STOCK PURCHASE AGREEMENT
Exhibit 10.1
THIS STOCK PURCHASE AGREEMENT (“Agreement”), dated
December 10, 2018, is entered
into between DropCar, Inc., a Delaware corporation (the
“Seller”), and World Professional Cabling Systems, LLC,
a California limited liability company (the
“Purchaser”).
Recitals
A. Seller owns all of the issued and outstanding shares of common
stock, no par value per share (the “Shares”) of WPCS
International – Suisun City, Inc., a California corporation
(the “Company”).
B. Seller wishes to sell to Purchaser, and Purchaser wishes to
purchase from Seller, the Shares, subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties agree as
follows:
ARTICLE I. PURCHASE AND SALE; PURCHASE PRICE AND
CLOSING
1.1. Purchase
and Sale.
Subject to the terms and conditions set forth herein, at the
Closing, Seller shall sell to Purchaser, and Purchaser shall
purchase from Seller, the Shares for the consideration specified in
Section 1.2.
1.2.
Purchase Price
The purchase price for the Shares is $3,500,000.00 (the
“Purchase Price”).
1.3 Creation of Escrow Account
(a)
Purchaser has created an escrow account (the
“Escrow Account”), Escrow No. 101128, administered by
Xxxxxxxxx XxXxxxxx, of XxXxxxxx
Escrow Services, located at 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, XX 00000, tel. 000-000-0000, fax. 000-000-0000 (the
“Escrow Agent”), to receive the Purchase Price and
required documents Seller and Purchaser are to exchange and deliver
and to otherwise effect the transactions contemplated by Section
1.4 of this Agreement at the Closing Date.
(b)
Purchaser
and Seller shall deposit into the Escrow Account all monies and
documents
specified
in Section 1.4, at least one day prior to the Closing
Date.
(c)
Upon
delivery to the Escrow Agent of joint written instructions duly
executed by each of Purchaser and Seller, and only upon such
delivery, the Escrow Agent shall be instructed to release all
monies and documents from escrow.
1.4
Transactions to be Effected at the Closing.
(a)
At
the Closing, Purchaser shall deliver to Seller:
(i)
the
Purchase Price by wire transfer of immediately available funds to
an account designated in writing by Seller to Purchaser no later
than two Business Days prior to the Closing Date;
(ii)
a
certified resolution of all Members of Purchaser authorizing Xxxxxx
Xxxxxx, one of the Members of Purchaser, to enter into and
consummate the transactions contemplated by this Agreement on
behalf of Purchaser and certified Articles of Organization,
together with a Good Standing Certificate issued by the State of
California; and
(iii)
a
fully executed copy of the side letter by and among the Company and
Xxxxxx Xxxxxx.
(b)
At
the Closing, Seller shall deliver to Purchaser the
following:
(i)
stock
certificates evidencing the Shares, free and clear of all Liens,
duly endorsed in blank or accompanied by stock powers or other
instruments of transfer duly executed in blank with all required
stock transfer tax stamps affixed thereto;
(ii)
a
certified resolution of the Board of Directors of Seller
authorizing Seller to enter into and consummate the transactions
contemplated by this Agreement on behalf of Seller and certified
Certificate of Incorporation and By-Laws of Seller, together with a
Good Standing Certificate issued by the State of
Delaware;
(iii)
a
certificate of non-foreign status satisfying the requirements of
Treasury Regulations Section 1.1445-2(b); and
(iv)
written
resignations dated as of the Closing Date and effective as of the
Closing executed by the officers and directors of the Company who
are not to continue as officers or directors of the Company after
the Closing Date.
1.5. Closing
Subject to the terms and conditions of this Agreement, the
consummation of the transactions contemplated by this Agreement
(the “Closing”) shall take place at XxXxxxxx Escrow
Services, located at 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx,
XX 00000, tel. 000-000-0000, fax. 000-000-0000, at 2:00 p.m., PST,
on the second Business Day after all of the conditions to Closing
set forth in Article V are either satisfied or waived (other than
conditions which, by their nature, are to be satisfied on the
Closing Date), or at such other time, date or place as Seller and
Purchaser may mutually agree upon in writing. The date on which the
Closing is to occur is herein referred to as the “Closing
Date”.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that the
statements contained in this Article II are true and correct as the
date hereof.
2.1. Corporate Existence and Power
Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all
corporate power and authority required to carry on its business as
now conducted.
2.2. Corporate Authorization
The execution, delivery and performance by Seller of this Agreement
and the consummation by Seller of the transactions contemplated in
this Agreement are within Seller’s corporate powers and have
been duly authorized by all necessary corporate action on the part
of Seller. This Agreement constitutes a valid and binding agreement
of Seller enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding
at law or in equity).
