Exhibit 6
EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
This EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered into
by and among Make Your Move, Inc., a Nevada corporation, and its assignees
("Purchaser"), and Xxxx Xxx Ban, an unmarried woman ("Seller"), with reference
to the following facts:
A. Allpaq Technologies Corporation, a California corporation is engaged in
the business of TN, STN and TFT LCD Technology, designing and manufacturing
computers, computer Liquid Crystal Display (LCD) monitors, Game Board
Systems, MP3 Players and LCD panels, and providing other original equipment
manufacturers services under the Allpaq trade name and xxxx. LCD Displays
are frequently used in electronic computer games.
B. Seller is the owner of one hundred thousand (100,000) shares of
one-tenth of one cent ($.001) par value common stock of the described
corporation representing all the issued and outstanding capital stock of
the described corporation.
C. Seller wishes to sell, and Purchaser wishes to acquire, all of the
capital stock of the described corporation, on the terms and subject to the
conditions hereinafter set forth.
Based upon the foregoing, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows.
1. DEFINITIONS . In addition to the terms defined elsewhere in
this Agreement, as used in this Agreement, the following terms
shall have the following meanings:
1.1 "Aboveground Storage Tanks" and "Underground
Storage Tanks" shall have the meaning given them in Section
6901 et seq., as amended, of RCRA, or any applicable state
or local statute, law, ordinance, code, rule, regulation,
order ruling, or decree governing Aboveground Storage Tanks
or Underground Storage Tanks.
1.2 "Affiliate" shall have the meaning ascribed to it
in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, as in effect on
the date hereof.
1.3 "Assets" means all of the assets and properties of
Corporation, including, without limitation, all assets and
properties necessary for the conduct of the Business in the
manner in which and to the extent to which such business is
currently being conducted and include, without limitation,
all tangible and intangible assets owned by Corporation
including all vehicles, equipment and inventory and all
Contracts, customer lists, intellectual property, cash and
accounts receivable and all other facilities whether
contemplated or under development, and licenses and permits
of Corporation.
1.4 "Business" means the business of TN, STN and TFT
LCD Technology, designing and manufacturing computers,
computer Liquid Crystal Display (LCD) monitors, Game Board
Systems, MP3 Players and LCD panels, and providing other
original equipment manufacturers services under the Allpaq
trade name and xxxx.
1.5 "Charter Documents" means the Articles of
Incorporation, Bylaws, restrictive stock agreements of
Corporation, including all amendments thereto.
1.6 "Closing" means the closing of the transactions
under this Agreement.
1.7 "Code" means the Internal Revenue Code of 1986, as
amended.
1.8 "Contract" means any indenture, lease, sublease,
license, loan agreement, mortgage, note, indenture,
restriction, will, trust, commitment, obligation or other
contract, agreement or instrument, whether written or oral.
1.9 "Corporation" means Allpaq Technologies
Corporation, a California corporation, and its subsidiaries,
collectively.
1.10 "Corporation Shares" means the one hundred
thousand (100,000) shares of one-tenth of one cent ($.001)
par value stock of Corporation collectively owned by Seller.
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1.11 "Environmental, Health and Safety Laws" means all
federal, state, regional or local statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees,
rulings, and changes or ordinances or judicial or
administrative interpretations thereof, whether currently in
existence or hereafter enacted or promulgated, any of which
govern (or purport to govern) or relate to pollution,
protection of the environment, public health and safety, air
emissions, water discharges, hazardous or toxic substances,
solid or hazardous waste or occupational health and safety,
as any of these terms are or may be defined in such
statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings and changes or ordinances, or
judicial or administrative interpretations thereof,
including, without limitation, the Solid Waste Disposal Act,
as amended by the Resource Conservation and Recovery Act of
1976 and subsequent Hazardous and Solid Waste Amendments of
1984 (collectively, "RCRA"); the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
by the Superfund Amendment and Reauthorization Act
(collectively, "CERCLA"); the Hazardous Materials
Transportation Act; the Toxic Substances Control Act; the
Clean Air Act; the Clean Water Act; the Federal Insecticide,
Fungicide and Rodenticide Act, as amended ("FIFRA"); the
Emergency Planning and Community Right-to-Know Act of 1986,
as amended ("EPCRA"); the Occupational Safety and Health Act
of 1970, as amended ("OSHA"); and all applicable foreign
laws.
1.12 "Exchange Shares" means two hundred thousand
(200,000) shares of one-tenth of one cent ($.001) par value
common stock of Purchaser.
1.13 "Financial Statements" means the Balance Sheet
dated not earlier than December 31, 2000 and related
Statement of Earnings, Statement of Cash Flow and related
notes of Corporation for the year ended December 31, 2000,
audited by reputable CPA firm such as Pricewaterhouse
Xxxxxx.
1.14 "GAAP" means generally accepted accounting
principles.
1.15 "Governmental Authority" means any nation or
government, any state, regional, local or other political
subdivision thereof, and any entity or official exercising
executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.16 "Insurance Policies" means valid, outstanding and
enforceable policies of insurance issued to Corporation by
reputable insurers covering the Assets and the Business
against risks of the nature normally insured against by
corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such
corporations
1.17 "Intellectual Property" means (i) all inventions
(whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all
patents, patent applications, and patent disclosures,
together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and
reexaminations thereof, (ii) all trademarks, service marks,
trade dress, logos, together with all translations,
adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all
applications, registrations, and renewals in connection
therewith, (iii) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in
connection therewith, (iv) all mask works and all
applications, registrations, and renewals in connection
therewith, (v) all trade secrets and confidential business
information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier
lists, pricing and cost information, and business and
marketing plans and proposals), (vi) all computer software
(including data and related documentation), (vii) all
registered domain names, website content, website related
software, and all other Internet related tools and
applications, (viii) all other proprietary rights, and (ix)
all copies and tangible embodiments thereof (in whatever
form or medium).
1.18 "Lien" means any mortgage, deed of trust, pledge,
security interest, encumbrance, lien or charge of any kind
(including, but not limited to, any conditional sale or
other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or
comparable law or any jurisdiction in connection with such
mortgage, pledge, security interest, encumbrance, lien or
charge).
1.19 "Material Adverse Change (or Effect)" means a
change (or effect), in the condition (financial or
otherwise), properties, assets, liabilities, rights,
obligations, operations, business or prospects of
Corporation which change (or effect) individually or in the
aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations,
operations, business or prospects.
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1.20 "Percentage Interest" means each Seller's
proportionate interest in the Exchange Shares calculated by
dividing (i) the number of Corporation Shares owned by such
Seller immediately prior to the transfer thereof at the
Closing by (ii) the total number of Corporation Shares
transferred to Purchaser at the Closing.
1.21 "Person" means an individual, partnership,
corporation, limited liability company, business trust,
joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other
entity, of whatever nature.
1.22 "Permits" means all licenses and required
governmental or official approvals, permits or
authorizations for the Business and operations.
1.23 "Securities Act" means the Securities Act of 1933,
as amended.
1.24 "Tax Return" means any tax return, filing or
information statement required to be filed in connection
with or with respect to any Taxes.
1.25 "Taxes" means all taxes, fees or other
assessments, including, but not limited to, income, excise,
property, sales, franchise, intangible, withholding, social
security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any
interest or penalties related thereto.
2. EXCHANGE OF SHARES.
2.1 Exchange. Upon the Closing, in accordance with the
terms and conditions hereof, Seller shall sell, transfer,
convey and assign to Purchaser the Corporation Shares and,
in consideration for the conveyance to Purchaser of the
Exchange Shares, Purchaser shall issue to Seller the
Exchange Shares. The Exchange Shares shall be adjusted for
Purchaser stock splits and stock dividends issued prior to
the Closing Date.
2.2 Contingent Consideration. As additional
consideration for the conveyance to Purchaser of the
Corporation Shares, Purchaser agrees to pay to Seller the
sum of One Million, Two Hundred Thousand Dollars
($1,200,000), in the form of a (5%) royalty payment based on
yearly net sales. Once the total of said royalty is
satisfied, the Purchaser will be under no further obligation
to make said royalty payment. The Purchaser reserves the
right to make a lump sum payment of One Million, Two Hundred
Thousand Dollars ($1,200,000) to satisfy its royalty
obligation.
2.3 Tax Treatment . Purchaser and Seller intend that
the transactions contemplated by this Agreement qualify as a
reorganization under the provisions of Section 368(a) of the
Code; provided that no party hereto makes any
representations to any other party hereto that this
transaction will in fact qualify as such.
3. CLOSING, ITEMS TO BE DELIVERED, FURTHER ASSURANCES AND
EFFECTIVE DATE.
3.1 Time and Place . Subject to the terms and
conditions of this Agreement, the Closing of the exchange
shall take place at 9:00 a.m. on or before June 30, 2001, at
the offices of Purchaser's counsel, or such other time and
place as the parties may otherwise agree.
