EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 7th day
of August, 2008 by and among Qlinks America, Inc., a Colorado corporation (the
"Company"), Xxxxx Xxxxxxx, an individual having an address at 0000 Xxxxxxxx
Xxxxx, Xxxx Xxxx, XX 00000 (the "Stockholder"), certain individuals listed on
Exhibit A, who join on a limited basis through the Addendum #1, and CS
Acquisition IV, LLC, a Colorado Limited Liability Company ("CSA") or assigns.
RECITALS
CSA wishes to purchase from the Stockholder and others (and those
persons listed on Exhibit A who join in this Agreement on a limited basis
through the Addendum #1 hereto), and the Stockholder wishes to sell to CSA, upon
the terms and conditions stated in this Agreement, a total of 7,350,000 shares
of the Company's Common Stock (the "Common Stock") owned by the Stockholder and
those other persons listed on Exhibit A (the "Shares"), for the consideration
set forth in Section 2 of this Agreement.
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Affiliate" shall mean (a) with respect to an individual, any member of
such individual's family including lineal ancestors and descendents; (b) with
respect to an entity, any officer, director, stockholder, partner, manager,
investor or holder of an ownership interest of or in such entity or of or in any
Affiliate of such entity; and (c) with respect to a Person, any Person which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such Person or entity.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"CSA" shall have the meaning set forth in the preamble to this
Agreement.
"Benefit Arrangement" means each (i) employee benefit plan, as defined
in Section 3(3) of ERISA, (ii) employment contract and (iii) bonus, deferred
compensation, incentive compensation, performance compensation, stock purchase,
stock option, stock appreciation, restricted stock, phantom stock, savings,
profit sharing, severance, termination pay (other than statutory or common law
requirements for reasonable notice), health or other medical, salary
continuation, cafeteria, dependent care, vacation, sick leave, holiday pay,
fringe benefit, reimbursement, life insurance, disability or other (whether
insured or self-insured) insurance, supplementary unemployment, pension
retirement, supplementary retirement, welfare or other plan, program, policy or
arrangement, whether written or unwritten, formal or informal, which any current
-1-
or former employee, consultant or director of the Company, the Company's
Subsidiaries or any ERISA Affiliate participated or participates in or was or is
covered under, or was or is otherwise a party, and with respect to which the
Company, the Company's Subsidiaries or any ERISA Affiliate is or ever was a
sponsor or participating employer, or had or has an obligation to make
contributions, or was or is otherwise a party.
"Capital Stock" shall have the meaning set forth in Section 4.6 of this
Agreement.
"Capital Stock Equivalents" shall have the meaning set forth in Section
4.6 of this Agreement.
"Closing" shall have the meaning set forth in Section 3 of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 3 of this
Agreement.
"Code" shall have the meaning set forth in the recitals of this
Agreement.
"Common Stock" shall have the meaning set forth in the recitals to this
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement.
"Company Subsidiary" shall have the meaning set forth in Section 4.7 of
this Agreement.
"Contingent Obligation" as to any Person shall mean the undrawn face
amount of any letters of credit issued for the account of such Person and shall
also mean any obligation of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness, leases, dividends, letters of credit or
other obligations ("Primary Obligations") of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such Primary Obligation or any property constituting direct or
indirect security therefore, (b) to advance or supply funds (i) for the purchase
or payment of any such Primary Obligation or (ii) to maintain working capital or
equity capital of the Primary Obligor or otherwise to maintain the financial
condition or solvency of the Primary Obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the obligee under
any such Primary Obligation of the ability of the Primary Obligor to make
payment of such Primary Obligation, or (d) otherwise to assure or hold harmless
the obligee under such Primary Obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.
"Contracts" shall mean all contracts, leases, subleases, notes, bonds,
mortgages, indentures, Permits and Licenses, non-competition agreements, joint
venture or partnership agreements, powers of attorney, purchase orders, and all
other agreements, arrangements and other instruments, in each case whether
written or oral, to which such Person is a party or by which any of them or any
of its assets are bound.
"Environmental Claim" shall mean any summons, citation, directive,
information request, notice of potential responsibility, notice of violation or
deficiency, order, claim, complaint, investigation, proceeding, judgment, letter
or other communication, written or oral, actual or threatened, from the United
-2-
States Environmental Protection Agency or other federal, state, local or foreign
agency or authority, or any other entity or individual, public or private,
concerning (a) any intentional or unintentional act or omission which involves
Regulated Substances on or off the property of a Person which might result in
such Person incurring a liability; (b) the imposition of any Lien on property,
including, but not limited to, Liens asserted by any Government Entity in
connection with a remedial action to the presence or release of Regulated
Substances; or (c) any alleged violation of or responsibility under
Environmental Laws which could result in a Person incurring a liability.
"Environmental Law" shall mean any Law relating to the assessment,
investigation, remediation, reduction or control of exposure to or other
regulation of pollutants, contaminants, chemicals, wastes or other material in
order to (1) protect human health and safety and the environment, including
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata and natural resources, (2) provide for worker safety and health, (3)
regulate the emission, discharge, release or threat thereof of pollutants,
contaminants, substances, chemicals, wastes or other material into the
environment, or otherwise relating to the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, substances, chemicals, wastes or other material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any entity which has ever been considered
a single employer with The Company or CSA, as the case may be, under Section
4001(b) of ERISA or Section 414(b), (c), (m) or (o) of the Code.
"Financial Statements" shall have the meaning set forth in Section 4.10
of this Agreement.
"Governmental Approval" shall mean the consent, approval, order or
authorization of, or registration, declaration or filing with any court,
administrative agency or commission or other Governmental Entity, authority or
instrumentality, domestic or foreign.
"Governmental Entity" means the government of the United States of
America, any other nation or any political subdivision thereof, whether foreign,
state or local, and any agency, authority, instrumentality, regulatory body,
court, tribunal, arbitrator, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"Indebtedness" shall mean as to any Person and whether recourse is
secured by or is otherwise available against all or only a portion of the assets
of such Person and whether or not contingent, but without duplication: (a) every
obligation of such Person for money borrowed; (b) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (d) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (including
-3-
securities repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not more than
120 days overdue or which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP); (e) every Capital Lease Obligation of such Person; (f) any
obligation of such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection with any sales by
such Person unless such sales are on a non-recourse basis (as to collectibility)
of (i) accounts or general intangibles for money due or to become due, (ii)
chattel paper, instruments or documents creating or evidencing a right to
payment of money or (iii) other receivables, whether pursuant to a purchase
facility or otherwise, other than in connection with the disposition of the
business operations of such Person relating thereto or a disposition of
defaulted receivables for collection and not as a financing arrangement; (g)
every obligation of such Person under any forward contract, futures contract,
swap, option or other financing agreement or arrangement (including, without
limitation, caps, floors, collars and similar agreements), the value of which is
dependent upon interest rates, currency exchange rates, commodities or other
indices (a "derivative contract"); (h) every obligation in respect of
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent that such Person is liable therefore as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness provide that
such Person is not liable therefore and such terms are enforceable under
applicable law; and (i) every Contingent Obligation of such Person with respect
to Indebtedness of another Person.
"Intellectual Property" shall mean all trade names, trademarks (whether
or not registered), service marks, patents and copyrights (including any
registrations or pending applications for registration of any of the foregoing),
trade secrets, inventions, processes, formulae, technology, technical data,
information, know-how and other proprietary intellectual property, and all
licenses or other rights relating to any of the foregoing that are attributable
to the conduct of, used in, or related to, the operations of a Person and its
subsidiaries.
"Inventories" shall mean shall mean all inventory, merchandise,
finished goods, raw materials, work-in-process, packaging, supplies and similar
personal property owned by the Company and held or stored by or for the Company
or in transit in connection therewith (including, without limitation, held or
stored for the Company at warehouses owned by third parties), for use in the
operation of its business as of a particular date, whether or not recorded on
its books or financial records, and any prepaid deposits for any of the same at
such date.
"IP Licenses" shall have the meaning set forth in Section 4.15 of this
Agreement.
"Latest SEC Document" shall mean the Company's Quarterly Report on Form
10-QSB for the quarter ended June 30, 2008, as amended.
"Laws" shall mean all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, writs, injunctions,
judgments and decrees applicable to the specified Person and to the businesses
and assets thereof.
-4-
"License" shall mean any franchise, authorization, license, permit,
certificate of occupancy, easement, variance, exemption, certificate, consent or
approval of any Governmental Entity or other Person.
"Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind.
"Material Adverse Effect" shall mean an event or change, individually,
or in the aggregate with other events or changes, that could reasonably be
expected to have a material adverse effect on (a) the business, properties,
prospects, condition (financial or otherwise) or results of operations of the
entity and its Subsidiaries taken as a whole (other than those events, changes
or effects resulting from general economic conditions or the industry in which
such entity is engaged generally) or (b) the ability of such party to consummate
the transactions contemplated hereby.
"Material Contracts" shall have the meaning set forth in Section 4.19
of this Agreement.
"Permitted Liens" shall mean (a) easements, restrictions, covenants,
rights of way or minor irregularities of title currently of record against any
leased real property or that otherwise do not interfere with the use and
occupancy thereof; (b) liens for Taxes not yet due and payable, or for Taxes
being contested in good faith by appropriate proceedings, provided that in each
such case, adequate reserves are maintained in accordance with GAAP; (c)
warehouse and materialmen's liens which do not individually or in the aggregate
interfere with the use of the related assets and (d) a blanket security interest
and lien in favor of its lender.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, limited liability company,
association, corporation, institution, entity, party, Governmental Entity or any
other juridical entity of any kind or nature whatsoever.