2.3. Capitalization.
(a) The authorized capital stock of the Company consists of one
hundred (100) shares of common stock, no par value ("Common
Stock"), of which 100 shares are issued and outstanding and
constitute the Shares. All of the Shares have been duly authorized,
are validly issued, fully paid and non-assessable, and are owned of
record and beneficially by Seller, free and clear of all
Encumbrances.
(b)There are no outstanding or authorized options, warrants,
convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the capital stock of the
Company or obligating Seller or the Company to issue or sell any
shares of capital stock of, or any other interest in, the Company.
The Company does not have outstanding or authorized any stock
appreciation, phantom stock, profit participation or similar
rights. There are no voting trusts, stockholder agreements, proxies
or other agreements or understandings in effect with respect to the
voting or transfer of any of the Shares.
2.4. No Insolvency
No insolvency proceeding of any kind, whether voluntary or
involuntary, is pending or, to the Knowledge of Seller, threatened
against Seller or the assets or properties of Seller and Seller has
not taken any action in contemplation of, or, to the Knowledge of
Seller, that would provide grounds for, the initiation of any
insolvency proceeding, whether voluntary or
involuntary.
2.5. Non-Contravention
The execution, delivery and performance by Seller of this Agreement
do not and will not (a) result in the creation or imposition of any
Lien on any Asset, or (b): (i) contravene or conflict with the
certificate of incorporation or bylaws of Seller; or (ii)
contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to Seller or the
Company.
2.6. No Other Representations and Warranties.
Except for the representations and warranties contained in this
Article II, neither Seller nor any other Person has made or makes
any other express or implied representation or warranty, either
written or oral, on behalf of Seller, including any representation
or warranty as to the accuracy or completeness of any information
regarding the Company furnished or made available to Purchaser and
its representatives or as to the future revenue, profitability or
success of the Company, or any representation or warranty arising
from statute or otherwise in law.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF
PURCHASER
Purchaser hereby represents and warrants to Seller that the
statements contained in this Article III are true and correct as
the date hereof.
3.1. Organization and Existence
Purchaser is a limited liability company, validly existing and in
good standing under the laws of the State of California, and has
all corporate power and authority required to carry on its business
as now conducted.
3.2. Corporate Authorization
The execution, delivery and performance by Purchaser of this
Agreement and the consummation by Purchaser of the transactions
contemplated hereby are within the corporate powers of Purchaser
and have been duly authorized by all necessary corporate action on
the part of Purchaser. This Agreement constitutes a valid and
binding agreement of Purchaser enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding
at law or in equity).
3.3. Governmental Authorization
The execution, delivery and performance by Purchaser of this
Agreement require no material action by or in respect of, or filing
with, any governmental body, agency, official or
authority.
3.4. Non-Contravention
(a) The execution, delivery and performance by Purchaser of this
Agreement do not and will not contravene or conflict with the
articles of incorporation or bylaws of Purchaser or any agreement
to which Purchaser is a party or is bound.
(b) The execution, delivery and performance by Purchaser of this
Agreement do not and will not contravene, conflict with or
constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to
Purchaser.
3.5. Finders’ Fee
There is no broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Purchaser who
might be entitled to any fee or commission upon the
Closing.
3.6. Financing
Purchaser has cash or a combination of cash and commitments for
financing which are not subject to any material conditions and
which will be in an amount sufficient to enable Purchaser to
purchase the Shares and pay the Purchase Price.
3.7. Solvency
Immediately after giving effect to the transactions contemplated
hereby, Purchaser shall be solvent and shall: (a) be able to pay
its debts as they become due; (b) own property that has a fair
saleable value greater than the amounts required to pay its debts
(including a reasonable estimate of the amount of all contingent
liabilities); and (c) have adequate capital to carry on its
business. No transfer of property is being made and no obligation
is being incurred in connection with the transactions contemplated
hereby with the intent to hinder, delay or defraud either present
or future creditors of Purchaser or Seller. In connection with the
transactions contemplated hereby, Purchaser has not incurred, nor
plans to incur, debts beyond its ability to pay as they become
absolute and matured.
3.8. Litigation
There is no action, suit, investigation or proceeding pending
against, or, to the knowledge of Purchaser, threatened against or
affecting Purchaser before any court or arbitrator of any
governmental body, agency or official which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay
the transactions contemplated hereby.
3.9. Investment Purpose.
Purchaser is acquiring the Shares solely for its own account for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof. Purchaser acknowledges
that the Shares are not registered under the Securities Act of
1933, as amended, or any state securities laws, and that the Shares
may not be transferred or sold except pursuant to the registration
provisions of the Securities Act of 1933, as amended or pursuant to
an applicable exemption therefrom and subject to state securities
laws and regulations, as applicable. Purchaser is able to bear the
economic risk of holding the Shares for an indefinite period
(including total loss of its investment), and has sufficient
knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risk of its
investment.
