EXHIBIT 2.1
PURCHASE AGREEMENT
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PURCHASE AND EXCHANGE AGREEMENT
among
XXXXXX HOLDING COMPANY, INC.,
PROGRESSIVE LENDING, LLC
and
XXXXXXX X. XXXXXX
DATED September 30, 2003
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS..........................................................1
1.1 "ACCOUNTS"..........................................................1
1.2 "ADDITIONAL BUYER SHARES"...........................................1
1.3 "AFFILIATE".........................................................1
1.4 "AGREEMENT".........................................................1
1.5 "BALANCE SHEET".....................................................1
1.6 "BUYER".............................................................1
1.7 "BUYER INDEMNIFIED PARTIES".........................................1
1.8 "CLAIM".............................................................1
1.9 "CLAIM NOTICE"......................................................1
1.10 "CLOSING"...........................................................1
1.11 "CLOSING BALANCE SHEET".............................................1
1.12 "CLOSING DATE"......................................................1
1.13 "CLOSING TANGIBLE NET WORTH"........................................2
1.14 "COBRA".............................................................2
1.15 "CODE" 2
1.16 "COMMON STOCK"......................................................2
1.17 "COMPANY"...........................................................2
1.18 "COMPETITIVE BUSINESS"..............................................2
1.19 "DISPUTE NOTICE"....................................................2
1.20 "DISCLOSURE SCHEDULES"..............................................2
1.21 "DOL" 2
1.22 "EBT" 2
1.23 "EMPLOYEE BENEFIT PLAN".............................................2
1.24 "ENCUMBRANCE".......................................................2
1.25 "ERISA".............................................................2
1.26 "ERISA AFFILIATE"...................................................2
1.27 "FINAL NET WORTH"...................................................2
1.28 "FINANCIAL STATEMENTS"..............................................2
1.29 "GAAP" 2............................................................2
1.30 "HIPAA".............................................................3
1.31 "INDEMNIFIED PARTIES"...............................................3
1.32 "INDEMNIFYING PARTIES"..............................................3
1.33 "INTELLECTUAL PROPERTY".............................................3
1.34 "IRS" 3
1.35 "KNOWLEDGE" OR "KNOWLEDGE"..........................................3
1.36 "LEASED PROPERTY"...................................................3
1.37 "LOSSES"............................................................3
1.38 "MARKET PRICE"......................................................3
1.39 "MATERIAL" OR "MATERIAL"............................................3
1.40 "MATERIAL ADVERSE EFFECT" OR "MATERIAL ADVERSE EFFECT"..............3
1.41 "MEASUREMENT PERIOD"................................................3
1.42 "MEMBERSHIP INTERESTS"..............................................3
1.43 "NOTES".............................................................3
1.44 "ORDINARY COURSE OF BUSINESS" OR "ORDINARY COURSE OF BUSINESS"......3
1.45 "PERMITS"...........................................................3
1.46 "PERSON"............................................................3
1.47 "PERSONAL PROPERTY".................................................3
1.48 "PLEDGE AGREEMENT"..................................................3
1.49 "PURCHASE PRICE"....................................................3
1.50 "SECURITIES ACT"....................................................3
1.51 "SECURITY AGREEMENT"................................................4
1.52 "SELLER INDEMNIFIED PARTIES"........................................4
1.53 "SELLER"............................................................4
1.54 "TAX RETURNS".......................................................4
1.55 "TAXES".............................................................4
1.56 "THIRD PARTY DEBT"..................................................4
1.57 "TRANSACTION DOCUMENTS".............................................4
1.58 "THIRD PARTY CLAIMS"................................................4
ARTICLE 2 PURCHASE AND SALE OF SHARES..........................................4
2.1 PURCHASE AND SALE OF MEMBERSHIP INTERESTS...........................4
2.2 CONSIDERATION FOR MEMBERSHIP INTERESTS..............................4
2.3 CLOSING.............................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND THE COMPANY....7
3.1 SELLER MATTERS......................................................7
3.2 COMPANY ORGANIZATION; GOOD STANDING; CORPORATE AUTHORITY;
ENFORCEABILITY......................................................8
3.3 CAPITALIZATION......................................................9
3.4 SUBSIDIARIES AND AFFILIATES.........................................9
3.5 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS......................9
3.6 FINANCIAL STATEMENTS; OBLIGATIONS...................................9
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS...............................10
3.8 TAXES..............................................................12
3.9 PROPERTY...........................................................13
3.10 CONTRACTS..........................................................14
3.11 CUSTOMERS..........................................................15
3.12 CLAIMS AND LEGAL PROCEEDINGS.......................................15
3.13 LABOR MATTERS......................................................15
3.14 EMPLOYEE BENEFIT PLANS.............................................15
3.15 PERSONNEL..........................................................17
3.16 INTELLECTUAL PROPERTY..............................................17
3.17 ACCOUNTS RECEIVABLE................................................17
3.18 CORPORATE BOOKS AND RECORDS........................................17
3.19 LICENSES, PERMITS, AUTHORIZATIONS, ETC.............................18
3.20 COMPLIANCE WITH LAWS...............................................18
3.21 INSURANCE..........................................................18
3.22 BROKERS OR FINDERS.................................................18
3.23 GOVERNMENT CONTRACTS...............................................18
3.24 ABSENCE OF QUESTIONABLE PAYMENTS...................................19
3.25 BANK ACCOUNTS......................................................19
3.26 PREVIOUS CONDUCT OF BUSINESS; INSIDER INTERESTS....................19
3.27 FULL DISCLOSURE....................................................19
3.28 TANGIBLE NET WORTH.................................................19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER.............................19
4.1 ORGANIZATION.......................................................20
4.2 ENFORCEABILITY.....................................................20
4.3 NO APPROVALS OR NOTICES REQUIRED; NO CONFLICTS WITH INSTRUMENTS....20
4.4 CLAIMS AND LEGAL PROCEEDINGS.......................................20
4.5 BROKERS OR FINDERS.................................................20
4.6 TAX CONSEQUENCES...................................................20
4.7 FULL DISCLOSURE....................................................20
ARTICLE 5 COVENANTS...........................................................20
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING.............20
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.............................22
5.3 NO ALTERNATIVE TRANSACTIONS........................................22
5.4 NOTIFICATION OF CERTAIN MATTERS....................................22
5.5 FURTHER ACTION.....................................................22
5.6 PUBLICITY..........................................................23
5.7 COVENANTS NOT TO COMPETE; CONFIDENTIALITY..........................23
5.8 TAX MATTERS........................................................24
5.9 CLOSING DEBTS AND OBLIGATIONS......................................25
5.10 EMPLOYEE BENEFIT PLANS.............................................25
5.11 OPERATION OF COMPANY...............................................25
5.12 CLOSING BALANCE SHEET..............................................26
5.13 INFUSION OF CAPITAL................................................27
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER........................28
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.........................28
6.2 [RESERVED].........................................................28
6.3 PERFORMANCE OF AGREEMENTS..........................................28
6.4 OPINION OF COUNSEL FOR THE COMPANY AND THE SELLER..................28
6.5 CONSENTS TO SALE OF MEMBERSHIP INTERESTS...........................28
6.6 SELLER'S CERTIFICATE...............................................28
6.7 APPROVALS AND CONSENTS.............................................28
6.8 PROCEEDINGS AND DOCUMENTS; MANAGING MEMBER'S CERTIFICATE...........28
6.9 COMPLIANCE WITH LAWS...............................................29
6.10 LEGAL PROCEEDINGS..................................................29
6.11 DELIVERY OF CERTIFICATES...........................................29
6.12 DUE DILIGENCE REVIEW...............................................29
6.13 NO MATERIAL ADVERSE CHANGE.........................................29
6.14 RESIGNATIONS.......................................................29
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLER...29
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.........................29
7.2 PERFORMANCE OF AGREEMENTS..........................................29
7.3 APPROVALS AND CONSENTS.............................................29
7.4 COMPLIANCE WITH LAWS...............................................29
7.5 LEGAL PROCEEDINGS..................................................29
7.6 PURCHASE PRICE.....................................................30
7.7 REGISTRATION RIGHTS AND VOTING AGREEMENT...........................30
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...................................30
8.1 TERMINATION........................................................30
8.2 EFFECT OF TERMINATION..............................................30
8.3 EXPENSES AND TERMINATION FEE.......................................30
8.4 AMENDMENT..........................................................31
8.5 WAIVER 31
ARTICLE 9 SURVIVAL AND INDEMNIFICATION........................................31
9.1 SURVIVAL...........................................................31
9.2 INDEMNIFICATION....................................................31
9.3 PROCEDURE FOR INDEMNIFICATION......................................32
9.4 REMEDY.............................................................33
9.5 INVESTIGATIONS; WAIVERS............................................33
ARTICLE 10 GENERAL............................................................33
10.1 EXPENSES...........................................................33
10.2 SPECIFIC ENFORCEMENT...............................................33
10.3 CONSEQUENTIAL DAMAGES..............................................33
10.4 ASSIGNMENT.........................................................34
10.5 NOTICES............................................................34
10.6 GOVERNING LAW; ARBITRATION; JURISDICTION VENUE.....................34
10.7 SUCCESSORS AND ASSIGNS.............................................35
10.8 SEVERABILITY.......................................................35
10.9 ENTIRE AGREEMENT; COUNTERPARTS.....................................35
EXHIBITS:
EXHIBIT A - FORM OF ESCROW AGREEMENT - DEPOSIT
EXHIBIT B - FORM OF PROMISSORY NOTE
EXHIBIT C - SECURITY AGREEMENT
EXHIBIT D - PLEDGE AGREEMENT
EXHIBIT E - ESCROW AGREEMENT - SHARES
EXHIBIT F - OPINION OF THE SELLER'S COUNSEL
EXHIBIT G - THE SELLER'S CERTIFICATE
EXHIBIT H - COMPANY SECRETARY'S CERTIFICATE
EXHIBIT I - REGISTRATION RIGHTS AND VOTING AGREEMENT
PURCHASE AND EXCHANGE AGREEMENT
This Purchase and Exchange Agreement (this "Agreement") is dated as of
September 30, 2003, among Xxxxxx Holding Company, Inc., a Delaware corporation
("Buyer"), Progressive Lending, LLC, a Washington limited liability company (the
"Company") and Xxxxxxx X. Xxxxxx, an individual (the "Seller").
RECITALS
A. The Seller owns all of the membership interests of the Company set
forth opposite his name on Schedule 1.46 attached hereto (collectively, the
"Membership Interests"), which Membership Interests constitute all of the
outstanding ownership interests of the Company, and desire and intend to sell
the Membership Interests to Buyer at the price and on the terms and subject to
the conditions set forth below.
B. Buyer desires and intends to purchase the Membership Interests from
the Seller at the price and on the terms and subject to the conditions set forth
below.
C. The Company joins in this Agreement for the purposes hereinafter set
forth.
AGREEMENT
In consideration of the terms hereof, the parties agree as follows:
DEFINITIONS
"Accounts". As defined in Section 3.17.
"Additional Buyer Shares". As defined in Section 2.2(e).
"Affiliate". Any person who directly, or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the person specified. For purposes of this definition, "person" means any
individual, firm, corporation, constituent members of a partnership, constituent
members of a limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, governmental authority or other
entity of any kind, and includes any successor (by merger or otherwise) of such
entity.
"Agreement". As defined in the first paragraph of this agreement.
"Balance Sheet". The balance sheet of the Company as of June 30, 2003.
"Buyer". As defined in the first paragraph of this Agreement.
"Buyer Indemnified Parties". As defined in Section 9.2.1.
"Claim". As defined in Section 9.2.1(c).
"Claim Notice". As defined in Section 9.3.1.
"Closing". As defined in Section 2.3.
"Closing Balance Sheet". The balance sheet of the Company as of the
close of business on the Closing Date (but excluding liabilities not being
transferred to Buyer in connection with the transactions contemplated hereby),
as determined pursuant to the terms and conditions of Section 5.13.
"Closing Date". The date, time and place of Closing as specified in
Section 2.3.
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"Closing Tangible Net Worth". The net worth of the Company as set forth
on the Closing Balance Sheet prior to any revisions thereto pursuant to Section
5.13. The calculation of "Closing Tangible Net Worth" will assign no value to
employee, management or owner notes or receivables or goodwill.
"COBRA". The health care continuation provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended.
"Code". As defined in Section 3.7.
"Common Stock". As defined in Section 3.3(a).
"Company". As defined in the first paragraph of this Agreement.
"Competitive Business". As defined in Section 5.7.1.
"Dispute Notice". As defined in Section 9.3.2.
"Disclosure Schedules". The Disclosure Schedules attached and made a
part hereof and which constitute in their entirety a representation and warranty
under Article 3.
"DOL". The United States Department of Labor.
"EBT" shall be defined as earnings before income taxes of the Company
as determined in accordance with GAAP plus the amount of any additional costs
imposed on the Company by Buyer in excess of the historical cost for such matter
(such as the annual audit).
"Employee Benefit Plan". Any retirement, pension, profit sharing,
deferred compensation, stock bonus, savings, bonus, incentive, cafeteria,
medical, dental, vision, hospitalization, life insurance, accidental death and
dismemberment, medical expense reimbursement, dependent care assistance, tuition
reimbursement, disability, sick pay, holiday, vacation, severance, change of
control, stock purchase, stock option, restricted stock, phantom stock, stock
appreciation rights, fringe benefit or other employee benefit plan, fund,
policy, program, contract, arrangement or payroll practice of any kind
(including any "employee benefit plan," as defined in Section 3(3) of ERISA) or
any employment, consulting or personal services contract, whether written or
oral, qualified or nonqualified, funded or unfunded, or domestic or foreign, (a)
sponsored, maintained or contributed to by the Company or to which the Company
is a party, (b) covering or benefiting any current or former officer, employee,
agent, director or independent contractor of the Company (or any dependent or
beneficiary of any such individual), or (c) with respect to which the Company
has (or could have) any obligation or liability.
"Encumbrance". Any lien, mortgage, deed of trust, pledge, security
interest, charge or other adverse claim or interest of any kind.
"ERISA". The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate". Any corporation, partnership, limited liability
company, sole proprietorship, trade, business or other Person that, together
with the Company, is treated as a single employer under Section 414(b), (c), (m)
or (o) of the Code.
"Final Net Worth". The net worth of the Company (not including
liabilities not being transferred to Buyer in connection with the transactions
contemplated hereby) determined as of the Closing Date pursuant to the terms and
conditions of Section 5.13.
"Financial Statements". As defined in Section 3.6.
"GAAP". Generally accepted accounting principles in the United States.
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"HIPAA". The Health Insurance Portability and Accountability Act of
1997, as amended.
"Indemnified Parties". Buyer Indemnified Parties or Seller Indemnified
Parties, as the case may be, claiming to be entitled to indemnification pursuant
to Section 9.2.
"Indemnifying Parties". The party hereto claimed to owe a duty of
indemnification pursuant to Section 9.2.
"Intellectual Property". As defined in Section 3.16.
"IRS". The United States Internal Revenue Service.
"Knowledge" or "knowledge". A party will be deemed to have knowledge of
a particular fact or other matter if any individual who is serving, or who has
at any time served, in the capacity of director, officer, manager, member,
partner, or trustee of such Person (or in any other similar capacity) is, or at
any time was, actually aware of such fact or other matter, or would have become
aware of such fact or matter after engaging in a reasonable inquiry and
investigation.
"Leased Property". As defined in Section 3.9(a).
"Losses". As defined in Section 9.2.1.
"Market Price". As defined in Section 2.2(e).
"Material" or "material". Material individually or in the aggregate.
"Material Adverse Effect" or "material adverse effect". In connection
with any party, means any event, change, or effect that is materially adverse,
individually or in the aggregate, to the condition (financial or otherwise),
property, assets, liabilities, revenues, income, business, operations, results
of operations, or prospects of such party, taken as a whole.
"Measurement Period". As defined in Section 2.2(b).
"Membership Interests". As defined in Recital A of this Agreement.
"Note". As defined in Section 2.2.
"Ordinary Course of Business" or "ordinary course of business". An
action taken by a Person will be deemed to have been in the ordinary course of
business only if such action is consistent with past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person; and such action does not require to be authorized by the board of
directors of such Person and does not require any other separate or special
authorization of any nature.
"Permits". As defined in Section 3.20.
"Person". Any person, corporation, partnership, limited liability
company, joint venture, association, organization, other entity or governmental
or regulatory authority.
"Personal Property". As defined in Section 3.9(b).
"Pledge Agreement". As defined in Section 2.2(b).
"Purchase Price". The aggregate purchase price for the Membership
Interests, as defined in Section 2.2.
"Securities Act". Means the Securities Act of 1933, as amended.
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"Security Agreement". As defined in Section 2.2(b).
"Seller Indemnified Parties". As defined in Section 9.2.2.
"Seller". As defined in the first paragraph of this Agreement.
"Tax Returns". As defined in Section 3.8(b).
"Taxes". As defined in Section 3.8(a).
"Third Party Debt". All amounts owed by the Company as of the Closing
Date under any promissory note, loan, line of credit, interest-bearing
obligation, or capitalized leases. Third Party Debt also includes any debt
obligation of the Seller or his Affiliates for which the Company is liable,
whether direct or contingent, as a co-debtor, guarantor, co-signer, endorser, or
for which the Membership Interests or any assets of Company are pledged as
collateral.
"Transaction Documents". This Agreement and each of the agreements,
certificates, instruments, and documents executed or delivered pursuant to the
terms of this Agreement.
"Third Party Claims". As defined in Section 9.3.3.
PURCHASE AND SALE OF SHARES
Purchase and Sale of Membership Interests
. On the terms and subject to the conditions of this Agreement, Buyer
agrees to purchase the Membership Interests from the Seller, and the Seller
agrees to sell the Membership Interests to Buyer.
Consideration for Membership Interests. The aggregate purchase price
for the Membership Interests will be $1,500,000, subject to adjustment pursuant
to this Section 2.2 (the "Purchase Price"). The Purchase Price will be payable
as follows:
Pursuant to the terms of an escrow agreement by and among
Buyer, Seller and Xxxxxxx, Xxxx Xxxxxxxx & XxXxxxxx, X.X., as escrow agent (the
"Escrow Agent"), dated September 3, 2003 (the "Escrow Agreement - Deposit"),
Buyer deposited $30,000 into an account with the Escrow Agent ($30,000 plus any
and all interest, dividends or earnings thereon shall be collectively referred
to as the "Deposit")
An aggregate of $500,000 less the Deposit will be paid at
Closing in immediately available funds, paid to the Seller.
The delivery of a promissory note payable to the Seller, in the amount of
$500,000 which will be substantially in the form of Exhibit B attached to this
Agreement (the "Note"). The Note shall bear interest at a rate of 6% per annum
and be amortized over 48 months with equal payments of principal and interest
due (the "Note Payments"). Buyer shall have the option to defer a certain
portion of the Note Payments in the event EBT is less than $125,000 per fiscal
quarter during the first two years following Closing ("Target EBT"). The EBT of
the Company will be measured monthly during the first quarter following the
Closing and quarterly thereafter to determine any potential deferral. The Note
Payments may be deferred by a pro rated amount with the numerator being the
actual EBT for the measurement period (i.e., month or quarter) and the
denominator being the Target EBT for such period.
4
Any deferred portion of the Note Payments shall be paid in the next
succeeding quarter to the extent the Company exceeds the Target EBT during such
a period and can make up the shortfall from the immediately preceding quarter.
Following the second anniversary of the Closing Date, Buyer will calculate
the EBT of the Company during the Measurement Period, as that term is defined
herein. In the event there is no Purchase Price Reduction, as defined in
2.2(e)(ii) hereof, any amounts deferred during such two year period shall be
paid to Seller within 30 days following completion of the financial statements
for the Measurement Period but in no event later than 75 days following the
second anniversary of the Closing Date.
