constitute a material default by Company or
accelerate the maturity of, or otherwise modify, any Contract; and all Contracts
are in full force and effect. To the knowledge of Company , except as set forth
in Schedule 4.15, no default by any other party to any Contract is presently
known or claimed by Company to exist, nor has any condition occurred which, with
the giving of notice or the lapse of time, or both, would constitute a default
by such other party to any Contract; and (b) Company has not received any
written notice that, either before or after Closing, and has no reason to
believe that, before Closing or as a result of the transactions contemplated
hereby, any customer of Company (i) has ceased, or will cease, to use the
products, goods or services of Company, or (ii) has substantially reduced or
will substantially reduce, the use of products, goods or services of Company.
The Company represents that its contracts total approximately $26,000,000 in
revenues.
4.16 Insurance. Schedule 4.16 contains a complete list of all policies
of insurance maintained by Company, all of which are in full force and effect.
Company has delivered or made available to GRLC a true, correct and complete
copy of each such insurance policy (including any exhibits, schedules, riders,
amendments or modifications thereof.) All premiums due thereon have been paid
and Company has not received any notice of cancellation with respect thereto.
Schedule 4.16 lists and describes all occurrences which may form the basis for a
material claim by or on behalf of Company under any such policy; and Company has
timely given notice of all such occurrences to the appropriate insurer and has
not waived (either intentionally or, to Company's knowledge, inadvertently) its
right to make the related claim under any such policy.
4.17 Litigation. Except as set forth on Schedule 4.17 no Action is
pending or, to the knowledge of the Company, threatened against, by or affecting
Company or the Shares except as listed in Exhibit D. There are no unsatisfied
judgments or Orders against Company or any Shareholder to which any of them or
their assets and properties are subject except as listed in Exhibit D.
4.18 Taxes.
(a) Except as set forth in Schedule 4.18, Company has timely filed all
federal, state, local, and foreign tax returns, reports and estimates for all
years and periods (and portions thereof) for which any such reports, returns or
estimates were due with respect to any Taxes. All such returns and estimates
were prepared in the manner required by applicable Law and show the correct and
proper amount due. All Taxes shown thereby to be payable (or that are otherwise
payable) have been paid. Except as disclosed on Schedule 4.18, there are no
Taxes due and owing by Company of any kind or nature.
(b) Except as set forth in Schedule 4.18, all Taxes imposed on
Company by any Governmental Authority (including all deposits in connection
therewith required by applicable Law, and all interest and penalties thereon)
which have become due and payable by Company for all periods through the date
hereof have been paid in full, and adequate reserves for all other Taxes,
whether or not due and payable, and whether or not disputed, have been set up on
the books of Company, and such reserves will be adequate to pay all Taxes of
Company for all periods through Closing. There is not now any proposed
assessment against Company of additional Taxes of any kind. Company is not a
party to any Tax sharing or Tax allocation agreement, understanding, arrangement
or commitment. There is no dispute or Action concerning any Tax Liability of
Company raised by a Governmental Authority in writing.
(c) There are no Liens for Taxes upon any assets of Company except
Liens for Taxes not yet due.
(d) Except as set forth in Schedule 4.18 (which shall set forth
the type of return, date filed, and date of expiration of the applicable statute
of limitations), (i) the statute of limitations for the assessment of federal
income taxes has expired for all federal income tax returns of Company or such
returns have been examined by the Internal Revenue Service for all periods
through December 31, 2000; (ii) the statute of limitations for the assessment of
state, local, and foreign income taxes has expired for all applicable returns of
Company or such returns have been examined by the appropriate tax authorities
for all periods through December 31, 2000; and (iii) no deficiency for any Taxes
has been proposed, asserted or assessed against Company that has not been
resolved and paid in full.
(e) There are no outstanding written waivers or consents regarding
the application of the statute of limitations with respect to any taxes or
returns that have been given by Company.
(f) Except as set forth in Schedule 4.18, Company has complied in
all material respects with all applicable laws, rules and regulations relating
to the payment and withholding of Taxes (including, without limitation,
withholding of Taxes pursuant to 1441 or 1442 of the IRC or similar provisions
under any foreign laws) and have, within the time and in the manner prescribed
by law, withheld from employee wages and paid over to the proper Governmental
Authorities all amounts required to be so withheld and paid over under all
applicable Laws.
(g) Except as set forth in Schedule 4.18, Company has not filed
any consent agreement under 341(f) of the IRC or agreed to have 341(f)(2) of
the IRC apply to any disposition of a subsection (f) asset (as such term is
defined in 341(f)(4) of the IRC) owned by Company.
(h) Except as set forth in Schedule 4.18, Company is not a party
to any tax-sharing or allocation agreement, nor does Company owe any amount
under any tax-sharing or allocation agreement.
4.19 Employment and Labor Matters.
(a) Schedule 4.19(a) to the best of Company's knowledge contains a true,
complete and correct list of each employee, independent contractor, agent and
consultant of Company who on the date hereof performs services on a regular
basis in the business operations of or for Company. Each employee's and
independent contractor's job title, current compensation amounts and forms of
special fringe benefits or amounts, and forms of special compensation for the
preceding twelve (12) months is as set forth in due diligence materials provided
to GRLC by ________________. Except as set forth on Schedule 4.19(a), all
employees and independent contractors may be terminated at will by Company. No
such employees, independent contractor, agent or consultant has terminated his
or her employment, nor, to the knowledge of Company and the Shareholders, plans
to terminate employment as a result of the Merger. Schedule 4.19(a) sets forth
a true, complete and correct list of all employment agreements or other
compensation or benefit arrangements to which Company is a party and any other
commitments (oral or written) made by Company to any employee, agent,
independent contractor or consultant with respect to job security or tenure.
(b) Except as set forth in Schedule 4.19(b), no complaint against
Company has been filed or, to the knowledge of Company , threatened to be filed
with or by any tribunal that regulates labor or employment practices, and there
is no grievance filed or, to the knowledge of Company, threatened to be filed
against Company by any employee. There are no material controversies pending
or, to the knowledge of Company , threatened between Company and its employees,
and no labor union or other organization represents or, to the knowledge of
Company , claims to represent any of such employees' interests.
(c) Schedule 4.19(c) sets forth a true, complete and correct list
of all employee manuals and written policies, procedures, and work related rules
of Company, true and complete copies of which have been provided to or made
available to GRLC.
4.20 Employee Benefit Matters.
(a) Schedule 4.20 lists all "employee benefit plans" (the "ERISA
Plans") within the meaning of Section 3(3) of Employee Retirement Income
Security Act of 1974, as amended ("ERISA") to which Company contributes or is
required to contribute and all other practices, commitments, arrangements and
agreements pursuant to which Company provides, directly or indirectly, any
benefits for employees. Company is not required to contribute, and has never
been required to contribute, to any multi-employer plan within the meaning of
Section 3(37)(A) of ERISA. True correct and complete copies of all ERISA Plans,
together with related trusts, insurance contracts, summary plan descriptions,
annual reports and Form 5500 filings for the past three (3) years, have been
delivered to GRLC. With respect to any plan, arrangement or agreement, which is
not an ERISA Plan, true and complete copies of all plan documents or summaries
of the benefits provided have been delivered to GRLC.
(b) Each ERISA Plan has been operated and administered in all
material respects in accordance with all applicable Laws, including, without
limitation, ERISA and the IRC. Neither Company nor the Shareholders nor any of
the directors, officers, nor to Company's knowledge employees or agents of
Company, nor any "party in interest" or "disqualified person" (as such terms are
defined in Section 3(14) of ERISA and Section 4975 of the IRC) has been engaged
in or been a party to any "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the IRC), nor has any such person been
involved in or caused an ERISA Plan to be involved in a breach of fiduciary duty
under Section 404 of ERISA. Each ERISA Plan that is a "group health plan"
within the meaning of Section 5000(b)(1) of the IRC has been operated in
compliance with the group health plan continuation coverage requirements of
Section 4980B of the IRC and ERISA Sections 601 through 608 and the portability
and coverage requirements of Sections 9801 through 9812 of the IRC and ERISA
Sections 701 through 712. There are no pending claims or, to Company's
knowledge, threatened claims, against any of the ERISA Plans or its fiduciaries
by any employee or beneficiary covered under such ERISA Plan, or by any
Governmental Authority or otherwise involving such ERISA Plan or any of its
fiduciaries (other than for routine claims for benefits).
(c) Schedule 4.20(c) separately identifies any ERISA Plan that is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Company Pension Plan") and also lists any Company Pension Plan that has been
terminated in the last five (5) years. Each Company Pension Plan constitutes a
qualified plan within the meaning of Section 401(a) of the IRC and the trust
thereunder is exempt from federal income tax under Section 501(a) of the IRC.
No Company Pension Plan listed on Schedule 4.20(c) is subject to Title IV of
ERISA. All Company and employee contributions required to be made to each
Company Pension Plan have been made in a timely manner.
(d) Except for a Company Pension Plan, Company is not bound to
provide, and Company does not provide, benefits, including, without limitation,
death, health or medical benefits (whether or not insured), with respect to
current or former employees of Company beyond their retirement or other
termination of service with Company other than as required by applicable Law.
Neither this Agreement nor any transaction contemplated hereby will (i) entitle
any current or former employee, officer or director of Company to severance pay,
unemployment compensation or any similar payment, or (ii) accelerate the time of
payment or vesting, or increase the amount of any compensation due any such
employee, officer or director.
4.21 Environmental Matters. Company holds all Environmental Permits
necessary for the conduct of the Company's business, as the same is now being
conducted and the ownership of its assets and properties. Company has operated,
and is presently operating, in compliance with all applicable Environmental Laws
and Environmental Permits. To the knowledge of Company there are no existing
or pending Environmental Laws with a future compliance date that will require
operational changes or capital expenditures with respect to any Real Property
(or any other property presently or formerly owned, operated or controlled by
Company or as to which Company may bear responsibility or Liability), or any of
the Improvements thereon. To Company's knowledge, except as set forth in
Schedule 4.21, all Hazardous Materials and Solid Waste on, in, or under the Real
Property or real property operated by Company, wherever located, have been
properly removed and disposed of, and no past or present disposal, discharge,
spill or other release of, or treatment, transportation or other handling of
Hazardous Materials or Solid Waste on, in, under or off-site from any Real
Property, or, to the knowledge of Company adjacent property, will subject
Company or any subsequent owner, occupant or operator of such Real Property to
corrective or compliance action or any other Liability. There are no presently
pending, or to Company's knowledge, threatened Actions or Orders against or
involving Company (including any Person for whose acts or omissions Company is
responsible) relating to any alleged, past or ongoing violation of Environmental
Laws. To Company's knowledge, no underground storage tanks are currently
located on any Real Property.
