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Exhibit 2.1
STOCK PURCHASE AGREEMENT
AMONG
XXXX ACQUISITION CORP.
XXXXX XXXXXX AND
PRIME RATE INCOME & DIVIDEND ENTERPRISES, INC.
VACATION OWNERSHIP MARKETING, INC.
DATED AUGUST 27, 2001
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
1.1 Definitions 1
ARTICLE II SALE AND PURCHASE OF SHARES 6
2.1 Sale and Purchase of Shares 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND OF THE COMPANY 6
3.1 Due Incorporation; No Subsidiaries 6
3.2 Due Authorization 7
3.3 Consents and Approvals 8
3.4 Compliance With Securities Laws 9
3.5 Capitalization 10
3.6 Financial Statements; Undisclosed Liabilities 11
3.7 No Adverse Effects or Changes 11
3.8 Title to Properties 12
3.9 Condition and Sufficiency of Assets 13
3.10 Leased Real Property 13
3.11 Personal Property 14
3.12 Inventories 15
3.13 Accounts Receivable and Advances 15
3.14 Intellectual Property 15
3.15 Contracts 16
3.16 Permits 17
3.17 Insurance; Claims 17
3.18 Employee Benefits 18
3.19 Employment and Labor Matters 20
3.20 Taxes 21
3.21 Environmental Matters 22
3.22 Litigation 23
3.23 No Conflict of Interest 24
3.24 Bank Accounts; Holders of Powers of Attorney 24
3.25 Customers, Suppliers, Etc. 24
3.26 Claims Against the Seller, Officers
and Directors of the Company, and other Persons 25
3.27 Improper and Other Payments 25
3.28 Due Diligence Materials 25
3.29 No Defaults or Violations 25
3.30 Accuracy of Statements 26
3.31 Investigation 26
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER 27
4.1 Due Incorporation 27
4.2 Due Authorization 27
4.3 Consents and Approvals;
Authority Relative to this Agreement 27
ARTICLE V COVENANTS 28
5.1 Implementing Agreement 28
5.2 Access to Information and Facilities 28
5.3 Preservation of Business 29
5.4 Consents and Approvals 30
5.5 Maintenance of Insurance 31
5.6 Resignation of Officers and Directors 31
5.7 Bank Accounts 31
5.8 Supplemental Information 31
5.9 Non-competition 32
5.10 Exclusivity 33
5.11 Use of Name 33
5.12 Tax Indemnity 33
5.13 Termination of Certain Agreements 34
5.14 Seller not to Inhibit 34
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER 34
6.1 Warranties True as of Both Present Date and Closing Date 34
6.2 Compliance with Agreements and Covenants 34
6.3 Consents and Approvals 35
6.4 Expiration of HSR Waiting Period (if any) 35
6.5 Documents 35
6.6 Opinion of Counsel 35
6.7 Accountant's Letter 37
6.8 Delivery of Exhibits 38
6.9 No Adverse Change 38
6.10 Actions or Proceedings 38
6.11 Obtainment of Financing 38
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER 39
7.1 Warranties True as of Both Present Date and Closing Date 39
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7.2 Compliance with Agreements and Covenants 39
7.3 Expiration of HSR Waiting Period (if any) 39
7.4 Documents 39
7.5 Actions or Proceedings 39
7.6 Consents and Approvals 40
ARTICLE VIII THE CLOSING 40
8.1 The Closing 40
8.2 Deliveries by the Seller 40
8.3 Deliveries by the Buyer 41
ARTICLE IX TERMINATION 42
9.1 Termination 42
9.2 Effect of Termination 42
ARTICLE X INDEMNIFICATION 42
10.1 Survival 42
10.2 Indemnification by Sellers 43
10.3 Claims 43
10.4 Notice of Third-Party Claims; Assumption of Defense 44
10.5 Settlement or Compromise 45
10.6 Failure of Indemnifying Person to Act 45
10.7 Claims Against Escrow 45
10.8 Tax Character 45
ARTICLE XI MISCELLANEOUS 46
11.1 Expenses 46
11.2 Amendment 46
11.3 Notices 46
11.4 Effect of Investigation 48
11.5 Waivers 48
11.6 Counterparts 48
11.7 Interpretation 48
11.8 Assignment 49
11.9 No Third-Party Beneficiaries 49
11.10 Publicity 49
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11.11 Liquidated Damages 49
11.12 Further Assurances 50
11.13 Severability 50
11.14 Remedies Cumulative 50
11.15 Entire Understanding 50
11.16 Brokers 50
11.17 Applicable Law; Resolution of Disputes; Venue 50
11.18 Jurisdiction of Disputes; Waiver of Jury Trial 51
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made this
__________day of August, 2001, by and among XXXX Acquisition Corp., a Delaware
corporation (the "Buyer"); Vacation Ownership Marketing, Inc., a Delaware
corporation ("XXXX" or the "Company"); Xxxxx Xxxxxx, an individual, Xxx Xxxxxx,
an Individual, and Prime Rate Income & Dividend Enterprises, Inc. (individually,
a "Seller", collectively, the "Sellers"), being the majority Shareholders of the
Company.
W I T N E S S E T H
WHEREAS, the Buyer wishes to purchase from Seller, and Seller wishes to
sell to the Buyer, shares of the securities of the Company owned by him.
N O W T H E R E F O R E ,
In consideration of the foregoing and the mutual covenants, agreements
and warranties herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
The following terms shall have the following meanings for the purposes
of this Agreement:
"Affiliate" means, with respect to any specified Person,
(a) any other Person which, directly or indirectly, owns or controls,
is under common ownership or control with, or is owned or controlled by, such
specified Person;
(b) any other Person which is a director, officer or partner or is,
directly or indirectly, the beneficial owner of 10 percent or more of any class
of equity securities of the specified Person or a Person described in clause (a)
of this paragraph;
(c) another Person of which the specified Person is a director, officer
or partner or is, directly or indirectly, the beneficial owner of 10 percent or
more of any class of equity securities; or
(d) any relative or spouse of the specified Person or any of the
foregoing Persons.
"Auditors" means Xxxxxx and XxXxxxxx, Certified Public Accountants, 0000 Xxxx
00xx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Telephone: (000) 000-0000, Facsimile:
(000) 000-0000.
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"Business Day" means any day of the year other than
(a) any Saturday or Sunday, or
(b) any day which is a Legal Holiday as declared to be such by federal
law.
"Buyer Confidential Information" means all confidential information concerning
the Buyer or its Affiliates that
(a) is not and has not become ascertainable or obtainable from public
or published information,
(b) is not received from a third party or is received from a third
party pursuant to the authorization of the Buyer,
(c) was not in the Company's or in the Seller's possession prior to
disclosure thereof to the Seller or the Company in connection with the
transactions contemplated herein, and
(e) was not independently developed by the Company or by the Seller.
"Cash Amounts" has the meaning set forth in SECTION 2.1(B).
"Claim" has the meaning set forth in SECTION 10.2.
"Closing" means the consummation(s) of the transactions contemplated herein.
"Closing Date" means the date on which the Closing occurs.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company Confidential Information" means all confidential information concerning
the Company or its Affiliates that
(a) is not and has not become ascertainable or obtainable from public
or published information,
(b) is not received from a third-party or is received from a
third-party pursuant to the authorization of the Company or the Seller in
connection with the Buyer's due diligence review of the Company,
(c) was not in the Buyer's possession prior to disclosure thereof to
the Buyer in connection with the transactions contemplated herein, and
(d) was not independently developed by the Buyer.
"Company Adverse Change" means a change (or circumstance involving a prospective
change) in the business, operations, assets, liabilities, results of operations,
cash flows, condition (financial or otherwise) or prospects of the Company which
the Buyer deems to be adverse.
"Company Adverse Effect" means an effect (or circumstance involving a
prospective effect) on the business, operations, assets, liabilities, results of
operations, cash flows, condition (financial or otherwise) or prospects of the
Company which the Buyer deems to be adverse.
"Contract" means any contract, lease, commitment, understanding, sales order,
purchase order, agreement,
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indenture, mortgage, note, bond, right, warrant, instrument, plan, permit or
license, whether written or oral.
"Dollars" or numbers preceded by the symbol "$" means amounts in United States
Dollars.
"Environmental Law" means any law which relates to or otherwise imposes
liability or standards of conduct concerning mining or reclamation of mined
land, discharges, emissions, releases or threatened releases of noises, odors or
any pollutants, contaminants or hazardous or toxic wastes, substances or
materials, whether as matter or energy, into ambient air, water, or land, or
otherwise relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of pollutants,
contaminants, or hazardous or toxic wastes, substances or materials, including,
but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 and the Superfund Amendments and Reauthorization Act of
1986 (together, as amended, "CERCLA"), the Resource Conservation and Recovery
Act of 1976, as amended, the Toxic Substances Control Act of 1976, as amended,
the Federal Water Pollution Control Act Amendments of 1972, the Clean Water Act
of 1977, as amended, any so-called "Superlien" law, and any other similar
federal, state or local Law.
"Environmental Permit" means any permit, license, approval, consent or other
authorization required by or pursuant to any applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Escrow Account" means the escrow account established pursuant to the terms of
the Escrow Agreement.
"Escrow Agent" means Xxx Xxxxxx, Esq., under the terms of the Escrow Agreement,
or any successor.
"Escrow Agreement" means the Escrow Agreement and Instructions dated as of
August 24, 2001, by and among the Buyer, the Seller and the Escrow Agent.
"Escrow Fund" means the funds paid into the Escrow Account by the Buyer pursuant
to the terms of the Escrow Agreement, plus interest accrued and income earned
thereon pursuant to the terms of the Escrow Agreement.
"Existing Borrowing" means all borrowing from lending institutions, vendors or
agencies of federal, state or local governments or their political subdivisions,
as set forth on the Financial Statements or in the books and records of the
Company.
"Financial Statements" means, and includes, all of the following:
(a) the audited financial statements of the Company as of May 31, 2001,
(including all schedules and notes thereto), consisting of the balance sheet at
such date and the related statements of income and expenses, retained earnings,
changes in financial position and cash flows for the twelve-month period then
ended, which shall be prepared in accordance with GAAP and the SEC's Regulation
S-B;
(b) the unaudited financial statements of the Company as of August 24,
2001, (including all schedules and notes thereto), consisting of the balance
sheet at such date and the related statements of income and expenses, retained
earnings, changes in financial position and cash flows for the twelve-month
period then ended, which shall be prepared in accordance with GAAP and the SEC's
Regulation S-B; and, in addition
(d) any other financial statements issued by the Company.
"GAAP" means United States generally accepted accounting principles at the time
in effect.
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"Governmental Authority" means the government of the United States or any
foreign country or any state or political subdivision thereof and any entity,
body or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Group" shall collectively mean all affiliated groups of corporations of which
the Company is or has been a member that have filed any consolidated Tax Returns
for any period ending on or before the Closing Date for which the statute of
limitations has not yet expired.
"Hazardous Material" means any pollutant or contaminant or hazardous, dangerous
or toxic chemical, material or substance within the meaning of any applicable
Law (including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, all as now or at any time hereafter in
effect.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Indemnified Person" means the Buyer, and its Officers, Directos, and
Shareholders, or those other Persons entitled to, or claiming a right to,
indemnification.
"Indemnifying Person" means the Seller.
"Intellectual Property" means any and all trademarks, trade names, service
marks, patents, copyrights (including any registrations, applications, licenses
or rights relating to any of the foregoing), technology, trade secrets,
inventions, know-how, designs, computer programs, processes, and all other
intangible assets, properties and rights. The "Company's Intellectual Property"
means any and all Intellectual Property used by the Company in the conduct of
its business.
"Latest Financial Statements" means the unaudited financial statements of the
Company as of August 24, 2001, (including all schedules and notes thereto),
consisting of the balance sheet at such date and the related statements of
income and expenses, retained earnings, changes in financial position and cash
flows for the twelve-month period then ended, which shall be prepared in
accordance with GAAP and the SEC's Regulation S-B;
"Latest Financial Statements Date" means the date of the Latest Financial
Statements.
"Law" or "Laws" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority.
"Lien" means any mortgage, lien, charge, restriction, pledge, security interest,
option, lease or sublease, claim, right of any third party, easement,
encroachment or encumbrance.
"Loss" or "Losses" means any and all liabilities, losses, costs, claims, damages
(including consequential damages), penalties and expenses (including attorneys'
fees and expenses and costs of investigation and litigation). ["Losses" also
include liabilities for taxes that have become due and payable or which have
accrued with respect to the Company that have not been paid prior to the Closing
Date or which have not been reserved on the Financial Statements. (Any Taxes
attributable to the operations of the Company payable as a result of an audit of
any Tax Return shall be deemed to have accrued in the period to which such Taxes
are attributable.)]
In the event any of the foregoing are indemnifiable hereunder, the terms "Loss"
and "Losses" shall include any and all attorneys' fees and expenses and costs of
investigation and litigation incurred by the Indemnified Person in enforcing
such indemnity. No Loss shall be reduced by reason of tax benefits allegedly
enjoyed as a result of such Loss by an Indemnified Party.
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"NASD" means the National Association of Securities Dealers.
"NASD Reports" means all reports, filings, and forms required to be filed by
Persons pursuant to the regulations of NASDAQ and the NASD.
"Person" means any individual, corporation, proprietorship, firm, partnership,
limited partnership, trust, association or other entity, including a government
or government department, agency or instrumentality.
"Real Property Leases" has the meaning set forth in SECTION 3.10(B).
"Related Agreement" means any Contract which is or is to be entered into at the
Closing or otherwise pursuant to this Agreement. The Related Agreements executed
by a specified Person shall be referred to as "such Person's Related
Agreements", "its Related Agreements" or another similar expression.
"SEC" means the United States Securities and Exchange Commission.
"SEC Reports" means all reports, filings, and forms required to be filed by
Persons under the Securities Act and the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Security" or "Securities" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or group
or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered into on a
national securities exchange relating to foreign currency, or, in general, any
interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to or purchase, any of the
foregoing.
"Shares" means the number of shares of the Issued and Outstanding Common Stock,
Par Value $0.001 per share, of the Company as is set forth opposite the names of
each of the Sellers on EXHIBIT 2.1.
"Subsidiaries" means any Person 50.1% or more of the voting power of which is
controlled by another Person.
"Survival Date" has the meaning set forth in SECTION 10.1.
"Taxes" means all taxes, charges, fees, duties, levies or other assessments,
including income, gross receipts, net proceeds, ad valorem, turnover, real and
personal property (tangible and intangible), sales, use, franchise, excise,
value added, stamp, leasing, lease, user, transfer, fuel, excess profits,
occupational, interest equalization, windfall profits, severance, employee's
income withholding, other withholding, unemployment and Social Security taxes,
which are imposed by any Governmental Authority, and such term shall include any
interest, penalties or additions to tax attributable thereto.
"Tax Return" means any report, return or other information required to be
supplied to a Governmental Authority in connection with any Taxes.
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"Tax Statute of Limitations Date" means the close of business on the 30th day
after the expiration of the applicable statute of limitations with respect to
Taxes, including any extensions thereof (or if such date is not a Business Day,
the next Business Day).
"Tax Warranty" means a representation or warranty in SECTIONS 3.20.
"Territory" means the United States, Canada and all other countries in which the
Company has transacted business prior to the Ending Date as contemplated by
SECTION 5.8.
"Title and Authorization Warranty" means a representation or warranty in
SECTIONS 3.2, 3.4, OR 3.7.
"Two Times Prime Rate" means two times the weighted average prime rate (as the
prime rate as from time to time announced by Citibank, N.A. in New York City).
ARTICLE II
SALE AND PURCHASE OF SHARES
2.1 SALE AND PURCHASE OF SHARES.
(a) Each Seller hereby agrees to sell to the Buyer that number of
Shares set forth on EXHIBIT 2.1 opposite his or its name, free and clear of all
Liens, and the Buyer hereby agrees to purchase all such Shares, subject, of
course, to the terms and conditions of this Agreement.