3.10. Inspections
Purchaser is an informed and sophisticated buyer and has engaged
expert advisors, experienced in the evaluation and purchase of
businesses such as the Company. Purchaser has undertaken such
investigations and has been provided with and has evaluated such
documents and information as it has deemed necessary to enable
Purchaser to make an informed decision with respect to the
execution, delivery and performance of this Agreement. Purchaser
acknowledges that it has conducted its own independent
investigation, review and analysis of the Company and that neither
Seller nor any other Person has made any representation or warranty
as to the prospects, financial or otherwise, of the Company, except
as expressly set forth herein. Purchaser agrees to accept the
Company as it exists on the Closing Date based upon its own
inspection, examination and determination with respect thereto as
to all matters and without reliance upon any express or implied
representations or warranties of any nature made by or on behalf of
or imputed to Seller, except as expressly made in this
Agreement.
ARTICLE IV. COVENANTS OF PARTIES
4.1. Conduct of Business Prior to the Closing Date
From the date hereof until the Closing Date, except as otherwise
provided in this Agreement or consented to in writing by Purchaser
(which consent shall not be unreasonably withheld, delayed or
conditioned), Seller shall, and shall cause the Company to: (a)
conduct the business of the Company in the ordinary course of
business; and (b) use commercially reasonable efforts to maintain
and preserve intact the current organization, business and
franchise of the Company and to preserve the rights, franchises,
goodwill and relationships of its employees, customers, lenders,
suppliers, regulators and others having business relationships with
the Company.
4.2. Access to Properties, Records and Employees
From the date hereof until the Closing, Seller shall continue to
allow the Company afford to Purchaser and Purchaser’s
accountants, counsel and other representatives reasonable access
upon reasonable advance notice during normal business hours to the
Company’s properties, books, contracts and other business
records and shall promptly furnish to Purchaser all such other
information concerning the Company and its properties and personnel
as Purchaser may from time to time reasonably request; provided,
however, that any such investigation shall be conducted under the
supervision of Seller’s personnel and in such a manner as not
to interfere with the conduct of the business of the Company or any
other businesses of Seller. Purchaser acknowledges that, pursuant
to the foregoing, it may become privy to financial data, customer
lists, and other information concerning Seller normally considered
confidential and that the unauthorized communication of such
confidential information to third parties could injure
Seller’s business in the event the transactions contemplated
by this Agreement are not completed. Accordingly, prior to such
completion, Purchaser agrees to take reasonable steps to ensure
such confidential information obtained by it shall remain
confidential and shall not be disclosed or revealed to third
parties or used to solicit any customers of Seller identified
therein.
4.3. Employment of Seller’s Employees
On the Closing Date, Purchaser shall offer employment on an
“at will” basis to the Company’s employees,
(except to the extent any such employees voluntarily leave the
employ of the Company prior to the Closing Date. Employees of
Seller who are employed pursuant to the preceding sentence by
Purchaser are sometimes referred to as “Transferee
Employees.” Any such offer shall be at such salary or wage
and benefit levels and on such other terms and conditions at least
equal to the salary or wage and benefit levels in effect for such
employee on the Closing Date. Seller will not take any action which
would impede, hinder, or otherwise compete with Purchaser’s
effort to hire any of the prospective Transferee Employees.
Purchaser shall not assume responsibility for any Transferee
Employee until such employee commences employment with Purchaser.
Nothing contained in either Section 4.3 or 4.4 shall be construed
to require Purchaser to assume any liability for sums or benefits
due Seller’s employees as a result of their employment or
termination by Seller.
4.4. Employee Benefit Plans of Purchaser
Purchaser shall provide for Transferee Employees employee benefits
and policies, including severance benefits, the same as those that
are in effect for Purchaser’s employees as in effect from
time to time subsequent to the Closing. Purchaser will credit
service with Seller and their predecessors for purposes of vesting
and eligibility to participate in such plans and policies,
including vacation, applicable to Transferee Employees following
the Closing Date. Immediately upon becoming Transferee Employees,
Transferee Employees shall be covered by Purchaser’s health
and welfare plans without any exclusion for preexisting
conditions.
4.5. Non-competition by Seller
4.5.1
Seller
acknowledges and agrees that it would substantially diminish the
value of Purchaser’s acquisition of the Shares, assets and
the goodwill of the Company were Seller to compete against the
Purchaser subsequent to the consummation of this transaction.
Seller agrees that for a period of two (2) years following the
Closing hereunder, Seller will not, directly or indirectly, engage
in, or directly or indirectly, be financially interested in, any
business substantially similar to the business of the Company as
conducted as of the Closing Date.
4.5.2
In
addition, for a period of two (2) years following the Closing
hereunder, Seller will not, directly or indirectly, induce or
attempt to influence any employee, customer, independent contractor
or supplier of Company to terminate his or her employment or any
other relationship with Company.