"Preferred Stock" shall have the meaning set forth in Section 4.6 of
this Agreement.
"Regulated Substances" shall mean any pollutant, contaminant,
substance, chemical, waste or other material which is listed, defined,
identified or otherwise regulated under any Environmental Law, including those
materials identified as "hazardous" or "toxic," including, without limitation,
petroleum or petroleum products, polychlorinated biphenyls ("PCBs"), flammable
materials, explosives, radioactive materials, urea formaldehyde foam insulation,
asbestos or asbestos-containing materials and "source," "special nuclear" and
"by product" material as defined in the Atomic Energy Act of 1985, 42 U.S.C.
ss.ss.3011 et seq.
"Retiree" shall mean (a) any retired or former employee, director or
officer of the Company; or (b) any former independent contractor of the Company.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section 4.9 of this
Agreement.
"SEC Reports" means each report, schedule, registration statement,
definitive proxy statement and other document required to be filed by the
Company and its predecessors and officers and directors under the Exchange Act
-5-
or the Securities Act as such documents have been amended since the time of
their filing.
"Shares" shall have the meaning set forth in the recitals to this
Agreement.
"Stockholder" shall have the meaning set forth in the recitals to this
Agreement.
"Subsidiary" shall mean any Person in which another Person, directly or
indirectly, owns 50% of either the equity interests in or voting control of,
such Person.
"Takeover Proposal" shall mean any proposal for a tender or exchange
offer, , consolidation, sale of all or substantially all of such party's assets,
including the Shares with respect to the Stockholder, sale of in excess of
fifteen percent of the shares of capital stock or other business combination
involving such party or any proposal or offer to acquire in any manner a
substantial equity interest (including any interest exceeding fifteen percent of
the equity outstanding) in, or all or substantially all of the assets of, such
party other than the transactions contemplated by this Agreement.
"Taxes" means all federal, state, county, local, municipal, foreign and
other taxes, assessments, duties or similar charges of any kind whatsoever,
including all corporate franchise, income, gross receipts, occupation, windfall
profits, sales, use, ad valorem, value-added, profits, license, withholding,
payroll, employment, excise, premium, real property, personal property, customs,
net worth, capital gains, transfer, stamp, documentary, social security,
disability, environmental, alternative minimum, recapture and other taxes, and
including all interest, penalties and additions imposed with respect thereto,
whether disputed or not and including any obligations to indemnify or otherwise
assume or succeed to the Tax liability of any Person, and any liability in
respect of any Tax as a result of being a member of any affiliated, combined,
consolidated, unitary or similar group.
"Tax Return" means any report, return, statement, estimate,
informational return, declaration or other written information required to be
supplied to a taxing authority in connection with Taxes.
"Taxing Authority" means any domestic, foreign, federal, national,
state, county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising tax
regulatory authority.
"Transaction Documents" shall mean this Agreement.
2. PURCHASE AND SALE OF THE SHARES. Subject to the terms and conditions
of this Agreement, on the Closing Date, CSA shall purchase, and the Stockholder
(and those persons listed on Exhibit A who join in this Agreement on a limited
basis through the Addendum #1 hereto) shall sell to CSA, the Shares listed on
Exhibit A, free and clear of any Lien, in exchange for the purchase price as
specified below. At the Closing, the Stockholder shall deliver or cause to be
delivered to CSA the certificate(s) representing the Shares, each properly
endorsed for transfer to CSA and CSA shall deliver to the Stockholder a
Promissory Note to each Seller in the amount shown in Exhibit A which is the
aggregate sum of $106,000 in U.S. funds (the "Purchase Price") to be allocated
-6-
among Stockholder and those persons listed on Exhibit A upon the payment
schedule set forth on Exhibit A.
3. CLOSING. On August 7, 2008 and upon confirmation that the other
conditions to closing specified herein have been satisfied or duly waived by
CSA, the Stockholder shall deliver to Xxxxxxx Xxxxxxx, in trust, a certificate
or certificates, registered in the name of "CS Acquisition IV, LLC.,"
representing the Shares, with instructions that such certificates are to be held
for release to CSA only upon payment in full of the Purchase Price to the
Stockholder and those individuals listed on Exhibit A by CSA. Upon such receipt
by Xxxxxxx Xxxxxxx of the certificates, CSA shall deliver a Promissory Note
payable to the individuals listed on Exhibit A as instructed therein. The
Closing of the purchase and sale of the Shares shall take place at the offices
of Xxxxxxx X. Xxxxxxx, Esq., 0000 Xxxxxxx Xxxx, Xxxxxx, XX 00000, or at such
other location and on such other date as the Stockholder and CSA shall mutually
agree. The shares purchased shall be Pledged as collateral for the Note, and
held in escrow in the names of Sellers, pending payment.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER AND THE COMPANY.
The Stockholder and the Company hereby, jointly and severally, represent and
warrant to CSA that, except as set forth in the schedules delivered herewith
(collectively, the "Disclosure Schedules"):
4.1. AUTHORITY; BINDING AGREEMENTS OF THE STOCKHOLDER. The
Stockholder has the legal capacity to own the Shares owned by the Stockholder.
The execution and delivery by the Stockholder of this Agreement and the
consummation by the Stockholder of the transactions contemplated hereby has been
duly and validly authorized by all necessary action of the Stockholder. The
Stockholder has the legal capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and the Stockholder has duly
executed and delivered this Agreement. This Agreement is a legal, valid and
binding obligation of the Stockholder enforceable against the Stockholder in
accordance with its terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization and other laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
4.2. OWNERSHIP OF CAPITAL STOCK. The Stockholder is the record
and beneficial owner of the Shares. The Stockholder has valid and marketable
title to the Shares, free and clear of any Liens and has the absolute and
unrestricted right, power and capacity to sell, assign and transfer the Shares
to CSA. The delivery to CSA of the certificates representing the Shares and the
payment to the Stockholder in accordance with Section 2 will transfer to CSA
record and beneficial ownership of the Shares free and clear of all Liens. The
Shares are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of such Shares. The
Stockholder does not own any rights, subscriptions, warrants, options,
conversion rights or agreements of any kind outstanding to purchase or otherwise
acquire any shares of capital stock or other equity securities of CSA.
-7-
4.3. NO BREACH BY STOCKHOLDER. The execution and delivery of
this Agreement by the Stockholder does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation under, or result in the creation
of any Lien on any of the properties or assets of the Stockholder under, any
provision of (i) any contract or agreement to which the Stockholder is a party
or by which any of his property or assets are bound, (ii) any license,
franchise, permit or other similar authorization held by the Stockholder, or
(iii) any judgment, order or decree or statute, law, ordinance, rule or
regulation applicable to the Stockholder or his property or assets.
4.4. GOVERNMENTAL CONSENTS. No permit, consent, approval,
license, order or authorization of, or registration, declaration or filing with,
any court or other Governmental Entity is required to be obtained or made in
connection with the execution, delivery or performance of this Agreement by the
Stockholder or the consummation by the Stockholder of any of the transactions
contemplated hereby.
4.5 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado, and has all requisite corporate power and corporate authority
to enter into the Transaction Documents to which it is a party, to consummate
the transactions contemplated hereby and thereby, to own, lease and operate its
properties and to conduct its business. The Company is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except where
the failure to obtain such qualification or license would not, individually or
in the aggregate, have a Material Adverse Effect. The Stockholder has heretofore
delivered or made available to CSA complete and correct copies of the
certificate of incorporation and by-laws of the Company. The Company is not in
violation of its organizational documents.
4.6 CAPITALIZATION. The authorized capital stock of the
Company consists of 100,000,000 shares of no par value Common Stock and
10,000,000 shares of preferred stock (the "Preferred Stock," and together with
the Common Stock, the "Capital Stock"), of which 18,781,680 shares of Common
Stock are issued and outstanding on the date hereof. No other shares of any
other class or series of Capital Stock or securities exercisable or convertible
into or exchangeable for Capital Stock ("Capital Stock Equivalents") are
authorized, issued or outstanding. The outstanding shares of Capital Stock have
been duly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of, and are not subject to, any preemptive,
subscription or similar rights. To the Stockholder's and the Company's
knowledge, none of the outstanding Capital Stock was issued in violation of any
Law, including without limitation, federal and state securities laws. There are,
or will be at closing, no outstanding warrants, options, subscriptions, calls,
rights, agreements, convertible or exchangeable securities or other commitments
or arrangements relating to the issuance, sale, purchase, return or redemption,
and, to the Stockholder's and the Company's knowledge, voting or transfer of any
shares, whether issued or unissued, of Capital Stock, Capital Stock Equivalents
or other securities of the Company. The Company does not have outstanding
-8-
stockholder purchase rights or "poison pill" or any similar arrangement in
effect giving any Person the right to purchase any equity interest in the
Company upon the occurrence of certain events.