(b) In consideration for the sale of the Shares by each of the Sellers
to the Buyer, the Buyer shall pay to each of the Sellers that sum of money (such
amount being referred to as the "Cash Amount") in the amount set forth opposite
his or its name on EXHIBIT 2.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND OF
THE COMPANY
In order to induce the Buyer to enter into this Agreement, the Company
and the Seller, jointly and severally, represent and warrant to the Buyer, as at
the date of this Agreement and as at the Closing Date (as if such
representations and warranties were remade on the Closing Date), as follows:
3.1 DUE INCORPORATION; NO SUBSIDIARIES.
(a) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware with all requisite power and
authority to own, lease and operate its properties and to carry on its business
as they are now being owned, leased, operated and conducted.
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(b) The Company is licensed or qualified to do business and is in good
standing (where the concept of "good standing" is applicable) as a foreign
corporation in each jurisdiction where the nature of the properties owned,
leased or operated by it and the business transacted by it require such
licensing or qualification.
(c) The jurisdictions in which the Company is incorporated and licensed
or qualified to do business as a foreign corporation are as follows:
(i) N/A ;
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(d) The Company has no direct or indirect Subsidiaries, either wholly
or partially owned, and the Company does not hold any direct or indirect
economic, voting or management interest in any Person or directly or indirectly
own any security issued by any Person.
(e) True, correct and complete copies of the Certificate of
Incorporation and By-laws, as amended, and all minutes of all meetings (or
written consents in lieu of meetings) of the Board of Directors (and all
committees thereof) and stockholders of the Company have been delivered to the
Buyer
(f) Except as set forth in SCHEDULE 3.1, all action taken by the Board
of Directors (and all committees thereof) and stockholders of the Company is
reflected in such, minutes and written consents.
3.2 DUE AUTHORIZATION.
(a) The Seller and the Company have full power and authority to enter
into this Agreement, and the Seller and the Company have full power and
authority to enter into their respective Related Agreements and to consummate
the transactions contemplated hereby and thereby.
(b) The Seller and the Company have duly and validly executed and
delivered this Agreement, and the Seller and the Company have duly and validly
executed and delivered (or prior to or at the Closing will duly and validly
execute and deliver) their respective Related Agreements.
(c) The Seller and the Company expressly represent and warrant that the
approval of the shareholders of the Company is not required in order for the
Seller or for the Company to consummate the transactions contemplated herein or,
that, should such approval be requested by the Buyer, the Seller and the Company
shall obtain such approval prior to the Closing.
(d) The Seller and the Company expressly represent and warrant that, at
all material times,
(i) the Seller had, has, and will have, full and valid title
and control of the Shares;
(ii) there was, is, and will be no existing impediment or
encumbrance to the sale and transfer of such Shares to the Buyer, and
on delivery to the Buyer of the Shares,
(A) all of the Shares have been, are, and will be
free and clear of all taxes, liens, encumbrances, charges or
assessments of any kind and shall not be subject to preemptive
rights, tag-along rights, cumulative voting, or similar rights
of any shareholder of the Company,
(B) all of the Shares have been, are, and will be
legally and validly issued in compliance with all applicable
Law, and
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(C) all of the Shares have been, are, and will be
fully paid and non-assessable shares, and the Shares have all
been, are, and will be issued under duly authorized
resolutions of the Board of Directors of the Company.
(e) This Agreement constitutes legal, valid and binding obligations of
the Seller and the Company, and each respective Related Agreement upon execution
and delivery by the Seller or by the Company will constitute legal, valid and
binding obligations of such party, in each case, enforceable in accordance with
their respective terms.
3.3 CONSENTS AND APPROVALS.
(a) Except as set forth on SCHEDULE 3.3, no consent, authorization or
approval of, filing or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement, is necessary in
connection with the execution, delivery and performance by the Seller or by the
Company of this Agreement, their respective Related Agreements or the
consummation of the transactions contemplated hereby, or thereby.
(b) Except as set forth on SCHEDULE 3.3, the execution, delivery and
performance by the Seller and the Company of this Agreement and their respective
Related Agreements do not and will not, and the consummation of the transactions
contemplated hereby and thereby does not and will not,
(i) violate any provisions of the Articles of Incorporation,
as amended, or By-laws of the Company;
(ii) violate any Law;
(iii) permit any Governmental Authority to impose any
restrictions or limitations of any nature on the Seller or the Company
or the Buyer with respect to the transactions contemplated hereby;
(iv) violate, conflict with, or result in the breach of any of
the terms of, result in a material modification of, or otherwise give
any other contracting party the right to terminate, or constitute a
default under, any contract or other agreement to which the Seller or
the Company is a party or by or to which it or they or any of their
assets or properties may be bound or subject;
(v) violate any order, judgment, injunction, award or decree
of any court, arbitrator or governmental or regulatory body against, or
binding upon, the Seller or the Company to which any of their assets or
properties may be bound or subject;
(vi) result in the creation of any security interest, lien,
encumbrance, adverse claim, proscription or restriction on any property
or asset (whether real, personal, mixed, tangible or intangible),
right, contract, agreement or business of the Seller or the Company; or
(vii) violate, conflict with, modify or cause any default
under or acceleration of (or give any party any right to declare any
default or acceleration upon notice or passage of time or both), in
whole or in part, any charter, article of incorporation, bylaw,
mortgage, lien, deed of trust, indenture, lease, agreement, instrument,
order, injunction, decree, judgment, law or any other restriction of
any kind to which either the Seller or the Company are a party or by
means of which either of them or any of their properties may be bound
or subject.
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3.4 COMPLIANCE WITH SECURITIES LAWS.
(a) Since August 16, 2000, through the Closing Date, the Seller and the
Company have timely filed all SEC Reports.
(b) The Seller and the Company have delivered to the Buyer true and
complete copies of the SEC Reports and all correspondence between the SEC and
the Seller and the Company and its attorneys and accountants and market-makers.
Such SEC Reports, at the time filed, complied in all respects with all
applicable Laws. None of the SEC Reports, including without limitation, any
financial statements or schedules included therein, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
(c) With respect to the NASD,
(i) The Seller and the Company have delivered to the Buyer
true and complete copies of the NASD Reports and all correspondence
between the NASD and the Seller and the Company and its attorneys and
accountants and market-makers;
(ii) Such NASD Reports, at the time filed, complied in all
respects with all applicable Laws;
(iii) None of the NASD Reports, including without limitation,
the Form 15c-211 and all attachments, exhibits and schedules included
therein, contain any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not
misleading; and
(iv) The Company is currently listed on the OTC Electronic
Bulletin Board with the following trading symbol: "XXXX". The Company
is not in default with respect to any listing requirements or trading
privileges or policy statements of the SEC or of the NASD or of any
other Governmental Authority. There are no investigations pending or
threatened against the Company by the SEC or by the NASD or by any
other Governmental Authority which would threaten or jeopardize its
trading status or listing privileges, and there is no reason whatsoever
for the Seller or the Company to suspect otherwise, irrespective of
whether or not the Seller or the Company believes such rules or
regulations, or such investigations, pose such a threat to its trading
status or listing privileges.
(d) To the date of this Agreement, the Company has offered and sold its
Securities only as shown on SCHEDULE 3.4.
(e) Except as set forth in SCHEDULE 3.4, all of the offerings listed
therein were conducted in full compliance with all applicable Laws and the
Company's Articles of Incorporation and By-laws.
(f) Except as set forth in SCHEDULE 3.4, the Company did not prepare or
distribute any offering prospectus, solicitation, or other documents in
connection with any prior offering and has provided to the Buyer copies of all
documents prepared and filed in connection with any such offerings.
(g) Except as set forth in SCHEDULE 3.4, all investors in all prior
offerings were "Accredited Investors" as that term is defined in Regulation D.
(h) The Company was not, has not been, and is not, at any time a "blind
pool" as that term is generally interpreted.
(i) The Company was not, has not been, and is not, at any time an
"Investment Company" as the term is generally interpreted.
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3.5 CAPITALIZATION.
(a) The Authorized Capitalization of the Company consists of :
(i) 50,000,000 shares of Common Stock, Par Value $0.001 per
share ( the "XXXX Common Stock") of which APPROXIMATELY ______________
SHARES are Issued and Outstanding and are held, of record, by
approximately ____________ persons,
(A) with each holder thereof being entitled to cast
one vote for each share held on all matters properly submitted
to the Shareholders for their vote; and
(B) there being no pre-preemptive rights or
cumulative voting; and
(b) 10,000,000 shares of Preferred Stock, Par Value $0.001 per share
(the "XXXX Preferred Stock") of which no shares are Issued and Outstanding, with
the Board of Directors being authorized from time to time, without shareholder
action, to determine and state the designations and the preferences,
limitations, relative rights, and voting rights, if any, of each such series by
the adoption and filing in accordance with the Laws of the State of Delaware,
before the issuance of any shares of such series, of a Certificate of
Designations determining the terms and numbers of shares of such series, which
amendment need not be approved by the stockholders or the holders of any class
or series of shares except as provided by law.
(c) Except as set forth on SCHEDULE 3.5, no other Securities of the
Company are
(i) authorized; or
(ii) issued and outstanding;
(d) All of the issued and outstanding shares of Common Stock of the
Company have been duly and validly issued in accordance and compliance with all
applicable Laws, rules and regulations and are fully paid and nonassessable;
(e) There are no outstanding options, warrants, convertible securities,
scrip, rights to subscribe for, puts, calls, rights of first refusal, tag-along
agreements, nor any other agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for any Securities of the Company or
arrangements by which the Company is or may become bound to issue additional
Securities of the Company, nor are there any outstanding Securities granted or
issued by the Company that are convertible into any Securities of the Company,
and none is authorized;
(f) No Securities of the Company are subject to preemptive rights or
similar rights of the stockholders of the Company nor are any Securities subject
to any liens or encumbrances imposed through the actions or failure to act of
the Company, or otherwise;
(g) There are no anti-dilution or price adjustment provisions contained
in any Security authorized or issued by the Company (or in the Company's
Articles of Incorporation or By-laws or in any agreement providing rights to
security holders) that will be triggered by the transactions contemplated by
this Agreement;
(h) The Company is not obligated or committed to purchase, redeem or
otherwise acquire any of its Securities;
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(i) There are no agreements or arrangements under which the Company is
obligated to register the sale of any of its Securities under the Securities
Act;
(j) All presently exercisable voting rights in the Company are vested
exclusively in its outstanding shares of Common Stock, each share of which is
entitled to one vote on every matter to come before its shareholders;
(k) There are no voting trusts or other voting arrangements with
respect to any of the Company's securities; and
(l) The assignments, endorsements, stock powers and other instruments
of transfer delivered by the Seller to the Buyer at the Closing will be
sufficient to transfer the Seller's entire interest, legal and beneficial, in
the Shares to the Buyer.
3.6 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(a) The Financial Statements have been prepared in accordance with GAAP
consistently applied and present fairly the financial position, assets,
liabilities and retained earnings of the Company as of the dates thereof and the
revenues, expenses, results of operations, changes in financial position and
cash flows of the Company for the periods covered thereby. The Financial
Statements are in accordance with the books and records of the Company, do not
reflect any transactions which are not bona fide transactions, and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
(b) Except as set forth in EXHIBIT 3.6 or in the Latest Financial
Statements, the Company has no liabilities, debts, claims or obligations,
whether accrued, absolute, contingent or otherwise, whether due or to become
due, other than trade payables and accrued expenses incurred in the ordinary
course of business since the date of the Latest Financial Statements.
(c) The Seller and the Company represent and warrant that there is no
basis for the assertion against the Company, as at the date of this Agreement,
or as at the Closing Date, of any liability of any nature or in any amount not
fully reflected or reserved against in the Financial Statements, and there is no
reason for Company or the Seller to believe otherwise, irrespective of whether
or not they believe the claim is valid or not.
3.7 NO ADVERSE EFFECTS OR CHANGES.
Except as listed on SCHEDULE 3.7, since the Latest Financial Statement
Date, the Company has not:
(a) suffered any Company Adverse Change or Effect;
(b) suffered any damage, destruction or Loss (as that term is defined
herein) to any of its assets or properties (whether or not covered by
insurance);
(c) incurred any obligation or entered into any Contract which requires
a payment by the Company in excess of $100.00 or entered into any Contract to
provide for the delivery of goods or the performance of services, or any
combination thereof, by the Company, having a value in excess of $100.00;
(d) sold, transferred, conveyed, assigned, leased, encumbered or
otherwise disposed of any of its assets or properties;
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(e) waived, released or canceled any claims against third parties or
debts owing to it, or any rights;
(f) made any changes in its accounting systems, policies, principles or
practices;
(g) entered into, authorized, or permitted any transaction with the
Seller or any Affiliate of the Seller;
(h) authorized for issuance, issued, sold, delivered or agreed or
committed to issue, sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise), any of its Securities, or
amended any of the terms of any of its Securities;
(i) split, combined, or reclassified any shares of its Securities,
declared, set aside or paid any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its securities, or
redeemed or otherwise acquired any Securities of the Company or of any other
Person;
(j) except for Existing Borrowing, made any borrowing, incurred any
debt, or assumed, guaranteed, endorsed or otherwise become liable (whether
directly, contingently or otherwise) for the obligations of any other Person, or
made any payment or repayment in respect of any indebtedness;
(k) made any loans, advances or capital contributions to, or
investments in, any other Person;
(l) entered into, adopted, amended or terminated any bonus, profit
sharing, compensation, termination, stock option, stock appreciation right,
restricted stock, performance unit, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreements, trusts, plans, funds
or other arrangements for the benefit or welfare of any director, officer or
employee, or increased in any manner the compensation or fringe benefits of any
director or officer;
(m) authorized or made any capital expenditure;
(n) made any Tax election or settled or compromised any federal, state,
local or foreign Tax liability, or waived or extended the statute of limitations
in respect of any such Taxes;
(o) paid any amount, performed any obligation or agreed to pay any
amount or perform any obligation, in settlement or compromise of any suits
against the Company or its Affiliates or any of its directors, officers,
employees, agents, or shareholders.
(p) paid any amount, performed any obligation or agreed to pay any
amount or perform any obligation, in settlement or compromise of any claims of
liability against the Company or its Affiliates or any of its directors,
officers, employees, agents, or shareholders; or
(q) terminated, modified, amended or otherwise altered or changed any
of the terms or provisions of any Contract, or paid any amount not required by
Law or by any Contract.
3.8 TITLE TO PROPERTIES.
Except as disclosed on EXHIBIT 3.8, the Company has, and on the Closing
Date will have, good and marketable title to, and is, and on the Closing Date
will be, the lawful owner of, all of the tangible and intangible assets,
properties and rights used in connection with its business and all of the
tangible and intangible assets, properties and rights reflected in the Financial
Statements, other than assets leased under the leases set forth in EXHIBITS 3.9
or 3.10.
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3.9 CONDITION AND SUFFICIENCY OF ASSETS.
(a) Except as disclosed on EXHIBIT 3.9, all of the tangible assets and
properties of the Company, whether real or personal, owned or leased, have been
well maintained and are in good operating condition and repair (with the
exception of normal wear and tear), and are free from defects other than such
minor defects as do not interfere with the intended use thereof in the conduct
of normal operations or adversely affect the resale value thereof.
(b) Immediately after the Closing Date, the Company shall own or have a
permanent right to use all the assets, properties, rights, know-how, key
personnel, processes and ability which are required for or currently used in
connection with the operation of its business as it is presently conducted.
(c) Such assets, properties and rights were sufficient to produce the
income as shown on the Financial Statements.
(d) Except as set forth in EXHIBIT 3.9, the Company has no liabilities
not directly related to, and that did not arise directly out of, the business of
the Company.
3.10 LEASED REAL PROPERTY.
(a) The Company does not hold legal title to, or own any legal or
beneficial interest in any real property.
(b) EXHIBIT 3.10 lists all leases pursuant to which the Company holds,
occupies or uses any real property (the "Real Property Leases") and EXHIBIT 3.10
includes complete and accurate legal descriptions of such leased real property.
(c) The Company does not hold, occupy or use any real property except
for the real property subject to the Real Property Leases (the "Leased Real
Property"). True and complete copies of the Real Property Leases have been
provided to the Buyer.
(d) The activities carried on in all buildings, plants, facilities,
installations, fixtures and other structures or improvements included as part
of, or located on or at, the Leased Real Property, and the buildings, plants,
facilities, installations, fixtures and other structures or improvements
themselves, are not in violation of, or in conflict with, any applicable zoning,
Environmental Law, health regulations or ordinance or any other similar Law.
