STOCK PURCHASE AGREEMENT July 31, 2007
July
31,
2007
The
parties to this Stock Purchase Agreement are Advanced Connections, Inc., an
Idaho corporation (“ACI”), Crystal Hospitality Holdings, Inc., a Delaware
corporation (“CHH”); and Crystal International Travel Group. Inc., a Delaware
corporation (the “Stockholder”).
Accordingly,
it is agreed as follows:
1. Transactions
at the Closing.
1.1 Purchase
of CHH Stock.
At the
closing referred to in section 2,
the
Stockholder shall sell, assign and deliver to ACI all of the shares of CHH
capital stock owned by the Stockholder as set forth on Schedule 1
and ACI
shall purchase and acquire those shares
(the
“CHH Shares”).
1.2 Payment
of Purchase Price.
At
the
closing, ACI shall pay $10.00 to the Stockholder. As additional consideration
and subject to the conditions set forth in Sections 1.3 and 1.4 below, ACI
shall
make cash payments of $2,500.00 (the “Monthly Purchase Price”) to the
Stockholder beginning on August 31, 2007 and continuing to make such payments
on
the last day of each month for a period of fifty-nine months (the “Monthly
Purchase Price Period”).
1.3 Offset
of the Monthly Purchase Price.
Subsequent to the closing, ACI shall license back to the Stockholder the right
and obligation to maintain and operate xxx.xxxxxxxx.xxx (the “Website”) pursuant
to terms and conditions to be determined within thirty days of the Closing
for
the Monthly Purchase Price Period. At the end of each month during the Monthly
Purchase Price Period, the Stockholder shall calculate the revenues generated
by
the Website and remit to ACI within five business days the revenue generated
during the month, which shall offset by the Monthly Purchase Price to the extent
applicable.
1.4 Repurchase
Right.
At any
time during the Monthly Purchase Price Period, the Stockholder shall have the
right to reacquire the Website by providing ACI ten days prior written notice;
provided, however, that if the Website is reacquired, the sole consideration
the
Stockholder shall be required to tender is that ACI shall no longer be required
to make any additional Monthly Purchase Price payments.
1.5 Certain
Definitions.
(a) As
used
in this agreement:
(i) the
term
“Cash and Cash Equivalents” means all cash and other liquid assets, including,
but not limited to, bank deposits, paper currency and coins, negotiable money
orders and checks, U.S. Treasury bills, money-market fund shares and commercial
paper;
(ii) the
term
“Knowledge of the Stockholder” means the actual knowledge, after due inquiry, of
any the Stockholder; and
(iii) the
term
“Material Adverse Effect” means any change or event that has had, or would
reasonably be expected to have, a material adverse effect on the assets,
liabilities, financial condition, business, or operations of CHH.
2. Closing.
2.1 Date
of Closing Subject
to the satisfaction of the conditions set forth in section 7
(or
waiver by ACI), the closing under this agreement shall take place at the offices
of Crystal International Travel Group, Inc. at 0000 Xxxxxxxxxxxx Xxxxx,
00xx
Xxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 (or at such other place as the parties may agree
upon in writing) on or before July 27, 2007. The date on which the closing
is
held is referred to in this agreement as the “Closing Date.” At the closing, the
parties shall execute and deliver the documents referred to in
section 8.
2.2 Outside
Date for Closing. If
the
closing has not occurred by July 31, 2007, this agreement may be terminated
as
provided in section 10;
upon
such termination none of the parties shall have any liability of any kind
arising out of this agreement other than any liability resulting from its breach
of this agreement prior to termination.
3. Representations
and Warranties by CHH and the Stockholder. Each
of
CHH and the Stockholder represents and warrants to ACI, except as set forth
in a
correspondingly numbered disclosure schedule delivered by CHH to ACI, as
follows:
3.1 Organization
and Authority of CHH. CHH
is a
corporation duly organized, validly existing and in good standing under the
laws
of Delaware and has the full power and authority to enter into and to perform
this agreement and to own, lease and operate its properties as it now does
and
to carry on its business as it is presently being conducted. CHH is duly
qualified and in good standing as a foreign corporation in each jurisdiction
in
which it is required to be so qualified. The copies of CHH’s organizational
documents and any stockholder or voting agreements that have been delivered
to
ACI are complete and correct, and there are no other documents or agreements
affecting the rights or obligations of the stockholders of CHH as such. The
execution, delivery and performance of this agreement by CHH have been duly
authorized by all necessary corporate and stockholder action and this agreement
constitutes a legal, valid and binding obligation of CHH enforceable against
CHH
in accordance with its terms.
CHH
Tours, Inc. is the sole stockholder of each of its subsidiaries.
3.2 No
Conflicts.
(a) The
execution, delivery and performance of this agreement by CHH and the Stockholder
will not (i) conflict with the organizational or governing documents of
CHH; (ii) conflict with, or result in the breach or termination of, or
constitute a default under, or increase CHH’s obligations, or diminish CHH’s
rights under, any lease, agreement, commitment or other instrument, or any
order, judgment or decree, to which CHH is a party or by which CHH or any of
its
properties is bound; (iii) constitute a violation of any law, regulation,
order, writ, judgment, injunction or decree applicable to CHH; (iv) result
in the creation of any claim, lien, security interest, charge or encumbrance
upon any capital stock or assets of CHH; or (v) have a Material Adverse
Effect.
(b) No
consent, approval or authorization of, or designation, declaration or filing
with, any court or governmental authority or any other person or entity is
required on the part of CHH or any of the Stockholder in connection with the
execution, delivery and performance of this agreement by CHH or the
Stockholder.
2
3.3 Capitalization. CHH
has
outstanding [ ] shares of common stock and no shares of preferred stock, which
are owned solely by the Stockholder and no other person or entity holds any
equity interest in CHH. The Stockholder holds those shares of record and
beneficially, free and clear of any claim, lien or encumbrances. There are
no
outstanding subscriptions, options, warrants or rights of any kind to acquire
any interest in or shares of any class of CHH; there are no outstanding
securities convertible into any interest in CHH; and there are no obligations
that might require CHH to issue any such options, warrants, rights or
securities. There are no existing arrangements that require or permit any shares
or other interest in CHH to be voted by or at the discretion of anyone other
than the record owner, and there are no restrictions of any kind on the transfer
of any shares in CHH, except as may be imposed by applicable United States
federal and state securities laws.
At the
closing, ACI shall acquire all of the outstanding stock of CHH, free and clear
of any claim, lien or encumbrance.
3.4 Financial
Statements. Schedule 3.4
contains
the consolidated balance sheets of CHH as of as of December 31, 2006. All of
the
financial statements contained in schedule 3.4
conform
to the books and records of CHH as prepared in the ordinary course of business,
reflect all expenses attributable to CHH during the periods covered, and present
fairly the financial position and the results of its operations of CHH as of
the
dates and for the periods indicated, in accordance with GAAP applied on a
consistent basis. All of the books of account of CHH have been exhibited or
made
available to ACI, and those books of account have been maintained in accordance
with good business practice on a consistent basis and accurately record all
transactions of CHH during the periods covered by them. All of the accounts
receivable reflected in the balance sheets referred to in this
section 3.4,
and all
of the accounts receivable outstanding as of the date of this agreement, arose
from bona fide transactions in the ordinary course of business and none of
them
is subject to any defense, counterclaim or setoff, and none of the Stockholder
has any reason to believe that any of them will not be collected in full when
due).
