EXHIBIT 10.1
CONTRACT
OF
SALE OF STOCK
IN
CRANBERRY CREEK RAILROAD, INC.
DATED
DECEMBER 30, 2005
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TABLE OF CONTENTS
AGREEMENT .......................................................... 3
RECITALS ........................................................... 3
1. Sale of Shares .......................................... 3
2. Purchase Price .......................................... 4
3. Representations and Warranties by the Seller ............ 4
4. Representations and Warranties by Purchaser.............. 11
5. Conduct Prior to Closing; Covenants .................... 12
6. Indemnification.......................................... 15
7. Closing.................................................. 17
8. Post Closing Covenants of Seller......................... 18
9. Termination ............................................. 19
10. Amendments, Waivers, and Consents ....................... 20
11. Governing Law............................................ 20
12. Headings ............................................... 20
13. Entire Agreement ........................................ 20
14 Survival of Representations, Warranties, and Covenants... 21
15. Successors and Assigns................................... 21
16 Notices ................................................ 21
17. Attorneys Fees ......................................... 22
18. Severability .......................................... 22
19. Counterparts ........................................... 22
20. Expenses .............................................. 22
21 Failure or Indulgence Not Waiver; Remedies Cumulative ... 23
SIGNATURE PAGE........................................................ 24
EXHIBITS.............................................................. 25
SELLER DISCLOSURE SCHEDULE............................................ 31
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AGREEMENT
This Contract of Sale (the "Agreement"), dated the Thirtieth day of
December, 2005 (the "Effective Date"), by and between the Estate of Xxxxxx X.
Xxxxxxxxx, having an address c/o Xxxx X. Xxxxxxxxx, Administratrix, 00 Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxx (sometimes hereinafter referred to as the "Estate"
and sometimes as the "SELLER"), and Chartwell International, Inc., a Nevada
corporation having an address of 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX
00000 (sometimes hereinafter referred to as "Chartwell" and sometimes as the
"PURCHASER"). Certain other capitalized terms used in this Agreement are defined
in Exhibit A attached hereto. The SELLER is a creation of the Probate Court of
the County of Orange in the State of New York at Goshen, New York (hereinafter
referred to as the "Probate Court") and will cease to exist at some unspecified
time after March 31, 2006 and the completion of the transactions contemplated
herein.
RECITALS
WHEREAS, the SELLER shall own Sixty-Six and Two-Thirds (66 2/3 %) Percent
of the issued and outstanding common shares of Cranberry Creek Railroad, Inc., a
New Jersey corporation (hereinafter sometimes referred to as the "Company" or as
"Cranberry Creek") free and clear of all encumbrances at the time of Closing
(the "Shares"), and
WHEREAS, the SELLER desires to sell and the PURCHASER desires to buy such
Shares, on the terms and conditions herein stated,
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed by and between the parties hereto as follows:
1. Sale of Shares. The SELLER shall sell and transfer to the PURCHASER,
and the PURCHASER hereby agrees to purchase and acquire from the SELLER,
Sixty-Six and two-thirds
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(66 2/3 %) Percent of all the issued and outstanding shares of capital stock in
Cranberry Creek Railroad, Inc., consisting of twenty (20) shares of common
stock.
2. Purchase Price. The purchase price for all of the Shares to be sold,
conveyed and transferred by SELLER is ONE-MILLION SIX-HUNDRED FIFTY-THOUSAND and
No/100 ($1,650,000.00) US DOLLARS (hereinafter the "Consideration"), which the
PURCHASER agrees to pay to the SELLER as follows:
A. Deposit. ONE HUNDRED SIXTY FIVE THOUSAND AND NO/100 ($165,000.00)
DOLLARS (the "Deposit") on the date of execution of this Agreement, by wire
transfer cash, certified check, or bank check, which sum shall be held in an
interest bearing escrow account, for the account of SELLER, by the law firm of
Xxxxxxxxxx and Gubits, Esqs., 000 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000,
pursuant to an escrow agreement in the form attached hereto as Exhibit C until
the Closing Date (the "Escrow Agreement"), at which time such funds shall be
released forthwith to SELLER. All interest earned shall be payable to such party
hereto that is entitled to receive the Deposit as provided in this Agreement.
