STOCK PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”)
is
made and entered into as of April 24, 2008, by and among TERMINUS, INC., a
Nevada corporation (the “Purchaser”),
THE
BLACKHAWK FUND, a Nevada corporation (the “Company”),
and
Palomar Enterprises, Inc., a Nevada corporation (the “Seller”).
Capitalized terms used in this Agreement without definition shall have the
meanings set forth or referenced in Article
VIII.
ARTICLE
I
1.1 Agreement
to Purchase and Sell.
Upon
the terms and subject to the conditions set forth herein, the Seller agrees
to
sell to the Purchaser, and the Purchaser agrees to purchase from the Seller,
at
the Closing, all of the Shares owned by the Seller, free and clear of all
Liens.
1.2 Purchase
Price.
The
aggregate purchase price (the “Purchase
Price”)
for
the Shares shall be THREE HUNDRED SIXTY THREE THOUSAND DOLLARS
($363,000).
1.3 Payment
of the Purchase Price.
The
Purchase Price shall be paid by a certified or back check made payable to the
Seller, or by wire transfer pursuant to instructions provided by the Seller,
at
the Closing.
ARTICLE
II
2.1 Representations
and Warranties concerning the Company.
The
Seller and the Company, jointly and severally, hereby represent and warrant
to
the Purchaser as follows:
(a) Authority.
The
Company has all necessary power and authority to enter into and deliver this
Agreement and each of the other agreements, certificates, instruments and
documents contemplated hereby (collectively, the “Ancillary
Documents”)
to
which it is a party, to carry out its obligations hereunder and under any
Ancillary Document and to consummate the transactions contemplated hereby and
by
the Ancillary Documents. All actions, authorizations and consents required
by
Law for the execution, delivery and performance by the Company of this Agreement
and each Ancillary Document to which it is a party, and the consummation of
the
transactions contemplated hereby and thereby, have been properly taken or
obtained, including without limitation, the approval of this Agreement and
the
transactions contemplated by it by the Board of Directors of the
Company.
(b) Execution
and Delivery.
This
Agreement has been, and each Ancillary Document to which the Company is a party
will be at the Closing, duly authorized, executed, and delivered by the Company
and constitutes a legal, valid, and binding obligation of the Company,
enforceable against the Company in accordance with their respective terms and
conditions, except as enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency or other similar laws affecting or
relating to creditors’ rights generally or by general principles of
equity.
(c) No
Conflicts.
The
execution, delivery and performance by the Company of this Agreement and each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in a breach of any term, condition or provision of,
or
require the consent of any Person under, or result in the creation of or right
to create any Lien upon any of the assets of the Company under, (i) any Laws
to
which the Company or any of its assets are subject, (ii) any permit, judgment,
order, writ, injunction, decree or award of any Governmental Authority to which
the Company or any of its assets are subject, (iii) the certificate or
articles of incorporation or bylaws of the Company, or (iv) any license,
indenture, promissory note, bond, credit or loan agreement, lease, agreement,
commitment or other instrument or document to which the Company is a party
or by
which the Company or any of its assets are bound.
(d) Governmental
Consents.
No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any Governmental Authority, is required to be obtained by the
Company in connection with or as a result of the execution and delivery of
this
Agreement or any of the Ancillary Documents, or the performance of its
obligations hereunder and thereunder.
(e) Organization,
Standing and Qualification.
The
Company is a corporation duly organized, validly existing, and in good standing
under the Laws of the jurisdiction of its organization. The Company has all
requisite power and authority to own, lease, and operate its properties and
to
carry on its business as now being conducted, to use its name and is duly
qualified, licensed, or authorized to do business and in good standing, in
each
jurisdiction where the nature of the activities conducted by it or the character
of the properties owned, leased or operated by it require such qualification,
licensing or authorization. Each such jurisdiction is identified on Schedule
2.1(e).
The
Company’s corporate minute books reflect all resolutions approved and other
actions taken by its shareholders or Board of Directors and any committees
thereof since the date of its incorporation. The Seller or the Company have
previously delivered to the Purchaser true, correct, and complete copies of
the
Certificates of Incorporation and Bylaws of the Company, each as currently
in
effect (collectively, the “Organization
Documents”).
2
(f) Capitalization.
The
authorized capital stock of the Company consists solely of 4,000,000,000 shares
of common stock, par value $0.001 per share (the “Common Stock”), of
which
562,293,791 shares are issued and outstanding, 150,000,000
shares of Class B common stock, par value $0.001 per share (the “Class B Common
Stock”), of which 30,000,000, and
50,000,000 shares of preferred stock, $0.001 par value, of which no shares
are
issued and outstanding as Series A Preferred Stock, 10,000,000 shares are issued
and outstanding as Series B Preferred Stock, and 10,000,000 shares are issued
and outstanding as Series C Preferred Stock. As
of the
date hereof, each person owns of record such number, class, and series of
capital stock as is set forth opposite such person’s name on Schedule
2.1(f).
All of
the issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid, non-assessable, and were issued in
compliance with all federal and state securities laws. No shares of Common
Stock
are held in treasury. Except as disclosed in Schedule
2.1(f),
there
are no outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible or exchangeable securities, profits interests,
conversion rights, preemptive rights, rights of first refusal or other rights,
agreements, arrangements or commitments of any nature whatsoever under which
the
Company is or may become obligated to issue, redeem, assign or transfer any
shares of capital stock or purchase or make payment in respect of any shares
of
capital stock of the Company now or previously outstanding, and there are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to or any shares of its capital stock. There
are
no stockholders agreements, voting agreements, or other similar agreements
with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.
(g) No
Subsidiaries or Other Equity Interests.
The
Company does not, nor has it ever at any time since its organization, had a
direct or indirect Subsidiary or owned, directly or indirectly, any equity,
investment or other equity interest, or any right (contingent or otherwise)
to
acquire the same, in any other Person.
(h) Reporting
Company.
The
Company is a publicly-held company subject to reporting obligations pursuant
to
Section 13 of the Exchange Act, and
its
Common Stock is registered pursuant to Section 12(g) of the Exchange Act.
(i) Listing.
The
Common Stock is quoted on the OTC Bulletin Board. The Company has not received
any oral or written notice that its common stock is not eligible nor will become
ineligible for quotation on the OTC Bulletin Board nor that its common stock
does not meet all requirements for the continuation of such quotation. The
Company satisfies all the requirements for the continued quotation of its common
stock on the OTC Bulletin Board.
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(j) SEC
Documents; Financial Statements.
The
Company has filed all SEC Documents required to be filed by it under the
Securities Laws, including pursuant to Section 13(a) or 15(d) of the Exchange
Act, and for the twelve months preceding the date hereof, such SEC Documents
have filed on a timely basis or the Company has received a valid extension
of
such time of filing and has filed any such SEC Documents prior to the expiration
of any such extension. Except as may have been corrected or supplemented in
a
subsequent SEC Document, as of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act
and
the rules and regulations of the SEC promulgated thereunder, and none of the
SEC
Documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except as may have been corrected or
supplemented in a subsequent SEC Document, the financial statements of the
Company included in the SEC Documents (the “Financial
Statements”)
comply
in all material respects with applicable accounting requirements and the rules
and regulations of the SEC with respect thereto as in effect at the time of
filing. Except as may have been corrected or supplemented in a subsequent SEC
Document, the Financial Statements have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved (“GAAP”), except as may be otherwise specified in
such Financial Statements or the notes thereto, or, in the case of unaudited
financial statements, as permitted by Item 310(b) of Regulation S-B promulgated
under the Securities Act and the Exchange Act, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations
and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments and the lack of footnotes.
The
Company has not received any letters of comment from the Staff of the SEC which
have not been satisfactorily resolved as of the date hereof.
(k) Material
Changes.
Since
the date of the latest balance sheet included within the SEC Documents, except
as specifically disclosed in Schedule
2.1(k),
(i)
there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any Liabilities (contingent or otherwise), (iii) the Company
has not materially altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made
any
agreements to purchase or redeem any shares of its capital stock, and (v) the
Company has not issued any equity securities. The Company does not have pending
before the SEC any request for confidential treatment of
information.
(l) Internal
Control Over Financial Reporting.
The
Company and its subsidiaries maintain a system of internal control over
financial reporting sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared
with
the existing assets at reasonable intervals and appropriate action is taken
with
respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures as of the
date prior to the filing date of the most recently filed periodic report under
the Exchange Act (such date, the “Evaluation
Date”).
The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company’s internal controls (as such term is defined in Item
307(b) of Regulation S-K under the Exchange Act) or, to the knowledge of the
Company, in other factors that could significantly affect the Company’s internal
controls. The
Company has no “off-balance sheet arrangements” (as defined in Item 303(a)(4) of
Regulation S-K promulgated by the SEC).
4
(m) Xxxxxxxx-Xxxxx
Act.
The
Company is in compliance with applicable requirements of the Xxxxxxxx-Xxxxx
Act
of 2002 and applicable rules and regulations promulgated by the SEC
thereunder in effect as of the date of this Agreement, except where such
noncompliance could not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect.
(n) Absence
of Undisclosed Liabilities.
Except
to the extent adequately reflected on or reserved against in the Financial
Statements and except for recurring Liabilities incurred in the ordinary course
of business consistent with recent past practice, as of December 31, 2007 (the
“Balance
Sheet Date”),
the
Company had no direct or indirect Liabilities for any period prior to such
date
or arising out of transactions entered into or any set of facts existing prior
thereto. Since the Balance Sheet Date, the Company has not incurred any
Liabilities except as set disclosed on Schedule
2.1(n).
(o) Ordinary
Course.