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3.2 Closing Obligations. At the Closing:
(a) Seller's Deliveries. Seller shall deliver to
Purchaser:
(1) Certificates representing the Corporation Shares
with duly executed and notarized stock powers attached, for
transfer to Purchaser;
(2) A release in the form of Exhibit 3.2(a)(ii)
executed by Seller (the "Release");
(3) A written opinion of counsel dated as of the
Closing Date in substantially the form of Exhibit
3.2(a)(iii) with only such changes therein as shall be in
form and substance reasonably satisfactory to Purchaser (the
"Opinion of Seller's Counsel");
(4) Employment agreement in the form of Exhibit
3.2(a)(iv), executed by Seller (the "Seller Employment
Agreement");
(5) Duly adopted resolutions of Corporation's Board of
Directors satisfactory to Purchaser in its sole discretion
(A) terminating Corporation's Employee Benefits Plans (other
than employee welfare benefit plans), with such termination
effective prior to the Closing Date, (B) providing that no
contributions shall be made to Corporation's 401(k) Plan
after such date, and (C) directing Corporation's legal
counsel to apply for a determination letter from the
Internal Revenue Service with respect to the termination of
the 401(k) Plan and to submitting Notice of Intent to
Terminate to all participants and beneficiaries under the
401(k) Plan; and
(6) A certificate executed by Seller representing and
warranting to Purchaser that Seller's representations and
warranties hereunder was accurate in all respects as of the
date of this Agreement and is accurate in all respects as of
the Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Schedules that were
delivered by Seller to Purchaser prior to the Closing Date).
(b) Purchaser Deliveries. Purchaser shall deliver to
Seller:
(1) Certificates representing the number of Exchange
Shares to be issued to Seller at the Closing pursuant to
Section 2.1 hereof;
(2) A written opinion of counsel dated as of the
Closing Date in substantially the form of Exhibit 3.2(b)(ii)
with only such changes therein as shall be in form and
substance reasonably satisfactory to Purchaser (the "Opinion
of Purchaser's Counsel");
(3) The Seller Employment Agreement, executed by
Purchaser; and
(4) A certificate executed by Purchaser to the effect
that, except as otherwise stated in such certificate, each
of Purchaser's representations and warranties in this
Agreement was accurate in all respects as of the date of
this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date.
(c) Mutual Performance. At or prior to the Closing, the
parties shall also deliver to each other the agreements,
certificates, and other documents and instruments referred
to in Articles 7. and 8. hereof.
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3.3 Third Party Consents. To the extent that the
Corporation Shares may not be transferred to Purchaser
hereunder without the consent of another Person which has
not been obtained, this Agreement shall not constitute an
agreement to transfer the same if an attempted transfer
would constitute a breach thereof or be unlawful, and
Seller, at her expense, shall use their best efforts to
obtain any such required consent(s) as promptly as possible.
If any such consent shall not be obtained or if any
attempted transfer would be ineffective or would impair
Purchaser's rights so that Purchaser would not in effect
acquire the benefit of all such rights, Seller, to the
maximum extent permitted by law, shall act after the Closing
as Purchaser's agent in order to obtain for it the benefits
thereunder and shall cooperate, to the maximum extent
permitted by law, with Purchaser in any other reasonable
arrangement designed to provide such benefits to Purchaser.
3.4 Further Assurances. Each of the parties hereto will
cooperate with the others and execute and deliver to the
other parties such other instruments and documents and take
such other actions as may be reasonably requested from time
to time by such other party as necessary to carry out,
evidence and confirm the intended purposes of this
Agreement.
3.5 Effective Date. The effective date of this
Agreement and all related instruments executed at the
Closing shall be the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As a material
inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser makes
the following representations and warranties to Seller.
4.1 Corporate Status . Purchaser is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Nevada.
4.2 Corporate Power and Authority . Purchaser has the
corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. Purchaser
has taken all action necessary to authorize the execution
and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the
transactions contemplated hereby.
4.3 Enforceability . This Agreement has been duly
executed and delivered by Purchaser and constitutes a legal,
valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms, except as
the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in
equity.
4.4 No Commissions. Other than pursuant to ongoing
contracts or arrangements with employees or consultants of
Purchaser or any of its subsidiaries, Purchaser has not
incurred any obligation for any finder's or broker's or
agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby, other
than such compensation as may be due and payable to its
officers or employees.
4.5 Capitalization. All of the Purchaser Shares (i)
have been duly authorized and validly issued and are fully
paid and non-assessable, (ii) were issued in compliance with
all applicable state and federal securities laws, (iii) were
not issued in violation of any preemptive rights or rights
of first refusal, and (iv) represent sixteen and 67/100ths
percent (16.67%) of the issued and outstanding shares of
capital stock of Purchaser on a fully diluted basis as of
the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. As a material
inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller makes the
following representations and warranties to Purchaser.
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5.1 Corporate Status . Corporation is a corporation
duly organized, validly existing and in good standing under
the laws of the State of California and has the requisite
power and authority to own or lease the Assets and to carry
on the Business as now being conducted. Corporation is duly
authorized and qualified, under all applicable laws,
regulations, ordinances and orders of public authorities, to
carry on the Business in the places and in the manner as now
conducted, except as disclosed on Schedule 5.1, where the
failure to be so authorized or qualified would not have a
Material Adverse Effect on the Business or on the
operations, Assets or condition (financial or otherwise), of
Corporation.
5.2 Power and Authority . Seller has the power and
authority to execute and deliver this Agreement, to perform
their obligations hereunder and to consummate the
transactions contemplated hereby. Seller has taken all
action necessary to authorize the execution and delivery of
this Agreement, the performance of their obligations
hereunder, and the consummation of the transactions
contemplated hereby.
5.3 Enforceability . This Agreement has been duly
executed and delivered by Seller, and constitutes the legal,
valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms.
5.4 Capitalization . Seller is the record and
beneficial owner of all of the outstanding shares of stock
of Corporation. Seller owns the Corporation Shares free and
clear of all Liens, restrictions and claims of any kind. All
of the Corporation Shares (i) have been duly authorized and
validly issued and are fully paid and non-assessable, (ii)
were issued in compliance with all applicable state and
federal securities laws, (iii) were not issued in violation
of any preemptive rights or rights of first refusal, (iv)
were issued for fair market value in exchange for cash, and
(v) no preemptive rights or rights of first refusal exist,
and no such rights arise by virtue of or in connection with
the transactions contemplated hereby. There are no
outstanding or authorized rights, options, warrants,
convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments
of any kind that could require Corporation to issue or sell,
or require any Seller to sell or transfer, any shares of
Corporation's capital stock (or securities convertible into
or exchangeable for shares of its capital stock). There are
no outstanding stock appreciation, phantom stock, profit
participation or other similar rights with respect to
Corporation. There are no proxies, voting rights or other
agreements or understandings with respect to the voting or
transfer of the shares of Corporation. Except as set forth
on Schedule 5.4, (i) Corporation is not obligated to redeem
or otherwise acquire any of its shares of stock, and (ii)
there has been no transaction or action taken with respect
to the equity ownership of Corporation in contemplation of
the transactions described in this Agreement.
5.5 Subsidiaries . Schedule 5.5 lists the name of each
of Corporation's subsidiaries and sets forth the number and
class of the authorized capital stock of each of
Corporation's subsidiaries and the number of shares of each
of Corporation's subsidiaries which are issued and
outstanding, all of which shares (except as set forth on
Schedule 5.5) are owned by Corporation, free and clear of
all Liens and claims of every kind. In addition, Schedule
5.5 also sets forth all rights, options, warrants,
convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments
of any kind that could require any such subsidiary to issue
or sell any shares of the its capital stock (or securities
convertible into or exchangeable for shares of its capital
stock). Except as set forth in Schedule 5.5, Corporation
does not presently own of record or beneficially, or
control, directly or indirectly, any capital stock,
securities convertible into capital stock, or any other
equity interest in any corporation, association or business
entity, nor is Corporation, directly or indirectly, a
participant in any joint venture, partnership or other
non-corporate entity.
5.6 No Violation . The execution and consummation of
this Agreement will not (i) contravene any provision of the
Charter Documents, (ii) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority
or of any arbitration award which is either applicable to,
binding upon or enforceable against Corporation or Seller,
or the assets of Corporation, (iii) conflict with, result in
any breach of, or constitute a default (or an event which
would, with the passage of time or the giving of notice or
both, constitute a default) under, or give rise to a right
to terminate, amend, modify, abandon or accelerate, any
Contract which is applicable to, binding upon or enforceable
against Seller or the Assets, (iv) result in or require the
creation or imposition of any Lien upon or with respect to
any of the assets of Corporation, or (v) require the
consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, any
court or tribunal or any other Person.
5.7 No Commissions. Seller and Corporation have not
incurred any obligation for any finder's or broker's or
agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby.
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5.8 Financial Statements . Seller has delivered to
Purchaser the Financial Statements, a copy of which is
attached hereto as Schedule 5.8. The balance sheet dated as
of May 31, 2001 of Corporation included in the Financial
Statements is referred to herein as the "Current Balance
Sheet." The Financial Statements have been audited by Xxxx
Xxxxx, CPA, have been prepared in accordance with GAAP, and
fairly present the financial position of Corporation at each
of the balance sheet dates and the results of operations for
the periods covered thereby. The books and records of
Corporation fully and fairly reflect all transactions,
properties, assets and liabilities of Corporation. There are
no material special or non-recurring items of income or
expense during the periods covered by the Financial
Statements, and the Current Balance Sheet does not reflect
any write up or revaluation increasing the book value of any
assets, except as specifically disclosed in the notes
thereto. The Financial Statements reflect all adjustments
necessary for a fair presentation of the financial
information contained therein.