(e) Except as set forth in EXHIBIT 3.10, no Hazardous Material have
been used in the construction or repair of, or any alterations or additions to,
or are otherwise located on, any portion of the Leased Real Property.
(f) No parcel of land included in the Leased Real Property relies on or
regularly makes use of access to the nearest public road or right-of-way over
land owned by others, except where such access is by means of one or more valid
recorded easements not subject to divestiture, the terms of which have been
disclosed in writing to the Buyer prior to the date hereof, and which easements
the Company is entitled to use under the terms of the documents creating such
easements and under the terms of the Real Property Leases. All covenants or
other restrictions (if any) to which any of the Leased Real Property is subject
are being in all respects properly performed and observed and, except for
covenants contained in the Real Property Leases, do not provide for forfeiture
or reversion of title if violated, and neither the Company nor the owners of any
of the Leased Real Property has received any notice of violation (or claimed
violation) thereof.
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(g) The Company has delivered to the Buyer true and complete copies of
the most recent title insurance policies and surveys (if any) for the Leased
Real Property and copies of any recorded documents referred to in such policies
or surveys, together with copies of all reports (if any) of any engineers,
environmental consultants or other consultants in its possession relating to any
of the Leased Real Property.
(h) Each separate parcel included in the Leased Real Property and any
improvements located thereon are served by water, storm and sanitary sewer
facilities, telephone, gas and electricity, fire protection, drainage and other
public utilities, all of which are adequate for the present and continued use
thereof in the usual and normal conduct of the Company's business and
operations, and have adequate parking facilities that meet all requirements
imposed by applicable Laws.
(i) None of the Leased Real Property is subject to any recorded or
unrecorded Lien, easement, right-of-way, building or use restriction, exception,
variance, reservation or limitation as might in any material respect interfere
with or impair the present and continued use thereof in the usual and normal
conduct of the business and operations of the Company.
(j) Except as disclosed on EXHIBIT 3.10, there is no pending, or, to
the knowledge of any of the Seller or the Company, any threatened or proposed
proceeding or governmental action to modify the zoning classification of, or to
condemn or take by the power of eminent domain (or to purchase in lieu thereof),
or to classify as a landmark, or to impose special assessments on, or otherwise
to take or restrict in any way the right to use, develop or alter, all or any
part of the Leased Real Property.
(k) All the Real Property Leases are in full force and effect, valid
and enforceable in accordance with their respective terms, except as such
enforce ability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar Laws in effect which affect the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies.
(l) Except as set forth in EXHIBIT 3.10, none of the Real Property
Leases have been amended or modified and there are no agreements, written or
oral, between the Company and the owner of the Leased Real Property, other than
the Real Property Leases. the Company has not received any notice of any, and
there exists no, dispute, claim, event of default or event which constitutes or
would constitute (with notice or lapse of time or both) a default under any Real
Property Lease.
(m) All rent and other amounts due and payable with respect to the Real
Property Leases have been paid through the date of this Agreement, and all rent
and other amounts due and payable with respect to the Real Property Leases on or
prior to the Closing Date will have been paid prior to the Closing Date.
(n) All lessors under the Real Property Leases have consented or, prior
to the Closing Date will have consented (where such consent is necessary), to
the consummation of the transactions contemplated by this Agreement or the
Related Agreements without requiring modification in the rights or obligations
of the lessors thereunder.
3.11 PERSONAL PROPERTY.
(a) EXHIBIT 3.11 sets forth a true and complete list of all of the
tangible personal property (other than inventories included in EXHIBIT 3.12)
used by the Company in its business having an original acquisition cost of
$1,000.00 or more.
(b) EXHIBIT 3.11 also sets forth all leases of personal property
binding upon the Company, or any of its
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assets or properties, and all items of personal property covered thereby. All of
such tangible personal property is presently utilized by the Company in the
ordinary course of its business.
(c) The Company has delivered to the Buyer true and complete copies of
all such personal property leases.
3.12 INVENTORIES.
(a) EXHIBIT 3.12 contains a true and accurate schedule of all
inventories of the Company as at the Latest Financial Statements Date, with a
complete listing of all items that have remained in inventory for over twelve
months.
(b) Except as described on EXHIBIT 3.12, each item of the inventory
owned by the Company is of merchantable quality, is not obsolete and is usable
and saleable in the ordinary course of its business, and none of such items is
held on assignment or consignment. Such inventories are fairly reflected in the
inventory accounts on the balance sheets included in the Financial Statements in
accordance with GAAP, including all appropriate reserves, and are valued at the
lower of cost or market.
3.13 ACCOUNTS RECEIVABLE AND ADVANCES.
(a) EXHIBIT 3.13 contains a true and accurate schedule of all accounts
receivable of the Company and all loans and advances to all Persons
("Advances").
(b) Except as disclosed on EXHIBIT 3.13,
(i) each account receivable of the Company (collectively, the
"Accounts Receivable") represents a sale made in the ordinary course of
business other than to Affiliates and which arose pursuant to an
enforceable written Contract for a bona fide sale of goods or for
services performed, and the Company has performed all of its
obligations to produce the goods or perform the services to which such
Account Receivable relate; and
(ii) to the best of the Seller's and the Company's knowledge,
no Account Receivable or Advance is subject to any claim for reduction,
counterclaim, set-off, recoupment or other claim for credit, allowances
or adjustments by the obligor thereof.
(c) Except as reserved against in the Financial Statements, all
Accounts Receivable and Advances are collectible in full within 90 days of their
origination.
3.14 INTELLECTUAL PROPERTY.
(a) EXHIBIT 3.14 is a true and complete list of all of the trademarks,
trade names, service marks, patents and copyrights (including any registrations
of or pending applications for any of the foregoing) used by the Company in the
conduct of its business.
(b) Except as disclosed on EXHIBIT 3.14,
(i) all of the Company's Intellectual Property is owned by the
Company free and clear of all Liens, and is not subject to any license,
royalty or other agreement, and the Company has not granted any license
or agreed to pay or receive any royalty in respect of any Intellectual
Property,
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(ii) none of the Company's Intellectual Property has been or
is the subject of any pending or threatened litigation or claim of
infringement,
(iii) no license or royalty agreement to which the Company is
a party is in breach or default by any party thereto or the subject of
any notice of termination given or threatened,
(iv) the products manufactured or sold by the Company and any
process, method, part, design, material or other intellectual Property
they employ, and the marketing and use by the Company of any such
product, service or other intellectual Property, do not infringe any
Intellectual Property or confidential or proprietary rights of another,
and the Company has not received any notice contesting its right to use
any intellectual Property, and
(v) the Company owns or possesses adequate rights in
perpetuity in and to all Intellectual Property necessary to conduct its
business as presently conducted.
3.15 CONTRACTS.
(a) EXHIBIT 3.15 lists all the Contracts and arrangements to which the
Company is a party or by which it is bound, or to which any of its assets or
properties is subject, such as, by way of illustration, and not limitation,
(i) any collective bargaining agreement and a summary of the
collective bargaining unit's position with respect to any such
agreement currently the subject of negotiations;
(ii) any Contract or arrangement of any kind with any
employee, officer or director of the Company or any of the respective
Affiliates of such individuals, or any Contract, or other arrangement
of any kind with either the Seller or any Affiliate of the Seller other
than any such Contract or arrangement described in SECTION 3.18(A);
(iii) any Contract or arrangement with a sales representative,
manufacturer's representative, distributor, dealer, broker, sales
agency, advertising agency or other Person engaged in sales,
distributing or promotional activities, or any Contract to act as one
of the foregoing on behalf of any Person;
(iv) any Contract or arrangement of any nature which involves
the payment or receipt of cash or other property, an unperformed
commitment, or goods or services:
(A) having a value in excess of $100.00, if such
Contract or arrangement is not for the purchase by the Company
of raw materials, or
(B) having a value in excess of $100.00, if such
Contract or arrangement is for the purchase by the Company of
raw materials;
(v) any Contract or arrangement pursuant to which the Company
has made or will make loans or advances, or has or will have incurred
debts or become a guarantor or surety or pledged its credit on or
otherwise become responsible with respect to any undertaking of another
(except for the negotiation or collection of negotiable instruments in
transactions in the ordinary course of business);
(vi) any indenture, credit agreement, loan agreement, note,
mortgage, security agreement, lease of real property or personal
property, loan commitment or other Contract or arrangement relating to
the borrowing of funds, an extension of credit or financing;
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(vii) any Contract or arrangement involving a partnership,
joint venture or other cooperative undertaking;
(viii) any Contract or arrangement involving any restrictions
with respect to the geographical area of operations or scope or type of
business of the Company;
(ix) any power of attorney or agency agreement or arrangement
with any Person pursuant to which such Person is granted the authority
to act for or on behalf of the Company, or the Company is granted the
authority to act for or on behalf of any Person;
(x) any Contract for which the full performance thereof may
extend beyond 60 days from the date of this Agreement;
(xi) any Contract not made in the ordinary course of business
which is to be performed in whole or in part at or after the date of
this Agreement;
(xii) any Contract, whether or not fully performed, relating
to any acquisition or disposition of the Company or any predecessor in
interest of the Company, or any acquisition or disposition of any
subsidiary, division, line of business, or real property; and
(xiii) any Contract not specified above that is material to
the Company.
(b) The Seller has delivered to the Buyer true and complete copies of
each document listed on EXHIBIT 3.15, and a written description of each oral
arrangement so listed.
(c) Except as disclosed on EXHIBIT 3.15, all such Contracts and
arrangements,
(i) when entered into, were on terms no less favorable to the
Company than the terms which could have been obtained at the date
thereof from an unrelated third party, and
(ii) if canceled at any time by the other party, would not
have a Company Adverse Effect.
3.16 PERMITS.
(a) EXHIBIT 3.16 is a true and accurate list of all licenses,
certificates, permits, franchises, rights, code approvals and private product
approvals (collectively, "Permits") held by the Company.
(b) Except for the Permits listed on EXHIBIT 3.16, there are no
Permits, whether federal, state, local or foreign, which are necessary for the
lawful operation of the business of the Company.
3.17 INSURANCE; CLAIMS.
(a) EXHIBIT 3.17 contains an accurate and complete list of all policies
of fire, liability, workers' compensation, title and other forms of insurance
owned, held by or applicable to the Company (or its assets or business), and the
Company has heretofore delivered to the Buyer a true and complete copy of all
such policies, including all occurrence-based policies applicable to the Company
(or its business) for all periods prior to the Closing Date. All such policies
are, and will be, in full force and effect, all premiums with respect thereto
covering
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all periods up to and including the Closing Date have been, and will be, paid,
and no notice of cancellation or termination has been, or will have been,
received with respect to any such policy.
(b) Such policies are sufficient for compliance with
(i) all requirements of Law, and
(ii) all policies to which the Company is a party, and are
valid, in good standing, and are enforceable by the Company.
(c) Such insurance policies provide types and amounts of insurance
customarily obtained by businesses similar to the business of the Company.
(d) Except as set forth in EXHIBIT 3.17, the Company has not been
refused any insurance with respect to its assets or operations, and its coverage
has not been limited by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance, during the last three (3)
years.
(e) EXHIBIT 3.17(A) is a list, previously delivered by the Company to
the Buyer, which describes all claims which have been made by the Company in the
last three years under any workers' compensation, general liability, property or
other insurance policy applicable to the Company or any of its properties. Such
claim information includes the following information with respect to each
accident, loss, or other event:
(i) the identity of the claimant;
(ii) the nature of the claim;
(iii) the date of the occurrence;
(iv) the status as of the report date; and
(v) the amounts paid or expected to be paid or recovered.
(f) Except as set forth on EXHIBIT 3.17(A), there are no pending or
threatened claims under any insurance policy, no will there be any pending or
threatened claims prior to the Closing Dates.
3.18 EMPLOYEE BENEFITS.
(a) The Company is not a party to and does not participate in or have
any liability or contingent liability with respect to:
(i) except as listed on EXHIBIT 3.18, any "employee welfare
benefit plan" or "employee pension benefit plan" as those terms are
respectively defined in the appropriate sections of ERISA;
(ii) except as listed on EXHIBIT 3.18, any retirement or
deferred compensation plan, incentive compensation plan, stock plan,
unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other
fringe benefit arrangements for any current or former employee,
director, consultant or agent, whether pursuant to contract,
arrangement, custom or informal understanding, which does not
constitute an "employee benefit plan" (as defined in the appropriate
sections of ERISA) (referred to collectively hereinafter in this
Section as "arrangements"); or
(iii) except as listed on EXHIBIT 3.18, any employment,
consulting or agency agreement (referred to collectively hereinafter in
this Section as "Agreements").
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(b) A true and correct copy of each of the plans, arrangements, and
agreements listed on EXHIBIT 3.18, and all contracts relating thereto, or to the
funding thereof, including, without limitation, all trust agreements, insurance
contracts, administration contracts, investment management agreements,
subscription and participation agreements, and record keeping agreements, each
as in effect on the date hereof, has been supplied to the Buyer. In the case of
any plan, arrangement, or agreement which is not in written form, the Buyer has
been supplied with an accurate description of such plan, arrangement, or
agreement as in effect on the date hereof. A true and correct copy of the most
recent annual report, actuarial report, accountant's opinion of the plan's
financial statements, summary plan description, and Internal Revenue Service
determination letter with respect to each such plan or arrangement, to the
extent applicable, and a current schedule of assets (and the fair market value
thereof assuming liquidation of any asset which is not readily tradable) held
with respect to any funded plan, arrangement, or agreement has been supplied to
the Buyer, and there have been no material changes in the financial condition of
the respective plans from that stated in the annual reports and actuarial
reports supplied.
(c) As to all plans, arrangements, and agreements listed on EXHIBIT
3.18,
(i) all plans and arrangements comply and have been
administered in form and in operation in all material respects with all
requirements of Law applicable thereto, and there has been no notice
issued by any Governmental Authority questioning or challenging such
compliance;
(ii) plans that are employee pension benefit plans (as are
defined in the appropriate sections of ERISA) comply in form and in
operation with all applicable requirements of sections 401(a) and
501(a) of the Code; there have been no amendments to such plans except
amendments (A) which are the subject of a determination letter issued
with respect thereto by the Internal Revenue Service or (B) with
respect to which the remedial amendment period (within the meaning of
Treas. Reg. ss. 1.401(b)-1) has not expired; and no event has occurred
which will or could give rise to disqualification of any such plan
under such sections or to a tax under section 511 of the Code;
(iii) none of the assets of any plan is invested in employer
securities or employer real property;
(iv) there have been no "prohibited transactions" (as are
defined in the appropriate sections of ERISA or section 4975 of the
Code) with respect to any plan and the Company has not otherwise
engaged in any prohibited transaction;
(v) there has been no act or omission which has given rise to
or may give rise to fines, penalties, taxes, or related charges for
which the Company may be liable;
(vi) none of the payments contemplated by the plans,
arrangements or agreements would, in the aggregate, constitute excess
parachute payments as defined in section 280 G of the Code [without
regard to subsection (b)(4) thereof];
(vii) there are no actions, suits, or claims (other than
routine claims for benefits) pending or threatened involving such
plans, arrangements or agreements or the assets thereof, and no facts
exist which could give rise to any such actions, suits, or claims
(other than routine claims for benefits);
(viii) no plan is subject to Title IV of ERISA;
(ix) each plan which constitutes a "group health plan" (as
defined in the appropriate sections of ERISA) or section 498013(g)(2)
of the Code), including any plans of current and former affiliates
which must be taken into account under section 4980B and 414(t) of the
Code or the appropriate sections of ERISA, has been operated in
compliance with applicable Law, including the group health plan
continuation coverage extent such requirements are applicable;
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(x) actuarially adequate accruals for all obligations under
the plans, arrangements and agreements are reflected in the Financial
Statements and such obligations include a pro rata amount of the
contributions and PBGC premiums which would otherwise have been made in
accordance with past practices and applicable Law for the plan years
which include the date of Closing;
(xi) the Company has no liability or contingent liability
under any plan, arrangement or agreement for providing post-retirement
medical or life insurance benefits, other than statutory liability for
providing group health plan continuation coverage under the appropriate
sections of ERISA and section 4980B (or any predecessor section
thereto) of the Code; and
(xii) there has been no act or omission that would impair the
right or ability of the Company to unilaterally amend or terminate any
plan, arrangement or agreement.