Any deferred portion not repaid pursuant to (ii) or (iii) above shall be
additional payments due in the months following the fourth anniversary of the
date of this Agreement and the Note in accordance with the provisions of the
Note.
Payment of the Note will be secured by a security interest in the assets of
the Company pursuant to the terms of a Security Agreement, substantially in the
form of Exhibit C hereto (the "Security Agreement") and a pledge of all of the
issued and outstanding membership interests of the Company pursuant to the terms
of a Pledge Agreement substantially in the form of Exhibit D hereto (the "Pledge
Agreement").
Shares of the common stock, par value $.0001 per share, of Buyer (the
"Buyer Shares"), having a value of $500,000, will be issued to the Seller. The
number of Buyer Shares to be issued to the Seller at the Closing shall be
calculated by dividing (i) 500,000 by (ii) the weighted average trading price
(the "Issue Market Price") of Buyer Shares during the ten (10) days in which
shares of Buyer were traded immediately prior to the Closing.
Buyer shall pay to Seller as additional purchase price an amount equal to
the difference between the Loans Held for Resale and outstanding liability,
including any accrued interest, up to the Closing Date on the Company's
warehouse credit facilities as of the Closing Date.
Buyer Shares and any and all Additional Buyer Shares, as that term is
defined herein, shall be held in escrow pursuant to the terms of an escrow
agreement substantially in the form of Exhibit E (the "Escrow Agreement -
Shares") by Allegro Escrow Services, or such other escrow agent as acceptable to
the parties hereto (the "Escrow Shares"), until following completion and
agreement on the financial statements for the two years on the second
anniversary of the Closing Date (the "Measurement Period"). In the event the EBT
of the Company during the Measurement Period is less than $1,000,000 then some
or all of the Escrow Shares are subject to transfer back to Buyer.
In the event that EBT during the Measurement Period is below $1,000,000
then a Purchase Price reduction will occur based on $1,000,000 minus the actual
EBT of the Company during the Measurement Period multiplied by three (3) (the
"Purchase Price Reduction"). In no event shall the Purchase Price Reduction be
greater than $750,000.
The Purchase Price Reduction will be prorated between Escrow Shares and the
principal amount outstanding under the Note. For purposes of this calculation
the value of the Buyer Shares shall remain constant at $500,000. The principal
amount of the Promissory Note will be reduced by an amount equal to the Purchase
Price Reduction times a fraction the numerator of which is the principal
outstanding on the Note on the Second Anniversary of the Closing Date and the
denominator being the sum of the numerator plus $500,000 (the "Note Reduction").
Following the Purchase Price Reduction the Note shall be reissued and
reamoritized over the remaining term of the Note. In the event that the Note
Reduction is greater than the remaining principal due under the Note, the Note
will be cancelled and marked paid in full and the remaining Purchase Price
Reduction will be applied against the Escrow Shares. Under no circumstance will
the Seller have to return a portion or all of the cash purchase price paid at
Closing as a result of a Purchase Price Reduction. The number of Escrow Shares
that shall be returned to Buyer shall equal the remaining Purchase Price
Reduction (but in no event less than 50% of the Purchase Price Reduction)
divided by the average issue price for the Escrow Shares.
5
Within forty-five (45) days following the end of the Measurement Period,
Buyer shall provide the Seller with financial statements for the Company for the
Measurement Period ("Measurement Period Financial Statements"). The Measurement
Period Financial Statements shall be produced in the same format and level of
detail as the internally generated financial statements for the Company for the
period after the Closing. If the EBT of the Company for the Measurement Period
is less than $1,000,000 in the aggregate, then Buyer shall simultaneously
deliver to the Seller a calculation of the Purchase Price Reduction which will
include the number of Escrow Shares to be returned to Buyer and the amount by
which the Note shall be reduced (the "Escrow Share and Note Calculation"). The
maximum amount of any Purchase Price Reduction as set forth in the Escrow Share
and Note Calculation shall be $750,000.
The Seller shall have ten (10) business days following receipt of the
Measurement Period Financial Statements and the Escrow Share and Note
Calculation to deliver a notice to Buyer objecting to either calculation (an
"Objection Notice"). The Objection Notice shall set forth in detail the Seller's
grounds for objection. If an Objection Notice is not received by Buyer within
such ten (10) day period, the Escrow Share and Note Calculation shall be deemed
to have been agreed to by the Seller and the Escrow Agent shall be instructed to
deliver instructions to the transfer agent for Buyer to cancel the
certificate(s) representing the Escrow Shares and, if applicable, issue a new
certificate to Escrow Agent on behalf of the Seller in accordance with the
Escrow Share and Note Calculation. The Escrow Share and Note Calculation shall
be rounded to the nearest whole share.
If an Objection Notice is received within such ten (10) day period, either
Buyer or the Seller may submit the issues to binding arbitration in accordance
with Section 10.6 hereto at any time following thirty (30) days after receipt by
Buyer of the Objection Notice. No distribution of the Escrow Shares shall be
made by the Escrow Agent unless such distribution is made in accordance with (A)
a written notice executed by Buyer and the Seller instructing the Escrow Agent
as to the distribution of the Escrow Shares, or (B) a final decision of an
arbitrator pursuant to Section 10.6 hereto, or (C) a final non-appealable order
of a court of competent jurisdiction. Any decision of an arbitrator or final
non-appealable court order referred to in (B) or (C) above, shall be accompanied
by an opinion of counsel for the presenting party, satisfactory to the Escrow
Agent, to the effect that said decision of the arbitrator or court order, as the
case may be, is final and enforceable and is not subject to further appeal.
If Buyer issues additional shares of its common stock through an
unregistered private placement of securities during the Measurement Period and
the issuance price for the Buyer Shares issued at Closing is greater than the
issuance price in such placement, then Buyer will issue additional shares to
Seller within 30 days following the closing of such private placement in an
amount equal to the difference of (A) the number of Buyer Shares issued at
Closing minus (B) the number of Buyer Shares issued at Closing times the
quotient of the issuance price of such private placement divided by the issuance
price of the Buyer Shares at Closing ("Placement Additional Shares"). This
additional issuance shall not be applicable to any single private placement of
less than $75,000 in common stock of Buyer ("Individual Exemption") until the
aggregate of Individual Exemptions exceeds $250,000.
In the event the closing price of a Buyer Share on the two year anniversary
of the Closing (or the next trading day thereafter if such day is not a trading
day) has declined below the Issue Market Price, Buyer will issue an additional
number of Shares (the "Price Additional Shares" and with Placement Additional
Shares, collectively the "Additional Buyer Shares") to the Seller such that,
when combined with the original Buyer Shares issued at the Closing, the total
shares issued to the Seller as a result of the transactions contemplated by this
Agreement have a market value of $500,000 as at the second anniversary of the
Closing Date, subject to any Purchase Price Adjustment required hereunder.
Notwithstanding the foregoing, the number of Price Additional Buyer Shares shall
in no event exceed 20% of the original number of Buyer Shares issued at Closing.
Buyer shall grant Seller certain registration rights pursuant to the terms
of the Registration Rights and Voting Agreement attached hereto as Exhibit ___
(the "Voting Agreement"). In the event Seller is not offered the opportunity to
register the Buyer Shares during the Measurement Period, Seller shall have the
right but not the obligation to compel Buyer to repurchase the Buyer Shares and
Additional Shares pursuant to the terms of the Voting Agreement.
6
Closing. The closing of the transactions contemplated herein (the
"Closing") will occur on November 13, 2003, and will be held at the offices of
Buyer at 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx, or such other
time and date as Buyer, the Company, and the Seller will agree (the "Closing
Date"). At the Closing, each of Buyer, the Company and the Seller will take all
such action and deliver all such funds, documents, instruments, certificates and
other items as may be required, under this Agreement or otherwise, in order to
perform or fulfill all covenants, conditions and agreements on its part to be
performed or fulfilled at or before the Closing Date and to cause all conditions
precedent to the other parties' obligations under this Agreement to be satisfied
in full.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
AND THE COMPANY
To induce Buyer to enter into and perform this Agreement, and except as
otherwise set forth in the Disclosure Schedules, which exceptions will
specifically identify the paragraph or paragraphs of this Article 3 to which
such exceptions relate, and which will constitute in its entirety a
representation and warranty under this Article 3, the Company and the Seller,
jointly and severally, represent and warrant to Buyer as of the date of this
Agreement and as of the Closing as follows (which representations and warranties
will survive the Closing as provided in Article 9):
Seller Matters.
Residency. The Seller is a resident of the state of Arizona
and has the legal capacity to own his Membership Interests and has the legal
capacity to enter into, execute, deliver and perform this Agreement and to carry
out the transactions contemplated hereby.
Good Title. The Seller owns, beneficially and of record, 100%
of the Membership Interests which represents all of the issued and outstanding
equity of the Company. Such Membership Interests are owned free and clear of any
Encumbrance, restriction on sale, transfer or voting (other than restrictions
imposed by applicable securities laws), preemptive right, option or other right
to purchase and upon the consummation of the sale of such Membership Interests
as contemplated hereby, Buyer will have good title to such Membership Interests,
free and clear of any Encumbrance, restriction on sale, transfer or voting
(other than restrictions imposed by applicable securities laws), preemptive
right, option or other right to purchase.
Authority. To the extent that approvals for all license
transfers have been secured, the Seller has all requisite power, right, and
authority to enter into this Agreement and the other Transaction Documents to
which he is a party, to consummate the transactions contemplated hereby and
thereby, and to sell and transfer such Membership Interests without the consent
or approval of any other Person. All actions on the part of the Seller necessary
for the authorization, execution, delivery and performance of this Agreement and
the other Transaction Documents, the consummation of the transactions
contemplated hereby and thereby, and the performance of the Seller's obligations
under this Agreement and the other Transaction Documents have been taken or will
be taken prior to the Closing.
Enforceability. This Agreement has been, and the other
Transaction Documents to which the Seller is a party will be duly executed and
delivered by the Seller, and this Agreement is, and each of the other
Transaction Documents to which the Seller is a party will be, the legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms.
No Approvals or Notices Required; No Conflicts. The execution,
delivery and performance of this Agreement and the other Transaction Documents
by the Seller, and the consummation of the transactions contemplated hereby and
thereby, will not (a) constitute a violation (with or without the giving of
notice or lapse of time, or both) of any provision of any law or any judgment,
decree, order, regulation or rule of any court, agency or other governmental
authority applicable to the Seller, (b) require any consent, approval or
authorization of, or declaration, filing or registration with, any Person other
than compliance with applicable securities laws, (c) result in a default (with
or without the giving of notice or lapse of time, or both) under, acceleration
or termination of, or the creation in any party of the right to accelerate,
terminate, modify or cancel, any agreement, lease, note or other restriction,
encumbrance, obligation or liability to which the Seller is a party or by which
the Seller is bound or to which any assets of the Seller are subject, or (d)
result in the creation of any Encumbrance upon the assets of the Seller, or upon
any Membership Interests or other securities or equity interests of the Company.
7
Purchase for Own Account. Buyer Shares to be issued to the
Seller pursuant to this Agreement will be acquired for investment for the
Seller's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Securities Act,
and the Seller has no present intention of selling, granting any participation
in, or otherwise distributing the same.
Disclosure of Information. The Seller has received or to
Seller's knowledge has had full access to all the information that he considers
necessary or appropriate to make an informed investment decision with respect to
Buyer Shares to be issued to the Seller under this Agreement. The Seller further
has had an opportunity to ask questions and receive answers from Buyer regarding
the terms and conditions of the offering of Buyer Shares pursuant to this
Agreement and to obtain additional information (to the extent Buyer possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Seller or to which the
Seller had access.
Investment Experience. The Seller understands that the
acquisition of Buyer Shares pursuant to this Agreement involves substantial
risk. The Seller acknowledges that he can bear the economic risk of his
investment in Buyer Shares, including the ability to withstand a complete loss
of his investment, and has such knowledge and experience in financial or
business matters that Seller is capable of evaluating the merits and risks of
this investment in Buyer Shares and protecting his own interests in connection
with this investment. To the Seller's knowledge after consultation with his
counsel, the Seller is an "accredited investor" as such term is defined under
Section 501(a) of Regulation D promulgated under the Securities Act.
Restricted Securities. The Seller acknowledges that Buyer
Shares are characterized as "restricted securities" under the Securities Act
inasmuch as they are being acquired from Buyer in a transaction not involving a
public offering and that under the Securities Act and applicable regulations
thereunder such securities may be resold without registration under the
Securities Act only in certain limited circumstances. The Seller understands
that Buyer is under no obligation to register the offer and sale of any of Buyer
Shares issued hereunder and understands that Buyer has no present intention of
registering the offer and sale of such Buyer Shares. The Seller also understands
that there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such exemption may
not allow the Seller to transfer all or any portion of Buyer Shares under the
circumstances, in the amounts or at the times the Seller might propose.
Legend. The Seller acknowledges and understands that the
certificates evidencing Buyer Shares issued pursuant to this Agreement, will
bear a legend substantially similar to the legend set forth below:
THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
Company Organization; Good Standing; Corporate Authority;
Enforceability. The Company is a limited liability company organized under the
laws of the State of Washington and is qualified to do business, and is in good
standing in the states required due to (a) the ownership or lease of real or
personal property for use in the operation of the Company's business or (b) the
nature of the business conducted by the Company, except where the failure to be
so qualified or in good standing would not have a material adverse effect on the
Company. The Company has all requisite power, right and authority to own,
operate and lease its properties and assets, to carry on its business as now
conducted and as proposed to Buyer by the Company to be conducted and in all
states where the Company holds a license, to execute, deliver and perform its
obligations under this Agreement and the other Transaction Documents to which it
is a party, and to carry out the transactions contemplated hereby and thereby.
8
All actions on the part of the Company and its officers and directors
necessary for the authorization, execution, delivery and performance of this
Agreement and the other Transaction Documents, the consummation of the
transactions contemplated hereby and thereby, and the performance of all of the
Company's obligations under this Agreement and the other Transaction Documents
have been taken or will be taken prior to the Closing. This Agreement has been,
and the other Transaction Documents to which the Company is a party on the
Closing will be, duly executed and delivered by the Company, and this Agreement
is, and each of the other Transaction Documents to which it is a party on the
Closing will be, a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
Capitalization.
There are no equity interests in the Company other than the
Membership Interests. Seller is the Managing Member of the Company and is the
owner of 100% of the equity interest in the Company. There are no equity
interests in the Company other than the Membership Interests as described
herein. No person, firm or corporation other than Buyer has any agreement or
option or a right capable of becoming an agreement or option for the purchase,
subscription or issuance of any of the issued or unissued Membership Interests
or to direct the voting or disposition of the Membership Interests except as
otherwise set forth on Schedule 3.3.
Seller is the registered and beneficial owner of the
Membership Interests, free of any liens, encumbrances, security agreements,
equities, options, claims, charges and restrictions. Seller is the Managing
Member of the Company and has the right and authority to enter into this
Agreement on the terms and conditions set forth in it, and has full power to
transfer the legal and beneficial ownership of the Membership Interests to Buyer
without giving notice to, making any filing with, or obtaining the consent or
approval of any other person or governmental authority except as otherwise set
forth on Schedule 3.3.
The Company is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between any Persons,
that affects or relates to the voting or giving of written consents with respect
to any securities of the Company or the voting by any director of the Company.
Subsidiaries and Affiliates. The Company does not have, and has never
had, any Subsidiaries. The Company does not own, directly or indirectly, any
ownership, equity, profits or voting interest in, or otherwise control, any
corporation, partnership, joint venture or other entity, and has no agreement or
commitment to purchase any such interest.
No Approvals or Notices Required; No Conflicts. The execution, delivery
and performance of this Agreement and the other Transaction Documents by the
Company, and the consummation of the transactions contemplated hereby and
thereby, will not (a) constitute a violation (with or without the giving of
notice or lapse of time, or both) of any provision of any law or any judgment,
decree, order, regulation or rule of any court, agency or other governmental
authority applicable to the Company, (b) require any consent, approval or
authorization of, or declaration, filing or registration with, any Person, (c)
result in a default (with or without the giving of notice or lapse of time, or
both) under, acceleration or termination of, or the creation in any party of the
right to accelerate, terminate, modify or cancel, any agreement, lease, note or
other restriction, encumbrance, obligation or liability to which the Company is
a party or by which it is bound or to which any assets of the Company are
subject, (d) result in the creation of any Encumbrance upon the assets of the
Company, or upon any Membership Interests or other securities of the Company,
(e) conflict with or result in a breach of or constitute a default under any
provision of the organizational documents or operating agreement of the Company,
or (f) invalidate or have a material adverse effect any permit, license,
authorization or status used in the conduct of the business of the Company.
Financial Statements; Obligations. The Company and the Seller have
delivered to Buyer (a) audited balance sheets and statements of operations and
each Seller's equity in the Company at and for the fiscal years ended December
31, 2000, December 31, 2001, and December 31, 2002, and accompanying notes and
(b) compiled balance sheets and statements of operations and each Seller's
equity in the Company at and for the 6 month period ended June 30, 2003.
9
All the foregoing financial statements (including the notes thereto) are
referred to as the "Financial Statements" and such Financial Statements are
attached hereto as Disclosure Schedule 3.6. The Financial Statements have been
prepared in conformity with GAAP consistently applied throughout the periods
covered and present fairly the financial position and results of operations of
the Company at the dates and for the periods indicated. The Company has no
liabilities or obligations of any nature (absolute, accrued or contingent) that
are not fully reflected or reserved against in the Balance Sheet, as prescribed
by GAAP and the Financial Accounting Standards Board, except liabilities or
obligations set forth on Disclosure Schedule 3.6 and those incurred since the
date of the Balance Sheet in the ordinary course of business and consistent with
past practice. The Company is not a guarantor, indemnitor, surety or other
obligor of any indebtedness of any other Person. Disclosure Schedule 3.6 sets
forth all Third Party Debt, together with all the amounts owed by the Company
thereunder, as of the Closing. Disclosure Schedule 3.6 sets forth all
indebtedness and other obligations of the Seller relating to the Company,
together with all the amounts owed by the Seller in respect thereof, as of the
Closing.