4.22 Agreements and Transactions with Related Parties. Except as set
forth in Schedule 4.22, and in employment arrangements with Company, Company is
not directly or indirectly a party to any material contract, agreement, or lease
with, or any other commitment to, (a) any party owning, or formerly owning,
beneficially or of record, directly or indirectly, any of the shares of or other
equity interest in Company, including the Shareholders, (b) any person related
by blood, adoption or marriage to any such party, (c) any director or officer of
Company, (d) any corporation or other entity in which any of the foregoing
parties has, directly or indirectly, at least a five percent (5.0%) beneficial
interest in the share capital or other type of equity interest in such
corporation, or (e) any partnership in which any such party is a general partner
(any or all of the foregoing, other than Company, being herein referred to as
"Related Parties"). Without limiting the generality of the foregoing, except as
disclosed in Schedule 4.22, to Company's knowledge, none of the Related
Parties, directly or indirectly, owns or controls any assets or properties which
are or have been used in the Company's business, and none of the Related
Parties, directly or indirectly, engages in or has any material interest in or
connection with any business (x) which is or which, within the last three (3)
years, has been a competitor, customer or supplier of Company or has done
business with Company, or (y) which as of the date hereof sells or distributes
products or services which are similar or related to any Company products or
services.
4.23 Absence of Changes. Except as expressly provided for in this
Agreement or as may be set forth in Schedule 4.23, since the Company's Reference
Date:
(a) There has been no change in the business, assets, properties,
Liabilities, affairs, results of operations, condition (financial or otherwise),
cash flows or prospects of Company or in its relationships with suppliers,
customers, employees, lessors or others, other than changes in the ordinary
course of business, none of which have had or will have a material adverse
effect on Company, in the aggregate;
(b) There has been no material damage, destruction or loss to the
assets, properties, or business of Company, whether or not covered by insurance;
(c) The business of Company has been operated in the ordinary
course and consistent with its prior practices;
(d) The books, accounts and records of Company have been
maintained in the usual, regular and ordinary manner on a basis consistent with
prior years and with the basis in which the Company's financial statements were
prepared, and there has been no amendment to the articles of incorporation or
bylaws of Company;
(e) There has been no declaration, setting aside or payment of any
dividend or other distribution on or in respect of the Capital Stock of Company,
nor has Company engaged in any direct or indirect redemption, retirement,
purchase or other acquisition of any of the Capital Stock of Company;
(f) Company has not discontinued or determined to discontinue
selling any products or services previously sold by Company, the sales of which
have been material to Company;
(g) There has been no Lien (other than Liens for current Taxes
which are not yet due and payable and landlord's Liens created by operation of
Law) created on or in the assets of Company;
(h) There has been no sale, transfer, lease or other disposition
of any asset of Company to any Related Party or, except in the ordinary course
of the Company's business, to any other Person, and no debt to, or material
claim or right of, Company has been canceled, compromised, waived or released;
(i) There has been no amendment, termination or waiver of, or any
notice of any amendment, termination or waiver of, any material right of Company
under any Company Contract or under any franchise, certificate, license, permit
or authorization from any Governmental Authority;
(j) Company has not delayed or postponed the payment of any
accounts payable or other Liabilities outside the ordinary course of the
Company's business;
(k) Company has not paid or committed to pay any bonus,
profit-sharing or other extraordinary compensation payment or other arrangement
(except in the ordinary course of the Company's business and consistent with
past practices which have been disclosed to GRLC), nor has Company entered into
any agreement, contract or commitment with any Shareholder or any Related Party
or amended the terms of any existing agreement, contract or commitment with any
Shareholder or any Related Party; and
(l) There has been no change in the authorized, issued or
outstanding Capital Stock of Company.
4.24 Absence of Certain Business Practices. Neither Company nor the
Shareholders, or to the knowledge of Company, any officer, employee or agent of
Company, nor any other person acting on their behalf, has, directly or
indirectly, within the past five (5) years given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or other person
who is or may be in a position to help or hinder the business of Company (or
assist Company in connection with any actual or proposed transaction) which (a)
might subject Company to any damage or penalty in any Action or which might have
an adverse effect on the Company's business, (b) if not given in the past, might
have had a material adverse effect on the Company's business, or (c) if not
continued in the future, might materially adversely affect the Company's
business, or Company's operations, cash flows or prospects or which might
subject Company to suit or penalty in any Action.
4.25 Territorial Restrictions. Company is not restricted by any
written agreement or understanding with any other person from carrying on the
Company's business anywhere in the world, and no such restrictions will result
solely by virtue of the consummation of the transactions hereunder.
4.26 Investment Representation. The Shareholders, severally but not
jointly, represent that they are acquiring the GRLC Shares for their own account
for investment and not with a view to the resale or distribution in whole or in
part thereof in violation of the Securities Act of 1933, as amended (the
"Securities Act") or applicable state Law. The Shareholders, severally but not
jointly, represent that they have no present or contemplated agreement or
commitment providing for or which is likely to compel the disposition of the
GRLC Shares without registration under the federal and any applicable state
securities laws or an opinion of counsel acceptable to GRLC to the effect that
the intended transfer complies with such laws. The financial condition of each
Shareholder is currently adequate to bear the economic risk of an investment in
the GRLC Stock. Each Shareholder has sufficient knowledge and experience in
investment and business matters to understand the economic risk of such an
investment and the risk involved in a commercial enterprise such as GRLC. Each
Shareholder has had an opportunity to ask questions of, and receive answers
from, officers of GRLC, concerning GRLC and the GRLC Stock and to obtain any
additional information, which each Shareholder reasonably requested and is
material to his or her investment decision.
4.27 Full Disclosure. No representation, warranty or covenant of
Company contained in this Agreement, or in the Company Disclosure Schedules or
in any other written statement or certificate delivered by Company and the
Management Shareholders, or any of them, pursuant to this Agreement, or in
connection with the transactions contemplated herein contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading. To Company's knowledge, there is no fact which adversely affects,
or in the future may adversely affect, the business, assets, properties,
Liabilities, affairs, results of operations, condition (financial or otherwise),
cash flows or prospects of Company which has not been or is not disclosed in
this Agreement, the Company Disclosure Schedules or in the other instruments,
certificates, agreements or writings furnished to GRLC or Subsidiary by or on
behalf of the Shareholders pursuant to this Agreement or in connection with the
transactions contemplated herein.
5. REPRESENTATIONS AND WARRANTIES OF GRLC AND IMTO
As an inducement to Company and the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, GRLC hereby
represents, warrant and covenant as follows:
5.1 GRLC Disclosure Schedules. GRLC has heretofore delivered to
Company and the Shareholders certain schedules containing certain information
regarding GRLC, and the GRLC Capital (the "GRLC Disclosure Schedules"). All
information set forth in GRLC Disclosure Schedules is true, correct, complete
and set forth in a manner that is not materially misleading as of the date of
this Agreement. Information in such schedules specifically refers to the
article and section of this Agreement to which such information is responsive
and such information shall not be deemed to have been disclosed with respect to
any other article or section of this Agreement or for any other purposes unless
otherwise noted. Unless otherwise indicated, all capitalized terms used in the
GRLC Disclosure Schedules shall have the same meanings as used in this
Agreement.
5.2 Organization, Qualification and Authority.
(a) GRLC is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of organization,
which are listed on Schedule 5.2. and has principal offices and places of
business at the locations specified in Schedule 5.2. GRLC has all requisite
corporate power, and all requisite franchises, licenses, permits and authority
necessary to own or lease their assets and to carry on their business as, and in
all places where, such business is now conducted and such properties are owned
or leased. GRLC is duly licensed, qualified or domesticated as a foreign
corporation in the jurisdictions listed in Schedule 5.2, which are all
jurisdictions where the character of the property owned or the nature of the
business transacted by them makes such license, qualification or domestication
necessary.
(b) GRLC and IMTO have the full corporate power to enter into,
execute and perform this Agreement. This Agreement has been duly and validly
executed and delivered by GRLC and IMTO and constitutes the valid and legally
binding obligations of GRLC and IMTO subject to general equity principles,
enforceable in accordance with their respective terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or similar Laws affecting the
rights of creditors generally.
5.3 Authorization of GRLC Stock ; Ownership.
(a) The shares of GRLC Stock (Preferred Stock and/or Common Stock
and/or Conversion Common Shares shall be collectively referred to as "GRLC
Stock") to be issued to the Shareholders pursuant to this Agreement will be duly
authorized and reserved, as applicable, for issuance at or before Closing and
upon issuance to the Shareholders will be validly issued, fully paid and
non-assessable.
(b) The total authorized Capital Stock of GRLC is as set forth in
Schedule 5.3(b).
(c) All of the outstanding shares of Capital Stock of GRLC are
duly authorized, validly issued, fully paid and non-assessable and were
authorized, offered, issued and sold in accordance with all applicable
securities and other Laws and all rights of current or former shareholders of
GRLC and other Persons. No Person has any preemptive rights with respect to the
Capital Stock of GRLC. Other than as reflected on Schedule 5.3(b), there are no
outstanding securities convertible into the Capital Stock of GRLC or rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreements or arrangements providing for the issuance (contingent or otherwise)
of, or any Actions relating to, the Capital Stock of GRLC. Other than as
reflected on Schedule 5.3(b), there are no voting trusts, proxies or other
agreements or understandings with respect to the voting of the Capital Stock of
GRLC. GRLC is not subject to any obligation to repurchase or otherwise acquire
or retire any of its Capital Stock, and GRLC has no Liability for dividends
declared or accrued, but unpaid, with respect to its Capital Stock other than as
reflected in GRLC's financial statements referenced in Section 5.7.
(d) GRLC does not own or have an interest, direct or indirect, or
any commitment to purchase or otherwise acquire, any Capital Stock or other
equity interest, direct or indirect, in any other Person, except as set forth in
Schedule 5.3(c), free and clear of any and all Liens. All such interests so set
forth are owned of record and beneficially by such Entity as set forth in
Schedule 5.3(c) and are duly authorized, validly issued, fully paid and
non-assessable, and were authorized, offered, issued and sold in accordance with
all applicable securities and other Laws.