(d) Each employee pension benefit plan which is a multi-employer plan
with respect to which the Company may have any liability (including any
liability attributable to a current or former member of the Company's
"controlled group" as defined in the appropriate sections of ERISA) and the
maximum amount of such liability (determined as if a complete withdrawal
occurred with respect to each of such plans immediately after the Closing Date)
is listed on SCHEDULE 3.18.
(e) With respect to such plans, except as further listed on SCHEDULE
3.18,
(i) all contributions have been made as required by the terms
of the plans, the terms of any collective bargaining agreements, and
applicable Law;
(ii) the Company has not withdrawn, partially withdrawn, or
received any notice of any claim or demand for withdrawal liability or
partial withdrawal liability; and
(iii) the Company has not received any notice that any such
plan is in reorganization, that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of any excise
tax, that any such plan is or has been funded at a rate less than that
required under section 412 of the Code, or that any such plan is or may
become insolvent.
3.19 EMPLOYMENT AND LABOR MATTERS.
(a) EXHIBIT 3.19 contains a true, complete and accurate list of the
names, titles, annual compensation (including all bonuses and similar payments
made with respect to each such individual for the current and preceding fiscal
years) of all directors, officers and employees of the Company.
(b) The Company has and currently is conducting its business in full
compliance with all Laws relating to employment and employment practices, terms
and conditions of employment, wages and hours, affirmative action, and
nondiscrimination in employment.
(c) Except as disclosed on EXHIBIT 3.19, the relationships of the
Company with its employees are good. There is, and during the past five years
there has been, no labor strike, dispute, slow-down, work stoppage or other
labor difficulty actually pending or threatened against or involving the
Company, and no attempt is currently being made or during the past three years
has been made to organize any employees of the Company to form or enter a labor
union or similar organization.
(d) EXHIBIT 3.19 contains a list of all grievances by employees during
the past three years which have resulted in a significant change in work
practices or contract interpretation or terms or resulted in arbitration.
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3.20 TAXES.
(a) The amounts provided as a liability on the Financial Statements for
all Taxes are, and will be, adequate to cover all unpaid liabilities for all
Taxes, whether or not disputed, that have accrued with respect to or are
applicable to the periods ended on and including the Closing Date or to any
years and periods prior thereto and for which the Company may be directly or
contingently liable in its own right or as a transferee of the assets of, or
successor to, any Person.
(b) The Company has not incurred any Tax liabilities for any taxable
year for which the applicable statute of limitations has not expired.
(c) There are no Tax Liens (other than Liens for current Taxes not yet
due and payable) upon the properties or assets of the Company.
(d) Except as set forth on EXHIBIT 3.20, the Company has not granted or
been requested to grant any waiver of any statutes of limitations applicable to
any claim for Taxes.
(e) As at the date of this Agreement, and prior to the Closing Date,
all federal, state, local and foreign income, corporation and other Tax Returns
have been, and will be, filed for the Company, and all other filings in respect
of Taxes have been, and will be, made for the Company, for all periods as
required by Law.
(f) As at the date of this Agreement, and prior to the Closing Date,
all Information Returns required to be filed by the Company have been, or will
be, filed, and all statements required to be furnished to payees by the Company
have been, or will be, furnished to such payees, and the information set forth
on such Information Returns and statements is, and will be, true, complete and
correct.
(g) As at the date of this Agreement, and prior to the Closing Date,
all Taxes shown as due on all Tax Returns and other filings have been, and will
be, paid.
(h) As at the date of this Agreement, and prior to the Closing Date,
all Taxes which the Company is required by Law to withhold or collect, including
without limitation, sales and use taxes, and amounts required to be withheld for
Taxes of employees and other withholding taxes, have been, and will be, withheld
or collected and, to the extent required, have been, or will be, paid over to
the proper Governmental Authorities or are held in separate bank accounts for
such purpose.
(i) As at the date of this Agreement, and prior to the Closing Date,
each Tax Return and filing is, and will be, true and correct, and the Company
does not nor will have any additional liability for Taxes with respect to any
Tax Return or other filing heretofore filed or which was required by Law to be
filed, other than as reflected as liabilities on the Financial Statements.
(j) Except as set forth in EXHIBIT 3.20, none of the Tax Returns or
other filings that include the operations of the Company has ever been audited
or investigated by any Governmental Authority, and no facts exist which would
constitute grounds for the assessment of any additional Taxes by any
Governmental Authority with respect to the taxable years covered in such Tax
Returns and filings.
(k) Except as set forth in EXHIBIT 3.20, no material issues have been
raised in any examination by any Governmental Authority with respect to the
business and operations of the Company which, by application of similar
principles, reasonably could be expected to result in a proposed adjustment to
the liability for Taxes for any other period not so examined.
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(l) As at the date of this Agreement, and prior to the Closing Date,
the Seller is not, nor will be, a "foreign person" as defined in the Code.
(m) Except as set forth in EXHIBIT 3.20, the Company is not, nor will
be, a party to or is, or will be, otherwise subject to any arrangement having
the effect of or giving rise to the recognition of a deduction or loss in a
taxable period ending on or before the Closing Date, and a corresponding
recognition of taxable income or gain in a taxable period ending after the
Closing Date, or any other arrangement that would have the effect of or give
rise to the recognition of taxable income or gain in a taxable period ending
after the Closing Date without the receipt of or entitlement to a corresponding
amount of cash.
(n) Except as set forth in EXHIBIT 3.20, the Company is not subject to
any joint venture, partnership or other arrangement or contract which is treated
as a partnership for federal income tax purposes. Except for any tax-sharing
agreement which is attached to EXHIBIT 3.20 as an exhibit, the Company is not a
party to any tax-sharing agreement.
(o) Except as set forth on EXHIBIT 3.20, none of the assets of the
Company constitutes tax-exempt bond financed property or tax-exempt use property
within the meaning of Section 168 of the Code, and none of the assets reflected
on the Financial Statements is subject to a lease, safe harbor lease or other
arrangement as a result of which the Company is not treated as the owner for
federal income tax purposes.
(p) The Company has not made or become obligated to make, and will not
as a result of any event connected with any transaction contemplated herein
become obligated to make, any "excess parachute payment" as defined in section
280 G of the code [without regard to subsection (b)(4) thereof].
(q) As at the date of this Agreement, and prior to the Closing Date,
the basis of all depreciable or amortizable assets, and the methods used in
determining allowable depreciation or amortization (including cost recovery)
deductions of the Company, are, and will be, correct and in compliance with the
Code and the regulations thereunder.
3.21 ENVIRONMENTAL MATTERS.
Except as disclosed in EXHIBIT 3.21,
(a) the business, operations and facilities (whether owned or leased)
of the Company, and all existing uses of and activities on or at any of the
properties or facilities (whether owned or leased) of the Company, are in
material compliance with all Environmental Laws in effect as of the date hereof,
and no condition exists or event has occurred which, with or without notice or
the passage of time or both, would constitute a violation of or give rise to any
Lien under any Environmental Law, and there is no reason for Company or the
Seller to believe otherwise, irrespective of whether or not they believe the
claim is valid or not;
(b) the Company is in possession of all Environmental Permits necessary
or desirable for the conduct or operation of its business (or any part thereof),
and is in material compliance with all of the requirements, conditions and
limitations included in such Environmental Permits, and there is no reason for
Company or the Seller to believe otherwise, irrespective of whether or not they
believe the claim is valid or not;
(c) there is no, and the Company has not used or stored any, Hazardous
Material in, on, or at any of the properties or facilities now or previously
owned or leased by the Company except for inventories of substances listed on
EXHIBIT 3.21 which are used or are to be used in the ordinary course of business
(which inventories have been stored, used and disposed of in accordance with all
applicable Environmental Laws and Environmental Permits, including all so-called
"Right To Know Laws"), and there is no reason for Company or the Seller to
believe otherwise, irrespective of whether or not they believe the claim is
valid or not;
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(d) the Company has not received any notice from any Governmental
Authority or any other Person that any past or present aspect of the business,
operations or facilities (whether owned or leased) of the Company is in
violation of any Environmental Law or Environmental Permit, or that the Company
is responsible or liable (or potentially responsible or liable) for the
investigation, clean up or remediation of any Hazardous Materials at any
location, and there is no reason for the Company or the Seller to believe that
such a notice may be sent or that the Company may be responsible for an
investigation, clean up, or remediation;
(e) the Company has not at any time deposited or incorporated any
Hazardous Material into, on, beneath, or adjacent to any property, and there is
no reason for the Company or the Seller to believe otherwise, irrespective of
whether or not they believe the claim is valid or not;
(f) the Company is not the subject of any litigation or proceedings in
any forum, judicial or administrative, involving a demand for damages,
injunctive relief, penalties, or other potential liability with respect to
violations of or liability under any Environmental Law, and there is no reason
for the Company or the Seller to believe that any such proceedings are
threatened, irrespective of whether or not they believe the litigation or
proceeding is valid or not;
(g) the Company has timely filed all reports and notifications required
to be filed with respect to all of its operations, properties and facilities
(whether owned or leased) and has generated and maintained all required records
and data under all applicable Environmental Laws;
(h) neither the Company nor any predecessor thereof has transported or
arranged for the transportation of any Hazardous Material to any location which
is listed or proposed for listing on the National Priorities List pursuant to
CERCLA or on any similar state list; and
(i) no condition exists or has existed or event has occurred with
respect to
(i) any property that was at any time owned or leased, or any
direct or indirect subsidiary that was at any time owned, by the
Company, any predecessor to the Company or any Person that is or was an
Affiliate of the Company, which property or subsidiary has been sold,
transferred or disposed or for which any lease has terminated, and
there is no reason for the Company or the Seller to believe otherwise,
irrespective of whether or not they believe the condition is valid or
not; or
(ii) any predecessor to the Company, that could [in the case
of either of the foregoing clauses (i) or (ii)], with or without
notice, passage of time or both, give rise to any present or future
liability of the Company pursuant to any Environmental Law, and there
is no reason for the Company or the Seller to believe otherwise,
irrespective of whether or not they believe the condition is valid or
not.
3.22 LITIGATION.
(a) Except as disclosed in EXHIBIT 3.22,
(i) there are no actions, suits, arbitrations, regulatory
proceedings or other litigation, proceedings or governmental
investigations pending or threatened against or affecting the Company
or any of its officers, directors, employees, agents or stockholders
thereof in their capacity as such, or any of the Company's properties
or businesses, and there is no reason for the Company or the Seller to
believe otherwise, irrespective of whether or not they believe the
actions, suits, arbitrations, regulatory proceedings or other
litigation, proceedings or governmental investigations are valid or
not;
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(ii) all of the proceedings pending or threatened against the
Company or the Seller are fully covered by insurance policies (or other
indemnification agreements with third parties) and are being defended
by the insurers (or such third parties), subject to such deductibles as
are set forth in such SCHEDULE 3.22; and there is no reason for the
Company or the Seller to believe otherwise, irrespective of whether or
not they believe the proceedings are valid or not; and
(iii) neither the Company nor the Seller is subject to any
order, judgment, decree, injunction, stipulation or consent order of or
with any court or other Governmental Authority, and neither the Company
nor the Seller have entered into any agreement to settle or compromise
any proceeding pending or threatened against it or them which has
involved any obligation other than the payment of money or for which
the Company or the Seller have any continuing obligation, and there is
no reason for the Company or the Seller to believe otherwise,
irrespective of whether or not they believe the order, judgment,
decree, injunction, stipulation or consent order is valid or not.
(b) There are no claims, actions, suits, proceedings or investigations
pending or threatened by or against the Company or the Seller with respect to
this Agreement or the Related Agreements, or in connection with the transactions
contemplated hereby or thereby, and no Person has objected or threatened to
object thereto, and there is no reason for the Company or the Seller to believe
otherwise, irrespective of whether or not they believe the claims, actions,
suits, proceedings or investigations are valid or not.
3.23 NO CONFLICT OF INTEREST.
Except as disclosed on EXHIBIT 3.23,
(a) neither the Seller nor any of his Affiliates have or claim to have
any direct or indirect interest in any tangible or intangible property used in
the business of the Company, except as a holder of Shares;
(b) neither the Seller nor any of his Affiliates have any direct or
indirect interest in any other Person which conducts a business similar to, has
any Contract or arrangement with, or does business or is involved in any way
with, the Company, except for the ownership of less than 2% of any class of
securities of any publicly held corporation; and
(c) EXHIBIT 3.22 contains a complete and accurate description of all
such Persons, interests, arrangements and other matters.
3.24 BANK ACCOUNTS; HOLDERS OF POWERS OF ATTORNEY.
EXHIBIT 3.24 sets forth the names locations, and account numbers of
each bank or other financial institution at which the Company has an account or
safe deposit box, the names of all Persons authorized to draw thereon or have
access thereto, and the names of all Persons, if any, now holding powers of
attorney or comparable delegation of authority from the Company, together with a
summary statement thereof.
3.25 CUSTOMERS, SUPPLIERS, ETC.
(a) SCHEDULE 3.25 sets forth a list of the ten largest customers of the
Company in terms of revenue during each of
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(i) the calendar year ended December 31, 2000, and
(ii) the calendar year ended December 31, 2000 (collectively,
the "Major Customers"), showing the total revenue received in each such
period from each such customer.
(b) Except to the extent set forth in EXHIBIT 3.24, there has not been
any adverse change in the business relationship, and there has been no material
dispute, between the Company and any Major Customer or major supplier, agent or
sales representative, and there are no indications that any Major Customer
intends to reduce its purchases from the Company.
3.26 CLAIMS AGAINST THE SELLER, OFFICERS AND DIRECTORS OF THE COMPANY, AND OTHER
PERSONS
There are no pending or threatened claims against any Person which
could give rise to any claim for indemnification against the Company, and there
is no reason for the Company or the Seller to believe otherwise, irrespective of
whether or not they believe the claim is valid or not.
3.27 IMPROPER AND OTHER PAYMENTS.
Except as set forth on EXHIBIT 3.27,
(a) neither the Company nor the Seller, nor any director, officer,
employee, agent or representative of the Company, nor any Affiliate of them, nor
any Person acting on behalf of any of them, has made, paid, or received any
bribes, kickbacks or other similar payments to or from any Person, whether
lawful or unlawful;
(b) no contributions have been made, directly or indirectly, to a
domestic or foreign political party or candidate; and
(c) no improper foreign payment (as defined in the Foreign Corrupt
Practices Act) has been made by any of said persons or entities.
3.28 DUE DILIGENCE MATERIALS.
Except as provided in EXHIBIT 3.28, the Company and the Seller have
provided to the Buyer or its representatives, in accordance with the terms of
SECTION 5.2, all documents of the character and type requested by the Buyer in
connection with its "due diligence" investigation of the Company and the Seller,
and there are no documents in the possession of the Seller, of the Company or
any of their Affiliates or respective agents or representatives of a character
or type described in such requests which have not been so provided to the Buyer
or its representatives.
3.29 NO DEFAULTS OR VIOLATIONS.
(a) Except as disclosed on EXHIBIT 3.29:
(i) the Company has not breached any provision of, nor is in
default under, the terms of any Contract to which it is a party or
under which it has any rights or by which it is bound;
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(ii) no other party to any such Contract has breached such
Contract or is in default thereunder;
(iii) neither the Company nor any other such party to such a
Contract has given notice to the other respecting a claimed breach or
default; and
(iv) there is no reason for the Company or the Seller to
believe otherwise, irrespective of whether or not they believe the
claim is valid or not.
(b) Except as disclosed on EXHIBIT 3.29, the Company and the Seller,
are, and at the Closing will be, in compliance with, and no violation exists,
nor will exist, under any and all Laws applicable to the Company and to the
Seller (insofar as such non-compliance or violation or Laws may effect ability
of any one of them to sell and convey the Shares to the Buyer and to otherwise
consummate the transactions contemplated hereby), and there is no reason for the
Company or the Seller to believe otherwise, irrespective of whether or not they
believe the violation is valid or not.