4.7 SUBSIDIARIES. Section 4.7 of the Disclosure Schedule
contains a list of the name of each Subsidiary of the Company (each such
corporation, partnership or other entity being referred to herein as a "Company
Subsidiary"). Section 4.7 of the Disclosure Schedule sets forth, with respect to
each Company Subsidiary, its type of entity, the jurisdiction of its
organization, its authorized and outstanding capital stock, partnership
interests or equivalent ownership interests and the Company's current ownership
of such shares or interests. Each of the outstanding shares of capital stock of
each of the Company Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable and owned by the Company or another Company Subsidiary free
and clear of any Liens and were not issued in violation of, nor subject to, any
preemptive, subscription or similar rights. There are no outstanding warrants,
options, subscriptions, calls, rights, agreements, convertible or exchangeable
securities or other commitments or arrangements relating to the issuance, sale,
purchase, return or redemption, or to the Stockholder's and the Company's
knowledge, voting or transfer of any shares, whether issued or unissued, of any
Company Subsidiary. The Company and the Company Subsidiaries do not own any
equity interests in any other Person. Each Company Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite power and authority to own, lease and operate
its properties and to conduct its business. Each Company Subsidiary is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to obtain such qualification or license
would not, individually or in the aggregate, have Material Adverse Effect.
4.8 NO VIOLATION; CONSENTS AND APPROVALS. The execution and
delivery by the Stockholder and the Company of the Transaction Documents does
not, and the consummation of the transactions contemplated hereby and thereby
and compliance with the terms hereof and thereof will not, conflict with or
result in any violation of or default (or an event which, with notice or lapse
of time or both, would constitute a default) under, (a) the terms and conditions
or provisions of the certificate of incorporation or by-laws of the Company or
any Company Subsidiary, (b) any Law applicable to the Company or any Company
Subsidiary or the property or assets of the Company or any Company Subsidiary,
or (c) give rise to any right of termination, cancellation or acceleration
under, or result in the creation of any Lien upon any of the properties of the
Company or any Company Subsidiary under any Contract to which the Company or any
Company Subsidiary is a party or by which the Company or any Company Subsidiary
or any assets of the Company or any Company Subsidiary may be bound, except, in
the case of clauses (b) and (c), for such conflicts, violations or defaults
which are set forth in Section 4.8 of the Disclosure Schedule and as to which
requisite waivers or consents will have been obtained prior to the Closing or
which, individually or in the aggregate, would not have a Material Adverse
Effect. No Governmental Approval is required to be obtained or made by or with
respect to the Company or any Company Subsidiary in connection with the
execution and delivery of this Agreement or the consummation by the Company or
the Stockholder of the transactions contemplated hereby. The Company has taken
all action necessary to exempt the sale of the Shares to CSA and the other
transactions contemplated by this Agreement from the provisions of any
-9-
stockholder rights plan or other "poison pill" arrangement, any anti-takeover,
business combination or control share law or statute binding on the Company or
to which the Company or any of its assets and properties may be subject and any
provision of the Company's certificate of incorporation or bylaws that is or
could reasonably be expected to become applicable to CSA as a result of the
transactions contemplated hereby, including without limitation, the sale of the
Shares to CSA and the ownership, disposition or voting of the Shares by CSA or
the exercise of any right granted to CSA pursuant to this Agreement.
4.9. SEC DOCUMENTS. The Company has timely filed with the SEC,
and has heretofore made available to CSA (through reference to documents filed
by XXXXX or otherwise), true and complete copies of, each report, schedule,
registration statement, definitive proxy statement and other document required
to be filed by it and its predecessors since June 16, 2006 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or the Securities Act (as
such documents have been amended since the time of their filing, collectively,
the "SEC Documents"). As of their respective dates, the SEC Documents, (a)
complied in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations thereunder and
(b) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
4.10. FINANCIAL STATEMENTS.
(a) The audited consolidated financial statements
and the unaudited consolidated interim financial statements of the Company
included or incorporated by reference in the SEC Documents (collectively, the
"Financial Statements"), (a) at the time filed, complied as to form in all
material respects with applicable accounting requirements and published rules
and regulations with respect thereto, (b) fairly present in all material
respects the consolidated financial condition and the results of operations and
cash flows of the Company and the Company Subsidiaries as of the dates and for
the periods indicated (subject, in the case of any unaudited interim financial
statements, to normal year-end adjustments and other adjustments described
therein) and (c) were prepared in accordance with the rules and regulations of
the SEC and generally accepted accounting principles ("GAAP"), except as
disclosed therein and in the notes thereto, and, in the case of unaudited
statements, as permitted by Form 10-QSB of the SEC. All of the Company
Subsidiaries have been consolidated in the Financial Statements.
(b) The Company has devised and maintains a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary, (1) to
permit preparation of financial statements in conformity with GAAP or any other
criteria applicable to such statements and (2) to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any difference.
-10-
4.11 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
2007, each of the Company and the Company Subsidiaries has conducted business
only in the ordinary course of business consistent with past practice, and,
other than as expressly contemplated by this Agreement, since such date, there
has not been with respect to the Company or the Company Subsidiaries any:
(a) change or, to the knowledge of the Stockholder
and the Company, threatened change in the business, assets, operations,
condition (financial or otherwise), results of operations or prospects of the
business of the Company or the Company Subsidiaries, which has had or could have
a Material Adverse Effect;
(b) transactions not in the ordinary course of
business consistent with past practice;
(c) damage, destruction or loss, whether or not
insured, materially affecting the Company' business or assets;
(d) change in accounting principles, methods or
practices, investment practices, claims, payment and processing practices or
policies regarding intercompany transactions;
(e) revaluation of any assets;
(f) declaration, setting aside, or payment of a
dividend or other distribution in respect of the capital stock of the Company or
the Company Subsidiaries, or any direct or indirect redemption, purchase or
other acquisition of any shares of such capital stock;
(g) issuance or sale of any shares of any equity
security or of any security exercisable or convertible into or exchangeable for
equity securities;
(h) amendment to the certificate of incorporation,
by-laws or similar organizational documents of the Company or the Company
Subsidiaries;
(i) sale, assignment or transfer of or lapse of any
rights with respect to Intellectual Property, other than in the ordinary course
of business consistent with past practice;
(j) indebtedness incurred for borrowed money or any
commitment to borrow money, any incurrence of a contingent liability or any
guaranty or commitment to guaranty the indebtedness of others entered into, by
the Company or the Company Subsidiaries;
(k) capital expenditure or capital commitment
requiring an expenditure of monies in the future by the Company or the Company
Subsidiaries, other than transactions in the ordinary course of business
consistent with past practice not in excess of $1,000 in the aggregate for the
Company and the Company Subsidiaries;
-11-
(l) cancellation of any debt or waiver or release of
any contract, right or claim, except for negotiations of debt settlements and
releases;
(m) amendment, termination or revocation of, or a
failure in any material respect to perform obligations or the occurrence of any
default under (i) any Contract to which the Company or the Company Subsidiaries
is or, as of December 31, 2007, was a party, other than in the ordinary course
of business consistent with past practice, or (ii) any License;
(n) increase or commitment to increase the salary or
other compensation payable or to become payable to the Company' or the Company
Subsidiaries' officers, directors, employees, agents or independent contractors,
or the payment of any bonus to the foregoing persons except in the ordinary
course of business consistent with past practice;
(o) execution of termination, severance or similar
agreements with any officer, director, employee, agent or independent contractor
of the Company or the Company Subsidiaries;
(p) entering into any leases of real property or
agreement to acquire real property;
(q) new or change of any Tax election;
(r) steps taken to incorporate any Subsidiary, other
than Sub;
(s) acquisition or disposition of, or incurrence of a
Lien (other than a Permitted Lien) on, any assets and properties of the Company
or any Company Subsidiary;
(t) transaction by the Company or any Company
Subsidiary with any officer, director or Affiliate thereof or any Affiliate of
any such officer, director or Affiliate; or
(u) any agreement, or other commitment, whether in
writing or otherwise, to take any of the actions specified in this Section 4.11,
except as expressly contemplated by this Agreement.
4.12 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company
nor any of the Company Subsidiaries has any indebtedness, liability or
obligation, whether or not accrued, absolute, contingent or otherwise, known or
unknown, and whether due or to become due, which was not reflected or reserved
against in the balance sheets and the notes thereto which are part of the Latest
SEC Document, except for those (i) incurred in connection with this Agreement or
(ii) incurred in the ordinary course of business and in each such case is fully
reflected on the Company' books of account and, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
-12-
4.13 PERSONAL PROPERTY.
(a) Each of the Company and the Company Subsidiaries has good,
valid and marketable title to, or a valid leasehold interest in, all assets
respectively owned or leased by each of them, including, without limitation, all
assets reflected in Financial Statements and all assets acquired by the Company
or the Company Subsidiaries since December 31, 2007 (except for assets which
have been sold or otherwise disposed of in the ordinary course of business
consistent with past practice), free and clear of all Liens, other than
Permitted Liens. All personal property of each of the Company or the Company
Subsidiaries is in good operating condition and repair, ordinary wear and tear
excepted, and is suitable and adequate for the uses for which it is intended or
is being used and its use complies in all material respects with applicable
Laws. To the Stockholder's and the Company's knowledge, there are no facts or
conditions affecting the Company, the Company Subsidiaries or their assets or
business which could, individually or in the aggregate, interfere in any
material respect with the use, occupancy or operation thereof as currently (or
proposed to be) used, occupied or operated, or their adequacy for such use,
except for facts or conditions relating solely to general economic, business or
political developments affecting the economy generally.
(b) Following the consummation of the transactions
contemplated by this Agreement, each of the Company and the Company Subsidiaries
will have no assets or personal property.
4.14. REAL PROPERTY. The Company does not own or lease any
real property.