(e) Each holder of Capital Stock of GRLC is the legal and
beneficial owner of such Capital Stock as set forth on Schedule 5.3(b), free and
clear of any and all Liens (other than community property rights under
applicable Georgia law). There are no outstanding contracts, demands,
commitments or other agreements or arrangements under which GRLC is or may
become obligated to sell, transfer or assign any of its Capital Stock or items
listed on Schedule 5.3(c).
5.4 No Inconsistent Obligations. The execution, delivery or
performance of this Agreement to which GRLC is a party will not result in a
violation or breach of, or constitute a default under (i) the articles of
incorporation or bylaws of GRLC, (ii) any term or provision of any indenture,
note, mortgage, bond, security agreement, loan agreement, guaranty, pledge, or
other instrument, contract, agreement or Order to which GRLC is a party or by
which any is subject or bound; nor will such actions result in (a) the creation
of any Lien on any of the GRLC Stock or any of the assets or properties of GRLC,
(b) the acceleration or creation of any Liability of GRLC, (c) the forfeiture of
any material right or privilege of GRLC, or (d) the forfeiture of any material
right or privilege of GRLC which may affect GRLC's ability to perform under this
Agreement.
5.5 Consents. The execution, delivery and performance of this
Agreement to which GRLC is a party do not (a) require the consent, approval or
action of, or any filing with, or notice to, any Person, or (b) impose any other
term, condition or restriction on GRLC pursuant to any business combination or
takeover Law.
5.6 No Violation; Compliance with Laws. GRLC is not in default under or
in violation of (a) its articles of incorporation or bylaws, or (b) any Order.
The operations of GRLC and its predecessors have been conducted in all material
respects in compliance with all applicable Laws. (For purposes of this
paragraph, any violation of applicable Law that could result in imposition of a
fine or other monetary penalty in excess of $20,000 upon GRLC shall be deemed to
be a material non-compliance). GRLC has not received any notification of any
asserted past or present failure by such Entity to comply with any applicable
Law.
5.7 SEC Reports and Financial Statements.
(a) GRLC is current in all forms, reports and documents required
to be filed by GRLC with the Securities and Exchange Commission (the "SEC").
All such required forms, reports and documents (including those that GRLC may
file subsequent to the date hereof, are referred to herein as the "SEC Reports."
As of their respective filing dates: the SEC Reports (i) complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC thereunder applicable to such SEC Reports; and, (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact, or omit to state a material fact, required to be stated
therein, or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. No Subsidiary is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the SEC Reports (the "GRLC
Financial Statements"), including each SEC Report filed after the date hereof
until the Closing (i) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto; (ii) was
prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as may be permitted by the SEC
on Form 10-QSB under the Exchange Act); and (iii) fairly presented the
consolidated financial position of GRLC and the Subsidiaries as at the
respective dates thereof and the consolidated results of GRLC's operations and
cash flows for the periods indicated (subject, in the case of unaudited
financial statements, to normal audit adjustments). The balance sheet of GRLC
contained in GRLC's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2001 is hereinafter referred to as the "GRLC Balance Sheet."
Except as disclosed in GRLC Financial Statements, since the date of the GRLC
Balance Sheet, GRLC has not incurred any liability required under GAAP to be set
forth on a balance sheet (absolute, accrued, contingent or otherwise) which is,
individually or in the aggregate, material to the business, results of
operations or financial condition of GRLC and the Subsidiaries, taken as a
whole, except for liabilities incurred since the date of the GRLC Balance Sheet
in the ordinary and usual course of business consistent with past practices.
5.8 Liabilities. GRLC has no Liability except (i) those reflected on
the GRLC Financial Statements, (ii) Liabilities incurred in the ordinary course
of business since the date of the GRLC Balance Sheet, or (iii) as specifically
disclosed in Schedule 5.8.
5.9 Ability to Conduct Business; Intellectual Property Rights.
(a) GRLC has the means, rights, and Information required to offer and sell
the products now being offered and sold by them and to perform the services that
are presently being performed by them.
(b) The term "GRLC Intellectual Property Assets" includes:
(i) all fictional business names, trading names, registered and unregistered
trademarks, service marks, and applications owned, used, or licensed by GRLC as
licensee or licensor (collectively, "GRLC Marks");
(ii) all patents owned, used, or licensed by GRLC as licensee or licensor,
patent applications of, and inventions and discoveries that may be patentable by
GRLC (collectively, "GRLC Patents");
(iii) all versions of all works owned, used, or licensed by GRLC as licensee
or licensor in connection with the GRLC Business whether published or
unpublished (collectively, "GRLC Copyrighted Works");
(iv) all rights in mask works of GRLC as licensee or licensor (collectively,
"GRLC Rights in Mask Works"); and
(v) all know-how, trade secrets, confidential Information, customer lists,
software, technical Information, data, process technology, plans, drawings, and
blue prints of GRLC that are not commonly known by or available to the public
and which derive economic value from not being generally known to, and not being
readily ascertainable by proper means by, other Persons who can obtain economic
value from its disclosure or use and are the subject of efforts that are
reasonable under the circumstances to maintain its secrecy (collectively, "GRLC
Trade Secrets").
(c) Schedule 5.9(b) contains a complete and accurate list, including any
royalties paid or received by GRLC, of all contracts relating to the GRLC
Intellectual Property Assets to which GRLC is a party or by which it is bound,
except for any license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs with a value of less than
$1,000 under which GRLC is the licensee. There are no outstanding and, to GRLC
or its Subsidiaries knowledge, no threatened disputes or disagreements with
respect to any such contract.
(d) Know-How Necessary for the Business
(i) The GRLC Intellectual Property Assets are all the intellectual property
necessary for the operation of the GRLC Business as currently conducted. GRLC
are the owner of all right, title, and interest in and to each of the GRLC
Intellectual Property Assets, (except as set forth in Schedule 5.9(b)) free and
clear of all Liens and has the right to use without payment to a third party
(except as set forth in Schedule 5.9(b)) all of the GRLC Intellectual Property
Assets.
(ii) Except as set forth in Schedule 5.9(c), all former and current
employees of GRLC and independent contractors engaged by GRLC has executed
written contracts with such Entity that assign to it (or another Entity of GRLC)
all rights to any inventions, improvements, discoveries, or Information relating
to the GRLC Business. To GRLC's and Subsidiary's knowledge, no employee of GRLC
or independent contractor engaged by GRLC has entered into any contract that
restricts or limits in any way the scope or type of work in which such employee
or independent contractor may be engaged or requires the employee or independent
contractor to transfer, assign, or disclose Information concerning his or her
work to anyone other than one of GRLC.
(e) Trademarks
(i) Schedule 5.9(d) contains a complete and accurate list of all GRLC Marks.
Except as set forth in Schedule 5.9(b), one of GRLC is the owner of all right,
title, and interest in and to each of the GRLC Marks, free and clear of all
Liens.
(ii) All GRLC Marks that have been registered with the United States Patent
and Trademark Office are currently in compliance with all formal legal
requirements (including the timely post-registration filing of affidavits of use
and incontestability and renewal applications), are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date.
(iii) No GRLC Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and, to GRLC's and Subsidiary's knowledge, no such
action is threatened with respect to any of the GRLC Marks.
(iv) To GRLC or its Subsidiaries knowledge, there is no trademark or
trademark application of any third party potentially interfering with any GRLC
Xxxx.
(v) To GRLC's and Subsidiary's knowledge, no GRLC Xxxx is infringed or, to
GRLC's and Subsidiary's knowledge, has been challenged or threatened in any way.
None of the GRLC Marks infringes or is alleged to infringe any trade name,
trademark, or service xxxx of any third party.
(vi) All GRLC products and materials containing a GRLC Xxxx that has been
registered with the United States Patent and Trademark Office bear the proper
federal registration notice where permitted by law.
(f) Copyrights
(i) Schedule 5.9(e) contains a complete and accurate list of all GRLC
Copyrighted Works. Except as set forth in Schedule 5.9(b), GRLC is the owner of
all right, title, and interest in and to each of the GRLC Copyrights, free and
clear of all Liens.
(ii) All the GRLC Copyrighted Works have been registered and are currently
in compliance with formal legal requirements, are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety days after the date of Closing.
(iii) To GRLC or its Subsidiaries knowledge, none of the GRLC Copyrighted
Works is infringed or has been challenged or threatened in any way. No portion
of any of the GRLC Copyrighted Works infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(iv) All copies of the GRLC Copyrighted Works have been marked with the
proper copyright notice.
(g) Trade Secrets
(i) With respect to each GRLC Trade Secret, any documentation relating to
such GRLC Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) GRLC has taken reasonable precautions to protect the secrecy,
confidentiality, and value of the GRLC Trade Secrets.
(iii) GRLC has good title and the (but not necessarily exclusive) right to
use the GRLC Trade Secrets. To GRLC's and Subsidiary's knowledge, the GRLC
Trade Secrets are not part of the public knowledge or literature and have not
been used, divulged, or appropriated either for the benefit of any Person (other
than GRLC) or to the detriment of GRLC. To GRLC's and Subsidiary's knowledge,
no GRLC Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
5.10 Contracts.
(a) Schedule 5.10 sets forth a true, complete and correct list of (i) all
clients of GRLC accounting for 5% or more of GRLC's revenue in the fiscal year
2002 and (ii) all non-client contracts, contractual rights, leases, purchase
orders and sales orders, written or oral, involving payments in excess of
$10,000 or that may not be terminated by GRLC within thirty (30) days without
any adverse consequence to GRLC ((i) and (ii) collectively, "GRLC Contracts").
