SHARE PURCHASE AGREEMENT
Exhibit
99.1
This
Share Purchase Agreement
(this
“Agreement”), dated as of the 31st day of December 2007, is made and entered
into by and among Luther
Capital management, LLC,
a
Nebraska limited liability company, or its assigns (the “Buyer”),
and
all of the Shareholders
of
the
Company, (the “Sellers”).
Whereas,
the
Sellers own all of the outstanding stock of Esco, Inc., a Nevada corporation
(the “Company”).
Whereas,
subject
to the terms and conditions of this Agreement, the Sellers desire to sell,
and
the Buyer desires to purchase, ninety-seven percent (97%) of the issued and
outstanding shares of the Company.
Now,
Therefore,
in
consideration of the premises and the mutual promises and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
Section
1. Purchase
of Shares.
1.1 Purchase
of Shares.
On the
terms and subject to the conditions set forth in this Agreement, at the Closing
(as hereinafter defined), (a) the Sellers agree to sell, assign, transfer,
and
deliver to the Buyer, and the Buyer agrees to purchase from the Sellers,
the
number of shares of common stock of the Company identified on Schedule 1.1
hereto (the “Company
Shares”),
which
Company Shares constitute ninety-seven percent (97%) of the issued and
outstanding shares of capital stock of the Company. Company Shares are sometimes
referred to herein as the “Shares.”
1.2 Purchase
Price.
On the
terms and subject to the conditions set forth in this Agreement, in
consideration for all of the Shares, the purchase price (the “Purchase
Price”)
for
the Shares shall be One Hundred Thousand Dollars ($100,000). The Purchase
Price
shall be paid at the Closing by
the
Buyer to the Sellers
by wire
transfer or other immediately available funds to an account or accounts
designated by the Sellers at the Closing.
1.3 Legal
and Accounting Fees.
At the
Closing, the Buyer shall deliver to Xxxxxxxx | Xxxxxxxxxx, PC, LLO, Twenty-Five
Thousand Dollars ($25,000) in readily available cash for payment of the
Company’s legal and accounting fees and costs, incurred since its inception,
whether unbilled, billed, or accrued, or whether incurred for purposes of
this
Agreement and the transactions contemplated herein (the “Fee Payment”). After
Closing, the Sellers shall cause Xxxxxxxx | Xxxxxxxxxx, PC, LLO, to pay the
legal and accounting fees and costs of the Company. In the event the legal
and
accounting fees and costs, exceed the Fee Payment, then the Company shall
be
responsible to pay all such excess amounts, including amounts related to
Closing
the transactions contemplated herein.
Section
2. Closing;
Further Assurances; Related Matters.
2.1 Closing.
Subject
to the terms and conditions of this Agreement, the closing of the transactions
contemplated by this Agreement (the “Closing”)
shall
take place on January 2, 2008, at 10:00 a.m., local time, at the offices
of
Xxxxxxxx | Xxxxxxxxxx, PC, LLO, Omaha, Nebraska, or on such other date and
at
such other time or place as the parties may agree. The date on which the
Closing
occurs is sometimes referred to herein as the “Closing
Date.”
The
effective date of the Closing shall be start of business on January 1, 2008.
2.2 Instruments
of Conveyance.
At the
Closing, the Sellers shall deliver any and all shares certificates representing
the Shares to the Buyer, duly endorsed in blank (or accompanied by duly executed
stock powers).
2.3 Further
Assurances.
Each
party hereto shall, on the Closing Date and from time to time thereafter,
at any
other party’s reasonable request and without further consideration, execute and
deliver to such other party such instruments of transfer, conveyance, and
assignment in addition to those delivered pursuant to Section 2.2, as shall
be reasonably requested to transfer, convey, and assign the Shares to the
Buyer
and otherwise to effect the transactions contemplated by this
Agreement.
Section
3. Representations
and Warranties of the Seller.
Sellers,
jointly and severally, hereby represents and warrants to the Buyer as
follows:
3.1 Organization.
The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its organization. The Company has all
requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted. The Company
has
delivered to the Buyer true and correct copies of the Articles of Incorporation
and Bylaws, and any amendments thereto (the “Governing
Documents”)
of the
Company, in each case as currently in effect.
3.2 Authorization.
The
Sellers have the power and authority to execute and deliver this Agreement
and
perform its obligations hereunder. This Agreement has been duly executed
and
delivered by the Sellers and constitutes, and when executed and delivered
by the
parties thereto will constitute, a valid and binding agreement of the Sellers,
enforceable against the Sellers in accordance with its terms, except that
(a)
such enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors’ rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may
be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.3 Absence
of Restrictions and Conflicts.