4.5.3
Seller
shall not at any time following the closing use for Seller’s
benefit, or disclose, communicate or divulge to, or use for the
direct or indirect benefit of any person or entity, any
confidential information of Company. “Confidential
information,” as used in the preceding sentence, means any
information regarding Company’s business methods, business
policies, procedures, techniques, research or development projects
or results; historical or projected financial information, budgets,
trade secrets or other knowledge or processes of or developed by
Company; any names and addresses of customers or clients or any
data on or relating to past, present or prospective Company
customers or clients; or any other confidential information
relating to or dealing with the business, operations or activities
of Company, excepting in each case information otherwise lawfully
known generally by, or readily accessible to, the trade or the
general public.
4.5.4
Seller
acknowledges that the restriction contained in Section 4.5.1 is
reasonable and necessary in order to protect Purchaser’s
legitimate interests and that any violation thereof would result in
irreparable injury to Purchaser. Seller therefore acknowledges and
agrees that, in the event of any violation thereof, Purchaser shall
be authorized and entitled to obtain, from any court of competent
jurisdiction, preliminary and permanent injunctive relief as well
as an equitable accounting of all profits or benefits arising out
of such violation, which rights and remedies shall be cumulative
and in addition to any other rights or remedies to which Purchaser
may be entitled. In the event that Section 4.5.1 is held to be in
any respect an unreasonable restriction upon Seller, then the court
so holding may reduce the territory to which it pertains and/or the
period of time during which it operates, or effect any other change
to the extent necessary to render such Section enforceable by said
court.
4.5.5
In
the event of any breach or violation of the restriction contained
in Section 4.5.1, the time period therein specified shall xxxxx
during the time of any violation thereof and that portion remaining
at the time of commencement of any violation shall not begin to run
until such violation has been fully and finally cured.
4.5.6
The
parties agree that the restrictions on Seller in this Section 4 are
an incidental part of the overall transaction contemplated by this
Agreement; no part of the overall consideration being paid by
Purchaser to Seller hereunder is being allocated separately to such
restrictions; and no party will take a position inconsistent with
this Section 4 for tax or any other purpose.
4.6. Certain Tax and Financial Matters.
(a)
Seller
shall be responsible for, and shall duly and timely pay all
federal, state and local taxes (including withholding taxes)
attributable to the ownership of the Shares and the operation of
the Business prior to the Closing Date. Purchaser shall be
responsible for, and shall duly and timely pay, all federal, state
and local taxes (including withholding taxes) attributable to the
ownership of the Shares and the operation of the Business acquired
from Seller from and after the Closing Date.
(b)
Purchaser
will prepare, or cause to be prepared, all tax returns for the
Company and its subsidiaries for all taxable periods (or portions
thereof) ending prior to the Closing Date (the “Pre-Closing
Tax Period”) at its cost, including the portion of any
consolidated, combined or unitary tax returns for the Company and
its subsidiaries, where the Company or any of its subsidiaries are
part of a consolidated, combined or unitary group with Seller. All
such tax returns (or portions thereof) shall be prepared in
accordance with past practice insofar as they relate to the Company
and its subsidiaries except as required pursuant to applicable law.
Purchaser shall furnish Seller with such prepared tax returns
(completed to the extent required by Purchaser pursuant to this
Section 4.6(b)) at least thirty (30) days before such tax returns
are due for Seller’s review. Purchaser shall make any
reasonable changes suggested by Seller. Purchaser shall timely file
any such tax returns for the Pre-Closing Tax Period required by
applicable law to be filed by the Company or its subsidiaries and
Seller shall timely file any such tax returns for the Pre-Closing
Tax Period required by applicable law to be filed by Seller and any
of its subsidiaries. All taxes owed by the applicable party
pursuant to Sections 4.6(a) and 4.6(c) with respect to a tax return
prepared pursuant to this Section 4.6(b) shall be paid by the
responsible party to the party filing such tax return at least five
(5) days prior to the date such tax return is filed. The filing
party shall timely pay its share of the taxes and the share of
taxes received from the other party due with such tax
return.
(c)
For
the purposes of this Agreement, in the case of any taxable period
that includes (but does not end on) the Closing Date (a
“Straddle Period”), the amount of taxes that is
allocable to the portion of such Straddle Period ending on (and
including) the Closing Date shall (i) in the case of taxes that are
imposed on a periodic basis (such as real property taxes), be
deemed to be the amount of such taxes for the entire period (or in
the case of such taxes determined on an arrears basis, the amount
of such taxes for the immediately preceding period) multiplied by a
fraction the numerator of which is the number of calendar days in
the portion of the Straddle Period ending on (and including) the
Closing Date and the denominator of which is the number of calendar
days in the entire relevant Straddle Period; and (ii) in the case
of taxes that are not described in clause (i) above (such as income
taxes, taxes imposed in connection with any sale or other transfer
or assignment of property, and payroll and similar taxes), be
deemed to be equal to the amount that would have been payable if
the taxable year or period ended on the Closing Date; provided,
that, in determining such amount, exemptions, allowances or
deductions that are calculated on a periodic basis (other than with
respect to property placed into service after the Closing), such as
the deduction for depreciation, shall be taken into account on a
pro-rated basis in the manner described in clause (i)
above.