4.15 INTELLECTUAL PROPERTY.
(a) Section 4.15(a) of the Disclosure Schedule sets
forth (i) all trade name registrations, trademark registrations, service xxxx
registrations, patents and copyright registrations (and any pending applications
for any of the foregoing) that are owned by the Company or any of the Company
Subsidiaries, and (ii) all Intellectual Property that is licensed to the Company
or any of the Company Subsidiaries by third parties and material to their
business. None of the Company or the Company Subsidiaries has received any
written notice that the rights of the Company or the Company Subsidiaries in
their Intellectual Property have been declared unenforceable or otherwise
invalid by any court or Governmental Entity. The Company and the Company
Subsidiaries have taken commercially reasonable steps to maintain and protect
the rights of the Company and the Company Subsidiaries in and to each item of
their Intellectual Property, it being understood that the Company has not
registered Intellectual Property which it may have a legal right to register. To
the knowledge of the Stockholder and the Company, there are no rights of any
Person that would interfere with or prevent the use by the Company of any of the
rights of the Company and the Company Subsidiaries in and to any Intellectual
Property that is material to their business. To the Stockholder's and the
Company's knowledge, there is no existing third party infringement, misuse, or
misappropriation of the Intellectual Property of the Company or any of the
Company Subsidiaries. With respect to any agreements by which the Company or the
Company Subsidiaries are licensed or otherwise are granted the right to use any
item of third party Intellectual Property that is material to the respective
businesses of the Company and the Company Subsidiaries (the "IP Licenses"), the
-13-
consummation of the transactions contemplated by this Agreement shall not cause
a breach of such agreements or cause the licensor under such agreements to be
able to terminate such agreements.
(b) Except as would not have a Material Adverse
Effect, neither the Company nor any of the Company Subsidiaries has interfered
with, infringed upon, misappropriated or otherwise violated any Intellectual
Property right of any Person.
(c) No item of Intellectual Property owned by
the Company or any of the Company Subsidiaries is subject to any outstanding
injunction, judgment, order, decree, ruling or charge to which the Company or
any of the Company Subsidiaries is a party or to which its assets are bound. No
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand to which the Company or any of the Company Subsidiaries is a party or to
which any of their assets are bound is pending or, to the Stockholder's and the
Company's knowledge, threatened which challenges the legality, validity,
enforceability or ownership of, or the Company' or the Company Subsidiaries'
right to use, any items of Intellectual Property.
(d) Neither the Company nor any of the Company
Subsidiaries has agreed to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict of or with any third party
Intellectual Property (other than pursuant to shrink wrap licenses for
commercially available "off the shelf" software). Except as would not have a
Material Adverse Effect, (i) the Company and the Company Subsidiaries possess
the sole and exclusive good, valid and transferable title in and to all items of
Intellectual Property that the Company and the Company Subsidiaries purport to
own, free and clear of all Liens, and (ii) no royalties or other payments are
required in connection with the use and enjoyment by the Company or the Company
Subsidiaries of any of their respective items of Intellectual Property (other
than royalties or other payments, in each case not exceeding $5,000 with respect
to licenses of commercially available software).
4.16 LITIGATION; COMPLIANCE WITH LAWS.
(a) There are: (i) no claims, actions, suits,
investigations or proceedings pending or, to the Stockholder's and the Company's
knowledge, threatened against, relating to or affecting the Company or the
Company Subsidiaries, the business, the assets, or any employee, officer,
director, stockholder, or independent contractor of the Company or the Company
Subsidiaries in their capacities as such, and (ii) no orders of any Governmental
Entity or arbitrator outstanding against the Company or the Company
Subsidiaries, the business, the assets, or any employee, officer, director,
stockholder, or independent contractor of the Company or the Company
Subsidiaries in their capacities as such, or that could prevent or enjoin, or
delay in any respect, consummation of the transactions contemplated hereby.
Section 4.16 of the Disclosure Schedule includes a description of all pending or
threatened claims, actions, suits, investigations or proceedings involving the
Company or the Company Subsidiaries, the business, the assets, or any employee,
officer, director, stockholder or independent contractor of the Company or the
Company Subsidiaries in their capacities as such.
-14-
(b) The Company and the Company Subsidiaries have
complied and are in compliance in all material respects with all Laws applicable
to the Company, any Subsidiary of the Company, its business or its assets,
including the Sarbanes Oxley Act of 2002. Neither the Company nor the Company
Subsidiaries has received notice from any Governmental Entity or other Person of
any material violation of Law applicable to the Company, any of the Company
Subsidiaries, their business or their assets. The Company and the Company
Subsidiaries have obtained and hold all required Licenses (all of which are in
full force and effect) from all Government Entities applicable to the Company,
the Company Subsidiaries, their business or their assets. No violations are or
have been recorded in respect of any such License and no proceeding is pending,
or, to the Stockholder's and the Company's knowledge, threatened to revoke or
limit any such License.
4.17 EMPLOYEE BENEFIT PLANS.
(a) (i) Neither the Company nor any of its
ERISA Affiliates maintains or sponsors, or has any liability, contingent or
otherwise, with respect to, any Benefit Arrangement, (ii) no Benefit Arrangement
provides or has ever provided post-retirement medical or health benefits or
severance benefits, except to the extent required by Part 6 of Title I of ERISA
or similar state laws, and (iii) no Benefit Arrangement is or has ever been a
"welfare benefit fund," as defined in Section 419(e) of the Code, or an
organization described in Sections 501(c)(9) or 501(c)(20) of the Code. The
Company has made available to CSA true and complete copies of: (i) each written
Benefit Arrangement document and a description of each unwritten Benefit
Arrangement, (ii) each summary plan description relating to any Benefit
Arrangement, (iii) each trust, insurance or other funding contract or agreement
relating to any Benefit Arrangement, (iv) each administrative services contract
or agreement relating to any Benefit Arrangement, (v) the three most recent
annual reports (Forms 5500) for each Benefit Arrangement (including all related
schedules), if applicable, and (vi) the most recent Internal Revenue Service
determination letter, opinion, notification or advisory letter (as the case may
be) for each Benefit Arrangement which is intended to constitute a qualified
plan under Section 401 of the Code. Neither the Company nor any ERISA Affiliate
has any obligation or commitment to establish, maintain, operate or administer
any new Benefit Arrangement or to amend any Benefit Arrangement so as to
increase benefits thereunder or otherwise.
(b) Neither the Company nor any ERISA Affiliate
has or has ever had any liability with respect to any Benefit Arrangement that
is subject to Title IV of ERISA, including a "multiemployer plan," as defined in
Section 3(37) of ERISA or a "single employer plan" within the meaning of Section
4001(a)(15) of ERISA. Neither the Company nor any ERISA Affiliate has terminated
a Benefit Arrangement with respect to which any liability remains outstanding.
(c) Each Benefit Arrangement conforms in all
material respects to, and has been operated and administered in material
compliance with, its terms and all applicable laws, including ERISA and the
Code, and including, but not limited to the requirements of ERISA Sections 601
et seq. and 701 et seq. and Sections 4980B, 9801 and 9802 of the Code. Each
Benefit Arrangement intended to be qualified under Section 401(a) of the Code is
so qualified and is the subject of a currently effective favorable IRS
-15-
determination, opinion, notification or advisory letter issued by the IRS.
Neither the Company nor any ERISA Affiliate has incurred or is subject to a tax
under Section 4979 of the Code. No Benefit Arrangement has assets that include
securities issued by the Company or any ERISA Affiliate.
(d) There are no pending or, to the Stockholder's
and the Company's knowledge, threatened actions, suits, claims, trials,
arbitrations, investigations or other proceedings by any Person or Governmental
Authority, including any present or former participant or beneficiary under any
Benefit Arrangement (or any beneficiary of any such participant or beneficiary)
involving any Benefit Arrangement or any rights or benefits under any Benefit
Arrangement other than ordinary and usual claims for benefits by participants or
beneficiaries thereunder. To the Stockholder's and the Company's knowledge, no
event has occurred and no condition exists that could subject the Company or the
fund of any Benefit Arrangement to the imposition of any tax or penalty with
respect to any Benefit Arrangement, whether by way of indemnity or otherwise.
All contributions required to have been made or remitted and all expenses
required to have been paid by the Company to or under any Benefit Arrangement
under the terms of any such plan, any agreement or any applicable law have been
paid within the time prescribed by any such plan, agreement or law. All
contributions to or under any Benefit Arrangement have been currently deductible
under the Code when made. No "prohibited transaction" (as defined in ERISA
Section 406) or breach of fiduciary responsibility has occurred with respect to
any Benefit Arrangement for which a tax, penalty or other liability of whatever
nature could be incurred by the Company, whether by way of indemnity or
otherwise.
(e) There is no contract, agreement or benefit
arrangement covering any current or former employee or director of the Company
or any ERISA Affiliate which, individually or in the aggregate, could be
expected to give rise to the payment of any amount which would constitute an
"excess parachute payment" (as defined in Section 280G of the Code) or be
nondeductible under Section 162(m) of the Code. Neither the execution of this
Agreement nor the consummation of any of the transactions contemplated hereby
will, either alone or in conjunction with any other event (including the
termination of an employee's employment) (i) result in any obligation or
liability (with respect to accrued benefits or otherwise) on the part of the
Company or any ERISA Affiliate under any Benefit Arrangement, or to any present
or former employee, director, officer, stockholder, contractor or consultant of
the Company or any ERISA Affiliate, (ii) be a trigger event under any Benefit
Arrangement that will result in any payment (whether of severance pay or
otherwise) becoming due to any such present or former employee, officer,
director, stockholder, contractor, or consultant, or (iii) accelerate the time
of payment or vesting, or increase the amount, of any compensation theretofore
or thereafter due or granted to any employee, officer, director, stockholder,
contractor, or consultant of the Company or any ERISA Affiliate.