The
execution, delivery, and performance of this Agreement, the consummation
of the
transactions contemplated by this Agreement and the fulfillment of and
compliance with the terms and conditions of this Agreement do not and will
not
(as the case may be) violate or conflict with, constitute a breach or violation
of or default under, permit the acceleration of any obligation under or give
rise to any right of termination under, (a) any term or provision of the
Governing Documents of the Company, (b) any contract of which the
Company
is a
party, or (c) any law or order. No consent, order, or authorization of, or
registration, declaration, or filing with, any governmental authority, or
with
any third party with respect to any agreement or arrangement referred to
in
clause (b) of the preceding sentence, with respect to the Company, is required
in connection with the execution, delivery, or performance of this Agreement
or
the consummation of the transactions contemplated by this
Agreement.
-2-
3.4 Capitalization.
(a) The
Governing Documents set forth the Company’s authorized capital stock, and
Schedule
1.1 sets
forth the number of issued and outstanding shares of its capital stock and
the
holder or holders of such shares. All of the outstanding Shares of the Company,
if applicable, are duly authorized, validly issued, fully paid and
non-assessable and are not subject to or issued in violation of any preemptive
right, subscription right or any similar right under applicable laws, Governing
Documents of the Company or any agreement to which the Company is a party
or is
otherwise bound. The Company does not own beneficially or otherwise, directly
or
indirectly, any capital stock of, or other securities, equity or ownership
interest in, or has any obligation to form or participate in, any other person.
No shares of capital stock of the Company are held by the Company in its
treasury.
(b) The
Sellers have good and valid title to, and are the record owners of, the Company
Shares, free and clear of any and all liens. Except with respect to transfer
restrictions under applicable securities laws, no legend or other similar
item
appears upon any certificates representing any shares of the Company which
constitutes a restriction on transfer or otherwise provides any third party
with
rights with respect to the Shares.
(c) There
are
no subscriptions, options, convertible securities, calls, puts, rights,
warrants, or other agreements, claims, or commitments of any nature whatsoever
obligating the Company to purchase, redeem, issue, transfer, deliver, or
sell,
or cause to be purchased, redeemed, issued, transferred, delivered, or sold,
additional shares or other securities of the Company. There are no dividends
which have accrued or been declared but are unpaid on the shares or equity
of
the Company and there are no stock appreciation, phantom stock, or similar
rights with respect to the shares or equity of the Company. There are no
bonds,
debentures, notes or other indebtedness of the Company having the right to
vote
(or convertible into or exchangeable for securities with the right to
vote).
3.5 Financial
Statements.
(a) The
books
of account and related records of the Company correctly, accurately and
completely reflect all of its assets, liabilities and transactions in compliance
with generally accepted accounting principles in the United States (“GAAP”),
applied on a consistent basis throughout the periods covered. Schedule 3.5
contains
correct, accurate and complete copies of the audited balance sheets and
statements of income, changes in shareholders’ equity and cash flow of the
Company as of and for the fiscal year ended December 31, 2006, and the
unaudited internally prepared balance sheet and statements of income and
changes
in shareholders’ equity and cash flow as of and for the eleven (11) months
ending November 30, 2007 (individually, a “Financial Statement” and
collectively, the “Financial Statements”). Each Financial Statement (i) has
been prepared based on, and in accordance with, the books of account and
related
records of the Company, (ii) has been prepared in compliance with GAAP
applied on a consistent basis for the periods covered, except for footnotes
to
any interim statements, and (iii) correctly, accurately and completely
presents the financial condition, financial position, results of operations,
assets and liabilities of the Company for the periods covered.
-3-
(b) No
Undisclosed Material Liabilities.
Except
for liabilities incurred in the ordinary course of business consistent
with past
practice since the date of the last Financial Statement attached hereto
as of
the date of this Agreement (the “Most Recent Financial Statement”), there are no
liabilities of the Company of any kind whatsoever (whether accrued, contingent,
absolute, due, to become due, determined, determinable or otherwise) required
by
GAAP to be reflected on a balance sheet except for liabilities or obligations
reflected or reserved against in the Most Recent Financial
Statement.
3.6 Absence
of Certain Changes or Events.
Since
the date of the Most Recent Financial Statement, the Company has conducted
its
business in the ordinary course substantially in the same manner as it has
historically conducted.
3.7 Legal
Proceedings.
There
is no claim, action, suit, proceeding or governmental investigation pending
or,
to the knowledge of the Sellers, threatened against the Company, by or before
any governmental authority or by any third party that (i) if finally determined
adversely, are reasonably likely, individually or in the aggregate, to have
a
material adverse effect, (ii) challenges the validity of this Agreement,
or
(iii) would be reasonably likely to adversely affect or restrict the Sellers’
ability to consummate the transactions contemplated hereby.
3.8 Tax
Returns and Taxes.
The
Company (i) has timely filed or caused to be filed on a timely basis with
the appropriate taxing authorities all material tax returns required to be
filed
by or with respect to the Company, or with respect to which the Company could
have liability, and (ii) has paid or made adequate provision for the
payment of all taxes shown to be due on such tax returns. Such tax returns
are
correct and complete in all material respects. None of the tax returns
applicable to the Company is currently being audited or examined by any taxing
authority. There is no material unpaid tax deficiency, determination or
assessment currently outstanding against the Company or, to the knowledge
of the
Sellers, any claim for additional taxes. There are no outstanding agreements
or
waivers extending the statute of limitations relating to the assessment of
taxes
applicable to the Company.