Since
the Balance Sheet Date, except as otherwise disclosed on Schedule 2.1(o),
the
Company has operated its business in the ordinary course consistent with past
practice and there has not occurred:
(i) any
change in the condition (financial or otherwise), properties, assets,
liabilities, business, prospects, operations or results of operations that
has
had or could reasonably be expected to have a Material Adverse Effect on the
Company;
(ii) any
amendments or changes in any of its Organization Documents;
(iii) any
issuance or sale of any shares of or interests in, or rights of any kind to
acquire any shares of or interests in, or receipt of any payment based on the
value of, its capital stock or any securities convertible or exchangeable into
shares of its capital stock (including, without limitation, any stock options,
phantom stock or stock appreciation rights) or any adjustment, split,
combination or reclassification of its capital stock, or any declaration or
payment of any dividend or any distribution on, or any redemption, purchase,
retirement or other acquisition, directly or indirectly, of any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock;
5
(iv) any
investment of a capital nature on its own account;
(v) any
entering into, amendment of, modification in, relinquishment, termination or
non-renewal by the Company of any contract, lease, transaction, commitment
or
other right or obligation, except for purchase and sale commitments entered
into
in the ordinary course of business consistent with recent past
practice;
(vi) any
waiver, forfeiture or failure to assert any rights of a material value or made,
whether directly or indirectly, any payment of any material Liability before
the
same came due in accordance with its terms;
(vii) any
material damage, destruction or loss of the Company’s assets or properties,
whether covered by insurance or not;
(viii) any
payment of (or any making of oral or written commitments or representations
to
pay) any bonus, increased salary or special remuneration to any director,
officer, employee or consultant or any entry into or alterations of the terms
of
any employment, consulting or severance agreement with any such person; any
payment of any severance or termination pay (other than payments made in
accordance with existing plans or agreements); any grant of stock option or
issuance of any restricted stock; any entry into or modification of any
agreement or Employee Benefit Plan (except as required by law) or any similar
agreement;
(ix) any
modification of any term of benefits payable under any Employee Benefit
Plan;
(x) (A)
any
creation, incurrence or assumption of any Liability for borrowed money except
those Liabilities incurred in the ordinary course of business consistent with
recent past practice, (B) issuance or sale of any securities convertible into
or
exchangeable for debt securities of the Company; or (C) issuance or sale of
options or other rights to acquire from the Company, directly or indirectly,
debt securities of the Company or any securities convertible into or
exchangeable for any such debt securities;
(xi) any
material change in the amounts or scope of coverage of insurance
policies;
(xii) any
merger or consolidation with any other Person, acquisition of any capital stock
or other securities of any other Person, or acquisition of all or a significant
portion of the assets of any other Person, or acquisition of any assets or
properties from any Seller or its affiliate or family member;
6
(xiii) any
assumption or guarantee of any Liability or responsibility (whether primarily,
secondarily, contingently or otherwise) for the obligations of any other
Person;
(xiv) any
loan,
advance (including, without limitation, any loan or advance to any stockholder,
officer, director or employee of such Company) or capital contribution to,
or
investment in, any Person;
(xv) any
sale,
transfer or lease to others of, any grant, creation or assumption of Liens
against, or otherwise disposed of, any of its material assets, whether tangible
or intangible;
(xvi) any
lapse, failure to take any actions to protect, or any adverse change in respect
of any of its Proprietary Rights;
(xvii) any
consummation of any other transaction that is not in the Company’s ordinary
course of business consistent with recent past practice;
(xviii) any
collection of the Company’s accounts receivable, or any payment of the Company’s
accounts payable, in each case that is not in the Company’s ordinary course of
business consistent with recent past practice; or
(xix) any
agreement or commitment, in writing or otherwise, to take any of the actions
described in the foregoing subclauses (i) through (xviii).
(p) Title
to Assets.
Except
as disclosed on Schedule 2.1(p),
the
Company has good and marketable title to all of the tangible and intangible
assets owned by it, free and clear of any Liens, and none of such assets are
owned by any Person other than the Company. The Company owns, leases, licenses
or otherwise has the contractual right to use all of the assets used in or
necessary for the conduct of its business as currently conducted. The Company
has delivered to the Purchaser a schedule of the fixed assets of the Company
dated within thirty (30) days prior to the date hereof. All personal property
owned or leased by the Company, taken as a whole, is in good repair and is
operational and usable in the operation of the Company, subject to ordinary
wear
and tear.
(q) Receivables
and Payables.
Except
as disclosed on Schedule 2.1(q),
(i) the accounts and notes receivable reflected on the Financial Statements
or arising since the Balance Sheet Date (collectively, the “Receivables”),
are
bona fide, represent valid obligations to the Company, and have arisen or were
acquired in the ordinary course of business and in a manner consistent with
recent past practice and with the Company’s regular credit practices;
(ii) the Company’s provision for doubtful accounts reflected on its
Financial Statements or reserved on its books since the Balance Sheet Date
has
been determined in accordance with the generally accepted accounting principles
consistently applied; (iii) the Receivables have been collected or are
collectible in full, net of any allowance for uncollectibles recorded on the
Financial Statements or properly reserved on its books since the Balance Sheet
Date, in a manner consistent with past practice in the ordinary course of
business and without resort to litigation; (iv) none of the Receivables is
or will at the Closing Date be subject to any defense, counterclaim or setoff;
(v) since the Balance Sheet Date, the Company has not canceled, reduced,
discounted, credited or rebated or agreed to cancel, reduce, discount, credit
or
rebate, in whole or in part, any Receivables; and (vi) there has been no
material adverse change since the Balance Sheet Date in the amounts of
Receivables or the allowances with respect thereto, or accounts payable of
the
Company, from those reflected in the balance sheet of the Company as of such
date. The Company has provided to the Purchaser a schedule of aged Receivables
and payables for the Company as of a date which is within three (3) business
days of the date hereof.
7
(r) Real
Property.
(i) Schedule 2.1(r)
sets
forth a true and complete list of all real property owned, leased, or otherwise
used by the Company, identifying whether it is owned or leased, and if leased,
the lessor or other owner thereof (the “Real
Property”).
Except as set forth on Schedule
2.1(r),
the
Company does not now own, and has never owned, any real property.
(ii) There
is
not existing or proposed as a matter of public record or, to the Knowledge
of
the Company, presently contemplated, any condemnation or similar action, or
zoning action or proceeding, with respect to any portion of the Real Property.
None of the existing buildings and improvements which in part comprise the
Real
Property fails to comply fully with all size, height, set back, use and other
zoning restrictions and regulations applicable thereto, including, without
limitation, the parking space requirements of all applicable zoning ordinances
and regulations. The Company or its landlord has obtained all licenses, permits,
approvals, certificates, and other authorizations required by applicable Laws
for the use and occupancy of the Real Property as it is currently being
utilized. None of the Real Property is subject to any encumbrance, easement,
right-of-way, building or use restriction, exception, variance, reservation,
limitation or other Liens which might in any material respect interfere with
or
impair the continued use thereof as currently utilized or proposed to be
utilized by the Company.
(s) Proprietary
Rights.
(i) The
Company owns or possesses licenses or other rights to use all trademarks, trade
and business names, internet domain names, service marks, service names,
copyrights, customer lists, trade secrets and inventions (whether or not
patentable) (collectively, “Proprietary
Rights”)
that
are necessary to the conduct of the Company’s business as currently conducted or
anticipated.
(ii) Schedule 2.1(s)(ii)
sets
forth a true and complete list of all trademarks, trade names, service marks,
service names, internet domain names, copyrights and patents included in the
Proprietary Rights of the Company (identifying which are owned and which are
licensed), including all United States, state and foreign registrations or
applications for registration thereof and all agreements relating thereto.
All
filing, registration, maintenance or similar fees payable in connection with
each registration (or application therefor) of Proprietary Rights set forth
on
Schedule
2.1(s)(ii)
have
been paid and each such registration is valid and in full force and
effect.
8
(iii) Except
as
disclosed in Schedule
2.1(s)(iii),
the
Company is not required to pay any royalty, license fee or similar compensation
in connection with the conduct of its business as currently
conducted.
(iv) The
Company has not interfered with, infringed upon, misappropriated or otherwise
come into conflict with the Proprietary Rights of any other Person or committed
any acts of unfair competition and no claims have been asserted by any Person
alleging such interference, infringement, misappropriation, conflict or act
of
unfair competition.
(v) To
the
Knowledge of the Company, no Person is infringing upon its Proprietary
Rights.
(vi) There
are
no Proprietary Rights developed by any shareholder, director, officer,
consultant or employee of the Company that are used in the Company’s business
and that have not been transferred to, or are not owned free and clear of any
Liens by, the Company.
(t) Material
Agreements.
Schedule 2.1(t)(1)
sets
forth a true and complete list, and the Seller has provided to the Purchaser
complete copies (including all amendments and extensions thereof and all waivers
thereunder) or, if oral, an accurate and complete description, of each of the
following, whether written or oral, to which the Company is a party or is
otherwise bound (each, a “Material
Agreement”):
(i) all
loan
agreements, indentures, mortgages, notes, installment obligations, capital
leases or other agreements or instruments relating to the borrowing of money
(or
guarantees thereof);
(ii) all
continuing contracts or commitments for the future purchase, sale or manufacture
of products, materials, supplies, equipment or services requiring payment to
or
from the Company;
(iii) all
contracts with any Governmental Authority;
(iv) all
leases, subleases or any other agreements or arrangements under which the
Company has the right or license to use any personal property, whether tangible
or intangible, owned or licensed by another Person;
(v) all
agreements or arrangements under which any other Person has the right or license
to use any real property or personal property, whether tangible or intangible,
owned, leased or licensed by the Company;
(vi) all
contracts or understandings which by their terms restrict the ability of the
Company to conduct its business or to otherwise compete, including as to manner
or place;
9
(vii) all
joint
venture or similar agreements or understandings;
(viii) lease
and
other agreements pertaining to the Real Property;
(ix) all
collective bargaining, employment, severance, consulting, nondisclosure or
confidentiality agreements, and agreements requiring a charge of control or
parachute payments, or any other type of contract or understanding with any
officer, employee or consultant, other than pursuant to Employee Benefit Plans,
which is not immediately terminable by the Company without cost or other
liability to the Company;
(x) all
agreements with sales agents or representatives, wholesalers, distributors
and
dealers;
(xi) all
agreements concerning any Hazardous Materials; and
(xii) all
other
agreements, without regard to monetary amount, to which the Company has been
a
party since January 1, 2007.
Except
as
disclosed on Schedule
2.1(t)(2),
the
Company is not, and to the Knowledge of the Company, any other party thereto
is
not, in default under any Material Agreement and no event has occurred or is
reasonably expected to occur which (after notice or lapse of time or both)
would
become a breach or default under, or would otherwise permit modification,
cancellation, acceleration, or termination of, any Material Agreement or would
result in the creation of or right to obtain any Lien upon, or any Person
obtaining any right to acquire, any assets, rights or interests of the Company.