5.9 Changes Since the Current Balance Sheet . Except as
specifically set forth in Schedule 5.9, since the date of
the Current Balance Sheet, Corporation has not (i) issued
any capital stock or other securities; (ii) made any
distribution of or with respect to its capital stock or
other securities or purchased or redeemed any of its
securities; (iii) paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees,
or amended any other terms of employment of such persons;
(iv) sold, leased or transferred any of its properties or
assets other than in the ordinary course of business
consistent with past practice; (v) made or obligated itself
to make capital expenditures other than in the ordinary
course of business consistent with past practice; (vi) made
any payment in respect of its liabilities other than in the
ordinary course of business consistent with past practice;
(vii) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of
transactions involving in excess of Five Thousand Dollars
($5,000) in the aggregate other than in the ordinary course
of business consistent with past practice, except for this
Agreement and the transactions contemplated hereby; (viii)
waived, cancelled, compromised or released any rights having
a value in excess of Five Thousand Dollars ($5,000) in the
aggregate; (ix) made or adopted any change in its accounting
practice or policies; (x) made any adjustment to its books
and records other than in respect of the conduct of its
business activities in the ordinary course consistent with
past practice; (xi) entered into any transaction with any
Affiliate other than intercompany transactions in the
ordinary course of business consistent with past practice;
(xii) entered into any employment agreement; (xiii)
terminated, amended or modified agreements in the aggregate
involving an amount in excess of Five Thousand Dollars
($5,000); (xiv) imposed any security interest or other Lien
on any of its Assets; (xv) delayed paying any account
payable which is due and payable except to the extent being
contested in good faith; (xvi) made or pledged any
charitable contribution; (xvii) entered into any other
transaction or was subject to any event which had or may
have a Material Adverse Effect on Corporation or the
Business; (xviii) engaged in any transaction other than in
the ordinary course of the Business; (xix) suffered or
incurred any work interruptions, labor grievances, or claims
filed, or any similar event which has or would have a
Material Adverse Effect on Corporation or the Business; or
(xx) agreed to do or authorized any of the foregoing.
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5.10 Litigation . Except as set forth in Schedule 5.10,
there is no action, suit, or other legal or administrative
proceeding or governmental investigation pending,
threatened, anticipated or contemplated against, by or
affecting Seller, Corporation, the Business, or the Assets,
or which questions the validity or enforceability of this
Agreement or the transactions contemplated hereby, and there
is no basis for any of the foregoing. There are no
outstanding orders, decrees or stipulations issued by any
Governmental Authority in any proceeding to which Seller or
Corporation is or was a party which have not been complied
with in full or which continue to impose any material
obligations on Seller, Corporation or the Assets.
5.11 Liabilities; Bank Accounts . Schedule 5.11 sets
forth all liabilities or obligations, whether accrued,
absolute, contingent or otherwise, of Corporation,
including, without limitation, (i) liabilities and
obligations reflected on the Current Balance Sheet and not
paid or discharged, (ii) liabilities and obligations
exceeding Ten Thousand Dollars ($10,000) in the aggregate,
incurred in the ordinary course of business consistent with
past practice since the date of the Current Balance Sheet,
and (iii) liabilities incurred in the ordinary course of
business prior to the date of the Current Balance Sheet
which, in accordance with GAAP consistently applied, were
not required to be recorded thereon (the liabilities and
obligations referenced in (i), (ii) and (iii) above are
referred to as the "Designated Liabilities"). None of the
Designated Liabilities relates to any breach of contract,
breach of warranty, tort, infringement, or violation of law,
and none arose out of any action, suit, claim, governmental
investigation, or arbitration proceeding. Schedule 5.11 also
sets forth the outstanding principal amount of and
outstanding interest on (as of the date set forth in the
Schedule) all indebtedness for borrowed money and
capitalized lease obligations (including the outstanding
principal amount and accrued but unpaid interest and the
name of the lender) owed to a bank or any other Person by
Corporation. Schedule 5.11 also lists the account numbers
and names of each bank, broker or other depository
institution at which Corporation maintains a depository
account, and the names of all persons authorized to withdraw
funds from each such account.
5.12 Undisclosed Liabilities. Corporation has no
liabilities, and there is no basis for any present or future
charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against Corporation giving
rise to any liability, except those liabilities reflected in
the Financial Statements. Corporation has not guaranteed the
obligations of any third Person.
5.13 Environmental Matters .
(a) Corporation is and has at all times been in
compliance with all Environmental, Health and Safety Laws
governing the Business and its operations, Assets,
including, without limitation, Environmental, Health and
Safety Laws with respect to discharges into the ground
water, surface water and soil, emissions into the ambient
air, and generation, accumulation, storage, treatment,
transportation, transfer, labeling, handling, manufacturing,
use, spilling, leaking, dumping, discharging, release or
disposal of Hazardous Substances (as defined herein), or
other Waste (as described herein). Corporation is not
currently liable for any penalties, fines or forfeitures for
failure to comply with any Environmental, Health and Safety
Laws. Corporation is in full compliance with all notice,
record keeping and reporting requirements of all
Environmental, Health and Safety Laws, and has complied with
all informational requests or demands arising under the
Environmental, Health and Safety Laws.
(b) Corporation has not generated, manufactured, used,
transported, transferred, stored, handled, treated, spilled,
leaked, dumped, discharged, released or disposed, nor has it
allowed or arranged for any third parties to generate,
manufacture, use, transport, transfer, store, handle, treat,
spill, leak, dump, discharge, release or dispose of,
Hazardous Substances or other Waste to or at any location
other than a site lawfully permitted to receive such
Hazardous Substances or other Waste for such purposes, nor
has it performed, arranged for or allowed by any method or
procedure such generation, manufacture, use, transportation,
transfer, storage, treatment, transport, spillage, leakage,
dumping, discharge, release or disposal in contravention of
any Environmental, Health and Safety Laws. Corporation has
not generated, manufactured, used, stored, handled, treated,
transported, spilled, leaked, dumped, discharged, released
or disposed of, or allowed or arranged for any third parties
to generate, manufacture, use, store, handle, treat,
transport, spill, leak, dump, discharge, release or dispose
of, Hazardous Substances or other Waste upon property owned
or leased by it, except as permitted by law. For purposes of
this Section, the term "Hazardous Substances" shall be
construed broadly to include any toxic or hazardous
substance, material, or waste, and any other contaminant,
pollutant or constituent thereof, whether liquid, solid,
semi-solid, sludge and/or gaseous, including without
limitation, chemicals, compounds, by-products, pesticides,
asbestos containing materials, petroleum or petroleum
products, and polychlorinated biphenyls, the presence of
which requires investigation or remediation under any
Environmental, Health and Safety Laws or which are or become
regulated, listed or controlled by, under or pursuant to any
Environmental Health and Safety Laws. For purposes of this
Section, the term "Waste" shall be construed broadly to
include agricultural wastes, biomedical wastes, biological
wastes, bulky wastes, construction and demolition debris,
garbage, household wastes, industrial solid wastes, liquid
wastes, recyclable materials, sludge, solid wastes, special
wastes, used oils, white goods, and yard trash.
8
(c) Corporation has not caused, or allowed to be caused
or permitted, either by action or inaction, a Release or
Discharge, or threatened Release or Discharge, of any
Hazardous Substance on, into or beneath the surface of any
property owned or leased by it (for purposes of this
Section, the "Premises"). There has not occurred, nor is
there presently occurring, a Release or Discharge, or
threatened Release or Discharge, of any Hazardous Substance
on, into or beneath the surface of the Premises. For
purposes of this Section, the terms "Release" and
"Discharge" shall have the meanings given them in the
Environmental, Health and Safety Laws.
(d) Corporation has not generated, handled,
manufactured, treated, stored, used, shipped, transported,
transferred, or disposed of, nor has it allowed or arranged,
by contract, agreement or otherwise, for any third parties
to generate, handle, manufacture, treat, store, use, ship,
transport, transfer or dispose of, any Hazardous Substance
or other Waste to or at a site which, pursuant to CERCLA or
any similar state law (i) has been placed on the National
Priorities List or its state equivalent; or (ii) the
Environmental Protection Agency or the relevant state agency
has notified Corporation that it has proposed or is
proposing to place on the National Priorities List or its
state equivalent. Neither Corporation nor Seller has
received notice, and Corporation and Seller have no
knowledge of any facts which could give rise to any notice,
that Corporation is a potentially responsible party for a
federal, state or local environmental cleanup site or for
corrective action under CERCLA, RCRA or any other applicable
Environmental Health and Safety Laws. Corporation has not
submitted nor was required to submit any notice pursuant to
Section 103(c) of CERCLA with respect to the Premises.
Corporation has not received any written or oral request for
information in connection with any federal or state
environmental cleanup site, or in connection with any of the
real property or premises where Corporation have
transported, transferred or disposed of other Wastes.
Corporation has not been required to undertake, nor has it
undertaken, any response or remedial actions or clean-up
actions of any kind at the request of any Governmental
Authorities or at the request of any other third party.
Corporation has no liability under any Environmental, Health
and Safety Laws for personal injury, property damage,
natural resource damage, or clean up obligations.
(e) Corporation does not use, nor has it used, any
Aboveground Storage Tanks or Underground Storage Tanks, and
there are not now nor have there ever been any Underground
Storage Tanks on the Premises.
(f) Schedule 5.13 identifies the operations and
activities, and locations thereof, which have been conducted
and are being conducted by Corporation on the Premises which
have involved the generation, accumulation, storage,
treatment, transportation, labeling, handling,
manufacturing, use, spilling, leaking, dumping, discharging,
release or disposal of Hazardous Substances. Schedule 5.13
also identifies the locations to which Corporation has
transferred, transported, hauled, moved, or disposed of
Waste over the past five (5) years and the types and volumes
of Waste transferred, transported, hauled, moved, or
disposed of to each such location.
