SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement") is made as of January 23, 2006 by
Global Gold Mining, LLC, a Delaware, United States limited liability company
("Buyer"), Athelea Investments an Armenian Closed Joint Stock Company (the
Company"), shareholders Xxxxx Xxxxxxxx, a citizen of Australia resident in
Armenia, ("A"), Xxxxxx Xx Xxxxxxx, a citizen of Australia resident in Australia
("B"), Xxxxx Xxxxxxxxx, a citizen of Armenia resident in Armenia ("C"), and
Xxxxx Xxxxxxxxx, a citizen of the United States resident in Armenia ("D")
(collectively "Sellers").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, eighty shares which is
the equivalent of eighty percent (80%) of the issued and outstanding shares (the
"Shares") of the Company and thereafter to transfer back to Sellers certain
assets not connected to the "Getik" gold and uranium property and exploration
license in Armenia (which property is more particularly described in Exhibit 1
attached hereto and made a part hereof ) ("Getik") for the consideration and on
the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"Acquired Company"--the Company and its Subsidiaries if any,
collectively.
"Applicable Contract"--any Contract (a) under which the Acquired
Company has or may acquire any rights, (b) under which the Acquired Company has
or may become subject to any obligation or liability, or (c) by which the
Acquired Company or any of the assets owned or used by it is or may become
bound.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving
a result would use in similar circumstances to ensure that such result is
achieved as expeditiously as possible.
"Breach"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Buyer"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Company"--as defined in the Recitals of this Agreement.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contract"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages"--as defined in Section 10.2.
"Disclosure Letter"--the disclosure letter delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"Employment Agreements"--as defined in Section 2.4(a)(iii).
"Encumbrance"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Facilities"--any real property, leaseholds, or other interests
currently or formerly owned or operated by the Acquired Company and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by the Acquired
Company.
"GAAP"--generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(b) were prepared.
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"Governmental Authorization"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Activity"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Acquired
Company.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefore and asbestos or asbestos-containing materials.
"Intellectual Property Assets"--as defined in Section 3.22.
"Interim Balance Sheet"--as defined in Section 3.4.
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"Knowledge"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter.
A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor, or trustee of
such Person (or in any similar capacity) has, or at any time had, Knowledge of
such fact or other matter.
"Legal Requirement"--any national, regional, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Order"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of such
Person (or by any Person or group of Persons exercising similar authority) ; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
"Organizational Documents"--(a) the articles or certificate of
formation a company ; (b) any charter or similar constituent document adopted or
filed in connection with the creation, formation, or organization of a Person;
and (c) any amendment to any of the foregoing.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan"--as defined in Section 3.13.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
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"Promissory Notes"--as defined in Section 2.4(b)(ii).
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership of voting securities or other voting interests representing at least
25% of the outstanding voting power of a Person or equity securities or other
equity interests representing at least 25% of the outstanding equity securities
or equity interests in a Person.
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"Representative"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act"--the United States Securities Act of 1933 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Shares"--as defined in the Recitals of this Agreement.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threatened"--a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING.
2.1 Shares. Subject to the terms and conditions of this Agreement, at
the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Sellers.
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2.2 Purchase Price. The purchase price (the "Purchase Price") for the
Shares will be One Hundred Thousand (100,000) shares of the common stock of
Global Gold Corporation ("GBGD") which shall be delivered and vest on the terms
of the Stock Award Agreements attached hereto and made a part hereof as Exhibit
2. The Purchase Price is inclusive of and the Sellers are solely and separately
responsible for all taxes, fees and levies, duties and other charges applicable
now or those which may become applicable in the future, including such taxes,
duties or other charges acknowledged retroactive, which may be imposed on any of
the Purchase Price (including, but not limited to, the property tax, profit or
income tax, VAT) (all taxes, duties or other charges hereinafter collectively
referred to as the "Taxes"), associated with, or payment of, such Purchase
Price. Buyer may calculate, and withhold from the Purchase Price and pay any Tax
on behalf of the Sellers.
2.3 Closing. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Buyer's counsel at 0x Xxxxxxxx
Xxxxxx, Xxxxx #0 Xxxxxxx , Xxxxxxx, at 10:00 a.m. (local time) on or before
January 31, 2006. Subject to the provisions of Section 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
2.4 Closing Obligations. At the Closing:
-------------------
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers or
equivalent documents), with signatures for transfer to Buyer;
(ii) an executed version of the Shareholders
Agreement attached hereto and made a part hereof as Exhibit 3
(the Shareholder's Agreement");
(iii) a certificate executed by Sellers representing
and warranting to Buyer that each of Sellers' representations
and warranties in this Agreement was accurate in all respects
as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date
(giving full effect to any supplements to the Disclosure
Letter that were delivered by Sellers to Buyer prior to the
Closing Date in accordance with Section 5.5.; and
(v) a resolution of the Company authorizing transfer
of Shares to Buyer.
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(b) Buyer will deliver to Sellers:
(i) the Purchase Price;
(ii) an executed version of the Shareholders
Agreement;
(iii) a legal transfer of all assets and
liabilities not connected to Getik,
(including but not limited to the right to
use the name "Athelea" and all financial
rights and obligations) back to Sellers and
(iv) a certificate executed by Buyer to the effect
that, except as otherwise stated in such certificate, each of
Buyer's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made
on the Closing Date;
3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers represent and warrant to
Buyer as follows:
3.1 Organization and Good Standing.
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate list for the Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do
business, and its capitalization (including the identity of each
participant and the number of shares held by each). The Acquired
Company is a company duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation, with full
company power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to
own or use, and to perform all its obligations under Applicable
Contracts. The Acquired Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
(b) Sellers have delivered to Buyer copies of the
Organizational Documents of the Acquired Company, as currently in
effect.
3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with
its terms. Upon the execution and delivery by Sellers of the documents
identified in Article 2.4(a) above, (collectively, the "Sellers'
Closing Documents"), the Sellers' Closing Documents will constitute the
legal, valid, and binding obligations of Sellers, enforceable against
Sellers in accordance with their respective terms. Sellers have the
absolute and unrestricted right, power, authority, and capacity to
execute and deliver this Agreement and the Sellers' Closing Documents
and to perform their obligations under this Agreement and the Sellers'
Closing Documents.
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(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution nor delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a
violation of any provision of the Organizational Documents of
the Acquired Company, or (B) any resolution adopted by the
board of directors or the stockholders of the Acquired
Company;
(ii) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person
the right to challenge any of the Contemplated Transactions or
to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Acquired Company or a
Seller, or any of the assets owned or used by the Acquired
Company, may be subject;
(iii) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization
that is held by the Acquired Company or that otherwise relates
to the business of, or any of the assets owned or used by, the
Acquired Company;
(iv) cause Buyer or the Acquired Company to become
subject to, or to become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Acquired
Company to be reassessed or revalued by any taxing authority
or other Governmental Body;
(vi) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person
the right to declare a default or exercise any remedy under,
or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
(vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or
used by the Acquired Company.
Except as set forth in Part 3.2 of the Disclosure Letter, no
Seller or Acquired Company is or will be required to give any
notice to or obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated
Transactions.
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(c) Sellers are acquiring the GBGD shares for their own
account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act.
3.3 Capitalization. Sellers are and will be on the Closing Date the
record and beneficial owners and holders of the Shares, free and clear of all
Encumbrances. A owns 30 Shares, B owns 30 Shares, C owns 10 Shares, and D owns
30 Shares. No legend or other reference to any purported Encumbrance appears
upon any certificate representing equity securities of the Acquired Company. All
of the outstanding equity securities of each Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Acquired Company. None of the outstanding equity
securities or other securities of the Acquired Company was issued in violation
of any other Legal Requirement. The Acquired Company does not own, nor has any
Contract to acquire, any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business.