Except as disclosed on Schedule 2.1(t)(3):
(i) each Material Agreement is in full force and effect and is a valid and
binding obligation of the Company, and, to the Knowledge of the Company, the
other parties thereto; (ii) there are no unresolved disputes with respect
to any Material Agreement; and (iii) the Company has no reasonable basis to
believe that any party to a Material Agreement intends either to modify, cancel
or terminate such Material Agreement.
(u) Litigation.
Except
as disclosed on Schedule 2.1(u),
there
is no claim, legal action, suit, arbitration, investigation or other
proceeding pending, or to the Knowledge of the Company, threatened against
or
relating to the Company or its assets. Neither the Company nor any of its assets
are subject to any outstanding judgment, order, writ, injunction or decree
of
any Governmental Authority. There is currently no investigation or review by
any
Governmental Authority with respect to the Company pending or, to the Knowledge
of the Company, threatened, nor has any Governmental Authority notified the
Company of its intention to conduct the same.
(v) Compliance
with Laws.
The
Company has all licenses, permits, and other authorizations from all applicable
Governmental Authorities necessary or desirable for the conduct of its business
as currently conducted or as currently expected to be conducted following the
Closing Date. Schedule 2.1(v)
hereto
sets forth a true and complete list of all such licenses, permits and other
authorizations obtained by the Company, each of which is in full force and
effect and no violations thereunder have been recorded. The Company is in
compliance, and has complied, with all Laws applicable to it and has not
received any notice of any violation thereof.
10
(w) Environmental
Matters.
Except
as disclosed in Schedule
2.1(w):
(i) During
the period that the Company has owned, leased, or operated any properties or
facilities, neither it nor any other Person has disposed, released, or
participated in or authorized the release or threatened release of Hazardous
Materials on, from or under such properties or facilities. There is not now
nor
has there ever been any presence, disposal, release or threatened release of
Hazardous Materials on, from or under any of such properties or facilities,
which may have occurred prior to the Company having taken possession of any
of
such properties or facilities. For the purposes of this Agreement, the terms
“disposal,” “release,” and “threatened release” shall have the definitions
assigned thereto by the Comprehensive Environmental Response Compensation and
Liability Act of 1980, 42 U. S.C. § 9601 et seq., as amended (“CERCLA”).
(ii) The
operations of the Company and properties that the Company owns, leases, or
operates, are in compliance with Environmental Law. During the time that the
Company has owned, leased or operated its properties and facilities, neither
the
Company nor any other Person has used, generated, manufactured or stored on,
under or about such properties or facilities or transported or arranged for
disposal to or from such properties or facilities, any Hazardous Materials
which
may be considered a violation of applicable Environmental Law.
(iii) During
the time that the Company has owned, leased or operated its properties and
facilities, there has been no litigation or proceeding brought or, to the
Knowledge the Company, threatened against the Company by, or any settlement
reached the Company with, any Persons alleging the presence, disposal, release
or threatened release of any Hazardous Materials, on from or under any of such
properties or facilities.
(iv) There
are
no facts, circumstances or conditions relating to the properties and facilities
owned, leased or operated by the Company which could give rise to a claim under
any Environmental Law or to any material Environmental Costs and Liabilities.
(x) Related
Party Transactions.
Except
as disclosed on Schedule 2.1(x),
since
January 1, 2005, no Related Party has been directly or indirectly a party
to any contract or other arrangement (whether written or oral) with the Company
providing for services (other than as an employee of the Company), products,
goods or supplies, rental of real or personal property, or otherwise requiring
payments from or to the Company. For purposes hereof, the term “Related
Party”
shall
mean any Seller or a director or officer of the Company or any member of his
or
her family or any corporation, partnership, limited liability company, other
business entity or trust in which he or she or any member of his or her family
has greater than a ten percent (10%) interest, or of which he or she or any
member of his or her family is an officer, director, general partner, member
or
trustee.
(y) Insurance.
Schedule 2.1(y)(l)
sets
forth a list of the Company’s insurance policies (including property, casualty,
liability (general, professional and directors and officers) and workers’
compensation), listing for each policy the identity of the insurance carrier,
the policy period, the limits and retentions and any special exclusions. Except
as set forth on Schedule 2.1(y)(2),
such
insurance coverage and coverage amounts are customary for the business engaged
in by the Company. Such policies are currently in full force and effect, all
premiums have been paid in full with respect thereto and the Company has not
received any notice of termination or modification from the insurance carriers.
All of the Company’s assets are insured, pursuant to the insurance policies
described in Schedule 2.1(y)(1),with
respect to loss due to general liability, fire and other risks in accordance
with good industry practice and consistent with claims historically incurred.
Schedule 2.1(y)(l)
also
sets forth a true and complete description of any self-insurance arrangement
by
or affecting the Company, including any reserves established thereunder, if
any.
11
(z) Taxes.
(i) The
Company has timely filed with the appropriate taxing authorities all returns
and
reports in respect of Taxes (“Returns”)
required to be filed by it (taking into account any extension of time to file
granted to or on the account of the Company). The information on such Returns
is
complete and accurate in all material respects. The Company has paid on a timely
basis all Taxes (whether or not shown on any Return) due and payable. There
are
no Liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of the Company. As used in this Section
2.1(z),
the
Company shall mean, individually and collectively, (i) the Company and (ii)
any
individual, trust, corporation, partnership or other entity as to which the
Company may be liable for Taxes incurred by such individual or entity as a
transferee or pursuant to any provision of federal, state, local or foreign
law
or regulation.
(ii) No
unpaid
(or unreserved in accordance with generally accepted accounting principles
applied on a consistent basis) deficiencies for Taxes have been claimed,
proposed or assessed by any taxing authority or other Governmental Authority
with respect to the Company for any Pre-Closing Period and, to the best
knowledge of the Company or the Seller, there are no pending audits,
investigations or claims for or relating to any liability in respect of
Taxes of the Company, nor has the Company been notified of any request for
such
an audit, investigation or claim. The Company has not requested any extension
of
time within which to file any currently unfiled returns in respect of any Taxes
and no extension of a statute of limitations relating to any Taxes is in effect
with respect to the Company.
(iii) (1)
The
Company has made or will make provision for all Taxes payable by it with respect
to any Pre-Closing Period which are not payable prior to the Closing Date; (2)
the provisions for Taxes with respect to the Company for the Pre-Closing Period
are adequate to cover all Taxes with respect to such period; (3) the
Company has withheld and paid all Taxes required to have been withheld and
paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder or other third party; (4) all material
elections with respect to Taxes made by or, to the Knowledge of the Company,
affecting the Company as of the date hereof are set forth in Schedule
2.1(z)(iii)(4);
(5) the
Company is not a “consenting corporation” under Section 341(f) of the
Code,
or any
corresponding provision of state, local or foreign law; (6) there are no
private letter rulings in respect of any Tax pending between the Company and
any
taxing authority; (7) the Company has never been a member of an affiliated
group
within the meaning of Section 1504 of the Code, or filed or been included in
a
combined, consolidated or unitary return of any Person other than the Company;
(8) the Company is not liable for Taxes of any other Person, or is
currently under any contractual obligation to indemnify any Person with respect
to Taxes, or is a party to any tax sharing agreement or any other agreement
providing for payments by the Company with respect to Taxes; (9) the
Company is not, and has not been, a real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code; (10) the Company is not a person
other than a United States person within the meaning of the Code; (11) the
Company is not a party to any joint venture, partnership, or other arrangement
or contract which could be treated as a partnership for federal income tax
purposes; (12) the Company has not entered into any sale leaseback or any
leveraged lease transaction that fails to satisfy the requirements of Revenue
Procedure 75-21 (or similar provisions of foreign law); (13) the Company has
not
agreed and is not required, as a result of a change in method of accounting
or
otherwise, to include any adjustment under Section 481 of the Code (or any
corresponding provision of state, local or foreign law) in taxable income;
(14)
the Company is not a party to any agreement, contract, arrangement or plan
that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any “excess
parachute payments” within the meaning of Section 280G of the Code; (15) the
Company has never been a Subchapter S corporation (as defined in Section
1361(a)(1) of the Code); (16) Schedule
2.1(z)(iii)(16)
contains
a list of all jurisdictions to which any Tax is properly payable by the Company;
(17) the Company is not a personal holding company within the meaning of Section
542 of the Code; (18) the Company has not made an election and is not required
to treat any of its assets as owned by another Person for federal income tax
purposes or as tax-exempt bond financed property or tax-exempt use property
within the meaning of Section 168 of the Code (or any corresponding provision
of
state, local or foreign law).
12
(aa) Employee
Benefit Plans.
(i) Schedule 2.1(aa)(i)
lists
all Employee Benefit Plans which have been maintained or contributed to by
the
Company or to which the Company has been obligated to contribute. Except as
set
forth on Schedule 2.1(aa)(ii),
neither
the Company nor any of its ERISA Affiliates (as defined below), maintains or
has
maintained, contributed to or been obligated to contribute to a Pension Plan
subject to Title IV of ERISA or Section 412 of the Code. Except as set
forth on Schedule
2.1(aa)(iii),
each
Pension Plan and Welfare Plan disclosed on Schedule 2.1(a)(i)
has been
maintained in compliance with its terms and all material provisions of ERISA
and
the Code, applicable thereto (including rules and regulations
thereunder).
(ii) The
Company has delivered or made available to Purchaser prior to the date hereof
complete and correct copies of (a) any employment agreements and any procedures
and policies relating to the employment of employees of the Company and the
use
of temporary employees and independent contractors by the Company (including
summaries of any procedures and policies that are unwritten), (b) plan
instruments and amendments thereto for all Employee Benefit Plans and related
trust agreements, insurance and other contracts, summary plan descriptions,
summaries of material modifications and material communications distributed
to
the participants of each Employee Benefit Plan (and written summaries of any
unwritten Employee Benefit Plans, modifications to Employee Benefit Plans and
employee communications), (c) to the extent annual reports on Form 5500 are
required with respect to any Employee Benefit Plan, the three most recent annual
reports and attached schedules for each Employee Benefit Plan as to which such
report is required to be filed, (d) where applicable, the most recent (A)
opinion, notification and determination letters, (B) actuarial valuation
reports, and (C) nondiscrimination tests performed under the Code (including
401(k) and 401(m) tests) for each Employee Benefit Plan, (e) all material
communications received from or sent to the Internal Revenue Service or the
Department of Labor (including a written description of any oral communication),
and (f) any Forms 5330 required to be filed by the Company or any Affiliate,
whether related to an Employee Benefit Plan or otherwise.