5.14 Real Property, Leases and Significant Personal
Property . Schedule 5.14 sets forth all real and personal
property included (or that will be included) on the Current
Balance Sheet, all other real and personal property of
Corporation with a value in excess of Two Thousand, Five
Hundred Dollars ($2,500) and acquired since the Current
Balance Sheet Date, and all leases for real and personal
property to which Corporation is a party involving real or
personal property having a value in excess of Two Thousand,
Five Hundred ($2,500), including, in each case, and
indication as to which real and personal property is
currently owned, or was formerly owned, by Seller or
Corporation or their Affiliates. True, complete and correct
copies of all such leases have been provided to Purchaser.
Except as set forth in Schedule 5.14, (i) all of the trucks
and other material machinery and equipment and all other
tangible assets of Corporation are in good working order and
condition, ordinary wear and tear excepted and have been
maintained in accordance with all applicable specifications
and warranties; (ii) all leases set forth in Schedule 5.14,
are in full force and effect and constitute valid and
binding agreements of Corporation and constitute valid and
binding agreements of the other parties thereto in
accordance with their respective terms; and (iii) all fixed
assets used by Corporation are either owned by Corporation
or leased under a valid agreement. Schedule 5.14 also sets
forth a summary description of all plans or projects
involving the opening of new operations or the acquisition
of any real property or existing business, with respect to
which Corporation has made any expenditure in the two-year
period prior to the date of the Agreement in excess of Ten
Thousand Dollars ($10,000) in the aggregate, or which if
pursued by Corporation would require additional expenditures
of capital in excess of Ten Thousand Dollars ($10,000) in
the aggregate.
9
5.15 Good Title, Adequacy and Condition . Except as set forth in
Schedule 5.15, Corporation has, and at Closing will have, good,
legal, and marketable title to the Assets with full power to
sell, transfer and assign the same, free and clear of any Lien.
The Assets constitute, in the aggregate, all of the assets and
properties necessary for the conduct of the Business in the
manner in which and to the extent to which such business is
currently being conducted and include, without limitation, all
tangible and intangible assets owned by Corporation including all
vehicles, equipment and inventory (more particularly described in
Schedule 5.15), and all Contracts, customer lists, Intellectual
Property, cash and accounts receivable, and Permits of
Corporation.
5.16 Compliance with Laws . Corporation is not in violation of
any law or regulation or any order of any court or federal,
state, local or other Governmental Authority having jurisdiction
over Corporation, and, except to the extent set forth on Schedule
5.16, there are no claims, actions, suits or proceedings pending
or, to the knowledge of Corporation, threatened, against or
affecting Corporation or the Business, at law or in equity, or
before or by any federal, state, local or other Governmental
Authority having jurisdiction over any of them, and no notice of
any such claim, action, suit or proceeding, whether pending or
threatened, has been received. Corporation has conducted and is
conducting the Business in compliance with the requirements,
standards, criteria and conditions set forth in applicable
federal, state and local statutes, ordinances, orders, approvals,
variances, rules and regulations and is not in violation of any
of the foregoing.
5.17 Employee Benefit Plans.
(a) Schedule 5.17 contains a list setting forth each
employee benefit plan or arrangement of Corporation,
including but not limited to employee profit sharing plans,
as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), multiemployer
plans, as defined in Section 3(37) of ERISA, employee
welfare benefit plans, as defined in Section 3(1) of ERISA,
deferred compensation plans, stock option plans, bonus
plans, stock purchase plans, hospitalization, disability and
other insurance plans, severance or termination pay plans
and policies, whether or not described in Section 3(3) of
ERISA, in which employees, their spouses or dependents, of
Corporation participate ("Employee Benefit Plans") (true and
accurate copies of which, together with the most recent
annual reports on Form 5500 and summary plan descriptions
with respect thereto, were furnished to Purchaser). With
respect to each Employee Benefit Plan (i) each has been
administered in all material respects in compliance with its
terms and with all applicable laws, including, but not
limited to, ERISA and the Code; (ii) no actions, suits,
claims or disputes are pending, or threatened; (iii) no
audits, inquiries, reviews, proceedings, claims, or demands
are pending with any governmental or regulatory agency; (iv)
there are no facts which could give rise to any material
liability in the event of any investigation, claim, action,
suit, audit, review, or other proceeding; (v) all material
reports, returns, and similar documents required to be filed
with any governmental agency or distributed to any plan
participant have been duly or timely filed or distributed;
and (vi) no "prohibited transaction" has occurred within the
meaning of the applicable provisions of ERISA or the Code.
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(b) With respect to each Employee Benefit Plan intended
to qualify under Code Section 401(a) or 403(a): (i) the
Internal Revenue Service has issued a favorable
determination letter, true and correct copies of which have
been furnished to Purchaser, that such plans are qualified
and exempt from federal income taxes; (ii) no such
determination letter has been revoked nor, to the best
knowledge of Corporation and Seller, has revocation been
threatened, nor has any amendment or other action or
omission occurred with respect to any such plan since the
date of its most recent determination letter or application
therefor in any respect which would adversely affect its
qualification or materially increase its costs; (iii) no
such plan has been amended in a manner that would require
security to be provided in accordance with Section
401(a)(29) of the Code; (iv) no reportable event (within the
meaning of Section 4043 of ERISA) has occurred, other than
one for which the 30-day notice requirement has been waived;
and (v) as of the Closing Date, the present value of all
liabilities that would be "benefit liabilities" under
Section 4001(a)(16) of ERISA if benefits described in Code
Section 411(d)(6)(B) were included will not exceed the then
current fair market value of the assets of such plan
(determined using the actuarial assumptions used for the
most recent actuarial valuation for such plan).
(c) None of the Employee Benefit Plans obligates
Corporation to pay separation, severance, termination or
similar benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a
"change of control" (as such term is defined in Section 280G
of the Code), and all required or discretionary (in
accordance with historical practices) payments, premiums,
contributions, reimbursements, or accruals for all periods
ending prior to or as of the Closing shall have been made or
properly accrued on the Current Balance Sheet of Corporation
as of the Closing, and none of the Employee Benefit Plans
has any unfunded liabilities which are not reflected on the
Current Balance Sheet of Corporation.
11
5.18 Tax Returns and Examinations. Except as set forth
on Schedule 5.18, (i) all Tax Returns required to have been
filed by or with respect to Corporation and any affiliated,
combined, consolidated, unitary or similar group of which
Corporation is or was a member (a "Relevant Group") with any
Governmental Authority have been duly filed, and each such
Tax Return correctly and completely reflects the income,
franchise or other Tax liability and all other information,
including the tax basis and recovery periods for assets,
required to be reported thereon; (ii) Corporation has
furnished or made available to Purchaser complete and
accurate copies of all income and franchise tax returns, and
any amendments thereto, filed by Corporation for all taxable
years ending on or after December 31, 2000; (iii) all Taxes
(whether or not shown on any Tax Return and whether or not
assessed) owed by Corporation have been paid; (iv) the
provisions for Taxes due by Corporation (as opposed to any
reserve for deferred Taxes established to reflect timing
differences between book and tax income) in the Financial
Statements are sufficient for, and adequate to cover, all
unpaid Taxes of Corporation; (v) Corporation is not a party
to any current agreement extending the time within which to
file any Tax Return; (vi) no claim has ever been made by any
Taxing Authority in a jurisdiction in which Corporation does
not file Tax Returns that it is or may be subject to
taxation by that jurisdiction; (vii) Corporation has
withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third
party; (viii) Corporation does not expect any Governmental
Authority to assess any additional Taxes against or in
respect of it for any past period; (ix) there is no dispute
or claim concerning any Tax liability of Corporation either
(a) claimed or raised by any Governmental Authority or (b)
otherwise known to Corporation; (x) no issues have been
raised in any examination by any Governmental Authority with
respect to which, by application of similar principles,
reasonably could be expected to result in a proposed
deficiency for any other period not so examined; (xi)
Schedule 5.18 lists all federal, state, local and foreign
income Tax Returns filed by or with respect to Corporation
for all taxable periods ended on or after January 1, ____,
and indicates those tax returns that currently are the
subject of audit; (xii) Corporation has delivered to
Purchaser complete and correct copies of all federal, state,
local and foreign income Tax Returns filed by, and all Tax
examination reports and statements of deficiencies assessed
against or agreed to by, Corporation since January 1, 2001;
(xiii) Corporation has not waived any statute of limitations
in respect of Taxes or agreed to any extension of time with
respect to any Tax assessment or deficiency; (xiv)
Corporation has not made any payments, is not obligated to
make any payments, and is not a party to any agreement that
12
under certain circumstances could require it to make any
payments, that would not be deductible by reason of the
application of Section 280G of the Code; (xv) Corporation is
not a party to any Tax allocation or sharing agreement;
(xvi) none of the assets of Corporation constitutes
tax-exempt bond-financed property or tax-exempt use
property, within the meaning of Section 168 of the Code;
(xvii) Corporation is not a party to any "safe harbor lease"
that is subject to the provisions of Section 168(f)(8) of
the Code as in effect prior to the Tax Reform Act of 1986,
or to any "long-term contract" within the meaning of Section
460 of the Code; (xviii) Corporation is not a party to any
joint venture, partnership or other arrangement that is
treated as a partnership for federal income Tax purposes;
(xix) there are no accounting method changes, or proposed or
threatened accounting method changes, of Corporation that
could give rise to any adjustment under Section 481 of the
Code for periods after the Closing Date; (xx) Corporation
has not received any written ruling of a Governmental
Authority related to Taxes or entered into any written and
legally binding agreement with a Governmental Authority
relating to Taxes; (xxi) Corporation has substantial
authority for the treatment of, or has disclosed (in
accordance with Section 6662(d)(2)(ii) of the Code) on its
federal income Tax Returns, all positions taken on its
relevant federal income Tax Returns that could give rise to
a substantial understatement of federal income Tax within
the meaning of Section 6662(d) of the Code; (xxii)
Corporation has no liability for Taxes of any Person other
than Corporation (a) under Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local or
foreign law), (b) as a transferee or successor, (c) by
contract or (d) otherwise; (xxiii) no consent has been filed
relating to Corporation pursuant to Section 341(f) of the
Code, nor has Corporation made any tax election that would
materially increase the amount of Taxes payable by
Corporation in any period after the Closing; (xxiv) Seller
will pay her respective expenses incurred in connection with
this transaction; (xxv) Corporation is not an investment
company defined in Section 368(a)(2)(F)(iii) and (iv) of the
Code; and (xxvi) the fair market value of the Assets of
Corporation exceeds the sum of its liabilities, plus the
amount of liabilities, if any, to which the transferred
assets are subject; (xxvii) Corporation is not under the
jurisdiction of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code.