(c) Except as disclosed on EXHIBIT 3.29, no notice from any
Governmental Authority has been received by the Company claiming any violation
of any Law (including any building, zoning or other ordinance) or requiring any
work, construction, or expenditure, or asserting any Tax, assessment or penalty,
and there is no reason for the Company or the Seller to believe that any such
notice may be sent, that any work, construction, or expenditure will be
required, or that any Tax, assessment, or penalty may be asserted or assessed,
irrespective of whether or not they believe the claim is valid or not.
3.30 ACCURACY OF STATEMENTS.
(a) No representation or warranty by the Company or by the Seller
contained in this Agreement or the Related Agreements or in any other written
statement, information, material or certificate furnished or to be furnished to
the Buyer pursuant hereto or in connection with the transactions contemplated
hereby by the Company or by the Seller 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 therein or herein not misleading,
when all are taken together as a whole, and it is agreed that, in the event of
any inconsistency between this Agreement and any other writings, this Agreement
shall control.
(b) The Seller and the Company know of no information or fact which has
or would have an adverse effect on the financial condition, business, or
business prospects of the Company, or on the ability of the Seller to sell and
convey the Shares to the Buyer, which has not been disclosed to the Buyer, and
there is no reason for Company or the Seller to believe otherwise, irrespective
of whether or not they believe the claim is valid or not.
3.31 INVESTIGATION.
It shall be no defense to an action for breach of this Agreement or any
Related Agreement that:
(a) the Buyer or its agents have (or have not) made investigations into
the affairs of the Company, or
(b) that the Company or the Seller (or any one of them) could not have
known of the misrepresentation or breach of warranty.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
In order to induce the Seller to enter into this Agreement, the Buyer
represents and warrants to the Seller, as at the date of this Agreement and as
at the Closing Date (as if such representations and warranties were remade on
the Closing Date), as follows:
4.1 DUE INCORPORATION.
The Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with all requisite power and
authority to own, lease and operate its properties and to carry on its business
as they are now being owned, leased, operated and conducted.
4.2 DUE AUTHORIZATION.
(a) The Buyer has full power and authority to enter into this Agreement
and the Related Agreements and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by the Buyer of this
Agreement and Related Agreements have been duly and validly approved by the
board of directors of the Buyer and no other actions or proceedings on the part
of the Buyer are necessary to authorize this Agreement, the Related Agreements
and the transactions contemplated hereby and thereby.
(b) The Buyer has duly and validly executed and delivered this
Agreement and has duly and validly executed and delivered (or prior to or at the
Closing Date will duly and validly execute and deliver) the Related Agreements.
(c) This Agreement and the Related Agreements constitute legal, valid
and binding obligations of the Buyer, in each case enforceable in accordance
with their respective terms, except as such enforce ability may be limited by
applicable. bankruptcy, insolvency, moratorium, reorganization or similar Laws
in effect which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
4.3 CONSENTS AND APPROVALS; AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Except as set forth on SCHEDULE 4.3, no consent, authorization or
approval of, filing or registration with, or cooperation from, any Governmental
Authority or any other Person not a party to this Agreement is necessary in
connection with the execution, delivery and performance by the Buyer of this
Agreement, its respective Related Agreements or the consummation of the
transactions contemplated hereby, or thereby.
(b) Except as set forth on SCHEDULE 4.3, the execution, delivery and
performance by the Buyer of this Agreement and its respective Related Agreements
does not and will not, and the consummation of the transactions contemplated
hereby and thereby does not and will not,
(i) violate any Law;
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(ii) violate or conflict with, result in a breach or
termination of, constitute a default or give any third party any
additional right (including a termination right) under, permit
cancellation of, result in the creation of any Lien upon any of the
assets or properties of the Buyer under, or result in or constitute a
circumstance which, with or without notice or lapse of time or both,
would constitute any of the foregoing under any Contract to which the
Buyer is a party or by which the Buyer or any of its assets or
properties are bound;
(iii) permit the acceleration of the maturity of any
indebtedness of the Buyer or indebtedness secured by its respective
assets or properties; or
(iv) violate or conflict with any provision of any of the
certificate of incorporation, charter, bylaws or similar organizational
instruments of the Buyer.
ARTICLE V
COVENANTS
5.1 IMPLEMENTING AGREEMENT.
(a) Subject to the terms and conditions hereof, each Party hereto shall
use its reasonable best efforts to take all action required of it to fulfill its
obligations under the terms of this Agreement and to facilitate the consummation
of the transactions contemplated hereby.
(b) The Seller agrees that unless this Agreement is terminated in
accordance with the provisions of SECTION 9.1, the Seller will not encumber the
Shares, will not sell the Shares to any Person other than the Buyer (or an
Affiliate of the Buyer), and will not take any other action which would have the
effect of preventing or disabling the Seller's respective performance of his
obligations under this Agreement.
5.2. ACCESS TO INFORMATION AND FACILITIES.
(a) From and after the date of this Agreement or such earlier time as
the Buyer and the Seller shall have mutually agreed, the Seller shall, and shall
cause the Company to give the Buyer and the Buyer's representatives unrestricted
access during normal business hours to all of the facilities, properties, books,
contracts, commitments and records of the Company, and the Seller shall make the
officers and employees of the Company available to the Buyer and its
representatives as the Buyer and its representatives shall from time to time
request. The Buyer and its representatives will be furnished with any and all
information concerning the Company which the Buyer or its representatives
reasonably request.
(b) Except as may be reasonably necessary to carry out this Agreement
and the transactions contemplated hereby, the Buyer will not, will cause its
Affiliates not to, and will instruct its and its Affiliates' agents and
financing sources not to disclose the Company Confidential Information to any
Person other than the Buyer's employees, agents and financing sources on a "need
to know" basis without the prior consent of the Company, unless compelled to
disclose any such the Company Confidential Information by judicial or
administrative process or, in the opinion of the Buyer's counsel, by other
requirements of Law.
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(c) Except as may be reasonably necessary to carry out this Agreement
and the transactions contemplated hereby, the Seller will not, will cause their
Affiliates not to, and will instruct their, and their Affiliates' agents and
financing sources to not disclose any the Buyer Confidential Information to any
Person other than Seller or the Company's employees, agents and financing
sources without the prior consent of the Buyer, unless compelled to disclose any
such the Buyer Confidential information by judicial or administrative process
or, in the opinion of the Seller's counsel, by other requirements of Law.
5.3 PRESERVATION OF BUSINESS.
(a) From the date of this Agreement until the Closing Date, the Seller
shall cause the Company to operate only in the ordinary and usual course of
business and consistent with past practice, and the Seller and the Company shall
use their best efforts to:
(i) maintain the assets of the Company in substantially their
current state of repair, excepting normal wear and tear, and preserve
intact the present business organization and personnel of the Company;
(ii) preserve the goodwill and advantageous relationships of
the Company with customers, suppliers, independent contractors,
employees and other Persons material to the operation of its business;
and
(iii) not permit any action or omission which would cause any
of the representations or warranties of the Seller or the Company
contained herein to become inaccurate or any of the covenants of the
Seller to be breached.
(b) From the date of this Agreement until the Closing Date, and without
limiting the generality of the foregoing, the Company will not, without the
prior written consent of the Buyer,
(i) incur any obligation or enter into any Contract which
requires a payment by the Company in excess of $100.00 or enter into
any Contract to provide for the delivery of goods or the performance of
services, or any combination thereof, by the Company, having a value in
excess of $100.00;
(ii) sell, transfer, convey, lease, assign or otherwise
dispose of any of its assets or properties;
(iii) waive, release or cancel any claims against third
parties or debts owing to it, or any rights which have value;
(iv) make any changes in its accounting systems, policies,
principles or practices;
(v) enter into, authorize, or permit any transaction with the
Seller or any Affiliate of the Seller;
(vi) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, convertible or exchangeable securities,
commitments, subscriptions, rights to purchase or otherwise), any of
its Securities, or amend any of the terms of any of its Securities;
(vii) split, combine, or reclassify any shares of its
Securities, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its securities, or redeem or otherwise acquire
any Securities of the Company or of any other Person;
(viii) make any borrowing, incur any debt, or assume,
guarantee, endorse or otherwise become
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liable (whether directly, contingently or otherwise) for the
obligations of any other Person, or make any payment or repayment in
respect of any indebtedness;
(ix) make any loans, advances or capital contributions to, or
investments in, any other Person;
(x) enter into, adopt, amend or terminate any bonus, profit
sharing, compensation, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit
or welfare of any director, officer or employee, or increase in any
manner the compensation or fringe benefits of any director or officer;
(xi) lease or encumber any assets;
(xii) authorize or make any capital expenditure;
(xiii) make any Tax election or settle or compromise any
federal, state, local or foreign Tax liability, or waive or extend the
statute of limitations in respect of any such Taxes;
(xiv) pay any amount, perform any obligation or agree to pay
any amount or perform any obligation, in settlement or compromise of
any suits or claims of liability against the Company or its Affiliates
or any of its directors, officers, employees, agents, or shareholders;
(xv) settle or compromise any suits or claims the Company may
have against any Person, including its Affiliates or any of its
directors, officers, employees, agents, or shareholders; or
(xvi) terminate, modify, amend or otherwise alter or change
any of the terms or provisions of any contract, or pay any amount not
required by Law or by any contract.
5.4 CONSENTS AND APPROVALS.
(a) The Seller shall use their best efforts, and shall cause the
Company to use its best efforts, to obtain all consents, approvals, certificates
and other documents required in connection with the performance by any such
parties of this Agreement and their respective Related Agreements and the
consummation of the transactions contemplated hereby and thereby, including all
consents and approvals by each party to any of the Contracts referred to in
EXHIBIT 3.3; provided, however, that no contact will be made by the Seller or
the Company (or any representative of any of such Parties) with any third party
to obtain any such consent or approval except in accordance with a plan
previously agreed to by the Buyer.
(b) The Seller shall, and shall cause the Company to, make all filings,
applications, statements and reports to all Governmental Authorities and other
Persons which are required to be made prior to the Closing Date by or on behalf
of the Seller, the Company or any of their respective Affiliates pursuant to any
applicable Law or contract in connection with this Agreement or any of their
respective Related Agreements and the transactions contemplated hereby and
thereby, including prompt filings under the HSR Act, if applicable, and
expedited submission of all materials required by any Governmental Authority in
connection with such filings.
(c) The Buyer shall make all filings, applications, statements and
reports to all Governmental Authorities and other Persons which are required to
be made prior to the Closing Date by or on behalf of the Buyer or any of its
Affiliates pursuant to any applicable Law or contract in connection with this
Agreement or any Related Agreement and the transactions contemplated hereby and
thereby, including prompt filings under the HSR Act, if applicable and expedited
submission of all materials required by any Governmental Authority in connection
with such filings.
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(d) The Seller shall, and shall cause the Company to, make all filings,
applications, statements and reports to the SEC and the NASD which are required
to be made prior to the Closing Date by or on behalf of the Seller, the Company
or any of their respective Affiliates pursuant to any applicable Law or contract
in connection with this Agreement or any of their respective Related Agreements
and the transactions contemplated hereby and thereby, including the prompt and
timely filings of Forms 3, 4 and 5 under the Exchange Act, and Form 15c-211
under SEC Section 15(c) under the Exchange Act, and the expedited submission of
all materials required by any Governmental Authority in connection with such
filings.
5.5 MAINTENANCE OF INSURANCE.
The Seller shall cause the Company to continue to carry its existing
insurance through the Closing Date, and shall not allow any breach, default,
termination or cancellation of such insurance policies or agreements to occur or
exist.
5.6 RESIGNATION OF OFFICERS AND DIRECTORS.
The Seller shall cause each officer and member of the Board of
Directors of, and each trustee or fiduciary of any plan or arrangement involving
employee benefits of, the Company, if so requested by the Buyer, to tender his
resignation from such position effective as of the Closing Date.
5.7 BANK ACCOUNTS.
Prior to, and, then, on the day of the Closing, the Seller will
arrange:
(a) for the Company's then current bank account to be closed;
(b) for all funds from said bank account to be transferred into a bank
account to be selected by the Buyer; and
(c) for the delivery of all bank account statements and records
pertaining to the Company's (former) bank account to the Buyer.
5.8 SUPPLEMENTAL INFORMATION.
(a) From time to time prior to the Closing Date, the Seller and the
Company will promptly disclose in writing to the Buyer any matter hereafter
arising which, if existing, occurring or known at the date of this Agreement
would have been required to be disclosed to the Buyer or which would render
inaccurate any of the representations, warranties or statements set forth
herein.
(b) From time to time prior to the Closing Date, the Buyer will
promptly disclose in writing to the Seller any matter hereafter arising which,
if existing, occurring or known at the date of this Agreement would have been
required to be disclosed to the Seller or which would render inaccurate any of
the representations, warranties or statements set forth in ARTICLE IV hereof.
(c) No information provided to a Party pursuant to this Section shall
be deemed to cure any breach of any representation, warranty or covenant made in
this Agreement or the Related Agreements.
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5.9 NON-COMPETITION.
The Seller agrees that the following provisions of this Section are
intimately linked to the other transactions contemplated by this Agreement, and
the Seller acknowledges that the Buyer would not enter into this Agreement
without the Seller agreeing to be bound by the following provisions from the
date hereof until the "Ending Date", as hereinafter defined:
(a) Except as expressly approved (which approval shall not be
unreasonably withheld) by the Buyer, the Seller agrees that until August 27,
2003 (the "Ending Date") that he shall not, directly or indirectly,
(i) except as an officer or employee of the Company (or any
successor corporation into which it may be merged or consolidated),
engage in, control, advise, manage, serve as a director, officer, or
employee of, act as a consultant to, provide any funds for, receive any
economic benefit from, have any financial interest in (except
investment in not more than 2% of any class of securities of any
publicly traded Company) or exert any influence upon (whether by
guarantee, loan or otherwise), any business which conducts activities
in the Territory (as hereinafter defined) similar to those conducted by
the Company provided that this restriction shall not apply to any
activity in connection with a business that does not actually or
potentially compete with the activities of the Company;
(ii) except in connection with any duties as an officer or
employee of the Company, solicit, divert or attempt to solicit or
divert any party who is or was a customer or supplier of the Company,
provided that this restriction shall not apply to any activity on
behalf of a business that does not actually or potentially compete with
the activities of the Company;
(iii) employ, solicit for employment or encourage to leave
their employment, in each case, either as an employee, agent or
representative, any person who was during the two-year period prior to
such employment, solicitation or encouragement or is an officer,
employee, agent or representative of the Company;
(iv) disturb, or attempt to disturb, any business relationship
between any third party and the Company; or
(v) make any statement to any third party, including the press
or media, likely to result in adverse publicity for the Company.
(b) In the event of actual or threatened breach of the provisions of
this Section, the Buyer, in addition to any other remedies available to it for
such breach or threatened breach, including the recovery of damages, shall be
entitled to an injunction restraining the Seller, as appropriate, from such
conduct.
(c) If at any time any of the provisions of this Section shall be
determined to be invalid or unenforceable by reason of being vague or
unreasonable as to duration, area, scope of activity or otherwise, then this
Section shall be considered divisible (with the other provisions to remain in
full force and effect) and the invalid or unenforceable provisions shall become
and be deemed to be immediately amended to include only such time, area, scope
of activity and other restrictions, as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter, and
the Seller expressly agrees that this Agreement, as so amended, shall be valid
and binding as though any invalid or unenforceable provision had not been
included herein.
(d) The provisions of this Section shall be in addition to, and not in
limitation of, any other provisions contained in any other agreement restricting
competition by the Seller.
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(e) The Seller shall not, directly or indirectly,
(i) disclose, or
(ii) use for their own benefit, or for the benefit of any
other Person (other than, in the case of (A) below, the Company or an
Affiliate of the Company),
(A) any secret or confidential information, customer
lists, supplier information, or any other data of or
pertaining to the Company or to any Affiliate of the Company,
their respective businesses or financial affairs, or their
products which are not a matter of public knowledge, or
(B) any Buyer Confidential Information (collectively,
the "Confidential Information").
(f) The Seller agrees that upon the request of the Company on or after
the Closing Date, he will immediately deliver to the Company all original
papers, books, manuals, lists, correspondence and documents containing or
relating to the Confidential Information, together with all copies thereof,
except that the Seller may keep copies of such materials as shall be necessary
to permit the Seller to prepare his tax returns or to comply with any other
legal requirements.