Absence of Certain Changes or Events. Since the date of the Balance
Sheet, neither the Company, nor the Seller with respect to the Company, nor any
of the Company's officers, directors or employees in their representative
capacities on behalf of the Company has:
received oral or written notice that there has been, will be
or may be a loss of, or contract cancellation by, any current customer of the
Company, which loss or cancellation would result in lost annual revenues to the
Company of at least $10,000, or received substantive information which would
form the basis for any belief that there may be such a loss or cancellation;
taken any action or entered into or agreed to enter into any
transaction, agreement or commitment other than in the ordinary course of
business, except for the execution of this Agreement;
forgiven or canceled any indebtedness or waived any claims or
rights of material value (including, without limitation, any indebtedness owing
by the Seller, officer, director, employee or Affiliate of the Company);
granted any increase in the compensation of members,
directors, officers, employees or consultants (including any such increase
pursuant to any employment agreement or bonus, pension, profit sharing, lease
payment or other plan or commitment);
borrowed or agreed to borrow any funds, assumed or become
subject to, whether directly or by way of guarantee or otherwise, any
liabilities or obligations (absolute, accrued or contingent), or incurred any
liabilities or obligations (absolute, accrued or contingent) except liabilities
and obligations incurred in the ordinary course of business and consistent with
past practice not to exceed $10,000 individually, or increased, or experienced
any change in any assumptions underlying or methods of calculating, any bad
debt, contingency or other reserves;
paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued or contingent) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of claims, liabilities and obligations reflected or reserved against in
the Balance Sheet or incurred in the ordinary course of business and consistent
with past practice since the date of the Balance Sheet, or prepaid any
obligation having a fixed maturity of more than 90 days from the date such
obligation was issued or incurred;
permitted or allowed any of its property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any mortgage,
pledge, lien, security interest, Encumbrance, institutional control, restriction
or charge, except (i) conditional sales or similar security interests granted in
connection with the purchase of equipment or supplies in the ordinary course of
business, (ii) assessments for current taxes not yet due and payable, (iii)
landlord's liens for rental payments not yet due and payable, and (iv)
mechanics', materialmen's, carriers' and other similar statutory liens securing
indebtedness that is in the aggregate less than $1,000, was incurred in the
ordinary course of business and is not yet due and payable;
written off as uncollectible any notes or accounts receivable,
except for write downs and write offs that are in the aggregate less than
$10,000, incurred in the ordinary course of business and consistent with past
practice;
10
sold, transferred or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible) with an
aggregate net book value in excess of $1,000; provided, however, the Company
shall be permitted to pay out to the Seller simultaneous with the Closing, any
cash or money market funds held by the Company net of any outstanding drafts or
other obligations and the difference between the "loan held for sale" as of the
Closing Date ("Closed Loans") and the warehouse line of credit outstanding as of
the Closing Date, all as provided in Section 2.2(e) hereto, provided, further,
that in no event shall the Tangible Net Worth of the Company be reduced to less
than $0 at Closing;
disposed of or permitted to lapse any rights to the use of any
trademark, trade name, patent or copyright, or disposed of or disclosed to any
Person other than representatives of Buyer any trade secret, formula, process or
know how not theretofore a matter of public knowledge;
made any single capital expenditure or commitment in excess of
$5,000 for additions to property, equipment or intangible capital assets or made
aggregate capital expenditures in excess of $2,000 for additions to property,
equipment or intangible capital assets;
made any change in any method of accounting or accounting
practice or internal control procedure;
issued any membership interests or other ownership or equity,
other securities or options or other rights to acquire any equity or other
securities, or declared, paid or set aside for payment any dividend or other
distribution in respect of its membership interests, or redeemed, purchased or
otherwise acquired, directly or indirectly, any membership interests or other
securities of the Company, or otherwise permitted the withdrawal by any of the
holders of membership interests of the Company of any cash or other assets
(real, personal or mixed, tangible or intangible), in compensation, indebtedness
or otherwise, other than as set forth in Subparagraph (i) above;
except for transactions that are not material in the
aggregate, loaned or advanced any amount to, or sold, transferred or leased any
properties or assets (real, personal or mixed, tangible or intangible) to, or
entered into any agreement or arrangement with, any of the Company's officers,
directors, members or employees or any Affiliate of the Company's officers,
directors or employees, except directors' fees and compensation paid to officers
and employees at rates not exceeding the rates of compensation disclosed on
Disclosure Schedule 3.16;
entered into or agreed to enter into, or otherwise suffered to
be outstanding, any power of attorney of the Company or any obligations or
liabilities (absolute, accrued or contingent) of the Company, as guarantor,
surety, co signer, endorser, co-maker, indemnitor or otherwise, in respect of
the obligation of any other Person;
received notice of, or otherwise obtained knowledge of: (i)
any claim, action, suit, arbitration, proceeding or investigation involving,
pending against or threatened against the Company or any employee of the Company
before or by any court or governmental or nongovernmental department,
commission, board, bureau, agency or instrumentality, or any other Person; (ii)
any valid basis for any claim, action, suit, arbitration, proceeding,
investigation or the application of any fine or penalty materially adverse to
the Company or any officer or director of the Company before or by any Person;
or (iii) any outstanding or unsatisfied judgments, orders, decrees or
stipulations to which the Company or any officer, director or employee of the
Company is a party that relate directly to the transactions contemplated herein
or that would have any material adverse effect upon the business, assets,
operations, prospects or condition (financial or other) of the Company;
entered into or agreed to any sale, assignment, transfer or
license of any patents, trademarks, copyrights, trade secrets or other
intangible assets of the Company to a third party or any amendment or change to
any existing license or other agreement relating to intellectual property;
taken any action to accelerate the collection of receivables,
or failed to pay payables, in a timely manner consistent with past practices;
failed to inform Buyer of any material bad debts not disclosed
on the Balance Sheet;
11
received notice of, or otherwise obtained knowledge of, any
other event or facts that could have a material adverse effect on the business,
its assets, operations, prospects, or condition (financial or other) of the
Company;
distributed, sold, or otherwise disposed of any assets
(including intellectual property) required or reasonably necessary for the
operation of the Company's business, in the manner in which the business has
historically operated; or
agreed, whether in writing or otherwise, to take any action
described in this Section 3.7.
Taxes.
For purposes of this Agreement, the term "Taxes," means (i)
any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities, including, without
limitation, taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with respect to such amounts;
(ii) any liability for the payment of any amounts of the type described in
clause (i) as a result of being or ceasing to be a member of an affiliated,
consolidated, combined or unitary group for any period (including, without
limitation, any liability under Treasury Regulation Section 1.1502-6 or any
comparable provision of foreign, state or local law); and (iii) any liability
for the payment of any amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other Person or as
a result of any obligations under any agreements or arrangements with any other
Person with respect to such amounts and including any liability for taxes of a
predecessor entity; and the term "Tax" means any one of the foregoing Taxes.
Each of the Company and the Seller has filed on a timely basis
all reports, returns, declarations, claims for refund, information returns,
statements or other similar documents, including any schedules or attachments
thereto, and including any amendment thereof with respect to any Taxes ("Tax
Returns") that the Company or the Seller was required to file. All such Tax
Returns were correct and complete in all material respects and have been
prepared and completed in accordance with applicable law, and were prepared in
accordance with the applicable statutes, rules and regulations. All Taxes owed
by the Company or owed by Seller as a result of his ownership of the Company
(whether standing alone or as a part of a consolidated group and whether or not
shown on any Tax Return) have been paid in full when due. The Company has no
obligation for Taxes, other than obligations for current year taxes not yet due
and payable. No such Tax Returns are currently the subject of audit or
examination nor has the Company been notified in writing, or otherwise, of any
request for an audit or examination. The Company has made adequate estimated tax
payments sufficient to cover any Taxes accrued but not yet due and payable. The
Company is not currently the beneficiary of any extension of time within which
to file any Tax Return, and the Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to any Tax assessment or deficiency. The Company has duly and timely withheld
from employee salaries, or wages or other compensation (whether or not paid in
cash) and other amounts paid to creditors, independent contractors and other
third parties and paid over to the appropriate governmental authority all
amounts required to be so withheld and paid over for all periods under all
applicable Tax or other laws. No amounts have been or would be required to be
withheld with respect to the lapse of restrictions on the Membership Interests.
The Tax Returns of the Company do not contain a disclosure under Section 6662 of
the Internal Revenue Code of 1986, as amended (the "Code") (or any predecessor
provision or comparable provision of state, local or foreign law).
There is no dispute, claim or proposed adjustment concerning
any Tax liability of the Company or the Seller as a result of his ownership of
the Company either (A) claimed or raised by any authority in writing or (B)
based upon personal contact with any agent of such authority. Neither the
Company nor the Seller is a party to nor has it been notified in writing or,
otherwise, that it is the subject of any pending, proposed or threatened action,
investigation, proceeding, audit, claim or assessment by or before the IRS or
any other governmental authority, nor does the Company have any reason to
believe that any such notice will be received in the future. No claim for
assessment, deficiency, or collection of Taxes, or proposed assessment,
deficiency, or collection from the IRS or any other governmental authority
exists, which has not been satisfied. The IRS has never audited any Tax Return
of the Company or the Seller. The Company has not filed any requests for rulings
with the IRS. No power of attorney has been granted by the Company, Seller or
his affiliates with respect to any matter relating to Taxes of the Company.
12
There are no Tax liens of any kind upon any property or assets of the Company,
except for inchoate liens for Taxes not yet due and payable. The Company has
delivered to Buyer correct and complete copies of all Tax Returns (which are due
and have been filed), examination reports and statements of deficiencies
assessed against or agreed to by the Company for the years 2000, 2001 and 2002.
Neither the Company nor any other Person on behalf of the
Company has filed a consent under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company.
The Company has not made any payment or payments, is not obligated to make any
payment or payments, and is not a party to (or participating employer in) any
agreement or Employee Benefit Plan that could obligate it or Buyer to make any
payment or payments that would constitute an "excess parachute payment," as
defined in Section 280G of the Code (or any comparable provisions of foreign,
state, or local law) or that would otherwise not be deductible under Section 162
or 404 of the Code. 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. The
Company is not a party to any Tax allocation, Tax sharing or similar agreement.
The Company (A) has not been a member of any affiliated group within the meaning
of Code Section 1504 of the Code or any similar group defined under a similar
provision of state, local, or foreign law filing a consolidated federal income
Tax Return (other than a group the common parent of which was the Company) and
(B) has no liability for the Taxes of any Person (other than those of the
Company) under Treasury Regulation Section 1.1502-6 (or any comparable provision
of foreign, state or local law), as a transferee or successor, by contract, or
otherwise. The Company has not requested or received a ruling from any Taxing
authority or signed a closing agreement with any Taxing authority. No claim has
ever been made by a Taxing authority in a jurisdiction where the Company does
not file Tax returns that the Company is or may be subject to taxation by such
jurisdiction.
There has been no ownership change, as defined in Section
382(g) of the Code (or any comparable provision of state, local or foreign law),
with respect to the Company during or after any taxable period in which the
Company incurred a net operating loss. Disclosure Schedule 3.8(e) sets forth the
amount of any net operating loss, net capital loss, net-unrealized built-in loss
(as defined under Section 382 of the Code), unused investment or other credit,
unused foreign tax or excess charitable contribution allocable to the Company.
The Company is not a party to any joint venture, partnership,
or other arrangement or contract which could be treated as a partnership for
federal income tax purposes.
The Company has not been a party to a distribution to which
Section 355(d) or (e) of the Code applies.
The Company does not have and has not had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States and such foreign country, and the Company
has not engaged in a trade or business within, or derived any income from, any
state, local or foreign jurisdiction other than those for which Tax Returns have
been duly filed by the Company.
No election has been made with respect to Taxes of the Company
which has not been disclosed to Buyer.
Property.
Disclosure Schedule 3.9(a) contains a complete and accurate
list of all real property that is leased, rented or used by the Company (the
"Leased Property"). The Company has delivered to Buyer true and complete copies
of all leases, subleases, rental agreements or licenses relating to the Leased
Property.
Disclosure Schedule 3.9(b) contains a complete and accurate
list of each item of personal property as of June 30, 2003, having a book value
in excess of $250 that is owned, leased, rented or used by the Company (the
"Personal Property"); provided, however, that such list need not describe the
Company's Intellectual Property (as defined in Section 3.16). The Company has
delivered to Buyer true and complete copies of all leases and subleases and all
material rental agreements, contracts of sale, tenancies or licenses relating to
the Personal Property.
13
The Leased Property and the Personal Property include all
properties and assets (whether real, personal or mixed, tangible or intangible)
(other than, in the case of the Personal Property, property rights with an
individual book value of less than $250, and the Intellectual Property)
reflected in the Balance Sheet and all the properties and assets purchased by
the Company since the date of the Balance Sheet (except for such properties or
assets sold since the date of the Balance Sheet in the ordinary course of
business). The Leased Property and the Personal Property include all property
used in the business of the Company (other than, in the case of the Personal
Property, property rights with an individual book value of less than $250, and
the Intellectual Property).
The Company's leasehold interest in, as applicable, each
parcel of the Leased Property is free and clear of all liens, pledges, security
interests, charges, Encumbrances, institutional controls and other known adverse
claims or interests of any kind.
The Company's offices and other structures and the Company's
Personal Property are adequate for the uses to which they are being put and
there are no applicable adverse zoning, building or land use codes or rules,
ordinances, regulations or other restrictions relating to zoning or land use
that currently or, to the Knowledge of the Company and/or the Seller, may
prospectively prevent, or cause the imposition of material fines or penalties as
the result of, the use of all or any portion of the Leased Property for the
conduct of the business as presently conducted. The Company has received all
necessary approvals with regard to occupancy and maintenance of the Leased
Property. The Leased Property is correctly zoned for its current use.
Except for (i) assessments for current taxes not yet due and
payable and (ii) mechanics', materialmen's, carriers' and other similar
statutory liens securing indebtedness that is in the aggregate less than $500,
which was incurred in the ordinary course of business and is not yet due and
payable, the Personal Property is free and clear of all Encumbrances.
Each lease of any portion of the Leased Property and each
lease, license, rental agreement, contract of sale or other material agreement
to which the Personal Property is subject is valid, binding and enforceable in
accordance with its terms against the parties thereto; the Company has performed
all obligations imposed upon it thereunder; and the Company is not in default
thereunder, nor to the Knowledge of the Company and/or the Seller is there any
event that with notice or lapse of time, or both, would constitute a default
thereunder. No consent is required from any Person under any lease or other
agreement or instrument relating to the Leased Property or Personal Property in
connection with the consummation of the transactions contemplated by this
Agreement, and the Company has not received notice that any party to any such
lease or other agreement or instrument intends to cancel, terminate or refuse to
renew the same or to exercise or decline to exercise any option or other right
thereunder. The Company has not granted any lease, sublease, tenancy or license
of any portion of the Leased Property or Personal Property.
Contracts. Disclosure Schedule 3.10 contains a complete and accurate
list as of June 30, 2003, of all contracts, agreements, arrangements and
understandings with a value in excess of $2,000, oral or written, to which the
Company is a party or by which the Company is bound, including, without
limitation, all security agreements, Intellectual Property licenses and other
license agreements, credit agreements, instruments relating to the borrowing of
money, purchase contracts, sale contracts, research contracts and scientific
collaboration or cooperation agreements. All contracts set forth on such
Schedule 3.10 are valid, binding and enforceable in accordance with their terms
against each party thereto and are in full force and effect; the Company has
performed all obligations imposed upon it thereunder; and the Company is not in
default thereunder; nor is there any event that with notice or lapse of time, or
both, would constitute a default thereunder. Furthermore, no breach or default
by any other party to any such contract of any provision thereof, nor any
condition or event that, with notice or lapse of time or both, would constitute
such a breach or default, has occurred. True and complete copies of each such
contract have been delivered to Buyer. To the knowledge of Seller and Company,
no consent is required from any Person under any contract, agreement,
arrangement or understanding set forth on Disclosure Schedule 3.10 in connection
with the consummation of the transactions contemplated by this Agreement, and
the Company has not received notice, and is not otherwise aware, that any party
to any such contract, agreement, arrangement or understanding intends to cancel,
terminate or refuse to renew such contract, agreement, arrangement or
understanding or to exercise or decline to exercise any option or material right
thereunder.
14
Customers. To the knowledge of Seller and Company, Disclosure Schedule
3.11 sets forth a complete and accurate list of the customers and/or investors
of the Company accounting for 1% or more of the Company's revenues during the
fiscal year last ended and the period ended June 30, 2003, showing the
approximate total revenues from each such customer or investors during the
fiscal year last ended and the period ended June 30, 2003. The Company has not
received any notice from its customers that would cause it, in its reasonable
judgment, to expect any material modification to its relationship with any
customers named on such Schedule 3.11.
Claims and Legal Proceedings. There are no claims, actions, suits,
arbitrations, criminal or civil investigations or proceedings pending or
involving or, to the knowledge of the Company and/or the Seller, threatened
against the Company or the Seller before or by any court or governmental or
nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person. There is no valid basis for any claim,
action, suit, arbitration, investigation or proceeding that could reasonably be
expected to be materially adverse to the business, assets, operations, prospects
or condition (financial or other) of the Company before or by any Person. There
are no outstanding or unsatisfied judgments, orders, decrees or stipulations to
which the Company is a party that involve the transactions contemplated herein
or that would have a material adverse effect on the business, assets,
operations, prospects or condition (financial or other) of the Company.
Labor Matters. There are no labor disputes, employee grievances or
disciplinary actions pending or, to the knowledge of the Company and/or the
Seller, threatened against or involving the Company or any present or former
employee of the Company. To the knowledge of Seller and Company, the Company has
complied with all material provisions of law relating to employment and
employment practices, terms and conditions of employment, wages and hours
including, without limitation, equal opportunity, workplace safety, workers'
compensation and other similar laws. To the knowledge of Seller and Company, the
Company is not engaged in any unfair labor practice and does not have any
liability for any arrears of wages or penalties for failure to comply with any
such provisions of law. There is no labor strike, dispute, slowdown or stoppage
pending or threatened against or affecting the Company, and the Company has not
experienced any work stoppage or similar concerted employee activities. No
collective bargaining agreement is binding on the Company. The Company does not
have any knowledge of any organizational efforts presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Company, and the Company has not been requested by any group of employees or
others to enter into any collective bargaining agreement or other agreement with
any labor union or other employee organization.
Employee Benefit Plans.
Employee Benefit Plan Listing. Disclosure Schedule 3.14
contains a complete and accurate list of all Employee Benefit Plans. Neither the
Company nor any ERISA Affiliate has any agreement, arrangement, commitment or
obligation, whether formal or informal, whether written or unwritten and whether
legally binding or not, to create, enter into or contribute to any additional
Employee Benefit Plan, or to modify or amend any existing Employee Benefit Plan.
There has been no amendment, interpretation or other announcement (written or
oral) by the Company, any ERISA Affiliate or any other Person relating to, or
change in participation or coverage under, any Employee Benefit Plan that,
either alone or together with other such items or events, could Materially
increase the expense of maintaining such Employee Benefit Plan (or the Employee
Benefit Plans taken as a whole) above the level of expense incurred with respect
thereto for the most recent fiscal year included in the Financial Statements.
The terms of each Employee Benefit Plan permit the Company to amend or terminate
such Employee Benefit Plan or the Company's participation in any Employee
Benefit Plan sponsored by an ERISA Affiliate at any time and for any reason
without penalty and without Material liability or expense. None of the rights of
the Company under any Employee Benefit Plan will be impaired in any way by this
Agreement or the consummation of the transactions contemplated by this
Agreement.
Documents Provided. The Company has delivered to Buyer true,
correct and complete copies (or, in the case of unwritten Employee Benefit
Plans, descriptions) of all Employee Benefit Plans (and all amendments thereto),
along with, to the extent applicable to the particular Employee Benefit Plan,
copies of the following: (i) the last three annual reports (Form 5500 series)
filed with respect to such Employee Benefit Plan; (ii) all summary plan
descriptions, summaries of material modifications and all employee manuals or
communications filed or distributed with respect to such Employee Benefit Plan
during the last three years; (iii) all contracts and agreements (and any
amendments thereto) relating to such Employee Benefit Plan, including, without
limitation, trust agreements, investment management agreements, annuity
contracts, insurance contracts, bonds, indemnification agreements and service
provider agreements; (iv) the most recent determination letter issued by the IRS
with respect to such Employee Benefit Plan; (v) all written communications
relating to the amendment, creation or termination of such Employee Benefit
Plan, or an increase or decrease in benefits, acceleration of payments or
vesting or other events that could result in liability to the Company since the
date of the most recently completed and filed annual report;
15
(vi) all correspondence to or from any governmental entity or agency relating to
such Employee Benefit Plan; (vii) samples of all administrative forms currently
in use, including, without limitation, all COBRA and HIPAA forms and notices;
(viii) all coverage, nondiscrimination, top heavy and Code Section 415 tests
performed with respect to such Employee Benefit Plan for the last three years;
and (ix) the most recent registration statement, annual report (Form 11-K) and
prospectus prepared in connection with such Employee Benefit Plan.