5.19 Insurance . Corporation and the Business are
covered by valid, outstanding and enforceable policies of
insurance issued to Corporation by reputable insurers
covering its properties, Assets and the Business against
risks of the nature normally insured against by corporations
in the same or similar lines of business and in coverage
amounts typically and reasonably carried by such
corporations (the "Insurance Policies"). The Insurance
Policies are in full force and effect, and all premiums due
thereon have been paid. Corporation has complied with the
provisions of the Insurance Policies. Corporation has not
failed to give, in a timely manner, any notice required
under any of the Insurance Policies to preserve its rights
thereunder.
13
5.20 Receivables . All of the receivables being
transferred to Purchaser hereunder are valid and legally
binding, represent bona fide transactions, and arose in the
ordinary course of business of Corporation. All of such
receivables are good and collectible receivables, and will
be collected in full in accordance with the terms of such
receivables (and in any event within six months following
the Closing), without setoff or counterclaims.
5.21 Licenses and Permits . Corporation possesses all
Permits for its Business and operations. All Permits are
valid and in full force and effect, Corporation is in
compliance in all material respects with their requirements,
and no proceeding is pending or threatened to revoke or
amend any of the Permits. None of the Permits is or will be
impaired or in any way affected by the execution and
delivery of this Agreement or the transactions contemplated
hereby.
5.22 Contracts, Customer Lists and Employment Matters.
Schedule 5.22 lists all customers and Contracts of
Corporation, including, without limitation, (i) any written
arrangement (or group of written arrangements) for the
furnishing or receipt of services that calls for performance
over a period of more than one (1) year; (ii) any written
arrangement concerning a partnership or joint venture; (iii)
any written arrangement (or group of written arrangements)
under which Corporation has created, incurred or assumed or
may create, incur or assume indebtedness (including
capitalized lease obligations) involving more than Ten
Thousand Dollars ($10,000) or under which it has imposed (or
may impose) a security interest on any of its Assets,
tangible or intangible; (iv) any employment agreement; (v)
any written arrangement concerning confidentiality or
non-competition; (vi) any written arrangement involving
Corporation and its present or former affiliates, officers,
directors or shareholders; (vii) any written arrangement
under which the consequences of a default or termination
could have a material adverse effect on the assets,
liabilities, business, financial condition, operations or
future prospects of Corporation; (viii) any other written
arrangement (or group of related arrangements) either
involving more than Ten Thousand Dollars ($10,000) or not
entered into in the ordinary course of Business; and (ix)
that account for more than one percent (1%) of Corporation's
annual revenue for the twelve-month period ending May 31,
2001. All of the Contracts (i) are valid and binding
obligations of the parties, (ii) are not in default nor will
become in default solely upon notice or the passage of time
without curative action and (iii) will remain in full force
and effect following the Closing, without requiring the
consent of the other parties thereto and without causing a
default, right to terminate or right to modify any terms
under any such Contracts. Corporation has delivered to
Purchaser true, complete and correct copies of all
Contracts. None of the parties to the Material Contracts
(which include all of Corporation's significant customers)
has cancelled or substantially reduced or, to the knowledge
of Corporation or Seller, is currently attempting or
threatening to cancel any Contract or substantially reduce
utilization of the services provided by Corporation, and
Corporation has complied with all commitments and
obligations pertaining to any Contract, and is not in
default under any such Contract, and no notice of default
has been received. Corporation has not been the subject of
any election in respect of union representation of employees
and is not bound by or subject to any arrangement with any
labor union. No employees of Corporation are represented by
any labor union or covered by any collective bargaining
agreement and no campaign to establish such representation
has ever occurred or is in progress. There is no pending, or
to Seller's knowledge, threatened labor dispute involving
Corporation and any group of employees, nor has Corporation
experienced any labor interruptions over the past three
years and Corporation considers its relationship with
employees to be good, except as set forth on Schedule 5.22.
The Corporation is not a party to any verbal contract,
agreement or other arrangement which, if reduced to written
form, would be required to be listed in Schedule 5.22.
Seller has delivered to Purchaser a correct and complete
copy of each written arrangement, as amended to date, listed
in Schedule 5.22.
14
5.23 Officers, Directors and Key Employees; Employment
Agreements; Compensation . Schedule 5.23 sets forth an
accurate list showing all officers, directors and key
employees of Corporation, listing all employment agreements
with such officers, directors and key employees (and any
other employees having employment agreement with
Corporation) and the rate of compensation (and the portions
thereof attributable to salary, bonus and other
compensation, respectively) of each of such persons.
Schedule 5.23 also lists any increase in compensation or any
special bonus payable to any officer, director, key employee
or other employee of Corporation.
5.24 Predecessor Status, etc. Schedule 5.24 sets forth
all names of all predecessor corporations for the past five
years of Corporation, including the names of any entities
from whom Corporation previously acquired material assets.
Except as disclosed in Schedule 5.24, Corporation has not
been a subsidiary or division of another corporation or a
part of an acquisition which was later rescinded.
5.25 Spin-Off by Corporation . Except as set forth in
Schedule 5.25, there has not been, within the preceding two
(2) years, any sale, spin-off or split-up of material assets
of Corporation or any other person or entity that directly,
or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with,
Corporation other than in the ordinary course of business.
5.26 Securities Law Representations.
(a) Seller was granted access to the business premises,
offices, properties, and business, corporate and financial
books and records of Purchaser. Seller was permitted to
examine the foregoing records, to question officers of
Purchaser, and to make such other investigations as they
considered appropriate to determine or verify the business
and financial condition of Purchaser. Purchaser furnished to
Seller all information regarding its business and affairs
that Seller requested.
(b) Seller recognizes that the Exchange Shares will not
be registered under the Securities Act and will therefore
constitute "restricted securities" as defined pursuant to
Rule 144(a)(3) under the Securities Act under which means,
among other things, that Seller generally will not be able
to sell the Exchange Shares for a period of at least one (1)
year following the Closing Date, and may not be sold,
offered for sale, transferred, pledged, hypothecated or
otherwise disposed of except in compliance with the
Securities Act, as such, by way of illustration but without
limitation, in compliance the safe harbor provisions of Rule
144; further, the legal consequences of the foregoing mean
that Seller must bear the economic risk of the investment in
the Exchange Shares for an indefinite period of time;
further, if either Seller desires to sell or transfer all or
any part of the Exchange Shares, Purchaser may require such
Seller's counsel to provide a legal opinion that the
transfer may be made without registration under the
Securities Act; further, other restrictions discussed
elsewhere herein may be applicable; further, Seller is
subject to the restriction on transfer described herein and
Purchaser will issue stop transfer orders with Purchaser's
transfer agent to enforce such restrictions; further, the
Exchange Shares will bear a legend restricting transfer; and
further, the following paragraph, or language substantially
equivalent thereto, will be inserted in or stamped on the
certificates evidencing the same:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT. THIS STOCK MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THE SAME UNDER THE SECURITIES
ACT OF 1933 OR OPINION OF COUNSEL SATISFACTORY TO CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE SECURITIES LAWS.
15
(c) Because of their considerable knowledge and
experience in financial and business matters, Seller is able
to evaluate the merits, risks, and other factors bearing on
the suitability of the Exchange Shares as an investment.
Seller, individually or by virtue of a "purchaser
representative" (as defined pursuant to Rule 501(h) under
the Securities Act), qualifies as an "accredited investor"
as defined under Rule 501(a) under the Securities Act.
(d) Each Seller's annual income and net worth are such
that he would not now be, and does not contemplate being,
required to dispose of any investment in the Exchange
Shares, including the risk of losing all or any part of his
investment and the inability to sell, transfer, pledge, or
otherwise dispose of any of the Exchange Shares for an
indefinite period.
(e) Each Seller's acquisition of the Exchange Shares
will be solely for his own account, as principal, for
investment, and not with a view to, or for resale in
connection with, any underwriting or distribution.