5.10 EXCLUSIVITY.
(a) Neither the Seller, nor the Company, nor any of their respective
directors, officers, employees, representatives, agents or Affiliates shall,
directly or indirectly, solicit, initiate, encourage, respond favorably to,
permit or condone inquiries or proposals from, or provide any Confidential
Information to, or participate in any discussions or negotiations with, any
Person (other than the Buyer, and the respective directors, officers, employees,
representatives and agents) concerning:
(i) any merger, sale of assets not in the ordinary course of
business, acquisition, business combination, change of control or other
similar transaction involving the Company, or
(ii) any purchase or other acquisition by any Person of the
Shares, or
(iii) any sale, or issuance by the Company of any shares of
its Securities.
(b) The Seller will promptly advise the Buyer of, and communicate to
the Buyer, the terms and conditions of (and the identity of the Person making),
any such inquiry or proposal received.
5.11 USE OF NAME.
From and after the Closing Date, neither the Seller nor any of his
Affiliates will directly or indirectly use in any manner any trade name,
trademark, service xxxx or logo used by the Company or any word or logo that is
similar in sound or appearance.
5.12 TAX INDEMNITY.
The Sellers, and each of them, agree to jointly and severally indemnify
the Buyer against, and agree to hold it harmless from, any and all liabilities
for Taxes that have become due and payable or which have accrued with respect to
the Company that have not been paid prior to the Closing Date or which have not
been reserved on the
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Financial Statements. (Any Taxes attributable to the operations of the Company
payable as a result of an audit of any Tax Return shall be deemed to have
accrued in the period to which such Taxes are attributable.)
5.13 TERMINATION OF CERTAIN AGREEMENTS.
The Seller shall, and the Seller agrees that he shall cause his
Affiliates and the Company to, and that his Affiliates and the Company shall,
effective as of the Closing Date, without any cost to the Company, terminate,
rescind, cancel and render void and of no effect all of the Contracts between
the Company, on the one hand, and the Seller or any of his Affiliates, as the
case may be (other than the Company), on the other hand, except for those
Contracts listed in EXHIBIT 5.13 and those Contracts entered into pursuant to
this Agreement.
5.14 SELLER NOT TO INHIBIT.
Neither the Seller nor the Company will take any action (nor omit to
take any action) which would adversely affect the ability of the Seller to sell
and convey the Shares to the Buyer or adversely affect the business or business
prospects of the Company.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under ARTICLE II of this Agreement are
subject to the satisfaction or waiver by the Buyer of the following conditions
precedent on or before the Closing Date unless otherwise specified:
6.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING DATE.
The representations and warranties of the Seller and the Company
contained herein shall have been accurate, true and correct on and as of the
date of this Agreement, and shall also be accurate, true and correct on and as
at the Closing Date with the same force and effect as though made by the Seller
and the Company on the Closing Date.
6.2 COMPLIANCE WITH AGREEMENTS AND COVENANTS.
The Seller and the Company shall have performed and complied with all
of their respective covenants, obligations and agreements contained in this
Agreement to be performed and complied with by them on or prior to the Closing
Date.
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6.3 CONSENTS AND APPROVALS.
The Buyer shall have received written evidence satisfactory to the
Buyer that all consents and approvals required for the consummation of the
transactions contemplated hereby or the ownership and operation by the Buyer of
the Company and its business have been obtained, and all required filings have
been made, including those set forth on EXHIBIT 3.3.
6.4 EXPIRATION OF HSR WAITING PERIOD (IF ANY).
The applicable waiting period, if any, under the HSR Act shall have
expired or been earlier terminated without action by the justice Department or
the Federal Trade Commission to prevent consummation of the transactions
contemplated by this Agreement.
6.5 DOCUMENTS.
The Buyer shall have received all of the agreements, documents and
items specified in SECTION 8.2.
6.6 OPINION OF COUNSEL.
The Buyer shall have received the written opinions, dated as at the
Closing Date, from Xxx Xxxxxx, Esq., Xxxxxxxxxx Xxxxxxx Xxxxx, Xxxxx 000, 12773
Xxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, counsel to the Seller and to
the Company, to the effect that:
(a) The Company has been duly incorporated and is existing as a
corporation in good standing under the laws of Delaware.
(b) The Company is legally authorized to carry on its business under
the laws of Delaware.
(c) The Shares have been duly issued and are fully paid and
nonassessable.
(d) The Seller and the Company have the full right, power and authority
to enter into this Agreement and to carry out and consummate the transactions
contemplated herein, the Seller has full power and authority to sell, assign, or
transfer the Shares, and delivery of such shares to the Buyer will transfer to
the Buyer title thereto free and clear of all liens, pledges, encumbrances,
security interests, or claims.
(e) This Agreement has been duly executed and delivered by the Seller
and the Company, and this Agreement constitutes the legal, valid and binding
obligation of the Seller and of the Company enforceable against the Company and
the Seller in accordance with its respective terms.
(f) The approval of the shareholders of the Company is not required in
order for the Seller or for the Company to consummate the transactions
contemplated herein.
(g) The execution, delivery and performance of this Agreement by the
Company and the Seller, and the consummation of the transactions contemplated
hereby, will not:
(i) violate any provisions of the Articles of Incorporation,
as amended, or the By-laws of the Company;
(ii) violate any provision of applicable Law or rule or
regulation of any Governmental Authority;
(iii) permit any Governmental Authority to impose any
restrictions or limitations of any nature on any of the Seller or the
Company or the Buyer with respect to the transactions contemplated
hereby;
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(iv) violate, conflict with, or result in the breach of any of
the terms of, result in a material modification of, or otherwise give
any other contracting party or Person the right to terminate, or
constitute a default under, any contract or other agreement to which
the Company or the Selling Shareholder is a party or by or to which it
or they or any of their assets or properties may be bound or subject;
(v) violate any order, judgment, injunction, award or decree
of any court, arbitrator or Governmental Authority against, or binding
upon, the Company or the Selling Shareholder or to which any of their
assets or properties may be bound or subject;
(vi) result in the creation of any security interest, lien,
encumbrance, adverse claim, proscription or restriction on any property
or asset (whether real, personal, mixed, tangible or intangible),
right, contract, agreement or business of the Seller or the Company; or
(vi) violate, conflict with, modify or cause any default under
or acceleration of (or give any party any right to declare any default
or acceleration upon notice or passage of time or both), in whole or in
part, any charter, article of incorporation, bylaw, mortgage, lien,
deed of trust, indenture, lease, agreement, instrument, order,
injunction, decree, judgment, law or any other restriction of any kind
to which either the Seller or the Company are a party or by means of
which either of them or any of their properties may be bound or
subject;
(h) As at the date of this Agreement, and, as at the date of the
Closing,
(i) the Seller had, has, and will have, full and valid title
and control of the Shares;
(ii) there was, is, and will be no existing impediment or
encumbrance to the sale and transfer of such Shares to the Buyer;
(iii) and on delivery to the Buyer of the Shares:
(A) all of the Shares will have been, are, and will
be free and clear of all taxes, liens, encumbrances, charges
or assessments of any kind and shall not be subject to
preemptive rights, tag-along rights, or similar rights of any
shareholder of the Company;
(B) all of the Shares will have been, are, and will
be legally and validly issued in material compliance with all
applicable Laws;
(C) all of the Shares will have been, are, and will
be fully paid and non-assessable shares, and all the Shares
have all been, are, and will be issued under duly authorized
resolutions of the Board of Directors of the Company.
(i) Since August 16, 2000, through the Closing Date, the Company and
the Seller have timely filed all forms, reports and documents with the SEC
required to be filed by it and them (all of the foregoing having been filed
prior to the date hereof), including but not limited to:
(i) any filings required in connection with or pursuant to
Regulation D, as applicable;
(ii) any Forms 3, 4 and 5 required to be filed pursuant to the
Exchange Act; and
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(iii) all exhibits included therein and financial statements
and schedules thereto and documents;
(j) Since August 16, 2000, through the Closing Date, the Company and
the Seller have timely filed all forms, reports and documents with the NASD
required to be filed by it and them (all of the foregoing having been filed
prior to the date hereof), including but not limited to, Form 15c-211.
(k) The Company was not, has not been, and is not, at any time, an
"Investment Company" as the term is generally interpreted.
(l) The sale of the Shares by the Seller will not will not give rise to
any dissenting shareholders' rights under Section 262 of the General Corporation
Law of the State of Delaware, the Company's Articles of Incorporation or
By-laws, or otherwise.
(m) The acquisition of the Shares by the Buyer, and the sale of the
Shares by the Seller will not be subject to the "Interested Stockholder" Statute
set forth in Section 203 of the General Corporation Law of the State of
Delaware.
(n) The offer, issue, sale, and delivery of the Shares under the
circumstances contemplated by the Agreement constitute exempted transactions
under the Securities Act, and registration of the Shares under the Securities
Act is not required in connection with any such offer, issue, sale, or delivery
of such Shares.
(o) After reasonable investigation, such counsel has no actual
knowledge of any litigation, arbitration, governmental or other proceeding
(formal or informal), or investigation pending or threatened with respect to the
Seller or any of his business, properties, or assets or with respect to the
Company that:
(i) can reasonably be expected to result in any "Company
Adverse Change" or cause any "Company Adverse Effect" (as the terms are
defined in the Agreement) in the financial condition, results of
operations, business, properties, liabilities, or future prospects of
the Company, or
(ii) seeks to prohibit or otherwise challenge the consummation
of the transactions contemplated by the Agreement, or to obtain
substantial damages with respect thereto, except as disclosed in this
Agreement.
(p) The Company is not in default with respect to any listing
requirements or trading privileges or policy statements of the SEC or of the
NASD or of any other Governmental Authority. There are no investigations pending
or threatened against the Company by the SEC or by the NASD or by any other
Governmental Authority which would threaten or jeopardize its trading status or
listing privileges, and there is no reason whatsoever for the Seller or the
Company to suspect otherwise, irrespective of whether or not the Seller or the
Company believes such rules or regulations, or such investigations, pose such a
threat to its trading status or listing privileges.
6.7 ACCOUNTANT'S LETTER.
The Buyer shall have received letters, dated as at the Closing Date,
from Xxxxxx and XxXxxxxx, Certified Public Accountants, the independent
certified public accountants to the Company, to the effect that:
(a) that they are, and during the period covered by their report(s)
relating to the Latest Financial Statements defined in this Agreement and
referred to in SECTION 3.6 thereof, they were, independent certified public
accountants with respect to the Company within the meaning of the Securities Act
and the rules and regulations thereunder, and that, on the basis of procedures
(but not an examination made in accordance with GAAP) which consisted of a
reading of the latest available unaudited interim financial statements of the
Company dated August 24, 2000, a reading of the latest available Minutes of the
Meetings of the Stockholders and of the Boards of Directors of the Company,
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inquiries to certain officers and other employees of the Company responsible for
financial and accounting matters, and other specified procedures and inquiries,
nothing has come to their attention that caused them to believe that:
(i) the Latest Financial Statements of the Company referred to
in SECTION 3.6 of this Agreement were not prepared in accordance with
generally accepted accounting principals consistent in all material
respects with those followed in the preparation of the audited
Financial Statements of the Company referred to in SECTION 3.6, or are
not a fair presentation of the information purported to be shown;
(ii) there was any change in the capital stock or debt of the
Company or any decrease in the net current assets or stockholders's
equity of the Company as of the date of the latest available monthly
financial statements of the Company as of a specified date not more
than three Business Days prior to the date of such letter from Xxxxxx
and XxXxxxxx, each as compared with the amounts shown in the Latest
Financial Statements, other than as disclosed in this Agreement or any
change or decrease [which shall be set forth in such letter from Xxxxxx
and XxXxxxxx, which the Purchaser in its sole discretion shall accept;
(iii) there was any decrease in consolidated net sales, net
earnings, or net earnings per share (on a primary or a fully diluted
basis) of the Common Stock of the Company since the Latest Financial
Statements Date, each as compared with the corresponding period in
August 24, 2000, other than as disclosed in the Agreement or any
decrease, which the Buyer in its sole discretion shall accept.
6.8 DELIVERY OF EXHIBITS.
All exhibits respecting the Company and/or the Seller or either of them
have been, or shall be, delivered in final form at least three Business Days
prior to the Closing Date (not counting the Closing Date itself as one of such
days) and no such exhibit contains or reflects a Company Adverse Change from the
last previous draft of such exhibit or, if none, the last oral discussion or
written memorandum respecting such exhibit or schedule.
6.9 NO ADVERSE CHANGE.
No Company Adverse Change shall have occurred, and no event shall have
occurred which, in the judgment of the Buyer, is reasonably likely to have a
Company Adverse Effect.
6.10 ACTIONS OR PROCEEDINGS.
No action or proceeding by any Governmental Authority or other Person
shall have been instituted or threatened which:
(a) might have a Company Adverse Effect, or
(b) could enjoin, restrain or prohibit, or could result in substantial
damages in respect of, any provision of this Agreement or any of the Related
Agreements or the consummation of the transactions contemplated hereby or
thereby or any integration of any operations of the Company with those of the
Buyer and its Affiliates.
6.11 OBTAINMENT OF FINANCING.
The obligation of the Buyer to consummate the transactions contemplated
by, and with which to comply with the undertaking made by it under, this
Agreement shall be conditioned upon its ability to obtain financing with which
to do so. Consequently, if the Buyer is unable to obtain financing in an amount
and on terms it, in its sole discretion,
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deems sufficient (i) to purchase the Shares, or (ii) to consummate the
transactions contemplated by this Agreement, or (iii) to otherwise comply with
the undertakings made by it under this Agreement, then (iv), the Buyer shall
have no obligation to do so, and (v), neither the Seller nor the Company shall
have any rights or recourse whatsoever against the Buyer and its Officers,
Directors, and Shareholders.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of Seller under ARTICLE II of this Agreement are
subject to the satisfaction or waiver by the Seller of the following conditions
precedent on or before the Closing Date:
7.1 WARRANTIES TRUE AS OF BOTH PRESENT DATE AND CLOSING DATE.
The representations and warranties of the Buyer contained herein shall
have been accurate, true and correct on and as of the date of this Agreement,
and shall also be accurate, true and correct on and as at the Closing Date with
the same force and effect as though made by the Buyer on the Closing Date.
7.2 COMPLIANCE WITH AGREEMENTS AND COVENANTS.
The Buyer shall have performed and complied with all of its respective
covenants, obligations and agreements contained in this Agreement to be
performed and complied with by it on or prior to the Closing Date.
7.3 EXPIRATION OF HSR WAITING PERIOD (IF ANY).
The applicable waiting period, if any, under the HSR Act shall have
expired or have been earlier terminated without action by the Justice Department
or the Federal Trade Commission to prevent consummation of this Agreement.
7.4 DOCUMENTS.
The Seller shall have received all of the agreements, documents and
items specified in SECTION 8.3.
7.5 ACTIONS OR PROCEEDINGS.
No action or proceeding by any Governmental Authority or other Person
shall have been instituted or threatened which could enjoin, restrain or
prohibit, or could result in substantial damages in respect of, any provision of
this Agreement or any of the Related Agreements or the consummation of the
transactions contemplated hereby or thereby or any integration of any operations
of the Company with those of the Buyer and its Affiliates.
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7.6 CONSENTS AND APPROVALS.
The Seller shall have received written evidence satisfactory to the
Seller that all consents and approvals required for the consummation of the
transactions contemplated hereby have been obtained, and all required filings
have been made, including those set forth in EXHIBIT 4.3.
ARTICLE VIII
THE CLOSING
8.1 THE CLOSING.
(a) The Closing shall be scheduled to occur at 1:00 pm at the offices
of:
Xxxxxx Xxxxxxxx Xxxxxxx, LLC
00xx Xxxxx
000 Xxxx 42 nd Street
New York, New York 1001
on the later of:
(i) August 27, 200, or
(ii) on such later date as the Parties hereto shall mutually
agree.
(b) The Closing, and all transactions to occur at the Closing, shall be
deemed to have taken place at, and shall be effective as of, the close of
business on the Closing Date.