Compliance. With respect to each Employee Benefit Plan: (i)
such Employee Benefit Plan is, and at all times since inception has been,
maintained, administered, operated and funded in all material respects in
accordance with its terms and in compliance with all applicable requirements of
all applicable laws, statutes, orders, rules and regulations, including, without
limitation, ERISA, COBRA, HIPAA and the Code; (ii) the Company (and each of its
employees, officers, directors and the Seller), each ERISA Affiliate (and each
of its employees, officers, directors and the Seller) and, to the Knowledge of
the Company and the Seller, all other Persons (including, without limitation,
all fiduciaries) have, at all times, properly performed all of their duties and
obligations (whether arising by operation of law or by contract) under or with
respect to such Employee Benefit Plan, including, without limitation, all
reporting, disclosure and notification obligations; (iii) all returns, reports
and other information (including, without limitation, all Form 5500 series
annual reports, together with all schedules and audit reports required with
respect thereto) relating to such Employee Benefit Plan required to be filed
with any governmental entity or agency have been accurately completed and timely
and properly filed; (iv) all notices, statements, reports and other disclosure
(including, without limitation, all summary plan descriptions and summaries of
material modifications) required to be given or made to participants in such
Employee Benefit Plan or their beneficiaries have been accurately completed and
timely and properly disclosed or provided; (v) none of the Company (or any of
its employees, officers, members, directors or the Seller), any ERISA Affiliate
(or any of its employees, officers, members, directors and the Seller) or, to
the Knowledge of the Company or the Seller, any other fiduciary of such Employee
Benefit Plan has engaged in any transaction or acted or failed to act in a
manner that violates the fiduciary requirements of ERISA or any other applicable
law; (vi) no transaction or event has occurred or, to the Knowledge of the
Company or the Seller, is threatened or about to occur (including any of the
transactions contemplated in or by this Agreement) that constitutes or could
constitute a prohibited transaction under Section 406 or 407 of ERISA or under
Section 4975 of the Code for which an exemption is not available; and (vii) the
Company has not incurred, and there exists no condition or set of circumstances
in connection with which the Company or Buyer could incur, directly or
indirectly, any Material liability or expense (except for routine contributions
and benefit payments) under ERISA, the Code or any other applicable law,
statute, order, rule or regulation, or pursuant to any indemnification or
similar agreement, with respect to such Employee Benefit Plan.
Qualification. Each Employee Benefit Plan that is intended to
be qualified under Section 401(a) of the Code is, and at all times since
inception has been, so qualified and its related trust is, and at all times
since inception has been, exempt from taxation under Section 501(a) of the Code.
Each such Employee Benefit Plan either (i) is the subject of an unrevoked
favorable determination letter from the IRS with respect to such Employee
Benefit Plan's qualified status under the Code, as amended by the Tax Reform Act
of 1986 and all subsequent legislation, or (ii) has remaining a period of time
under the Code or applicable Treasury regulations or IRS pronouncements in which
to apply to the IRS for such a letter and to make any amendments necessary to
obtain such a letter from the IRS. No fact exists or is reasonably expected by
the Company or the Seller to arise, that could adversely affect the
qualification or exemption of any such Employee Benefit Plan or its related
trust. No such Employee Benefit Plan is a "top-heavy plan," as defined in
Section 416 of the Code.
Contributions, Premiums and Other Payments. All contributions,
premiums and other payments due or required to be paid to (or with respect to)
each Employee Benefit Plan have been timely paid, or, if not yet due, have been
accrued as a liability on the Financial Statements. All income taxes and wage
taxes that are required by law to be withheld from benefits derived under the
Employee Benefit Plans have been properly withheld and remitted to the proper
depository.
Multiemployer, Defined Benefit and Money Purchase Pension
Plans, and Multiple Employer Welfare Arrangements. Neither the Company nor any
ERISA Affiliate maintains or contributes to, and has ever maintained or
contributed to (or been obligated to contribute to), (i) a multiemployer plan as
defined in Section 3(37) or Section 4001(a)(3) of ERISA or 414(f) of the Code,
(ii) a multiple employer plan within the meaning of Section 4063 or 4064 of
ERISA or Section 413(c) of the Code, (iii) an employee benefit plan, fund,
program, contract or arrangement that is subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA, or (iv) a multiple employer welfare
arrangement as defined in Section 3(40) of ERISA.
16
Post-Employment Benefits. Neither the Company nor any Employee
Benefit Plan provides or has any obligation to provide (or contribute toward the
cost of) post-employment or post-termination benefits of any kind, including,
without limitation, death and medical benefits, with respect to any current or
former officer, employee, agent, director or independent contractor of the
Company, other than (i) continuation coverage mandated by Sections 601 through
608 of ERISA and Section 4980B(f) of the Code, (ii) retirement benefits under
any Employee Benefit Plan that is qualified under Section 401(a) of the Code,
and (iii) deferred compensation that is accrued as a current liability on the
Financial Statements.
Suits, Claims, and Investigations. There are no actions, suits
or claims (other than routine claims for benefits) pending or, to the Knowledge
of the Company or the Seller, threatened with respect to (or against the assets
of) any Employee Benefit Plan, nor, to the Knowledge of the Company or the
Seller, is there a basis for any such action, suit or claim. No Employee Benefit
Plan is currently under investigation, audit or review, directly or indirectly,
by the IRS, the DOL or any other governmental entity or agency, and, to the
Knowledge of the Company and the Seller, no such action is contemplated or under
consideration by the IRS, the DOL or any other governmental entity or agency.
Effect of Transaction. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated by this
Agreement, will (i) entitle any individual to severance pay, unemployment
compensation or any other payment from the Company, Buyer or any Employee
Benefit Plan, (ii) otherwise increase the amount of compensation due to any
individual or forgive indebtedness owed by any individual, (iii) result in any
benefit or right becoming established or increased, or accelerate the time of
payment or vesting of any benefit, under any Employee Benefit Plan, or (iv)
require the Company or Buyer to transfer or set aside any assets to fund or
otherwise provide for any benefits for any individual.
Personnel. Disclosure Schedule 3.15 sets forth a true and complete list
of the names and the stated annual salary (or hourly wage rate) of all officers,
employees, contractors, and consultants of the Company.
Intellectual Property. To the knowledge of Seller and Company,
Disclosure Schedule 3.16 sets forth a list of all trade names, trademarks,
patents, copyrights, computer software, hardware, operating system software, and
telecommunications links (the "Intellectual Property") owned by or licensed to
the Company. The Company owns all rights, title, and interest in and to all
Intellectual Property, or has the requisite licenses necessary to operate the
business of the Company. The Company has the right to consummate the
transactions contemplated by this Agreement without violating or infringing upon
any material rights of any third party and without material breach of any
third-party license to the Company, and there is currently no actual or, to the
Knowledge of the Company or the Seller, threatened suit by any third party based
on an alleged violation, infringement or breach by the Company. After the
Closing, except as disclosed on Disclosure Schedule 3.17, the Company will
continue to have the right to use the Intellectual Property after the sale
contemplated by this Agreement that are material to the operation of the
business.
Accounts Receivable. Disclosure Schedule 3.17 sets forth as of June 30,
2003 (and will be updated as of Closing) a true and complete list of all
accounts receivable of the Company. All accounts receivable of the Company
reflected in the Balance Sheet or existing at the time of Closing ("Accounts")
represent amounts due for services performed or sales actually made in the
ordinary course of business and properly reflect the amounts due. All Accounts
existing and remaining unpaid at the time of Closing are fully collectible by
Company.
Books and Records. The Company has furnished to Buyer true and complete
copies of (a) the organizational documents and operating agreement of the
Company as currently in effect, including all amendments thereto, (b) the record
books of the Company, and (c) the membership transfer books of the Company. Such
minutes reflect all meetings of the Company's members, board of directors and
any committees thereof since the Company's inception, and such records
accurately reflect the events of and actions taken at such meetings. Such
membership transfer books accurately reflect all issuances and transfers of
shares of capital stock of the Company since its inception.
17
Licenses, Permits, Authorizations, etc. The Company has received all
required governmental approvals, authorizations, consents, licenses, orders,
registrations and permits of all agencies, whether federal, state, local or
foreign (the "Permits"). Disclosure Schedule 3.19 contains a list of all Permits
with expiration dates, if any. The Company is in material compliance with the
terms of all Permits, and all Permits are valid and in full force and effect,
and no proceeding is pending or, to the Knowledge of the Company and/or the
Seller, threatened, the object of which is to revoke, limit or otherwise affect
any Permit. The Company has not received any notifications of any asserted
failure to obtain any Permit.
Compliance with Laws. The Company is and has been in compliance with
all federal, state, local and foreign laws, rules, regulations, ordinances,
decrees and orders applicable to the operation of its business, to its
employees, or to its property, including, without limitation, all such laws,
rules, ordinances, decrees and orders relating to antitrust, consumer
protection, currency exchange, environmental protection, equal opportunity,
health, occupational safety, pension, securities and trading with the enemy
matters. The Company has not received any notification of any asserted present
or past unremedied failure by the Company to comply with any of such laws,
rules, ordinances, decrees or orders.
Insurance.
The Company maintains (a) insurance on all of its property
(including leased premises) that insures against loss or damage by fire or other
casualty (including extended coverage) and (b) insurance against errors and
omissions, liabilities, claims and risks of a nature and in such amounts as are
normal and customary in the Company's industry. All insurance policies of the
Company are in full force and effect, all premiums covering all periods up to
and including the Closing have been paid, no notice of cancellation or
termination has been received with respect to any such policy or binder, and all
such policies (along with policy numbers) are listed on Schedule 3.21. Such
policies or binders are sufficient for compliance with all requirements of law
currently applicable to the Company and of all agreements to which the Company
is a party, will remain in full force and effect through the Closing Date
without the payment of additional premiums. To the knowledge of Seller and
Company, the Company has not been refused any insurance with respect to its
respective assets or 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.
Disclosure Schedule 3.21(b) lists all the insurance policies
maintained by the Company (including retroactive policies) covering and/or
related to workers' compensation, short-term and/or long-term disability benefit
and other similar employee benefit provisions, as required by law (the "Workers
Compensation Policies"). Schedule 3.21(b) includes all policy numbers and/or
certifications of coverage and the amounts of such coverage under the policies.
The Workers Compensation Policies coverages and limits comply with all
applicable federal and state statutory requirements. Disclosure Schedule 3.21(b)
lists all claims known to the Company, whether filed or unfiled, which are
currently subject to claims management and/or adjudication as an outstanding
claim, or which may become subject to claims management and/or adjudication
during open periods permitted either under applicable state or federal laws or
the listed Workers Compensation Policies. The Company has at all times
maintained insurance coverage as required by Ohio law or such other applicable
laws where Company is licensed and/or does business.
Brokers or Finders. The Company or Seller has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by or on
behalf of the Company, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby other than as set forth on Schedule 3.22, which
shall be the sole responsibility of Seller.
Government Contracts. To the knowledge of Seller and Company, the
Company has never been, nor as a result of the consummation of the transactions
contemplated by this Agreement will it be, suspended or debarred from bidding on
contracts or subcontracts for any agency of the United States government or any
foreign government, nor to the Knowledge of the Company and/or the Seller has
such suspension or debarment been threatened or action for suspension or
debarment been commenced. To the knowledge of Seller and Company, the Company
has not been nor is it currently being audited, as provided by the Federal
Acquisition Regulations or, to the Knowledge of the Company and/or the Seller,
investigated by the United States Government Accounting Office, the United
States Department of Justice or any of its agencies, or other authorities of any
agency of the United States government, or any foreign government, nor, to the
knowledge of the Company and the Seller, has such audit or investigation been
threatened.
18
Absence of Questionable Payments. Neither the Company nor any of its
directors or officers, or to the knowledge of the Company and/or the Seller, any
agents, employees or other Person acting on behalf of the Company, has used any
funds of the Company for improper or unlawful contributions, payments, gifts or
entertainment, or made any improper or unlawful expenditures relating to
political activity to government officials or others. Neither the Company nor
any of its current directors or officers, agents, employees or any other Person
acting on behalf of the Company, has accepted or received any improper or
unlawful contributions, payments, gifts or expenditures. The Company has at all
times complied, and is in compliance in all respects, with the applicable
provisions of the U.S. Foreign Corrupt Practices Act, as amended, and other
applicable domestic and foreign laws and regulations relating to corrupt
practices and similar matters.
Bank Accounts. Disclosure Schedule 3.25 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains safe deposit boxes or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.
Previous Conduct of Business; Insider Interests. Except as set forth on
Disclosure Schedule 3.26, all the transactions of the Company with third parties
have been conducted on an arm's-length basis. Disclosure Schedule 3.26 sets
forth all agreements, contracts and understandings as of June 30, 2003, and the
date hereof between the Company and its Affiliates. Except as set forth on
Disclosure Schedule 3.26, no officer, director, employee, contractor, consultant
or other representative of the Company has any direct or indirect interest, and
the Seller have no direct or indirect interest, other than as a Seller of the
Company (a) in any property, real or personal, tangible or intangible, used in
or directly pertaining to the business of the Company, including, without
limitation, any intellectual property, or (b) in any agreement, contract,
arrangement or obligation relating to the Company, its present or prospective
business or its operations. Except as set forth on Disclosure Schedule 3.26,
neither the Company nor any of its officers, members, directors, employees,
contractors or consultants has any interest, either directly or indirectly, in
any entity that presently (i) provides any services, produces and/or sells any
products or product lines, or engages in any activity that is the same, similar
to or competitive with any activity or business in which the Company is now
engaged or proposes to engage or (ii) is a supplier, customer or creditor, or
has an existing contractual relationship with any of the Company's employees (or
persons performing similar functions).
Full Disclosure. To the knowledge of Seller and Company, no information
furnished by the Company or the Seller to Buyer in connection with this
Agreement (including, but not limited to, the Financial Statements and all
information in the Disclosure Schedules and the Exhibits hereto) or to be
furnished prior to the Closing by or on behalf of the Company or the Seller to
Buyer, or to others in connection with obtaining approval of the transaction
contemplated by this Agreement, is false or misleading in any material respect.
Neither the Company nor the Seller has made any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements made or information delivered in or pursuant to this Agreement,
including, but not limited to, the financial statements, the Disclosure
Schedules and Exhibits hereto, or in or pursuant to closing certificates
executed or delivered by the Company or the Seller not misleading.
Tangible Net Worth. As of the Closing, the Company will have tangible
net worth, of not less than $0, inclusive of cash and cash equivalents
distributed to Seller at or prior to Closing but not including the infusion of
capital referenced in Section 5.13 hereof.
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce the Company and the Seller to enter into and perform this
Agreement, Buyer represents and warrants to the Company and the Seller as of the
date of this Agreement and as of the Closing as follows (which representations
and warranties will survive the Closing as provided in Article 9):
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Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware. Buyer has all
requisite corporate power and authority to own, operate and lease its properties
and assets, to carry on its business as now conducted and as proposed to be
conducted, to execute, deliver and perform its obligations under this Agreement
and the other Transaction Documents to which it is a party, and to carry out the
transactions contemplated hereby and thereby.
Enforceability. All corporate action on the part of Buyer and its
officers and directors necessary for the authorization, execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party, the consummation of the transactions contemplated hereby and thereby,
and the performance of all of Buyer's obligations under this Agreement and the
other Transaction Documents to which it is a party has been taken or will be
taken prior to the Closing. This Agreement has been, and the other Transaction
Documents to which Buyer is a party on the Closing will be, duly executed and
delivered by Buyer, and this Agreement is, and each of the other Transaction
Documents to which Buyer is a party on the Closing will be, a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.
No Approvals or Notices Required; No Conflicts with Instruments. The
execution, delivery and performance by Buyer of this Agreement and the other
Transaction Documents to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, will not (a) constitute a
violation (with or without the giving of notice or lapse of time, or both) of
any provision of any law or any judgment, decree, order, regulation or rule of
any court, agency or other governmental authority applicable to Buyer, (b)
require Buyer to obtain any consent, approval or authorization of, or
declaration, filing or registration with, any Person, or (c) constitute a
violation of any provisions of Buyer's Certificate of Incorporation or bylaws.
Claims and Legal Proceedings. There is no claim, action, suit,
arbitration, criminal or civil investigation or proceeding pending or involving
or, to Buyer's Knowledge, threatened against Buyer before or by any court or
governmental or nongovernmental department, commission, board, bureau, agency or
instrumentality, or any other Person, that questions the validity of this
Agreement or any action taken or to be taken by Buyer pursuant to this Agreement
or in connection with the transactions contemplated hereby. Buyer knows of no
reason why consents for this transaction from any regulatory or judicial body
would be withheld.
Brokers or Finders. Buyer has not incurred, and will not incur,
directly or indirectly, as a result of any action taken by or on behalf of
Buyer, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement or any transaction
contemplated hereby, that would result in any claim against the Seller.
Tax Consequences. Buyer does not make any representations or warranties
with respect to, and expressly disclaims any responsibility for, any Tax
consequences to the Seller arising out of the structure or terms of this
Agreement, or the negotiation or consummation hereof. The Seller will be solely
responsible for any such Tax consequences.
Full Disclosure. No information furnished by Buyer to the Company or
the Seller in connection with this Agreement or to be furnished prior to the
Closing by or on behalf of Buyer to the Company or the Seller, or to others in
connection with obtaining approval of the transaction contemplated by this
Agreement, is false or misleading in any material respect. Buyer has not made
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made or information delivered in or
pursuant to this Agreement or in or pursuant to closing certificates executed or
delivered by Buyer not misleading.
20
COVENANTS
Conduct of Business by the Company Pending the Closing. Unless Buyer
will otherwise agree in writing, the business of the Company will be conducted,
and the directors, officers, member or managers of each of the Company and the
Seller will cause the business of Company to be conducted, in the ordinary
course and in a manner consistent with past practice and in accordance with
applicable law; and each of the Company and the Seller will preserve
substantially intact the business organization of the Company, keep available
the services of the current officers, employees, and consultants of the Company,
and preserve the current relationships of the Company with customers, suppliers,
and other persons with which the Company has significant business relations. By
way of amplification and not limitation, except as otherwise contemplated by
this Agreement, neither the Company nor any of the Seller will, between the date
of this Agreement and the time of Closing, directly or indirectly do, or propose
to do, any of the following without giving Buyer prior written notice of and
receiving Buyer's prior written consent:
amend or otherwise change the organizational documents or
operating agreement of the Company;
issue, sell, pledge, dispose of, grant, encumber or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of capital stock of any class of any of the Company, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without limitation,
any phantom interest), of the Company or (ii) any assets of the Company, other
than in the ordinary course of business;
declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock property or otherwise, with respect to any
of the Company's capital stock, other than as disclosed on Schedule 5.1;
provided, however, the Seller will be permitted to take a distribution or
dividend of all cash or cash equivalents in the Company provided that such a
distribution or dividend does not reduce the Closing Tangible Net Worth of the
Company below $0;
reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire, directly or indirectly, any of the Company's membership
interests;
(i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) or form any corporation,
partnership, other business organization or division thereof, or acquire
directly or indirectly any material amount of assets; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for,
the obligations of any Person, or make any loans or advances, except in the
ordinary course of business and consistent with past practice which loans will
be on terms and conditions satisfactory to Buyer; (iii) enter into any contract
or agreement other than in the ordinary course of business, consistent with past
practice; (iv) authorize any single capital expenditure that is in excess of
$1,000 or capital expenditures that are, in the aggregate, in excess of $2,000;
or (v) enter into or amend any contract, agreement, commitment or arrangement
with respect to any matter set forth in this subsection (e);
except as contemplated hereunder, enter into any employment,
consulting or agency agreement, or increase the compensation payable or to
become payable to its officers, employees or consultants, except for increases
in accordance with existing agreements or past practices for employees of any of
the Company who are not officers of any of the Company, or grant any severance
or termination pay to, or enter into any employment or severance agreement with,
any director, member, officer employee of any of the Company, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
member, officer or employee;
take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures (including, without limitation, procedures
with respect to the payment of accounts payable and collection of accounts
receivable);
make any Tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign Tax
liability;
21
pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the Balance Sheet or subsequently incurred in the ordinary course of business
and consistent with past practice;
enter into any equipment lease;
take or agree to take any action specified in Section 3.7, or
enter into any other material transaction other than those specified above; or
agree to do any of the foregoing.