3.4 Financial Statements. Sellers have delivered to Buyer any of the
following which exist: (a) balance sheets of the Acquired Company as at December
31, 2005 and the related statements of income, changes in stockholders' equity,
and cash flow for each of the fiscal years then ended, (b) a balance sheet of
the Acquired Company as at December 31, 2005 (including the notes thereto, the
"Balance Sheet"), and the related statements of income, changes in shareholders'
equity, and cash flow for the fiscal year then ended.
3.5 Books and Records. The books of account, minute books, share record
books, and other records of the Acquired Company, all of which have been made
available to Buyer, are complete and correct and have been maintained in
accordance with sound business practices and legal requirements, including the
maintenance of an adequate system of internal controls. The minute books of the
Acquired Company contains accurate and complete records of all meetings held of,
and corporate action taken by the Acquired Company, and no meeting has been held
for which minutes have not been prepared and are not contained in such minute
books. At the Closing, all of those books and records will be in the possession
of the Acquired Company.
3.6 Title to Properties; Encumbrances. Part 3.6 of the Disclosure
Letter contains a complete and accurate list of all real property, leaseholds,
licenses, or other interests therein owned by the Acquired Company. Sellers have
delivered to Buyer copies of the deeds and other instruments (as recorded) by
which the Acquired Company acquired such real property and interests, and copies
of all title insurance policies, opinions, abstracts, and surveys in the
possession of Sellers or the Acquired Company and relating to such property or
interests. The Acquired Company owns (with good and marketable title in the case
of real property, subject only to the matters permitted by the following
sentence) all the properties, licenses, and assets (whether real, personal, or
mixed and whether tangible or intangible) that it purports to own located in the
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facilities owned or operated by the Acquired Company or reflected as owned in
the books and records of the Acquired Company, including all of the properties
and assets reflected in the Balance Sheet and the Interim Balance Sheet (except
for assets held under capitalized leases disclosed or not required to be
disclosed in Part 3.6 of the Disclosure Letter and personal property sold since
the date of the Balance Sheet and the Interim Balance Sheet, as the case may be,
in the Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by the Acquired Company since the date of the
Balance Sheet (except for personal property acquired and sold since the date of
the Balance Sheet in the Ordinary Course of Business and consistent with past
practice). All material properties and assets reflected in the Balance Sheet and
the Interim Balance Sheet are free and clear of all Encumbrances and are not, in
the case of real property, subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations of any nature
except, with respect to all such properties and assets, (a) mortgages or
security interests shown on the Balance Sheet or the Interim Balance Sheet as
securing specified liabilities or obligations, with respect to which no default
(or event that, with notice or lapse of time or both, would constitute a
default) exists, (b) mortgages or security interests incurred in connection with
the purchase of property or assets after the date of the Interim Balance Sheet
(such mortgages and security interests being limited to the property or assets
so acquired), with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (c) liens for current
taxes not yet due, and (d) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of the Acquired Company, and (ii) zoning laws
and other land use restrictions that do not impair the present or anticipated
use of the property subject thereto. All buildings, plants, and structures owned
by the Acquired Company lies wholly within the boundaries of the real property
owned by the Acquired Company and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person.
3.7 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment of the Acquired Company, if any, are structurally
sound, are in good operating condition and repair, and are adequate for the uses
to which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost. The building,
plants, structures, and equipment of the Acquired Company are sufficient for the
continued conduct of the Acquired Company's business after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8 Accounts Receivable. All accounts receivable of the Acquired
Company that are reflected on the Balance Sheet or the Interim Balance Sheet or
on the accounting records of the Acquired Company as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Balance Sheet or the
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Interim Balance Sheet or on the accounting records of the Acquired Company as of
the Closing Date (which reserves are adequate and calculated consistent with
past practice and, in the case of the reserve as of the Closing Date, will not
represent a greater percentage of the Accounts Receivable as of the Closing Date
than the reserve reflected in the Interim Balance Sheet represented of the
Accounts Receivable reflected therein and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of aging).
Subject to such reserves, each of the Accounts Receivable either has been or
will be collected in full, without any set-off, within ninety days after the day
on which it first becomes due and payable. There is no contest, claim, or right
of set-off, other than returns in the Ordinary Course of Business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Part 3.8 of the Disclosure Letter contains
a complete and accurate list of all Accounts Receivable as of the date of the
Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
3.9 Inventory. All inventory of the Acquired Company, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of a
quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Balance Sheet or
the Interim Balance Sheet or on the accounting records of the Acquired Company
as of the Closing Date, as the case may be. All inventories not written off have
been priced at the lower of cost or market value basis. The quantities of each
item of inventory (whether raw materials, work-in-process, or finished goods)
are not excessive, but are reasonable in the present circumstances of the
Acquired Company.
3.10 No Undisclosed Liabilities. Except as set forth in Part 3.10 of
the Disclosure Letter, the Acquired Company has no liabilities or obligations of
any nature (whether known or unknown and whether absolute, accrued, contingent,
or otherwise) except for liabilities or obligations reflected or reserved
against in the Balance Sheet or the Interim Balance Sheet.
3.11 Taxes.
(a) The Acquired Company has filed or caused to be filed all
Tax Returns that are or were required to be filed by or with respect to
any of it, either separately or as a member of a group of corporations,
pursuant to applicable Legal Requirements. Sellers have delivered to
Buyer copies of, and Part 3.11 of the Disclosure Letter contains a
complete and accurate list of, all such Tax Returns. The Acquired
Company has paid, or made provision for the payment of, all Taxes that
have or may have become due pursuant to those Tax Returns or otherwise,
or pursuant to any assessment received by the Acquired Company, except
such Taxes, if any, as are listed in Part 3.11 of the Disclosure Letter
and are being contested in good faith and as to which adequate reserves
have been provided in the Balance Sheet and the Interim Balance Sheet.
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(b) The Tax Returns of the Acquired Company subject to such
Taxes have been audited by all the relevant authorities or are closed
by the applicable statute of limitations for all taxable years through
the date of Closing. Part 3.11 of the Disclosure Letter contains a
complete and accurate list of all audits of all such Tax Returns,
including a reasonably detailed description of the nature and outcome
of each audit. All deficiencies proposed as a result of such audits
have been paid, reserved against, settled, or, as described in Part
3.11 of the Disclosure Letter, are being contested in good faith by
appropriate proceedings. Part 3.11 of the Disclosure Letter describes
all adjustments for all taxable years since 2004. Except as described
in Part 3.11 of the Disclosure Letter, no Seller or Acquired Company
has given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of the
Acquired Company or for which the Acquired Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes
on the respective books of the Acquired Company are adequate and are at
least equal to the Acquired Company's liability for Taxes. There exists
no proposed tax assessment against the Acquired Company except as
disclosed in the Balance Sheet or in Part 3.11 of the Disclosure
Letter. All Taxes that the Acquired Company is or was required by Legal
Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a
consolidated basis) the Acquired Company are true, correct, and
complete. There is no tax sharing agreement that will require any
payment by the Acquired Company after the date of this Agreement.
3.12 No Material Adverse Change. Since the date of the Balance Sheet,
there has not been any adverse change in the business, operations, properties,
prospects, assets, or condition of the Acquired Company, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.13 Employee benefits.
(a) Part 3.13(i) of the Disclosure Letter contains a complete
and accurate list of all Company employee benefit plans and
obligations.
(b) The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit.
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3.14 Compliance with Legal Requirements; Governmental
Authorizations.