(d)
From
and after the Closing Date, Purchaser and Seller shall, with
respect to the Company and its subsidiaries:
(i)
cooperate in providing each other with information reasonably
requested to assist in the completion of tax returns or reports and
the preparation or auditing of any financial
statements;
(ii)
cooperate in preparing for or responding to any audits by or
disputes with any taxing authorities the Business;
(iii)
make available to the other all available information, records and
documents and making employees available on a mutually convenient
basis to provide additional information relating to the foregoing;
and
(iv)
provide timely written notice to the other of any tax audits or
assessments for which the other may be liable and copies of related
correspondence, to the extent the notifying party has itself
received such notice.
(e)
Without
the written consent of Seller, neither Purchaser nor the Company
shall:
(i)
extend or waive, or cause to be extended or waived, or permit the
Company or extend or waive, any statute of limitations or other
period for the assessment of any tax or deficiency related to any
taxable period (or portion thereof) ending prior to the Closing
Date;
(ii)
make or change any tax election or accounting method or practice
that has retroactive effect to any taxable period (or portion
thereof) ending prior to the Closing Date;
(iii)
initiate any voluntary disclosure or other communication with any
taxing authority relating to any actual or potential tax payment or
tax return filing obligation of the Company for any taxable period
(or portion thereof) ending prior to the Closing Date;
(iv)
take any action on the Closing Date with respect to the Company
other than in the ordinary course of business consistent with the
past custom and practice that would result in any liability with
respect to taxes to Seller under this Agreement or otherwise;
or
(v)
make any election under Section 338 of the Internal Revenue Code of
1986, as amended (or any similar provision under state, local or
non-U.S. law), with respect to the transactions contemplated by
this Agreement.
4.7. Preservation of Books and Records
To the extent that Seller has in its possession, custody, and
control, Seller shall preserve all of its books, contracts and
records (including, without limitation, its accounting ledgers and
journals and its tax returns) relating to the Company for a period
of not less than three (3) years from the Closing Date, and during
such period Seller shall permit representatives of Purchaser, on
reasonable advance notice, and during normal business hours, to
examine and photocopy (at Purchaser’s expense) any of such
books, contracts and records.
4.8. Further Assurances
From time to time on and after the Closing Date, each party hereto
shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances or instruments as the other
party may reasonably request for the purpose of fully carrying out
the provisions and purposes of this Agreement and fully
consummating the transactions contemplated herein.
4.9. Documents and Information.
After the Closing Date, the Purchaser shall, until the seventh
(7th) anniversary of the Closing Date, retain all books, records
and other documents pertaining to the Company and historical
operations of the Company in existence on the Closing Date and make
the same available for inspection and copying by Seller or its
representatives during normal business hours of the Purchaser, upon
reasonable request and upon reasonable notice. After the Closing
Date, during normal business hours of the Purchaser, upon
reasonable request and upon reasonable notice, Purchaser shall make
available such books, records, and personnel as reasonably required
by the Seller or its representatives in connection with the
preparation of their tax returns, financial statements or
investigation of compliance with this Agreement or any third-party
claim. In addition, after the Closing Date, Purchaser and its
personnel shall provide all certifications and representations as
reasonably required by the Seller or its representatives in
connection with the preparation
of their tax returns, financial statements or investigation of
compliance with this Agreement or any third-party
claim.
4.10. Transfer Taxes.
All transfer, documentary, sales, use, stamp, registration, value
added and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any
real property transfer tax and any other similar tax) shall be
borne and paid by Purchaser when due. Purchaser shall, at its own
expense, timely file any tax return or other document with respect
to such taxes or fees (and Seller shall cooperate with respect
thereto as necessary).
4.11. Release.
In further consideration of the transactions contemplated hereby,
effective as of the Closing, Seller hereby irrevocably and
unconditionally releases, waives and holds the Purchaser from and
against any and all claims of any nature in any capacity (the
“Claims”) arising on or prior to the Closing (the
“Release”), but excluding the Seller’s rights
under this Agreement or any other transaction document. It is
further agreed and understood that this Release is a full and final
release of all Claims whether known or unknown, fixed or
contingent, manifested or unmanifested.