(f) No Benefit Arrangement is required to comply
with the provisions of any foreign law.
(g) Other than routine claims for benefits under
any Benefit Arrangement, there are no pending, or, to the Stockholder's and the
Company's knowledge, threatened, actions or proceedings involving any Benefit
Arrangement, or the fiduciaries, administrators, or trustees of any Benefit
-16-
Arrangement or the Company or any of its ERISA Affiliates as the employer or
sponsor under any Benefit Arrangement, with any of the IRS, the Department of
Labor, the Pension Benefit Guaranty Corporation, any participant in or
beneficiary of any Benefit Arrangement or any other person whomsoever. The
Stockholder knows of no reasonable basis for any such claim, lawsuit, dispute,
action or controversy.
4.18 TAXES.
(a) The Company has not timely filed but has
caused to be filed all Tax Returns required to be filed under applicable Tax
Laws. All such Tax Returns were, when filed, and continue to be, true, correct
and complete in all material respects. The Company is not currently the
beneficiary of any extension of time within which to file any Tax Return, except
for the 2007 tax returns which will be filed timely per the filed extension. No
claim has ever been made by the Taxing Authority of any jurisdiction in which
the Company does not file Tax Returns or pay Taxes that it may be subject to
taxation by that jurisdiction, nor is there any meritorious basis for such a
claim.
(b) All Taxes due and owing by the Company
(whether or not shown on any Tax Return) have been timely paid. Any liability of
the Company for Taxes not yet due and payable, or that are being contested in
good faith by appropriate proceedings, have been provided for on the Financial
Statements in accordance with GAAP. There are no Liens for Taxes (other than
Taxes not yet due and payable) upon any of the assets of the Company.
(c) The Company has timely withheld and paid
all Taxes required to have been withheld and paid in connection with any amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party (including withholding of Taxes pursuant to Sections 1441,
1442, 3121 and 3402 of the Code or any comparable provision of any state, local
or foreign Laws, any applicable Tax convention, or otherwise).
(d) No foreign, federal, state or local Tax
audits or administrative or judicial Tax proceedings are pending with respect to
the Company. The Company has not received from any Taxing Authority (i) any
notice indicating an intent to commence any audit or other review, (ii) any
request for information related to Tax matters, or (iii) any notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted or
assessed by any authority against the Company. Each deficiency resulting from
any audit or examination relating to Taxes of the Company has been timely paid.
The Company has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.
(e) The Company is not a party to and is not
bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes, whether or not in
writing (including any advance pricing agreement, closing agreement or other
agreement relating to Taxes with any Taxing Authority).
-17-
(f) The Company has delivered to CSA (i) complete
and correct copies of all its Tax Returns for all taxable periods and (ii)
complete and correct copies of all private letter rulings, revenue agent
reports, information document requests, notices of proposed deficiencies,
deficiency notices, protests, petitions, closing agreements, settlement
agreements, pending ruling requests and any similar documents, submitted,
received or agreed to by or on behalf of the Company and relating to Taxes for
all taxable periods for which the statute of limitations has not yet expired.
(g) The Company has no liability for the Taxes
of any other Person under Treasury Regulation Section 1.1502-6 (or similar
provision of state, local or foreign Law), as a transferee, successor, by
contract or otherwise.
(h) The unpaid Taxes of the Company (i) did not,
as of the most recent fiscal month end, exceed the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Company' books and
records provided to the Company, and (ii) shall not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Company. Since its inception, the Company has
not incurred any liability for Taxes arising from extraordinary gains or losses,
as that term is used in GAAP, other than in the ordinary course of business
consistent with past practice.
(i) The Company has not been a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.
4.19 CONTRACTS AND COMMITMENTS. Section 4.19 of the Disclosure
Schedule sets forth a list of all material agreements, Contracts and commitments
to which the Company or any Company Subsidiary is a party or by which the
Company, any Company Subsidiary or their respective assets are bound (each, a
"Material Contract"), including, without limitation:
(a) agreements, contracts, commitments or
arrangements involving Intellectual Property;
(b) employment agreements or severance agreements or
employee termination arrangements that are not terminable at will by the Company
or a Company Subsidiary without penalty;
(c) any change of control agreements with employees
of the Company or any Company Subsidiary;
(d) agreements, contracts, commitments or
arrangements containing any covenant limiting the ability of the Company or any
Company Subsidiary to engage in any line of business or to compete with any
business or person;
-18-
(e) agreements or contracts with any officer,
director or employee of (i) the Company or (ii) any Company Subsidiary (other
than employment, severance and change of control agreements covered by clause
(b) or (c) above);
(f) agreements or contracts under which the Company
or any Company Subsidiary has borrowed or loaned money, or any note, bond,
indenture, mortgage, installment obligation or other evidence of indebtedness
for borrowed or loaned money or any guarantee of such indebtedness, in each
case, relating to amounts in excess of $5,000;
(g) joint venture agreements or other agreements
involving the sharing of profits;
(h) leases pursuant to which personal or real
property is leased to or from the Company or any Company Subsidiary;
(i) powers of attorney from the Company or any
Company Subsidiary;
(j) guaranties, suretyships or other contingent
agreements of the Company or any Company Subsidiary;
(k) all agreements, contracts, commitments and
arrangements between the Company or any Company Subsidiary and any Governmental
Entity;
(l) any agreement, contract, commitment or
arrangement relating to capital expenditures with respect to the Company or any
Company Subsidiary and involving future payments which exceed $5,000 in any 12
month period;
(m) any agreement, contract, commitment or
arrangement relating to the acquisition of assets (other than in the ordinary
course of business consistent with past practice) or any capital stock of any
business enterprise;
(n) any investment banking or other professional
services agreement;
(o) contracts (other than those covered by clause (a)
through (n) above) pursuant to which the Company and the Company Subsidiaries
will receive or pay in excess of $5,000 over the life of the contract;
(p) any other material agreements, Contracts and
commitments whether or not entered into in the ordinary course of business; and
(q) all proposed arrangements or contracts of the
Company or the Company Subsidiaries which the Company reasonably expects to be
near consummation and of a type that if entered into would be a Contract
described in clauses (a) through (o) above.
-19-
Neither the Company, any Company Subsidiary nor, to the Stockholder's and the
Company's knowledge, any other party thereto, is in material breach of or in
material default under any Material Contract. Each such Material Contract is in
full force and effect, and is a legal, valid and binding obligation of the
Company and/or the applicable Company Subsidiaries and, to the Stockholder's and
the Company's knowledge, each of the other parties thereto, enforceable in
accordance with its terms.
4.20. INSURANCE.
(a) At closing no insurance will be in force
or effect. Section 4.20 of the Disclosure Schedule contains a complete and
accurate list of all insurance policies currently providing and that have been
providing coverage in favor of the Company or the Company Subsidiaries (or any
predecessor) specifying the insurer and type of insurance under each. The
Company has heretofore delivered to CSA true, correct and complete copies of all
such policies. Each current policy is in full force and effect, all premiums are
currently paid, no notice of cancellation or termination has been received with
respect to any such policy and, to the knowledge of the Stockholder and the
Company, there is no threatened increase in premiums or cancellation or
termination of any such policy. Such policies have been sufficient for
compliance with all requirements of law and any Contracts to which the Company
or any of the Company Subsidiaries is a party. Neither the Company nor the
Company Subsidiaries (or any predecessor) has been refused any insurance with
respect to its assets and operations, nor has its coverage been limited by any
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance. Each of the Company and the Company Subsidiaries (or
any predecessor) has insured by reputable insurers the assets used by such
company (or any predecessor) in the conduct of its business that are of an
insurable character against risks of liability, casualty and fire in adequate
amounts and consistent with prudent industry practice, and maintains such
insurance against hazards, risks and liability to persons and property to the
extent and in the manner customary for companies in similar businesses,
similarly situated, and such insurance has been effective, in full force and
effect, without interruption since the date such company (or any predecessor)
commenced business. The insurance specified in Section 4.20 of the Disclosure
Schedule has been effective, in full force and effect, without interruption
since the date specified in Section 4.20 of the Disclosure Schedule as the
initial date of coverage.
(b) There is no pending claim by the Company or
the Company Subsidiaries under any insurance policy listed in Section 4.20 of
the Disclosure Schedule. Section 4.20 of the Disclosure Schedule sets forth all
claims by the Company or the Company Subsidiaries (whether or not resolved)
under any insurance policy, which claims have been outstanding at any time since
January 1, 2006. Neither the business nor the assets of the Company or the
Company Subsidiaries has had any casualty loss or occurrence which may give rise
to any claim of any kind not covered by insurance and the Company and the
Company Subsidiaries are not aware of any occurrence which may give rise to any
claim not covered by insurance.