Access to Information; Confidentiality. From the date hereof to the
time of the Closing, the Company and the Seller will, and will cause their
representatives to, afford Buyer and its representatives reasonable access at
all reasonable times to the officers, employees, agents, properties, offices and
other facilities, books and records of the Company and will furnish Buyer with
all financial, operating and other data and information as Buyer may reasonably
request and as such access is necessary to the consummation of the transactions
contemplated hereby. From the date hereof until the time of Closing, the Company
will provide Buyer with monthly and other financial statements of the Company as
they become available internally at the Company but in no event within 21 days
following the end of each month, all of which financial statements will be
prepared in conformity with GAAP consistent with past practices and will fairly
present the financial position and results of operations of the Company as of
the dates and for the periods specified.
No Alternative Transactions.
Neither the Company, nor the Seller, nor any Affiliate of the
Seller will, directly or indirectly, through any officer, director, agent,
investment banker, attorney or otherwise, solicit, initiate or encourage the
submission of any proposal, offer, inquiry or contact from any Person relating
to any acquisition or purchase of all or (other than in the ordinary course of
business) any portion of the assets of, or any equity interest in, any of the
Company or any business combination with any of the Company, or participate in
any negotiations or discussions regarding, or furnish to any other Person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
Person, to do or seek any of the foregoing. The Company and the Seller and any
Affiliate of the Seller immediately will cease and cause to be terminated with
no obligation, financial or otherwise, on the part of the Company or the Seller,
all existing discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing.
The Company and the Seller will notify Buyer promptly if any
such proposal or offer, or any inquiry or contact with any Person with respect
thereto, is made and will, in any such notice to Buyer, indicate in reasonable
detail the identity of the Person making such proposal, offer, inquiry or
contact and the terms and conditions of such proposal, offer, inquiry or
contact. The Company agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which any of the
Company, is a party.
Notification of Certain Matters. The Company and/or the Seller will
give prompt written notice to Buyer, and Buyer will give prompt written notice
to each of the Company and/or the Seller, of (a) the occurrence or nonoccurrence
of any event which would be likely to (i) cause any representation or warranty
of the Company and/or the Seller, or Buyer, respectively, contained in this
Agreement to be materially untrue or inaccurate or (ii) result in the material
failure to satisfy a closing condition in Article 6 or Article 7; (b) any
material failure of the Company and/or the Seller, or Buyer, respectively, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it or them; and (c) any written communication from any Person
alleging that the consent of such Person may be required in connection with the
transactions contemplated by this Agreement; provided, however, that the
delivery of any notice pursuant to this Section 5.4 will not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
22
Further Action. Upon the terms and subject to the conditions hereof,
each of the parties hereto will (a) make promptly its respective filings, and
thereafter make any other required submissions, under applicable laws with
respect to the transactions contemplated hereby and will cooperate with the
other parties with respect to such filings and submissions and (b) use its best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, including, without limitation, using its best efforts to
obtain all waivers, licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
as are necessary for the consummation of the transactions contemplated hereby
and to fulfill the conditions to the closing of the sale of the Membership
Interests to Buyer. In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
each party to this Agreement will use its best efforts to take all such action.
None of Buyer, the Company or the Seller will undertake any course of action
inconsistent with this Agreement or that would make any representations,
warranties or agreements made by such party in this Agreement untrue or any
conditions precedent to this Agreement unable to be satisfied at or prior to the
Closing.
Publicity. None of the parties hereto will disclose, make or issue, or
cause to be disclosed, made or issued, any statement or announcement concerning
this Agreement or the transactions contemplated hereby to any third parties
(other than its officers, directors, employees, authorized representatives,
legal advisors and financial advisors who need to know such information in
connection with carrying out or facilitating the transactions contemplated
hereby) without the prior written consent of the other parties, except as
required by law.
Covenants Not to Compete; Confidentiality.
Covenants. In consideration of the payment of the Purchase
Price by Buyer to the Seller at the Closing, the Seller covenants and agrees as
follows:
During the two-year period commencing on the Closing
Date, neither the Seller nor any of the Seller's Affiliates will engage in any
Competitive Business (as such term is defined below), whether directly or
indirectly, for its account or otherwise, or as a shareholder, owner, partner,
principal, agent, joint venturer, consultant, advisor, franchisor or franchisee,
independent contractor or otherwise, in, with or of any person or entity that
engages directly or indirectly in any Competitive Business. As used herein,
"Competitive Business" will mean any business that competes with the Company or
Buyer or their Affiliates in the United States. Specifically, and without
limitation, a Competitive Business includes a business that originates, funds,
buys, sells, services, brokers or otherwise deals in mortgages or other
instruments for financing real property. This covenant shall be of no effect in
the event of a termination without Cause, as that term is defined therein, of
the employment agreement between Company and Seller dated the date hereof prior
to the second anniversary of the Closing Date or if an Event of Default occurs
under the terms of the Note and Seller exercise his right to accelerate payments
due thereunder and foreclose his security interest in the assets and membership
interests of the Company.
During the two-year period commencing on the Closing
Date, neither the Seller nor any of the Seller's
Affiliates will, directly or indirectly, hire, or solicit or encourage to leave
the employment of the Company, Buyer or any of their Affiliates, or any former
employee of the Company hired by Buyer, the Company or their Affiliates, or have
any arrangement (financial, consulting or otherwise) with any such individual.
From and after the Closing, the Seller and his
Affiliates will keep confidential and not use or disclose to any party any
confidential information relating to the assets, business, or affairs of Buyer
and the Company (including the financial statements of the Company delivered
pursuant to Section 3.6 hereof). The confidentiality and non-use obligations set
forth in this Section 5.7.1(c) will not apply to any information which is
available to the public through no breach of this Agreement by the Seller and
his Affiliates, or is disclosed to the Seller and his Affiliates by third
parties who are not under any duty of confidentiality with respect thereto, or
is required to be disclosed by the Seller and his Affiliates in connection with
pending litigation or investigation; provided, however, that in the event that
the Seller or his Affiliates become required in connection with pending
litigation or investigation to disclose any of the confidential information
relating to the assets, business or affairs of Buyer or the Company, then the
Seller or his Affiliates will provide Buyer with reasonable notice so that Buyer
may seek a court order protecting against or limiting such disclosure or any
other appropriate remedy; and in the event such protective order or other remedy
is not sought, or is sought but not obtained, the Seller and his Affiliates will
furnish only that portion of the information that is required and will endeavor,
at Buyer's expense, to obtain a protective order or other assurance that the
portion of the information furnished by the Seller and his Affiliates will be
accorded confidential treatment.
23
Minor Investments. Notwithstanding the provisions of Section
5.7.1(a) above, the Seller and his Affiliates may at any time own in the
aggregate, directly or indirectly, for investment purposes only, 5% or less of
any class of securities of any entity traded on any national securities exchange
or quoted on the Nasdaq National Market.
Remedies. The Seller acknowledges that compliance with the
provisions of this Section 5.7 is necessary and proper to preserve and protect
the business of the Company acquired by Buyer under this Agreement and to assure
that the parties receive the benefits intended to be conveyed pursuant to this
Section 5.7. The Seller agrees that any failure by the Seller or any of his
Affiliates to comply with the provisions of this Section 5.7 will entitle Buyer
and its Affiliates, in addition to such other relief and remedies as may be
available, to equitable relief, including, but not limited to, the remedy of
injunction. Resort to any remedy will not prevent the concurrent or subsequent
employment of any other remedy, or preclude the recovery by Buyer and their
Affiliates of monetary damages and compensation.
Severability; Reformation. The covenants in this Section 5.7
are severable and separate, and the unenforceability of any specific covenant
will not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction will determine that
the scope, time or territorial restrictions set forth in this Section 5.7 are
unreasonable and therefore unenforceable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent that the court
deems reasonable and this Agreement will thereby be reformed.
Tax Matters.
The Seller will be responsible for the payment of all
transfer, sales and use and documentary taxes, filing and recording fees and
similar charges relating to the transactions contemplated herein.
The Seller or his Affiliates will prepare or cause to be
prepared and file or cause to be filed all Tax Returns of the Company for all
periods ending on or prior to the Closing Date which are filed after the Closing
Date, including filing a tax return for the partial year period ending on the
Closing Date. The Seller will be responsible and liable for the reporting and
timely payment of any Taxes imposed on or with respect to the properties,
income, and operations of the Company for all periods ending on or prior to the
Closing Date, including all Taxes on properties, income, and operations of the
Company through the Closing Date.
Buyer will prepare or cause to be prepared and file or cause
to be filed all Tax Returns of the Company for Tax periods that begin after the
Closing Date. Buyer will be responsible and liable for the timely reporting and
payment of any Taxes imposed on or with respect to the properties, income, and
operations of the Company for all periods beginning after the Closing Date and
ending at any time thereafter, including all Taxes on income and operations of
the Company earned after the Closing Date.
Buyer will prepare or cause to be prepared and file or cause
to be filed all Tax Returns of the Company for Tax periods beginning before the
Closing Date and ending after the Closing Date, except where a return or final
return can be filed by the Seller for Company operations through the Closing
Date, as is required in paragraph (b) above. All Taxes shown to be due on
returns to be prepared by Buyer will be prorated in accordance with the
provisions of Section 5.8(g). Buyer will provide the Seller adequate time to
review and comment upon each such Buyer prepared Tax Return described in this
paragraph (d) prior to filing. The Seller will pay to Buyer within fifteen (15)
days after the date on which Taxes are paid on any return described in this
paragraph (d), an amount equal to the portion of such Taxes which relate to the
portion of such taxable period ending on the Closing Date in accordance with the
provisions of Section 5.8(g).
Buyer, the Company and the Seller will cooperate fully, as and
to the extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section 5.8 and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation will include the
retention and (upon the other party's request) the provision of records and
information that are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any materials provided
hereunder. The Company and the Seller agree (i) to retain all books and records
with respect to Tax matters pertinent to the Company relating to any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or the Seller, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any Taxing authority, and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if the other party so requests, the Company or
the Seller, as the case may be, will allow the other party to take possession of
such books and records.
24
Buyer and the Seller further agree, upon request, to use
reasonable efforts to obtain any certificate or other document from any
governmental body or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed.
For purposes of this Section 5.8, Taxes will be computed based
on the closing of the books method as of the end of the Closing Date; provided,
however, that exemptions, allowances and deductions (such as depreciation
deductions) calculated on an annual basis will be prorated on a per diem basis,
and provided further, in the case of any Tax imposed upon the ownership or
holding of real or personal property, such Taxes will be prorated based on the
percentage of the actual period to which such Taxes relate that precedes the day
following the Closing Date.
The Seller, at his sole expense, will have the exclusive
authority to represent the Company before any Taxing authority or any court
regarding the Tax consequences of the operations of the Company for all periods
ending on or prior to the Closing Date; provided, however, that the Seller will
allow Buyer and its counsel to participate in any such proceeding; and provided
further, that the Seller will not enter into any settlement of any contest or
otherwise compromise any issue that affects or may affect the Tax liability of
the Company for any period beginning after the Closing Date without the prior
written consent of Buyer. The Seller will keep Buyer fully and timely informed
with respect to the commencement, status and nature of any administrative or
judicial proceedings involving any Tax liability of the Company for all taxable
periods.
Closing Debts and Obligations. At Closing, the Company will be free and
clear of all Third Party Debt, other debts, obligations, liabilities, and Taxes,
whether or not shown on the Financial Statements, other than liabilities for
trade accounts payable, customer deposits, accrued commissions, and ad valorem
Taxes (not yet due and payable, but subject to proration in accordance with
Section 5.8), which will remain the liability and obligation of the Company
post-Closing but which Seller will leave sufficient cash and cash equivalents to
pay for such liabilities. All other payables, liabilities, and Taxes of the
Company will be paid by the Seller or assumed by the Seller prior to Closing.
The Company and the Seller will pay all employee wages through date of Closing
and pay employees all other accrued payroll or accrued vacation or sick time.
Company will remit all withholding on all payroll through Closing.
Employee Benefit Plans. The Company's Employee Benefit Plans will
remain in place, in full force and effect, with no material changes from
December 31, 2002 to Closing. The Company will terminate its Employment Benefit
Plans at Closing, including but not limited to any pension, 401(k) or deferral
benefit plan. The Company will have no accrued liability related to Employee
Benefit Plans not included the Company Balance Sheets as of the Closing.
Operation of Company. During the Measurement Period, each of Buyer and
Company will, except with the unanimous consent of all of the directors of Buyer
and Company,
operate the business in the ordinary course and in a manner reasonably
consistent with past practice and the budget for the Company;
maintain warehouse credit facilities in substantially the same amounts and
on the same conditions as set forth in Schedule 3.10 hereto and as are generally
available to banks such as the Company;
not acquire (including without limitation, by merger, consolidation, or
acquisition of stock or assets) or form any corporation, partnership, other
business organization or division thereof that will be merged with or own the
Company or which will utilize the assets, personnel, credit facility, or other
operations of the Company;
not enter into any employment, consulting, or agency agreement, or
terminate any such agreement, or fire or lay-off any employee (other than for
cause), which will in any fashion impact the profit and loss statement of
Company, or change or cause to be changed the compensation and benefits payable
or to become payable to the employees of Company;
25
not grant any severance or termination pay to any employee of Company, or
establish, adopt, amend, discontinue, terminate or freeze any bonus, profit
sharing, ERISA Employee Plan applicable to the Company or any employee of the
Company, except as and when required by applicable law; or
not take any action to change, alter, amend any accounting policies and
procedures, including procedures with respect to accounts payable and collection
of accounts receivable, except where necessary to remain consistent with the
accounting practices of the consolidated financial statements of Buyer;
provided, however, that notwithstanding the foregoing, Buyer will be permitted
simultaneously with the Closing to file a certificate of merger to effect a
merger of Company into a wholly owned subsidiary of the Company, Progressive
Lending Inc., a Delaware corporation, for all purposes in this Agreement the
Company shall refer to both the pre-merger and post-merger companies.
Closing Balance Sheet.
The Seller shall prepare and deliver to the Buyer, within 30
days following the Closing Date, a Closing Balance Sheet, including the Seller's
determination of the Closing Tangible Net Worth. The Closing Tangible Net Worth
shall be determined (as of the close of business on the Closing Date but without
giving effect to the consummation of the transactions contemplated hereby) in
accordance with the provisions of this Section 5.12(a). In the event of a
conflict or inconsistency between Section 5.13(a)(i), Section 5.12(a)(ii) and/or
Section 5.12(a)(iii), the provisions of Section 5.12(a)(iii) shall take
precedence over the provisions of Section 5.12(a)(ii) and Section 5.12(a)(i),
and the provisions of Section 5.12(a)(ii) shall take precedence over the
provisions of Section 5.12(a)(i).
The Closing Tangible Net Worth shall be determined in accordance with
principles, practices and procedures which are consistent with those which were
applied in the preparation of the Financial Statements with respect to the
assets and liabilities of the Company and in evaluating the Company's net worth
under the Correspondent Agreement with The Provident Bank dated January 5, 1999,
as amended, and the Mortgage Warehousing and Security Agreement with Flagstar
Bank FSB, dated December 23, 2002.
Notwithstanding anything to the contrary in Section 5.12(a)(i), if any of
the accounting principles, practices or procedures required by Section
5.12(a)(i) produces asset or liability values which are not in compliance with
GAAP, the Closing Tangible Net Worth shall reflect an adjustment necessary to
produce asset or liability values which are in compliance with GAAP.
Notwithstanding anything to the contrary in Section 5.12(a)(ii) or Section
5.12(a)(i), in determining the Closing Tangible Net Worth, no value shall be
given to mortgages held for resale or commissions due the Company (or portions
thereof) not paid within 30 days of the Closing Date.
The Buyer will have 30 days following receipt of the Closing
Balance Sheet to review such statement and to determine if, in the Buyer's
judgment, it has been prepared in accordance with Section 5.12(a). If, in the
Buyer's judgment, adjustments are necessary for the Closing Balance Sheet to
correctly state Closing Tangible Net Worth in accordance with Section 5.12(a),
the Buyer, not later than the aforesaid deadline, shall notify the Seller in
writing (the "Buyer's Letter") of its proposed adjustments, including the
amount, nature and basis for the adjustments. If the Buyer does not send a
Buyer's Letter to the Seller within such period, the Closing Balance Sheet (and
the Seller's determination of the Closing Tangible Net Worth contained therein)
shall be determinative of the Final Net Worth.
As soon as practicable after the Seller's receipt of the
Buyer's Letter, if so delivered pursuant to Section 5.12(b), the Buyer and the
Seller shall confer and endeavor to resolve the adjustments, if any, which are
in dispute.
If the Buyer and the Seller do not confer or are unable to
resolve all of the proposed adjustments in the Buyer's Letter, if so delivered
pursuant to Section 5.12(b), to the mutual satisfaction of the Buyer and the
Seller, then, if a conference pursuant to Section 5.12(c) occurs, within the
20-day period following such conference, the Buyer's independent auditors and
the Seller's independent auditors shall choose an accounting firm that is
independent of the Buyer and the Seller to be jointly engaged by the Buyer and
the Seller to arbitrate the dispute.
26
If the provisions of Section 5.12(d) become operative, then
the arbitrator engaged pursuant to Section 5.12(d) shall be furnished with a
copy of this Agreement, any amendments hereto and, the Closing Balance Sheet and
the Buyer's Letter. The arbitrator shall have 30 days to review this material,
and additional material that either the Buyer or the Seller voluntarily choose
to submit and such other information as the arbitrator deems appropriate. Within
the 30-day period, the arbitrator will furnish the Buyer and the Seller with its
written determination regarding each unresolved adjustment of the Buyer
submitted for arbitration.
The arbitrator shall confine itself only to adjustments
proposed in Buyer's Letter and not resolved in a subsequent writing signed by
both the Buyer and the Seller. The Buyer and the Seller shall each have the
right to submit supporting or explanatory material to the arbitrator and to the
other party. The arbitrator, in reaching a decision, shall provide a written
explanation of its conclusions to the Buyer and the Seller, and its
determination shall be conclusive and binding upon the Buyer and the Seller. The
award or decision of the arbitrator shall be deemed final and may be entered and
enforced in any court of competent jurisdiction. The Buyer and the Seller agree
to submit to the jurisdiction of any such court for the enforcement of such
award or decision. The fee and expenses of the arbitrator shall be borne equally
by the Seller and the Buyer.
In preparing and reviewing the Closing Balance Sheet and the
Buyer's Letter, and in conducting the reviews by the Buyer or the Seller and the
arbitrator, the Buyer and the Seller will grant the other party and the
arbitrator all reasonable access to the financial records of the Company, as
applicable, and any workpapers, including (where applicable) auditor workpapers
prepared with respect to the Closing Balance Sheet, the Buyer's review thereof
and the Seller's review of the Buyer's Letter.
The determination of Closing Tangible Net Worth contained in
the Closing Balance Sheet prepared by the Seller pursuant to Section 5.12(a)
will be modified by any adjustments (i) agreed to by the Buyer and the Seller
pursuant to Section 5.12(c), or (ii) determined by the arbitrator pursuant to
Section 5.12(f). The Closing Tangible Net Worth after any and all such
adjustments shall be determinative of the Final Net Worth.
If the Seller fails to prepare and deliver a Closing Balance
Sheet in accordance with Section 5.12(a), then the Buyer shall prepare and
deliver to the Seller a Closing Balance Sheet within 30 days following the
expiration of the 30 day period provided for in Section 5.12(a), a Closing
Balance Sheet, including the Buyer's determination of the Closing Tangible Net
Worth. The determination of Closing Net Worth contained in the Closing Balance
Sheet prepared by the Buyer pursuant to this Section 5.12(i) will be
determinative of the Final Net Worth and not subject to adjustment or
arbitration pursuant to Sections 5.12(c) through 5.12(h).