(f) Lock-up Agreement. At any time before or after the
Closing Date, Seller agrees to execute any and all stock
restriction agreements, lock-up agreements, and other
agreements affecting the transfer of the Exchange Shares
consistent with agreements executed by other stockholders of
Purchaser.
5.27 Intellectual Property.
(a) Corporation owns or has the right to use pursuant
to license, sublicense, agreement, or permission all
Intellectual Property necessary or desirable for the
operation of the businesses of Corporation as presently
conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by Corporation
immediately prior to the Closing hereunder shall be owned or
available for use by Purchaser on identical terms and
conditions immediately subsequent to the Closing hereunder.
Corporation has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that
it owns or uses.
(b) Corporation has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties, and
Seller nor the directors and officers (and employees with
responsibility for Intellectual Property matters) of
Corporation has ever received any charge, complaint, claim,
demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any
claim that Corporation must license or refrain from using
any Intellectual Property rights of any third party). No
third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Intellectual Property rights of Corporation.
(c) Schedule 5.28(c) identifies each patent issued in
Corporation's name, each patent application filed or
pending, trade name and registered or unregistered trademark
or service xxxx used by Corporation, license, agreement, or
other permission that Corporation has granted to any third
party with respect to any of its Intellectual Property
(together with any exceptions). Corporation has delivered to
Purchaser correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to
Purchaser correct and complete copies of all other written
documentation evidencing ownership and prosecution (if
applicable) of each such item.. With respect to each item of
Intellectual Property required to be identified in Schedule
5.28(c):
(1) Corporation possesses all right, title, and
interest in and to the item, free and clear of any security
interest, license, or other restriction;
(2) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(3) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is
pending or is threatened that challenges the legality,
validity, enforceability, use, or ownership of the item; and
(4) Corporation has never agreed to indemnify any
person or entity for or against any interference,
infringement, misappropriation, or other conflict with
respect to the item.
16
(d) Schedule 5.28(d) identifies each item of
Intellectual Property that any third party owns and that
Corporation uses pursuant to license, sublicense, agreement,
or permission. Corporation has delivered to Purchaser
correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property
required to be identified in Schedule 5.28(d):
(1) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and
in full force and effect;
(2) the license, sublicense, agreement, or permission
shall continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the
consummation of the transactions contemplated hereby;
(3) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has
occurred that with notice or default or permit termination,
modification, or acceleration thereunder;
(4) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(5) with respect to each sublicense, the
representations and warranties set forth in clauses (i)
through (iv) above are true and correct with respect to the
underlying license;
(6) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(7) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is
pending or, to the Knowledge of Seller or Corporation, is
threatened that challenges the legality, validity, or
enforceability of the underlying item of Intellectual
Property; and
(8) Corporation has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement, or permission.
(e) Corporation shall not interfere with, infringe
upon, misappropriate, or otherwise come into conflict with,
any Intellectual Property rights of third parties as a
result of the continued operation of its Businesses as
presently conducted and as presently proposed to be
conducted.
5.28 No Misrepresentations. None of the representations and
warranties of Seller set forth in this Agreement or in the
attached Schedules, notwithstanding any investigation thereof by
Purchaser, contains any untrue statement of a material fact, or
omits the statement of any material fact necessary to render the
statements made not misleading.
6. CONDUCT OF BUSINESS PENDING THE CLOSING.
6.1 Conduct of Business by Corporation Pending the Closing .
Seller covenants and agrees that, except as otherwise expressly
required or permitted by the terms of this Agreement, between the
date of this Agreement and the Closing, the Business of
Corporation shall be conducted only in, and Corporation shall not
take any action except in, the ordinary course of business
consistent with past practice. Corporation and Seller shall use
its or their reasonable best efforts to preserve intact
Corporation's Business organizations, to keep available the
services of its current officers, employees and consultants, and
to preserve its present relationships with customers, suppliers
and other Persons with which it has business relations. By way of
amplification and not limitation, Corporation shall not, except
as expressly required or permitted by the terms of this Agreement
between the date of this Agreement and the Closing, directly or
indirectly, do or propose or agree to do any of the following
without the prior written consent of Purchaser:
17
(a) amend or otherwise change its Charter Documents;
(b) issue, sell, pledge, dispose of, encumber, or
authorize the issuance, sale, pledge, disposition, grant or
encumbrance of any of its Assets, tangible or intangible,
except in the ordinary course of business consistent with
past practice; or any shares of its capital stock of any
class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such
capital stock;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock or other
securities;
(d) reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any
of its capital stock or other securities;
(a) sell, lease or transfer any of its Assets (other than in the
ordinary course of business consistent with past practice), or acquire
(including, without limitation, for cash or shares of stock, by
merger, consolidation or acquisition of stock or assets) any interest
in any corporation, partnership or other business organization or
division thereof or any assets; or make any investment either by
purchase of stock or securities, contributions of capital or property
transfer, or purchase any property or assets of any other Person
(except in the ordinary course of business consistent with past
practice); make or obligate itself to make capital expenditures other
than in the ordinary course of business consistent with past practice;
other than in the ordinary course of business consistent with past
practice, incur any obligations or liabilities including, without
limitation, any indebtedness for borrowed money, issue any debt
securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person,
or make any loans or advances, modify, terminate, amend or enter into
any Contract other than as expressly required or permitted herein or
in the ordinary course of business consistent with past practice, or
impose any security interest or other Lien on any of its assets other
than in the ordinary course of business consistent with past practice;
(b) pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees
or, except as presently bound to do, grant any severance or
termination pay to, or enter into any employment or severance
agreement with, any of its directors, officers or employees, or
establish, adopt, enter into or amend or take any action to accelerate
any rights or benefits which any collective bargaining, bonus, profit
sharing trust, compensation, stock option, restricted stock pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees;
(c) take any action with respect to accounting policies or
procedures other than in the ordinary course of business and in a
manner consistent with past practices;
(d) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of due
and payable liabilities reflected or reserved against in the Financial
Statements, as appropriate, or liabilities incurred after the date
thereof in the ordinary course of business and consistent with past
practice or delay paying any amount payable beyond forty-five (45)
days following the date on which it is due, except to the extent being
contested in good faith;
(e) enter into any transaction or agreement with Seller or an
Affiliate thereof except for such transactions or agreements expressly
permitted herein;
(f) make or pledge any charitable contributions in excess of Five
Thousand Dollars ($5,000) in the aggregate; or
(g) agree, in writing or otherwise, to take or authorize any of
the foregoing actions or any action which would make any
representation or warranty in Article V untrue or incorrect in any
respect.
7. CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES.
7.1 Further Assurances . Each party shall execute and deliver
such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby and to satisfy the conditions set
forth in Articles 8. and 9. Seller shall cause Corporation to comply
with all of the covenants under this Agreement.
7.2 Confidentiality; Publicity . Seller and Corporation shall not
disclose the terms of this transaction to any third party nor make any
public announcement related to this Agreement or the transactions
contemplated hereby without the prior written approval of Purchaser.
18
7.3 No Other Discussions . Seller, Corporation and their
respective Affiliates, employees, agents and representatives will not
(i) initiate, encourage the initiation by others of or entertain
discussions or negotiations with third parties or respond to
solicitations by third persons relating to any merger, sale or other
disposition of any substantial part of the assets, the Business or the
properties of Corporation (whether by merger, consolidation, sale of
stock, sale of assets, or otherwise), or (ii) enter into any agreement
or commitment (whether or not binding) with respect to any of the
foregoing transactions. Seller will immediately notify Purchaser if
any third party attempts to initiate any solicitation, discussion or
negotiation with respect to any of the foregoing transactions.
7.4 Due Diligence Investigation . Purchaser shall be entitled to
conduct, prior to Closing, a due diligence investigation of
Corporation, the Assets and the Business. Corporation shall provide
Purchaser and its designated agents and consultants with the access to
Corporation's Business and the Assets and all books, records,
documents, correspondence and other materials related thereto which
Purchaser, its agents and consultants require to conduct such due
diligence review. If the results of Purchaser's due diligence review
are not satisfactory to Purchaser in its sole and absolute discretion,
then Purchaser may elect not to close the transactions contemplated by
this Agreement by delivery of written notice to Seller on or before
the Closing Date.
7.5 Access to Information. Upon reasonable notice, Seller shall
cause to afford to the officers, employees, accountants, counsel, and
other authorized representatives of Purchaser full access, during the
period prior to the Closing Date, to all of the properties, books,
contracts, commitments, records, and senior management of . Unless
otherwise required by law, Purchaser will hold any such information
that is nonpublic in confidence, will not use such information in its
business if the transaction does not close, and will return such
information if the transaction does not close.
7.6 Covenant not to Compete . Seller agrees that for the period
of five (5) years immediately following the Closing, Seller shall not,
directly or indirectly:
(a) alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent
contractor, or security holder, of any Person, engage in any
business activity which is directly or indirectly in
competition with the Business; provided, however, that the
beneficial ownership of less than five percent (5%) of any
class of securities of any entity having a class of equity
securities actively traded on a national securities exchange
or the Nasdaq Stock Market shall not be deemed, in and of
itself, to violate the prohibitions of this Section;
(b) induce any customer acquired hereunder or any other
customer of Purchaser or any of its Affiliates to patronize
any business which is directly or indirectly in competition
with the Business; (ii) canvass, solicit or accept for or on
behalf of any such competitive business any customer of
Purchaser or any of its Affiliates; or (iii) request or
advise any customer of Purchaser or any of its Affiliates to
withdraw, curtail or cancel any such customer's business
with Purchaser or any of its Affiliates or their successors;
(c) employ any person who was employed by Purchaser or
any of its Affiliates, within one year prior to the date
being employed by Seller or any of its Affiliates, or in any
manner seek to induce any employee of Purchaser or any of
its Affiliates to leave his or her employment;
(d) in any way utilize, disclose, copy, reproduce or
retain in his possession any of the proprietary rights, or
records acquired by Purchaser hereunder, including, but not
limited to, any customer lists.