13
(iii) Each
Pension Plan identified in Schedule 2.1(aa)(i)
hereto
which is intended to be “qualified” within the meaning of Section 401(a) of
the Code has been determined by the Internal Revenue Service (the “IRS”)
to be
so qualified as of the date of the determination letter set forth on
Schedule 2.1(aa)(iii),
and the
Company is not aware of any fact which would indicate that the qualified status
of each such Pension Plan or the tax exempt status of each trust created
thereunder has been adversely affected. None of the Pension Plans identified
in
Schedule 2.1(aa)(i)
hereto
are currently the subject of an audit or other investigation by the IRS, the
Department of Labor, the Pension Benefit Guaranty Corporation (the “PBGC”)
or any
other Governmental Authority nor are any the subject of any law suits,
complaints, claims or legal proceedings of any kind.
(iv) No
“prohibited transaction,” as such term is defined in Section 406 of ERISA,
has occurred with respect to any Pension Plan or Welfare Plan identified in
Schedule 2.1(aa)(i)
hereto
which has resulted or may result in Liability to the Company or any of the
ERISA
Affiliates. No breach of fiduciary responsibility under Part 4 of Title I of
ERISA has occurred which has resulted or may result in Liability to the Company
such Pension Plan or Welfare Plan. Except as disclosed on Schedule
2.1(aa)(iv),
no
ERISA Affiliate has incurred any material Liability for any penalty or Tax,
nor,
to the Knowledge of the Company, does any fact exist which would subject the
Company to any penalty or Tax under Sections 4971, 4972, 4975, 4976, 4977,
4978,
4979, 4980, 4980B, 4980D, 5000 of the Code or Section 502 of ERISA with respect
to any such Pension Plan or Welfare Plan.
(v) Except
as
disclosed in Schedule
2.1(aa)(v),
each
Welfare Plan identified thereon has, to the extent applicable, at all times
been
in compliance with the provisions of Section 4980B of the Code and Parts 6
and 7
of Title I of ERISA. Except as disclosed on Schedule 2.1(aa)(v)
and
except as described in the immediately preceding sentence, none of the Welfare
Plans provides or promises post-retirement health or life benefits to current
employees or retirees of the Company or its ERISA Affiliates.
(vi) Except
as
disclosed on Schedule 2.1(aa)(vi),
all
contributions required to be paid under the terms of each Employee Benefit
Plan
identified in Schedule 2.1(aa)(i)
hereto
have been made. As of and including the Closing Date, the Company shall have
made all contributions required to be made by it up to and including the Closing
Date with respect to each Employee Benefit Plan, or adequate accruals therefor
will have been provided for and will be reflected on an unaudited balance sheet
of the Company provided to Purchaser by the Company.
14
(vii) Except
as
disclosed in Schedule
2.1(aa)(vii)
and in
subsection (ix) below, no Pension Plan identified in Schedule 2.1(aa)(i)
hereto
or trust created thereunder has been terminated or partially terminated by
the
Company and the Company has no knowledge of any events which would cause a
voluntary or involuntary termination of any such Pension Plan.
(viii) Neither
the Company nor any of its ERISA Affiliates has maintained or contributed to,
been obligated or required to contribute to, or withdrawn in a partial or
complete withdrawal from, a “Multiemployer Plan,” as such term is defined in
Section 4001(a)(3) of ERISA.
(ix) With
respect to each Pension Plan identified in Schedule 2.1(aa)(i)
subject
to Title IV of ERISA (A) neither the Company nor any ERISA Affiliate has
withdrawn from any such Plan during a plan year in which it was a “substantial
employer” (within the meaning of Section 4001 (a)(2) of ERISA),
(B) neither the Company nor any ERISA Affiliate has filed a notice of
intent to terminate any such Pension Plan or adopted any amendment to treat
any
such Pension Plan as terminated, (C) the PBGC has not instituted
proceedings to terminate any such Pension Plan, and no other event or condition
has occurred which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any such
Pension Plan, (D) no accumulated funding deficiency, whether or not waived,
exists with respect to any such Pension Plan and no condition has occurred
or
exists which by the passage of time would be expected to result in an
accumulated funding deficiency as of the last day of the current plan year
of
any such Pension Plan, (E) all required premium payments to the PBGC have
been paid when due, (F) no reportable event (as described in
Section 4043 of ERISA) for which the notice requirements to the PBGC have
not been waived, has occurred with respect to any such Pension Plan, (G) no
amendment with respect to which security is required under Section 307 of
ERISA has been made or is reasonably expected to be made to any Pension Plan,
and (H) as of the last day of the most recent prior plan year, the market
value of assets under each such Pension Plan subject to the minimum funding
standards equaled or exceeded the present value of benefit liabilities
thereunder as determined in accordance with the actuarial valuation assumptions
set forth in such Pension Plan.
(x) Except
as
required by law or by the terms of an Employee Benefit Plan, the Company has
not
proposed or agreed to any changes to any Employee Benefit Plan that would cause
an increase in benefits under any such Employee Benefit Plan (or the creation
of
new benefits or plans) nor to change any employee coverage which would cause
an
increase in the expense of maintaining any such Employee Benefit
Plan.
(xi) No
Employee Benefit Plan provides benefits or payments based on or measured by
the
value of an equity security of or interest in the Company or any ERISA
Affiliate.
(xii) Except
as
disclosed on Schedule
2.1(aa)(ii),
no
Employee Benefit Plan is a plan, agreement or arrangement providing for
benefits, in the nature of severance benefits, and the Company does not have
outstanding any liabilities with respect to any severance benefits available
under any Employee Benefit Plan.
15
(bb) Employee
Matters.
(i) The
Company has provided to the Purchaser lists all current employees of the Company
and their hourly rates of compensation or base salaries (as applicable), the
date of last increase in such compensation or salaries, and all other
compensation paid to such employees. To the Knowledge of the Company, no
employee of the Company has any plans to terminate employment with the Company.
The Company has complied with all Laws relating to the hiring of employees
and
the employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the withholding and payment of
social security and other Taxes.
(ii) Except
as
set forth on Schedule 2.1(bb):
(A) the Company is not delinquent in payments to any of its employees for
any wages, salaries, commissions, bonuses or other direct compensation for
any
services performed by them to date or amounts required to be reimbursed to
such
employees and, upon termination of the employment of any such employees, neither
the Purchaser nor the Company will by reason of any event, fact or circumstance
occurring or existing prior to the Closing be liable to any of such employees
for severance pay or any other payments; (B) there is no unfair labor
practice complaint against the Company pending before the National Labor
Relations Board or any other Governmental Authority; (C) there is no labor
strike, material dispute, slowdown or stoppage actually pending or, to the
Knowledge of the Company, threatened against the Company; (D) the Company
has not experienced any significant deterioration in its relationship with
its
employees; and (E) no labor union currently represents the employees of the
Company and, to the Knowledge of the Company, no labor union has taken any
action with respect to organizing the employees of the Company.
(iii) Except
for payment of the Purchase Price to the Seller, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will: (A) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of the Company, under any Employee
Benefit Plan or otherwise; (B) increase any compensation or benefits payable
under any Employee Benefit Plan or otherwise; or (C) result in the acceleration
of the time of payment or vesting of any such compensation benefits. No Employee
Benefit Plan or other arrangement provides benefits or payments contingent
upon,
triggered by or increased as a result of a change in the ownership or effective
control of the Company.
(cc) Bank
Accounts and Powers of Attorney.
Schedule 2.1(cc)
sets
forth a true and complete list of (i) each bank, broker, or other financial
institution in or with which the Company has a depository account, investment
or
brokerage account, checking account, trust account, escrow account or safe
deposit box; (ii) all account numbers for such accounts; and (iii) the
names of all Persons who are authorized signatories on such accounts or who
otherwise have access thereto. Except as set forth on Schedule 2.1(cc),
the
Company has not granted any general or special powers of attorney to act on
its
behalf.
16
(dd) Brokerage
Fees.
The
Company has not engaged or authorized any broker, investment banker or other
Person to act on its behalf, directly or indirectly, as a broker or finder
who
might be entitled to a fee, commission or other remuneration in connection
with
the transactions contemplated by this Agreement.
(ee) Inventory.
The
inventory of the Company (including that reflected on the Financial Statements)
is in merchantable condition, and suitable and usable or salable in the ordinary
course of business for the purposes for which it was intended, and has been
reflected on the Financial Statements and carried on the books of account of
the
Company in accordance with GAAP applied on a consistent basis. Without limiting
the generality of the foregoing, such inventory does not include any obsolete
or
defective materials or any excess stock items, except as have been reserved
against as reflected on the Financial Statements or the books of the Company.
The reserves created by the Company to cover returns have been calculated and
carried on the books of account of the Company in accordance with GAAP applied
on a consistent basis.
(ff) Restrictions
on Business Activities.
There
is no agreement, judgment, injunction, order, or decree binding upon the Company
or any Seller or, to the Knowledge of the Company, any employee of the Company,
that has or could reasonably be expected to have the effect of prohibiting
or
materially impairing any business practice of the Company or the conduct of
business by the Company as currently conducted or as currently expected to
be
conducted by the Company following the Closing.
(gg) Books
and Records.
All
accounts, books, ledgers and official and other records prepared and kept by
the
Company are true, complete, and accurate in all material respects and have
been
kept in accordance with sound business practices.
(hh) Trade
Relations.
Schedule
2.1(hh)
sets
forth the top ten (10) customers and top ten (10) suppliers of the Company
for
the year ended December 31, 2007. The Company has not received any written
or
oral notice from any material customers of the Company, or any material
suppliers to the Company, that such customer or supplier intends to terminate,
cancel or limit or adversely modify or change its business relationship with
the
Company. To the Knowledge of the Company, no such termination, cancellation
or
limitations or any adverse modification or change will arise as a result of
the
execution, delivery, or performance of this Agreement or any Ancillary Documents
to which the Company is a party.
(ii) Investment
Company.