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) The Acquired Company is, and at all times has
been, in full compliance with each Legal Requirement that is
or was applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) (A) may
constitute or result in a violation by the Acquired Company
of, or a failure on the part of the Acquired Company to comply
with, any Legal Requirement, or (B) may give rise to any
obligation on the part of the Acquired Company to undertake,
or to bear all or any portion of the cost of, any remedial
action of any nature; and
(iii) The Acquired Company has not received, at any
time, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of the Acquired Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by the
Acquired Company or that otherwise relates to the business of, or to
any of the assets owned or used by, the Acquired Company. Each
Governmental Authorization listed or required to be listed in Part 3.14
of the Disclosure Letter is valid and in full force and effect. Except
as set forth in Part 3.14 of the Disclosure Letter:
(i) The Acquired Company is, and at all times has
been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified or
required to be identified in Part 3.14 of the Disclosure
Letter;
(ii) no event has occurred or circumstance exists
that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter;
14
(iii) The Acquired Company has not received, at any
time, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of or failure to comply with any term or requirement
of any Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to
any Governmental Authorization; and
(iv) all applications required to have been filed for
the renewal of the Governmental Authorizations listed or
required to be listed in Part 3.14 of the Disclosure Letter
have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations
have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations
necessary to permit the Acquired Company to lawfully conduct and
operate their businesses in the manner they currently conduct and
operate such businesses and to permit the Acquired Company to own and
use their assets in the manner in which they currently own and use such
assets.
3.15 Legal Proceedings; Orders.
(a) Except as set forth in Part 3.15 of the Disclosure
Letter, there is no pending Proceeding:
(i) that has been commenced by or against the
Acquired Company or that otherwise relates to or may affect
the business of, or any of the assets owned or used by, the
Acquired Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of Sellers and the Acquired Company, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. Sellers have delivered to Buyer
copies of all pleadings, correspondence, and other documents relating
to each Proceeding listed in Part 3.15 of the Disclosure Letter. The
Proceedings listed in Part 3.15 of the Disclosure Letter will not have
a material adverse effect on the business, operations, assets,
condition, or prospects of the Acquired Company.
15
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which the Acquired Company,
or any of the assets owned or used by the Acquired Company, is
subject;
(ii) no Seller is subject to any Order that relates
to the business of, or any of the assets owned or used by, the
Acquired Company; and
(iii) no officer, director, agent, or employee of the
Acquired Company is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the
business of the Acquired Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) The Acquired Company is, and at all times has
been, in full compliance with all of the terms and
requirements of each Order to which it, or any of the assets
owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists
that may constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which the Acquired
Company, or any of the assets owned or used by the Acquired
Company, is subject; and
(iii) the Acquired Company has not received, at any
time, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any term or
requirement of any Order to which the Acquired Company, or any
of the assets owned or used by the Acquired Company, is or has
been subject.
3.16 Absence of Certain Changes and Events. Except as set forth in Part
3.16 of the Disclosure Letter, since the date of the Balance Sheet, the Acquired
Company has conducted its businesses only in the Ordinary Course of Business and
there has not been any:
(a) change in the Acquired Company's authorized or issued
capital; grant of any share option or right to purchase shares of
capital of the Acquired Company; issuance of any security convertible
into such capital stock; grant of any registration rights; purchase,
redemption, retirement, or other acquisition by the Acquired Company of
any shares; or declaration or payment of any dividend or other
distribution or payment;
16
(b) amendment to the Organizational Documents of the Acquired
Company;
(c) payment or increase by the Acquired Company of any
bonuses, salaries, or other compensation to any stockholder, director,
officer, or (except in the Ordinary Course of Business) employee or
entry into any employment, severance, or similar Contract with any
director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or
with any employees of the Acquired Company;
(e) damage to or destruction or loss of any asset or property
of the Acquired Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business,
financial condition, or prospects of the Acquired Company, taken as a
whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii)
any Contract or transaction involving a total remaining commitment by
or to the Acquired Company of at least $1,000.00 USD;
(g) sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of
the Acquired Company or mortgage, pledge, or imposition of any lien or
other encumbrance on any material asset or property of the Acquired
Company, including the sale, lease, or other disposition of any of the
Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Acquired Company;
(i) material change in the accounting methods used by the
Acquired Company; or
(j) agreement, whether oral or written, by the Acquired
Company to do any of the foregoing.
3.17 Contracts; No Defaults.
(a) Part 3.17(a) of the Disclosure Letter contains a complete
and accurate list, and Sellers have delivered to Buyer true and
complete copies, of:
(i) each Applicable Contract that involves
performance of services or delivery of goods or materials by
the Acquired Company;
17
(ii) each Applicable Contract that involves
performance of services or delivery of goods or materials to
the Acquired Company;
(iii) each Applicable Contract that was not entered
into in the Ordinary Course of Business;
(iv) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Applicable Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any
real or personal property;
(v) each licensing agreement or other Applicable
Contract with respect to patents, trademarks, copyrights, or
other intellectual property, including agreements with current
or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other
employee representative of a group of employees;
(vii) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by the Acquired Company
with any other Person;
(viii) each Applicable Contract containing covenants
that in any way purport to restrict the business activity of
the Acquired Company or any Affiliate of the Acquired Company
or limit the freedom of the Acquired Company or any Affiliate
of the Acquired Company to engage in any line of business or
to compete with any Person;
(ix) each Applicable Contract providing for payments
to or by any Person based on sales, purchases, or profits,
other than direct payments for goods;
(x) each power of attorney that is currently
effective and outstanding;
(xi) each Applicable Contract entered into other than
in the Ordinary Course of Business that contains or provides
for an express undertaking by the Acquired Company to be
responsible for consequential damages;
(xii) each Applicable Contract for capital
expenditures in excess of Ten Thousand United States Dollars
($10,000.00);
18
(xiii) each written warranty, guaranty, and or other
similar undertaking with respect to contractual performance
extended by the Acquired Company other than in the Ordinary
Course of Business; and
(xiv) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably complete
details concerning such Contracts, including the parties to the
Contracts, the amount of the remaining commitment of the Acquired
Company under the Contracts, and the Acquired Company's office where
details relating to the Contracts are located.
(b) Except as set forth in Part 3.17(b) of the Disclosure
Letter:
(i) No Seller (and no Related Person of a Seller) has
or may acquire any rights under, and no Seller has or may
become subject to any obligation or liability under, any
Contract that relates to the business of, or any of the assets
owned or used by, the Acquired Company; and
(ii) no officer, director, agent, employee,
consultant, or contractor of the Acquired Company is bound by
any Contract that purports to limit the ability of such
officer, director, agent, employee, consultant, or contractor
to (A) engage in or continue any conduct, activity, or
practice relating to the business of the Acquired Company, or
(B) assign to the Acquired Company or to any other Person any
rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure
Letter, each Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter is in full force and effect and is
valid and enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure
Letter:
(i) The Acquired Company is, and at all times has
been, in full compliance with all applicable terms and
requirements of each Contract under which the Acquired Company
has or had any obligation or liability or by which the
Acquired Company or any of the assets owned or used by the
Acquired Company is or was bound;
(ii) each other Person that has or had any obligation
or liability under any Contract under which the Acquired
Company has or had any rights is, and at all times has been,
in full compliance with all applicable terms and requirements
of such Contract;
19
(iii) no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene,
conflict with, or result in a violation or breach of, or give
the Acquired Company or other Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or
modify, any Applicable Contract; and
(iv) the Acquired Company has not given to or
received from any other Person, at any time, any notice or
other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation or breach
of, or default under, any Contract.
(e) There are no renegotiations of, attempts to renegotiate,
or outstanding rights to renegotiate any material amounts paid or
payable to the Acquired Company under current or completed Contracts
with any Person and no such Person has made written demand for such
renegotiation.