Seller agrees and acknowledges that the restrictions contained in this Section
are reasonable in scope and duration, and are necessary to protect Purchaser. If
any provision of this Section is adjudged by a court of competent jurisdiction
to be invalid or unenforceable, the same will in no way affect the validity or
enforceability of the remainder of this Agreement. If any such provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision, the area covered thereby or otherwise, then the parties agree that
the court making such determination shall have the power to reduce the duration,
area or scope of such provision, and/or to delete specific words or phrases, and
in its reduced or modified form, such provision shall then be enforceable and
shall be enforced. Seller further agrees and acknowledge that any breach of this
Section will cause irreparable injury to Purchaser and upon any breach or
threatened breach of any provision of this Section, Purchaser shall be entitled
to injunctive relief, specific performance or other equitable relief, without
the necessity of posting bond; provided, however, that this shall in no way
limit any other remedies which Purchaser may have as a result of such breach,
including the right to seek monetary damages.
19
7.7 Termination of Related Party Agreements . All existing
agreements between Corporation and Seller or their Affiliates, other
than those set forth in Section 7.7, shall have been cancelled prior
to the Closing.
7.8 Code Section 338(h)(10) Election. At Purchaser's election,
Purchaser may make, and Seller and Corporation shall join in making,
an election under Section 338(h)(10) of the Code with respect to the
Assets and any comparable election under state or local Tax law, and
Seller shall cooperate with Purchaser in the completion and timely
filing of such elections in accordance with the provisions of Treasury
Regulation Sec.1.338(h)(10)-1 (or any comparable provisions of state
or local Tax law) or any successor provision. Should Purchaser make
such election, Seller and Purchaser shall act together in good faith
to (i) determine and agree upon the amount of the modified aggregate
deemed sales price ("MADSP") (within the meaning to Treas. Reg.
Sec.1.338(h)(10)-1(f) and (ii) agree upon the proper allocations (the
"Allocations") of the MADSP among the Assets in accordance with Treas.
Reg. Sec.1.338(h)(10)-1(f). Seller and Purchaser will calculate the
gain or loss, if any, resulting from the election in a manner
consistent with the Allocations and will not take any position
inconsistent with the election or the Allocations in any tax return or
otherwise. Seller will allocate the MADSP among the Assets in a manner
consistent with the Allocations and will not take any position
inconsistent with the election or the Allocations in any tax return or
otherwise.
8. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to effect the transactions contemplated hereby shall be
subject to the fulfillment at or prior to the Closing Date of the
following conditions, any or all of which may be waived in whole or in
part by Purchaser;
8.1 Accuracy of Representations and Warranties and Compliance
with Obligations . The representations and warranties of Seller
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect
as though made at and as of that time except (i) for changes
specifically permitted by or disclosed pursuant to this Agreement, and
(ii) that those representations and warranties which address matters
only as of a particular date shall remain true and correct as of such
date. Seller and Corporation shall have performed and complied with
all of their obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date, including these
obligations set forth in Article 7. herein. Seller and Corporation
shall have delivered to Purchaser a certificate, dated as of the
Closing Date, duly signed, certifying that such representations and
warranties are true and correct and that all such obligations have
been performed and complied with.
8.2 No Material Adverse Change or Destruction of Property .
Between the date hereof and the Closing Date, (i) there shall have
been no Material Adverse Change of Corporation, the Business, or the
Assets, (ii) there shall have been no adverse federal, state or local
legislative or regulatory change affecting in any material respect the
service, or products of Corporation or the Business, and (iii) none of
the Assets shall have been damaged by fire, flood, casualty, riot or
other cause (regardless of insurance coverage for such damage), and
there shall have been delivered to Purchaser a certificate to that
effect, dated as of the Closing Date and signed by Seller.
8.3 Corporate Certificate . Corporation shall have delivered to
Purchaser (i) copies of the Charter Documents as in effect immediately
prior to the Closing Date, (ii) copies of resolutions adopted by its
Board of Directors and shareholders authorizing the transactions
contemplated by this Agreement, (iii) written resignations of
Corporation's officers and Board of Directors and (iv) a certificate
of good standing issued by the Secretary of State of the State of
California as of a date not more than ten (10) days prior to the
Closing Date, certified in the case of subsections (i) and (ii) as of
the Closing Date by the Secretary of Corporation as being true,
correct and complete.
8.4 Delivery of Shares . At Closing, Seller shall deliver to
Purchaser certificates representing the Corporation Shares accompanied
by duly executed stock powers, and such other instruments of transfer
of title as are necessary to transfer to Purchaser good and marketable
title to the Corporation Shares.
8.5 Consents . Corporation and Seller shall have received
consents to the transactions contemplated hereby and waivers of rights
to terminate or modify any material rights or obligations of
Corporation and Seller from any person from whom such consent or
waiver is required under any Contract to which Seller, Corporation or
the Assets are bound as of a date not more than ten (10) days prior to
the Closing Date, or who, as a result of the transactions contemplated
hereby, would have such rights to terminate or modify such contracts,
either by the terms thereof or as a matter of law.
8.6 No Adverse Litigation . There shall not be pending or
threatened any action or proceeding by or before any court or other
governmental body which shall seek to restrain, prohibit, invalidate
or collect damages arising out of the transactions contemplated
hereby, and which, in the judgment of Purchaser, makes it inadvisable
to proceed with the transactions contemplated hereby.
8.7 Due Diligence Review . Purchaser shall have completed its due
diligence review of Corporation, the Assets and the Business pursuant
to Section 7.4, and shall be satisfied with the results of such review
and assessment.
8.8 Seller Employment Agreement . Seller shall have entered into
the Seller Employment Agreement.
8.9 Opinion of Counsel . Purchaser shall have received the
Opinion of Seller's Counsel.
20
8.10 Release . At the Closing, Seller and such of her Affiliates
as may be designated by Purchaser shall deliver to Purchaser the
Release.
8.11 Approvals. All authorizations, consents, orders, or
approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Authority, the failure to
obtain which would have a material adverse effect on , shall have been
filed, occurred, or been obtained.
8.12 No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction, or other order issued by
any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transaction shall be in
effect.
8.13 Termination of Employee Benefit Plans. Purchaser shall have
received copies of duly adopted resolutions of Corporation's Board of
Directors satisfactory to Purchaser in its sole discretion (i)
terminating Corporation's Employee Benefits Plans (other than Employee
Welfare Benefit Plans), with such termination effective prior to the
Closing Date, (ii) providing that no contributions shall be made to
Corporation's 401(k) Plan after such date, and (iii) directing
Corporation's legal counsel to apply for a determination letter from
the Internal Revenue Service with respect to the termination of the
401(k) Plan and to submit a Notice of Intent to Terminate to all
participants and beneficiaries under 401(k) Plan.
8.14 No Liens or Encumbrances. All liens, judgments, and other
encumbrances on the Corporation Shares shall have been satisfied and
released prior to Closing.
8.15 Spousal Consent. Pursuant to Nevada community property law,
Purchaser shall have received executed written consents to this
Agreement and the transactions contemplated herein from the spouse of
Seller, if applicable.
9. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of Seller
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following
conditions, any or all of which may be waived in whole or in part by
Seller:
9.1 Accuracy of Representations and Warranties and Compliance
with Obligations . The representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect
as though made at and as of that time except (i) for changes
specifically permitted by or disclosed pursuant to this Agreement, and
(ii) that those representations and warranties which address matters
only as of a particular date shall remain true and correct as of such
date. Purchaser shall have performed and complied in all material
respects with all of its obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date. Purchaser
shall have delivered to Seller a certificate, dated as of the Closing
Date, and signed by an executive officer thereof, certifying that such
representations and warranties are true and correct, and that all such
obligations have been performed and complied with, in all material
respects.
9.2 Other Conditions . Purchaser shall have delivered to Seller
the Purchaser Shares.
9.3 Opinion of Counsel . Seller shall have received the Opinion
of Purchaser's counsel.