The
Company is not, and is not an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
(jj) Application
of Takeover Protections.
The
Company and its Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Purchaser as a result
of
the Purchaser and the Company fulfilling their obligations or exercising their
rights under this Agreement and the Ancillary
Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Purchaser’s ownership of the Shares.
17
(kk) No
Market Manipulation.
The
Company and its Affiliates have not taken, and will not take, directly or
indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock to
facilitate the sale or resale of the Common Stock or affect the price at which
the Common Stock may be issued or resold, provided, however, that this provision
shall not prevent the Company from engaging in investor relations/public
relations activities consistent with past practices.
(ll) No
Disagreements with Accountants and Lawyers.
There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers
formerly or presently employed by the Company, including but not limited to
disputes or conflicts over payment owed to such accountants and
lawyers.
(mm) DTC
Status.
The
Company’s transfer agent is a participant in and the Common Stock is eligible
for transfer pursuant to the Depository Trust Company Automated Securities
Transfer Program. The name, address, telephone number, fax number, contact
person and email address of the Company transfer agent is set forth on
Schedule
2.1(mm)
hereto.
(nn) Disclosure.
No
representation or warranty made by the Company in this Agreement, nor any
information contained in any Ancillary Document to be delivered by the Company
or the Seller pursuant hereto, or any information relating to the Company
provided or made available to the Purchaser in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
or will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading in any material respect in light
of
the circumstances under which they were made.
2.2 Representations
and Warranties of the Seller.
The
Seller hereby represents and warrants to the Purchaser as follows:
(a) Authority.
The
Seller has all necessary power or legal capacity and authority to enter into
and
deliver this Agreement and each of the Ancillary Documents to which the Seller
is a party, to carry out the Seller’s obligations hereunder and under such
Ancillary Document and to consummate the transactions contemplated hereby and
by
such Ancillary Documents. All actions, authorizations, and consents required
by
Law for the execution, delivery, and performance by the Seller of this Agreement
and each Ancillary Document to which the Seller is a party, and the consummation
of the transactions contemplated hereby and thereby, have been properly taken
or
obtained.
(b) Execution
and Delivery.
This
Agreement has been, and each Ancillary Document to which it is a party will
be
at the Closing, duly authorized, executed, and delivered by the Seller and
constitutes, or will constitute at the Closing, a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with
their respective terms and conditions, except as enforceability thereof may
be
limited by applicable bankruptcy, reorganization, insolvency, or other similar
laws affecting or relating to creditors’ rights generally or by general
principles of equity.
18
(c) No
Conflicts.
The
execution, delivery and performance by the Seller of this Agreement and each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in a breach of any term, condition or provision of,
or
require the consent of any Person under, or result in the creation of or right
to create any Lien upon any of the assets of the Seller under, (i) any Laws
to
which the Seller or any of its assets are subject, (ii) any permit, judgment,
order, writ, injunction, decree, or award of any Governmental Authority to
which
the Seller or any of its assets are subject, (iii) the certificate of
formation or incorporation or the operating agreement or bylaws of the Seller
(or their equivalent), or (iv) any license, indenture, promissory note, bond,
credit or loan agreement, lease, agreement, commitment or other instrument
or
document to which the Seller is a party or by which the Seller or any of its
assets are bound.
(d) Governmental
Consents.
No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any Governmental Authority, is required to be obtained by the
Seller in connection with or as a result of the execution and delivery of this
Agreement or any of the Ancillary Documents, or the performance of the Seller’s
obligations hereunder or thereunder.
(e) Organization,
Standing, and Qualification.
The
Seller is a corporation duly organized, validly existing, and in good standing
under the Laws of the jurisdiction of its organization. The Seller has all
requisite power and authority to own, lease, and operate its properties and
to
carry on its business as now being conducted.
(f) Ownership.
The
Seller owns, beneficially and of record, free and clear of any Liens, such
number, class, and series of Shares as set forth on Schedule
2.2(f).
At the
Closing, upon delivery of and payment for such Shares as provided in this
Agreement, all of the Shares owned by the Seller shall be transferred to the
Purchaser, and the Purchaser shall have good and valid title to the Shares,
free
and clear of any Liens. There are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible or exchangeable
securities, profits interests, conversion rights, preemptive rights, rights
of
first refusal or other rights, agreements, arrangements or commitments of any
nature whatsoever under which the Seller is or may become obligated to sell,
assign, or transfer any shares of capital stock of the Company owned by the
Seller.
(g) Brokerage
Fees.
The
Seller has not engaged or authorized any broker, investment banker, or other
Person to act on its behalf, directly or indirectly, as a broker or finder
who
might be entitled to a fee, commission, or other remuneration in connection
with
the transactions contemplated by this Agreement.
2.3 Representations
and Warranties of the Purchaser.
The
Purchaser hereby represents and warrants to the Sellers as follows:
(a) Authority.
The
Purchaser has all necessary power and authority to enter into and deliver this
Agreement and each of the Ancillary Documents to which it is a party, to carry
out its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and by the Ancillary Documents. All actions, authorizations,
and consents required by Law for the execution, delivery, and performance by
the
Purchaser of this Agreement and each Ancillary Document to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, have
been, or prior to the Closing will have been, properly taken or
obtained.
19
(b) Execution
and Delivery.
This
Agreement has been, and each Ancillary Document to which the Purchaser is a
party will be at the Closing, duly authorized, executed and delivered by the
Purchaser and constitutes a legal, valid, and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms and
conditions, except as enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency or other similar laws affecting or
relating to creditors’ rights generally or by general principles of
equity.
(c) No
Conflicts.
The
execution, delivery, and performance by the Purchaser of this Agreement and
each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in a breach of any term, condition or provision of,
or
require the consent of any Person under, or result in the creation of or right
to create any Lien upon any of the assets of the Purchaser under, (i) any Laws
to which the Purchaser or any of its assets are subject, (ii) any judgment,
order, writ, injunction, decree or award of any Governmental Authority to which
the Purchaser or any of its assets are subject, (iii) the Certificate of
Incorporation or Bylaws of the Purchaser, or (iv) any license, indenture,
promissory note, bond, credit or loan agreement, lease, agreement, commitment
or
other instrument or document to which the Purchaser is a party or by which
any
of its assets are bound, except where, in the case of clause (iv), such
violation, conflict, breach, etc. would not, individually or in the aggregate,
have a Material Adverse Effect on the Purchaser.
(d) Governmental
Consents.
No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any Governmental Authority, is required to be obtained by the
Purchaser in connection with or as a result of the execution and delivery of
this Agreement or any of the Ancillary Documents, or the performance of its
obligations thereunder.
(e) Organization,
Standing and Qualification.
The
Purchaser is a corporation duly incorporated, validly existing, and in good
standing under the Laws of the State of Nevada. The Purchaser has all requisite
power and authority to own, lease, and operate its properties and to carry
on
its business as now being conducted.
(f) Brokerage
Fees.
The
Purchaser has not engaged or authorized any broker, investment banker, or other
Person to act on its behalf, directly or indirectly, as a broker or finder
who
might be entitled to a fee, commission, or other remuneration in connection
with
the transactions contemplated by this Agreement.
20
ARTICLE
III
3.1 Conduct
of Business Pending the Closing.
The
Company hereby covenants and agrees that, prior to the Closing, except as
contemplated by this Agreement or as set forth in Schedule 3.1,
it
shall (and each of the Sellers hereby covenants and agrees to cause the Company
to comply with the provisions of this Section 3.1):
(a) conduct
its business in the usual, regular and ordinary course consistent with recent
past practice and use its commercially reasonable efforts to take, or refrain
from taking, as the case may be, any action which would cause the
representations and warranties made in Section 2.1,
including, without limitation, Section 2.1(o),
to
become untrue or inaccurate; and
(b) use
its
commercially reasonable efforts to maintain and preserve its business
organization and relationships with its customers, vendors, suppliers and others
having business dealings with it and retain the services of its officers and
employees.
3.2 No
Solicitation.
The
Company shall not, and the Seller shall not, directly or indirectly (through
their respective Affiliates, employees, agents or representatives), initiate
contact with, solicit, encourage, respond to or participate in any way in
discussions or negotiations with, or provide any information or assistance
to,
or take any other action intended or designed to facilitate the efforts of
(including without limitation, the execution of any letter of intent, term
sheet
or definitive agreement), any Person other than the Purchaser concerning any
acquisition of equity interests in the Company or any significant portion of
the
assets of the Company (including by merger or other similar transaction). The
Company or the Seller shall promptly notify the Purchaser if they are contacted
or approached in respect of any such transaction, as well as the material terms
of the proposed transaction and the identity of the contacting party.
3.3 Reasonable
Efforts; Assurances.
Upon
the terms and subject to the conditions of this Agreement, each of the parties
hereto shall use all reasonable efforts to take or cause to be taken all action,
and to do or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by
this
Agreement, including using commercially reasonable efforts to (a) obtain
all consents or approvals required or desirable in connection with the
transactions contemplated hereby, (b) effect promptly all necessary or
appropriate registrations or filings with any Governmental Authorities, and
(c) fulfill or cause the fulfillment of the conditions to Closing set forth
in Article
IV.
The
parties shall use their respective reasonable efforts to consummate the
transactions contemplated by this Agreement on or before April 30, 2008, and
agree to act in good faith with respect to the consummation of such
transactions. In case at any time after the Closing Date any further action
is
reasonably necessary or desirable to carry out the purposes of this Agreement,
each of the parties hereto shall take such further action without additional
consideration.
21
(a) Prior
to
the Closing, the Company shall afford to the Purchaser and its accountants,
counsel, and other representatives full access upon reasonable prior notice
and
during normal business hours to all of the Company’s properties, books,
accounts, records, contracts, and personnel and, during such period, the Company
shall, and shall cause its accountants, counsel, and other representatives
to,
furnish promptly to the Purchaser and its representatives all information
concerning the Company’s business, properties and personnel as the Purchaser or
its representatives may reasonably request; provided,
however,
that
such investigation shall be conducted in a manner so as to minimize any
unreasonable disruptions to the operations of the business and, consistent
with
the confidential nature of the transaction, the Purchaser shall not contact
any
customers or employees of the Company without the prior consent of the Company.