In the event the Closing Balance Sheet indicates that the
amount paid Seller under Section 2(e) hereof as additional purchase was
incorrect by $5,000 or less, the parties agree to make no adjustments to
Purchase Price. If the amount of discrepancy is greater than $5,000 each of the
parties agrees to reimburse the other the full amount of the difference within
ten (10) days following the finalization of the Closing Balance Sheet.
Infusion of Capital. Immediately following the Closing, Buyer shall
place assets with a fair market value of not less than $250,000 into the Company
as additional paid in capital.
Notice of Defaults. Buyer shall provide Seller with notice immediately
following Buyer receiving notice of an event of default under any funded
indebtedness of Buyer and the respective Creditor exercising its right to
accelerate the repayment of such indebtedness.
Section 338 Election. Buyer covenants that it will not make a Section
338 election under the Code for the transaction contemplated by this Agreement.
Consents. Buyer, Seller and the Company agree to work in good faith to
procure all consents to the transaction contemplated by this Agreement,
including but not limited to any regulatory or licensing body or group and the
warehouse lenders for Company. Buyer agrees to pay any new application fees for
any consent and Seller agrees to pay the surrender fee for the Company's license
in Washington. Buyer covenants to use its reasonable best efforts to have
Flagstar release Seller from his personal guaranty under the Flagstar Warehouse
Credit Agreement.
27
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to perform and observe the covenants,
agreements, and conditions to be performed and observed by it at or before the
Closing will be subject to the satisfaction of the following conditions, which
may be expressly waived only in writing signed by Buyer.
Accuracy of Representations and Warranties. Each of the representations
and warranties of the Company and the Seller contained in this Agreement and the
other Transaction Documents to which each is a party (including applicable
Exhibits or Disclosure Schedules) will be true and correct as of the date hereof
and at and as of the Closing Date; except to the extent such representations and
warranties are made as of a specified date, in which case such representations
and warranties will be true and correct as of the specified date.
[Reserved].
Performance of Agreements. The Company and the Seller will have
performed all obligations and agreements and complied with all covenants and
conditions contained in this Agreement or any other Transaction Document to be
performed and complied with by them at or prior to the Closing.
Opinion of Counsel for the Company and the Seller. Buyer will have
received the opinion of Douglas, Eden, Xxxxxxxx & XxXxxxxx, counsel for the
Company and the Seller, dated the Closing Date, in substantially the form
attached as Exhibit F.
Consents to Sale of Membership Interests. The Company will have
received and will have delivered to Buyer written consents to the sale of the
Membership Interests from each of the parties (other than the Company) to those
agreements, leases, notes or other documents set forth as requiring such consent
on the Disclosure Schedules, which consents will be satisfactory in all respects
to Buyer in its sole and absolute discretion.
Seller's Certificate. Buyer will have received a certificate from the
Seller, dated the Closing Date, substantially in the form attached as Exhibit G,
certifying that the conditions set forth in Sections 6.1, 6.3, 6.5, 6.7 and 6.14
have been fulfilled.
Approvals and Consents. All transfers of permits or licenses and all
approvals, applications or notices from public agencies, federal, state, local
or foreign, or other third parties, the granting or delivery of which is
necessary for the consummation of the transactions contemplated hereby or for
the continued operation of the Company as set forth in the Disclosure Schedules,
will have been obtained, and all waiting periods specified by law will have
passed. All other consents, approvals, and notices referred to in the Disclosure
Schedules will have been obtained or delivered. All such transfers, approvals,
and consents will be satisfactory in all respects to Buyer in its sole and
absolute discretion. The Company's warehouse lenders in existence on the date
hereof shall have agreed in writing to maintain such lines following the
Closing.
Proceedings and Documents; Managing Member's Certificate. All corporate
and other proceedings in connection with the transactions contemplated hereby
and all documents and instruments incident to such transactions will have been
approved by counsel to Buyer, and Buyer will have received a certificate of the
Managing Member of the Company, substantially in the form attached as Exhibit H,
as to the authenticity and effectiveness of the actions of the officers of the
Company authorizing the sale of the Membership Interests and the other
transactions contemplated by this Agreement and the other Transaction Documents
to which the Seller is a party, and such other documents as are reasonably
specified by counsel to Buyer. Copies of (a) the Company's organizational
documents, (b) operating agreement, as certified by the Managing Member of the
Company, and (c) resolutions of the Company's members relating to the
transactions contemplated by this Agreement and the Transaction Documents will
be attached to such certificate.
28
Compliance with Laws. The consummation of the transactions contemplated
by this Agreement will be legally permitted by all laws and regulations to which
Buyer is subject.
Legal Proceedings. No order of any court or administrative agency will
be in effect that enjoins, restrains, conditions or prohibits consummation of
this Agreement, and no litigation, investigation or administrative proceeding
will be pending or threatened that would enjoin, restrain, condition or prevent
consummation of this Agreement or the transactions contemplated hereby.
Delivery of Certificates. The Seller will deliver to Buyer at Closing
certificates representing the Membership Interests, duly endorsed for transfer
on the Company's books.
Due Diligence Review. The results of the due diligence investigations
by Buyer and its representatives of the Company shall be reasonably satisfactory
to Buyer.
No Material Adverse Change. The Company shall have certified at Closing
that no material adverse change shall have occurred with respect to the Company,
including the operation or condition thereof or liabilities relating thereto,
during the period beginning on the date of this Agreement and ending on the
Closing Date.
Resignations. Buyer will have received copies of resignations effective
as of the Closing Date of all the directors and officers of the Company.
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND THE SELLER
The obligations of the Company and the Seller to perform and observe
the covenants, agreements, and conditions to be performed and observed by any of
them at or before the Closing will be subject to the satisfaction of the
following conditions, which may be expressly waived only in writing signed by
the Company and the Seller.
Accuracy of Representations and Warranties. Each of the representations
and warranties of Buyer contained in this Agreement and the other Transaction
Documents to which it is a party will be true and correct as of the date hereof
and at and as of the Closing Date, except to the extent such representations and
warranties are made as of a specified date, in which case such representations
and warranties will be true and correct as of the specified date.
Performance of Agreements. Buyer will have performed all obligations
and agreements and complied with all covenants and conditions contained in this
Agreement or any other Transaction Document to be performed and complied with by
it at or prior to the Closing.
Approvals and Consents. All transfers of permits or licenses and all
approvals, applications or notices to public agencies, federal, state, local, or
foreign, required to be obtained by Buyer for the consummation of the
transactions contemplated hereby will have been obtained, and all waiting
periods specified by law will have passed.
Compliance with Laws. The consummation of the transactions contemplated
by this Agreement will be legally permitted by all laws and regulations to which
the Company and the Seller are subject.
Legal Proceedings. No order of any court or administrative agency will
be in effect that enjoins, restrains, conditions or prohibits consummation of
this Agreement, and no litigation, investigation or administrative proceeding
will be pending or threatened that would enjoin, restrain, condition or prevent
consummation of this Agreement or the transactions contemplated hereby.
29
Purchase Price. At Closing Buyer will deliver to the Seller (i) the
cash portion of the Purchase Price, (ii) the Note, (iii) the Security Agreement,
(iv) the Pledge Agreement for Progressive Lending LLC, (v) Buyer Shares and (vi)
the Voting Agreement.
Registration Rights and Voting Agreement. At Closing Buyer will deliver
a counterpart to the registration rights and voting agreement in the form of
Exhibit I attached hereto.
TERMINATION, AMENDMENT AND WAIVER
Termination. This Agreement may be terminated at any time prior to the
Closing (notwithstanding any approval of this Agreement by the Seller):
by mutual written consent of the Company and Buyer;
by the Seller, if Buyer will have breached any of their
representations, warranties, covenants or agreements;
by Buyer, if the Company and/or the Seller will have
breached any of its or his representations, warranties, covenants or
agreements;
by either the Seller or Buyer if the Closing has not occurred
by December 31, 2003; provided, however, that a later date may be agreed upon in
writing by the parties hereto; provided further, however, that the right to
terminate this Agreement under this subsection (d) will not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before such
date; or
by either the Seller or Buyer if there will be any law or
regulation that makes consummation of the sale of the Membership Interests by
the Seller to Buyer illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Buyer or the Company from consummating the
sale of the Membership Interests by the Seller to Buyer is entered and such
judgment, injunction, order or decree will become final and nonappealable;
provided, however, that the party seeking to terminate this Agreement pursuant
to this subsection (e) will have used all reasonable efforts to remove such
judgment, injunction, order or decree.
Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1(a), there will be no further obligation on the
part of any party, except that Sections 8.2, 10.1, 10.2, 10.3 and 10.6 will
survive any such termination and nothing will relieve any party from liability
for any breach.
Expenses and Termination Fee.
Subject to Sections 8.3(b), 8.3(c), and 8.3(d) whether or not
the transaction contemplated by this Agreement is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants, and legal counsel) will be paid by the party incurring
such expenses;
If Buyer terminates this Agreement pursuant to Section 8.1(c),
then the Company or Seller will pay promptly (but in no event later than five
business days after the occurrence of the event giving Buyer the right to so
terminate this Agreement) to Buyer all of its actual and reasonable expenses
(including attorney and accountant fees and expenses) incurred in connection
with the negotiation and preparation of this Agreement, the Transaction
Documents, and the letter of intent dated August 12, 2003. The Company agrees
that the payment of such fees and expenses would be in addition to any other
remedies, legal or equitable, available to Buyer for any breach by the Company
or Seller of any of its or his representations, warranties, or covenants
contained in this Agreement;
If the Seller terminates this Agreement pursuant to Section
8.1(b), then Buyer will pay promptly (but in no event later than five business
days after the occurrence of the event giving the Seller the right to so
terminate this Agreement) to the Seller all of his individual actual and
reasonable expenses (including attorney and accountant fees and expenses)
incurred in connection with the negotiation and preparation of this Agreement,
the Transaction Documents, and the letter of intent dated July 24, 2003.
30
Buyer agrees that the payment of such fees and expenses would be in addition to
any other remedies, legal or equitable, available to the Seller for any breach
by Buyer of any of its representations, warranties, or covenants contained in
this Agreement;
If the Company breaches its covenants under Section 5.3 of
this Agreement, the Company must pay promptly (but in no event later than five
business days after Buyer notifies the Company of such a breach) to Buyer
[$150,000,] which Buyer and the Company agree approximates Buyer's actual and
reasonable expenses (including attorney and accountant fees and expenses)
incurred in connection with the negotiation and preparation of this Agreement,
the Transaction Documents, and the letter of intent dated August 12, 2003.
Amendment. Buyer, the Company and the Seller may amend, modify, or
supplement this Agreement at any time, but only in writing duly executed on
behalf of each of the parties to be bound thereby. This Agreement will only be
valid and binding on the parties following execution by all parties hereto.
Waiver. At any time prior to the Closing, any party may (a) extend the
time for the performance of any obligation or other act of any other party, (b)
waive any inaccuracy in the representations and warranties contained in any
Transaction Document, or (c) waive compliance with any agreement or condition in
any Transaction Document. Any such extension or waiver will be valid only if set
forth in an instrument in writing signed by the party or parties to be bound.
The failure of any party at any time or times to require performance of any
provisions will in no manner affect its right at a later time to enforce the
same. No waiver by any party of any condition or of any breach of any terms,
covenants, representations, warranties or agreements contained in this Agreement
will be deemed to be a further or continuing waiver of any such condition or
breach in other instances or a waiver of any other condition or any breach of
any other terms, covenants, representations, warranties or agreements.
SURVIVAL AND INDEMNIFICATION
Survival. All representations and warranties contained in this
Agreement or the other Transaction Documents will survive the Closing. The
covenants and agreements contained in this Agreement that contemplate
performance after the Closing will survive the Closing and will continue until
all obligations with respect thereto will have been performed or satisfied or
will have been terminated in accordance with their terms.
Indemnification.
By the Seller. From and after the Closing Date, the Seller
will indemnify, defend and hold Buyer and its officers, directors, agents,
attorneys and Affiliates (the "Buyer Indemnified Parties") harmless from and
against, and will reimburse Buyer Indemnified Parties for, any and all losses,
damages, debts, liabilities, obligations, judgments, orders, awards, writs,
injunctions, decrees, fines, penalties, taxes, costs or expenses (including but
not limited to any legal and accounting fees and expenses) ("Losses") arising
out of or in connection with:
any inaccuracy in or other breach of any
representation or warranty made by the Company or the Seller in this Agreement
or in any other Transaction Document;
any failure by the Company or the Seller to perform
or comply, in whole or in part, with any covenant or agreement in this
Agreement or any other Transaction Document to which it is a party;
any claim, demand, cause of action, suit, proceeding,
hearing or investigation ("Claim") by any person or entity relating to the
Company's operation of the business on or before the Closing Date;
any workers compensation claim relating to the
Company's operation of business on or before the Closing Date which is not
covered by the Company's Workers Compensation Policies; or
fraud by the Seller.
By Buyer. From and after the Closing Date, Buyer will
indemnify, defend and hold the Seller (the "Seller Indemnified Parties")
harmless from and against, and will reimburse the Seller for, any and all Losses
arising out of or in connection with:
31
any inaccuracy in or other breach of any
representation or warranty made by Buyer in this Agreement or in any other
Transaction Document;
any failure by Buyer to perform or comply, in whole
or in part, with any covenant or agreement in this Agreement or any other
Transaction Document to which it is a party; or
any Claim by any person or entity relating to the
Company's operation of its business after the Closing Date.
Procedure for Indemnification.
Claim Notice. In the event that any Indemnified Party sustains
or incurs any Losses (or is subject to a claim which if successful would result
in a Loss) in respect of which indemnification may be sought pursuant to this
Article 9, such Indemnified Party may assert a claim for indemnification by
giving written notice (the "Claim Notice") to the Indemnifying Party, which will
describe in reasonable detail the facts and circumstances on which the asserted
claim for indemnification is based. Unless the claim described in the Claim
Notice is contested by the Indemnifying Party by written notice to the
Indemnified Party of the amount of the claim that is contested, given within
thirty (30) days of the receipt of the Claim Notice, the Indemnified Party may
recover such undisputed amount of the claim described in the Claim Notice.
Dispute Notice. If, within thirty (30) days of the receipt by
the Indemnifying Party of the Claim Notice, the Indemnifying Party contests in
writing to the Indemnified Party that such Loss constitutes an indemnifiable
claim (the "Dispute Notice"), then the Indemnified Party and the Indemnifying
Party, acting in good faith, will attempt to reach agreement with respect to
such claim.
Third-Party Claims.
With respect to claims for indemnification
resulting from or in connection with any Claim or any legal proceeding
commenced by a third party ("Third Party Claim"), the Indemnified Party will
give the Claim Notice to the Indemnifying Party no later than twenty (20) days
prior to the time any initial answer or response to the asserted claim is
legally required under any applicable court or procedural rule. With respect
to Third Party Claims not governed by any applicable court or procedural rule,
the Indemnified Party will provide the Claim Notice to the Indemnifying Party
within thirty (30) days of receipt of notice of such Claim; provided, however,
that the failure to notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability it may have to the Indemnified Party, except
to the extent that the Indemnifying Party demonstrates that the defense of such
Claim is prejudiced by the Indemnified Party's failure to give such notice.
The Indemnifying Party will be entitled to
participate in the defense of any Third Party Claim at such Indemnifying Party's
expense, and at the option of the Indemnifying Party (subject to the limitations
set forth below) will be entitled to assume the defense thereof by appointing a
recognized and reputable counsel acceptable to the Indemnified Party to be the
lead counsel in connection with such defense; provided that:
the Indemnifying Party provides written
notice to the Indemnified Party of its intention to assume the defense of such
Third Party Claims within fifteen (15) days of receipt of the Claim Notice; and
the Indemnified Party will be entitled to
participate in the defense of such Third Party Claim and to employ counsel of
its choice for such purpose provided that the fees and expenses of such separate
counsel will be borne by the Indemnified Party; and
32
the Indemnifying Party will not be entitled
to assume control of such defense (unless otherwise agreed to in writing by the
Indemnified Party) or will relinquish control of such defense and in either case
will pay the fees and expenses of counsel retained by the Indemnified Party if
the Third Party Claim is an environmental claim or any other claim of which the
aggregate amount in controversy is less than $25,000.00; and
if the Indemnifying Party will control
the defense of any Third Party Claim, the Indemnifying Party agrees to
vigorously defend such claim and to obtain the prior written consent of the
Indemnified Party (which consent will not be unreasonably withheld) before
entering into any settlement of a claim; provided that prior written consent
will not be necessary if pursuant to or as a result of such settlement,
injunctive or other relief will be imposed against the Indemnifying Party (and
not the Indemnified Party) or such settlement expressly and unconditionally
releases the Indemnified Party from all liabilities and obligations with respect
to such claim, with prejudice. Notwithstanding the above, with regard to any
Third Party Claim for Taxes the Indemnified Party's consent to any settlement
may be withheld for any reason, unless the proposed settlement is determined not
to have any adverse effect on the tax returns, tax treatments, and tax
obligations of the Indemnified Party or its Affiliates; and
if the Indemnified Party will control the
defense of such claim, the Indemnified Party agrees to
vigorously defend such claim and to obtain the prior written consent of the
Indemnifying Party (which consent will not be unreasonably withheld) before
entering into any settlement of a claim; provided that prior written consent
will not be necessary if pursuant to or as a result of such settlement,
injunctive or equitable relief will be imposed against the Indemnified Party
(and not the Indemnifying Party) or if such settlement expressly and
unconditionally releases the Indemnifying Party from all liabilities and
obligations with respect to such claim, with prejudice.
Remedy. This Agreement will not limit the remedies of the Parties with
respect to any matters arising under or related to this Agreement or any of the
Transaction Documents. Each Party will retain the right to pursue any other
remedies, at law or in equity, which such Party may have by virtue of the
provisions of this Agreement or at law.
Investigations; Waivers. An Indemnified Party's right to
indemnification provided for in this Article 9 will remain in effect
notwithstanding any investigation at any time by or on behalf of any party or
any waiver by any party of any condition to such party's obligations to
consummate the transactions contemplated hereby.
GENERAL
Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each party will each pay its own fees and expenses
for the negotiation, preparation and carrying out of this Agreement and the
other Transaction Documents (including legal and accounting fees and expenses);
provided, however, that, should any action be brought hereunder, the attorneys'
fees and expenses of the prevailing party will be paid by the other party to
such action. The Seller will pay any transfer or similar taxes that may be
payable in connection with the transactions contemplated by this Agreement and
will pay all expenses of the Company and the Seller incurred in connection with
the negotiation and preparation of this Agreement and the other Transaction
Documents.
Specific Enforcement. The parties expressly agree that they will be
irreparably damaged if this Agreement is not specifically enforced. Upon a
breach or threatened breach of the terms, covenants and/or conditions of this
Agreement by any party, Buyer, the Company and the Seller will, in addition to
all other remedies, be entitled to a temporary or permanent injunction, without
showing any actual damage, and/or a decree for specific performance, in
accordance with the provisions of this Agreement.
Consequential Damages. No party will be liable to the other parties for
any special, indirect, incidental or consequential damages resulting from any
breach of this Agreement.
33
Assignment. This Agreement will not be assigned by operation of law or
otherwise, except that Buyer may assign all or any of its rights and obligations
to any of its Affiliates. In the event of any such permitted assignment, Buyer
will guarantee the performance of such obligations by such assignee.
Notices. Unless otherwise provided, any notice under this Agreement
will be given in writing and will be deemed effectively given (a) upon personal
delivery to the party to be notified, (b) upon confirmation of receipt by fax by
the party to be notified, (c) one business day after deposit with a reputable
overnight courier, prepaid for overnight delivery and addressed as set forth in
(d), or (d) three (3) days after deposit with the U.S. Post Office, postage
prepaid, registered or certified with return receipt requested and addressed to
the party to be notified at the address indicated for such party below, or at
such other address as such party may designate by 10 days' advance written
notice to the other parties given in the foregoing manner.
To Buyer: Xxxxxx Holding Company, Inc.