3.9 Brokers,
Finders, and Investment Bankers.
Neither
the Sellers nor the Company has engaged any broker, finder, investment banker,
or other intermediary or incurred any liability for any investment banking
fees,
financial advisory fees, brokerage fees, finders’ fees, or other similar fees in
connection with the transactions contemplated by this Agreement.
-4-
Section
4. Representations
and Warranties of the Buyer.
The
Buyer
hereby represents and warrants to the Sellers as follows:
4.1 Organization.
The
Buyer is a business entity duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization.
The
Buyer has all requisite power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted.
4.2 Authorization.
The
Buyer has the power and authority to execute and deliver this Agreement and
perform its obligations hereunder and thereunder. This Agreement has been
duly
executed and delivered by the Buyer and constitutes, when executed and delivered
by the parties thereto will constitute, a valid and binding agreement of
the
Buyer, enforceable against the Buyer in accordance with its terms, except
that
(a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors’ rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court
before which any proceeding therefor may be brought.
4.3 Absence
of Restrictions and Conflicts.
The
execution, delivery, and performance of this Agreement, the consummation
of the
transactions contemplated by this Agreement, and the fulfillment of and
compliance with the terms and conditions of this Agreement does not and will
not
(as the case may be) violate or conflict with, constitute a breach or violation
of or default under, permit the acceleration of any obligation under or give
rise to any right of termination under, (a) any term or provision of the
Buyer’s Articles of Organization, Operating Agreement or any amendments thereto,
(b) any agreement or other obligation or instrument to which the Buyer is
bound, or (c) any law or order. No consent, order, or authorization of, or
registration, declaration, or filing with, any governmental authority, or
with
any third party with respect to any agreement or arrangement referred to
in
clause (b) of the preceding sentence, with respect to the Buyer, is required
in
connection with the execution,
delivery, or performance of this Agreement or the consummation of the
transactions contemplated by this Agreement.
4.4 Brokers,
Finders, and Investment Bankers.
Buyer
has not engaged any broker, finder, investment banker, or other intermediary
or
incurred any liability for any investment banking fees, financial advisory
fees,
brokerage fees, finders’ fees, or other similar fees in connection with the
transactions contemplated by this Agreement.
4.5 Shares
for Buyer’s Own Account.
This
Agreement is made with the Buyer in reliance upon the Buyer’s representation to
the Seller, which by the Buyer’s execution of this Agreement, the Buyer hereby
confirms, that the Shares to be purchased hereunder by the Buyer will be
acquired for investment for the Buyer’s own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and
that
the Buyer has no present intention of selling, granting any participation
in, or
otherwise distributing the same. By executing this Agreement, the Buyer further
represents that the Buyer does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any
of the
Shares.
-5-
4.6 Disclosure
of Information.
The
Buyer has had an opportunity to discuss the Company’s business, management and
financial affairs with the Company’s management.
4.7 Restricted
Securities.
The
Buyer understands that the Shares have not been, and will not be, registered
under the Securities Act of 1933, as amended (the “Securities Act”), by reason
of a specific exemption from the registration provisions of the Securities
Act
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of the Buyer’s representations as expressed herein. The
Buyer understands that the Shares are “restricted securities” under applicable
U.S. federal and state securities laws and that, pursuant to these laws,
the
Buyer must hold the Shares indefinitely unless they are registered with the
Securities and Exchange Commission and qualified by state authorities, or
an
exemption from such registration and qualification requirements is available.
The Buyer acknowledges that the Company has no obligation to register or
qualify
the Shares for resale. The Buyer further acknowledges that if an exemption
from
registration or qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of sale,
the
holding period for the Shares, and on requirements relating to the Company
which
are outside of the Sellers’ control, and which the Sellers is under no
obligation and may not be able to satisfy.
4.8 Public
Market.
The
Buyer understands that no public market now exists for the Shares, and that
the
Sellers have made no assurances that a public market will ever exist for
the
Shares.
4.9 Legends.
The
Buyer understands that the Shares and any securities issued in respect of
or
exchange for the Shares, may bear one or all of the following
legends:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT
SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
Any
legend required by the securities laws of any state to the extent such laws
are
applicable to the Shares represented by the certificate so
legended.
4.10 Accredited
Investor.
The
Buyer is an accredited investor as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
4.11 No
General Solicitation.
Neither
the Buyer, nor any of its officers, directors, employees, agents, shareholders
or partners has either directly or indirectly, including through a broker
or
finder (a) engaged in any general solicitation, or (b) published any
advertisement in connection with the acquisition of the Shares.