(b) From
time
to time for a period of three (3) years after the Closing, the Purchaser shall
afford, and shall cause the Company to afford, upon reasonable prior notice
and
during normal business hours of the Company, to the Seller and its accountants,
counsel, and other representatives access to the books, records, and personnel
of the Company with respect to matters relating to the operations of the Company
prior to the Closing Date to the extent that they have a legitimate business
purpose for the same (e.g., for Tax purposes or for purposes of defending
claims) and provided that such access does not unreasonably interfere with
the
operations of the Company.
3.5 Notification
of Certain Matters.
The
Company and Purchaser shall promptly notify each other in writing:
(a) if,
subsequent to the date of this Agreement and prior to the Closing Date, either
of them becomes aware of the occurrence of any event or the existence of any
fact that would render any of the representations and warranties made by it
(and, in case of the Company, made by the Seller) in Sections 2.1,
2.2
or
2.3,
as the
case may be, if made on or as of the date of such event or the Closing Date,
inaccurate or untrue (other than with respect to representations and warranties
made as of a specified date);
(b) of
any
breach by either of them of any of its (and, in case of the Company, the
Seller’s) covenant or agreement contained in this Agreement;
(c) of
any
notice or other communication from any third party alleging that the consent
of
such third party is or may be required in connection with the transactions
contemplated by this Agreement;
(d) of
any
notice or other communication from any Governmental Authority in connection
with
or relating to the transactions contemplated hereby; or
(e) if
the
Company or the Seller become aware of any material deterioration in the
relationship with any customer, supplier, or employee of the
Company.
22
3.6 Public
Announcements.
No
party will issue or make or cause the publication of, any press release or
other
public announcement with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties
hereto; provided,
however,
that
nothing herein will prohibit any party from issuing, making, or causing the
publication of any such press release or public announcement to the extent
that
such party is advised by its legal counsel that such action is required by
Law,
in which case the party making such determination will use reasonable efforts
to
allow the other parties reasonable time to review and comment on such release
or
announcement in advance. For the purposes of this Section, the Company shall
be
entitled to give such prior written consent on behalf of the
Seller.
3.7 Transfer
Taxes.
The
Seller shall pay all transfer taxes, if any, payable in connection with the
consummations of the transactions contemplated by this Agreement.
3.8 Further
Assurances; Cooperation.
Each
party hereto will, before, at, and after the Closing, execute and deliver such
instruments and take such other actions as the other party or parties, as the
case may be, may reasonably require in order to carry out the intent of this
Agreement. Without limiting the generality of the foregoing, at any time after
the Closing, at the request of the Company or the Purchaser, and without further
consideration, the Seller (a) will execute and deliver such instruments of
sale,
transfer, conveyance, assignment and confirmation and take such action as the
Company or the Purchaser may reasonably deem necessary or desirable in order
to
more effectively transfer, convey and assign to the Purchaser, and to confirm
the Purchaser’s title to, the Shares, and (b) will execute such documents, take
such action, and provide such assistance (and shall cause its agents and
representatives to provide such assistance) as the Company or the Purchaser
may
reasonably deem necessary or desirable in order to prepare and file any future
SEC Documents that the Company seeks to file with the SEC under the Securities
Act or the Exchange Act.
ARTICLE
IV
4.1 Conditions
to Obligation of the Seller.
The
obligation of the Seller to consummate the transactions contemplated hereby
shall be subject to the satisfaction on or prior to the Closing of the following
conditions (any of which may be waived on behalf of the Seller in writing by
the
Company):
(a) the
Purchaser shall have performed and complied with all obligations and agreements
required to be performed and complied with by it hereunder on or prior to the
Closing;
(b) the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct as of the Closing Date as if made as of such date
(other than those representations and warranties that address matters only
as of
a particular date or only with respect to a specific period of time, which
need
only be true and correct as of such date or with respect to such
period);
23
(c) there
shall be no order, decree, or ruling by any Governmental Authority nor any
action, suit, claim or proceeding by or before any Governmental Authority shall
be pending, which seeks to restrain, prevent or materially delay or restructure
the transactions contemplated hereby or by any Ancillary Document, or which
otherwise questions the validity or legality of any such
transactions;
(d) there
shall be no statute, rules, regulation, or order enacted, entered, or enforced
or deemed applicable to the transactions contemplated hereby which would
prohibit or, render illegal the transactions contemplated by this Agreement
or
the Ancillary Documents;
(e) each
of
the documents to be delivered by the Purchaser pursuant to Section 5.3
shall
have been so delivered by the Purchaser at the Closing.
4.2 Conditions
to Obligation of the Purchaser.
The
obligation of the Purchaser to consummate the transactions contemplated hereby
shall be subject to the satisfaction on or prior to the Closing of the following
conditions (any of which may be waived in writing by the
Purchaser):
(a) the
Seller and the Company shall have performed or complied with all obligations
and
agreements required to be performed or complied with by any of them hereunder
on
or prior to the Closing (including, without limitation, those specified in
Section
5.2);
(b) the
representations and warranties of the Seller and the Company contained in this
Agreement shall be true and correct as of the Closing Date as if made as of
such
date (other than those representations and warranties that address matters
only
as of a particular date or only with respect to a specific period of time,
which
need only be true and correct as of such date or with respect to such
period);
(c) there
shall be no order, decree, or ruling by any Governmental Authority nor any
action, suit, claim, or proceeding by or before any Governmental Authority
shall
be pending, which seeks to restrain, prevent, or materially delay or restructure
the transactions contemplated hereby or any Ancillary Document, or which
otherwise questions the validity or legality of any such
transactions;
(d) there
shall be no statute, rules, regulation, or order enacted, entered, or enforced
or deemed applicable to the transactions contemplated hereby which would
prohibit or render illegal the transactions contemplated by this Agreement
or
the Ancillary Documents;
(e) the
Company and the Seller shall have obtained on terms and conditions satisfactory
to the Purchaser all consents and approvals of third parties (including
Governmental Authorities) that are required (i) for the consummation of the
transactions contemplated hereby or any Ancillary Document, or (ii) in
order to prevent a breach of, a default under or a termination, material change
in the terms or conditions or material modification of, any Material Agreement
as a result of the consummation of the transactions contemplated hereby;
24
(f) the
Company and the Seller shall have delivered evidence
satisfactory to the Purchaser that all Liabilities of the Company have been
satisfied, compromised, or otherwise extinguished as of the Closing;
and
(g) each
of
the documents to be delivered by Sellers or the Company pursuant to Section 5.2
shall
have been so delivered by Sellers or the Company at the Closing.
ARTICLE
V
5.1 Closing.
The
closing of the transactions contemplated hereby (the “Closing”)
shall
take place at the offices of Indeglia & Xxxxxx, 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000, as soon as practicable but in no event later than
10:00 a.m., Pacific time, on the third (3rd) Business Day after the date on
which each of the conditions set forth in Sections 4.1
and
4.2
have
been satisfied or waived by the party or parties entitled to the benefit of
such
conditions, or at such other place, at such other time or on such other date
as
the parties may mutually agree. The date on which the closing actually occurs
is
referred to herein as the “Closing
Date”.
5.2 Deliveries
by the Seller and the Company.
Subject
to the terms and conditions hereof, the Seller and the Company shall deliver
the
following to the Purchaser at or before the Closing:
(a) certificates,
duly endorsed for transfer or accompanied by a duly executed blank stock power,
in
either
case with medallion signature guarantees,
and with
evidence of payment of any applicable stamp or transfer taxes, representing
all
of the Shares;
(b) certified
resolutions of the Seller’s board of directors authorizing the transactions
contemplated by this Agreement and the endorsement and negotiation of the
certificates representing all of the Shares;
(c) the
corporate minute book of the Company, including the articles of incorporation,
as amended, the bylaws, as amended, all minutes of the stockholders, board
of
directors, and committees thereof, and the corporate seal;
(d) all
stock
ledgers for all series of preferred stock of the Company;
(e) a
certified list of common stockholders from the Company’s transfer agent, dated
as of the date of Closing;
(f) all
accounting books and records for the Company commencing January 1, 2001 through
the present;
(g) all
SEC
XXXXX codes for the Company;
25
(h) resolutions
of the board of directors appointing Xxxxx Xxxxxxx as a director of the Company,
effective as of the Closing;
(i) resignations
of all officers and directors of the Company, effective [as of the
Closing];
(j) a
letter
of instruction to the Company’s transfer agent signed by Xxxxxx Xxxxxxxxxxx on
behalf of the Company advising the transfer agent of the change of officers
and
directors contemplated by this Agreement;
(k) a
letter
to the Company’s current certifying accountants signed by Xxxxxx Xxxxxxxxxxx on
behalf of the Company advising the certifying accountants of the change of
officers and directors contemplated by this Agreement;
(l) evidence
satisfactory to the Purchaser that all Liabilities of the Company have been
satisfied, compromised, or otherwise extinguished as of the
Closing;
(m) evidence
that the Company and/or the Seller have obtained on terms and conditions
reasonably satisfactory to the Purchaser all consents and approvals of third
parties (including Governmental Authorities) that are required (i) for the
consummation of the transactions contemplated hereby or (ii) in order to prevent
a material breach of, a default under or a termination, material change in
the
terms or conditions or material modification of, any Material Agreement as
a
result of the consummation of the transaction contemplated hereby;
and
(n) certificates
of the Company and the Seller, in form and substance reasonably satisfactory
to
the Purchaser, dated the Closing Date, certifying compliance with the conditions
set forth in Sections 4.2(a)
and
4.2(b).
5.3 Actions
or Deliveries by the Purchaser.
Subject
to the terms and conditions hereof, the Purchaser shall deliver the following
to
the Seller at or before the Closing:
(a) the
Purchase Price in accordance with Section
1.3;
and
(b) a
certificate of the Purchaser, in form and substance reasonably satisfactory
to
the Seller, dated the Closing Date and signed by the President of the Purchaser
evidencing compliance with the conditions set forth in Sections
4.1(a)
and
4.1(b).
5.4 Other
Documents.
The
parties agree to execute and deliver on or before the Closing all other
documents that are reasonably necessary or desirable in order to consummate
the
transactions contemplated hereby and to carry out the intent of this
Agreement.
5.5 Expenses.
Except
as otherwise specifically provided herein, the Seller and the Company, on one
hand, and the Purchaser, on the other hand, shall pay their own expenses,
including, but not limited to, attorneys’, accountants’, financial advisors’ and
brokers’ or finders’ fees, incurred in connection with the transactions
contemplated hereby (“Expenses”).