B. Closing Consideration. ONE MILLION AND FOUR HUNDRED EIGHTY-FIVE
THOUSAND DOLLARS AND NO/100 ($1,485,000) upon satisfaction of all the conditions
in Section 5(B), by wire transfer, certified check, or bank check or money order
which sum shall be held in an interest bearing escrow account, for the account
of SELLER, by the law firm of Xxxxxxxxxx and Gubits, Esqs., pursuant to the
Escrow Agreement until the Closing Date, at which time such funds shall be
released forthwith to SELLER. All interest earned shall be payable to such party
hereto that is entitled to receive the Deposit as provided in this Agreement.
3. Representations and Warranties by the SELLER. The SELLER represents
and warrants to PURCHASER that, to the best of SELLER'S knowledge and except as
set-forth in the disclosure schedules delivered by the SELLER to the PURCHASER
(the "SELLER Disclosure Schedule") which have been provided to purchaser prior
to the date hereof:
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A. Corporate Existence and Power.
(i) The Estate is a validly existing entity in good standing
under the laws of the State of New York, and is fully qualified to sell the
Estate's Shares in accordance with this Agreement subject to review and approval
by the Probate Court. Lastly, the Estate will promptly notify Chartwell of any
change in the Estate's ability to execute, deliver and perform in accordance
with this Agreement.
(ii) Cranberry Creek will be a validly existing New Jersey
corporation at the time of the Closing. SELLER has heretofore delivered to
PURCHASER true and complete copies of Cranberry Creek's Certificate of
Incorporation and Bylaws as currently in effect.
(iii) Middletown and New Jersey Railway Company, Inc. (hereinafter
"M&NJ") will be a validly existing New York corporation at time of Closing and
is a 100% wholly-owned and controlled Subsidiary of Cranberry Creek. SELLER has
heretofore delivered to PURCHASER true and complete copies of M&NJ's Certificate
of Incorporation and Bylaws as currently in effect.
(iv) The M&NJ is the sole Subsidiary of Cranberry Creek and
Cranberry Creek has no other Subsidiaries, foreign or domestic, Affiliated in
any way.
B. Authorization. The execution, delivery and performance by the
SELLER of this Agreement and the consummation of the transactions contemplated
hereby are within the Estate's powers and have been duly authorized by all
necessary action subject to approval by the Probate Court.
C. Governmental Authorization. The execution, delivery and
performance by the SELLER of this Agreement and the consummation by the SELLER
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, other than
(a) any filings under the Securities Act or Securities
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Exchange Act, and (b) any other filings, approvals or authorizations by the
Probate Court", and (c) filings as may be necessary with the Surface
Transportation Board.
D. Compliance with Law and Other Instruments. Cranberry Creek and
its Subsidiary hold or will hold at time of Closing all Material licenses,
permits and authorizations necessary for the lawful conduct of their business as
now being conducted pursuant to all applicable Laws of all governmental bodies,
agencies and other authorities having jurisdiction over Cranberry Creek, its
Subsidiary or any part of their operations, and there are no Material violations
or claimed violations by Cranberry Creek or its Subsidiary, or action or
proceeding pending against Cranberry Creek or its Subsidiary of any such
license, permit or authorization or any such Law. Section 3(D) of the Company
Disclosure Schedule sets forth all such required licenses, permits and
authorizations.
E. Capitalization. As of November 1, 2005, there were outstanding
thirty (30) shares of common stock. There is no other capital stock or class of
capital stock, or indebtedness or debentures of any kind whatsoever outstanding.
There are no contingent or voting rights and/or covenant rights attendant to any
of the Shares and no agreements related thereto. All outstanding capital stock
of Cranberry Creek have been duly authorized and validly issued and are fully
paid and nonassessable and free of preemptive rights.