-6-
4.12 Exculpation.
The
Buyer acknowledges that it is not relying upon any person, other than the
Company and its officers and directors, in making its investment or decision
to
invest in the Company.
4.13 Residence.
The
Buyer is domicile in Nebraska.
4.14 Public
Shell.The
Buyer
acknowledges that the Company has no operations or material assets and has
not
conducted any business operations of whatever kind.
Section
5. Additional
Covenants and Agreements.
5.1 Conduct
of Business.
Except
as expressly provided for herein or as consented to by the Buyer (which consent
shall not be withheld unreasonably, delayed or conditioned), during the period
from the date of this Agreement to the Closing Date, the Sellers shall cause
the
Company to act and carry on its business only in the ordinary course of business
consistent with past practice and, to the extent consistent therewith, use
all
reasonable efforts to preserve intact its current business
organizations.
5.2 Access
to Information and Confidentiality.
Between
the date of this Agreement and the Closing, the Sellers shall give the Buyer
and
its authorized representatives reasonable access to all books and records
of the
Company and permit the Buyer to make such inspections thereof as the Buyer
may
reasonably request.
5.3 Reasonable
Best Efforts.
Each of
the parties shall cooperate, and use its reasonable best efforts to take,
or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement, including acquiring
all consents or approvals required prior to the Closing Date.
5.4 Fees
and Expenses.
The
Buyer will pay all costs and expenses incurred by the Sellers or the Company
in
connection with the transactions contemplated by this Agreement (including,
without limitation, attorneys’ and accountants’ fees and expenses). The Buyer
shall bear all such costs and expenses incurred by it in connection with
the
transactions contemplated by this Agreement.
5.5 Public
Announcements.
Upon
execution of this Agreement, no party shall make any public announcements
regarding this Agreement
or the transactions contemplated by this Agreement to the financial community,
government agencies, employees or the general public without the prior written
approval of the other party. After
Closing, the parties shall mutually agree upon a public announcement. The
Sellers shall not unreasonable withhold consent
to
such public announcement.
Section
6. Conditions
to Obligations of the Parties
6.1 Conditions
to Obligations of the Sellers.
The
obligations of the Sellers to consummate the transactions contemplated hereby
are further subject to the satisfaction (or waiver) at or prior to the Closing
of the following conditions:
-7-
(a) Representations
and Warranties.
The
representations and warranties of the Buyer contained in Section 4 of this
Agreement shall be true and correct in all material respects at the date
hereof
and shall be true and correct in all material respects as of the Closing
Date as
if made at and as of such time, except for (i) changes permitted or contemplated
by this Agreement, and (ii) representations and warranties which are as
of a
specific date;
(b) Performance
of Obligations.
The
Buyer shall have performed in all material respects its covenants and
obligations under this Agreement required to be performed by it at or prior
to
the Closing pursuant to the terms hereof;
(c) Purchase
Price and Fee Payment.
The
Buyer shall have delivered to the Sellers the Purchase Price and Fee
Payment.
6.2 Conditions
to Obligations of the Buyer.
The
obligations of the Buyer to consummate the transactions contemplated hereby
are
further subject to the satisfaction (or waiver) at or prior to the Closing
of
the following conditions:
(a) Representations
and Warranties.
The
representations and warranties of the Sellers contained in Section 3 of
this
Agreement shall be true and correct in all respects at the date hereof
and shall
be true and correct in all respects as of the Closing Date as if made at
and as
of such time, except for (i) changes permitted or contemplated by this
Agreement, (ii) representations and warranties which are as of a specific
date
and (iii) failures
to comply with the foregoing condition that individually or in the aggregate
would not have a material adverse effect;
(b) Performance
of Obligations.
The
Sellers shall have performed in all material respects its covenants and
obligations under this Agreement required to be performed by it at or prior
to
the Closing pursuant to the terms hereof;
(c) Resignations.
The
directors and officers of the Company shall have tendered their resignations
to
the Company; and
(d) Closing
Documents.
The
Sellers shall have delivered to the Buyer the documents and instruments
described in Section 2.2.
Section
7. Termination.
7.1 Termination
- General.
This
Agreement may be terminated at any time at or prior to the Closing:
(a) in
writing, by mutual consent of the parties hereto;
(b) by
written notice from the Buyer to the Sellers, if any condition to the obligation
of the Buyer to consummate the transactions contemplated hereby set forth
in
Section 6.2 becomes incapable of satisfaction prior to the Closing Date
and
shall not have been waived by the Buyer;
-8-
(c) by
written notice from the Sellers to the Buyer, if any condition to the obligation
of the Seller to consummate the transactions contemplated hereby set forth
in
Section 6.1 becomes incapable of satisfaction prior to the Closing Date
and
shall not have been waived by the Sellers; or
(d) by
written notice by the Sellers, if the Closing has not occurred on or prior
to
January 3, 2008.
7.2 Procedure
and Effect of Termination.