STOCK
PURCHASE AGREEMENT
Page
10
ARTICLE V. CLOSING CONDITIONS
5.1. Conditions to Obligations of Seller
The obligation of Seller to consummate the transactions
contemplated by this Agreement is subject to the fulfillment on the
Closing Date of the following conditions (any of which may be
waived by Seller):
(a)
the
representations and warranties of Purchaser set forth in Article
III shall be true and correct in all material respects as if made
at and as of the Closing Date with the same force and effect as if
made on the Closing Date except (a) in each case, or in the
aggregate, where the failure to be true and correct has not had,
and would not reasonably be expected to have an material adverse
effect on Seller (without giving effect to any references therein
to any material adverse effect or other materiality
qualifications), or (b) for those representations and warranties
which address matters only as of a particular date (which
representations shall have been true and correct, subject to the
qualifications as set forth in the preceding clause (a), as of such
particular date);
(b)
Purchaser
shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it on
or prior to the Closing Date; and
(c)
Purchaser
shall have delivered to Seller the Purchase Price in accordance
with Section 1.3(a)(i).
5.2. Conditions to Obligations of Purchaser
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the fulfillment on the
Closing Date of the following conditions (any of which may be
waived by Purchaser):
(a)
the representations and warranties of Seller set
forth in Article II shall be true and correct in all material
respects as if made at and as of the Closing Date
with
the same force and effect as if made on the Closing Date except (a)
in each case, or in the aggregate, where the failure to be true and
correct has not had, and would not reasonably be expected to have
an material adverse effect on Purchaser (without giving effect to
any references therein to any material adverse effect or other
materiality qualifications), or (b) for those representations and
warranties which address matters only as of a particular date
(which representations shall have been true and correct, subject to
the qualifications as set forth in the preceding clause (a), as of
such particular date);
(b)
Seller
shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it on
or prior to the Closing Date; and
(c)
Seller
shall have delivered, or caused to be delivered, to Purchaser stock
certificates evidencing the Shares, free and clear of Liens, duly
endorsed in blank or accompanied by stock powers or other
instruments of transfer duly executed in blank and with all
required stock transfer tax stamps affixed.
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PURCHASE AGREEMENT
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5.3. Conditions to the Obligations of Both Parties
The obligations of each party to consummate the transactions
contemplated under this Agreement shall also be subject to the
fulfillment Closing Date of the following conditions:
(a)
each of the agreements required to be entered into by both parties
under the terms of this Agreement and in the form attached to this
Agreement shall be duly executed and delivered on or before the
Closing Date.
ARTICLE VI. SURVIVAL; INDEMNIFICATION
6.1. Survival
The representations and warranties contained in Article II and
Article III shall survive the Closing until the eighteen (18) month
anniversary of the Closing Date; provided, however, that (a) the
representations and warranties contained in Section 2.1
(Corporate Existence and Power)
and Section 2.2
(Corporate Authorization) and (b) the
representations and warranties contained in Section 3.1
(Organization and Existence)
and Section 3.2
(Corporate Authorization) shall
survive the Closing for the full period of all applicable statutes
of limitation (giving effect to any waiver, mitigation or extension
thereof) plus 90 days. Notwithstanding any investigation or audit
conducted before or after the Closing Date or the decision of any
party to complete the Closing, each party shall be entitled to rely
upon the representations and warranties set forth herein. However,
no representation or warranty shall survive the Closing if the
party to which such representation or warranty is made has actual
knowledge on the Closing Date that such representation or warranty
is not true.
6.2. Indemnification By Seller
Subject to the other terms and conditions of this Article VI,
Seller shall indemnify and hold Purchaser harmless against any and
all claims, damage, loss, liability and expense (including without
limitation reasonable expenses of investigation and reasonable
actual attorney’s fees and expenses incurred in connection
with any action, suit or proceeding but excluding punitive,
incidental, consequential, special or indirect damages (including
loss of revenue, diminution in value and any damages based on any
type of multiple)) (collectively, “Damages”) incurred
or suffered by Purchaser arising out of:
(a)
any
misrepresentation or breach of warranty, covenant or agreement made
or to be performed by Seller pursuant to this
Agreement.
6.3 Certain Limitations.
(a)
Seller
shall not be liable to Purchaser for indemnification under Section
6.2 unless any such claim for indemnification exceeds $100,000.00;
(ii) the aggregate amount of Damages with respect to all matters
referred to in this Section 6.2(a) (determined without regard to
any materiality qualification contained in any representations,
warranty or covenant giving rise to the claim for indemnity
hereunder) exceeds $25,000.00 in any one year and then only to the
extent of such excess; and (iii) in no event shall Seller’s
obligation to indemnify Purchaser exceed an amount equal to the
Purchase Price in the aggregate.
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PURCHASE AGREEMENT
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(b)
The
aggregate amount of all Damages for which Seller shall be liable
pursuant to Section 6.2 shall not exceed the Purchase
Price.