GRLC has heretofore delivered or made available to Company a true, correct and
complete copy of each of the written GRLC Contracts (including all exhibits,
amendments or modifications thereto), and a complete and accurate summary of
each oral GRLC Contract. All of the GRLC Contracts have been entered into in
the ordinary course of the GRLC Business, and are valid and effective in
accordance with their terms. GRLC has performed in all material respects all
obligations to be performed by them as of the date of this Agreement under all
GRLC Contracts, and none of GRLC is in material default or in arrears under any
of the terms thereof. No condition exists or has occurred which, with the
giving of notice or the lapse of time, or both, would constitute a material
default by any Entity comprising the GRLC Corporation or accelerate the maturity
of, or otherwise modify, any GRLC Contract; and all GRLC Contracts are in full
force and effect. To the knowledge of GRLC, except as set forth in Schedule
5.10, no default by any other party to any GRLC Contract is presently known or
claimed by any Entity comprising the GRLC Corporation to exist, nor has any
condition occurred which, with the giving of notice or the lapse of time, or
both, would constitute a default by such other party to any GRLC Contract; and
(b) Neither GRLC or any entity comprising GRLC, has received any written notice
that, either before or after Closing, and have no reason to believe that, before
Closing or as a result of the transactions contemplated hereby, any client of
GRLC (i) has ceased, or will cease, to use the products, goods or services of
GRLC, or (ii) has substantially reduced or will substantially reduce, the use of
products, goods or services of GRLC.
5.11 Litigation. Except as set forth on Schedule 5.11, or as noted in
the 10-QSB for the most resent quarter ending, filed by GRLC, no Action is
pending or, to the knowledge of GRLC or Subsidiary, threatened against, by or
affecting GRLC or the GRLC Stock. Except as set forth on Schedule 5.11 or as
noted in the 10-QSB for most recent quarter ending, there are no unsatisfied
judgments or Orders against GRLC to which any of them or their assets and
properties are subject.
5.12 Real Property; Environmental Matters. GRLC does not own or have
title to any real property. GRLC holds all Environmental Permits necessary for
the conduct of the GRLC Business currently being conducted and the ownership of
their assets and properties. GRLC has operated, and is presently operating, in
compliance with all applicable Environmental Laws and Environmental Permits. To
the knowledge of GRLC and its Subsidiary, there are no existing or pending
Environmental Laws with a future compliance date that will require operational
changes or capital expenditures with respect to any real property (or any other
property presently or formerly owned, operated or controlled by any Entity
comprising GRLC or as to which any such Entity may bear responsibility or
Liability), or any of the Improvements thereon ("GRLC Real Property"). To
GRLC's and Subsidiary's knowledge, except as set forth in Schedule 5.12, all
Hazardous Materials and Solid Waste on, in, or under the GRLC Real Property or
real property operated by any Entity comprising GRLC, wherever located, have
been properly removed and disposed of, and no past or present disposal,
discharge, spill or other release of, or treatment, transportation or other
handling of Hazardous Materials or Solid Waste on, in, under or off-site from
any GRLC Real Property, or, to the knowledge of GRLC and Subsidiary, adjacent
property, will subject GRLC or any subsequent owner, occupant or operator of
such GRLC Real Property to corrective or compliance action or any other
Liability. There are no presently pending, or to GRLC's and Subsidiary's
knowledge, threatened Actions or Orders against or involving GRLC (including any
Person for whose acts or omissions GRLC is responsible) relating to any alleged,
past or ongoing violation of Environmental Laws. To GRLC's knowledge, no
underground storage tanks are currently located on any GRLC Real Property.
5.13 Agreements and Transactions with Related Parties. Except as set
forth in Schedule 5.13, and in employment arrangements with GRLC, none of GRLC
is directly or indirectly a party to any material contract, agreement, or lease
with, or any other commitment to, (a) any party owning, or formerly owning,
beneficially or of record, directly or indirectly, any of the shares of or other
equity interest in GRLC, (b) any person related by blood, adoption or marriage
to any such party, (c) any director or officer of GRLC, (d) any corporation or
other entity in which any of the foregoing parties has, directly or indirectly,
at least a five percent (5.0%) beneficial interest in the share capital or other
type of equity interest in such corporation, or (e) any partnership in which any
such party is a general partner (any or all of the foregoing, other than GRLC,
being herein referred to as "GRLC Related Parties"). Without limiting the
generality of the foregoing, except as disclosed in Schedule 5.13, to GRLC's and
Subsidiary's knowledge, none of the GRLC Related Parties, directly or
indirectly, owns or controls any assets or properties which are or have been
used in the GRLC Business, and none of the GRLC Related Parties, directly or
indirectly, engages in or has any material interest in or connection with any
business (x) which is or which, within the last three (3) years, has been a
competitor, customer or supplier of GRLC or has done business with GRLC, or (y)
which as of the date hereof sells or distributes products or services which are
similar or related to any of GRLC Group products or services.
5.14 Taxes.
(a) Except as set forth in Schedule 5.14, GRLC has timely filed all federal,
state, local, and foreign tax returns, reports and estimates for all years and
periods (and portions thereof) for which any such reports, returns or estimates
were due with respect to any Taxes. All such returns and estimates were
prepared in the manner required by applicable Law and show the correct and
proper amount due. All Taxes shown thereby to be payable (or that are otherwise
payable) have been paid. Except as disclosed on Schedule 5.14, there are no
Taxes due and owing by GRLC of any kind or nature.
(b) There are no Liens for Taxes upon any assets of GRLC except
Liens for Taxes not yet due.
(c) Except as set forth in Schedule 5.14 (which shall set forth
the type of return, date filed, and date of expiration of the applicable statute
of limitations), (i) the statute of limitations for the assessment of federal
income taxes has expired for all federal income tax returns of GRLC or such
returns have been examined by the Internal Revenue Service for all periods
through December 31, 2000; (ii) the statute of limitations for the assessment of
state, local, and foreign income taxes has expired for all applicable returns of
GRLC or such returns have been examined by the appropriate tax authorities for
all periods through December 31, 2000; and (iii) no deficiency for any Taxes has
been proposed, asserted or assessed against GRLC that has not been resolved and
payment arrangements are being met
(d) There are no outstanding written waivers or consents regarding
the application of the statute of limitations with respect to any taxes or
returns that have been given by GRLC.
(e) GRLC has complied in all material respects with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to 1441 or 1442
of the IRC or similar provisions under any foreign laws) and have, within the
time and in the manner prescribed by law, withheld from employee wages and paid
over to the proper Governmental Authorities all amounts required to be so
withheld and paid over under all applicable Laws.
(f) Except as set forth in Schedule 5.14, GRLC has not filed any
consent agreement under 341(f) of the IRC or agreed to have 341(f)(2) the IRC
apply to any disposition of a subsection (f) asset (as such term is defined in
341(f)(4) of the IRC) owned by GRLC.
(g) Except as set forth in Schedule 5.14, GRLC is not a party to
any tax-sharing or allocation agreement, nor does GRLC owe any amount under any
tax-sharing or allocation agreement.
5.15 Receivables. Except as set forth in Schedule 5.15, all notes and
accounts receivable shown on GRLC Balance Sheet and all such receivables now
held by GRLC are valid and collectible obligations and were not and are not
subject to any offset or counterclaim, except for amounts reserved against such
receivables which are reflected on the GRLC Balance Sheet and, with respect to
notes and accounts receivable arising after the GRLC Reference Date and now
outstanding, except for a percentage thereof equal to the percentage which said
reserved amounts on the GRLC Balance Sheet constituted the aggregate of notes
and accounts receivable on the GRLC Reference Date.
5.16 Insurance. Prior to closing, GRLC will deliver or make
available to Company a true, correct and complete copy of such insurance policy
(including any exhibits, schedules, riders, amendments or modifications
thereof.) All premiums due thereon have been paid and GRLC has not received any
notice of cancellation with respect thereto. Except as set forth on Schedule
5.16, there are no occurrences which may form the basis for a material claim by
or on behalf of any Entity comprising GRLC under such policy; and the
appropriate member of GRLC has timely given notice of all such occurrences to
the appropriate insurer and has not waived (either intentionally or, to GRLC's
and the Subsidiary's knowledge, inadvertently) its right to make the related
claim under such policy.
5.17 Absence of Changes. Except as expressly provided for in this
Agreement or as may be set forth in Schedule 5.17, since the GRLC Reference
Date:
(a) There have been no changes in the business, assets,
properties, liabilities, affairs, results of operations, condition (financial or
otherwise), cash flow or prospects of GRLC or in their relationships with
suppliers, customers, employees, lessors or others, other than changes which
occurred in the ordinary course of business, which have had or will have a
material adverse effect on GRLC, in the aggregate;
(b) There has been no material damage, destruction or loss to the
assets, properties, or business of GRLC, whether or not covered by insurance;
(c) GRLC business has been operated in the ordinary course and
consistent with its prior practices;
(d) The books, accounts and records of GRLC have been maintained
in the usual, regular and ordinary manner on a basis consistent with prior years
and with the basis in which the financial statements described in Section 5.7
were prepared, and there has been no Amendment to the Articles of Incorporation
or By-laws of GRLC;
(e) There has been no declaration, setting aside or payment of any
dividend or other distribution on or in respect of the Capital Stock of GRLC,
nor has GRLC engaged in any direct or indirect redemption, retirement, purchase
or other acquisition of any of the Capital Stock of GRLC;
(f) GRLC has not discontinued or determined to discontinue selling
any products or services previously sold by GRLC, the sales of which have been
material to GRLC;
(g) There has been no Lien (other than Liens for current Taxes
which are not yet due and payable and landlord's Liens created by operation of
Law) created on or in the assets of GRLC;
(h) There has been no sale, transfer, lease or other disposition
of any asset of GRLC to any Related Party or, except in the ordinary course of
GRLC Business, to any other Person, and no debt to, or material claim or right
of, GRLC has been canceled, compromised, waived or released;
(i) There has been no amendment, termination or waiver of, or any
notice of any amendment, termination or waiver of, any material right of GRLC
under any Contract of GRLC or under any franchise, certificate, license, permit
or authorization from any Governmental Authority;
(j) GRLC has not delayed or postponed the payment of any accounts
payable or other Liabilities outside the ordinary course of GRLC business;
(k) GRLC has not paid or committed to pay any bonus,
profit-sharing or other extraordinary compensation payment or other arrangement
(except in the ordinary course of GRLC business and consistent with past
practices which have been disclosed to the Company), nor have GRLC entered into
any agreement, contract or commitment with any shareholder or any Related Party
or amended the terms of any existing agreement, contract or commitment with any
shareholder or any Related Party; and
(l) There has been no change in the authorized, issued or
outstanding Capital Stock of GRLC.