In the
event of the termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to Section 7.1 hereof, written
notice
thereof shall forthwith be given by the Sellers, on the one hand, or the
Buyer,
on the other hand, so terminating to the other parties, and this Agreement
shall
become null and void and have no effect and the transactions contemplated
hereby
shall be abandoned. If this Agreement is terminated pursuant to Section 7.1
hereof, there
shall be no liability or obligation hereunder on the part of the Sellers,
the
Company, the Buyer or any of their respective directors, officers, employees,
affiliates, controlling persons, agents or representatives, except (i) to
the
extent that such termination results from a material breach by a party of
any
representation, warranty, covenant or agreement in this Agreement; and (ii)
except that the obligations provided for in this Section 7.2 and
Sections 5.4, 10.1, 10.6 and 10.10 hereof shall survive any such
termination.
Section
8. Indemnification.
8.1 Indemnification
Obligations of the Sellers.
Except
to the extent otherwise provided in this Section 8, the Sellers shall indemnify,
defend, and hold harmless the Buyer and its officers, directors, employees,
and
affiliates, and each of the heirs, executors, successors, and assigns of
any of
the foregoing (collectively, the “Buyer
Indemnified Parties”)
from,
against, and in respect of any and all losses arising out of or relating
to:
(a) any
breach or inaccuracy of any representation or warranty made by the Sellers
in
this Agreement or any certificate or document delivered pursuant to this
Agreement; or
(b) any
breach of any covenant, agreement, or undertaking made by the Sellers in
this
Agreement.
8.2 Indemnification
Obligations of the Buyer.
The
Buyer shall indemnify and hold harmless the Seller and his respective officers,
directors, employees, and affiliates, and each of the heirs, executors,
successors, and assigns of any of the foregoing (collectively, the “Seller
Indemnified Parties”)
from,
against, and in respect of any and all losses arising out of or relating
to:
(a) any
breach or inaccuracy of any representation or warranty made by the Buyer
in
Section 4, or any certificate or document delivered pursuant to this Agreement;
and
(b) any
breach of any covenant, agreement, or undertaking made by the Buyer in
this
Agreement.
-9-
8.3 Claims
Period.
For
purposes of this Section 8, a “Claims
Period”
shall
be the period during which a claim for indemnification may be asserted under
this Section 8 by an Indemnified Party, which period shall begin on the Closing
Date and terminate eighteen (18) months after the Closing Date; and from
any
breach of the representations and warranties contained in Sections 3.1, 3.2,
3.3, 3.4(b), 4.1, 4.2 4.3, 4.5, 4.10, 9.4 and 9.5 hereof, the Claims Period
shall extend indefinitely, subject to any statute of limitations applicable
to
the underlying claim against such Indemnified Party. Notwithstanding the
foregoing, if prior to the close of business on the last day of the
applicable Claims
Period, an Indemnifying Party shall have been properly notified of a claim
for
indemnity hereunder and such claim shall not have been finally resolved or
disposed of at such date, such claim shall continue to survive and shall
remain
a basis for indemnity hereunder until such claim is finally resolved or disposed
of in accordance with the terms hereof.
8.4 Threshold
and Cap Amounts.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the Sellers have any liability for losses arising under Section 8.1 until
the
aggregate of all such losses for which indemnification is sought therefor
exceeds Ten Thousand Dollars ($10,000.00) (the “Threshold
Amount”),
after
which the damaged party shall be entitled to be indemnified for all losses
exceeding the Threshold Amount. The Sellers’ aggregate liability for all losses
under this Section 8 shall be limited to the amount of the Purchase Price
(the
“Cap”).
Notwithstanding the foregoing, losses arising under (a) Sections 3.4(b),
3.8,
3.9, 4.4, 5.4, or (b) pursuant to any matter constituting fraud under applicable
law shall not be subject to the Threshold Amount.
8.5 Limitations
on Indemnification.
Notwithstanding anything contained herein to the contrary:
(a) No
Indemnifying Party shall be liable hereunder for any special, punitive
or loss
of opportunity damages of any kind or nature (other than for any such damages
actually incurred by an Indemnified Party to an unaffiliated third
party).
(b) Attorney,
consultant, and other professional fees and disbursements incurred by an
Indemnified Party in connection with this Section 8 shall be reasonable
and
based only on time actually spent which shall be charged at no more than
such
professional’s standard hourly rate.
Section
9. Post-Closing
Covenants.
9.1 Preparation
and Filing of Tax Returns.
From
and after Closing, the Buyer will cause the Company to prepare and timely
file
all appropriate Federal, state, provincial, local and foreign tax returns
in
respect of the Company, including the December 31, 2007, Federal and state
income tax returns. The Company has filed all other required tax returns
for the
Company.
9.2 Payment
of Taxes.
The
Buyer
shall cause the Company to timely pay (a) all income taxes, and all other
taxes
shown as due with respect to tax returns which the Buyer on behalf of the
Company is obligated to prepare and file or cause to be prepared and filed
pursuant to Section 9.1, and (b) all taxes other than income taxes due on
or
before the Closing Date for which no tax return is required to be filed.