-20-
4.21 LABOR MATTERS.
(a) The Company and each of the Company Subsidiaries
is in compliance in all material respects with all federal, state, local and
foreign Laws and regulations respecting employment and employment practices,
terms and conditions of employment, wages, hours, collective bargaining, safety
and health, work authorization, equal employment opportunity, immigration,
withholding, unemployment compensation, worker's compensation and employee
privacy and right to know; (b) there is no pending, or, to the knowledge of the
Stockholder and the Company, any threatened, charge, complaint, allegation,
application or other process against the Company or any Company Subsidiaries
before the National Labor Relations Board or any other comparable Governmental
Entity; (c) there is, and have been, (i) no labor strike, dispute, slowdown or
work stoppage or other job action pending, or to the knowledge of the
Stockholder and the Company, threatened against or otherwise affecting or
involving the Company or any Company Subsidiaries or (ii) no lawsuits (other
than grievance proceedings) pending, or to the knowledge of the Stockholder and
the Company, threatened between the Company or any Company Subsidiaries and any
current or former employee or independent contractor of the Company or any union
or other collective bargaining unit representing any current or former employee
of the Company; (d) no employees of the Company or any Company Subsidiaries are
covered by any collective bargaining agreements and, to the knowledge of the
Stockholder and the Company, no effort is being made by any union to organize
any of the employees of the Company or any Company Subsidiaries; and (e) to its
knowledge, neither the Company nor any Company Subsidiaries has hired any
illegal aliens as employees or independent contractors.
4.22. ENVIRONMENTAL MATTERS.
(a) Each of the Company and the Company Subsidiaries
have complied in all material respects at all times with all applicable
Environmental Laws and their requirements. The Company and each of the Company
Subsidiaries has obtained all necessary Licenses and filed all required reports
and notifications pursuant to all Environmental Laws. All such Licenses are in
good standing, and each of the Company and the Company Subsidiaries has complied
at all times with all terms and conditions of such Licenses. Neither the Company
nor any of the Company Subsidiaries has received any notice or communications
from any Governmental Entity with respect to any violation of Environmental Law.
(b) No Environmental Claim has been filed by or
against the Company or any of the Company Subsidiaries, and neither the Company
nor any of the Company Subsidiaries has received any written notice of any
investigation, claim or review which has occurred or is pending or threatened
against it by any Governmental Entity with respect to any Environmental Laws.
Neither the Company nor any of the Company Subsidiaries owns, operates or leases
a treatment, storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, as amended, or under any other comparable
foreign, state or local Law. Neither the Company nor any of the Company
Subsidiaries has transported or arranged for the transport, treatment or
disposal of any Regulated Substances to any location.
-21-
(c) Neither the Company nor any of the Company
Subsidiaries has ever generated, manufactured, used, transported, treated,
stored, handled, disposed of, discharged, released, transferred, produced or
processed any Regulated Substance at, to, under or on any real property owned,
operated or leased by the Company or any of the Company Subsidiaries, or any
other location. No written or oral notification of a discharge or release of
Regulated Substances by the Company or any of the Company Subsidiaries has been
registered or filed by or on behalf of the Company or any of the Company
Subsidiaries, and no site or facility now or previously owned, operated or
leased by the Company or any of the Company Subsidiaries is listed on the United
States Environmental Protection Agency's National Priorities List of
Uncontrolled Hazardous Waste Sites or any similar list of sites requiring
investigation or clean-up.
(d) No Liens have arisen under or pursuant to
any Environmental Law on any site or facility now or previously owned, operated
or leased by the Company or any of the Company Subsidiaries, and, to the
knowledge of the Stockholder and the Company, no Governmental Entity has taken,
or is in the process of taking, any action that could subject any such site or
facility to such Liens. There are no conditions existing at any real property
ever owned, operated or leased by the Company or any of the Company Subsidiaries
that will require now or in the future remedial or corrective action, removal,
monitoring or closure pursuant to Environmental Law.
(e) Neither the Company nor any of the Company
Subsidiaries has contractually, or by operation of Law, assumed or succeeded to
any liabilities related to Environmental Laws of any predecessors of the Company
or the Company Subsidiaries.
4.23. BROKERS. No broker, finder or financial advisor or other
person is entitled to any brokerage fees, commissions, finders' fees or
financial advisory fees in connection with the transactions contemplated hereby
by reason of any action taken by the Stockholder, the Company or any of their
respective directors, officers, employees, representatives or agents.
4.24. CERTAIN AGREEMENTS. Neither the Company nor any Company
Subsidiary is a party to any: (a) agreement with any director, officer or other
employee of the Company or any Company Subsidiary, the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Company of the nature contemplated by this
Agreement; or (b) agreement or plan, any of the benefits of or rights under
which will be increased, or the vesting or payment of the benefits of or rights
under which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
4.25. ABSENCE OF CERTAIN COMMERCIAL PRACTICES. Neither the
Stockholder, the Company nor any Company Subsidiary, nor, to the knowledge of
the Stockholder and the Company, any director, officer, agent, employee or other
person acting on behalf of the Company or any Company Subsidiary, has: (i) given
or agreed to give any gift or similar benefit of more than nominal value to any
customer, supplier, or governmental employee or official or any other person who
is or may be in a position to help or hinder the Company or any Company
-22-
Subsidiary or assist the Company or any Company Subsidiary in connection with
any proposed transaction, which gift or similar benefit, if not given in the
past, might have materially and adversely affected the business or prospects of
the Company or any Company Subsidiary, or which, if not continued in the future,
might materially and adversely affect the business or prospects of the Company
or any Company Subsidiary; or (ii) used any corporate or other funds for
unlawful contributions, payments, gifts, or entertainment, or made any unlawful
contributions, payments or gifts, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act. Neither the Stockholder, the Company nor any Company Subsidiary,
nor, to the knowledge of the Stockholder and the Company, any director, officer,
agent, employee or other person acting on behalf of the Company or any Company
Subsidiary, has accepted or received any unlawful contributions, payments, gifts
or expenditures.
4.26. BANK ACCOUNTS. Section 4.26 of the Disclosure Schedule
sets forth an accurate list of each bank, trust company, savings institution or
other financial institution with which the Company has an account or safe
deposit box and the names and identification of all persons authorized to draw
thereon or to have access thereto, and sets forth the names of each person
holding powers of attorney or agency authority from the Company, as applicable,
and a summary of the terms thereof and the names of each person holding credit
cards in the name of the Company, with the credit cards being so held
identified.
4.27. CORPORATE NAMES. Section 4.27 of the Disclosure Schedule
sets forth a complete and accurate list of names used by the Company and each of
the Company Subsidiaries in addition to its corporate name.
4.28. NO CURRENT OPERATIONS. The Company and the Company
Subsidiaries have no current business operations. The Company and the Company
Subsidiaries have (i) abandoned (whether by foreclosure, liquidation or
otherwise) of all of their prior business operations and (ii) neither the
Company nor the Company Subsidiaries will have any liabilities or obligations
arising from prior business operations, nor the terms of foreclosure require
them to retain any liabilities of such prior business.
4.29. BOOKS AND RECORDS. The books of account, minute books,
stock record books and other records of the Company and the Company
Subsidiaries, all of which have been made available to CSA, are complete and
correct in all material respects and have been maintained in accordance with
sound business practices in all material respects.
4.30. LISTING AND MAINTENANCE REQUIREMENTS. The Company's
Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely
to have the effect of, terminating the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has never received
notice from the OTC Bulletin Board to the effect that the Company is not in
compliance with the listing or maintenance requirements of such trading market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
-23-
requirements. Following the consummation of the transaction, the Common Stock
will be eligible for continued trading on the OTC Bulletin Board.
4.31. MANIPULATION OF PRICE. Neither the Stockholder nor the
Company has, and to their knowledge, no one acting on its behalf has, taken,
directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company.
4.32. FULL DISCLOSURE. No representation or warranty, exhibit
or schedule furnished by or on behalf of the Company or any of the Company
Subsidiaries in this Agreement or any other Transaction Document contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading. None of the Stockholder, the Company or the Company
Subsidiaries has any knowledge of any facts pertaining to the Stockholder, the
Company or the Company Subsidiaries, or their business or assets that could have
a Material Adverse Effect and that have not been disclosed in this Agreement,
the schedules and exhibits hereto and the Transaction Documents, except for any
facts relating solely to general economic, business or political developments
affecting the economy generally.
5. REPRESENTATIONS AND WARRANTIES OF CSA. CSA hereby represents and
warrants to the Company that:
5.1 ORGANIZATION OF CSA. CSA is a Colorado Limited Liability
Company duly organized, validly existing and in good standing under the laws of
the State of Colorado and has all requisite corporate power and corporate
authority to enter into the Transaction Documents, to consummate the
transactions contemplated hereby and thereby, to own, lease and operate its
properties and to conduct its business.
5.2 AUTHORITY. The execution, delivery and performance by CSA
of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of CSA, including, without limitation, the approval
of the Manager of CSA. The Transaction Documents have been duly executed and
delivered by CSA and, assuming that the Transaction Documents constitute a valid
and binding obligation of the Stockholder and the Company, constitute a valid
and binding obligation of CSA. CSA is duly qualified or licensed to do business
as a limited liability company and is in good standing.
5.3 NO VIOLATION; CONSENTS AND APPROVALS. The execution and
delivery by CSA of the Transaction Documents does not, and the consummation of
the transactions contemplated hereby and thereby and compliance with the terms
hereof and thereof will not conflict with, or result in any violation of or
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, (a) the terms and conditions or provisions of the
articles of incorporation or by-laws of CSA, (b) any Laws applicable to CSA or
the property or assets of CSA, or (c) give rise to any right of termination,
cancellation or acceleration under, or result in the creation of any Lien upon
any of the properties of CSA under, any Contracts to which CSA is a party or by
which CSA or any of its assets may be bound, except in the case of clauses (b)
and (c), for such conflicts, violations or defaults as to which requisite
waivers or consents will have been obtained prior to the Closing or which,
-24-
individually or in the aggregate, would not have a Material Adverse Effect. No
Governmental Approval is required to be obtained or made by or with respect to
CSA or any CSA Subsidiary in connection with the execution and delivery of this
Agreement or the consummation by CSA of the transactions contemplated hereby,
except where the failure to obtain such Governmental Approval would not,
individually or in the aggregate, have an CSA Material Adverse Effect.