(f) The Contracts relating to the sale, design, manufacture,
or provision of products or services by the Acquired Company has been
entered into in the Ordinary Course of Business and have been entered
into without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or promised, that
is or would be in violation of any Legal Requirement.
3.18 Insurance.
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of
insurance to which the Acquired Company is a party or under
which the Acquired Company, or any official of the Acquired
Company, is or has been covered at any time;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) any statement by the auditor of the Acquired
Company's financial statements with regard to the adequacy of
such entity's coverage or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting
the Acquired Company, including any reserves established
thereunder;
20
(ii) any contract or arrangement, other than a policy
of insurance, for the transfer or sharing of any risk by the
Acquired Company; and
(iii) all obligations of the Acquired Company to
third parties with respect to insurance (including such
obligations under leases and service agreements) and
identifies the policy under which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the preceding policy years:
(i) a summary of the loss experience under each
policy;
(ii) a statement describing each claim under an
insurance policy which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer,
type of insurance, and period of coverage; and
(C) the amount and a brief description of
the claim; and
(iii) a statement describing the loss experience for
all claims that were self-insured, including the number and
aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure
Letter:
(i) All policies to which the Acquired Company is a
party or that provide coverage to any Seller, the Acquired
Company, or any officer of the Acquired Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is
financially sound and reputable;
(C) taken together, provide adequate
insurance coverage for the assets and the operations
of the Acquired Company and for all risks to which
businesses such as the Acquired Company are normally
exposed;
21
(D) are sufficient for compliance with all
Legal Requirements and Contracts to which the
Acquired Company is a party or by which it is bound;
(E) will continue in full force and effect
following the consummation of the Contemplated
Transactions; and
(F) do not provide for any retrospective
premium adjustment or other experienced-based
liability on the part of the Acquired Company.
(ii) No Seller or the Acquired Company has received
(A) any refusal of coverage or any notice that a defense will
be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(iii) The Acquired Company has paid all premiums due,
and have otherwise performed all of their respective
obligations, under each policy to which the Acquired Company
is a party or that provides coverage to the Acquired Company
or director thereof.
(iv) The Acquired Company has given notice to the
insurer of all claims that may be insured thereby.
3.19 Environmental Matters. Except as set forth in part 3.19 of
the disclosure letter:
(a) The Acquired Company is, and at all times has been, in
full compliance with, and has not been and is not in violation of or
liable under, any Environmental Law. No Seller or the Acquired Company
has any basis to expect, nor has any of them or any other Person for
whose conduct they are or may be held to be responsible received, any
actual or Threatened order, notice, or other communication from (i) any
Governmental Body or private citizen acting in the public interest, or
(ii) the current or prior owner or operator of any Facilities, of any
actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which
Sellers or the Acquired Company has had an interest, or with respect to
any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or
processed by Sellers, the Acquired Company, or any other Person for
whose conduct they are or may be held responsible, or from which
Hazardous Materials have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
22
(b) There are no pending or, to the Knowledge of Sellers and
the Acquired Company, Threatened claims, Encumbrances, or other
restrictions of any nature, resulting from any Environmental, Health,
and Safety Liabilities or arising under or pursuant to any
Environmental Law, with respect to or affecting any of the Facilities
or any other properties and assets (whether real, personal, or mixed)
in which Sellers or the Acquired Company has or had an interest.
(c) No Seller or Acquired Company has any basis to expect, nor
has any of them or any other Person for whose conduct they are or may
be held responsible, received, any citation, directive, inquiry,
notice, Order, summons, warning, or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or
potential violation or failure to comply with any Environmental Law, or
of any alleged, actual, or potential obligation to undertake or bear
the cost of any Environmental, Health, and Safety Liabilities with
respect to any of the Facilities or any other properties or assets
(whether real, personal, or mixed) in which Sellers or the Acquired
Company had an interest, or with respect to any property or facility to
which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by Sellers, the Acquired
Company, or any other Person for whose conduct they are or may be held
responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
3.20 Employees.
(a) Part 3.20 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee, official,
or participant of the Acquired Company, including each employee on
leave of absence or layoff status: employer; name; job title; current
compensation paid or payable and any change in compensation since
January 1, 2005; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under the Acquired Company's
pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock
ownership (including investment credit or payroll stock ownership),
severance pay, insurance, medical, welfare, or vacation plan, other
Employee Pension Benefit Plan or Employee Welfare Benefit Plan, or any
other employee benefit plan or any other plan.
(b) No employee or official of the Acquired Company is a party
to, or is otherwise bound by, any agreement or arrangement, including
any confidentiality, noncompetition, or proprietary rights agreement,
between such employee or director and any other Person ("Proprietary
Rights Agreement") that in any way adversely affects or will affect (i)
the performance of his duties as an employee or director of the
Acquired Companies, or (ii) the ability of the Acquired Company to
conduct its business, including any Proprietary Rights Agreement with
Sellers or the Acquired Company by any such employee or director.
23
(c) Part 3.20 of the Disclosure Letter also contains a
complete and accurate list of the following information for each
retired employee or director of the Acquired Company, or their
dependents, receiving benefits or scheduled to receive benefits in the
future: name, pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other
benefits.
3.21 Labor Relations; Compliance. The Acquired Company has not been and
is not a party to any collective bargaining or other labor Contract. The
Acquired Company has complied in all respects with all Legal Requirements
relating to employment, the payment of social security and similar taxes,
occupational safety and health, and other employee relations. The Acquired
Company is not liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the applicable Legal Requirements.
3.22 Intellectual Property.
(a) Intellectual Property Assets. The term "Intellectual
Property Assets" includes:
(i) the name Athelea , all fictional business names,
trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions
and discoveries that may be patentable (collectively,
"Patents");
(iii) all copyrights in both published works and
unpublished works (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential
information, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"Trade Secrets"); owned, used, or licensed by the Acquired
Company as licensee or licensor.
(b) Agreements. Part 3.22(b) of the Disclosure Letter contains
a complete and accurate list and summary description, including any
royalties paid or received by the Acquired Company, of all Contracts
relating to the Intellectual Property Assets to which the Acquired
Company is a party or by which the Acquired Company is bound There are
no outstanding and, to Sellers' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
24
(c) Know-How Necessary for the Business.
(i) The Intellectual Property Assets are all those
necessary for the operation of the Acquired Company's
businesses as they are currently conducted and contemplated to
be conducted. The Acquired Company is the owner of all right,
title, and interest in and to each of the Intellectual
Property Assets, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims, and has the right to use without payment to a third
party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.22(c) of the
Disclosure Letter, no employee of the Acquired Company has
entered into any Contract that restricts or limits in any way
the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than the
Acquired Company.
(d) Patents.
(i) Part 3.22(d) of the Disclosure Letter contains a
complete and accurate list and summary description of all
Patents. The Acquired Company is the owner of all right,
title, and interest in and to each of the Patents, free and
clear of all liens, security interests, charges, encumbrances,
entities, and other adverse claims.
(ii) All of the issued Patents are currently in
compliance with formal legal requirements (including payment
of filing, examination, and maintenance fees and proofs of
working or use), are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling
due within ninety days after the Closing Date.
(iii) No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition
proceeding. To Sellers' Knowledge, there is no potentially
interfering patent or patent application of any third party.
(iv) No Patent is infringed or, to Sellers'
Knowledge, has been challenged or threatened in any way. None
of the products manufactured and sold, nor any process or
know-how used, by the Acquired Company infringes or is alleged
to infringe any patent or other proprietary right of any other
Person.
25
(e) Trademarks.