The
Sellers represent and warrant that there will be no taxes due on the December
31, 2007, Federal and state corporate income tax returns, provided Closing
occurs after December 31, 2007. The Buyer shall cause the Company to timely
pay
or cause to be paid (a) all income taxes, and all other taxes shown as due
with
respect to tax returns which the Buyer is obligated to prepare and file or
cause
to be prepared and filed pursuant to Section 9.1 and (b) all taxes other
than
income taxes due and payable after the Closing Date for which no tax return
is
required to be filed.
-10-
9.3 Transfer
Taxes.
All
transfer, documentary, sales, use, stamp, registration and other such taxes,
and
all conveyance fees, recording charges and other fees and charges (including
penalties and interest, but excluding income taxes associated with the sale),
incurred in connection with, or as a result of, the Buyer’s acquisition of the
Shares will be paid by the Buyer.
9.4 Company
Registration.
The
following covenant of the Buyer shall survive the Closing:
(a) If
the
Company proposes to register (including for this purpose a registration
effected
by the Company for stockholders other than the Shareholders or Buyer) any
of its
stock or other securities under the Securities Act in connection with the
public
offering of such securities solely for cash (other than a registration
statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction, a registration on any form which does not include substantially
the
same information as would be required to be included in a registration
statement
covering the sale of the Registrable Securities or a registration in which
the
only common stock being registered is common stock issuable upon conversion
of
debt securities which are also being registered), the Company shall (and
the
Buyer shall cause the Company), at such time, promptly give each Seller
written
notice of such registration. Upon the written request of each Seller given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 10.1, the Company shall, subject to the provisions
of
Section 9.4(b), cause to be registered under the Securities Act all of
the
Registrable Securities that each such Seller has requested to be registered.
The
Company shall have the right to terminate or withdraw any registration
initiated
by it under this Section 9.4 prior to the effectiveness of such registration
whether or not any Seller has elected to include securities in such
registration. The expenses of such withdrawn registration shall be borne
by the
Company in accordance with Section 9.4(b) hereof.
(b) In
connection with any offering involving an underwriting of shares of the
Company’s capital stock pursuant to this Section 9.4, the Company shall not be
required to include any of the Sellers’ securities in such underwriting unless
they accept the terms of the underwriting as agreed upon between the Company
and
its underwriters, and then only in such quantity as the underwriters determine
in their sole discretion will not jeopardize the success of the offering
by the
Company. If the total number of securities, including Registrable Securities,
requested by the stockholders to be included in such offering exceeds the
amount
of securities to be sold other than by the Company that the underwriters
determine in their reasonable discretion is compatible with the success
of the
offering, then the Company shall be required to include in the offering
only
that number of such securities, including Registrable Securities, which
the
underwriters and the Company determine in their sole discretion will not
jeopardize the success of the offering. In no event shall any Registrable
Securities be excluded from such offering unless all other stockholders’
securities have been first excluded. In the event that the underwriters
determine that less than all of the Registrable Securities requested to
be
registered can be included in such offering, then the Registrable Securities
that are included in such offering shall be apportioned pro rata among
the
selling Sellers based on the number of Registrable Securities held by all
selling Sellers or in such other proportions as shall mutually be agreed
to by
all such selling Sellers. Notwithstanding the foregoing, in no event shall
the
amount of securities of the selling Sellers included in the offering be
reduced
below thirty percent (30%) of the total amount of securities included in
such
offering, unless such offering is the Company’s IPO in which case the selling
Sellers may be excluded beyond this amount if the underwriters make the
determination described above and no other stockholder’s securities are included
in such offering. For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder which is a Seller of Registrable
Securities and which is an investment fund, partnership, limited liability
company or corporation, the partners, members, retired partners, retired
members, stockholders and affiliates of such Seller, or the estates and
family
members of any such partners, retired partners, members and retired members
and
any trusts for the benefit of any of the foregoing persons shall be deemed
to be
a single “selling Seller”, and any pro-rata reduction with respect to such
“selling Seller” shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
“selling Seller,” as defined in this sentence.
-11-
(c) The
term
“Registrable Securities” means (i) the Company Shares sold hereunder, (ii) the
Company Shares retained by the Sellers, and (iii) any common stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of the Company Shares
referenced in clause (i) and (ii) above.
9.5 Right
of Co-Sale.
To the
extent Section 9.4 has not been satisfied by the Company or the Sellers’ Shares
have not been registered, the following covenant of the Buyer shall survive
the
Closing:
(a) In
the
event of a Proposed Transfer of any of the Company Shares acquired by the
Buyer
or its assigns (“Key Holder”) hereunder is to be sold to a third party, each
respective Seller may elect to exercise its Right of Co-Sale and participate
on
a pro-rata basis in the Proposed Transfer on the same terms and conditions
specified in the Proposed Transfer Notice, which shall be given no later
then
ten (10) days after agreement as to the terms and conditions of the Proposed
Transfer. Each Seller who desires to exercise its Right of Co-Sale must
give the
Key Holder written notice to that effect within thirty (30) days after
the
deadline for delivery of Proposed Transfer Notice, and upon giving such
notice
such Seller shall be deemed to have effectively exercised the Right of
Co-Sale.