10. INDEMNIFICATIONS.
10.1 Survival of Representations, Warranties, Indemnities and
Covenants. The representations, warranties and indemnities set forth
in this Agreement and any right to bring an action at law, in equity,
or otherwise for any misrepresentation or breach of warranty under
this Agreement shall survive for a period of three (3) years from the
Closing Date. All post-closing covenants (including, without
limitation, the obligation to pay contingent consideration pursuant to
Section 2.2 above) shall survive the Closing for the period specified
in this Agreement or, if not specified, for a period of three (3)
years following the Closing Date. Indemnification Provisions for the
Benefit of Purchaser. Seller agrees to indemnify and hold Purchaser,
and their respective officers, directors and affiliates harmless from
and against any and all Adverse Consequences (as defined below) that
any of such parties may suffer or incur resulting from, arising out
of, relating to, or caused by (i) the breach of any of Seller's
representations, warranties, obligations or covenants contained
herein, or (ii) the operation of the Business or ownership of the
Assets on or prior to the Closing Date, including, without limitation,
any claims or lawsuits based on conduct of Corporation, its employees
or Seller occurring before the Closing. For purposes of this Article
10., the phrase "Adverse Consequences" means all charges, complaints,
actions, suits, proceedings, hearings, investigations, claims,
demands, judgments, orders, decrees, stipulations, injunctions,
damages, dues, penalties, fines, costs, amounts paid in settlement,
liabilities (whether known or unknown, whether absolute or contingent,
whether liquidated or unliquidated, and whether due or to become due),
obligations, taxes, liens, losses, expenses, and fees, including all
attorneys' fees and court costs. In addition to and without limiting
the foregoing, Seller agrees, from and after the Closing, to indemnify
Purchaser from and against the entirety of any Adverse Consequences
Purchaser may suffer resulting from, arising out of, relating to, in
the nature of, or caused by any liability of for the unpaid taxes of
any person or entity (including Seller) under United States Treasury
Regulation Sec. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
Indemnification Provisions for the Benefit of Seller. Purchaser agrees
to indemnify and hold Seller harmless from and against any and all
Adverse Consequences Seller may suffer or incur resulting from,
arising out of, relating to, or caused by the breach of any of
Purchaser's representations, warranties, obligations or covenants
contained herein. Survival of Representations, Warranties, Indemnities
and Covenants. The representations, warranties and indemnities set
forth in this Agreement and any right to bring an action at law, in
equity, or otherwise for any misrepresentation or breach of warranty
under this Agreement shall survive for a period of three (3) years
from the Closing Date. All post-closing covenants (including, without
limitation, the obligation to pay contingent consideration pursuant to
Section 2.2 above) shall survive the Closing for the period specified
in this Agreement or, if not specified, for a period of three (3)
years following the Closing Date. Indemnification Provisions for the
Benefit of Purchaser. Seller agrees to indemnify and hold Purchaser,
and their respective officers, directors and affiliates harmless from
and against any and all Adverse Consequences (as defined below) that
any of such parties may suffer or incur resulting from, arising out
of, relating to, or caused by (i) the breach of any of Seller's
representations, warranties, obligations or covenants contained
herein, or (ii) the operation of the Business or ownership of the
Assets on or prior to the Closing Date, including, without limitation,
any claims or lawsuits based on conduct of Corporation, its employees
or Seller occurring before the Closing. For purposes of this Article
10., the phrase "Adverse Consequences" means all charges, complaints,
actions, suits, proceedings, hearings, investigations, claims,
demands, judgments, orders, decrees, stipulations, injunctions,
damages, dues, penalties, fines, costs, amounts paid in settlement,
liabilities (whether known or unknown, whether absolute or contingent,
whether liquidated or unliquidated, and whether due or to become due),
obligations, taxes, liens, losses, expenses, and fees, including all
attorneys' fees and court costs. In addition to and without limiting
the foregoing, Seller agrees, from and after the Closing, to indemnify
Purchaser from and against the entirety of any Adverse Consequences
Purchaser may suffer resulting from, arising out of, relating to, in
the nature of, or caused by any liability of for the unpaid taxes of
any person or entity (including Seller) under United States Treasury
Regulation Sec. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
Indemnification Provisions for the Benefit of Seller. Purchaser agrees
to indemnify and hold Seller harmless from and against any and all
Adverse Consequences Seller may suffer or incur resulting from,
arising out of, relating to, or caused by the breach of any of
Purchaser's representations, warranties, obligations or covenants
contained herein.
21
11. TERMINATION, AMENDMENT AND WAIVER
11.1 Termination . This Agreement may be terminated at any time
prior to the Closing:
(a) by notification from Purchaser as a result of
Purchaser's due diligence investigation pursuant to Section 7.4
above;
(b) by mutual written consent of all of the parties hereto
at any time prior to the Closing;
(c) by Purchaser in the event of a breach by Seller of any
provision of this Agreement; or
(d) by Purchaser or Seller if the Closing shall not have
occurred by September 1, 2001.
11.2 Effect of Termination . Except as provided in Article 10.
and for the provisions of Section 7.2, in the event of termination of
this Agreement pursuant to Section 12.1, this Agreement shall
forthwith become void; provided, however, that nothing herein shall
relieve any party from liability for the breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
12. GENERAL PROVISIONS.
12.1 Notices . All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered
(and shall be deemed delivered) by certified or registered mail (first
class postage pre-paid), guaranteed overnight delivery, or facsimile
transmission if such transmission is confirmed by delivery by
certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy
numbers (or to such other addresses or telecopy numbers which such
party shall designate in writing to the other party):
(a) if to Purchaser:
Make Your Move, Inc.
P. O. Xxx 00000
Xxxx, XX 00000-0000
Attn: Xxxxx X. Rolling, President
Facsimile: (000) 000-0000
with a copy to:
Walther, Key, Maupin, Oats, Cox & LeGoy
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Seller:
Xxxx Xxx Ban
c/o Allpaq Technologies
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxx, Esq.
c/o Allpaq Technologies
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Entire Agreement . This Agreement (including the Exhibits and
Schedules attached hereto) and other documents delivered at the
Closing pursuant hereto, contains the entire understanding of the
parties in respect of its subject matter and supersedes all prior
agreements and understandings (oral or written) between or among the
parties with respect to such subject matter. The Exhibits and
Schedules constitute a part hereof as though set forth in full above.
22
12.2 Expenses . Except as otherwise provided herein, the parties
shall pay their own fees and expenses, including their own counsel
fees, incurred in connection with this Agreement or any transaction
contemplated hereby. Seller hereby agrees to pay any and all sales
and/or use taxes which may become due and owing as a result of the
completion of the transactions contemplated hereby.
12.3 Amendment; Binding Effect; Assignment . This Agreement may
not be modified, amended, supplemented, canceled or discharged, except
by written instrument executed by all parties. The rights and
obligations of this Agreement shall bind and inure to the benefit of
the parties and their respective successors and assigns. Except as
expressly provided herein, the rights and obligations of this
Agreement may not be assigned by Seller without the prior written
consent of Purchaser.
12.4 Counterparts . This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument.
12.5 Governing Law; Interpretation . This Agreement shall be
construed in accordance with and governed for all purposes by the laws
of the State of Nevada applicable to contracts executed and to be
wholly performed within such State.
12.6 Joint Efforts. This Agreement is the result of the joint
efforts and negotiations of the parties hereto, with each party being
represented, or having the opportunity to be represented, by legal
counsel of its own choice, and no singular party is the author or
drafter of the provisions hereof. Each of the parties assumes joint
responsibility for the form and composition of this Agreement and each
party agrees that this Agreement shall be interpreted as though each
of the parties participated equally in the composition of this
Agreement and each and every provision and part hereof. The parties
agree that the rule of judicial interpretation to the effect that any
ambiguity or uncertainty contained in an agreement is to be construed
against the party that drafted the agreement shall not be applied in
the event of any disagreement or dispute arising out of this
Agreement.
12.7 Headings. All paragraph headings herein are inserted for
convenience of reference only and shall not modify or affect the
construction or interpretation of any provision of this Agreement.
12.8 Severability. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be illegal,
invalid or unenforceable, either in whole or in part, such illegality,
invalidity or unenforceability shall not affect the legality, validity
or enforceability of the remaining provisions or covenants, or any
part thereof, all of which shall remain in full force and effect.
12.9 Attorneys' Fees. The prevailing party in any proceeding
brought to enforce the provisions of this Agreement shall be entitled
to an award of reasonable attorneys' fees and costs incurred at both
the trial and appellate levels incurred in enforcing its rights
hereunder.
Make Your Move, Inc., a Nevada corporation
By: /s/ Xxxxx X. Rolling
-----------------------------
Name: Xxxxx X. Rolling
Title: President
"Purchaser"/s/Xxxxx Rolling
"Date"September 1, 2001
By: /s/ Xxxx Xxx Ban
------------------------------
Name: Xxxx Xxx Ban
"Seller"/s/Xxxx Xxx Ban
"Date"September 1, 2001
23
J:\COREL\WPDATA\RAW\Rolling\Make Your Move, Inc\Exchange Agreement6-29-01.wpd
SCHEDULES AND EXHIBITS
Schedule 5.1: Corporate Status
Schedule 5.4: Capitalization
Schedule 5.5: Corporation's Subsidiaries
Schedule 5.8: Financial Statements
Schedule 5.9: Current Balance Sheet
Schedule 5.10: Litigation
Schedule 5.11: Liabilities; Bank Accounts
Schedule 5.13: Environmental Matters
Schedule 5.14: Real Property, Leases and Significant Personal Property
Schedule 5.15: Good Title, Adequacy and Condition
Schedule 5.16: Compliance With Law
Schedule 5.17: Employee Benefit Plans
Schedule 5.18: Tax Returns
Schedule 5.22: Contracts, Customer Lists and Employment Matters
Schedule 5.23: Officers, Directors and Key Employees
Schedule 5.24: Predecessor Corporations
Schedule 5.25: Spin-Off by Corporation
Schedule 5.27(c): Trade Names and Service Marks
Schedule 5.27(d): Intellectual Property
Exhibit 3.2(a)(ii): Release
Exhibit 3.2(a)(iii): Opinion of Seller's Counsel
Exhibit 3.2(a)(iv): Seller Employment Agreement
Exhibit 3.2(b)(ii): Opinion of Purchaser's Counsel
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