It is
the express intention of the parties that the Seller shall personally be
responsible for all Expenses incurred by the Company, its Affiliates, or their
respective agents in connection with the transactions contemplated hereby.
26
ARTICLE
VI
6.1 Termination.
This
Agreement may be terminated at any time prior to the Closing:
(a) by
mutual
consent of the Purchaser and the Seller;
(b) by
either
the Purchaser or the Seller if the Closing shall not have been consummated
on or
before April 30, 2008 (provided that the terminating party is not otherwise
in
material breach of its obligations under this Agreement), which date may be
extended by written agreement of the Purchaser and the Seller; or
(c) by
either
the Purchaser or the Seller, if a permanent injunction or other order by any
Federal or state court which would make illegal or otherwise restrain or
prohibit the consummation of the transactions contemplated hereby shall have
been issued and shall have become final and non-appealable.
6.2 Effect
of Termination.
In the
event of the termination of this Agreement in accordance with this Article
VI,
this
Agreement shall thereafter become void and there shall be no liability on the
part of any party hereto or their respective directors, officers, stockholders
or agents, except that any such termination shall be without prejudice to the
rights of any party hereto arising out of any breach by any other party of
this
Agreement.
ARTICLE
VII
7.1 Survival;
Indemnity.
The
representations, warranties, covenants, and agreements of the parties contained
in this Agreement, and the indemnification rights set forth in this Article
VII,
shall
survive the Closing. Notwithstanding the foregoing, the representations and
warranties of the parties shall only so survive until the third anniversary
of
the Closing Date; provided,
however,
that
the representations and warranties contained in (A) Section 2.1(a),
(b), (e)
(but
only with respect to due organization) or (f)
shall
survive in perpetuity, and (B) Section
2.1(w), (z), or (aa)
shall
survive until sixty (60) days after the expiration of the applicable statute
of
limitations (the period from the Closing Date to such applicable date is
hereinafter referred to as the “Survival
Period”).
Nothing contained in the foregoing sentence shall prevent recovery under this
Article after the expiration of the Survival Period so long as the party making
a claim or seeking recovery complies with the provisions of clause (x) and
(y)
of the following sentence. No party shall have any claim or right of recovery
for any breach of a representation, warranty, covenant, or agreement unless
(x)
written notice is given in good faith by that party to the other party of the
representation, warranty, covenant, or agreement pursuant to which the claim
is
made or right of recovery is sought setting forth in reasonable detail the
basis
for the purported breach of the representation, warranty, covenant, or
agreement, the amount or nature of the claim being made, if then ascertainable,
and the general basis therefor and (y) such notice is given prior to the
expiration of the Survival Period.
27
7.2 General
Indemnification by the Seller and the Company.
The
Seller and the Company, jointly and severally, agree to indemnify the Purchaser
and its officers, directors, shareholders, employees, Affiliates, attorneys,
accountants and agents (the “Purchaser
Parties”),
and
hold them harmless from and against any and all damages, losses, liabilities,
costs, and expenses (including, without limitation, reasonable expenses of
investigation and reasonable attorneys’ fees and expenses in connection with any
action, suit or proceeding) (collectively, “Purchaser
Damages”)
incurred or suffered by the Purchaser Parties as a result of any breach or
inaccuracy of any representation, warranty, covenant, or agreement of the Seller
or the Company contained in this Agreement, or any certificate delivered by
the
Seller or the Company pursuant to this Agreement.
7.3 Indemnification
by Purchaser.
The
Purchaser agrees to indemnify the Seller from and after the Closing and to
hold
the Seller and its officers, directors, stockholders, employees, Affiliates,
attorneys, accountants and agents (the “Seller
Parties”)
harmless from and against any and all damages, losses, liabilities, costs,
and
expenses (including, without limitation, reasonable expenses of investigation
and reasonable attorneys ‘ fees and expenses in connection with any action, suit
or proceeding) (collectively, “Seller
Damages”)
incurred or suffered by the Seller Parties arising out of any breach of any
representation, warranty, covenant or agreement of the Purchaser.
(a) Notification
of Claims.
Upon
any party (the “Indemnified
Party”)
becoming aware of a fact, condition, or event that constitutes a basis for
a
claim for Purchaser Damages or Seller Damages, as the case may be, in respect
thereof against the other party (the “Indemnifying
Party”)
under
Section 7.2
or
7.3,
if such
a claim is to be made, the Indemnified Party will with reasonable promptness
and
specificity notify the Indemnifying Party or Parties in writing of such fact,
condition or event. The failure to notify the Indemnifying Party or Parties
under this Section
7.4
shall
not relieve any Indemnifying Party of any liability that it may have to the
Indemnified Party except to the extent that such failure to notify shall have
resulted in a waiver of any lawful and valid affirmative defense to any
third-party claim or otherwise materially prejudices the Indemnifying Party
or
Parties in connection with the administration or defense of such third-party
claim.
(b) Third-Party
Claims.
(i) Upon
receipt by the Indemnifying Party or Parties of any notice of claim for
indemnification hereunder arising from a third-party claim, the Indemnifying
Party or Parties shall assume the administration and defense of such third-party
claim with counsel that is reasonably satisfactory to the Indemnified Party
and
shall proceed with the administration and defense of such third-party claim
diligently and in good faith; provided,
however,
that
any Indemnifying Party shall be entitled to assume the administration and
defense of such third-party claim only if it agrees in writing with the
Indemnified Party that it is obligated to indemnify the Indemnified Party
pursuant to this Article with respect to such third-party claim; and
provided,
further
that no
Indemnifying Party shall be entitled to assume the administration and defense
of
any third-party claim that (A) seeks an injunction or other equitable relief
that might materially and adversely affect any Indemnified Party, or (B)
involves any criminal action or any claim that could reasonably be expected
to
result in a criminal action against any Indemnified Party. Each parties’ counsel
in connection with this transaction shall be deemed to be reasonably
satisfactory to the other party for purposes of this Section
7.4(b)(i).
The
Indemnified Party shall be fully consulted by the Indemnifying Party or Parties
and shall have the right to participate, at its own expense, in the
investigation, administration and defense of such third-party claim. Any party
hereto receiving notice of any proposed settlement of any such third-party
claim
shall promptly provide a copy of such notice to the other parties hereto. The
Indemnifying Party or Parties shall not have the right to settle or compromise
any third-party claim for which indemnification is being sought hereunder
without the consent of the Indemnified Party unless as a result of such
settlement or compromise the Indemnified Party is fully discharged and released
from any and all liability with respect to such third-party claim. The
Indemnified Party shall make available to the Indemnifying Party or Parties
and
its counsel all books, records, documents and other information relating to
any
third-party claim for which indemnification is sought hereunder, and the parties
to this Agreement shall render to each other reasonable assistance in the
defense of any such third-party claim.
28
(ii) Notwithstanding
any other provision of this Agreement, if the Indemnified Party is not entitled
to defend a third-party claim under Section
7.4(b)(i),
the
Indemnified Party shall have the absolute right, at its election (to be
exercised in its sole discretion by written notice to the Indemnifying Party
or
Parties) to assume from the Indemnifying Party or Parties the administration
and
defense of any such third-party claim against the Indemnified Party with counsel
that is reasonably satisfactory to the Indemnifying Party. In such event, the
Indemnified Party shall proceed with the administration and defense of such
third-party claim(s) diligently and in good faith, and the Indemnifying Party
shall be fully consulted by the Indemnified Party or Parties and shall have
the
right to participate, at its own expense, in the investigation, administration
and defense of such third-party claim. The Indemnifying Party or Parties shall
be responsible for the costs and expenses of the administration and defense
of
such claim(s) incurred prior to the Indemnified Party or Parties’ assumption of
the administration and defense of such claim(s) and shall not be responsible
for
costs and expenses incurred after such assumption, and the Indemnifying Party
shall have the right to participate in, but not control, the defense of such
claim(s) at the sole cost and expense of the Indemnifying Party.
ARTICLE
VIII
8.1 Certain
Definitions.
For
purposes of this Agreement, the following terms and phrases shall have the
following meanings:
“Affiliate”
shall
have the meaning ascribed to it in Rule 405 promulgated under the Securities
Act.
29
“Business
Day”
shall
mean any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in the State of New York are authorized by law,
regulation or executive order to close.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
“Employee
Benefit Plan”
shall
mean any “employee benefit plan” as defined in Section 3(3) of ERISA and any
other plan, policy, program, practice, agreement, understanding or arrangement
(whether written or unwritten) providing compensation or other benefits to
any
current or former director, officer, employee or consultant (or to any dependent
or beneficiary thereof), of the Company or any ERISA Affiliate, which are now,
or were within the past six years, maintained by the Company or any ERISA
Affiliate, or under which the Company or any ERISA Affiliate has or could have
any obligation or liability, whether actual or contingent (and including,
without limitation, any liability arising out of an indemnification, guarantee,
hold harmless or similar agreement), including, without limitation, all
incentive, bonus, deferred compensation, vacation, holiday, cafeteria, medical,
disability, stock purchase, stock option, stock appreciation, phantom stock,
restricted stock or other stock-based compensation plans, policies, programs,
practices or arrangements.
“Environmental
Law”
shall
mean any federal, state, local or foreign law (including any common law),
statute, code, ordinance, rule, regulation or other requirement relating to
the
environment, natural resources or public or employee health and safety, and
includes, but not limited to, CERCLA, the Hazardous Materials Transportation
Act, 49 U.S.C. § 1801 et seq., as amended, the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq., as amended, the Clean Water Act, 33
U.S.C. § 2601 et seq., as amended, the Clean Air Act, 42 U.S.C. § 7401 et seq.,
as amended, the Toxic Substances Control Act, 15 U.S.C. § 6901 et seq., as
amended, the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
§ 136
et seq., as amended, the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., as
amended, the New York Navigation Law, as amended, and the Occupational Safety
and Health Act, 29 U.S.C. § 6901 et seq., as amended.