F. Assets and Liabilities.
(i) Schedule 3(F)(i) lists all of Cranberry Creek and its
Subsidiary's liabilities as of the Closing Date.
(ii) Schedule 3(F)(ii) lists all of Cranberry Creek and its
Subsidiary's Assets as of the Closing Date.
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G. Absence of Certain Changes. Since January 1, 2005, the business
of Cranberry Creek and its Subsidiary have been conducted in the ordinary course
consistent with recent past practice and there has not been any:
(i) event, occurrence or development of a state of circumstances
or facts which would, individually or in the aggregate, have a Material Adverse
Effect on Cranberry Creek or its Subsidiary (other than adverse effects arising
from the execution and performance of this Agreement, changes in general
economic conditions or changes applicable generally to the industry) or any
event, occurrence or development which would have a Material Adverse Effect on
the ability of then Estate to consummate this Agreement;
(ii) declaration or intent of any such declaration of dividends,
distributions, payments, split, combination, repurchase, nor any assumption or
guarantee of any indebtedness of any kind other than provided in Schedule 3(G);
(iii) creation or other incurrence by Cranberry Creek or its
Subsidiary of any Lien on any asset other than in the ordinary course consistent
with past practices;
(iv) transaction or commitment made, or any contract or agreement
entered into, by Cranberry Creek or its Subsidiaries relating to their Assets or
business (including the acquisition or disposition of any Assets) or any
relinquishment by Cranberry Creek or its Subsidiaries of any Contract or other
right, in either case, Material to Cranberry Creek or its Subsidiaries, other
than transactions and commitments in the ordinary course consistent with past
practices and those contemplated by this Agreement;
(v) labor dispute, pension plans, health liability, benefits,
bonuses, or other liabilities, obligations, or programs whatsoever other than a
health care plan for full-time employees;
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(vi) tax election or any settlement of tax liability, in either
case that is Material to Cranberry Creek or its Subsidiary, except as set forth
under Section 3 (G)(i);
(vii) except as otherwise disclosed to PURCHASER elsewhere in
this Agreement, and except as to taxes due and owing as of this date, asset
acquisition or expenditure in excess of $10,000 individually or $20,000 in the
aggregate;
(viii) payment, prepayment or discharge of liability other than
in the ordinary course of business or any failure to pay any liability when due;
(ix) write-offs or write-downs of any Assets of Cranberry Creek
or its Subsidiary;
(x) creation, termination or amendment of, or waiver of any
right under, any Material Contract of Cranberry Creek or its Subsidiary;
(xi) damage, destruction or loss having, or reasonably expected
to have, a Material Adverse Effect on Cranberry Creek or its Subsidiary;
(xii) event that, if taken during the period from the date of
this Agreement through the Closing Date, would constitute a breach of Section
5(A) hereof; or
(xiii) agreement or commitment to do any of the foregoing in this
Section 3(G).
H. Litigation. Except as set forth in the Section 3(H) of the SELLER
Disclosure Schedule and which the PURCHASER is fully appraised on an ongoing
basis, there is no action, suit, investigation, audit or proceeding pending
against, or to the Knowledge of the Estate threatened against, initiated by, or
affecting, Cranberry Creek or its Subsidiary,
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officers or directors or any of its properties before any court or arbitrator or
any governmental body, agency or official. No former shareholder, employee,
officer or director of Cranberry Creek or its Subsidiary has any claim pending
or to the Knowledge of the Estate threatened against Cranberry Creek or its
Subsidiary, officers or directors or any of its properties relating to sales of
Company Stock by the Estate or any of Cranberry Creek or its Subsidiaries'
current or former shareholders. Section 3(H) of the PURCHASER Disclosure
Schedule contains a complete list of all claims brought against the Estate,
Cranberry Creek, its Subsidiary, or pending, since incorporation or formation,
together with a brief statement of the nature and amount of the claim, the court
and jurisdiction in which the claim was brought, the resolution (if resolved),
and the availability of insurance to cover the claim. To the Knowledge of the
Estate, there are no facts or circumstances that could reasonably be expected to
give rise to any actions set forth in this Section 3(H).