(i) Part 3.22(e) of Disclosure Letter contains a
complete and accurate list and summary description of all
Marks. The Acquired Company is the owner of all right, title,
and interest in and to each of the Marks, free and clear of
all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All Marks that have been registered are
currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits
of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after
the Closing Date.
(iii) No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and, to Sellers'
Knowledge, no such action is Threatened with the respect to
any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially
interfering trademark or trademark application of any third
party.
(v) No Xxxx is infringed or, to Sellers' Knowledge,
has been challenged or threatened in any way. None of the
Marks used by the Acquired Company infringes or is alleged to
infringe any trade name, trademark, or service xxxx of any
third party.
(f) Copyrights.
(i) Part 3.22(f) of the Disclosure Letter contains a
complete and accurate list and summary description of all
Copyrights. The Acquired Company is the owner of all right,
title, and interest in and to each of the Copyrights, free and
clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All the Copyrights have been registered and are
currently in compliance with formal legal requirements, are
valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after
the date of Closing.
(iii) No Copyright is infringed or, to Sellers'
Knowledge, has been challenged or threatened in any way. None
of the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party.
(iv) All works encompassed by the Copyrights have
been marked with the proper copyright notice.
26
(g) Trade Secrets.
(i) With respect to each Trade Secret, the
documentation relating to such Trade Secret is current,
accurate, and sufficient in detail and content to identify and
explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual.
(ii) Sellers and the Acquired Company have taken all
reasonable precautions to protect the secrecy,
confidentiality, and value of their Trade Secrets.
(iii) The Acquired Company has good title and an
absolute right to use the Trade Secrets. The Trade Secrets are
not part of the public knowledge or literature, and, to
Sellers' Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person (other than
the Acquired Company) or to the detriment of the Acquired
Company. No Trade Secret is subject to any adverse claim or
has been challenged or threatened in any way.
3.23 Certain Payments. Neither the Acquired Company nor any
participant, officer, agent, or employee of the Acquired Company, or any other
Person associated with or acting for or on behalf of the Acquired Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Acquired Company or any
Affiliate of the Acquired Company, or (iv) in violation of any Legal
Requirement, (b) established or maintained any fund or asset that has not been
recorded in the books and records of the Acquired Companies.
3.24 Disclosure.
(a) No representation or warranty of Sellers in this Agreement
and no statement in the Disclosure Letter omits to state a material
fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances
in which they were made, not misleading.
27
(c) There is no fact known to either Seller that has specific
application to any Seller or the Acquired Company (other than general
economic or industry conditions) and that materially adversely affects
the assets, business, prospects, financial condition, or results of
operations of the Acquired Companies (on a consolidated basis) that has
not been set forth in this Agreement or the Disclosure Letter.
3.25 Relationships with Related Persons. No Seller or any Related
Person of Sellers or of the Acquired Company has, or since has had, any interest
in any property (whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to the Acquired Company's businesses. No
Seller or any Related Person of Sellers or of the Acquired Company is, or since
has owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had business dealings or
a material financial interest in any transaction with the Acquired Company, or
(ii) engaged in competition with the Acquired Company with respect to any line
of activities of the Acquired Company (a "Competing Business") in any market
presently served by the Acquired Company. Except as set forth in Part 3.25 of
the Disclosure Letter, no Seller or any Related Person of Sellers or of the
Acquired Company is a party to any Contract with, or has any claim or right
against, the Acquired Company.
3.26 Brokers or Finders. Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
Sellers as follows:
4.1 Organization and Good Standing. Buyer is a limited liability
company duly organized, validly existing, and in good standing under the laws of
the State of Delaware, USA.
4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Escrow Agreement
and the Promissory Notes (collectively, the "Buyer's Closing
Documents"), the Buyer's Closing Documents will constitute the legal,
valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Buyer has the absolute and
unrestricted right, power, and authority to execute and deliver this
Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution
nor delivery of this Agreement by Buyer nor the consummation or
performance of any of the Contemplated Transactions by Buyer will give
any Person the right to prevent, delay, or otherwise interfere with any
of the Contemplated Transactions pursuant to:
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(i) any provision of Buyer's Organizational
Documents;
(ii) any resolution adopted by the board of directors
or the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer
may be subject; or
(iv) any Contract to which Buyer is a party or by
which Buyer may be bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be
required to obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
4.3 Investment Intent. Buyer is acquiring the Shares for its own
account.
4.4 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
threatened.
4.5 Brokers or Finders. Buyer and its officers and agents have incurred
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Sellers harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE.
5.1 Access and investigation. Between the date of this Agreement and
the Closing Date, Sellers will, and will cause the Acquired Company and its
Representatives to, (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's Advisors") full and
free access to the Acquired Company's personnel, properties (including
subsurface testing), contracts, books and records, and other documents and data,
(b) furnish Buyer and Buyer's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Buyer may reasonably
request, and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
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5.2 Operation of the Businesses of the Acquired Company. Between the
date of this Agreement and the Closing Date, Sellers will, and will cause the
Acquired Company to:
(a) conduct the business of such Acquired Company only in the
Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the current
business organization of such Acquired Company, keep available the
services of the current officers, employees, and agents of the Acquired
Company, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others having
business relationships with the Acquired Company;
(c) confer with Buyer concerning operational matters of a
material nature; and
(d) otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of the Acquired
Company.
5.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause the Acquired Company not to, without the prior consent of
Buyer, take any affirmative action, or fail to take any reasonable action within
their or its control, as a result of which any of the changes or events listed
in Section 3.16 is likely to occur.
5.4 Required Approvals. As promptly as practicable after the date of
this Agreement, Sellers will, and will cause each Acquired Company to, make all
filings required by Legal Requirements to be made by them in order to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Sellers will, and will cause each Acquired Company to, (a)
cooperate with Buyer with respect to all filings that Buyer elects to make or is
required by Legal Requirements to make in connection with the Contemplated
Transactions, and (b) cooperate with Buyer in obtaining all consents identified
in Schedule 4.2.
5.5 Notification. Between the date of this Agreement and the Closing
Date, each Seller will promptly notify Buyer in writing if such Seller or the
Acquired Company becomes aware of any fact or condition that causes or
constitutes a Breach of any of Sellers' representations and warranties as of the
date of this Agreement, or if such Seller or the Acquired Company becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the occurrence
or discovery of any such fact or condition, Sellers will promptly deliver to
Buyer a supplement to the Disclosure Letter specifying such change. During the
same period, each Seller will promptly notify Buyer of the occurrence of any
Breach of any covenant of Sellers in this Section 5 or of the occurrence of any
event that may make the satisfaction of the conditions in Section 7 impossible
or unlikely.
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5.6 Payment of Indebtedness by Related Persons. Except as expressly
provided in this Agreement, Sellers will cause all indebtedness owed the
Acquired Company by any Seller or any Related Person of a Seller to be paid in
full prior to Closing.
5.7 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and will cause the Acquired
Company and each of its Representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business or assets (other than in
the Ordinary Course of Business) of the Acquired Company, or any of the capital
of the Acquired Company, or any merger, consolidation, business combination, or
similar transaction involving the Acquired Company.
5.8 Best Efforts. Between the date of this Agreement and the Closing
Date, Sellers will use their Best Efforts to cause the conditions in Sections 7
and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE.
6.1 Approvals of Governmental Bodies. As promptly as practicable after
the date of this Agreement, Buyer will, and will cause each of its Related
Persons to, make all filings required by Legal Requirements to be made by them
to consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, Buyer will, and will cause each Related Person to, (i)
cooperate with Sellers with respect to all filings that Sellers are required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(ii) cooperate with Sellers in obtaining all consents identified in Part 3.2 of
the Disclosure Letter; provided that this Agreement will not require Buyer to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization.