8.2 DELIVERIES BY THE SELLER.
At the Closing, in addition to any other documents or agreements
required under this Agreement, the Seller shall deliver to the Buyer the
following:
(a) Certificates evidencing all of the Shares, which certificates shall
be duly endorsed in blank or accompanied by stock powers executed in blank, with
all signatures medallion guaranteed and with all necessary transfer taxes and
other revenue stamps affixed and acquired at the Seller's expense, together with
such other duly executed instruments or documents as may be reasonably requested
by the Buyer in order to consummate the transactions contemplated by this
Agreement, including a letter, in the form set forth in EXHIBIT 8.2(A), from the
Company's Transfer Agent to the Seller acknowldeging the existrence of this
transaction and agreeing that it, the Transfer Agent, will, upon presentation of
the Certificates representing the Shares, re-issue these Certificates in the
name of, or pursuant to, the instructions of the Buyer.
(b) The written resignations of the persons listed in EXHIBIT 8.2(B) as
directors and officers of the Company;
(c) Evidence, in form satisfactory to the Buyer, that all consents and
approvals referred to in EXHIBIT 3.3 have been obtained;
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(d) Except for those Liens specified on EXHIBIT 8.2(D) attached hereto,
a written statement from each Person holding a Lien upon any of the assets of
the Company, or upon any Shares, confirming the repayment of the indebtedness
secured thereby and the release as of the Closing Date of:
(i) such Lien, and
(ii) all obligations under any and all Contracts relating
thereto;
(e) A certificate dated as at the Closing Date of the Seller certifying
as to the compliance by the Seller and the Company as the case may be, with
SECTIONS 6.1 and 6.2;
(f) The Certificates of Incorporation or similar instruments of the
Company certified by the Secretary of State or equivalent Person of the
jurisdiction of incorporation of the Company, and Bylaws or similar instruments
of the Company, certified by the Secretary of the Company;
(g) Certificates of Good Standing for the Company from the State of
Delaware;
(h) An opinion, dated at the Closing Date, of Xxx Xxxxxx, Esq., counsel
for the Seller and the Company, substantially in the form attached hereto as
EXHIBIT 6.8;
(i) An opinion, dated at the Closing Date, of Xxxxxx and XxXxxxxx,
Certified Public Accountants to the Company, substantially in the form attached
hereto as EXHIBIT 6.9;
(j) Estoppel certificates from [Name of Creditor, Contracting Party,
Landlord, etc__________________________________________________] substantially
in the forms attached hereto as Exhibit ____________; and
(k) A certificate of the Company's Secretary certifying Resolutions of
the Board of Directors of the Company approving this Agreement, the Company's
Related Agreements, and the transactions contemplated hereby and thereby,
together with an Incumbency and Signature Certificate regarding the officer(s)
signing on behalf of the Company.
8.3 DELIVERIES BY THE BUYER.
At the Closing, the Buyer shall deliver to the Sellers the following:
(a) the sum of $300,000.00, by U.S. Bank check or Wire Transfer,
payable to the order of each of the Sellers in the amount set forth opposite his
and its names as set forth in EXHIBIT 2.1;
(b) the sum of $50,000.00, by U.S. Bank check or Wire Transfer, payable
to the order of the Escrow Agent for deposit into the Escrow Account;
(c) A certificate, dated at the Closing Date, of an executive officer
of the Buyer, certifying as to compliance by the Buyer as the case may be, with
SECTIONS 7.1 and 7.2;
(d) Certificates of the Buyer's Secretary certifying Resolutions of the
Board of Directors approving this Agreement, the Buyer's Related Agreements, and
the transactions contemplated hereby and thereby, together with an Incumbency
and Signature Certificate regarding the officer(s) signing on behalf of the
Buyer;
(e) Evidence, in form satisfactory to the Seller, that all consents and
approvals referred to in EXHIBIT 4.3 have been obtained.
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ARTICLE IX
TERMINATION
9.1 TERMINATION.
This Agreement may be terminated at any time on or prior to the Closing
Date:
(a) By the mutual consent of the Seller and the Buyer;
(b) By the Seller or the Buyer, if the Closing shall not have taken
place on or before August 24, 2001; provided however, that the right to
terminate this Agreement under this SECTION 9.1(B) shall not be available to any
Party whose wilful failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such date;
(c) By the Buyer, if there shall have been a breach of any covenant,
representation or warranty or other agreement of the Seller or of the Company
hereunder, and such breach shall not have been remedied within ten Business Days
after receipt by the Seller of a notice in writing from the Buyer specifying the
breach and requesting such be remedied; or
(d) By the Seller [or any one of them], if there shall have been a
breach of any covenant, representation or warranty or other agreement of the
Buyer hereunder, and such breach shall not have been remedied within ten
Business Days after receipt by the Buyer of notice in writing from the Seller
specifying the breach and requesting such be remedied.
9.2 EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to SECTION 9.1, all
obligations of the Parties hereunder shall terminate, except for the obligations
set forth in SECTIONS 5.2(B) and (C), 11.1, 11.11 and 11.12, which shall survive
the termination of this Agreement, and except that no such termination shall
relieve any party from liability for any prior wilful breach of this Agreement.
ARTICLE X
INDEMNIFICATION
10.1 SURVIVAL.
Except as otherwise specified, the representations and warranties of
the Seller contained herein shall survive the Closing for a period expiring at
the close of business on the date that is 365 days after the Closing Date (the
"Survival Date") except that:
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(a) Tax Warranties shall survive until the Tax Statute of Limitations
Date; and
(b) Title and Authorization Warranties shall survive forever.
10.2 INDEMNIFICATION BY SELLERS.
Each Seller agrees, jointly and severaly, to indemnify the Buyer
against, and each Seller agrees to hold it harmless from, any and all Losses or
claims incurred or suffered by it relating to or arising out of or in connection
with any of the following (collectively, "Claims"):
(a) any misrepresentation, breach of warranty, or any inaccuracy in any
representation or warranty made by the Seller or the Company in this Agreement
or in any document, certificate, or affidavit delivered by the Seller or the
Company pursuant to the provisions of this Agreement or the Related Agreements;
or
(b) any breach of or failure by the Seller or the Company to perform
any covenant or obligation of such party set out or contemplated in this
Agreement or any Related Agreement or any document delivered at the Closing; or
(c) any liability, obligation, or commitment of any nature (absolute,
accrued, contingent, or other) to any Person, including the Buyer,
(i) of the Company; or
(ii) of the Seller, insofar as it effects his rights and
duties with respect to his ownership of, and the sale and conveyance of
the Shares, or with respect to the operation of the business of the
Company;
(d) any Environmental Expenses, any Environmental claims, any
Environmental Conditions, or any violation of Environmental Requirements; or
(e) any regulatory proceeding, action or suit [including any
investigation(s) in connection therewith] brought with respect to occurrences,
events, or matters occurring, taking place, or accruing prior to the Closing
Date.
10.3 CLAIMS.
(a) The provisions of this Section shall be subject to SECTION 10.4.
(b) Promptly (and in any event within 5 days after the service of any
citation or summons) after becoming aware of a claim for indemnification under
this Agreement, the Indemnified Person shall give notice to the Indemnifying
Person of such claim and the amount the Indemnified Person will be entitled to
receive hereunder from the Indemnifying Person; provided that the failure of the
Indemnified Person to promptly give notice shall not relieve the Indemnifying
Person of its obligations except to the extent (if any) that the Indemnifying
Person shall have been prejudiced thereby.
(c) If the Indemnifying Person does not object in writing to such claim
within 20 days of receiving notice thereof, the Indemnified Person shall be
entitled to recover, on the 25th day after such notice was given, from the
Indemnifying Person the amount of such claim, and no later objection by the
Indemnifying Person shall be permitted.
(d) If the indemnifying Person agrees that he has an indemnification
obligation but states that he is obligated to pay
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only a lesser amount, the Indemnified Person shall nevertheless be entitled to
recover, on the 25th day after such notice was given, from the Indemnifying
Person the lesser amount, without prejudice to the Indemnified Person's claim
for the difference.
(e) In addition to the amounts recoverable by the Indemnified Person
from the Indemnifying Person pursuant to the foregoing provisions, the
Indemnified Person shall also be entitled to recover from the Indemnifying
Person interest on such amounts at the rate of Two Times Prime from, and
including, the 25th day after such notice of an indemnification claim is given
to, but not including, the date such recovery is actually made by the
Indemnified Person.
10.4 NOTICE OF THIRD-PARTY CLAIMS; ASSUMPTION OF DEFENSE.
(a) Promptly (and in any event within 5 days after the service of any
citation or summons) after becoming aware of any claim or the commencement of
any suit, action or proceeding made or brought by any Person not a party hereto,
in respect of which indemnity may be sought under this Agreement, the
Indemnified Party shall give notice thereof to the Indemnifying Party; provided,
however, that the failure of the Indemnified Person to promptly give notice
shall not relieve the Indemnifying Person of its obligations except to the
extent (if any) that the Indemnifying Person shall have been prejudiced thereby.
(b) The Indemnifying Person may, at its own expense,
(i) participate in the defense of any claim, suit, action or
proceeding, and
(ii) upon notice to the Indemnified Person and the delivery by
the Indemnifying Person to the Indemnified Person of a written
agreement that the Indemnified Person is entitled to indemnification
for all Losses arising out of such claim, suit, action or proceeding
and that the Indemnifying Person shall be liable for the entire amount
of any Loss, at any time during the course of any such claim, suit,
action or proceeding, assume the defense thereof, provided that:
(iii) the Indemnifying Person's counsel is reasonably
satisfactory to the Indemnified Person; and
(iv) the Indemnifying Person shall thereafter consult with the
Indemnified Person upon the Indemnified Person's reasonable request for
such consultation from time to time with respect to such claim, suit,
action or proceeding.
(c) If the Indemnifying Person assumes such defense, the Indemnified
Person shall have the right (but not the duty) to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Person.
(d) If, however, the Indemnified Person reasonably determines in its
judgment that representation by the Indemnifying Person's counsel of both the
Indemnifying Person and the Indemnified Person would present such counsel with a
conflict of interest, then such Indemnified Person may employ separate counsel
to represent or defend it in any such claim, action, suit or proceeding, and the
Indemnifying Person shall pay the fees and disbursements of such separate
counsel.
(e) Whether or not the Indemnifying Person chooses to defend or
prosecute any such claim, suit, action or proceeding, all of the Parties hereto
shall cooperate in the defense or prosecution thereof.
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10.5 SETTLEMENT OR COMPROMISE.
(a) Any settlement or compromise made or caused to be made by the
Indemnified Person or the Indemnifying Person, as the case may be, of any claim,
suit, action or proceeding shall also be binding upon the Indemnifying Person or
the Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise; provided, however, that no obligation,
restriction or Loss shall be imposed on the Indemnified Person as a result of
such settlement without its prior written consent.
(b) The Indemnified Person will give the Indemnifying Person at least
30 days' notice of any proposed settlement or compromise of any claim, suit,
action or proceeding it is defending, during which time the Indemnifying Person
may reject such proposed settlement or compromise; provided, however, that from
and after such rejection, the Indemnifying Person shall be obligated to assume
the defense of and full and complete liability and responsibility for such
claim, suit, action or proceeding and any and all Losses in connection therewith
in excess of the amount of un-indemnifiable Losses which the Indemnified Person
would have been obligated to pay under the proposed settlement or compromise.
10.6 FAILURE OF INDEMNIFYING PERSON TO ACT.
In the event that the Indemnifying Person does not elect to assume the
defense of any claim, suit, action or proceeding, then any failure of the
Indemnified Person to defend or to participate in the defense of any such claim,
suit, action or proceeding or to cause the same to be done, shall not relieve
the Indemnifying Person of its obligations hereunder.
10.7 CLAIMS AGAINST ESCROW.
The Buyer may, but shall not be obligated to, direct that the Escrow
Agent, pursuant to the Escrow Agreement, pay to the Buyer, from time to time,
any amount that may be payable by the Seller to the Buyer under this ARTICLE X ,
and the Seller shall, promptly upon being requested to do so by the Buyer, join
in any written direction to the Escrow Agent pursuant to the Escrow Agreement.
The rights of the Buyer to look to the Escrow Agreement for
satisfaction of part or all of any claims or Losses that it may have against the
Seller under this Agreement are supplementary to, and not a limitation upon, its
rights and remedies to proceed directly against the Seller in respect of such
claims or Losses; provided, however, that any claim or Loss satisfied in part or
in whole by a distribution to the Buyer of funds from the Escrow Agreement
shall, to that extent, reduce the claim of the Buyer against the Seller under
this Agreement.
10.8 TAX CHARACTER.
The Seller and the Buyer agree that any payments pursuant to this
ARTICLE X will be treated for federal and state income tax purposes as
adjustments to the purchase price of the Shares, and that they will report such
payments on all Tax Returns consistently with such characterization.
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ARTICLE XI
MISCELLANEOUS
11.1 EXPENSES.
(a) The Seller shall pay all expenses of the Seller and the Company
(including attorneys' fees and expenses), and the Buyer shall pay all expenses
of the Buyer (including attorneys' fees and expenses), in each case incurred in
connection with this Agreement and the transactions contemplated hereby.
(b) The Seller shall pay all sales, use, stamp, transfer, service,
recording, real estate and like taxes or fees, if any, imposed by any
Governmental Authority in connection with the transfer and assignment of the
Shares.
11.2 AMENDMENT.
This Agreement may be amended, modified or supplemented but only in
writing signed by each of the Parties hereto.
11.3 NOTICES.
(a) Any notice, request, instruction or other document required by the
terms of this Agreement to be given to any other Party hereto shall be in
writing and shall be given either
(i) by telephonic facsimile, in which case notice shall be
presumptively deemed to have been given at the date and time displayed
on the sender's transmission confirmation receipt showing the
successful receipt thereof by the recipient;
(ii) by hand delivery or Federal Express or other method in
which the date of delivery is recorded by the delivery service, in
which case notice shall be presumptively deemed to have been given at
the time that records of the delivery service indicate the writing was
delivered to the addressee;
(iii) by prepaid telegram, in which case notice shall be
presumptively deemed to have been given at the time that the records of
the telegraphic agency indicate that the telegram was telephoned or
delivered to the recipient or addressee, as the case may be; or
(iv) by U.S. mail to be sent by registered or certified mail,
postage prepaid, with return receipt requested, in which case notice
shall be presumptively deemed to have been given forty-eight (48) hours
after the letter was deposited with the United States Postal Service.
(b) Notice shall be sent:
(i) If to the Buyer, to:
Xxxxxxxxxxx Xxxxxx, President
XXXX Acquisition Corp.
c/o National Residential Properties, Inc,
0000 XX 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Telephone Number: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxx X. Xxxxxxx, Xx., Esq.
0000 Xxxxx Xxxxxxx Xxxxx
Number 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Telephone Number: (000) 000-0000
(ii) If to the Company, to:
Xxxxx Xxxxxx, President
Vacation Ownership Marketing, Inc.
000 Xxxx Xxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Telephone Number: (000) 000-0000
and to:
Xxxxxxx Xxxxxxxxxx, Secretary
0000 00xx Xxxxxx
Xxxxx 0-X
Xxxxxx, Xxxxxxxx
Telephone Number: (000) 000-0000
Facsimile Telephone Number: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxx Xxxxxx, Esq.,
0000 Xxxx Xxxxxxx Xxxxx Xxxxxxx
Xxxxx X-0, Telephone Number (000) 000-0000
Facsimile Telephone Number (000) 000-0000
(iii) If to the Sellers, to:
Xxxxx Xxxxxx
000 Xxxx Xxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Telephone Number: (000) 000-0000
and to
Xxxxxxx Xxxxxxxxxx, President
Prime Rate Income & Dividend Enterprises, Inc.
0000 00xx Xxxxxx
Xxxxx 0-X
Xxxxxx, Xxxxxxxx
Telephone Number: (000) 000-0000
Facsimile Telephone Number: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxx Xxxxxx, Esq.,
0000 Xxxx Xxxxxxx Xxxxx Xxxxxxx
Xxxxx X-0, Telephone Number (000) 000-0000
Facsimile Telephone Number (000) 000-0000
(iv) or to such other address as a Party may have specified in
writing to the other Parties using the procedures specified above in
this Section.