5.18 Absence of Certain Business Practices. None of GRLC, or to the
knowledge of GRLC any officer, employee or agent of GRLC, nor any other person
acting on their behalf, has, directly or indirectly, within the past five (5)
years given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the business of GRLC (or assist GRLC in connection with any
actual or proposed transaction) which (a) might subject GRLC to any damage or
penalty in any Action or which might have an adverse effect on the GRLC
business, (b) if not given in the past, might have had a material adverse effect
on the GRLC business, or (c) if not continued in the future, might materially
adversely affect the GRLC business, or GRLC's operations, cash flows or
prospects or which might subject GRLC to suit or penalty in any Action.
5.19 Territorial Restrictions. GRLC is not restricted by any written
agreement or understanding with any Person from carrying on the GRLC business
anywhere in the world, and no such restrictions will result solely by virtue of
the consummation of the transactions hereunder.
5.20 Full Disclosure. No representation, warranty or covenant of GRLC
contained in this Agreement, in the GRLC Disclosure Schedules or in any other
written statement or certificate delivered by GRLC and Subsidiary, or any of
them, pursuant to this Agreement, or in connection with the transactions
contemplated herein contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading. To GRLC's and
Subsidiary's knowledge, there is no fact which adversely affects, or in the
future may adversely affect, the business, assets, properties, Liabilities,
affairs, results of operations, condition (financial or otherwise), cash flows
or prospects of GRLC which has not been or is not disclosed in this Agreement,
the GRLC Disclosure Schedules or in the other instruments, certificates,
agreements or writings furnished to Company or the Shareholders by or on behalf
of GRLC pursuant to this Agreement or in connection with the transactions
contemplated herein.
6. ADDITIONAL AGREEMENTS
6.1 Cooperation. The parties shall cooperate fully with each other and
with their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations hereunder, and all
parties shall use commercially reasonable efforts to consummate the transactions
contemplated herein and to fulfill their obligations hereunder. From time to
time and at any time, at the Company's or GRLC's request, whether on or after
the date hereof, and without further consideration, the Shareholders shall, at
their expense, execute and deliver such further documents and instruments of
conveyance, assignment, and transfer and shall take such further reasonable
actions as may be necessary or desirable, in the opinion of GRLC or the Company,
in connection with the consummation of the transactions described herein.
6.2 Expenses. All expenses incurred by GRLC, Company or the
Shareholders in connection with the negotiation, authorization, preparation,
execution and performance of this Agreement, including, subject to approval o
GRLC, Company, or the Shareholders, all fees and expenses of agents,
Representatives, counsel and accountants, shall be paid by the respective party,
which incurred such expense.
6.3 Brokers. The Company shall indemnify the Shareholders and hold
them harmless from and against all claims or demands for commissions or other
compensation by any broker, finder, or similar agent claiming to have been
employed by or on behalf of GRLCThe Shareholders (and, if Closing is not
consummated, Company) shall indemnify GRLC and the Company and hold them
harmless from and against all claims or demands for commissions or other
compensation by any broker, finder or similar agent claiming to have been
employed by or on behalf of the Shareholders (or any of them) or Company. GRLC
has retained the investment banking services of Regents Capital West and has
agreed to pay Regents a fee of 8% of the Purchase Price.
6.4 Employment Agreements. None
6.5 Disclosure; Publicity. No press release related to this Agreement
or the transactions contemplated herein, or other announcement to the public,
personnel, customers, or suppliers of the Shareholders or Company will be issued
or made without the joint approval of GRLC and the Company GRLC and the Company
will cooperate to prepare a joint (or other appropriate) press release to be
issued on or promptly following the Closing Date or, upon the request of either
GRLC or the Company, at the time of the signing of this Agreement. No party
shall disclose the terms hereof except such disclosures required in connection
with the performance of the terms hereof or required by an Order or applicable
Law, without first discussing such disclosure with the other parties.
6.6 Legending of GRLC Stock. The Shareholders acknowledge and agree
that all shares of GRLC Stock received by them hereunder have not been
registered under the Securities Act, or the securities Laws of any state. The
Shareholders acknowledge that there shall be placed on all certificates
representing the shares of GRLC Stock issued to the Shareholders pursuant to
this Agreement appropriate restrictive legends referencing the restrictions
imposed by applicable securities Laws. Each Shareholder agrees that he or she
will not offer to sell, sell or otherwise dispose of any GRLC Stock issued
pursuant to this Agreement in violation of the requirements of the Securities
Act. With respect to any such sale or disposition, each Shareholder agrees to
furnish to the Surviving Corporation or GRLC, upon request, such Information as
its counsel may deem necessary to assure that such sale or disposition is made
in full compliance with this Agreement, such rule and all applicable federal and
state securities Laws.
6.7 No Solicitation of Transactions. Prior to the termination of this
Agreement or the Closing, the parties hereto will not, and will direct their
respective officers, directors, financial advisors, counsels and other agents or
Representatives not to, directly or indirectly, (a) solicit proposals from,
negotiate with or provide Information to any other Person with respect to the
transfer of any Capital Stock or assets of Company. If, despite this provision,
Company or any of its Representatives receive such a proposal or inquiry,
Company shall promptly inform GRLC and advise such Person of this restriction.
6.8 Share Listing. GRLC and IMTO will use its best efforts to maintain
the listing and trading of its Common Stock on the OTC Bulletin Board, and in
the event the Common Stock, at some later date becomes listed on the NASDAQ
National Market, the NASDAQ Small Cap Market, the New York Stock Exchange, Inc.,
or the American Stock Exchange Inc., GRLC and IMTO shall use its best efforts to
maintain the listing of the Common Stock thereon, and will comply in all
respects with the reporting, filing and other obligations under the bylaws or
rules of the National Association of Securities Dealers, Inc. (the "NASD") and
such exchanges, as applicable. GRLC and IMTO shall promptly provide to the
Shareholders copies of any notices it receives regarding the continued
eligibility of the Common Stock for listing. In the event the Common Stock is
delisted from the OTC Bulletin Board, GRLC and/or IMTO will immediately apply to
have the Common Stock listed on the "Pink Sheets". In the event the Common
Stock is, at a later date, during the time that the shares of GRLC Stock and/or
IMTO Shares are owned by the Shareholders, traded on another exchange or market
other than the OTC Bulletin Board or Pink Sheets, and is later delisted from
such exchange or market, GRLC and/or IMTO agrees to immediately apply for
listing of the Common Stock on the OTC Bulletin Board.
6.9 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC, which may permit the resale of the
Conversion Common Shares to the public without registration, GRLC and IMTO agree
to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times after the
effective date on which GRLC becomes subject to the reporting requirements of
the Securities Act or the Exchange Act;
(b) file with the SEC in a timely manner all reports and other
documents required of GRLC under the Securities Act and the Exchange Act;
(c) so long as any Shareholder owns any restricted securities, to
furnish to each such Shareholder forthwith upon request, a written statement by
GRLC and/or IMTO as to its compliance with the reporting requirements of Rule
144, and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of GRLC and/or IMTO , and such other reports and
documents of GRLC and/or IMTO and other information in the possession of, or
reasonably obtainable by, GRLC and/or IMTO as such Shareholder may reasonably
request in availing itself of any rule or regulation of the SEC, allowing such
Shareholder to sell any such GRLC Stock and/or IMTO SHARES without registration.
6. 10 Resale Under Rule 144. GRLC and IMTO covenants and agrees that
for so long as any of shares of the GRLC Stock and/or IMTO Shares purchased
hereunder, remain outstanding and continue to be "restricted securities" within
the meaning of Rule 144 under the Securities Act, GRLC and IMTO shall use its
best efforts to expeditiously assist in and permit the prompt resale of the GRLC
Stock and/or IMTO Shares pursuant to Rule 144 under the Securities Act by the
Shareholders hereunder. GRLC and/or IMTO shall provide the transfer agent, at
GRLC's and/or IMTO"s expense, with any and all documents and/or information
necessary to complete the transfer under Rule 144, including but not limited to,
opinions of counsel to the transfer agent within five business days after the
Shareholder provides the information or documents reasonably required for the
transfer under Rule 144 to the transfer agent. GRLC and IMTO further agrees
that a standard form Seller's Representation Letter, Broker's Representation
Letter, Form 144 and certificate for the shares as prepared by the Shareholder's
brokerage firm shall conclusively constitute all the documents required for a
Rule 144 transfer approval by GRLC and/or IMTO.
7. COVENANTS PRIOR TO CLOSING
7.1 Covenants and Agreements of Company and Shareholders. The
following covenants and agreements of Company and the Shareholders shall be
effective from the date hereof to the Closing, unless GRLC shall consent in
writing to the waiver of any such covenant or agreement:
(a) Company and the Shareholders shall conduct the operations of
Company only in the ordinary and usual course and consistent with prior
practices, without the creation of any additional indebtedness for borrowed
money, except in the ordinary and usual course of business.
(b) Company and the Shareholders shall not cause Company to enter
into any contracts, agreements or other arrangements to provide, sell, rent,
lease, license, distribute or supply goods or services to any customer or any
third party except in the ordinary course of its operations at prices and on
terms consistent with the prior operating practices of Company.
(c) Company and the Shareholders shall maintain, preserve and
protect all of Company's assets in good condition, except for ordinary wear and
tear and damage by fire or other casualty.
(d) Company and the Shareholders shall maintain the books, records
and accounts of Company in the usual, regular and ordinary course of business on
a basis consistent with prior practices and in accordance with GAAP except as
disclosed on Schedule 4.7.
(e) Company and the Shareholders shall use their best efforts to
preserve Company's business, to keep available the services of its present
employees, to preserve the goodwill of its suppliers, customers and others
having business relations with it.
(f) No action shall be taken by Company or the Shareholders which
shall make any change in Company's Charter Documents, make any change in its
authorized or issued Capital Stock, shall issue or grant any right or option to
purchase or otherwise acquire any of its Capital Stock, shall declare or make a
dividend or other distribution or payment with respect to Company's Capital
Stock, or, directly or indirectly, redeem, purchase or otherwise acquire any of
same.
(g) No action shall be taken by Company or the Shareholders, which
shall cause Company to dissolve, liquidate or voluntarily declare bankruptcy or
seek the appointment of a receiver, trustee or custodian.
(h) the Company shall not grant any increase in the salary or other
compensation of its employees without the express written consent of GRLC,
except pursuant to the terms of employment agreements in effect on the date
hereof.
(i) the Company shall not take any action to institute any new
severance or termination pay practices with respect to any directors, officers
or employees of the Company or to increase the benefits payable under any
severance or termination payments.