I. Taxes. Except as set forth in Section 3(I) of the SELLER
Disclosure Schedule, Cranberry Creek and its Subsidiaries have prepared and
timely filed with the appropriate governmental agencies all franchise, income
and all other Tax returns and reports required to be filed on or before the
Closing Date (collectively the "Returns"), taking into account any extension of
time to file granted to or obtained on behalf of Cranberry Creek or its
Subsidiaries. To the Knowledge of the SELLER, no Tax liens have been filed with
respect to any Taxes.
J. Environmental Compliance. To the best Knowledge of the SELLER,
Cranberry Creek and its Subsidiary now and since January 1, 2005:
(i) are in compliance with all Environmental Laws and all
Environmental Permits.
(ii) have not received any written notice regarding any violation
of any Environmental Laws, or any Environmental Liabilities, including any
investigatory, remedial or corrective obligations, relating to Cranberry Creek,
its Subsidiary or its facilities arising under Environmental Laws.
(iii) have not caused, or are not causing or threatening to
cause, any disposals or releases of any Hazardous Material on or under any of
Cranberry Creek or its
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Subsidiary's properties and no such disposals or releases are migrating or have
migrated off of such properties in subsurface soils, groundwater or surface
waters after Cranberry Creek or its Subsidiaries has taken title to, or
possession or operation of any such properties and, no such disposals or
releases are migrating or have migrated off of such properties in subsurface
soils, groundwater or surface water;
(iv) have not installed, used, buried or removed any surface
impoundment or underground tank on or under any of Cranberry Creek's or its
Subsidiary's properties;
K. Contracts. Except as set forth in Section 3(K) of the SELLER
Disclosure Schedule and available to the PURCHASER for inspection, Cranberry
Creek and its Subsidiary are not currently bound or in the future bound by any
contracts whatsoever.
L. Insurance and Banking Facilities. Cranberry Creek and its
Subsidiary have in full force and effect all insurance and indemnity policies
that are customary in coverage and amount for companies of their size and
industry. Section 3(L) of the SELLER Disclosure Schedule comprises a complete
and correct list of (i) all contracts of insurance and indemnity of or relating
to Cranberry Creek and its Subsidiary in force at the date of this Agreement;
(ii) the names and locations of all banks or depository organizations in which
Cranberry Creek and its Subsidiary have accounts; and (iii) the names of all
Persons authorized to draw on such accounts.
M. Minutes and Stock Records. The SELLER has provided, or will
provide before Closing, PURCHASER with complete and correct copies of the minute
books and stock records of Cranberry Creek and its Subsidiary that it has in its
possession.
N. Full Disclosure. To the best of the SELLER's knowledge, all of
the representations and warranties made by the SELLER in this Agreement, and all
statements set forth in the certificates delivered by the SELLER at the Closing
pursuant to this Agreement, are true, correct and complete in all Material
respects and do not contain any untrue statement of a Material fact or omit to
state any Material fact necessary in order to make such representations,
warranties or
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statements, in light of the circumstances under which they were made,
misleading. To the best of the SELLER's knowledge, the copies of all documents
furnished by the SELLER pursuant to the terms of this Agreement are complete and
accurate copies of the original documents. To the best of the SELLER's
knowledge, the schedules, certificates, and any and all other statements and
information, whether furnished in written or electronic form, to PURCHASER or
their representatives by or on behalf of the SELLER in connection with the
negotiation of this Agreement and the transactions contemplated hereby do not
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.
4. Representations and Warranties by PURCHASER.
A. Corporate Existence and Power. Chartwell is a corporation duly
organized and validly existing under the laws of the State of Nevada, and is
qualified to own and operate its properties and assets. Chartwell has all
required corporate power and corporate authority to enter into and perform this
Agreement and the agreements contemplated hereby to which it is a party and to
carry out the transactions contemplated hereby. Chartwell is not in material
violation of any term of its Certificate of Incorporation or Bylaws, as amended
as of the date hereof.