11.4 EFFECT OF INVESTIGATION.
(a) Any due diligence review, audit or other investigation or inquiry
undertaken or performed by or on behalf of the Buyer shall not limit, qualify,
modify or amend the representations, warranties or covenants of, or indemnities
by, the Seller or the Company made or undertaken pursuant to this Agreement,
irrespective of the knowledge and information received (or which should have
been received) therefrom by the Buyer.
(b) Any due diligence review, audit or other investigation or inquiry
undertaken or performed by or on behalf of the Seller or the Company shall not
limit, qualify, modify or amend the representations, warranties and covenants
of, or indemnities by, the Buyer made or undertaken pursuant to this Agreement,
irrespective of the knowledge and information received (or which should have
been received) therefrom by the Seller or the Company.
11.5 WAIVERS.
(a) The failure of a Party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same.
(b) No waiver by a Party of any condition or of any breach of any term,
covenant, representation or warranty contained in this Agreement shall be
effective unless in writing, and no waiver in any one or more instances shall be
deemed to be a further or continuing waiver of any such condition or breach in
other instances or a waiver of any other condition or breach of any other term,
covenant, representation or warranty.
11.6 COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and by
different Parties hereto in separate counterparts, each of which when so
executed shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.7 INTERPRETATION.
(a) The headings preceding the text of Articles and Sections included
in this Agreement and the headings to Exhibits attached to this Agreement are
for convenience only and shall not be deemed part of this Agreement or be given
any effect in interpreting this Agreement.
(b) The use of the masculine, feminine or neuter gender herein shall
not limit any provision of this Agreement. The use of the terms "including" or
"include" shall in all cases herein mean "including, without limitation" or
"include, without limitation", respectively.
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(c) Underscored references to Articles, Sections, Subsections or
Exhibits shall refer to those portions of this Agreement.
(d) Consummation of the transactions contemplated herein shall not be
deemed a waiver of a breach of or inaccuracy in any representation, warranty or
covenant or of any party's rights and remedies with regard thereto.
(e) No specific representation, warranty or covenant contained herein
shall limit the generality or applicability of a more general representation,
warranty or covenant contained herein.
(f) A breach of or inaccuracy in any representation, warranty or
covenant shall not be affected by the fact that any more general or less general
representation, warranty or covenant was not also breached or inaccurate.
11.8 ASSIGNMENT.
(a) This Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective estates, heirs, legal representatives,
successors and assigns.
(b) No assignment of any rights or obligations hereunder may be made by
the Seller or by the Company without the prior written consent of the Buyer.
(c) The Buyer may freely assign its rights and obligations hereunder
without the consent of the Seller or of the Company, and upon such assignment,
the rights and obligations of the Buyer under this Agreement shall be binding
upon and inure to the benefit of the Buyer's Assignee or its Successor in
interest, as the case may be.
11.9 NO THIRD-PARTY BENEFICIARIES.
This Agreement is solely for the benefit of the Parties hereto and, to
the extent provided herein, their respective estates, heirs, successors,
Affiliates, directors, officers, employees, agents and representatives, and no
provision of this Agreement shall be deemed to confer upon other third parties
any remedy, claim, liability, reimbursement, cause of action or other right.
11.10 PUBLICITY.
Prior to the Closing Date, except as required by Law or the rules of
any stock exchange, no public announcement or other publicity regarding the
transactions referred to herein shall be made by the Buyer, the Seller, the
Company or any of their respective Affiliates, officers, directors, employees,
representatives or agents, without the prior written agreement of the Buyer and
the Seller, in any case, as to form, content, timing and manner of distribution
or publication; provided, however, that nothing in this Section shall prevent
such parties from discussing such transactions with those Persons whose
approval, agreement or opinion, as the case may be, is required for consummation
of such particular transaction or transactions.
11.11 LIQUIDATED DAMAGES.
(a) If, prior to the Closing, the Buyer materially fails to meet its
obligations under this Agreement or fails to close on
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55
the transactions contemplated hereby, unless the Buyer, as the case may be, is
entitled not to close pursuant to the terms hereof, the Seller may lawfully
terminate this Agreement in accordance with the notice and lapse of time
requirements of SECTION 9.1(D), and if this Agreement is so terminated, an
aggregate of $10,000.00 shall be payable by the Buyer to the Seller, all as
liquidated damages to Seller, and such payments shall be the sole remedy prior
to the Closing of the Seller and the Company for such failure by the Buyer and
shall only be available as a remedy prior to the Closing.
11.12 FURTHER ASSURANCES.
Upon the reasonable request of the Buyer, the Seller will on and after
the Closing Date execute and deliver to the Buyer such other documents,
releases, assignments and other instruments as may be required to effectuate
completely the transfer and assignment to the Buyer of, and to vest fully in the
Buyer title to, the Shares, and to otherwise carry out the purposes of this
Agreement.
11.13 SEVERABILITY.
If any provision of this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality or enforce ability of the other provisions
hereof shall not be affected thereby, and there shall be deemed substituted for
the provision at issue a valid, legal and enforceable provision as similar as
possible to the provision at issue.
11.14 REMEDIES CUMULATIVE.
Unless otherwise specified, the remedies provided in this, Agreement
shall be cumulative and shall not preclude the assertion or exercise of any
other rights or remedies available by law, in equity or otherwise.
11.15 ENTIRE UNDERSTANDING.
This Agreement and the Related Agreements set forth the entire
agreement and understanding of the Parties hereto and supersede any and all
prior agreements, arrangements and understandings among the Parties.
11.16 BROKERS.
(a) The Seller represents that no other broker or finder was engaged by
them, or has acted on their behalf, in connection with this Agreement or the
transactions contemplated hereby.
(b) In the event of a claim for brokerage, he Seller shall be solely
responsible for paying the same, and the Seller agrees to indemnify and hold the
Buyer harmless from and against any claim by any other broker or finder who
alleges that it acted on any Party's behalf for any fee, commission or payment
resulting from, or arising out of, the negotiation or execution of this
Agreement or the consummation of the transactions contemplated hereby.
11.17 APPLICABLE LAW; RESOLUTION OF DISPUTES; VENUE.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Florida, without giving effect
to the, principles of conflicts of Law thereof.
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(b) The Parties hereto irrevocably agree and consent that all disputes
concerning this Agreement and the Related Agreements or any claim or issue of
any nature (whether brought by the Parties hereto or by any other person
whatsoever) arising from or relating to this Agreement or to the corporate steps
taken to enter into it (including, without limitation, claims for alleged fraud,
breach of fiduciary duty, breach of contract, tort, etc.) which cannot be
resolved within reasonable time through discussions between the opposing
entities, shall be resolved solely and exclusively by means of arbitration to be
conducted in Miami-Dade County, Florida, which arbitration will proceed in
accordance with the rules of the American Arbitration Association (or any
successor organization thereto) then in force for resolution of commercial
disputes.
(c) The Arbitrators themselves shall have the right to determine and to
arbitrate the threshold issue of arbitrability itself, the decision of the
Arbitrators shall be final, conclusive, and binding upon the opposing entities,
and a judgment upon the award may be obtained and entered in any federal or
state court of competent jurisdiction.
(d) Each entity or Party involved in litigation or arbitration shall be
responsible for its own costs and expenses of any litigation or arbitration
proceeding, including its own attorney's fees (for any litigation, arbitration,
and any appeals).
11.18 JURISDICTION OF DISPUTES; WAIVER OF JURY TRIAL.
In the event any party to this Agreement commences any litigation,
proceeding or other legal action in connection with or relating to this
Agreement, any Related Agreement or any matters described or contemplated herein
or therein, with respect to any of the matters described or contemplated herein
or therein, the Parties to this Agreement hereby:
(a) agree as an alternative method of service to service of process in
any legal proceeding by mailing of copies thereof to such party at its address
set forth here in for communications to such party;
(b) agree that any service made as provided herein shall be effective
and binding service in every respect; and
(c) agree that nothing herein shall affect the rights of any party to
effect service of process in any other manner permitted by Law; and
EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN
CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT OR
ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, AND AGREE TO
TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
THE BUYER:
XXXX ACQUISITION CORP.
By:
--------------------------------- --------------------------------
Xxxxxxx Xxxxxx, President
By:
--------------------------------- --------------------------------
Xxxxxxxxxx Xxxxxx, Secretary
THE COMPANY:
VACATION OWNERSHIP MARKETING, INC.
By:
--------------------------------- --------------------------------
Xxxxx Xxxxxx, President
By:
--------------------------------- --------------------------------
Xxxx Xxxxxxxxxx, Secretary
THE SELLERS:
XXXXX XXXXXX
By:
--------------------------------- --------------------------------
Xxxxx Xxxxxx
XXX XXXXXX
By:
--------------------------------- --------------------------------
Xxx Xxxxxx
PRIME RATE INCOME &
DIVIDEND ENTERPRISES, INC.
By:
--------------------------------- --------------------------------
Xxxxxxx Xxxxxxxxxx, President
By:
--------------------------------- --------------------------------
,Secretary
EXHIBITS BEGIN ON THE FOLLOWING PAGE.
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EXHIBIT 2.1
Certificate Number of Cash Amount
Name of Seller Number Shares to be Sold to be Paid
-------------- ----------- ----------------- ----------
Xxxxx X. Xxxxxx 10908-2 396,925 $ _________
Xxxxx X. Xxxxxx & Xxx Xxxxxx,
Tenants by the Entireties 10919-9 496,925 $ _________
Xxxxx X. Xxxxxx & Xxx Xxxxxx,
Tenants by the Entireties 10920-7 432,209 $ _________
Prime Rate Income & Dividend
Enterprises, Inc. (Indicated as
"Prime Rate Income" on the
Certificate.) 10917-3 8,176,664 $ _________
59
EXHIBIT 3.3
XXXXXX AND XxXXXXXX
CERTIFIED PUBLIC ACCOUNTANTS
0000 XXXX 00XX XXXXXX, XXXXX 00 TELEPHONE (000)-000-0000
XXXXXXXX, XXXXXXXX 00000 FACSIMILE (000)-000-0000
E-MAIL: xxxxxxxxx@xxxxxxxxx.xxx
August 27, 2001
XXXX Acquisition Corporation
C/o National Residential Properties, Inc.
0000 XX 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Gentlemen
Reference is made to that certain Stock Purchase Agreement (the "Agreement")
dated August 27, 2001, by and among XXXX Acquisition Corp., a Delaware
corporation (the "Buyer"); Vacation Ownership Marketing, Inc., a Delaware
corporation ("XXXX" or the "Company"); Xxxxx Xxxxxx, an individual, Xxxxxxx
Xxxxxxxxxx, an Individual, and Prime Rate Income & Dividend Enterprises, Inc.
(individually, a "Seller", collectively, the "Sellers"), being the majority
Shareholders of the Company, which we have read.
We are, and during the period covered by their report(s) relating to the Latest
Financial Statements defined in SECTION 1.1 of the Agreement and referred to in
SECTION 3.6 thereof, we were, independent certified public accountants with
respect to the Company within the meaning of the Securities Act and the rules
and regulations thereunder, and that, on the basis of procedures (but not an
examination made in accordance with GAAP) which consisted of a reading of the
latest available unaudited interim financial statements of the Company dated
August 24, 2001 (the "Latest Financial Statements" as defined in SECTION 1.1 of
the Agreement), a reading of the latest available Minutes of the Meetings of the
Stockholders and of the Boards of Directors of the Company, inquiries to certain
officers and other employees of the Company responsible for financial and
accounting matters, and other specified procedures and inquiries, nothing has
come to our attention that caused us to believe that:
(i) the Latest Financial Statements of the Company referred to in
SECTION 3.6 of the Agreement were not prepared in accordance with
generally accepted accounting principles in the United States of
America, consistent in all material respects with those followed in the
preparation of the audited Financial Statements of the Company referred
to in SECTION 3.6, or are not a fair presentation of the information
purported to be shown;
(ii) there has been any change in the capital stock or debts of
XXXX, any decrease in the net current assets or stockholders' equity of
the Company, or that there was any change in the capital stock or debt
of the Company or any decrease in the net current assets or
stockholders's equity of the Company since the Latest Financial
Statements Date, as defined in SECTION 1.1 of the Agreement, other than
as disclosed in the Agreement or any change or decrease, which the
Buyer in its sole discretion shall accept;
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XXXX Acquisition Corporation
August 27, 2001
Page 2
(iii) there was any decrease in consolidated net sales, net
earnings, or net earnings per share (on a primary or a fully diluted
basis) of the Common Stock of the Company since the Latest Financial
Statements Date, each as compared with the corresponding period in
August 24, 2000, other than as disclosed in the Agreement or any
decrease, which the Buyer in its sole discretion shall accept.
Thank you for your assistance in this matter.
Yours truly,
/s/ Xxxxxx and XxXxxxxx
XXXXXX AND XXXXXXXX
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EXHIBIT 6.8
XXX X. XXXXXXX, XX.
ATTORNEY AT LAW
0000 XXXXX XXXXXXX XXXXX
NUMBER 0000
XXXX XXXX XXXXX, XXXXXXX 00000
(561) 659 - 1810
August 24, 2001
Telephone (000) 000-0000
Facsimile (000) 000-0000
Corporate Stock Transfer Inc.
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxx
Re: Stock Purchase Agreement dated as at August 27, 2001, by and among XXXX
Acquisition Corp. (the "Buyer"); Vacation Ownership Marketing, Inc.,
("XXXX" or the "Company"); Xxxxx Xxxxxx, an individual, and Xxx Xxxxxx,
an individual, and Prime Rate Income & Dividend Enterprises, Inc.
(collectively, the "Sellers").
Dear Xx. Xxxxx:
Pursuant to the Stock Purchase Agreement, the Sellers plan to sell
certain of their Shares of the Common Stock, Par Value $0.01 per share, of the
Company (the "Sellers' XXXX Shares") to my client, XXXX Acquisition Corp., as
follows:
Certificate Number of
Name of Seller Number Shares to be Sold
-------------- ----------- -----------------
Xxxxx X. Xxxxxx 10908-2 396,925
Xxxxx X. Xxxxxx & Xxx Xxxxxx,
Tenants by the Entireties 10919-9 496,925
Xxxxx X. Xxxxxx & Xxx Xxxxxx,
Tenants by the Entireties 10920-7 432,209
Prime Rate Income & Dividend
Enterprises, Inc. (Indicated as
"Prime Rate Income" on the
Certificate.) 10917-3 8,176,664
Enclosed please find true copies of the front side of the Certificates
evidencing(1) the Sellers' XXXX Shares. I have been assured by Xx. Xxxxxx that
the Medallion Guarantee is on the reverse side of each Certificate.
--------------------
(1) Certificates reflect holdings before the recent 1 for 20 Reverse Split.
62
Please confirm that, following the Closing(2) of the Stock Purchase
Agreement, upon presentation to you of the actual Certificates representing the
Sellers' Shares, with all signatures medallion guaranteed and with all necessary
transfer taxes and other revenue stamps affixed and acquired at the Sellers'
expense, you will re-issue the shares evidenced by these Certificates pursuant
to the instructions of the Buyer's authorized agent, whose name and address are:
Xxxxxxxxxxx Xxxxxx, President
XXXX Acquisition Corp.
c/o National Residential Properties, Inc,
0000 XX 0xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Telephone Number: (000) 000-0000
If the foregoing is acceptable, kindly execute this letter in the space
indicated to acknowledge your agreement to act in accordance with this request
and fax the same back to me. Should you have any questions concerning this
matter, please contact me at (000) 000-0000, which is also my fax number. Since
the Closing is set for Monday, I would appreciate it if you attend this at your
very earliest convenience. Thank you for your cooperation.
Yours truly,
Xxx X. Xxxxxxx, Xx.
ACKNOWLEDGED AND AGREED:
Corporate Stock Transfer Inc.
0000 Xxxxxx Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000 By: ____________________ Dated: August __, 2001
President
-------------------
(2) To occur at 1:00 pm at the offices of:
Xxxxxx Xxxxxxxx Xxxxxxx, LLC
00xx Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 1001
(000) 000-0000
63
EXHIBIT 8.2(b)
RESIGNATIONS
64
EXHIBIT 8.2(d)