(j) the Company shall not (except for salary increases for
employees who are not executive officers of the Company in the ordinary course
of business and consistent with past practice) adopt or amend, in any respect,
except as contemplated hereby or as may be required by applicable law or
regulation, any collective bargaining, bonus, profit sharing, compensation,
pension, retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund, plan, or arrangement for the benefit or welfare of
any directors, officers or employees.
7.2 Covenants and Agreements of GRLC. The following covenants and
agreements of GRLC shall be effective from the date hereof to the Closing,
unless the Shareholders shall consent in writing to the waiver of any such
covenant or agreement:
(a) GRLC shall conduct the operations of GRLC only in the ordinary
and usual course and consistent with prior practices, without the creation of
any additional indebtedness for borrowed money.
(b) GRLC shall not cause GRLC to enter into any contracts,
agreements or other arrangements to provide, sell, rent, lease, license,
distribute or supply goods or services to any customer or any third party except
in the ordinary course of their operations at prices and on terms consistent
with prior operating practices.
(c) GRLC shall maintain, preserve and protect, in good condition,
except for ordinary wear and tear and damage by fire or other casualty, all of
the assets of GRLC.
(d) GRLC shall maintain the books, records and accounts of GRLC in
the usual, regular and ordinary course of business on a basis consistent with
prior practices and in accordance with GAAP.
(e) GRLC shall use its best efforts to preserve GRLC Business, to
keep available the services of its present employees, to preserve the goodwill
of its suppliers, customers and others having business relations with GRLC.
(f) No action shall be taken by GRLC, which shall cause the GRLC
to dissolve, liquidate or voluntarily declare bankruptcy or seek the appointment
of a receiver, trustee or custodian.
8. CONDITIONS TO CLOSING
8.1 Conditions Precedent to GRLC's and Subsidiary's Obligations.
GRLC's and Subsidiary's obligations to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of the following conditions on
or before the Closing Date:
(a) the representations and warranties of Company and the
Shareholders set forth in Article 4 hereof shall be true and correct in all
material respects at and as of the Closing Date as if made on such date and the
Audit shall be completed not later than May 15, 2003.;
(b) Company and the Shareholders shall have performed in all
material respects all of the covenants and agreements required to be performed
by them under this Agreement prior to the Closing;
(c) there shall have been no material adverse change in the
Company's business;
(d) all material consents by third parties and all consents of
Governmental Authorities that are required for the consummation of the
transactions contemplated hereby, or in order to prevent a breach of, default
under, or a termination of any Contract shall have been obtained by Company and
the Shareholders;
(e) all registrations, filings, applications, notices, consents,
approvals, waivers, authorizations, qualifications and orders required to be
filed, made or obtained by the Shareholders or Company, including full and
complete cooperation in connection with preparation of audited financial
statements of Company, in order to consummate the transactions contemplated by
this Agreement.
(f) the Shareholders shall have delivered any and all certificates
representing the Shares, duly endorsed for transfer, with an irrevocable stock
power endorsed in blank, and such other documents, instruments and agreements
related thereto, as GRLC may reasonably request to deliver the Purchase
Consideration;
(g) (i) no Law shall be in effect, pending, or proposed, and no
injunction or restraining order shall be in effect, and (ii) no Litigation shall
be pending or threatened, in each case that prohibits, prevents, or enjoins (or
materially interferes with) the carrying out of this Agreement or any of the
transactions contemplated hereby, or that declares unlawful the transactions
contemplated by this Agreement, or that would have a material adverse effect on
the right of GRLC to own, operate, use, or control the Company's business after
the Closing Date;
(h) on the Closing Date, Company and the Shareholders shall have
delivered to GRLC:
(i) certified copies of the resolutions duly adopted by Company's
boards of directors authorizing the execution, delivery, and performance of this
Agreement and any other agreements or instruments contemplated by this
Agreement;
(ii) certificates executed by the Shareholders and the President and
the Chief Operating Officer of Company, dated the Closing Date, and certifying
in such detail as GRLC may reasonably request to the fulfillment of the
conditions specified in Section 8.1 hereof;
(iii) Certificate of the Secretary of State of Oklahoma , dated a
Current Date, as to the legal existence and good standing of Company under
applicable Law;
(iv) certificates from the Secretary of State of each jurisdiction in
which Company is required to be qualified as a foreign corporation for the
transaction of business, dated a Current Date, as to the due qualification and
good standing of Company under the Laws of such jurisdiction;
(v) such other documents or instruments as GRLC may reasonably request
to effect the transactions contemplated hereby; and
Any condition specified in this Section 8.1 may be waived by GRLC, provided that
no such waiver shall be effective unless it is set forth in a writing executed
by GRLC.
8.2 Conditions to Company's and the Shareholders' Obligations.
Company's and the Shareholders' obligation to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions on or before the Closing Date:
(a) the representations and warranties of GRLC set forth in
Article 5 hereof shall be true and correct in all material respects at and as of
the Closing Date as if made on such date;
(b) GRLC shall have performed in all material respects all of the
covenants and agreements required to be performed by them under this Agreement
prior to the Closing;
(c) all registrations, filings, applications, notices, consents,
approvals, waivers, authorizations, qualifications and orders required to be
filed, made or obtained by GRLC in order to consummate the transactions
contemplated by this Agreement;
(c) on the Closing Date, GRLC shall have delivered to Shareholders
the Purchase Consideration;
(e) on the Closing Date, GRLC shall have delivered to Company:
(i) certified copies of the resolutions duly adopted by GRLC's and
IMTO's boards of directors authorizing the execution, delivery, and performance
of this Agreement and the transactions contemplated hereby;
(ii) certificates executed by the President of GRLC, dated the Closing
Date, and certifying in such detail as Company may reasonably request to the
fulfillment of the conditions specified in Section 8.2 hereof; and
(iii) Certificates of the Secretary of State of Nevada dated a
Current Date, as to the legal existence and good standing of GRLC under
applicable Law;
Any condition specified in this Section 8.2 may be waived by Company
and the Shareholders, provided that no such waiver shall be effective unless it
is set forth in a writing executed by Company and the Shareholders.
9. CLOSING
9.1 Closing. The transactions contemplated herein shall be consummated
(the "Closing") at the offices of GRLC, or such other place that the parties
mutually agree upon, at 12:00 P.M., California time, on the later of March 17,
, 2003 or the second business day after the date on which all conditions to
Closing contained in Article 8 have been satisfied or waived, or on and at such
other time, date, and place as the Parties may mutually agree (the "Closing
Date"), with the Closing to be effective as of the filing of the documents
required by Corporate Laws to effect the Purchase, (the "Effective Date").
9.2 Post-Closing Transactions. The Shareholders shall deliver to GRLC
and the Company a certificate satisfactory to GRLC and the Company that all
duties, taxes and other impost payable in respect of the delivery of the Shares
have been paid by the Shareholders. Promptly upon receipt of the Shares, GRLC
shall issue the Purchase Consideration to the Shareholders. Prior to delivery
of the Shares pursuant to this Section, GRLC shall not be required to issue or
cause the issuance of the Purchase Consideration to the Shareholders.
9.3 Effect. All deliveries, payments and other transactions and
documents relating to Closing shall be interdependent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing).
9.4 Further Assurances. Each party shall, at the request of any other
party from time to time and at any time, whether on or after the Effective Date,
and without further consideration, execute and deliver such assignments,
transfers, assumptions, conveyances, powers of attorney, receipts,
acknowledgments, acceptances and assurances as may be reasonably necessary to
procure for the party so requesting, and its successors and assigns, or for
aiding and assisting in collecting and reducing to possession, the Shares, or to
otherwise satisfy and perform the obligations of the parties hereunder.
10. INDEMNIFICATION
10.1 Indemnification of GRLC and the Company. Subject to the
limitations set forth in Section 10.6, the Shareholders jointly shall indemnify
and hold harmless GRLC, the Company and their respective Affiliates, officers,
directors, employees and agents (collectively, the "GRLC Indemnitees") from,
against and in respect of any and all Damages and amounts paid in settlement
pursuant to Section 10.4 (collectively, the "GRLC Indemnified Losses") suffered
or incurred by any GRLC Indemnitee by reason of, or arising out of:
(a) any misrepresentation or breach of warranty of Company or the
Shareholders contained in this Agreement, or in any certificate, schedule,
instrument or document delivered to GRLC on behalf of Company or the
Shareholders pursuant to the provisions of this Agreement, including, without
limitation, the Company Disclosure Schedules (collectively, the "Company
Transaction Documents"); and
(b) any breach or non-fulfillment or non-performance, partial or
total, of any covenant or any agreement of Company or the Shareholders contained
in this Agreement, or in any certificate, schedule, instrument or document
delivered to GRLC by or on behalf of Company or the Shareholders pursuant to the
provisions of this Agreement; and
(c) any and all Taxes of Company or the Shareholders with respect
to any period (or portion thereof) up to and including the Closing Date, except
for Taxes of Company that are reflected on the Company Balance Sheet as current
liabilities for Taxes that exist as of the Closing Date. The indemnity provided
for in Section 10.1(c) shall be independent of any other indemnity provision
hereof and, anything in this Agreement to the contrary notwithstanding, shall
survive until the expiration of the applicable statute of limitation for the
Taxes referred to herein. Any indemnification regarding Taxes that is set forth
in this Section 10.1(c) shall not be subject to the provisions of Section
10.6(a) hereof.
10.2 Indemnification of the Shareholders. Subject to the limitations
set forth in Section 10.6, GRLC shall indemnify and hold the Shareholders and
their respective Affiliates, employees, agents, successors and assigns
(collectively, the "Shareholder Indemnitees") harmless from, against and in
respect of any and all Damages and amounts paid in settlement pursuant to
Section 10.4 (collectively, "Shareholder Indemnified Losses") suffered or
incurred by any Shareholder Indemnitees by reason of or arising out of:
(a) any misrepresentation or breach of warranty of GRLC contained
in this Agreement, or in any certificate, schedule, instrument or document
delivered to Company or the Shareholders by or on behalf of GRLC pursuant to the
provisions of this Agreement, including, without limitation, the GRLC Disclosure
Schedules (collectively, the "GRLC Transaction Documents"); and
(b) any breach or non-fulfillment or non-performance, partial or
total, of any covenant or any agreement of GRLC contained in this Agreement, or
in any certificate, schedule, instrument or document delivered to Company or the
Shareholders by GRLC pursuant to the provisions of this Agreement; and
(c) any and all Taxes of GRLC with respect to any period (or
portion thereof) up to and including the Closing Date, except for Taxes of GRLC
that are reflected on any of the financial statements described in Section 5.7
as current liabilities for Taxes, which liabilities continue to exist as of the
Closing Date. The indemnity provided for in Section 10.2(c) shall be
independent of any other indemnity provision hereof and, anything in this
Agreement to the contrary notwithstanding, shall survive until the expiration of
the applicable statute of limitation for the Taxes referred to herein, and any
indemnification regarding Taxes that is set forth in this Section 10.2(c) shall
not be subject to the provisions of Section 10.6(b) hereof.