-12-
(b) Each
Seller who timely exercises his, her or its Right of Co-Sale by delivering
the
written notice may include in the Proposed Transfer all or any part of
his, her
or its Company Shares equal to the product obtained by multiplying (i)
the
aggregate number of shares of Company Shares subject to the Proposed Transfer
by
(ii) a fraction, the numerator of which is the number of shares of Company
Shares owned by such Seller immediately before consummation of the Proposed
Transfer and the denominator of which is the total number of shares of
Company
Shares owned, in the aggregate, by all Sellers immediately prior to the
consummation of the Proposed Transfer plus the number of shares of Company
Shares held by the Key Holder. To the extent one or more of the Sellers
exercise
such right of participation in accordance with the terms and conditions
set
forth herein, the number of shares of Company Shares that the Key Holder
may
sell in the Proposed Transfer shall be correspondingly reduced.
(c) Each
Seller shall effect its participation in the Proposed Transfer by delivering
to
the transferring Key Holder, no later than thirty (30) days after such
Seller’s
exercise of the Right of Co-Sale, one or more stock certificates, properly
endorsed for transfer to the Prospective Transferee, representing the number
of
shares of Company Shares that such Seller elects to include in the Proposed
Transfer.
(d) The
terms
and conditions of any sale pursuant to this Section 9.5 will be memorialized
in,
and governed by, a written purchase and sale agreement with customary terms
and
provisions for such a transaction.
(e) Each
stock certificate a Seller delivers to the selling Key Holder pursuant
to this
Section 9.5 will be transferred to the Prospective Transferee against payment
therefor in consummation of the sale of the Company Shares pursuant to
the terms
and conditions specified in the Proposed Transfer Notice and the purchase
and
sale agreement, and the selling Key Holder shall concurrently therewith
remit to
each Seller the portion of the sale proceeds to which such Seller is entitled
by
reason of its participation in such sale. If any Prospective Transferee
or
Transferees refuse(s) to purchase securities subject to the Right of Co-Sale
from any Seller exercising its Right of Co-Sale hereunder, no Key Holder
may
sell any Key Holder Shares to such Prospective Transferee or Transferee
unless
and until, simultaneously with such sale, such Key Holder purchases all
securities subject to the Right of Co-Sale from such Seller.
(f) If
any
Proposed Transfer is not consummated within forty-five (45) days after
receipt
of the Proposed Transfer Notice by the Company and Sellers, the Key Holders
proposing the Proposed Transfer may not sell any Key Holder’s Shares unless they
first comply in full with each provision of this Section 9.5. The exercise
or
election not to exercise any right by any Seller hereunder shall not adversely
affect its right to participate in any other sales of Company Shares subject
to
this Section 9.5.
(g) “Proposed
Transfer” means any proposed assignment, sale, offer to sell, pledge, mortgage,
hypothecation, encumbrance, disposition of or any other like transfer or
encumbering of any Company Shares (or any interest therein) proposed by
any of
the Key Holders.
-13-
Section
10. Miscellaneous.
10.1 Notices.
All
notices, communications and deliveries hereunder shall be made in writing
signed
by the party making the same, shall specify the section hereunder pursuant
to which it is given or being made, and shall be delivered personally or
by
telecopy transmission or sent by registered or certified mail or by any express
mail or courier delivery service (with postage and other fees prepaid) as
follows:
If
to Buyer
|
If
to Xxxxxxx
|
Xxxxxx
Capital Management, LLC
Attn:
Xxxx Xxxxxx
P.O.
Box 309
0000
Xxxxx 00xx
Xxxxxx
Xxxxx,
XX 00000
Telephone
No.: 000.000.0000
|
Xxxxxxx
X. Xxxxx, Esq.
00000
Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx,
XX 00000
Telephone
No.: 000.000.0000
|
or
to
such other representative or at such other address of a party as such party
hereto may furnish to the other parties in writing. Such notice shall be
effective upon the date of delivery or refusal of delivery, if sent by personal
delivery, registered, certified, or express mail, or courier delivery, or
upon
transmission by telecopy transmission, if immediately confirmed by telephone
or
electronic means.
10.2 Attachments.
All
schedules, annexes and exhibits attached hereto are hereby incorporated into
this Agreement and are hereby made a part hereof as if set out in full in
this
Agreement.
10.3 Successors
in Interest.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and each of their respective successors and permitted assigns. No
party
may assign this Agreement or its rights hereunder without, the other parties
consent, provided, however, the Buyer may assign its right to purchase, but
not
the obligations under this Agreement, the Shares to third parties at Closing,
provided such third parties, on their own account, satisfy the representations
and warranties set forth in Section 4 and the other obligations and conditions
of Closing in this Agreement.