In the
event ACI determines, in its reasonable discretion, that it is necessary to
audit the unaudited financial statements of CHH as of December 31, 2006 in
order
to comply with any applicable law, ACI shall have the right to do so with an
auditor selected by ACI in its sole discretion, at CHH’s sole cost and
expense.
3.5 Absence
of Undisclosed Liabilities. Except
to
the extent reflected or reserved for in the unaudited balance sheet as of
December 31, 2006 referred to in section 3.4,
or in
the notes to either balance sheet, CHH has no liability or obligation of any
kind, whether accrued, absolute, contingent or otherwise, other than fees and
expenses incurred in connection with the consummation of the transactions
contemplated hereby, for which the Stockholder are solely liable. To the
Knowledge of the Stockholder, there is no basis for the assertion against CHH
of
any liability as of the date hereof.
3.6 Absence
of Certain Changes. Since
December 31, 2006, CHH has operated its business in the ordinary course and
consistent with past practice, and:
(a) there
has
not been any change or event that has had, or would reasonably be expected
to
have, a material adverse effect on the assets, liabilities, financial condition,
businesses or operations of CHH;
(b) CHH
has
not (i) entered into any transaction or incurred any liability or
obligation, (ii) incurred any extraordinary loss (whether or not covered by
insurance), or (iii) waived any rights of value;
(c) CHH
has
not sold or transferred any assets other than assets that have been replaced
with other assets of equal or greater value;
3
(d) CHH
has
not made any distribution or paid any dividend to any of the Stockholder or
acquired any stock or other interest in CHH or, directly or indirectly, made
any
other payment of any kind or any loan to any of the Stockholder or any of their
respective affiliates or members of their respective families;
(e) CHH
has
not granted or agreed to grant any general increase in any rate or rates of
salaries or compensation or in benefits of any kind to its employees, agents,
contractors or consultants, or any specific increase in the salary of or
compensation to any employee, agent, contractor or consultant or any bonus
or
other payment to any employee, agent, contractor or consultant;
(f) there
has
not been any default under any indebtedness of CHH or any event which with
the
lapse of time or giving of notice or both would constitute such a
default;
(g) CHH
has
not amended or terminated any contract or license to which it is a
party;
(h) CHH
has
not made any change in the manner in which its business is operated or the
accounting principles or practices employed by it in connection with its
business or introduced any material new method of management, operations or
accounting, and no person who was a management level employee (i.e., supervised
another employee) of CHH during the twelve months preceding the date of this
agreement is currently not employed by or performing substantially similar
services for CHH; and
(i) CHH
has
not established any new Employee Benefit Plan, amended or modified any existing
Employee Benefit Plan, or incurred any obligation or liability under any
Employee Benefit Plan different in nature or amount from obligations or
liabilities incurred during similar periods in prior years.
3.7 Ownership
of Personal Property. Except
for the lien, if any, of current taxes not yet due and payable, CHH has valid
title, free and clear of any claim, lien, security interest, charge or
encumbrance, to all personal property used in their respective businesses or
presently located on their respective premises, including, but not limited
to,
all personal property reflected on the unaudited consolidated balance sheet
of
CHH as of December 31, 2006 referred to in section 3.4.
CHH
does not owe any amount to, or have any contract with or commitment to, or
use
any property (real or personal) in its business owned or leased by, any of
the
Stockholder or any director, officer, employee, agent or representative of
CHH
or any of their respective affiliates or family members.
3.8 Condition
of Personal Property. All
items
of machinery, equipment and other tangible assets owned or used by CHH are,
in
all material respects, in good operating condition and in good condition of
maintenance and repair, ordinary wear and tear excepted, and conform in all
material respects to all applicable ordinances, rules, regulations and technical
standards and all applicable building, zoning and other laws.
3.9 Litigation;
Compliance with Laws. Except
as
disclosed in the reports, schedules, forms, statements and other documents
required to be filed by the Stockholder with the Securities and Exchange
Commission pursuant to the reporting requirements of the Securities Exchange
Act
of 1934, there is no claim, litigation, proceeding or governmental investigation
pending or, to the Knowledge of the Stockholder, threatened, or any order,
injunction or decree outstanding, against CHH or any of its respective
properties or assets, in any jurisdiction, and, to the Knowledge of the
Stockholder, there is no reasonable basis for future claims, litigations,
proceeds or investigations against CHH or any of its properties or assets.
CHH
is operating its business in compliance with all applicable legal requirements
of the United States (including, but not limited to, any United States law
or
regulation applicable to the conduct of business in any foreign jurisdiction),
all states and localities in the United States, and all foreign jurisdictions
and CHH, nor any manager, director or officer of CHH, nor any of the
Stockholder, has received any notice within the prior two years or that remains
outstanding or unresolved of any violation of any applicable legal requirement
of the United States, any state or locality in the United States, or any foreign
jurisdiction.
4
3.10 Taxes. CHH
has
filed all tax returns (including, but not limited to, all United States federal,
state and local tax returns and all tax returns required by any foreign
jurisdiction) required by law to be filed by it and each of those tax returns
was true, correct and complete, and CHH has paid, or made provision in its
consolidated financial statements referred to in section 3.4
for
payment of, all Taxes of CHH (whether or not shown on a tax return) arising
through the date of the financial statements referred to in
section 3.4.
There
are no claims pending against CHH, nor to the Knowledge of the Stockholder
are
there any threatened claims, for past due Taxes. There are no outstanding
waivers or agreements by CHH for the extension of the time for the assessment
of
any Tax. All Taxes that are or were required by law to be withheld or collected
by CHH have been duly withheld or collected and paid to the proper tax
authority. The United States federal income tax returns of CHH have not been
audited by the Internal Revenue Service within the prior six years. For purposes
of this agreement, the term “Taxes” means all taxes, charges, fees, levies or
other assessments, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
occupancy, rent, transaction, property or other taxes, customs, duties, fees,
assessments or charges of any kind, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority (including, without limitation, any state, local, federal or other
taxing authority, whether domestic or foreign).
No
taxing authority in a jurisdiction in which CHH does not file tax returns has
claimed that CHH is obligated to file tax returns in that jurisdiction. CHH
has
not deferred the payment of Taxes by the use of the cash, installment or a
long-term contract method of accounting, has been required to make an adjustment
under section 481 of the Internal Revenue Code (the “Code”) because of a
change of method of accounting or has entered into any closing agreement or
similar agreement requiring a payment of Tax after the time of the
closing.
CHH has
not deferred the recognition of income for tax purposes beyond the taxable
period in which the payment or account receivable to which that income relates
was received or accrued. CHH has not made any payment, and through the
consummation of the closing CHH will make any payment, that would be an “excess
parachute payment” within the meaning of Code Section 280G (or any
corresponding provisions of state, local or foreign Tax law), and CHH is not
a
party to any agreement, arrangement or plan that would obligate it to make
any
such payment.