5.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares to be
received by CSA hereunder will be acquired for its own account, not as nominee
or agent, and not with a view to the resale or distribution of any part thereof
in violation of the 1933 Act, and CSA has no present intention of selling,
granting any participation in, or otherwise distributing the same in violation
of the 1933 Act without prejudice, however, to CSA's right at all times to sell
or otherwise dispose of all or any part of such Shares in compliance with
applicable federal and state securities laws. Nothing contained herein shall be
deemed a representation or warranty by CSA to hold the Shares for any period of
time. CSA is not a broker-dealer registered with the SEC under the 1934 Act or
an entity engaged in a business that would require it to be so registered.
5.5 RESTRICTED SECURITIES. CSA understands that the Shares are
characterized as "restricted securities" under the U.S. federal securities laws
inasmuch as they are being acquired from the Stockholder in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.
5.6 LEGENDS. It is understood that, except as provided below,
certificates evidencing the Shares may bear the following or any similar legend:
(a) "The securities represented hereby have not
been registered under the Securities Act of 1933, as amended (the "Act") and may
not be transferred unless (i) such securities have been registered for sale
pursuant to the Act, (ii) such securities may be sold pursuant to Rule 144(k),
or (iii) the Company has received an opinion of counsel reasonably satisfactory
to it that such transfer may lawfully be made without registration under the
Securities Act of 1933 or qualification under applicable state securities laws."
(b) If required by the authorities of any state
in connection with the issuance of sale of the Shares, the legend required by
such state authority.
-25-
6. COVENANTS RELATING TO CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 CONDUCT OF THE BUSINESS PENDING THE CLOSING.
(a) During the period from the date of this Agreement
and continuing until the Closing, each of the Stockholder and the Company
agrees, that neither the Stockholder nor the Company shall, and shall cause the
Company Subsidiaries not to, engage in any business whatsoever other than in
connection with the consummation of the transactions contemplated by this
Agreement.
(b) During the period from the date of this Agreement
and continuing until the Closing, each of the Stockholder and the Company agrees
as to itself and, with respect to the Company, the Company Subsidiaries, that
except as expressly contemplated or permitted by this Agreement, or to the
extent that the other party shall otherwise consent in writing:
(i) It shall not amend or propose to amend
its certificate of incorporation or by-laws or equivalent organizational
documents except as contemplated in this Agreement.
(ii) It shall not, nor in the case of the
Company shall it permit the Company Subsidiaries to, issue, deliver, sell,
redeem, acquire, authorize or propose to issue, deliver, sell, redeem, acquire
or authorize, any shares of its capital stock of any class or any securities
convertible into, or any rights, warrants or options to acquire, any such shares
or convertible securities or other ownership interest and, in the case of the
Stockholder, shall not sell or otherwise transfer the Shares, provided that the
Company shall be permitted to issue the shares of its Common Stock to be issued
to the stockholders of CSA.
(iii) It shall not, nor in the case of the
Company shall it permit any of the Company Subsidiaries to, nor shall it propose
to: (i) 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 (ii) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock.
(iv) Other than dispositions in the ordinary
course of business consistent with past practice which would not cause a
Material Adverse Effect, individually or in the aggregate, to it and its
subsidiaries, taken as a whole, it shall not, nor shall it permit any of its
subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of its assets, excluding lien foreclosures on assets by
creditors.
(v) It shall promptly advise the other party
hereto in writing of any change in the condition (financial or otherwise),
operations or properties, businesses or business prospects of such party or any
of its subsidiaries which would result in a Material Adverse Effect.
-26-
(vi) It shall not permit to occur any (1)
change in accounting principles, methods or practices, investment practices,
claims, payment and processing practices or policies regarding intercompany
transactions and (2) incurrence of Indebtedness or any commitment to incur
Indebtedness, any incurrence of a contingent liability, Contingent Obligation or
other liability of any type.
(vii) It shall not, and the Company shall
not permit any of the Company Subsidiaries to, take or agree or commit to take
any action, (i) that is reasonably likely to make any of its representations or
warranties hereunder inaccurate; or (ii) that is prohibited pursuant to the
provisions of this Article VI.
(viii) It shall obtain releases of any claim
whatsoever, including compensation claims, by all officers, directors and the
Estate of Xxxxxxx Xxxxx.
7. Additional Agreements.
7.1 ACCESS TO INFORMATION. From the date hereof until the
Closing or the earlier termination of this Agreement, each party shall give the
other party and its respective counsel, accountants, representatives and agents
full access, upon reasonable notice and during normal business hours, to such
party's facilities and the financial, legal, accounting and other
representatives of such party with knowledge of the business and the assets of
such party and, upon reasonable notice, shall be furnished all relevant
documents, records and other information concerning the business, finances and
properties of such party and its subsidiaries that the other party and its
respective counsel, accountants, representatives and agents, may reasonably
request. No investigation pursuant to this Section 7.1 shall affect or be deemed
to modify any of the representations or warranties hereunder or the condition to
the obligations of the parties to consummate the transactions contemplated
hereby; it being understood that the investigation will be made for the purposes
among others of the board of directors of each party determining in its good
faith reasonable business judgment the accuracy of the representations and
warranties of the other party. In the event of the termination of this
Agreement, each party, if so requested by the other party, will return or
destroy promptly every document furnished to it by or on behalf of the other
party in connection with the transactions contemplated hereby, whether so
obtained before or after the execution of this Agreement, and any copies thereof
(except for copies of documents publicly available) which may have been made,
and will use reasonable efforts to cause its representatives and any
representatives of financial institutions and investors and others to whom such
documents were furnished promptly to return or destroy such documents and any
copies thereof any of them may have made.
7.2 NO SHOP; ACQUISITION PROPOSALS. From the date hereof until
the Closing or the earlier termination of this Agreement, neither the
Stockholder nor the Company shall, nor shall they authorize or permit any of
their respective officers, directors or employees or Subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it to, solicit, initiate or encourage (including by
way of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may reasonably be
expected to lead to, any Takeover Proposal, or negotiate with respect to, agree
to or endorse any Takeover Proposal. The Stockholder and the Company shall
promptly advise CSA orally and in writing of any such inquiries or proposals and
-27-
shall also promptly advise CSA of any developments or changes regarding such
inquiries or proposals. The Stockholder and the Company shall immediately cease
and cause to be terminated any existing discussions or negotiations with any
persons (other than CSA) conducted heretofore with respect to any Takeover
Proposal. The Stockholder and the Company agree not to release (by waiver or
otherwise) any third party from the provisions of any confidentiality or
standstill agreement to which the Stockholder or the Company is a party.
7.3 LEGAL CONDITIONS TO CLOSING; REASONABLE EFFORTS. Each of
CSA, the Stockholder and the Company shall take all reasonable actions necessary
to comply promptly with all legal requirements which may be imposed on itself
with respect to the consummation of the transactions contemplated hereby and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their Subsidiaries
in connection with the consummation of the transactions contemplated hereby.
Each of CSA, the Stockholder and the Company will, and the Company will cause
the Company Subsidiaries to, take all reasonable actions necessary to obtain
(and will cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party, required to be obtained or made by CSA, the
Stockholder or the Company or any of the Company Subsidiaries in connection with
the Closing or the taking of any action contemplated thereby or by this
Agreement.
7.4 CERTAIN FILING. Each party shall cooperate with the other
in (a) determining whether any action by or in respect of, or filing with, any
governmental body, agency, official or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (b) seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers. Each party shall consult with the other in connection with
the foregoing and shall use all reasonable commercial efforts to take any steps
as may be necessary in order to obtain any consents, approvals, permits or
authorizations required in connection with the transactions contemplated hereby
..
7.5 PUBLIC ANNOUNCEMENTS AND FILINGS. Each party shall give
the other a reasonable opportunity to comment upon, and, unless disclosure is
required, in the opinion of counsel, by applicable law, approve (which approval
shall not be unreasonably withheld), all press releases or other public
communications of any sort relating to this Agreement or the transactions
contemplated hereby .
8. CONDITIONS TO CLOSING.
8.1 CONDITIONS TO CSA'S OBLIGATIONS. The obligation of CSA to
purchase the Shares at the Closing is subject to the fulfillment to CSA's
satisfaction, on or prior to the Closing Date, of the following conditions, any
of which may be waived by such Investor (as to itself only):
-28-
(a) The representations and warranties made by
the Stockholder and/or the Company in Section 4 hereof qualified as to
materiality shall be true and correct at all times prior to and on the Closing
Date, except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall be
true and correct as of such earlier date, and, the representations and
warranties made by the Company in Section 4 hereof not qualified as to
materiality shall be true and correct in all material respects at all times
prior to and on the Closing Date, except to the extent any such representation
or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as
of such earlier date. The Company shall have performed in all material respects
all obligations and covenants herein required to be performed by it on or prior
to the Closing Date.
(b) The Stockholder and the Company shall have
obtained any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale of the
Securities and the consummation of the other transactions contemplated by the
Transaction Documents, all of which shall be in full force and effect.