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxx Xxxxx & Xxxxxxx LLP
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
To Company: Progressive Lending, LLC
0000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: President
Facsimile: 000-000-0000
If to the Seller: Xxxxxxx X. Xxxxxx
c/o Company
with a copy to: Douglas, Eden, Xxxxxxxx & XxXxxxxx, X.X.
XX Xxxx Xxxxxxxx
Xxxx 000 Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
Facsimile: (000) 000-0000
Governing Law; Arbitration; Jurisdiction Venue.
This Agreement will be governed by and construed under the
laws of the State of Delaware without regard to principles of conflict of laws;
and
Any controversy, dispute or claim arising out of or relating
to this Agreement or the breach hereof that cannot be settled by mutual
agreement (except for actions by any party seeking equitable, injunctive or
other relief) will be finally settled by arbitration as follows: Any party who
is aggrieved will deliver a notice to the other parties hereto setting forth the
specific points in dispute. Any points remaining in dispute twenty (20) days
after the giving of such notice will be submitted to arbitration in Washington,
before a single arbitrator appointed in accordance with American Arbitration
Association Rules, modified as expressly provided. The arbitrator may enter a
default decision against any party who fails to participate in the arbitration
proceedings. The decision of the arbitrator on the points in dispute will be
final, unappealable, and binding, and judgment on the award may be entered in
any court having jurisdiction. The parties irrevocably consent to the
jurisdiction and venue of the state and federal courts located in Washington, in
connection with any action relating to this Agreement. Notwithstanding any other
provision of this Agreement, the arbitrator will be authorized to apportion its
fees and expenses and the reasonable attorney fees and expenses of the parties
as the arbitrator deems appropriate. In the absence of any such apportionment,
the fees and expenses of the arbitrator will be borne 50% by Buyer, on the one
hand, and 50% by the Company or, if the Closing has occurred, by the Seller, on
the other hand, and each such party will bear the fees and expenses of its own
attorneys. The parties agree that this clause has been included to rapidly and
inexpensively resolve any disputes between them with respect to this Agreement,
and that this clause will be grounds for dismissal of any court action commenced
by either party with respect to this Agreement, other than post arbitration
actions seeking to enforce an arbitration award. The parties will keep
confidential, and will not disclose to any person, except as may be required by
law, the existence of any controversy hereunder, the referral of any such
controversy to arbitration or the status or resolution thereof.
34
Successors and Assigns. The terms and conditions of this Agreement will
inure to the benefit of and be binding on the respective successors and assigns
of the parties.
Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision will be excluded from this
Agreement, and the balance of this Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
Entire Agreement; Counterparts. This Agreement constitutes the entire
agreement among the parties with respect to this subject matter and supersedes
all prior agreements and undertakings, both written and oral, among the parties
with respect to this subject matter, including, but not limited to, the Letter
of Intent, dated August 12, 2003, between Buyer and the Company. This Agreement
may be executed in two or more counterparts, which together will constitute one
instrument. This Agreement will not be valid and binding until all signatories
hereto have validly executed this Agreement.
[SIGNATURE PAGE FOLLOWS]
35
IN WITNESS WHEREOF, the parties hereto have entered into and signed
this Agreement as of the date and year first above written.
PROGRESSIVE LENDING, LLC XXXXXX HOLDING COMPANY, INC.
By: By:
--------------------------- -----------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
-----------------------------------
Xxxxxxx X. Xxxxxx
36
EXHIBIT B
PROMISSORY NOTE
$500,000 Spokane, Washington
______________ ___, 2003
FOR VALUE RECEIVED, the undersigned Xxxxxx Holding Company, Inc.
("Maker") promises to pay to the order of Xxxxxxx X. Xxxxxx (together with his
permitted successors and/or assigns, "Holder"), at 0000 Xxxx Xxxxxxx Xxxxx,
Xxxxxxxx Xxxxxx, Xxxxxxx 00000, or at such other place as the holder hereof may
designate in writing, the principal sum of FIVE HUNDRED THOUSAND DOLLARS
($500,000), together with interest thereon from the date hereof at the rate of
6% per annum, subject to adjustments and limitations set forth herein and in the
Purchase and Exchange Agreement dated as of _________, 2003 among Maker,
Progressive Lending, LLC (the "Company") and Holder (the "Purchase Agreement"),
until paid in full ("Note"). The balance of outstanding principal and accrued
but unpaid interest after all adjustments will be paid in full on __________ __,
2007 or on such later date as set forth in A.(4) hereof (the "Maturity Date").
Notwithstanding the foregoing, in the event of any non-payment of either
principal or interest within twenty (20) days of the due date of such payment,
the Maker hereby agrees to pay to the Holder interest on the outstanding
principal balance hereof and on any overdue interest, at the interest rate plus
10.0% per annum until such payment default is cured or Holder has foreclosed on
any security interest securing this Note. In the event any interest rate
applicable hereto exceeds the highest rate allowable under applicable law, then
the rate of such interest will be reduced to the highest rate not in excess of
such maximum allowable interest and any excess previously paid by the Maker
shall be deemed to have been applied against the principal. Capitalized terms
used in this Note, but not otherwise defined, will have the meanings set forth
in the Purchase Agreement.
A. Subject to the limitations set forth herein, the Maker shall make
monthly payments of $11,742.51 ("Regular Monthly Payment") on the last
day of each month commencing with the month following the Closing Date
for 48 consecutive months.
(1) During the initial three (3) months following the Closing (the
"Initial Quarter") the EBT of the Company will be measured
monthly. If the EBT of the Company is less than $41,667 in a
month ("Target Monthly EBT"), then a portion of the Regular
Monthly Payment for the succeeding month will be deferred. The
deferred amount shall equal the product of the Regular Monthly
Payment times a fraction, the numerator of which shall be the
actual EBT of the Company in the previous month and the
denominator of which shall be the Target Monthly EBT.
(2) If during any quarter (following the Initial Quarter) during
the 48 months following Closing the EBT of the Company is
less than $125,000 ("Target Quarterly EBT"), a portion of
the Regular Monthly Payment in the succeeding three months
will be deferred. The deferred amount shall equal the
product of the Regular Monthly Payment times a fraction, the
numerator of which shall be the actual EBT of the Company in
the preceding fiscal quarter and the denominator of which
shall be the Target Quarterly EBT. Any deferred portion will
be paid in part or in whole in a succeeding fiscal quarter
in an amount equal to the actual EBT of the Company for the
succeeding quarter minus the Target Quarterly EBT (the
"Difference"). To the extent the Difference is greater than
or equal to the deferred amount from the previous quarter,
then the deferred portion from the previous quarter will be
paid in three equal installments with the Regular Monthly
Payment during the succeeding three months. If the
Difference is less than the deferred portion, then the
Regular Monthly Payment will be increased by the Difference
divided by three. Any remaining deferred portion will be
repaid pursuant to A.(4) hereof.
1
(3) In the event the EBT of the Company during the Measurement
Period is equal to or greater than the Target EBT then any
payments deferred during the Measurement Period shall be
paid not later than 75 days following the second anniversary
of the Note.
(4) All deferred payments, as at the Maturity Date shall be
aggregated and paid in monthly installments of $11,742.51
following the Maturity Date, subject to the adjustments as set
forth herein or in the Purchase Agreement, until all such
deferred payments have been paid.
B. Principal and interest due under this Note are subject to reduction as
set forth in the Section 2 of the Purchase Agreement in the event EBT of
the Company is less than $1,000,000 in the aggregate for the two years
following the Closing.
Examples.
(i) If during the first full month following the Closing Date the
EBT of the Company equals $35,000 then the monthly payment due
under the Note in the following month shall equal $9,863.63
(11,742.51 x 35,000/41,667); the deferred portion would be
$1,878.88.
(ii) If during the second month following the Closing Date, the EBT
of the Company equals $48,000, the Regular Monthly Payment
will be made. The deferred portion will be paid in three equal
installments of $626.29, which will be added to the Regular
Monthly Payments.
(iii) If the EBT of the Company during the second quarter following
the Closing Date was $110,000 then during the third quarter
following the Closing Date, the monthly payment amount shall
be $10,333.41 per month (11,742.51 x 110,000/125,000); the
deferred portion for such quarter would be $4,227.30.
2
C. If during the initial term of months 25 through 48 month of this Note an
aggregate of $57,000 is deferred (assuming no adjustment to purchase
price under the Purchase Agreement), then Holder shall receive four (4)
additional monthly payments of $11,742.51 in the 49th - 52nd months
following the Closing Date and a final payment of $10,029.96 in the 53rd
month following Closing (the "Deferred Payments"). The Deferred Payments
will not be subject to any further deferral based on the EBT of the
Company.
This Note is secured by the assets of the Company pursuant to that
Security Agreement dated as of the date of this Note (the "Security Agreement")
and by a pledge of all of the outstanding capital stock or other equity held by
Maker in the Company pursuant to that certain Pledge Agreement dated as of the
date of this Note (the "Pledge Agreement").
It shall be a "Maker Event of Default" if (i) the Maker fails to pay
within twenty (20) days of when due, any amount under this Note, (ii) the Maker
is in material breach of any of its representations, warranties or covenants
contained in the Pledge Agreement, the Security Agreement, or that certain
Voting and Registration Rights Agreement dated as of the date of this Note,
(iii) the Employment Agreement, dated as of September __, 2003, between Holder
and Maker (the "Employment Agreement") is terminated by Maker other than for
Cause (as defined in the Employment Agreement), (iv) the Maker is in material
breach of its covenants as set forth in Section 5.11 of the Purchase Agreement,
or (v) an event of default has occurred and is continuing under any material
indebtedness of the Maker and the holder of such indebtedness has notified Maker
that it has declared the full amount of such debt to be due and payable and has
begun foreclosure proceedings on any collateral securing such indebtedness. The
Maker shall have thirty (30) days (the "Cure Period") to cure a Maker Event of
Default other than (i) above. Upon the occurrence, and at any time during the
continuance (following the lapse of the Cure Period), of a Maker Event of
Default, Holder, at Holder's option and without the need for presentment,
demand, protest, or other notice of any kind, may declare all unpaid principal
hereof and interest hereunder to be immediately due and payable and same shall
become immediately due and payable upon such declaration; provided, however,
that if the Maker disputes the occurrence of the Maker Event of Default, the
Holder may not declare all unpaid principal hereof and interest hereunder to be
immediately due and payable until such dispute has been resolved.
If the Maker otherwise defaults in the performance of, or compliance
with, any of the terms and provisions of this Note (other than a Maker Event of
Default under the preceding paragraph), Holder shall provide written notice to
the Maker specifying with reasonable particularity the nonperformance or
noncompliance. Following such written notice of default by Maker, Maker shall
have twenty (20) days in which to contest such alleged default by written notice
specifying Maker's objections or to cure such default. In the event Maker
contests such default, the matter will be arbitrated pursuant to Section 10.6 of
the Purchase Agreement. If Maker does not contest such default or cure it, the
Holder may declare the principal of this Note, together with interest thereon,
to be due and payable. Any forbearance or failure to exercise this right will
not constitute a waiver of the Holder's right to exercise the right with respect
to such default and any subsequent default.
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Holder will also have the right to exercise its rights under the
Security Agreement and/or the Pledge Agreement in the event of any default. The
liability of the Maker for the repayment of the indebtedness evidenced by this
Note shall be limited to (i) the security given by the Maker for this Note under
the Security Agreement and/or the Pledge Agreement; and (ii) the full amount of
any owner distributions or dividends paid by Company to Maker during the term of
this Note.
Maker represents and covenants that the proceeds of this Note will be
used for business or commercial purposes, and not for personal, family, or
household purposes.
This Note may be transferred or assigned by Holder, provided, however,
that Maker shall be able to advance any defenses it may have against Xxxxxxx X.
Xxxxxx for repayment against any other party that is the "Holder" under this
Note from time to time.
The Maker agrees that the Maker shall pay or reimburse the Holder for
all reasonable out-of-pocket costs and expenses for attorneys' fees that the
Holder may reasonably pay or incur in connection with the collection of the
Note.
This Note will be governed by the laws of the State of Washington,
without regard to its conflicts of laws rules, it being the intent that the
substantive laws of the State of Washington will always apply.
MAKER: HOLDER:
Xxxxxx Holding Company, Inc. a Delaware
corporation
By:________________________________ _________________________________
Xxxxxx Xxxxx, Co-Chief Executive Officer Name: Xxxxxxx X. Xxxxxx
EXHIBIT C
SECURITIES PLEDGE AGREEMENT
THIS SECURITIES PLEDGE AGREEMENT (the "Agreement") is made as of the 10th
day of December, 2003, by and among Xxxxxx Holding Company, Inc., a Delaware
corporation ("Debtor"), and Xxxxxxx X. Xxxxxx (the "Secured Party").
RECITALS
A. Pursuant to a Purchase and Exchange Agreement, dated as of September
30, 2003 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Purchase Agreement"), by and among Debtor, Progressive
Lending, LLC, a Washington limited liability company (the "Company"), and the
Secured Party, Secured Party sold to Debtor all of the outstanding membership
interests in Progressive LLC (the "Membership Interests").
B. Pursuant to the Purchase Agreement, Debtor issued a promissory note
to the Secured Party in the principal amount of $500,000 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Note"), as
part of the purchase price paid by Debtor to Secured Party for the purchase of
the Membership Interests. Capitalized terms used in this Agreement, but not
otherwise defined herein, will have the respective meanings set forth in the
Note, collectively, and, if not defined therein, in the Purchase Agreement. The
permitted holder of the Note is referred to herein as the Original Noteholder
and his successors and assigns as permitted under the Note, who are referred to
herein, collectively, as the "Noteholders".
D. In order to induce the Secured Party to consummate the transactions
contemplated under the Purchase Agreement, including making the loan evidenced
by the Note, Debtor has agreed to pledge the Securities (as defined below),
including the Membership Interests, to the Secured Party, to secure payment of
the loan evidenced by the Note and related obligations.
NOW THEREFORE, in consideration of the mutual promises and undertakings
of the parties, the receipt and adequacy of which are acknowledged, the parties
agree as follows.
1. Grant of Pledge and Security Interest. As security for the full and
prompt payment of all sums due and to become due under and performance of all
obligations now or in the future arising under the Note, Debtor delivers to the
Secured Party, and further pledges, hypothecates, transfers, and assigns and
sets over to the Secured Party, a continuing security interest in and to all of
Debtor's now held and hereafter acquired right, title and interest in and to the
following (together, the "Securities"):
a. The Membership Interests owned by Debtor, as represented by
Certificate Number _____, which certificate has been delivered herewith by
Debtor to the Noteholders (or their designee), together with a duly executed
blank power of attorney attached thereto, including any rights to distributions
or otherwise on account of such Securities.
b. Each and every certificate or other instrument, document or
agreement representing the foregoing and all other securities, rights, warrants,
options and the like whether newly issued or otherwise created in respect of the
foregoing by stock split, stock dividend, merger, consolidation or otherwise,
together with duly executed blank powers of attorney or other instruments of
transfer, as appropriate, shall be delivered by Debtor to the Noteholders (or
their designee), under the terms and conditions of, and subject to, this
Agreement.
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c. All equitable rights in any of the foregoing, which may have
arisen, or may in the future arise, on account of any of the foregoing.
d. All proceeds of the foregoing.
Any sums paid upon or in respect of the Securities upon the liquidation
or dissolution of the issuer thereof shall be paid over to the Noteholders, to
be held by it hereunder as additional collateral security for the obligations of
Debtor under the Note and in case any distribution of ownership interests of the
Company shall be made on or in respect of the Securities pursuant to a
recapitalization or reclassification of the Membership Interests, the property
so distributed pursuant to such reorganization or reclassification shall be
delivered to the Noteholders, to be held by it hereunder as additional
collateral security for the obligations of Debtor under the Note.
Debtor hereby authorizes the Noteholders to file any financing
statements under the Uniform Commercial Code describing the above Securities
and/or to make such other filings as they deem appropriate or necessary.
2. Attorney-In-Fact. Debtor irrevocably appoints Secured Party as
Debtor's attorney-in-fact, with full power of substitution, to arrange for the
transfer of the Securities in the books and records of the Company, to cash any
and all checks for distributions, to arrange for re-transfer or, if applicable,
certification or re-certification of any securities, as required herein and for
delivery thereof to Secured Party, to endorse, demand, xxx for, or receive any
or all on account of the same and to take any other actions appropriate or
necessary in connection with Secured Party's rights under this Agreement.
3. Representations and Warranties of Debtor. Debtor makes the following
representations and warranties, which shall be deemed to be continuing
representations and warranties, while this Agreement is in effect:
a. The making, execution and delivery of this Agreement will
not violate the provisions of any law, order of court or agreement to which
Debtor is a party, or to which Debtor is subject, or to which any of the
Securities may be subject, except those that have been waived prior to closing
of the transactions contemplated by the Purchase Agreement and/or the Note.
b. Debtor has examined this Agreement and the Note in
connection with this Agreement, and has also obtained any legal advice as it
deemed necessary.
c. Debtor has the full power and authority to pledge the
Securities to the Noteholders pursuant to this Agreement.
d. Debtor has duly executed and delivered this Agreement and
it is the legal, valid and binding obligation of Debtor, enforceable against
Debtor, except as its enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and by general
principles of equity.
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e. Debtor is the sole owner of the Securities, holds good and
valid title to such Securities, free and clear of other liens, claims or
encumbrances in favor of persons other than the Noteholders.
4. Further Assurances & Defenses. Debtor shall not, at any time while
this Agreement is in effect, do or suffer any act or thing whereby the rights of
the Secured Party in the Securities would be materially impaired or diminished.
Debtor shall execute and deliver to Secured Party, in such form as shall be
reasonably acceptable to it, acknowledgements, certificates, assignments,
documents, instruments or otherwise, shall further execute, assign or endorse
over to the Noteholders (or their designee), all of Debtor's rights in the
Securities and create the security interests required under this Agreement and
take such further actions as may be required to confirm the rights of the
Secured Party in and to the Securities or otherwise to effectuate the intention
of this Agreement. Debtor shall defend such Securities against all claims,
liens, demands or otherwise of third parties, at any time claiming an interest
in the Securities which is adverse to the title or lien granted in this
Agreement, and shall notify Secured Party of the existence of any such purported
claims, liens, or otherwise. Debtor shall pay and discharge all expenses,
liabilities, tax assessments, etc., due, levied, or assessed by reason of or on
such Securities.
5. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default":
a. Debtor's failure to comply with any of the provisions of
this Agreement or any representation or warranty of Debtor under this Agreement
shall prove to be materially incorrect, untrue or misleading;
b. Attachment, execution or levy on any of the Securities;
c. Debtor voluntarily or involuntarily becoming subject to any
case or proceeding under (a) the Bankruptcy Code or (b) any other insolvency,
reorganization, liquidation, assignment for the benefit of creditors or other
similar state or federal law; or
d. Debtor shall fail to comply with, or become subject to any
administrative or judicial proceeding under any federal, state or local asset
forfeiture or similar law which can result in the forfeiture of any material
property; or
e. Debtor's failure to make a payment when due under the Note.
6. Secured Party's Rights Upon Default. Upon the occurrence of an Event
of Default, the Noteholders, shall have all rights and remedies in and against
the Securities, and otherwise, of a secured party under the Uniform Commercial
Code as enacted in the State of Washington and all other applicable laws and
shall also have all of the rights provided herein or in the Note, all of which
rights and remedies shall be cumulative to the fullest extent permitted by law.