3.11 Employees.
(a) For
the
three (3) years preceding the date of this Agreement, CHH has been in
compliance in all material respects with all currently applicable laws and
regulations respecting employment, termination of employment, discrimination
in
employment, terms and conditions of employment, wages, hours, and occupational
safety and health and employment practices, and has not engaged in any unfair
labor practice. For the three (3) years preceding the date of this
Agreement, CHH has in all material respects withheld all amounts required by
law
or by agreement to be withheld from the wages, salaries, and other payments
to
its employees and is not liable for any material arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing. CHH is not
liable for any material payment to any trust or other fund or to any
governmental or administrative authority with respect to unemployment
compensation benefits, social security, or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending claims against
CHH under any workers compensation plan or policy or for long term disability.
There are no controversies pending or, to CHH’s knowledge, threatened, between
CHH and any of its employees, which controversies have or could reasonably
be
expected to result in an action, suit, proceeding, claim, arbitration, or
investigation before any agency, court, or tribunal, foreign or domestic,
including claims for compensation, pending severance benefits, vacation time,
vacation pay, or pension benefits, or any other claim pending in any court
or
administrative agency from any current or former employee or any other Person
arising out of CHH’s status as employer or purported employer or any workplace
practices or policies whether in the form of claims for employment
discrimination, harassment, unfair labor practices, grievances, wage and hour
violations, wrongful discharge, or otherwise. CHH is not a party to any
collective bargaining agreement or other labor union contract nor does CHH
know
of any activities or proceedings of any labor union to organize any such
employees. To CHH’s knowledge, no employees of CHH are or have in the past been
in material violation of any term of any employment contract, non-competition
agreement, or any restrictive covenant to a former employer relating to the
right of any such employee to be employed by CHH because of the nature of the
business conducted by CHH or to the use of trade secrets or proprietary
information of others.
5
(b) The
transactions contemplated by this agreement will not trigger (either alone
or in
connection with an employment termination) or enhance any payments of any kind
to any employee, director, consultant or independent contractor of CHH, or
limit
the deducibility thereof.
3.12 Intellectual
Property.
(a) Schedule 3.12(a)
contains
a true and complete list of Intellectual Property owned or licensed by CHH.
CHH
owns, free and clear of any claim, lien or encumbrance, or possesses a
perpetual, exclusive, worldwide, and irrevocable license to use, distribute,
reproduce and create derivatives of, all of the Intellectual Property listed
or
summarized on schedule 3.12(a),
and the
items listed or summarized on schedule 3.12(a)
constitute all Intellectual Property necessary for or used in the continued
operation of the business of CHH in a manner consistent with past practices.
To
the Knowledge of the Stockholder, (a) there is no violation by others of any
right of CHH with respect to its Intellectual Property; and (b) CHH was and
is not infringing upon or misappropriating any Intellectual Property or other
rights of any third party, and there are no valid grounds for any bona fide
claim of any such kind. No proceedings are pending or, to the Knowledge of
the
Stockholder threatened, and no claim has been received by CHH or any of the
Stockholder alleging any such infringement or misappropriation. No
additional license fee, royalty or similar fee of any kind is payable by CHH
for
the use of any Intellectual Property.
(b) CHH
is
not, and as a result of the execution or delivery of this agreement or
performance of its obligations hereunder, will not be, in violation of any
license, sublicense, agreement or instrument to which it is a party or otherwise
bound, nor will execution or delivery of this agreement, or performance of
its
obligations hereunder, (1) cause the diminution, termination or forfeiture
of any of its Intellectual Property rights, (2) cause, or create an
individual or governmental cause of action for, the violation or infringement
of
any individual’s privacy rights.
(c) CHH
has
taken commercially reasonable steps to protect its rights in its confidential
or
proprietary information (both of CHH and that of third persons that CHH has
received under an obligation of confidentiality) and Intellectual
Property.
6
(d) “Intellectual
Property” means trademarks, trade names, service marks, trade dress, copyright
registrations and applications, material copyrightable content or other works,
patents, patent applications, material trade secrets, logos, software (including
both its executable code and source code), databases (including all of the
information in the databases including, but not limited to, personally
identifiable information, nonpersonally identifiable information, assessment
data, and other items and responses), web sites, and domain names and domain
name registrations (including any URL accessible by CHH’s clients or authorized
members of the public) owned throughout the world and used, or currently in
development, by CHH in their business.
3.13 ERISA
/
Certain Employment Matters.
(a) Neither
CHH nor any entity that would be deemed a “single employer” with CHH under
Section 414(b), (c), (m), or (o) of the Code or Section 4001 of ERISA
(an “ERISA Affiliate”) is a party to, obligated under, or otherwise maintains,
contributes or sponsors, any pension, annuity, retirement, equity-based, stock
purchase, savings, profit sharing, severance, health, welfare, or deferred
compensation plan or agreement, or any retainer, employment, consultant, bonus,
group insurance or other compensation, incentive or benefit contract, plan
or
arrangement with regard to any current or former employee, consultant,
independent contractor or director (or any dependent or spouse thereof) of
CHH
(each, an “Employee Benefit Plan”), and no such individual is entitled to any
benefits except pursuant to an Employee Benefit Plan.
Each
Employee Benefit Plan complies and has been maintained and operated in all
material respects in compliance with its terms and applicable law, including,
without limitation, ERISA, the Code, and all laws and regulations of any foreign
jurisdiction applicable to it. Each Employee Benefit Plan intended to qualify
under Section 401(a) of the Code is qualified and has received a
determination letter from the IRS to the effect that it is qualified under
Section 401 of the Code, and any trust maintained pursuant thereto is
exempt from federal income taxation under Section 501 of the Code and
nothing has occurred or is expected to occur that caused or could cause the
loss
of such qualification or exemption or the imposition of any penalty or tax
liability. All payments required by any Employee Benefit Plan, any collective
bargaining agreement or other agreement, or by any United States federal or
state law or the law of any foreign jurisdiction, with respect to all periods
through the date of this agreement have been made. No claim, lawsuit,
arbitration or other action (whether brought by a governmental authority or
otherwise) has been threatened, asserted, instituted, or, to the Knowledge
of
the Stockholder, anticipated against any of the Employee Benefit Plans (other
than non-material routine claims for benefits, and appeals of such claims)
and
no “prohibited transaction” within the meaning of Section 4975 of the Code
and Section 406 of ERISA has occurred or is expected to occur with respect
to
any
Employee Benefit Plan. None of CHH, any Subsidiary or any ERISA Affiliate,
or
any of their respective predecessors, has ever, directly or indirectly,
contributed to or been in any way liable with respect to any plan subject to
Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA.
Neither CHH nor any ERISA Affiliate provides for any health, disability, or
life
insurance benefits of any kind whatsoever (other than under Section 4980B
of the Code, the U.S. Social Security Act, a plan qualified under
Section 401(a) of the Code or as otherwise required by applicable law) to
any current or future retiree or terminated employee.