10.3 Assertion of Claims. No claim shall be brought by any GRLC
Indemnitee under Section 10.1, or any Shareholder Indemnitee under Section 10.2,
and no respective indemnitee hereunder shall be entitled to receive any payment
with respect thereto, unless the party or parties to be indemnified (whether one
or more, the "Indemnified Party") gives the party or parties from which
indemnification is sought (whether one or more, the "Indemnifying Party")
written notice of the existence of any such claim, specifying in reasonable
detail the basis therefore, prior to the expiration of the applicable Survival
Period. Except as set forth in Section 10.5, if the Indemnified and
Indemnifying Parties fail to reach a mutually acceptable resolution of such
claim within thirty (30) days after the giving of such notice, the Indemnified
Party shall have the right to commence arbitration or legal proceedings for the
enforcement of its rights hereunder.
10.4 Defense of Third Party Claims.
(a) If any claim or action by a third party arises after the Effective Date
for which an Indemnifying Party is liable under the terms of this Agreement,
then the Indemnified Party shall notify the Indemnifying Party, within thirty
(30) days after such claim or action arises and is known to the Indemnified
Party, and shall give the Indemnifying Party a reasonable opportunity, at its
sole cost and expense, to take part in any examination of the books and records
of the Shareholders, Company or Subsidiary, to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnified Party, to take all other required steps or proceedings to settle or
defend any such claim or action, and to employ counsel to contest any such claim
or action in the name of the Indemnified Party or otherwise. If the
Indemnifying Party wishes to assume the defense of such claim or action, it
shall give written notice to the Indemnified Party, and within ten (10) days
thereafter the Indemnified Party shall permit, and the Indemnifying Party shall
thereafter assume, the defense of any such claim or action, through counsel
reasonably satisfactory to the Indemnified Party; provided that the Indemnified
Party may participate in such defense at its own expense.
(b) If the Indemnifying Party does not assume the defense of any
such claim or action, then the Indemnified Party may defend against such claim
or action in such manner as it may deem appropriate (provided that the
Indemnifying Party may participate in such defense at its own expense);
provided, however, that the Indemnified Party may not settle any such claim or
action without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. If no settlement of such
claim or action is made, the Indemnifying Party (subject to the limitations
contained in Section 10.6) shall satisfy any judgment rendered with respect to
such claim or in such action, before the Indemnified Party is required to do so,
and pay all expenses, legal or otherwise, reasonably and necessarily incurred by
the Indemnified Party in the defense of such claim or Litigation.
(c) If a judgment is rendered against an Indemnified Party in any
action covered by the indemnification hereunder, or any lien in respect of such
judgment attaches to any of the assets of any of the an Indemnified Party, the
Indemnifying Party shall immediately upon such entry or attachment pay such
judgment in full or discharge such lien (subject to the limitation contained in
Section 10.6) unless, at the expense and direction of the Indemnifying Party, an
appeal is taken under which the execution of the judgment or satisfaction of the
lien is stayed. If and when a final judgment is rendered in any such action,
the Indemnifying Party shall forthwith pay such judgment or discharge such lien
(subject to the limitation in contained in Section 10.7) before the Indemnified
Party is compelled to do so.
10.5 Cooperation. Notwithstanding anything to the contrary contained
in this Article 10, the parties shall cooperate with each other to maximize the
availability of insurance coverage for claims or actions by third parties which
may be subject to indemnification pursuant to this Article 10, and if any
insurance carrier for any party agrees to defend such claim or action, such
defense shall be tendered to such insurance carrier and the rights of the
parties between themselves regarding the assumption and control of such defense
shall be subject to the reasonable requirements of such insurance carrier.
10.6 Limitation.
(a) The Shareholders shall have no obligation under this Article 10 to GRLC
Indemnitees for (i) any GRLC Indemnified Losses arising under Section 10.1
unless and until, and only to the extent that, the total GRLC Indemnified Losses
for which the Shareholders would otherwise be liable equals or exceeds the
limits provided by GRLC's current or then existing Director's and Officer's
Insurance Policies, provided however, that such deductible shall not apply to
any GRLC Indemnified Losses as a result of a breach of the representations in
Sections 4.2(b), 4.3(a), (b) or (d), 4.4(a), or 4.18(i), or resulting from
fraudulent or intentional misrepresentations, which losses shall be paid by the
Shareholders hereunder for their full amount (i.e., from the first dollar of
loss). Shareholders shall not be liable to the GRLC Indemnitees under this
Article 10 for GRLC Indemnified Losses in excess of the limits provided by
GRLC's current or then existing Director's and Officer's Insurance Policies,
provided however, such limitations shall not apply to any loss suffered by the
GRLC Indemnitees attributable to fraudulent or intentional misrepresentations or
omissions.
(b) GRLC and the Company shall have no obligation under this
Article 10 to Shareholder Indemnitees for any Shareholder Indemnified Losses
arising under Section 10.2 unless and until, and only to the extent that, the
total Shareholder Indemnified Losses for which GRLC and the Company would
otherwise be liable equals or exceeds the limits provided by GRLC's current or
then existing Director's and Officer's Insurance Policies, provided however,
that such deductible shall not apply to any Shareholder Indemnified Losses as a
result of a breach of the representations in Sections 5.2(b), or 5.3(a), (b),
(c), or (e), which losses shall be paid by GRLC and the Company hereunder for
their full amount (i.e., from the first dollar of loss). Anything to the
contrary notwithstanding, GRLC and the Company will be liable to the Shareholder
Indemnitees for Shareholder Indemnified Losses arising under Section 10.2 only
up to an aggregate equal to the limits provided by GRLC's current or then
existing Director's and Officer's Insurance Policies provided however that such
limitations shall not apply to any loss suffered by the Shareholder Indemnitees
attributable to fraudulent or intentional misrepresentations or omissions.
10.7 No Liability or Contribution by the Company The Company shall not
have any Liability to any Shareholder as a result of any misrepresentation or
breach of representation, warranty, agreement or covenant by or on behalf of any
Shareholder contained in this Agreement, the Company Disclosure Schedules or any
certificate, instrument, agreement or other writing delivered by or on behalf of
any Shareholder or Company pursuant to this Agreement, any Other Agreement, or
in connection with the transactions contemplated herein, and no Shareholder
shall have any right of indemnification or contribution against the Company on
account of any event or condition occurring or existing prior to or on the date
hereof.
10.8 Survival. The representations, warranties, covenants, agreements
and indemnifications of the parties contained in this Agreement shall survive
any investigation heretofore or hereafter made by GRLC, Company or the
Shareholders and the consummation of the transactions contemplated herein and
all such representations and warranties shall be of no further force and effect
after twenty-four (24) months from the Closing Date ("Survival Period")
provided, however, that the Survival Period shall not apply to the
representations, warranties, covenants, agreements and indemnities set forth in
Sections 4.18 and 5.14 hereof. Anything to the contrary notwithstanding, a
claim for indemnification, which is made but not resolved prior to the
expiration of the Survival Period, may be pursued and resolved after such
expiration.
11. MISCELLANEOUS
11.1 Notices.
(a) All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or sent by
pre-paid, first class, certified or registered mail, return receipt requested,
or overnight mail to the intended recipient thereof at its address set out
below, and, if reasonably practicable, a copy via facsimile to the intended
recipient thereof at its facsimile number set out below. Any such invoice,
demand or communication shall be deemed to have been duly given upon receipt (if
given or made in person). In proving the same, it shall be sufficient to show
that the envelope was duly addressed, stamped and posted and delivered, and
whether or not delivery was accepted. The addresses of the parties for purposes
of this Agreement are:
(i) If to GRLC or IMTO :
GRLC Corporation, Inc.
00000 Xxx Xxx Xxxxx
Xxx Xxxxx, XX 00000
Attn.: Xxxxx Xxxxx, CEO
With copy to:
Xxxxxx Xxxxxx
00000 Xxx Xxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile No.: 000-000-0000
Electronic Mail: xxxxxxx@xxxxxxxxxxxxx.xxx
(ii) If to the Company
Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxx
0000 Xxxxxx Xxx
Xxxxxx, XX 00000
Facsimile No.: 000-000-0000
Phone: 000-000-0000
Electronic Mail: xxxxxxxxx@xxxxxxxxxxxx.xxx
If to Shareholders See Schedule A
(b) Any party may change the address to which notices, requests,
demands or other communications shall be delivered or mailed by giving notice of
the new address to the other parties.
11.2 Counterparts. This Agreement (including all Company Transaction
Documents and all GRLC Transaction Documents) may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
11.3 Entire Agreement. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof,
and this Agreement contains the sole and entire agreement among the parties with
respect to the matters covered hereby. This Agreement shall not be altered or
amended except by an instrument in writing signed by or on behalf of the party
entitled to the benefit of the provision and against whom enforcement is sought.
11.4 Approval of the Shareholders. Execution by the Shareholders of
this Agreement shall be deemed to be approval by the Shareholders of the
Purchase in any and all manner required by Corporate Law.
11.5 Termination of Shareholder Agreements. Execution by the
Shareholders and Company of this Agreement shall be deemed to be a termination
of any and all pre-existing agreements with respect to the Capital Stock of
Company by, between, or among any of them.
11.6 Governing Law. The validity and effect of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of California, without regard to conflicts of law and venue shall be San Diego
County.
11.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, legal Representatives, successor and assigns.
11.8 Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable Laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof, shall constitute their
agreement with respect to the subject matter hereof and all such remaining
terms, or parts thereof, shall remain in full force and effect. The parties
agree to replace any illegal, invalid or unenforceable provision of this
Agreement and execute an amendment to this Agreement containing a valid
provision, which will implement the commercial purpose of the illegal, invalid
or unenforceable provision.