In connection with the foregoing, Secured Party, for the benefit of the
Noteholders, shall have the right, in compliance with applicable law, to:
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a. Take immediate possession of all pledged Securities, and
effect the full and absolute assignment of all rights, duties, and interests
under such Securities to the Noteholders.
b. Re-register all of the Securities in Agent's name, for the
benefit of the Noteholders, or in the name of another nominee or otherwise and
exercise all voting, dissent or other rights and privileges pertinent to the
Securities, and to that end Debtor hereby constitutes Secured Party as its proxy
and attorney-in-fact for purposes of voting the Securities, and this appointment
shall be deemed coupled with an interest and is and shall be irrevocable until
such Event of Default is no longer continuing, and all persons whatsoever shall
be conclusively entitled to rely upon the Secured Party's verbal or written
certification that it is entitled to vote the Securities hereunder. Debtor shall
execute and deliver to Secured Party any and all additional proxies and powers
of attorney that Secured Party may request in order to more effectively vote the
Securities in his own name. THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST
AND IS IRREVOCABLE.
c. In the event Secured Party shall exercise its rights under
this Section 6, the Note shall be deemed paid in full with no further payments
or other obligations due Noteholders.
7. Notices. All notices, requests and demands required, contemplated,
or permitted under this Agreement or with respect to the subject matter of this
Agreement to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed effectively given
(a) upon personal delivery to the party to be notified, (b) upon confirmation of
receipt by fax by the party to be notified or by automatic confirmation, (c) one
business day after deposit with a reputable overnight courier, prepaid for
overnight delivery and addressed as set forth below, or (d) three (3) days after
deposit with the U.S. Post Office, postage prepaid, registered or certified with
return receipt requested and addressed to the party to be notified at the
address indicated for such party on the signature pages to the Note or at such
other address as such party may designate by 10 days' advance written notice to
the other parties given in the foregoing manner.
8. Continuing Agreement; Successors and Assigns. This Agreement is a
continuing agreement and shall (a) remain in full force and effect until the
payment in full of all sums due under the Note, (b) be binding upon each party
and its respective successors and permitted assigns, and (c) inure to the
benefit of and be enforceable by the Secured Party and their successors,
transferees and permitted assigns. Debtor may not assign or transfer any of its
rights or obligations under this Agreement without the consent of the Secured
Party, which may be granted or withheld in such person's sole discretion. None
of the Noteholders may assign or transfer any of its rights or obligations under
this Agreement except to any subsequent Noteholder (i.e. any permitted successor
or assign of the Secured Party as noteholder or of the Noteholder under the
terms of its/his/her Note).
9. Costs and Expenses. Debtor shall pay to the Secured Party all costs
and expenses (including attorneys' fees and disbursements and court costs)
incurred by the Secured Party in collecting or otherwise enforcing the
obligations secured by this Agreement or in enforcing, preserving or protecting
any of its rights or remedies under this Agreement.
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10. Governing Law; Jurisdiction. This Agreement shall be governed by
Washington law, without reference to conflicts of laws principles, and except to
the extent that the Uniform Commercial Code provides for the application of the
law of Debtor's state of incorporation. The parties hereby submit to the
non-exclusive jurisdiction of the courts located in the State of Washington.
11. Construction. Whenever the context herein so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice-versa. "Includes" and "including" are not limiting. "Or" is not
exclusive. "All" includes "any" and "any" includes "all." No rule of strict
construction shall be applied against the Secured Party in interpreting this
Agreement.
12. Counterparts; Facsimile. This Agreement may be signed in any number
of counterparts (each of which may be transmitted by facsimile), each of which
shall be an original, with the same effect as if the signatures were upon the
same instrument.
13. Amendment or Waiver. This Agreement may not be changed, waived,
discharged or terminated unless in writing, signed by each party hereto. No
failure or delay on the part of the Secured Party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy hereunder.
14. Time of the Essence. Time is of the essence under this Agreement.
15. Partial Invalidity. If at any time any provision of this Agreement
is or becomes invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Agreement nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall in any way be
affected or impaired.
16. Termination. This Agreement shall terminate when the indebtedness
represented by the Note has been paid in full, at which time Secured Party shall
reassign and redeliver, at the expense of Debtor (or cause to be so reassigned
and redelivered to Debtor or to such person or persons as Debtor shall
designate, against receipt, such of the Securities (if any) as shall not have
been sold or otherwise applied by Secured Party pursuant to the terms hereof and
shall still be held by it hereunder, together with appropriate instruments of
reassignment and release.
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[Signature page to Securities Pledge Agreement]
IN WITNESS WHEREOF, as of the date indicated above, the parties have
executed this Agreement.
DEBTOR:
XXXXXX HOLDING COMPANY, INC.
By:___________________________________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
Sworn to before me this
10th day of December, 2003.
------------------------------------------------------
(Notary Public)
Acknowledged and accepted as of the date set forth
above:
SECURED PARTY:
------------------------------------------------------
Xxxxxxx X. Xxxxxx
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EXHIBIT I
VOTING AND REGISTRATION RIGHTS AGREEMENT
THIS VOTING AGREEMENT, dated as of ________ __, 2003, among XXXXXX HOLDING
COMPANY, INC., a Delaware corporation (the "Corporation") and XXXXXXX X. XXXXXX
(the "Stockholder").
The Stockholder owns Common Stock (as defined below) of the
Corporation. The Corporation and the Stockholder deem it to be in their
respective best interests to enter into this Agreement to set forth the voting
rights of the Stockholder. Capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement (as defined below).
NOW THEREFORE, in consideration of the premises and mutual covenants
and obligations hereinafter set forth, the Corporation and the Stockholder
hereby agree as follows:
Section 1. Definitions. The following words and terms shall have the
following meanings, respectively, unless the context clearly requires otherwise:
"Business Day" means any day that is not (i) a Saturday, Sunday or (ii)
a day on which the New York Stock Exchange is closed.
"Common Stock" means the Common Stock, $0.0001 par value per share of
the Corporation.
"Company Shares" means any shares of Common Stock issued to the
Stockholder.
"Xxxxx" means Xxxxxx X. Xxxxx.
"Xxxxx" means Xxxxxxx Xxxxx.
"Other Shares" means at any time those shares of Common Stock that do
not constitute Registrable Shares.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a governmental entity or any department, agency or political subdivision
thereof.
"Purchase Agreement" means that certain Purchase and Exchange Agreement
dated as of ________ __, 2003 among the Corporation, Progressive Lending, LLC, a
Washington limited liability company, and the Stockholder.
"Registrable Shares" means Restricted Shares that constitute Common
Stock.
"Registration Statement" shall mean any registration statement of the
Corporation which covers any of the Registrable Shares and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
1
"Restricted Shares" means shares of Common Stock, and includes (i)
shares of Common Stock which may be issued as a dividend or distribution or any
issuance contemplated in the Purchase Agreement, (ii) any other securities which
by their terms are exercisable or exchangeable for or convertible into Common
Stock, and (iii) any securities received in respect of the foregoing, in each
case in clauses (i) through (iii) that at any time are held by the Stockholder.
As to any particular Restricted Shares, such Restricted Shares shall cease to be
Restricted Shares when (A) the offer and sale of such shares have been
registered under the Securities Act, the Registration Statement in connection
therewith has been declared effective and they have been disposed of pursuant to
and in the manner described in such effective Registration Statement, (B) they
are sold or distributed pursuant to Rule 144, (C) they have been otherwise
transferred and new certificates or other evidences of ownership for them not
bearing a restrictive legend and not subject to any stop transfer order or other
restriction on transfer have been delivered by the Corporation or the issuer of
other securities issued in exchange for the Restricted Shares, or (D) they have
ceased to be outstanding.
Section 2. Stockholder Voting Agreement.
(a) Voting. For the period beginning on the Closing Date and ending on
the second anniversary thereof (the "Termination Date"), so long as the
Stockholder shall hold any shares of Common Stock, the Stockholder hereby agrees
that at any meeting of stockholders of the Corporation, however called, or in
connection with any written consent of stockholders of the Corporation, the
Stockholder shall vote (or cause to be voted) the shares of Common Stock owned
by the Stockholder as instructed by the Corporation in writing.
(b) IRREVOCABLE PROXY. THE STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS
XXXXX AND XXXXX, IN THEIR RESPECTIVE CAPACITIES AS REPRESENTATIVES OF THE
CORPORATION, AND ANY OTHER INDIVIDUAL WHO SHALL HEREAFTER SUCCEEED TO ANY SUCH
REPRESENTATIVE CAPACITY OF THE CORPORATION, AND ANY OTHER DESIGNEE OF THE
CORPORATION (THE "PROXY"), AND EACH OF THEM INDIVIDUALLY, THE STOCKHOLDER'S
IRREVOCABLE PROXY AND ATORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION AND
RE-SUBSTITUTION) TO VOTE THE SHARES OF COMMON STOCK HELD BY THE STOCKHOLDER AS
INDICATED IN SECTION 2(a) ABOVE. THE STOCKHOLDER INTENDS THAT THIS PROXY BE
IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN INTEREST AND WILL
TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY
TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY
GRANTED BY SUCH STOCKHOLDER WITH RESPECT TO THE STOCKHOLDER'S SHARES OF COMMON
STOCK.
(c) Additional Agreements. The Stockholder agrees that, until the
Termination Date, the Proxy may, in the Stockholder's name and stead (i) attend
any annual or special meeting of the stockholders of the Corporation and vote
all shares of Common Stock that are voting securities at any such annual or
special meeting (or pursuant to an action taken by written consent) as it deems
appropriate in its sole discretion and (ii) execute such amendments, waivers and
consents hereunder or under any other contract to which the Stockholder is a
party with respect to such shares. The Stockholder hereby revokes any and all
previous proxies granted with respect to its respective shares of Common Stock.
Such irrevocable proxy is executed and intended to be irrevocable in accordance
with Delaware law. The Stockholder hereby ratifies and confirms all that the
Proxy may lawfully do or cause to be done by virtue hereof.
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(d) No Transfers. From and after the date hereof until the Termination
Date, the Stockholder agrees with, and covenants to, the Corporation that the
Stockholder shall not, except as contemplated by the terms of this Agreement
(and consented to in writing by the Corporation), (i) directly or indirectly
sell, transfer, pledge, hypothecate, gift, assign or otherwise dispose (whether
with or without consideration and whether voluntarily or involuntarily or by
operation of law) or consent or enter into any contract, option or other
agreement or understanding with respect to any transfer of, any or all of his
shares of Common Stock or any interest therein to or in favor of any Person,
unless prior to any such transfer, such Person shall have agreed in writing,
in form and substance reasonably acceptable to the Corporation, for the benefit
of and delivered to the Corporation, to be bound by all provisions of this
Agreement applicable to the Stockholder, (ii) grant any proxy, power-of-attorney
or other authorization or consent in or with respect to such shares of Common
Stock, (iii) deposit such shares of Common Stock into a voting trust or enter
into a voting agreement or arrangement with respect to such shares of Common
Stock, or (iv) take any other action that would in any way restrict, limit or
interfere with the performance of the obligations of the Stockholder hereunder.
(e) Certain Events. The Stockholder agrees that this Agreement and the
obligations hereunder shall attach to its shares of Common Stock and shall be
binding upon any Person to which legal or beneficial ownership of such shares of
Common Stock shall pass, whether by operation of law or otherwise, including,
without limitation, the administrators or successors of the Stockholder. In the
event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of the Corporation
affecting the shares of Common Stock, or the acquisition of additional
securities in the Corporation after the date hereof by the Stockholder, the
obligations hereunder shall attach to such additional securities issued to or
acquired by the Stockholder.
(f) Further Assurances. The Stockholder shall, upon request of the
Corporation, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by the Corporation to be necessary or
desirable to carry out the provisions of this Section 2 and to vest in the
Corporation the power to vote shares of Common Stock as contemplated by this
Section 2.
Section 3. Further Issuance; Put; Lock-Up.
(a) If the Corporation issues additional shares of its Common Stock
through an unregistered private placement of securities during the two years
ending [_______________], 2005 and the issuance price for the Corporation's
shares issued at Closing is greater than the issuance price in such placement,
then the Corporation will issue additional shares to the Stockholder within 30
days following the closing of such private placement in an amount equal to the
difference between (A) the number of Buyer Shares issued at Closing minus (B)
the number of Buyer Shares issued at Closing multiplied by the product of the
issuance price of such private placement divided by the issuance price of the
Buyer Shares at Closing ("Placement Additional Shares"). This additional
issuance shall not be applicable to any single private placement of less than
$75,000 worth of Common Stock ("Individual Exemption") until the aggregate of
Individual Exemptions exceeds $250,000.
(b) In the event the closing price of a Company Share on the two year
anniversary of the Closing has declined below the Issue Market Price, the
Corporation will issue an additional number of shares of its Common Stock (the
"Price Additional Shares" and with Placement Additional Shares, collectively the
"Additional Company Shares") to the Stockholder such that, when combined with
the original Buyer Shares issued at the Closing and the Placement Additional
Shares, the total shares issued to the Stockholder as a result of the
transactions contemplated by the Purchase Agreement have a market value of
$500,000 as at the second anniversary of the Closing Date, subject to any
Purchase Price Adjustment required under the Purchase Agreement. Notwithstanding
the foregoing, the number of Price Additional Company Shares shall in no event
exceed 20% of the original number of Buyer Shares issued at Closing. For
purposes of this paragraph, the closing price of a Company Share on the second
anniversary of the Closing Date shall be equal to the weighted average trading
price of Common Stock during the ten (10) day period in which Common Stock is
traded immediately prior to the second anniversary of the Closing Date.
3
(c) On the second anniversary of the Closing Date, if the Corporation
has not offered the Stockholder an opportunity to register his Buyer Shares for
resale, the Stockholder may elect to cause the Corporation to repurchase his
Buyer Shares and Additional Company Shares, if any have been issued, for a
repurchase price of $500,000. The Stockholder must make his election under this
Section 3(c) within 30 days following the issuance of any Price Additional
Company Shares, if any Price Additional Company Shares are issued under Section
3(b) hereof or, if no Price Additional Company Shares have been issued, then
within 30 days following the second anniversary of the Closing Date.
(d) The Stockholder covenants and agrees that he shall not purchase,
sell or otherwise transfer or dispose of, and shall cause his affiliates (as
such term is defined in the Securities Exchange Act of 1934, as amended, and
including any person trading securities on behalf of the Stockholder) to not
purchase, sell or otherwise transfer or dispose of, any Common Stock (or other
securities) of the Corporation for a period of 120 days prior to the second
anniversary of the Closing Date.
Section 4. Piggyback Registration Rights. If the Corporation at any time
proposes for any reason to register the offer and sale of shares of Common Stock
under the Securities Act (other than on Form S-4 or Form S-8 promulgated under
the Securities Act (or any successor forms thereto)), the Corporation promptly
shall give written notice to the Stockholders of its intention to so register
such offer and sale and, upon the written request, delivered to the Corporation
within 30 days after delivery of any such notice by the Corporation, of the
Stockholders to include in such registration Registrable Shares (which request
shall specify the number of Registrable Shares proposed to be included in such
registration), the Corporation shall use its best efforts to cause all such
Registrable Shares to be included in such registration on the same terms and
conditions as the securities otherwise being sold in such registration;
provided, however, that if, at any time after giving written notice of its
intention to register the offer and sale of any securities and prior to the
effective date of the registration statement filed in connection with such
registration the Corporation shall determine for any reason either not to
register or to delay registration of such securities, the Corporation, at its
election, may give written notice of such determination to each holder of
Registrable Shares and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register the offer and sale of
any Registrable Shares in connection with such registration, and (ii) in the
case of a determination to delay registering the offer and sale of any
Registrable Shares, shall be permitted to delay registering the offer and sale
of any Registrable Shares, for the same period as the delay in registering such
other securities; provided further, however, that if the managing underwriter
advises the Corporation that the inclusion of all Registrable Shares requested
to be included in such registration would materially interfere with the
successful marketing (including pricing) of the Company Shares or any Other
Shares proposed to be registered by the Corporation, then the offer and sale of
the number of Company Shares, other Registrable Shares and Other Shares proposed
to be included in such registration shall be included in the following order:
first, the Company Shares proposed to be registered by the Corporation;
second, the Registrable Shares requested to be included in such
registration pro rata among the holders thereof based upon the number of
Registrable Shares requested to be registered by each such holder; and
third, the Other Shares.
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Section 5. Miscellaneous.
(a) Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Corporation and the Stockholder and, subject to Section 5(b), the
respective successors and assigns of the Corporation and the Stockholder. This
Agreement is not intended to create any third party beneficiaries.
(b) Assignment. The Stockholder may not assign his rights hereunder.
(c) Severability. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) Entire Agreement. This Agreement and the other writings referred to
herein or delivered pursuant hereto contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect hereto and
thereto.
(e) Notices. All communications hereunder to any party shall be deemed
to be sufficient if contained in a written instrument delivered in person or
sent by telecopy, nationally-recognized overnight courier guaranteeing next day
delivery or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at its address below or such other
address as such party may hereafter designate in writing:
if to the Corporation, to:
Xxxxxx Holding Company, Inc.
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
if to the Stockholder, to the Stockholder at the address indicated on
Schedule I hereto.
All such notices, requests, consents and other communications shall be
deemed to have been given and received (i) in the case of personal delivery or
delivery by telecopy, on the date of such delivery, (ii) in the case of dispatch
by nationally-recognized overnight courier, on the next Business Day following
such dispatch and (iii) in the case of mailing, on the third Business Day after
the posting thereof.
(f) Modifications; Amendments; Waivers. The terms and provisions of this
Agreement may not be modified or amended, nor may any provision be waived,
except pursuant to a writing signed by the Corporation and the Stockholder. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
5
(g) Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts (each of which may be transmitted via facsimile), and
each such counterpart hereof shall be deemed to be an original instrument, but
all such counterparts together shall constitute but one agreement.
(h) Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
(i) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION), THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED.
(j) Jurisdiction and Venue.
(i) Each of the parties hereto hereby irrevocably and
unconditionally submits, for himself, herself or itself and its, his or her
property, to the nonexclusive jurisdiction of any State of Delaware state court
or federal court of the United States of America sitting in the State of
Delaware and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such State of Delaware state court
or, to the extent permitted by law, in any such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(ii) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent that he, she or it may legally and effectively do
so, any objection that he, she or it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to the
Agreement in any State of Delaware state or federal court sitting in the State
of Delaware. Each of the parties hereto irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(iii) Each of the parties further agrees that the mailing of any
process required by any such court by certified or registered mail, return
receipt requested, to the address for notice herein provided shall constitute
valid and lawful service of process against him, her or it, without the
necessity for service by any other means provided by law.
(k) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(l) Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and
vice-versa.
(m) Construction. Where specific language is used to clarify by example
a general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
6
(n) Termination. This Agreement shall terminate and be of no further
force or effect if (i) the Stockholder has declared as immediately due and
payable, all of the principal (and interest thereon) under the Promissory Note,
dated __________, 2003, issued by the Corporation to the Stockholder in the
aggregate principal amount of $500,000 (the "Note"), pursuant to the terms of
the Note or (ii) has foreclosed on the Collateral (as defined under the Security
Agreement, dated as of _________, 2003, between Progressive Lending, LLC and the
Stockholder (the "Security Agreement")) pursuant to the terms of the Security
Agreement.
* * * * *
7
[Signature Page to XXXXXX HOLDING COMPANY, INC. Voting Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement on the date first written above.
COMPANY:
XXXXXX HOLDING COMPANY, INC.
By:___________________________________________________
Name:
Title:
------------------------------------------------------
Xxxxxxx X. Xxxxxx
S-1
STATE OF ___________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me this ________________ (date)
by Xxxxxxx X. Xxxxxx.
--------------------------------------------------------------
Notary Public
Title (and Rank):
---------------------------------------------
Printed Name:
-------------------------------------------------
My Commission Expires:
----------------------------------------
Serial Number, if any:
----------------------------------------
S-2
SCHEDULE I
Stockholder
Xxxxxxx X. Xxxxxx
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxx, XX 00000
With a copy to:
Douglas, Eden, Xxxxxxxx & XxXxxxxx, X.X.
Suite 909, U.S. Bank Building
West 000 Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxx, Esq.
Facsimile: (000) 000-0000