(c) Releases of liabilities shall have been exe-
cuted by the creditor/lenders of Company of debts as listed on Schedule 8.1(c).
Any real estate leases shall have been released as to the Company.
(d) No judgment, writ, order, injunction, award
or decree of or by any court, or judge, justice or magistrate, including any
bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted
by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated hereby, in the other Transaction Documents.
(e) The Stockholder and the Company shall have
delivered a Certificate, executed on behalf of the Stockholder and the Company
by its Chief Executive Officer or its Chief Financial Officer, respectively,
dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b), (c), (d), (h) and (i) of this Section 8.1.
(f) The Company shall have delivered a
Certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the resolutions adopted by the Board of Directors of
the Company approving the transactions contemplated by this Agreement and the
other Transaction Documents, certifying the current versions of the Articles of
Organization and Bylaws or other organizational documents of the Company and
certifying as to the signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the Company.
(g) CSA shall have completed its due diligence
review of the Company and such diligence review shall be satisfactory to CSA in
all respects, provided, however, that such due diligence review shall be
completed by CSA within five days after the date of this Agreement, unless the
inability to complete such due diligence review is the result of actions taken
-29-
or not taken by the Stockholder or the Company in response to requests for
information regarding the Company or the Stockholder reasonably requested by CSA
and, in such event, such five day period shall be tolled until such time as the
Stockholder or the Company reasonably responds to such request.
(h) No stop order or suspension of trading
shall have been imposed by the SEC or any other governmental or regulatory body
with respect to public trading in the Common Stock.
(i) All outstanding Indebtedness of the Company
shall have been fully paid and CSA shall have received evidence of such
repayment in form and substance reasonably satisfactory to CSA.
8.2 CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDER. The
Stockholder's obligation to sell the Shares at the Closing is subject to the
fulfillment to the satisfaction of the Stockholder on or prior to the Closing
Date of the following conditions, any of which may be waived by the Stockholder:
(a) The representations and warranties made
by CSA in Section 5 hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on and as of said
date. CSA shall have performed in all material respects all obligations and
covenants herein required to be performed by them on or prior to the Closing
Date.
(b) CSA shall have delivered the Purchase Price
to the Stockholder.
8.3 TERMINATION OF OBLIGATIONS TO EFFECT CLOSING; EFFECTS.
(a) The obligations of the Stockholder, on the
one hand, and CSA, on the other hand, to effect the Closing shall terminate as
follows:
(i) Upon the mutual written consent of the
Stockholder and CSA;
(ii) By the Stockholder if any of the
conditions set forth in Section 8.2 shall have become incapable of fulfillment,
and shall not have been waived by the Company;
(iii) By CSA if any of the conditions set
forth in Section 8.1 shall have become incapable of fulfillment, and shall not
have been waived by CSA; or
(iv) By either the Stockholder or CSA if the
Closing has not occurred on or prior to August 8, 2008 Closing Date");
provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
-30-
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party's seeking to
terminate its obligation to effect the Closing.
(b) Nothing in this Section 8.3 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents.
9. SURVIVAL AND INDEMNIFICATION.
9.1 SURVIVAL. The representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing of the
transactions contemplated by this Agreement for a period of one (1) year from
the Closing Date.
9.2 INDEMNIFICATION.
(a) To the extent permitted by law, the Stock-
holder shall indemnify and hold harmless CSA and its Affiliates and their
respective directors, officers, employees and agents from and against any and
all losses, claims, damages, liabilities and expenses (including without
limitation reasonable attorney fees and disbursements and other expenses
incurred in connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of enforcement thereof)
(collectively, "Losses") to which such Person may become subject as a result of
any breach of representation, warranty, covenant or agreement made by or to be
performed on the part of the Company under the Transaction Documents, and will
reimburse any such Person for all such amounts as they are incurred by such
Person.
(b) To the extent permitted by law, CSA shall
indemnify and hold harmless the Stockholder from and against any and all Losses
to which the Stockholder may become subject as a result of any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of CSA under the Transaction Documents, and will reimburse any such
Person for all such amounts as they are incurred by such Person.
9.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by any Person (the "Indemnified Person") of notice of any demand, claim
or circumstances which would or might give rise to a claim or the commencement
of any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 9.2, such Indemnified Person shall promptly notify
the indemnifying party (the "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person, and shall assume the
payment of all reasonable fees and expenses; PROVIDED, HOWEVER, that the failure
of any Indemnified Person so to notify the Indemnifying Party shall not relieve
the Indemnifying Party of its obligations hereunder except to the extent that
the Indemnifying Party is materially prejudiced by such failure to notify. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless: (i) the Indemnifying Party and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
-31-
or (ii) in the reasonable judgment of counsel to such Indemnified Person
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. The Indemnifying Party
shall not be liable for any settlement of any proceeding effected without its
written consent, which consent shall not be unreasonably withheld, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified Person
from and against any loss or liability (to the extent stated above) by reason of
such settlement or judgment. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, the
Indemnifying Party shall not effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability arising out of such proceeding.
9.4 LIMITATIONS. Notwithstanding the foregoing, the obligation
under this Agreement of an Indemnifying Party to indemnify any Indemnified Party
with respect to Losses shall not exceed the Purchase Price. The foregoing
limitation shall not apply, however, to (i) any breach of the representations or
warranties in Sections 4.1, 4.2, 4.5, 4.6, 4.18, 4.22, 4.23, 5.1 and 5.2, (ii)
any breach of representations or warranties that was made with an intent to
mislead or defraud or with reckless disregard for the accuracy thereof and (iii)
any breach of any covenant or agreement to be performed by a party hereunder.
10. MISCELLANEOUS.
10.1 SUCCESSORS AND ASSIGNS. This Agreement may not be
assigned by a party hereto without the prior written consent of the other party,
provided, however, that CSA may assign its rights and delegate its duties
hereunder in whole or in part to an Affiliate without the prior written consent
of the Company or the Stockholder provided, that no such assignment or
obligation shall affect the obligations of CSA hereunder. The provisions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties and to successors by operation
of law. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
10.2 COUNTERPARTS; FAXES. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This Agreement may
also be executed and transmitted via facsimile or by .pdf (portable document
format) via electronic mail, each of which shall be deemed an original.
10.3 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
-32-
10.4 NOTICES. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one Business Day after
delivery to such carrier. All notices shall be addressed to the party to be
notified at the address as follows, or at such other address as such party may
designate by ten days' advance written notice to the other party:
If to the Stockholder:
Xxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Fax: (000) 000-0000
With a copy to (which shall not constitute notice):
M. A. Xxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
If to CSA, to:
Xxxxx Xxxx
2000 Xxxxxxxxx, PMB 179
Xxxxxxxx, XX 00000
Fax: 000-000-0000
or such other address or telex or telecopy number as such party may hereafter
specify for the purpose by notice to the other party hereto.
10.5 EXPENSES. The parties hereto shall pay their own costs
and expenses in connection herewith.
10.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Stockholder, the Company
and CSA.
-33-
10.7 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
10.8 ENTIRE AGREEMENT. This Agreement, including the
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.
10.9 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of Colorado without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the courts of the State of Colorado located in
Jefferson County and the United States District Court for the District of
Colorado for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
[signature page follows]
-34-
IN WITNESS WHEREOF, the parties have executed this Agreement
or caused their duly authorized officers to execute this Agreement as of the
date first above written.
The Stockholder
/s/
---------------------------
Xxxxx Xxxxxxx
Qlinks America, Inc.
By:/s/
---------------------------
Name:
Title:
CS Acquisition IV, LLC
By:/s/
---------------------------
Name:
Title:
-35-
ADDENDUM #1
The following persons join in the Agreement to which this Addendum is
attached, on a limited basis, by agreeing to sell shares listed on Exhibit A
owned by each respective shareholder and agreeing to be bound by Sections 2,
4.1, 4.2, 4.3, 4.4, 8.1, 8.3, and 10.1 - 10.9, inclusive, of the Agreement.
The Xxxxxxx X. Xxxxx Estate
By: /s/
________________________
Targeted Shopping Solutions, Inc.
By: /s/
__________________________
EXHIBIT A
Consideration
The Xxxxxxx X. Xxxxx Estate 4,000,000 $ 40,000
(Due 10/01/08)
Xxxxx X. Xxxxxxx 2,500,000 $ 57,500
(Due 8/18/08 - $ 32,500
Due 9/03/08 - $ 25,000)
Targeted Shopping Solutions, Inc. 850,000 $ 8,500
(via exchange with First Regional Bank
FBO Xxxxx X Xxxxxxx XXX)
(Due 10/01/08)
Total
DISCLOSURE SCHEDULES
SCHEDULE 4.7
Subsidiaries
None
SCHEDULE 4.8
None
SCHEDULE 4.15(A)
Intellectual Property
None
SCHEDULE 4.16
Pending or Threatened Claims, Investigations, Proceedings, Suits, or Actions
None
SCHEDULE 4.19
Contracts and Commitments
a) - q), inclusive
None, except:
Transfer agent contract for services on
an ongoing basis.
(TranShare)
SCHEDULE 4.20
Insurance
None
SCHEDULE 4.26
Bank Accounts and Credit Cards
None
SCHEDULE 4.27
None
SCHEDULE 8.1(C)
Released Liabilities
The attached Schedule 8.1 identifies the relief of
all debt obligations of QLA.