“Environmental
Costs and Liabilities”
shall
mean any and all losses, liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs and expenses (including, without limitation,
fees, disbursements and expenses of legal counsel, experts, engineers and
consultants and the costs of investigation and feasibility studies and remedial
activities) arising from or under any Environmental Law or order or contract
with any Governmental Authority or any other Person.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate”
shall
mean any entity that, together with the Company, is or was treated as a single
employer under Section 414(b), (c) or (m) of the Code.
30
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended.
“GAAP”
shall
mean generally accepted accounting principles as in effect in the United
States.
“Governmental
Authority”
shall
mean any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign.
“Hazardous
Materials”
shall
mean any petroleum or petroleum products, radioactive materials,
asbestos-containing materials, radon gas, PCBs and any other hazardous or toxic
substance, material or waste which is or becomes prior to the Closing regulated
under, or defined as a “hazardous substance,” “pollutant,” “contaminant,”
“hazardous waste,” “toxic chemical,” “hazardous materials,” “toxic substance” or
“hazardous chemical” under any Environmental Law.
“Knowledge
of the Company”
shall
mean the actual knowledge of Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxx, upon due
inquiry.
“Laws”
shall
mean all applicable statutes, rules, regulations, ordinances, orders, writs,
injunctions, judgements, decrees, awards or restrictions of any governmental
entity.
“Liabilities”
shall
mean any liability or obligation, including without limitation, any direct
or
indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, whether known or unknown, fixed
or
unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured.
“Liens”
shall
mean any security interest, mortgage, lien, charge, claims, option and
encumbrance.
“Material
Adverse Effect”
used
in
connection with a party shall mean any event, change or effect that is or is
reasonably likely to become materially adverse to the condition (financial
or
otherwise), properties, assets, liabilities, businesses, operations, results
of
operations or prospects of such party and its subsidiaries, if any, on a
consolidated basis.
“Pension
Plan”
shall
mean any qualified or non-qualified Employee Pension Benefit Plan (including,
any Multiemployer Plan), as such term is defined in Section 3(2) of
ERISA.
“Person”
shall
mean any individual, firm, corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, governmental
entity of any kind.
“Pre-Closing
Period”
shall
mean all taxable periods ending on or before the Closing Date and the portion
ending on or before the Closing Date of any taxable period that includes (but
does not end on) the Closing Date.
“SEC”
shall
mean the United States Securities and Exchange Commission.
31
“SEC
Documents”
shall
mean all reports and registration statements filed, or required to be filed,
by
the Company pursuant to the Securities Laws.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“Securities
Laws”
shall
mean the Securities Act; the Exchange Act; the Investment Company Act of 1940,
as amended; the Investment Advisers Act of 1940, as amended; the Trust Indenture
Act of 1939, as amended; and the rules and regulations of the SEC promulgated
thereunder.
“Subsidiary”
shall
mean, as to any Person, any corporation, partnership, limited liability company
or other entity which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors, the general managers
or other persons performing similar functions, are at the time directly or
indirectly owned by such Person; unless otherwise specified, “Subsidiary” means
a Subsidiary of the Company.
“Taxes”
shall
mean taxes, fees, levies, duties, tariffs, imposts, and governmental impositions
or charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad
valorem,
net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers’ compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer
and
gains taxes, and (ii) interest, penalties, additional taxes and additions to
tax
imposed with respect thereto.
“Welfare
Plan”
shall
mean any Employee Welfare Benefit Plan, as such term is defined in Section
3(1)
of ERISA.
8.2 Other
Defined Terms.
Each of
the following terms have the meaning assigned to it in the Section
indicated:
|
Term
|
Section
|
|
|
Agreement
|
First
Paragraph
|
|
|
Ancillary
Documents
|
2.1(a)
|
|
|
Balance
Sheet Date
|
2.1(n)
|
|
|
CERCLA
|
2.1(r)
|
|
|
Closing
|
5.1
|
|
|
Closing
Date
|
5.1
|
|
|
Company
|
First
Paragraph
|
|
|
Evaluation
Date
|
2.1(l)
|
|
|
Expenses
|
5.5
|
|
|
Financial
Statements
|
2.1(j)
|
|
|
Indemnified
Party
|
7.4(a)
|
|
|
Indemnified
Plans
|
7.2(b)
|
|
|
Indemnifying
Party
|
7.4(a)
|
|
|
IRS
|
2.1(v)
|
32
|
Material
Agreements
|
2.1(o)
|
|
|
Organizational
Documents
|
2.1(e)
|
|
|
PBGC
|
2.1(v)
|
|
|
Proprietary
Rights
|
2.1(n)
|
|
|
Purchase
Price
|
1.2
|
|
|
Purchaser
|
First
Paragraph
|
|
|
Purchaser
Damages
|
7.2
|
|
|
Purchaser
Parties
|
7.2
|
|
|
Real
Property
|
2.1(n)
|
|
|
Receivables
|
2.1(l)
|
|
|
Related
Party
|
2.1(s)
|
|
|
Seller
|
First
Paragraph
|
|
|
Seller
Damages
|
7.3
|
|
|
Seller
Parties
|
7.3
|
|
|
Survival
Period
|
7.1
|
|
|
Tax
Returns
|
2.1(u)
|
ARTICLE
IX
9.1 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally (including delivery
by
courier service), transmitted by telecopy or mailed by registered or certified
mail, postage prepaid, return receipt requested, or sent by a nationally
recognized overnight courier service, as follows:
| (a) |
If
to the Purchaser, to:
|
Terminus,
Inc.
c/o
Indeglia & Xxxxxx
0000
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Telecopy:
(000) 000-0000
| (b) |
If
to the Company or the Seller, to:
|
Before
the Closing:
The
Blackhawk Fund
000
Xxxxxxxxxx Xxxxx, Xxxxx 000-X
Xxxxxxx,
XX 00000
Telecopy:____________________
33
After
the
Closing:
Palomar
Enterprises, Inc.
000
Xxxxxxxxxx Xxxxx, Xxxxx 000-X
Xxxxxxx,
XX 00000
Telecopy:____________________
or
to
such other address as the Person to whom notice is to be given may have
previously furnished to the other parties in writing in accordance herewith.
Notice shall be deemed given on the date received (or, if receipt thereof is
refused, on the date of such refusal).
9.2 Amendments
and Waivers.
This
Agreement may not be amended, modified, or supplemented except by written
agreement of the parties hereto. No waiver by any party of any non-compliance,
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
non-compliance, default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
9.3 Interpretation.
The
headings preceding the text of Articles and Sections included in this Agreement
and the headings to Exhibits and Schedules attached to this Agreement are for
convenience only and shall not be deemed part of this Agreement or be given
any
effect in interpreting this Agreement. The use of the masculine, feminine or
neuter gender herein shall not limit any provision of this Agreement. The use
of
the terms “including” or “include” shall in all cases herein mean “including,
without limitation” or “include, without limitation,” respectively. References
to any “Article,” “Section,” “Exhibit,” or “Schedule” shall refer to an Article
or Section of, or an Exhibit or Schedule to, this Agreement. In any case where
the concept of materiality is applied more than once to qualify any provision
of
this Agreement (whether by cross-referencing or incorporation or otherwise),
such provision shall be interpreted as if only one, but the broadest one, of
such materiality qualification applied to it. Any due diligence review, audit,
or other investigation or inquiry undertaken or performed by or on behalf of
a
party shall not limit, qualify, modify or amend the representations, warranties,
or covenants of, or indemnities made by any other party pursuant to this
Agreement, irrespective of the knowledge and information received (or which
should have been received) therefrom by the investigating party and consummation
of the transactions contemplated herein by a party shall not be deemed a waiver
of a breach of or inaccuracy in any representation, warranty, or covenant or
of
any other party’s rights and remedies with regard thereto.
9.4 Assignment;
Binding Upon Successors and Assigns.
None of
the parties hereto may assign or delegate any of its rights or obligations
hereunder without the prior written consent of the other parties hereto. This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors, heirs, legatees, distributes, and
assigns.
9.5 Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors, permitted assigns and legal
representatives, and nothing in this Agreement, express or implied, is intended
to confer upon any other Person any rights or remedies of any nature.
34
9.6 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to constitute an original and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties.
9.7 Governing
Law; Venue; Jurisdiction.
The
laws of the State of California (irrespective of its choice of law principles)
will govern the validity of this Agreement, the construction of its terms and
the interpretation and enforcement of the rights and duties of the parties
hereto. This Agreement shall be enforceable in any court of competent
jurisdiction. In furtherance of and not in limitation of the foregoing, the
parties hereto (i) agree and consent to the personal jurisdiction and venue
of the state and Federal courts sitting in Orange County, California in any
action or proceeding arising out of or connected in any way with this Agreement,
(ii) irrevocably waive, to the fullest extent permitted by law, any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum, and (iii) agree that service of process in any such
action or proceeding will be sufficient if sent by certified mail, return
receipt requested, to applicable address set forth above, and that such service
shall constitute “personal service,” and further agree to the invocation of said
jurisdiction by service of process in any other manner authorized by
law.
9.8 Severability.
If any
term or provision of this Agreement shall, to any extent, be held by a court
of
competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall not be affected thereby and this Agreement shall be deemed
severable and shall be enforced otherwise to the full extent permitted by
law.
9.9 Entire
Agreement.
This
Agreement (including the Schedules and Exhibits referred to herein and which
form a part hereof) and the Ancillary Documents constitute the entire agreement
among the parties hereto and supersedes all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof except for a confidentiality agreement by and among the parties hereto,
if any.
9.10 Schedules
and Exhibits.
The
Schedules and Exhibits attached hereto are incorporated herein and made a part
hereof for all purposes.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
35
IN
WITNESS WHEREOF, this Stock Purchase Agreement has been duly executed and
delivered by the parties hereto on the date first above written.
|
PURCHASER:
TERMINUS,
INC.
|
||
| |
|
|
| By: | /s/ Xxxxx Xxxxxxx | |
|
Name:
Xxxxx Xxxxxxx
Title:
President
|
||
|
COMPANY:
THE
BLACKHAWK FUND
|
||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxxxxx | |
|
Name: Xxxxxx Xxxxxxxxxxx |
||
| Title: President | ||
|
SELLER:
PALOMAR
ENTERPRISES, INC.
|
||
| |
|
|
| By: | /s/ Xxxxxx Xxxxxxxxxxx | |
|
Name: Xxxxxx Xxxxxxxxxxx |
||
|
Title:
President
|
||
36