B. Non-Contravention. Neither Chartwell nor any of its Subsidiaries
has and/or is bound by any contract, agreement, lease, commitment, or proposed
transaction, judgment, order, writ or decree, written or oral, absolute or
contingent, other than contracts entered into in the ordinary course of
business, which would Materially interfere with, or have a Material Adverse
Effect on the discharge of Chartwell's responsibilities and obligations under
this Agreement.
C. Legal Proceedings. There is no action, suit, proceeding or
investigation pending or currently threatened against Chartwell that threatens
the validity of this Agreement, or the right of Chartwell to enter into this
Agreement, or to consummate the transactions contemplated hereby, or that might
result, either individually or in the aggregate, in a Material Adverse Effect on
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the assets, business, properties, prospects, or financial condition of Chartwell
in a way that may or would interfere or jeopardize Chartwell's ability to
Materially perform under this Agreement.
D. Accredited Investor. Chartwell presently qualifies and will as of
the Closing Date qualify, as an "accredited investor" within the meaning of
Regulation D of the Securities Act.
5. Conduct Prior to Closing; Covenants.
A. Alternative Acquisition. While this Agreement is in effect, the
Estate will not, and will not permit, any of its representatives to, directly or
indirectly:
(i) initiate, solicit, negotiate, accept, discuss or encourage
any transaction or series of transactions with any outside Person, other than
Chartwell and its Affiliates involving any recapitalization, restructuring,
financing, investment, sale of stock, merger, consolidation, sale of assets or
encumbrance or other business combination transaction or extraordinary corporate
transaction of Cranberry Creek or its Subsidiary which would or could reasonably
be expected to impede, interfere with, prevent or Materially delay the sale of
the Shares (any such efforts by any such Person, including a firm proposal to
make such an acquisition, to be referred to as an "Alternative Acquisition");
(ii) provide information with respect to Cranberry Creek or its
Subsidiary to any Person, other than PURCHASER and the SELLER's Advisors,
relating to a possible Alternative Acquisition by any Person;
(iii) make or authorize any statement, recommendation or
solicitation in support of any possible Alternative Acquisition by any Person,
other than PURCHASER; or
(iv) entertain, consider or accept any proposal or offer from any
Person or enter into an agreement with any Person (other than the PURCHASER)
relating to any possible Alternative Acquisition.
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B. Conditions to Payment of Closing Consideration. The following
conditions must all be satisfied by SELLER before PURCHASER shall be obligated
to pay the Closing Consideration:
(i) On or before January 23, 2006, the Estate must have substantially
concluded the litigation in the State of New Jersey concerning establishing the
corporate governance of Cranberry Creek (the "Hearing"). On or before January
24, 2006, PURCHASER must either notify SELLER that the governance conditions
(Sections 5(B)(i) and (ii)) are acceptable "as is" or the SELLER shall have the
option to cancel this Agreement and refund the PURCHASER's deposit and any
interest whereupon neither party shall have any further obligations hereunder,
(ii) the disposition of the Hearing shall include an order by the
court for a shareholders meeting of Cranberry Creek to be held prior to the
Closing Date,
(iii) the SELLER shall have elected the following directors to the
Board of Directors of Cranberry Creek, Xxxx X. Xxxxxxxxx and Xxxxxx X.
Xxxxxxxxx, Xx.
(iv) the Board of Directors of Cranberry Creek shall have appointed
Xxxx X. Xxxxxxxxx as Chairman of the Board and Xxxxxx X. Xxxxxxxxx, Xx. as
Secretary of Cranberry Creek.
(v) The Board of Directors of Cranberry Creek shall have authorized
the transactions contemplated by this Agreement.
(vi) Cranberry Creek or its Subsidiary shall have executed a handling
agreement with Norfolk Southern Corporation in the form attached hereto as
Exhibit B.
(vii) SELLER shall deliver to PURCHASER any updates or changes to its
representations and warranties provided in Section 3, signed and confirmed by
PURCHASER.