(b) CHH
(i) has withheld and remitted all amounts required by law or by agreement
to be withheld and remitted from the wages, salaries and other payments to
their
employees; (ii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iii) is not
liable for any payment to any trust or other fund or to any governmental or
administrative authority with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the normal course of business and consistent
with
past practice). Hours worked by and payment made to employees of CHH have not
been in violation of the Fair Labor Standards Act or any other applicable law
dealing with such matters. Any individual engaged to provide services to CHH
has
been correctly classified as an independent contractor for all purposes,
including payroll tax, withholding, unemployment compensation and benefits.
CHH
has not received any notice of any pending or threatened inquiry, audit or
claim
by any government authority or individual concerning the correct classification
as an independent contractor of any person who has performed any services for
CHH.
7
3.14 Environmental
Matters.
(a) CHH
and
all of the real property leased or operated by it is and, during the period
leased or operated by CHH has been in compliance in all material respects with
all United States federal, state and local, and all foreign, laws, regulations,
rules, orders, decrees, ordinances and common law relating to pollution, the
protection of human health or the environment, including, but not limited to,
laws relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern (“Environmental Laws”).
“Materials of Environmental Concern” means chemicals, pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, radiation
(including, without limitation, radio-frequency radiation), and any other
chemicals, materials or substances regulated by or that could result in
liability under any Environmental Laws.
(b) To
the
Knowledge of the Stockholder, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, but not limited
to,
the release or potential release, emission, discharge or disposal of any
Material of Environmental Concern, that could form the basis of any claim
against or violation by CHH, or against any person or entity whose liability
for
any claim or violation CHH has (or may have) retained or assumed either
contractually or by operation of law.
(c) To
the
Knowledge of the Stockholder, (i) CHH has not generated, stored,
transported, treated, disposed or arranged for the treatment, transportation,
storage or disposal of Materials of Environmental Concern, (ii) there are
no underground storage tanks located on any real property owned or leased by
CHH, (iii) there is no asbestos contained in or forming part of any
building, building component, structure or office space owned or leased by
CHH,
(iv) no polychlorinated biphenyls (PCBs) are used or stored at any real
property owned or leased by CHH, and (v) without limiting the generality of
the preceding clause, none of the electrical equipment located at any real
property leased by CHH contains any PCBs.
(d) Materials
of Environmental Concern have not been generated, transported or disposed of
by
CHH or in connection with the conduct of its business from any real property
now
or previously owned, leased or operated by CHH in a manner or to a location,
which could reasonably be expected to give rise to liability under Environmental
Laws.
3.15 Permits
and Licenses. CHH
has
and is in compliance with, all permits, licenses, franchises and other
authorizations (“Licenses”) necessary for the conduct of its business, and all
such Licenses are valid and in full force and effect. Schedule 3.15
contains
a true and complete list of all Licenses that are material to the conduct of
the
business of CHH.
3.16 Transactions
with Affiliates. Except
as
disclosed in schedule 3.4, there is no existing obligation, and since December
31, 2006 there has been no transaction, between CHH and any of the Stockholder
or, other than compensation and expense reimbursement in the ordinary course
consistent with past practices, any manager, officer or director of CHH or
any
of their respective affiliates.
8
3.17 No
Misrepresentation. No
representation or warranty by the Stockholder in this agreement (including
the
schedules to this agreement) and no statement made or contained in any
certificate delivered to ACI pursuant to section 7.1
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 in this
agreement (including the schedules to this agreement) not misleading. The
representations and warranties of the Stockholder shall be true in all material
respects as of the Closing Date.
4. Representations
and Warranties of the Stockholder. Each
of
the Stockholder, severally and not jointly, represents and warrants to CHH
and
ACI that he, she or it has the full right, power and authority to enter into
and
perform this agreement in accordance with its terms; that he, she or it is
not
bound by or subject to any contractual or other obligation
that would be violated by his, her or its execution or performance of this
agreement; that this agreement is his, her or its legal, valid and binding
obligation enforceable against him, her or it in accordance with its terms;
that
he, she or it owns, beneficially and of record, the number of shares of capital
stock of CHH set forth opposite his, her or its name on
schedule 1,
in each
case free and clear of any liens, claims or encumbrances; and that upon
consummation of the transactions pursuant to section 1,
ACI
will acquire good and valid title to all the shares being purchased from him,
her or it, free and clear of any lien, claim or encumbrance.
5. Representations
and Warranties by ACI. ACI
represents and warrants to the Stockholder as follows:
5.1 Organization. ACI
is a
limited liability duly organized and validly existing under the laws of the
State of New Jersey and has the full power and authority to enter into and
perform this agreement in accordance with its terms.
5.2 Authorization
of Agreement. The
execution, delivery and performance of this agreement by ACI has been duly
authorized by all necessary action of ACI and this agreement constitutes the
legal, valid and binding obligation of ACI, enforceable against it in accordance
with its terms. The execution, delivery and performance of this agreement by
ACI
has been duly authorized by all necessary action of ACI and this agreement
constitutes the legal, valid and binding obligation of ACI, enforceable against
it in accordance with its terms.
5.3 Consents
of Third Parties. The
execution, delivery and performance of this agreement by ACI will not
(a) conflict with the organizational documents of ACI and will not conflict
with or result in the breach or termination of, or constitute a default under,
any lease, agreement, commitment or other instrument, or any order, judgment
or
decree to which ACI is a party or by which ACI is bound, or (b) constitute
a violation by ACI of any law or regulation applicable to ACI. No consent,
approval or authorization of, or designation, declaration or filing with, any
governmental authority is required on the part of ACI in connection with the
execution, delivery and performance of this agreement. The execution, delivery
and performance of this agreement by ACI will not (a) conflict with the
organizational documents of ACI and will not conflict with or result in the
breach or termination of, or constitute a default under, any lease, agreement,
commitment or other instrument, or any order, judgment or decree to which ACI
is
a party or by which ACI is bound, or (b) constitute a violation by ACI of
any law or regulation applicable to ACI. No consent, approval or authorization
of, or designation, declaration or filing with, any governmental authority
is
required on the part of ACI in connection with the execution, delivery and
performance of this agreement.
9
5.4 Litigation. There
is
no claim, litigation, proceeding or governmental investigation pending or,
to
the best of ACI’s knowledge, threatened, or any order, injunction or decree
outstanding, against ACI that would prevent the consummation of the transactions
contemplated by this agreement.
6. Further
Agreements of the Parties.
6.1 Operation
of the Business. From
the
date of this agreement through the Closing Date, the Stockholder shall cause
CHH
and each of the Subsidiaries:
(a) to
carry
on its business in the usual, regular and ordinary course in substantially
the
same manner as heretofore conducted;
(b) not
to,
except with ACI’s prior written approval or as expressly set forth on schedule
6.1(a),
(i) enter into any transaction or incur any liability or obligation (other
than fees and expenses of counsel and accountants to CHH in connection with
the
consummation of the transactions contemplated hereby), (ii) sell or
transfer any of its assets, other than assets that have worn out or been
replaced with other assets of equal or greater value or assets that are no
longer needed in the businesses of CHH, or (iii) hire any
employee;
(c) not
to
make any distribution or pay any dividend to any of the Stockholder or acquire
any stock or other interest in CHH or, directly or indirectly, make any other
payment of any kind or any loan to any of the Stockholder or any of their
respective affiliates or members of their respective families, other than
compensation for services or payments for products, in each case consistent
with
past practices;
(d) to
(i) maintain all of its assets in customary repair, maintenance and
condition, except to the extent of normal wear and tear and (ii) maintain
or cause to be maintained insurance on its assets and businesses as described
in
section.