10.4 Number;
Gender; Currency.
Whenever the context so requires, the singular number shall include the plural
and the plural shall include the singular, and the gender of any pronoun
shall
include the other genders. Unless otherwise expressly noted to the contrary,
all
references in this Agreement to “dollars” or “$” shall mean United States
dollars.
10.5 Captions.
The
titles, captions, and table of contents contained in this Agreement are inserted
herein only as a matter of convenience and for reference and in no way define,
limit, extend, or describe the scope of this Agreement or the intent
of
any provision hereof.
10.6 Controlling
Law; Integration; Amendment.
This
Agreement shall be governed by and construed and enforced in accordance with
the
internal laws of the State of Nebraska without reference to Nebraska choice
of
law rules. Except as hereinafter provided, this Agreement supersedes all
negotiations, agreements, and understandings among the parties with respect
to
the subject matter hereof.
This
Agreement constitutes the entire agreement among the parties hereto. This
Agreement may not be amended, modified, or supplemented except by written
agreement of the Buyer and the Sellers. No provision of this Agreement shall
be
construed against or interpreted to the disadvantage of any party hereto
by any
governmental authority by reason of such party or its counsel having or being
deemed to have structured or drafted such provision.
-14-
10.7 Severability.
Any
provision hereof which is prohibited or unenforceable in any jurisdiction
will,
as to such jurisdiction, be ineffective to the extent of such prohibition
or
unenforceability without invalidating the remaining provisions hereof, and
any
such prohibition or unenforceability in any jur-is-diction will not invalidate
or render unenforceable such provi-sion in any other jurisdiction. To the
extent
permitted by law, the parties hereto waive any provision of law which renders
any such provision prohibited or unenforceable in any respect.
10.8 Counterparts.
This
Agreement may be executed in counterparts each of which shall be deemed an
original and all of which together shall constitute one and the same
agreement.
10.9 Enforcement
of Certain Rights.
Nothing
expressed or implied in this Agreement is intended, or shall be construed,
to
confer upon or give any person, other than the parties hereto, and their
successors or permitted assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, or result in such person
being
deemed a third-party beneficiary of this Agreement.
10.10 Legal
Proceedings.
Any
controversy, claim, or question of interpretation in dispute between the
Sellers, on one hand, and the Buyer, on the other hand (the Sellers, on one
hand, and the Buyer, on the other hand, each being referred to as a “party”)
arising out of or relating to this Agreement or the breach thereof shall
be
brought in the U.S. federal and state courts situated in Xxxxxxx County,
Nebraska. The non-prevailing party shall pay all costs of the proceedings,
including reasonable attorney’s fees and expenses. Each party hereto hereby
submits to personal jurisdiction therein and irrevocably waives any objection
as
to venue therein, and further agrees not to plead or claim in any such court
that any such proceeding has been brought in an inconvenient forum. Each
such
person irrevocably consents to service of process in any such proceeding
by the
mailing of copies thereof by certified mail, postage prepaid, to such person’s
address for notices under this Agreement.
10.12 Waiver
of Conflict. Each
party to this Agreement acknowledges that Xxxxxxxx | Xxxxxxxxxx, PC, LLO,
counsel for the Company and Sellers, has in the past performed and may continue
to perform legal services for the Buyer, the Company and the Sellers in matters
unrelated to the transactions described in this Agreement. Accordingly, each
party to this Agreement hereby (a) acknowledges that they have had an
opportunity to ask for information relevant to this disclosure; and (b) gives
its informed consent to such representation by Xxxxxxxx | Xxxxxxxxxx, PC,
LLO,
in such unrelated matters and to the representation of the Company by Xxxxxxxx
|
Xxxxxxxxxx, PC, LLO, in connection with this Agreement and the transactions
contemplated hereby.
-15-
In
Witness Whereof,
each of
the parties hereto has executed this Agreement as of the date and year first
above written.
Buyer
Luther
Capital management, LLC
|
|
/s/
Xxxx Xxxxxx, Manager and Member
|
Sellers
/s/
Xxxxxxx X. Xxxxx
|
/s/
Xxxxxx X. Xxxxxxx
|
CVS
Operations Group Limited Partnership
/s/
Xxxxxxx X. Xxxxxxxxxx, its Partner
|
/s/
Xxxxxx X. Xxxxxxx
|
/s/
Xxxxxxx Xxxxxx
|
/s/
Xxxxxx X. Xxxxxxxx
|
/s/
Xxxxxx X. Xxxxxxxxx
|
/s/
Xxxxxxx X. Xxxxxxx
|
/s/
Xxxx Xxxxxx
|
/s/
Xxxxxxx X. Xxxxxx
|
/s/
Xxxx X. Xxxxxx
|
/s/
Xxxx X. Xxxxxxx
|
-16-