(c)
Payments
by Seller pursuant to Section 6.2 in respect of any Damages shall
be limited to the amount of any liability or damage that remains
after deducting therefrom any insurance proceeds and any indemnity,
contribution or other similar payment received or reasonably
expected to be received by the Seller in respect of any such claim.
Seller shall use its commercially reasonable efforts to recover
under insurance policies or indemnity, contribution or other
similar agreements for any Damages prior to seeking indemnification
under this Agreement.
(d)
Payments
by Seller pursuant to Section 6.2 in respect of any Damages shall
be reduced by an amount equal to any tax benefit realized or
reasonably expected to be realized as a result of such Damages by
the Purchaser.
(e)
Purchaser
shall take, and cause its Affiliates to take, all reasonable steps
to mitigate any Damages upon becoming aware of any event or
circumstance that would be reasonably expected to, or does, give
rise thereto, including incurring costs only to the minimum extent
necessary to remedy the breach that gives rise to such
Damages.
6.4 Indemnification by Purchaser.
Purchaser shall indemnify and hold Seller harmless against any and
all Damages incurred or suffered by Seller arising out
of:
(a)
any
misrepresentation or breach of warranty, covenant or agreement made
or to be performed by Purchaser pursuant to this
Agreement.
6.5. Procedures; Exclusivity.
(a) The party seeking indemnification under this Article VI (the
“Indemnified Party”) agrees to give prompt written
notice to the party against whom indemnity is sought (the
“Indemnifying Party”) of the assertion of any claim, or
the commencement of any suit, action or proceeding in respect of
which indemnity may be sought under this Article VI. The failure to
give such prompt written notice shall not, however, relieve the
Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or
defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the claim in reasonable detail, shall include
copies of all material written evidence thereof and shall indicate
the estimated amount, if reasonably practicable, of the Damages
that has been or may be sustained by the Indemnified Party. The
Indemnifying Party shall have the option to participate in and
control the defense of any such suit, action or proceeding at its
own expense and the Indemnified Party shall cooperate in good faith
in such defense. In the event that the Indemnifying Party assumes
the defense of any claim, it shall have the right to take such
action as it deems necessary to avoid, dispute, defend, appeal or
make counterclaims pertaining to any such claim in the name and on
behalf of the Indemnified Party. The Indemnifying Party shall not
be liable under this Article VI for any settlement effected without
its consent of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder.
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PURCHASE AGREEMENT
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(b) The parties acknowledge and agree that after the Closing, this
Article VI will provide the sole and exclusive remedy for any
breach of any representation, warranty, covenant or other agreement
or other claim arising out of this Agreement or the transactions
contemplated hereby. In furtherance of the foregoing, each party
hereby waives, to the fullest extent permitted under law, any and
all rights, claims and causes of action for any breach of any
representation, warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions
contemplated hereby it may have against the other parties hereto
and their Affiliates and each of their respective representatives
arising under or based upon any law, except pursuant to the
indemnification provisions set forth in this Article
VI.
6.6. Tax Treatment of Indemnification Payments.
Any payments made pursuant to this Article VI shall be treated for
all tax purposes as an adjustment to the Purchase
Price.
ARTICLE VII. MISCELLANEOUS
7.1. Termination
This Agreement may be terminated by either Seller or Purchaser if
for any reason the Closing shall not have taken place by December
31, 2018. Such termination shall be without liability to either
party except for any claims or causes of action arising under the
Agreement prior to the date of such termination. Upon any
termination of this Agreement under this Section 7.1, Purchaser
shall return all confidential information relating to Seller and
the Company obtained by Purchaser from Seller or Seller’s
agents.
7.2. Expenses
Each party hereto shall bear all expenses incurred by it in
connection with the negotiation and execution of this Agreement and
the consummation of the transactions provided for
herein.
7.3. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns. No rights or obligations created under this Agreement may
be assigned by either party without the prior written consent of
the other. Any attempted assignment in contravention of this
Agreement shall be void.
7.4. Entire Agreement; Amendment
THIS AGREEMENT (INCLUDING THE SCHEDULES ATTACHED HERETO) REPRESENTS
THE ENTIRE UNDERSTANDING AND AGREEMENT BETWEEN THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF, AND SUPERSEDES ANY PRIOR
UNDERSTANDINGS AND AGREEMENTS BETWEEN SUCH PARTIES WITH RESPECT TO
SUCH SUBJECT MATTER. THIS AGREEMENT CAN BE AMENDED, SUPPLEMENTED,
OR CHANGED ONLY BY AN INSTRUMENT IN WRITING WHICH MAKES SPECIFIC
REFERENCE TO THIS AGREEMENT AND WHICH IS SIGNED BY THE PARTY
AGAINST WHOM ENFORCEMENT OF ANY SUCH AMENDMENT, SUPPLEMENT OR
CHANGE IS SOUGHT.