6.2 Notices.
(a) From
the
date of this agreement through the Closing Date, the Stockholder shall cause
CHH
promptly to notify ACI in writing of, and furnish any information that ACI
may
reasonably request with respect to, (a) any claim, litigation, proceeding
or governmental investigation threatened or asserted by or against CHH or any
material development with respect to any such claim, litigation, proceeding
or
investigation, (b) any event or condition that would cause any of the
conditions to ACI’s obligation to consummate the transactions contemplated by
this agreement not to be fulfilled and (c) any Material Adverse
Effect.
(b) From
the
date of this agreement through the Closing Date, ACI shall promptly notify
CHH
and the Stockholder of, and furnish any information to the Stockholder
reasonably may request with respect to, any event or condition that would cause
any of the conditions to the Stockholder’ obligations to consummate the
transactions contemplated by this agreement not to be fulfilled.
6.3 Consents. The
Stockholder shall cause CHH to use commercially reasonable efforts to obtain
at
the earliest practicable date, by instruments in form and substance reasonably
satisfactory to ACI, all consents, without any conditions adverse to CHH or
ACI,
required for the consummation of the transactions contemplated by this
agreement, including, without limitation, all consents set forth on
schedule 6.3.
10
6.4 Expenses. Except
as
otherwise specifically provided in this agreement, each party shall bear its
own
expenses incurred in connection with the negotiation and preparation of this
agreement and in connection with all obligations required to be performed by
it
under this agreement.
6.5 Access
to Information.
(a) Prior
to
the closing, ACI and its representatives may make such reasonable investigation
of CHH as it may desire, and the Stockholder shall cause CHH to give to ACI
and
to its counsel, accountants and other representatives reasonable access during
normal business hours throughout the period prior to the closing to all of
the
assets, books, commitments, agreements, records and files of CHH, and CHH
promptly shall furnish to ACI during that period all documents and copies of
documents (certified as true and complete if requested) and information
concerning the business and affairs of CHH as ACI reasonably may request;
provided
that CHH
shall not be required to disclose to ACI or any representative of ACI that
information, in electronic form or otherwise, that is proprietary to clients
or
customers of CHH or where such disclosure would violate applicable law. ACI
shall (unless otherwise required by applicable law) hold, and shall cause its
representatives to hold, all such information and documents and all other
information and documents delivered pursuant to this agreement confidential
and,
if the transactions contemplated by this agreement are not consummated for
any
reason, shall return to CHH all such information and documents and any copies
as
soon as practicable and shall not disclose any such information (that has not
previously been disclosed by a party other than ACI or its affiliates) to any
third party unless required to do so pursuant to a request or order under
applicable laws and regulations or pursuant to a subpoena or other legal
process. ACI’s obligations under this section shall survive the termination
of this agreement.
(b) Prior
to
the closing, ACI shall provide to CHH such reasonable business records as CHH
may desire regarding the financial ability of ACI to consummate the transactions
contemplated by this Agreement; provided
that ACI
shall not be required to disclose to CHH that information, in electronic form
or
otherwise, that is proprietary to clients or customers of ACI or where such
disclosure would violate applicable law. CHH shall (unless otherwise required
by
applicable law) hold, and shall cause its representatives to hold, all such
information and documents and all other information and documents delivered
pursuant to this agreement confidential and, if the transactions contemplated
by
this agreement are not consummated for any reason, shall return to ACI all
such
information and documents and any copies as soon as practicable and shall not
disclose any such information (that has not previously been disclosed by a
party
other than CHH or its affiliates) to any third party unless required to do
so
pursuant to a request or order under applicable laws and regulations or pursuant
to a subpoena or other legal process. CHH’s obligations under this
section shall survive the termination of this agreement.
6.6 Releases. Effective
as of the Closing Date, and subject to the closing having occurred:
(a) The
Stockholder fully and unconditionally releases and discharges CHH and its
successors and assigns, from all claims or causes of action, whether known
or
unknown, that it, he or she ever had or has as of the Closing Date arising
out
of any event or occurrence prior to, or any fact or circumstance existing as
of,
the Closing Date, except that there shall be excluded from this release by
each
of the Stockholder any claim against CHH for indemnity for third party actions
brought against such Stockholder in its capacity as a Stockholder, director,
officer or employee of CHH (but this exclusion shall not limit any rights or
remedies that CHH or its affiliates may have under this Stock Purchase
Agreement).
11
(b) CHH
fully
and unconditionally releases and discharges each of the Stockholder, and their
respective successors and assigns, from all claims or causes of action, whether
known or unknown, that it ever had or has as of the Closing Date against such
Stockholder in such Stockholder’s capacity as a holder of capital stock of CHH.
For clarity, the foregoing does not release any claims or causes of action
against a Stockholder other than in such Stockholder’s capacity as a holder of
capital stock of CHH.
(c) For
clarity, no release or discharge of any actions or claims is made by any party
hereto with respect to this Stock Purchase Agreement or any of the documents,
instruments or agreements executed in connection therewith.
6.7 Other
Action. No
party
to this agreement shall take any action that would result in any of its
representations and warranties not being true as of the Closing Date. Each
of
the parties to this agreement shall use commercially reasonable efforts to
cause
the closing to be held at the earliest practicable date and, in that connection,
to cause the fulfillment at the earliest practicable date of all of the
conditions to the obligations of the parties to consummate the transactions
under this agreement.
6.8 Further
Assurances. At
any
time and from time to time after the closing, each of the parties shall, without
further consideration, execute and deliver to the other parties such additional
instruments of transfer, and shall take such other action as the other may
reasonably request to carry out the transactions contemplated by this
agreement.
6.9 Standstill. From
the
date of this agreement through the Closing Date (or, for clarity, termination
of
this agreement pursuant to its terms, if earlier), the Stockholder and CHH
shall
not directly or indirectly (i) solicit, initiate, or encourage the
submission of any proposal or offer from any person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion
of
the assets, of CHH (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussion or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by
any
person to do or seek any of the foregoing. The Stockholder shall notify
ACI immediately if any person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.
7. Conditions
to Closing.
7.1 Conditions
to the Obligations of ACI. ACI’s
obligation to consummate the transactions under this agreement is subject to
the
fulfillment, at or prior to the closing, of each of the following conditions
(any of which may be waived in writing by ACI):
(a) each
of
the representations and warranties of CHH and the Stockholder contained in
this
agreement shall be true in all material respects (without duplication of any
exceptions as to materiality contained therein) at and as of the time of the
closing with the same effect as if it had been made again at and as of that
time;
(b) CHH
and
each of the Stockholder shall have performed and complied in all material
respects with each obligation, covenant and condition required by this agreement
to be performed or complied with by him, her or it prior to or at the
closing;
12
(c) there
shall not be in effect an injunction or restraining order issued by a court
of
competent jurisdiction in an action or proceeding against the consummation
of
the transactions contemplated by this agreement;
(d) there
shall not have been any
change or event that has had, or would reasonably be expected to have, a
material adverse effect on the assets, liabilities, financial condition,
businesses or operations of CHH;
(e) there
shall not be pending or, to the Knowledge of the Stockholder, threatened, any
litigation, proceeding or governmental investigation relating to the
transactions contemplated by this agreement;
(f) ACI
shall
have been furnished with certificates of CHH and of the Stockholder’
Representative, on behalf of the Stockholder, dated the Closing Date, in form
and substance reasonably satisfactory to ACI, certifying to the fulfillment
of
the conditions set forth in sections 7.1(a)
through
7.1(e);
(g) ACI
shall
have completed, to its reasonable satisfaction, its due diligence of
CHH;
(h) there
shall not be outstanding any option to acquire from CHH any shares of CHH stock
(other than options that will automatically terminate upon
consummation of the closing).