6.2 Best Efforts. Except as set forth in the provision to Section 6.1,
between the date of this Agreement and the Closing Date, Buyer will use its Best
Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's obligation to
purchase the Shares and to take the other actions required to be taken by Buyer
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Buyer, in whole
or in part):
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7.1 Accuracy of Representations.
(a) All of Sellers' representations and warranties in this
Agreement (considered collectively), and each of these representations
and warranties (considered individually), must have been accurate in
all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on
the Closing Date, without giving effect to any supplement to the
Disclosure Letter.
(b) Each of Sellers' representations and warranties in
Sections must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date
as if made on the Closing Date, without giving effect to any supplement
to the Disclosure Letter.
7.2 Sellers' Performance.
(a) All of the covenants and obligations that Sellers are
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been
duly performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to Section
2.4 must have been delivered, and each of the other covenants and
obligations in Sections must have been performed and complied with in
all respects.
7.3 Consents. Each of the Consents identified in the Disclosure Letter,
and each Consent identified in Schedule 4.2, must have been obtained and must be
in full force and effect.
7.4 Additional Documents. Sellers must have delivered additional
documents reasonably by Buyers:
7.5 No Proceedings. Since the date of this Agreement, there must not
have been commenced or Threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
7.6 No Claim Regarding Stock Ownership or Sale Proceeds. There must not
have been made or Threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, the Acquired Company, or (b) is entitled to all or any
portion of the Purchase Price payable for the Shares.
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7.7 No Prohibition. Neither the consummation nor the performance of any
of the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE. Sellers' obligation to
sell the Shares and to take the other actions required to be taken by Sellers at
the Closing is subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by Sellers, in whole or
in part):
8.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
8.2 Buyer's Performance.
(a) All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been
performed and complied with in all material respects.
(b) Buyer must have delivered each of the documents required
to be delivered by Buyer pursuant to Section 2.4 and must have made the
cash payments required to be made by Buyer pursuant to Sections
2.4(b)(i) and 2.4(b)(ii).
8.3 Consents. Each of the Consents identified in the Disclosure
Letter must have been obtained and must be in full force and effect.
8.4 Additional Documents. Buyer must have delivered to Sellers
additional documents reasonably requested by Sellers.
8.5 No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that (a) prohibits the sale of the Shares by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
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9. TERMINATION.
9.1 Termination Events. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other party and
such Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Buyer to comply with its obligations under this Agreement) and Buyer
has not waived such condition on or before the Closing Date; or (ii) by
Sellers, if any of the conditions in Section 8 has not been satisfied
of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers to comply
with their obligations under this Agreement) and Sellers have not
waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on
or before December 31, 2005, or such later date as the parties may
agree upon.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 11.1 and 11.3 will survive; provided, however,
that if this Agreement is terminated by a party because of the Breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
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10. INDEMNIFICATION; REMEDIES.
10.1 Survival; Right to Indemnification not Affected by Knowledge. All
representations, warranties, covenants, and obligations in this Agreement, the
Disclosure Letter, the supplements to the Disclosure Letter, the certificate
delivered pursuant to Section 2.4(a)(v), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
10.2 Indemnification and Payment of Damages by Sellers. Sellers,
jointly and severally, will indemnify and hold harmless Buyer, the Acquired
Company, and their respective Representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by
Sellers in this Agreement (without giving effect to any supplement to
the Disclosure Letter), the Disclosure Letter, the supplements to the
Disclosure Letter, or any other certificate or document delivered by
Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made by
Sellers in this Agreement as if such representation or warranty were
made on and as of the Closing Date without giving effect to any
supplement to the Disclosure Letter, other than any such Breach that is
disclosed in a supplement to the Disclosure Letter and is expressly
identified in the certificate delivered pursuant to Section 2.4(a)(v)
as having caused the condition specified in Section 7.1 not to be
satisfied;
(c) any Breach by either Seller of any covenant or obligation
of such Seller in this Agreement;
(d) any product shipped or manufactured by, or any services
provided by, the Acquired Company prior to the Closing Date;
(e) any matter disclosed in the Disclosure Letter; or
(f) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with either
Seller or the Acquired Company (or any Person acting on their behalf)
in connection with any of the Contemplated Transactions.
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The remedies provided in this Section 10.2 will not be exclusive of or limit any
other remedies that may be available to Buyer or the other Indemnified Persons.
The Buyer also has the right of set off against any royalty payments.
10.3 Indemnification and Payment of Damages by Buyer. Buyer will
indemnify and hold harmless Sellers, and will pay to Sellers the amount of any
Damages arising, directly or indirectly, from or in connection with (a) any
Breach of any representation or warranty made by Buyer in this Agreement or in
any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any claim
by any Person for brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by such
Person with Buyer (or any Person acting on its behalf) in connection with any of
the Contemplated Transactions.
10.5 Time Limitations. If the Closing occurs, Sellers will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than those in Sections 3.3, 3.11, 3.13, and 3.19,
unless on or before January 1, 2007 Buyer notifies Sellers of a claim specifying
the factual basis of that claim in reasonable detail to the extent then known by
Buyer; a claim with respect to Section 3.3, 3.11, 3.13, or 3.19, or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time. If the Closing occurs, Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date
10.6 Procedure for Indemnification--Third Party Claims.
(a) Promptly after receipt by an indemnified party under
Section 10.2, 10.4, or (to the extent provided in the last sentence of
Section 10.3) Section 10.3 of notice of the commencement of any
Proceeding against it, such indemnified party will, if a claim is to be
made against an indemnifying party under such Section, give notice to
the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying
party's failure to give such notice.
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(b) If any Proceeding is brought against an indemnified party
and it gives notice to the indemnifying party of the commencement of
such Proceeding, the indemnifying party will, unless the claim involves
Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to
such Proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (ii) the indemnifying
party fails to provide reasonable assurance to the indemnified party of
its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party
of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such
defense, be liable to the indemnified party under this Section 10 for
any fees of other counsel or any other expenses with respect to the
defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding,
other than reasonable costs of investigation. If the indemnifying party
assumes the defense of a Proceeding, (i) it will be conclusively
established for purposes of this Agreement that the claims made in that
Proceeding are within the scope of and subject to indemnification; (ii)
no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Legal Requirements
or any violation of the rights of any Person and no effect on any other
claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnified party will have no
liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying
party of the commencement of any Proceeding and the indemnifying party
does not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a
result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any Indemnified
Person for purposes of any claim that an Indemnified Person may have
under this Agreement with respect to such Proceeding or the matters
alleged therein, and agree that process may be served on Sellers with
respect to such a claim anywhere in the world.
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10.7 Procedure for Indemnification--Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
11. GENERAL PROVISIONS.
11.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants in connection with this
Agreement and the Contemplated Transactions. Sellers will cause the Acquired
Companies not to incur any out-of-pocket expenses in connection with this
Agreement. In the event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.
11.2 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Unless consented
to by Buyer in advance or required by Legal Requirements, prior to the Closing
Sellers shall, and shall cause the Acquired Company to, keep this Agreement
strictly confidential and may not make any disclosure of this Agreement to any
Person. Sellers and Buyer will consult with each other concerning the means by
which the Acquired Company's employees, customers, and suppliers and others
having dealings with the Acquired Companies will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
11.3 Confidentiality. Between the date of this Agreement and the
Closing Date, Sellers will maintain in confidence, and will cause the officers,
employees, agents, and advisors of Buyer and the Acquired Company to maintain in
confidence this Agreement or the Contemplated Transactions, unless (a) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is required by legal proceedings.