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7.5. Counterparts
This Agreement may be executed in any number of counterparts with
the same effect as if the signatures to each were upon the same
instrument.
7.6. Notices
All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if
sent by a nationally recognized overnight courier (receipt
requested); (c) on the date sent by e-mail of a PDF document (with
confirmation of transmission) if sent during normal business hours
of the recipient, and on the next Business Day if sent after normal
business hours of the recipient or (d) on the third day after the
date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the
respective parties at the following addresses (or at such other
address for a party as shall be specified in a notice given in
accordance with this Section 7.6):
If to Seller:
0000 Xxxxxxxx Xxxxx 0000
Xxx Xxxx, XX 00000
Email: xxxxxxx@xxxxxxx.xxx;
xxxxxxxxxx@xxxxxxxxxxxxx.xxx
With a copy to:
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxxxxxx
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
000 0xx
Xxxxxx
Xxx Xxxx, XX 00000
Email: xxxxxx@xxxxx.xxx; xxxxxxxxxxxx@xxxxx.xxx
If to Purchaser:
World Professional Cabling Systems,
000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Email:
Xxxxx.xxxxxx@xxxx.xxx
With a copy to:
Xxxxxxx X. Xxxx
AKAY LAW
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Email:
xxxxxx@xxxxxxx.xxx
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7.7. Warranty Disclaimer
The only representations and warranties made by Seller hereunder
with respect to the Company are those representations and
warranties expressly set forth in this Agreement. SELLER EXPRESSLY
DISCLAIMS ALL IMPLIED WARRANTIES OF ANY NATURE, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
7.8. Applicable Law; Submission to Jurisdiction; Waiver of Jury
Trial.
(a)
This
Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to
its conflict of law rules.
(b)
ANY
LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL
COURTS OF THE UNITED STATES OF AMERICA IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE OR THE
SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND EACH
PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS,
SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY'S ADDRESS
SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE
PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE
LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH
COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c)
EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH
SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO
THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE
FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.8(C).
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7.9. Interpretation.
For purposes of this Agreement, (a) the words "include," "includes"
and "including" shall be deemed to be followed by the words
"without limitation"; (b) the word "or" is not exclusive; and (c)
the words "herein," "hereof," "hereby," "hereto" and "hereunder"
refer to this Agreement as a whole. Unless the context otherwise
requires, references herein: (x) to Articles, Sections and Exhibits
mean the Articles and Sections of and Exhibits attached to, this
Agreement; (y) to an agreement, instrument or other document means
such agreement, instrument or other document as amended,
supplemented and modified from time to time to the extent permitted
by the provisions thereof and (z) to a statute means such statute
as amended from time to time and includes any successor legislation
thereto and any regulations promulgated thereunder. This Agreement
shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting
an instrument or causing any instrument to be drafted. The Exhibits
referred to herein shall be construed with, and as an integral part
of, this Agreement to the same extent as if they were set forth
verbatim herein.
7.10. Headings.
The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.
7.11. Severability.
If any term or provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that
any term or other provision is invalid, illegal or unenforceable,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
7.12. No Third Party Beneficiaries.
This Agreement is for the sole benefit of the parties hereto and
their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any
other Person or entity any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.
7.13. Specific Performance.
The parties agree that irreparable damage would occur if any
provision of this Agreement were not performed in accordance with
the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy to
which they are entitled at law or in equity.
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ARTICLE VIII. DEFINITIONS
8.1. Definitions
The following terms, as used herein, have the following
meanings:
(a)
“Affiliate”
means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with
such other Person.
(b)
“Knowledge
of Seller” or any other similar knowledge qualification,
means the actual knowledge of Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxx or
Xxxx Commons.
(c)
“Lien”
means, with respect to any Asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of
such asset.
(d)
“Person”
means an individual, a corporation, a partnership, association, a
trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality
thereof.
8.2. Terms Defined in the Agreement
Each of the following terms is defined in the Section set forth
opposite such term:
|
|
Term
|
Section
|
|
|
Closing
Closing
Date
Common
Stock
|
1.4
1.4
2.3(a)
|
|
|
Company
|
Recital
|
|
|
Damages
|
6.2
|
|
|
Indemnified
Party
Indemnifying
Party
|
6.5(a)
6.5(a)
|
|
|
Purchase
Price
|
1.2
|
|
|
Shares
Transferee
Employees
|
Recital
4.3
|
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first
above written.
Signature: /s/ Xxxxxxx
Xxxxxxxxxx
Date: December 10,
2018
By: Xxxxxxx Xxxxxxxxxx
Its Chief Executive Officer
WORLD PROFESSIONAL CABLING SYSTEMS, LLC
Signature: /s/ Xxxxxx
Xxxxxx
Date: December 10,
2018
By: Xxxxxx Xxxxxx
Its: Authorized
Signatory
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