7.2 Conditions
to the Obligations of the Stockholder. The
obligations of the Stockholder to consummate the transactions under this
agreement are subject to the fulfillment, at or prior to the closing, of each
of
the following conditions (any of which may be waived by Stockholder holding
a
majority of all shares of common stock of CHH held by all Stockholder,
determined on an as converted basis):
(a) each
representation and warranty of ACI contained in this agreement shall be true
in
all material respects at and as of the time of the closing with the same effect
as though it had been made again at and as of that time;
(b) ACI
shall
have performed and complied in all material respects with all obligations,
covenants and conditions required by this agreement to be performed or complied
with by it prior to or at the closing;
(c) there
shall not be in effect an injunction or restraining order issued by a court
of
competent jurisdiction in an action or proceeding against the consummation
of
the transactions contemplated by this agreement; and
(d) CHH
shall
have been furnished with a certificate from ACI, dated the Closing Date, in
form
and substance satisfactory to CHH, certifying to the fulfillment of the
conditions set forth in sections 7.2(a)
through
7.2(c).
13
8. Transactions
at the Closing.
8.1 Documents
to be Executed and Delivered by the Parties. At
the
closing, the parties shall execute and deliver such
documents and instruments as shall be necessary to consummate
the
transactions contemplated by section 1.
8.2 Documents
to be Delivered by ACI, CHH and the Stockholder. At
the
closing, the parties shall deliver the following:
(a) The
Stockholder shall deliver to ACI the Stockholder’s original stock certificate
accompanied by a duly executed assignment separate from certificate;
(b) the
Stockholder shall deliver to ACI:
(i) the
certificate referred to in section 7.1(f);
(ii) copies
of
all consents received pursuant to section 6.3;
and
(iii) the
agreements referred to in section 7.1(h).
9. Survival
of Representations and Warranties; Indemnification.
9.1 Survival.
(a) All
representations and warranties by CHH and the Stockholder shall survive the
closing notwithstanding any investigation at any time by or on behalf of ACI,
and shall not be considered waived by the consummation of the transactions
contemplated by this agreement with knowledge of any misrepresentation or breach
by CHH or any of the Stockholder. The Stockholder shall not, however, have
any
liability for misrepresentation or breach of warranty except to the extent
that
notice of a claim is asserted in writing and delivered to the Stockholder’
Representative prior to the expiration of twelve months from the Closing Date,
except for (i) misrepresentations or breaches of warranty in sections
3.13
and
3.14
for
which a claim may be asserted within three years after the Closing Date,
(ii) misrepresentations or breaches of warranty in sections 3.1,
3.3,
4
and
11.2
for
which there shall be no time limitation for the assertion of a claim, and
(iii) misrepresentation or breach of warranty in section 3.10,
for
which a claim may be asserted at any time prior to sixty days after the
expiration of the statute of limitations applicable to the tax involved (the
representations and warranties referred to in the preceding clauses (i), (ii)
and (iii) being referred to collectively as the “Excepted Matters” and the
representations and warranties in the first sentence of section 3.1,
and
sections 3.3,
4
and
11.2,
being
referred to as the “Fundamental Matters”).
(b) All
representations and warranties by ACI shall survive the closing notwithstanding
any investigation at any time by or on behalf of the Stockholder and shall
not
be considered waived by their consummation of the transactions contemplated
by
this agreement with knowledge of any misrepresentation or breach by ACI. ACI
shall not, however, have any liability for misrepresentation or breach of any
representation or warranty except to the extent that notice of a claim is
asserted in writing and delivered to ACI prior to the expiration of twelve
months from the Closing Date, except for misrepresentations or breaches in
sections 5.1,
5.2
or
11.2,
for
which there shall be no time limitation.
14
(c) A
claim
for indemnification for any matter not involving a Third Party Claim (as defined
below) may be asserted by written notice to the party from whom indemnification
is sought, specifying in reasonable detail the claim and the basis upon which
indemnification is sought.
(d) All
statements contained in the certificate delivered by or on behalf of the
Stockholder pursuant to section 7.1(f)
of this
agreement shall be considered representations and warranties by the Stockholder
to ACI with the same force and effect as if contained in this agreement. All
statements contained in the certificate delivered by or on behalf of ACI
pursuant to section 7.2(d)
this
agreement shall be considered representations and warranties by ACI to the
Stockholder with the same force and effect as if contained in this
agreement.
9.2 Indemnification
of
ACI.
(a) Subject
to the limitations set forth in this section 9,
the
Stockholder shall indemnify ACI and its respective affiliates, partners,
members, stockholders, directors, managers, officers, employees and
representatives (the “Buyer Indemnified Parties”), in the manner and to the
extent provided in this section 9,
against
all loss, liability, expense (including reasonable fees and expenses of counsel,
whether involving a third party or between the parties to this agreement),
diminution in value or damage (collectively referred to as “Losses”) any of them
may suffer, sustain or become subject to as a result of any breach of any
representation, warranty, covenant or other agreement of any of the Stockholder
contained in this agreement, or any misrepresentation by any of the Stockholder,
or any claim by a third party that, without regard to the merits of the claim,
would constitute such a breach or misrepresentation. If any representation
or
warranty of any of the Stockholder is inaccurate, the Buyer Indemnified Parties
shall be deemed to have suffered Losses to the extent that the value of ACI
or
the value of CHH capital stock acquired by ACI is less than it would have been
if that representation and warranty had been accurate.
(b) To
the
extent that Losses arise from a breach by a Stockholder of a covenant of such
Stockholder or a breach of warranty or misrepresentation by such Stockholder
with respect to the matters set forth in section 4,
the
Stockholder (and only the Stockholder) shall bear the indemnification
obligation.
(c) None
of
the Stockholder may seek to avoid his or her share of liability for any Losses
based on any claim that CHH is liable for all or any portion of those Losses,
and after closing the Stockholder shall have no right of indemnification or
contribution against CHH or any of the Subsidiaries for any amounts paid to
any
Buyer Indemnified Party as a result of any Losses or for any other matter.
9.3 Indemnification
of the Stockholder.
ACI
shall
indemnify and hold harmless the Stockholder and CHH (prior to the closing)
and
their respective affiliates, partners, members, stockholders, directors,
managers, officers, employees and representatives against all loss, liability,
damage, diminution in value or expense (including reasonable fees and expenses
of counsel) they may suffer, sustain or become subject to as a result of any
breach of any representations, warranties, covenants or other agreements of
ACI,
as applicable, contained in this agreement, or any misrepresentation by ACI,
or
any claim by a third party that, without regard to the merits of the claim,
would constitute such a breach or misrepresentation.