11.4 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by fax (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and fax numbers
set forth below (or to such other addresses and fax numbers as a party may
designate by notice to the other parties):
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11.5 Arbitration ;Jurisdiction; Service of Process. The Parties
acknowledge that they are entering into and shall perform under this Agreement
in good faith, and any disputes will be resolved in good faith, with the letter
and spirit of this Agreement as the standard. The Parties will use their best
efforts to resolve any disputes between themselves within thirty (30) days.
During this thirty (30) day period, any party with ten (10) days' notice may
request and the other party must agree to meet in good faith to resolve the
dispute. After thirty day's effort, if a dispute is not resolved, any party may
refer the dispute for final settlement to and in accord with under the
Commercial Rules of the American Arbitration Association (the "Rules") by a
panel of three (3) arbitrators. In the case of any matter to be settled under
the Rules, each party hereto shall appoint one arbitrator and such two
arbitrators shall appoint a third arbitrator; provided, that if all three
arbitrators have not been appointed within thirty (30) days after the party
submitting the matter in dispute has notified the other party of such
submission, either party hereto may apply to the International Chamber of
Commerce for appointment of the remaining arbitrators. The place of arbitration
of any matter to be settled under the Rules shall be in New York City or at such
other place as the parties shall unanimously choose. On a case-by-case basis,
the parties may also agree to alternative dispute resolution methods. Such an
Agreement must be in writing and signed by both parties.
11.6 Applicable Law, Enforcement. This Agreement is an international
agreement and shall be governed and construed in accordance with the substantive
laws of New York, without regard to conflict of laws provisions. Each party
hereto hereby irrevocably and unconditionally agrees that any action to enforce
a decision rendered in an arbitration proceeding described in Article 8 may be
instituted (i) in Armenian courts, (ii) in the courts of the State of New York,
the courts of the United States of America for the Southern District of New
York, and appellate courts thereof, or (iii) in the courts of the United Kingdom
and hereby irrevocably and unconditionally waives, to the fullest extent
permitted by applicable law, any objection of the convenience of the forum of
any such legal suit, action or proceeding and irrevocably submits generally and
unconditionally to the jurisdiction in any such court in any suit, action or
proceeding.
11.7 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.8 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
39
11.9 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
11.10 Disclosure Letter.
(a) The disclosures in the Disclosure Letter, and those in any
Supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly
relate and not to any other representation or warranty in this
Agreement.
(b) In the event of any inconsistency between the statements
in the body of this Agreement and those in the Disclosure Letter (other
than an exception expressly set forth as such in the Disclosure Letter
with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control.
11.11 Assignments, Successors and No Third Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties, which will not be unreasonably withheld, except that Buyer
may assign any of its rights under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
11.12 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
40
11.13 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.14 Time of Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
11.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
Global Gold Mining, LLC Athelea Investments, CJSC
By:_____________________ By:_______________________
Van X. Xxxxxxxxx, Manager
------------------------- --------------------------
Xxxxx Xxxxxxxx Xxxxxx Xx Xxxxxxx
------------------------- --------------------------
Xxxxx Xxxxxxxxx Xxxxx Xxxxxxxxx
41
EXHIBIT 1
GETIK PROPERTY DESCRIPTION
The Getik exploration property is located in the Geghargunik Region north-east
of Lake Sevan approximately 000xx xxxxx-xxxx xx Xxxxxxx. The southern boundary
of the lease is formed by the Getik River between the villages of Jambarag and
Polat, a distance of approx 40km. the western and eastern boundaries of the
lease extend north of each village a distance of approximately 7 km to cover an
area of 27 km(2.) The property is more particularly described in the Republic of
Armenia exploration license issued to Athelea, CJSC.
42
CONFIDENTIAL DRAFT EXHIBIT 2
Global Gold Corporation
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
January 31, 2006
Mr.
, Armenia
Re: Restricted Stock Award
Dear Mr.:
As consideration for your sale of shares in Athelea Investments, CJSC
("Athelea") to Global Gold Mining, LLC (the "Company") pursuant to the Athelea,
CJSC Share Purchase Agreement with Global Gold Mining, LLC as the Buyer dated as
of January , 2006 (the "SPA") we hereby grant you [A, C and D version] 30,000
shares [B version substitutes 10,000 for 30,000] of the Common Stock of Global
Gold Corporation (the "Corporation"), evidenced by a certificate of shares of
our common stock, $.001 par value per share (the "Shares"), subject to
applicable securities law restrictions and the terms and conditions set forth
herein:
1. At the closing and transfer of the Athelea shares as
contemplated by the SPA, you shall become fully vested in the total Shares
granted hereunder.
2. In the event of a Seller breach of the SPA, during the
12-month period commencing with the date of issuance of the Shares, you with the
other Sellers shall forfeit a proportionate right, title and interest in and to
any of the Shares granted hereunder, without any payment by the Company
therefore unless mutually agreed otherwise. This clause shall not relieve you of
any other liability for such breach.
3. (a) Any Shares granted hereunder are not transferable and
cannot be assigned, pledged, hypothecated or disposed of in any way except in
accordance with applicable securities law restrictions. Any attempted transfer
in violation of the Section shall be null and void.
43
(b) Notwithstanding anything contained in this
Agreement to the contrary, no sale, transfer or pledge
thereof may be effected without an effective registration statement or an
opinion of counsel for the Corporation that such registration is not required
under the Securities Act of 1933, as amended, and any applicable state
securities laws.
4. During the period commencing with the date hereof, you
shall have all right, title and interest in and to the Shares granted hereunder,
including the right to vote the Shares and receive dividends or other
distributions with respect thereto.
5. You shall be solely responsible for any and all foreign,
Federal, state and local income taxes arising out of your receipt of the Shares
and your future sale of other disposition of them.
6. This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to its conflicts of law principles. All parties hereto
(i) agree that any legal suit, action or proceeding arising out of or relating
to this Agreement shall be instituted only in a Federal or state court in the
City of New York in the State of New York, (ii) waive any objection which they
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding, and (iii) irrevocably submit to the exclusive jurisdiction of any
Federal or state court in the City of New York in the State of New York, in any
such suit, action or proceeding, but such consent shall not constitute a general
appearance or be available to any other person who is not a party to this
Agreement. All parties hereto agree that the mailing of any process in any suit,
action or proceeding at the addresses of the parties shown herein shall
constitute personal service thereof.
7. If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
8. This Agreement and all the terms and provisions hereof
shall be binding upon and shall inure to the benefit of the parties and their
respective heirs and successors and, in the case of the Corporation, its
assigns.
9. This Agreement may not be amended except in a writing
signed by all of the parties hereto.
10. Nothing contained herein shall be construed to create an
employment agreement between the Corporation and you or require the Corporation
to employ or retain you under such a contract or otherwise.
44
11. In the event of any conflict between the terms of this
Agreement and of the Share Purchase Agreement, the provisions contained in this
Agreement shall control.
If this letter accurately reflects our understanding, please
sign the enclosed copy of this letter at the bottom and return it to us.