11.9 Waiver. Any term or condition of this Agreement may be waived at
any time by the party, which is entitled to the benefit thereof, but only if
such waiver is evidenced by a writing signed by such party. No failure on the
part of any party hereto to exercise, and no delay in exercising any right,
power or remedy created hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or remedy by any such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. No waiver of, or consent to, any breach of or default
in any term or condition of this Agreement by any party hereto shall constitute
a waiver of or consent to any succeeding breach of or default in the same or any
other term or condition hereof.
11.10 Headings. The headings of particular provisions of this
Agreement are inserted for convenience only and shall not be construed as a part
of this Agreement or serve as a limitation or expansion on the scope of any term
or provision of this Agreement.
11.11 Time of Performance. Time is of the essence of this Agreement.
11.12 Enforcement of this Agreement. In any action or other proceeding
brought by any party hereto to enforce the provisions of this Agreement, the
prevailing party, in addition to any other relief as may be awarded thereunder
shall be entitled to its costs, expenses and reasonable attorneys' fees.
12. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
specified with respect thereto below:
"Action" shall mean any action, suit, litigation, complaint, counterclaim,
claim, petition, mediation contest, or administrative proceeding, whether at
Law, in equity, in arbitration or otherwise, and whether conducted by or before
any Governmental Authority or other Person.
"Affiliate" means, as to any specified Person, any other Person that,
directly or indirectly through one or more intermediaries or otherwise,
controls, is controlled by, or is under common control with the specified
Person. As used in this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person (whether through ownership of Capital Stock of that Person,
by contract, or otherwise).
"Capital Lease" means a lease of (or other agreement conveying the right to
use) real or personal property that is required to be classified and accounted
for as a capital lease in accordance with GAAP as in effect on the date of this
Agreement.
"Capital Stock" means, with respect to (a) any corporation, any share, or
any depository receipt or other certificate representing any share, of an equity
ownership interest in that corporation, and (b) any other Entity, any share,
membership or other percentage interest, unit of participation, or other
equivalent (however designated) of an equity interest in that Entity.
"Charter Documents" means, with respect to any Entity at any time, in each
case as amended, modified, and supplemented at that time, the articles or
certificate of formation, incorporation, or organization (or the equivalent
organizational documents) of that Entity, (b) the bylaws, operating agreement,
trust indenture, or regulations (or the equivalent governing documents) of that
Entity, and (c) each document setting forth the designation, amount and relative
rights, limitations, and preferences of any class or series of that Entity's
Capital Stock or of any rights in respect of that Entity's Capital Stock.
"Damages" to any specified Person means any and all costs, damages and
expenses (including reasonable fees and actual disbursements by attorneys,
consultants, experts, or other Representatives, and Litigation costs) to, any
fine of or penalty on, or any Liability (including loss of earnings or profits)
obligations, fines, penalties, and Taxes of any other nature to that Person;
provided, however, that the amount of Damages shall be reduced appropriately for
tax benefits and insurance coverage, and shall not include indirect, incidental,
consequential, punitive, exemplary, lost opportunity, good will or special
damages of any nature, regardless of the nature of a party's claim or theory of
liability.
"Entity" or "Entities" means one or more sole proprietorships,
corporations, partnerships of any kind having a separate legal status, limited
liability companies, business trusts, unincorporated organizations or
associations, mutual companies, joint stock companies, or joint ventures.
"Environmental Laws" shall mean all Laws, general or particular
conditions, requirements, decrees, and covenants relating to health, safety and
the environment, including, without limitation, laws and covenants relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or Hazardous Materials or wastes
of every kind and nature into the environment (including, without limitation,
ambient air, surface water, ground water, soil and subsoil), or otherwise
relating to the manufacture, generation, processing, distribution, application,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes,
or to occupational or worker safety and health, and any and all laws,
directives, guidelines, policies, plans, Orders, stipulations, provisions and
conditions of Environmental Permits, licenses, stipulations, certificates of
authorization, and other operating authorizations, notices or demand letters
issued, entered, promulgated or approved thereunder.
"Environmental Permits" shall mean all permits, licenses, certificates,
approvals, authorizations, regulatory plans or compliance schedules required by
applicable Environmental Laws, or issued by a Government pursuant to applicable
Environmental Laws, or entered into by agreement of the party to be bound,
relating to activities that affect human health or the environment, including,
without limitation, permits, licenses, certificates, approvals, authorizations,
regulatory plans and compliance schedules for air emissions, water discharges,
pesticide and herbicide or other agricultural chemical storage, use or
application, and Hazardous Materials Solid Waste generation, use, storage,
treatment and disposal.
"Forum" shall mean any federal, national, state, local, municipal or
foreign court, governmental agency, administrative body or agency, tribunal,
private alternative dispute resolution system, or arbitration panel.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Governmental Approval" means at any time any authorization, consent,
approval, permit, franchise, certificate, license, implementing order, or
exemption of, or registration or filing with, any Governmental Authority,
including any certification or licensing of a natural person to engage in a
profession or trade or a specific regulated activity, at that time.
"Governmental Authority" means (a) any national, state, county, municipal,
or other government, domestic or foreign, or any agency, board, bureau,
commission, court, department, or other instrumentality of any such government,
and (b) any Person having the authority under any applicable Governmental
Requirement to assess and collect Taxes for its own account.
"Governmental Requirement" means at any time (a) any Law, rule, regulation,
judgment, decree, injunction, writ, edict, award, authorization or other
requirement of any Governmental Authority in effect at that time, and (b) any
obligation included in any certificate, certification, franchise, permit, or
license issued by any Governmental Authority or resulting from binding
arbitration, including any requirement under common law, at that time.
"Hazardous Material" shall mean any substance or material, including,
without limitation, raw materials, commercial products and wastes or waste
products that, because of its quantity, concentration, or physical, chemical or
infectious characteristics may cause or significantly contribute to an increase
in mortality or an increase in serious, irreversible or incapacitating illness,
or pose a substantial hazard to human health or the environment, including
without limitation petroleum and all substances and materials designated as
hazardous or toxic under any applicable Environmental Law.
"Improvements" shall mean all buildings, structures and other improvements
of any and every nature located on the Real Property and all fixtures attached
or affixed, actually or constructively, to the Real Property or to any such
buildings, structures or other improvements.
"Information" means all information, whether written or stored on computer
disks, tape(s), or electronically or optically stored, including without
limitation, (a) data, certificates, reports, files, records, agreements,
correspondence, plans, policies, practices, manuals, guides and statements, and
(b) summaries of unwritten agreements, arrangements, contracts, plans, policies,
programs, or practices or of unwritten amendments or modifications of,
supplements to, or waivers under any of the foregoing.
"IRC" shall mean the Internal Revenue Code of 1986, as amended.
"known," "to the knowledge of," "aware" or words of similar import employed
in this Agreement with reference to any individual or entity shall be
conclusively presumed to mean that the individual or entity has made reasonable
efforts under the circumstances to become knowledgeable; in the case of Company,
GRLC and Subsidiary, "knowledge" shall be deemed to be the individual and
collective knowledge (as defined above) of its directors and senior officers and
managers.
"Law" shall mean all federal, national, state, provincial, local, municipal
or foreign constitutions, statutes, rules, regulations, norms, ordinances, acts,
codes, legislation, treaties, conventions, common law principles, judicial
decisions and similar laws and legal requirements, whether of the United States
of America or any other jurisdiction as in effect from time to time.
"Liability" shall mean any liability or obligation whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due.
"Liens" means, with respect to any property or asset of any Person (or any
revenues, income, or profits of that Person therefrom) (in each case whether the
same is consensual or nonconsensual or arises by contract, operation of Law,
legal process, or otherwise), (a) any mortgage, lien, security interest, pledge,
attachment, levy, or other adverse claim, charge or encumbrance of any kind
thereupon or in respect thereof or (b) any other arrangement under which the
same is transferred, sequestered, or otherwise identified with the intention of
subjecting the same to, or making the same available for, the payment or
performance of any Liability in priority to the payment of the ordinary,
unsecured creditors of that Person, including any "adverse claim") in the case
of any Capital Stock. For purposes of this Agreement, a Person shall be deemed
to own subject to a Lien any asset that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, Capital
Lease, or other title retention agreement relating to that asset.
"Litigation" means any Action, case, proceeding, claim, grievance, suit, or
investigation or other proceeding conducted by or pending before any
Governmental Authority or any arbitration or mediation proceeding.
"Orders" shall mean all applicable orders, writs, judgments, injunctions,
decrees, rulings, consent agreements, and awards of or by any Forum or entered
by consent of the party to be bound.
"Other Agreements" means the written agreements, documents, instruments,
and certificates executed pursuant to or in connection with this Agreement, all
as amended, modified, or supplemented from time to time.
"Person" means any natural person, Entity, estate, trust, union or employee
organization, or Governmental Authority.
"Representatives" means, with respect to any Person, the directors,
officers, employees, Affiliates, accountants (including independent certified
public accountants), advisors, attorneys, consultants, or other agents of that
Person, or any other Representatives of that Person or of any of those
directors, officers, employees, Affiliates, accountants (including independent
certified public accountants), advisors, attorneys, consultants or other agents.
"Solid Waste" shall mean any garbage, refuse, sludge from a waste treatment
plant, water supply treatment plant, or air pollution control facility and other
discarded material, including solid, liquid, semisolid, or contained gaseous
material resulting from industrial, commercial, mining and agricultural
operations, and from community activities.
"Taxes" shall mean any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of whatever nature,
including without limitation income, gross receipts, excise, property, sales,
use, customs, value added, consumption, transfer, license, payroll, employee
income, withholding, social security, and franchise taxes, now or hereafter
imposed or levied by the United States of America or any Governmental Authority
or by any department, agency or other political subdivision or taxing authority
thereof or therein, all deposits required in connection therewith, and all
interests, penalties, additions to tax, and other similar Liabilities with
respect thereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
GRLC:
GREENLAND CORPORATION
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
COMPANY:
EXPERTHR OKLAHOMA, INC
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: President
IMTO
IMAGING TECHNOLOGIES CORPORATION
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Chief Executive Officer
SCHEDULE A
Shareholders
[CONFIDENTIAL]