15
9.4 Limitation
on Liability.
(a) The
Stockholder shall
not
be liable for any misrepresentation or breach of warranty under this agreement
unless and until the aggregate amount of Losses incurred by the Buyer
Indemnified Parties as a result of all misrepresentations or breaches of
warranty under this agreement exceeds $25,000 (in which event the Stockholder
shall be liable only for the amount in excess of the Losses incurred by the
Buyer Indemnified Parties over $25,000). This section 9.4(a)
shall
not apply, however, to any misrepresentation or breach of any warranty with
respect to any of the Fundamental Matters, Excepted Matters or any matter in
section 3.2(b).
(b) Notwithstanding
anything to the contrary in this Agreement, the Stockholder aggregate liability
under this Agreement for Losses or otherwise (including, without limitation,
for
any breach of covenant, representation, warranty, indemnity, defense obligation
or other obligation under this Agreement) shall not exceed $50,000.
(c) If
any
third party shall notify any party hereto with respect to any matter (a “Third
Party Claim”) that may give rise to a claim for indemnification by the party so
notified against any other party to this agreement hereto, the indemnified
party
shall promptly give notice of the matter to the indemnifying party (in the
case
of the Stockholder, notice to the Stockholder’ Representative being sufficient);
provided, however, that no delay on the part of the indemnified party in
notifying the indemnifying party shall relieve the indemnifying party from
any
obligation hereunder unless (and then solely to the extent) the indemnifying
party is thereby prejudiced.
(d) An
indemnifying party will have the right to defend the indemnified party against
the Third Party Claim with counsel of its choice satisfactory to the indemnified
party provided that (i) the indemnifying party notifies the indemnified
party, in writing, within 15 days after the indemnified party has given notice
of the Third Party Claim, that the indemnifying party will assume the defense
of
the Third Party Claim and pay all attorneys’ fees and other third party defense
costs in connection therewith, (ii) the indemnifying party provides the
indemnified party with evidence reasonably acceptable to the indemnified party
that the indemnifying party (in the case of the Stockholder, that each of the
Stockholder) will have the financial resources to defend against the Third
Party
Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction
or
other equitable relief, (iv) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of the
indemnified party, likely to establish a precedential custom or practice adverse
to the continuing business interests of the indemnified party, and (iv) the
indemnifying party conducts the defense of the Third Party Claim actively and
diligently.
(e) So
long
as the indemnifying party (in the case of the Stockholder, the Stockholder’
Representative on behalf of the Stockholder) is conducting the defense of the
Third Party Claim in accordance with section 9.4(d) above,
(i) the indemnified party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim and
(ii) the indemnified party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without
the
prior written consent of the indemnifying party (not to be unreasonably
withheld). In addition, the indemnifying party will not, at any time, consent
to
the entry of any judgment or enter into any settlement with respect to the
Third
Party Claim without the prior written consent of the indemnified party (not
to
be unreasonably withheld).
(f) If
any of
the conditions in section 9.4(d) above
is or becomes unsatisfied, (i) the indemnified party may defend against,
and consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it may deem appropriate (and
the
indemnified party need not consult with, or obtain any consent from, any
indemnifying party in connection therewith), provided, however,
that
the
indemnifying party shall be given the right to participate in such defense
through counsel chosen by the indemnified party at its expense, (ii) the
indemnifying party shall reimburse the indemnified party promptly and
periodically for the costs of defending against the Third Party Claim (including
attorneys’ fees and expenses) to the extent that the Third Party Claim is
subject to indemnity hereunder, and the indemnifying party shall remain
responsible for any Losses the indemnified party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party
Claim to the fullest extent provided in this section 9.4(f)(subject to the
other
limitations set forth in this section 9).
16
(g) With
respect to any action or proceeding subject to indemnification under this
section 9.4(g), (i) both the indemnified party and the indemnifying party
(in the case of the Stockholder, the Stockholder’ Representative), as the case
may be, shall be kept fully informed of the action or proceeding at all stages
thereof where such party is not represented by its own counsel, (ii) the
parties shall render to each other such assistance as they may reasonably
require of each other and shall cooperate in good faith with each other to
try
to ensure the proper and adequate defense of any such action or proceeding
brought by any third party, and (iii) regardless of which party is
controlling the settlement or defense of any action or proceeding, both the
indemnified party and indemnifying party shall act in good faith.
(h) With
respect to any pending action or proceeding subject to indemnification under
this section 9.4(f), the parties shall cooperate in such a manner as to preserve
in full (to the extent possible) the confidentiality of all confidential
business records and the attorney-client and work-product privileges. In
connection therewith, (i) each party shall use its commercially reasonable
efforts, in any action or proceeding in which he or it has assumed or
participated in the defense, to avoid production of confidential business
records (consistent with applicable law and rules of procedure), and
(ii) all communications between any party hereto and counsel responsible
for or participating in the defense of any action or proceeding shall, to the
extent possible, be made so as to reserve any applicable attorney-client or
work-product privilege.
9.5 Additional
Agreements Regarding Indemnity.
(a) The
parties shall treat any indemnity payment made under this agreement as an
adjustment to the Purchase Price for Tax purposes, and the parties agree to
file
their tax returns accordingly.
(b) The
amount of any Losses for which indemnification is provided under this section
9
shall be
net of (i) any amounts recovered by an indemnified party or any of its
respective affiliates pursuant to any indemnification by or indemnification
agreement with any third party, which amount shall be reduced by the fees,
costs
and expenses incurred by the indemnified party or such affiliate in recovering
such indemnification to the extent not recovered, and (ii) any insurance
proceeds or other cash receipts or reimbursement received at any time (whether
before or after payment of any amounts hereunder) from an indemnifying party
or
any of its respective affiliates as an offset against such Losses.
(c) This
section 9.5
sets
forth the exclusive remedies of the parties for any breach of this agreement
by
any other party, other than any rights that a party may have against any other
party hereto in the event of such other party’s willful fraud; provided,
however, the foregoing shall not limit any rights that any party may have to
seek equitable relief or any remedies that the parties may have with respect
to
the Limited Guaranty attached hereto.
17
(d) Each
indemnified party shall (at the expense and request of the indemnifying party)
use commercially reasonable efforts to pursue any available claims under all
applicable insurance policies with respect to any matter subject to
indemnification hereunder.
(e) If
an
indemnifying party makes any indemnification payment under this section
9
with
respect to indemnification obligations of such indemnifying party, and
subsequent to such payment the indemnified party recovers any amounts under
any
insurance policy with respect to any matter giving rise to such indemnification
payment, and such insurance proceeds (net of expenses incurred in connection
with making or perfecting claims under such policies and net of the aggregate
premiums paid under such policies) were not included in the computation of
the
Losses subject to indemnification, within 15 days after such payment the
indemnified party who received such net insurance proceeds shall promptly pay
to
the indemnifying party (and if more than one indemnifying party, pro rata among
them based on the amount of indemnification paid by each) of an amount equal
to
the insurance proceeds received, up to the amount of indemnification payments
previously received by it.