Very truly yours,
Global Gold Corporation
By:___________________________
Xxxxx X. Xxxxxxxxx, Chairman
Agreed:
------------------------------
45
EXHIBIT 3
SHAREHOLDERS AGREEMENT
ATHELEA INVESTMENTS, CJSC
Agreement made as of the 31st day of January, 2006 by and
among Global Gold Mining, LLC, a Delaware, United States limited liability
company ("GGM"), Xxxxx Xxxxxxxx, a citizen of Australia, Xxxxxx XxXxxxxxx, a
citizen of Australia, Xxxxx Xxxxxxxxx, a citizen of the Republic of Armenia, and
Xxxxx Xxxxxxxxx, a citizen of the United States (collectively referred to with
GGM as the "Shareholders" and individually as a "Shareholder")
WHEREAS, the Shareholders, directly or indirectly, own shares
of common stock of Athelea Investments, CJSC an Armenian joint stock company
currently having its offices in Yerevan, Armenia (the "Company") (shares of such
common stock, together with shares of common subsequently acquired by the
parties, being referred to as the "Shares");and
WHEREAS, the Shareholders desire to impose restrictions upon
the voting of the Stock and to facilitate the continuity of responsible
ownership of the Company,
NOW, THEREFORE, in consideration of the mutual covenants and
conditions herein contained, each of the parties hereby agrees as follows:
NOW, THEREFORE, it is agreed as follows:
1. Voting of Stock; Directors.
1.1 The Shareholders hereby agree with one another that they
will, at all times, vote their respective Shares so as to effectuate and bring
about the election of the following persons as directors of the Company so long
as each person remains a Shareholder, both of record and beneficially:
46
(a) One designee as agreed among and identified by
Messrs. Xxxxxxxx, DiGiovani, Ghazarian, and Xxxxxxxxx; and
(b) Two designees of GGM, and such other persons as
the directors as the Shareholders shall elect from time to time.
2. Ownership, Funding, Assignment, Transfer.
(a) GGM will own 80% of the Company and Messrs.
Xxxxxxxx, DiGiovani, Ghazarian, and Xxxxxxxxx (on the terms as of this date)
will own 20% of the equity interests in the Company. Investments and participant
loans registered and managed through the Company (Getik Mining LLC) bank account
shall be repaid before any profit distributions are made.
(b) GGM shall be responsible for all exploration,
development, capital, operating and other expenses (on debt or equity terms at
its option) necessary for the first three years to meet the licensing
requirements and extend the license as decided by the Company.
(c) GGM shall have the right to assign all or part of
its shares, rights and obligations in the Company upon notice to the other
Shareholders. No other Shareholder shall assign or otherwise transfer its
shares, rights and obligations in the Company without the consent of GGM, and
all other Shareholders shall give GGM thirty days right of first refusal to
purchase any other Shareholder's at (a) the lower of any bona fide written offer
to purchase all or any part of his Shares, or (b) the proportionate amount of
the Purchase Price established in the share Purchase Agreement, adjusted for
inflation in Armenia from January 3, 2006 (as reported for consumer prices by
the International Monetary Fund). In the event that GGM sells, or is in active
negotiation to sell, a controlling stake in Getik Mining LLC to any party all
shareholders have the unrestricted right to sell their respective shares without
regard to the preceding qualifications.
47
3. Obligation for Transfer of Certain Assets and Liabilities.
3.1 As soon as practicable after the execution of this
Agreement, GGM and its designees to the board shall vote to transfer assets and
liabilities not connected to the Getik property, as requested by the other
Shareholders. As soon as practicable after the execution of this Agreement,
all Shareholders and their designees shall vote to change the name of the
company to the "Getik Mining Company, CJSC", or such other name designated by
GGM, and all transferable right to the name "Athelea" shall be transferred as
requested by the other (non-GGM) Shareholders.
4. Miscellaneous
4.1 Notices. All notices or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be considered as duly given on (a) the date of delivery, if delivered in person,
by internationally recognized overnight delivery service or (b) ten days after
mailing by registered or certified mail, return receipt requested to the party
entitled to receive the same, to a Shareholder. Any party may change his or its
address by giving notice to the other party stating his or its new address.
Commencing on the 10th day after the giving of such notice, such newly
designated address shall be such party's address for the purpose of all notices
or other communications required or permitted to be given pursuant to this
Agreement
4.2 Governing Law; Arbitration. This Agreement and the rights
of the parties hereunder shall be governed by and construed in accordance with
the laws of the State of New York, without regard to its conflicts of law
principles. Any claim or dispute arising hereunder (including any issue as to
the arbitrability thereof and any claim for indemnification hereunder) shall be
determined by arbitration before a single arbitrator (subject to the last
sentence of this Section 16.14) in the New York City metropolitan area, in
accordance with the Commercial Arbitration Rules then obtaining of the American
Arbitration Association. Each party shall, no later than fifteen (15) days
before the date set for hearing, provide to the other parties and to the
arbitrator a copy of all documents that the party intends to submit at the
hearing and a list of all persons that party intends to call at the hearing,
unless the arbitrator shall permit otherwise in his sole discretion. The
arbitrator may adopt such procedures as he shall deem appropriate to achieve a
fair, prompt and cost-effective result. The award rendered in such arbitration
may provide for equitable remedies, an accounting and/or reimbursement for
attorneys', accountants', consultants' witnesses' or the arbitrator's fees, as
the arbitrator shall see fit. The award shall be final, and judgment on it may
be entered in or enforced by any court, state, federal or foreign, having
jurisdiction with respect thereto. Any party may apply to an appropriate court
of law for a preliminary injunction, attachment or similar remedy available to
it in aid of the arbitration proceeding provided for herein. This provision
shall not preclude the impleading or joining of one of the parties hereto by
another party in an action brought by a third party. In the event the total
amount in controversy, including (not net of) any meritorious counterclaim,
exceeds $250,000, the arbitration shall be held before a panel of three
independent arbitrators (none single-party appointed).
48
4.3 Entire Agreement; Waiver of Breach. This Agreement
constitutes the entire agreement among the parties and supersedes any prior
agreement or understanding among them with respect to the subject matter hereof,
and it may not be modified or amended in any manner other than as provided
herein; and no waiver of any breach or condition of this Agreement shall be
deemed to have occurred unless such waiver is in writing, signed by the party
against whom enforcement is sought, and no waiver shall be claimed to be a
waiver of any subsequent breach or condition of a like or different nature.
4.4 Binding Effect. This Agreement and all the terms and
provisions hereof shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, successors and permitted assigns.
4.5 Specific Performance. The parties hereby acknowledge that
irreparable damage will be caused by a violation or threatened violation of this
Agreement and that it is impossible to measure in money the damages which will
accrue to a party hereto or to the personal representative of a decedent by
reason of a failure to perform any of the obligations under this Agreement.
Therefore, if any party hereto or the personal representative of a decedent
shall institute any action or proceeding to enforce any of the provisions
hereof, any person (including the Company) against whom such action or
proceeding is brought hereby consents to a grant of an injunction restraining
any such violation or threatened violation of this Agreement or any other
appropriate decree of specific performance by any court having equity
jurisdiction and waives the claim or defense therein that such party or such
personal representative has an adequate remedy at law, and such person shall not
allege in any such action or proceeding the claim or defense that such remedy at
law exists.
4.6 Captions. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
4.7 Number and Gender. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.
4.8 Severability. If any provision of this Agreement shall be
held invalid or unenforceable, such invalidity or unenforceability shall attach
only to such provision and shall not in any manner affect or render invalid or
unenforceable any other severable provision of this Agreement, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
were not contained herein.
49
4.9 Amendments. This Agreement may not be amended except
in a writing signed by all of the parties hereto.
4.10 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. In addition, this Agreement may
contain more than one counterpart of the signature page and this Agreement may
be executed by the affixing of such signature pages executed by the parties to
one copy of the Agreement; all of such counterpart signature pages shall be read
as though one, and they shall have the same force and effect as though all of
the signers had signed a single signature page.
4.11 Term. This Agreement shall have a term of four (4) years,
and expire on January 31, 2010, unless extended by a mutually agreement in
writing.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
------------------------------
Xxxxx Xxxxxxxx
------------------------------
Xxxxxx XxXxxxxxx
------------------------------
Xxxxx Xxxxxxxxx
------------------------------
Xxxxx Xxxxxxxxx
Global Gold Mining, LLC
By:___________________________
Van X. Xxxxxxxxx, Manager