(f) Each
indemnified party shall reasonably cooperate with an indemnifying party, as
reasonably requested by it, him or her, in order for the indemnifying party’s
efforts to mitigate Losses subject to indemnification by such indemnifying
party, but no indemnified party shall be obligated to take any action (or omit
to take any action) pursuant to this provision if in its reasonable business
judgment the that act (or omission) would be adverse to its business
interests.
10. Termination.
10.1 Termination. This
agreement may be terminated:
(a) by
written agreement of ACI and the Stockholder’s Representative;
(b) by
ACI or
the Stockholder, by notice to the other, if at any time prior to the Closing
Date any event shall have occurred or any state of facts shall exist that
renders any of the conditions to its obligations as provided in this agreement
incapable of fulfillment and not subject to cure; or
(c) by
ACI or
the Stockholder, by written notice to the other, if the closing shall not have
occurred by the date referred to in section 2.2.
10.2 Liability. The
termination of this agreement shall not relieve any party of any liability
for
breach of this agreement prior to the date of termination.
11. Miscellaneous.
11.1 Notices. Any
notice or other communication under this agreement shall be in writing and
shall
be considered given when delivered personally or sent by facsimile, one business
day after being sent by a major overnight courier, or four days after being
mailed by registered mail, return receipt requested, to the parties at the
addresses set forth below (or at such other address as a party may specify
by
notice to the other):
18
if
to
CHH:
Crystal
Hospitality Holdings, Inc.
0000
Xxxxxxxxxxxx Xxxxx, 00xx
Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxxx 00000
Fax:
000.000.0000
if
to
ACI:
Advanced
Communications, Inc.
X.X.
Xxx
0000
Xxxxxxxxxxxxxx,
XX 00000
Fax:
000.000.0000
if
to the
Stockholder:
Crystal
Hospitality Holdings, Inc.
0000
Xxxxxxxxxxxx Xxxxx, 00xx
Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxxx 00000
Fax:
000.000.0000
11.2 Finders. The
Stockholder represents and warrant that neither CHH nor any of them has used
the
services of any broker or finder in connection with the transactions
contemplated by this agreement. ACI represents and warrants that it has not
used
the services of any broker or finder in connection with the transactions
contemplated by this agreement.
11.3 Entire
Agreement;
Amendment.
(a) This
agreement, including the schedules and exhibits, contains a complete statement
of all the arrangements among the parties with respect to its subject matter,
supersedes any previous agreements among them relating to that subject matter,
and cannot be changed or terminated orally. This agreement may be amended or
waived in writing signed (in the case of a waiver, by the party to be charged
thereby) by (i) CHH (until closing, but not thereafter),
(ii) Stockholder owning a majority of all shares of common stock held by
all Stockholder, determined on an as if converted basis (unless such amendment
by its terms affects Stockholder in a material adverse manner from other
Stockholder, in which case the written consent of such differently affected
Stockholder shall also be required), and (iii) ACI.
11.4 Headings. The
section headings of this agreement are for reference purposes only and are
to be
given no effect in the construction or interpretation of this
agreement.
11.5 Governing
Law. This
agreement shall be governed by and construed in accordance with the law of
the
State of Delaware applicable to agreements made and to be performed in New
York.
11.6 Submission
to Jurisdiction. The
courts located in the State and County of New York shall have jurisdiction
over
the parties with respect to any dispute or controversy between them arising
under or in connection with this agreement and, by execution and delivery of
this agreement, each of the parties to this agreement submits to the
jurisdiction of those courts, including, but not limited to, the in personam
and
subject matter jurisdiction of those courts, waives any objection to such
jurisdiction on the grounds of venue or forum non conveniens, the absence of
in
personam or subject matter jurisdiction and any similar grounds, consents to
service of process by mail (in accordance with section 11.1
or any
other manner permitted by law) and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this agreement. These consents
to
jurisdiction shall not be deemed to confer rights on any person other than
the
parties to this agreement.
19
11.7 Waiver
of Jury Trial. EACH
OF
THE PARTIES HERETO WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE,
DEFEND, INTERPRET OR OTHERWISE CONCERNING THIS AGREEMENT.
11.8 Severability. If
any
provision of this agreement is invalid or unenforceable, the balance of this
agreement shall remain in effect.
11.9 Waiver. Any
party
may waive compliance by any other party with any provision of this agreement.
No
waiver of any provision shall be construed as a waiver of any other provision.
Any waiver must be in writing.
11.10 Assignment. No
party
may
assign any of its rights or delegate any of its duties under this agreement
without the consent of the other parties, except that ACI may assign any of
its
rights and delegate any of its duties to any of its affiliates (but no such
assignment shall relieve ACI of any of its obligations under this
agreement).
11.11 Definition. As
used
in this agreement, the term ‘affiliate’ means any person or entity directly or
indirectly controlled by, controlling, or under common control with, any other
person or entity.
11.12 Publicity. Except
as
required by applicable law, no party shall issue any press release or other
public statement regarding the transactions contemplated by this agreement
without the prior written consent of ACI and CHH. After execution of this
agreement, CHH and ACI shall agree on a communications plan prior to any
announcement of this agreement or the transactions contemplated hereby to any
of
CHH’s customers or employees (other than those employees involved in the sale
process).
11.13 Parties
in Interest. Nothing
in this Agreement is intended to confer any rights or remedies under or by
reason of this agreement on any persons or entities other than the parties
hereto, and their respective successors and permitted assigns, and no provision
of this agreement shall give any third persons any right of subrogation or
action over or against the parties hereto, provided, however, that after
closing, the identified indemnified parties shall be third party beneficiaries
of section 9.
Nothing
in this agreement is intended to relieve or discharge the obligations or
liability of any third persons or entities to the parties hereto.
11.14 Specific
Performance. CHH
and
the Stockholder acknowledge that the business of CHH is of a special, unique
and
extraordinary character, and that any breach of this agreement by CHH or any
of
the Stockholder could not be compensated for by damages. Accordingly, if CHH
or
any of the Stockholder breaches its, his or her obligations under this agreement
ACI shall be entitled, in addition to any other remedies that it may have,
to
enforcement of this agreement by a decree of specific performance requiring
ACI,
CHH and the Stockholder to fulfill their respective obligations under this
agreement, without any bond or other security being required and without the
necessity of showing actual damages. The
foregoing shall not limit any rights or remedies that CHH and the Stockholder
may have in connection with a breach of this agreement by ACI.
20
-
SIGNATURE PAGE FOLLOWS -
21
| |
|
|
| By: | /s/ Xxxxx Xxxxx | |
|
Name:
Xxxxx Xxxxx
Title:
President/CEO
|
||
|
CRYSTAL
HOSPITALITY HOLDINGS, INC.
|
||
| |
|
|
| By: | /s/ Xxxxx Xxxxxx | |
|
Name:
Xxxxx Xxxxxx
Title:
President
|
||
|
ADVANCED
COMMUNICATIONS, INC.
|
||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxxx Xx. | |
|
Name: Xxxx X. Xxxxxxxx Xx. Title:
President
|
||