(viii) On or before January 24, 2006, PURCHASER shall have
commissioned and received at PURCHASER's expense, a Phase I environmental study
on the M&NJ property formerly occupied and/or used by Agway, Inc. and such
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report shall be available for inspection by the SELLER. In the event such Phase
I environmental study identifies Hazardous Materials or other materials in
violation of Environmental Laws, PURCHASER shall have the option to cancel this
Agreement and the SELLER shall refund the PURCHASER's deposit and any interest
whereupon neither party shall have any further obligations hereunder or
accepting the property "as is". Under no circumstances shall SELLER have any
obligation to perform any clean-up of the property."
C. Covenant of SELLER. The SELLER covenants and agrees that from the
date of this Agreement until the appointment of PURCHASER's representative as
President and/or Chairman to act in the capacity of a Chief Executive Officer of
the Company or otherwise termination of this Agreement, SELLER will do nothing
to cause the Company or its Subsidiary to Materially alter or cause the Material
alteration of any representation provided in Section 3 except as required in the
ordinary course of business and with full disclosure to and Knowledge of the
PURCHASER as evidenced by a signed notice.
D. Access. The SELLER shall afford to PURCHASER, and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of PURCHASER, reasonable access during normal business hours
during the period prior to the Closing Date or the termination of this Agreement
to all of the Company and its Subsidiary's properties, books, contracts,
commitments, personnel and records and, during such period. The SELLER shall
furnish promptly to PURCHASER a copy of each report, schedule, registration
statement and other documents filed by it concerning its business, properties
and personnel as PURCHASER or its representatives may reasonably request. Such
copies made by SELLER or its representatives at the sole expense of PURCHASER.
E. Notification of Certain Matters. The SELLER shall give prompt
notice to PURCHASER of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any of the SELLER's
representations or warranties contained in this Agreement to be untrue or
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inaccurate at or prior to the Closing Date and (ii) any failure of the SELLER to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5(E) shall not limit or otherwise affect the remedies
available hereunder to PURCHASER.
F. Public Announcements. Upon the Closing Date, only PURCHASER shall
have the right to issue any press release or other public statement with respect
to this Agreement or the transactions contemplated herein.
6. Indemnification.
A. Indemnification of PURCHASER. Up until sixty (60) days after the
Closing Date and subject to the limitations contained in this Section 6, the
SELLER shall defend, indemnify and hold harmless PURCHASER and its respective
officers, directors, stockholders, employees and agents from and against
two-thirds (2/3) of any and all losses, claims, judgments, liabilities, demands,
charges, suits, penalties, costs or expenses, including court costs and
attorneys' fees ("Claims and Liabilities") with respect to or arising from (i)
the Material breach of any warranty or any inaccuracy of any representation made
by the SELLER in this Agreement (as each such representation or warranty would
read if all qualifications as to Material Adverse Effect were deleted
therefrom), or (ii) the Material breach of any covenant or agreement made by the
SELLER in this Agreement.
B. Indemnification of SELLER. Up until sixty (60) days after the
Closing Date and subject to the limitations contained in this Section 6, the
PURCHASER shall defend, indemnify and hold harmless the SELLER, and SELLER'S
Advisors from and against any and all Claims and Liabilities with respect to or
arising from (i) the Material breach of any warranty or any inaccuracy of any
representation made by PURCHASER, or (ii) the Material breach of any covenant or
agreement made by PURCHASER in this Agreement.
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C. Claims Procedure. Promptly after the receipt by any indemnified
party (the "Indemnitee") of notice of the commencement of any action or
proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"Indemnifying Party") pursuant to this Section 6, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of its indemnification obligations contained in this
Section 6, except where, and solely to the extent that, such failure actually
and Materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within thirty (30) days after
receipt of such notice, but not in any event after the settlement or compromise
of such claim, the right to defend, at its own expense and by its own counsel
reasonably acceptable to the Indemnitee, any such matter involving the asserted
liability of the Indemnitee; provided, however, that if the Indemnitee
determines that there is a reasonable probability that a claim may Materially
and adversely affect it, other than solely as a result of money payments
required to be reimbursed in full by such Indemnifying Party under this Section
6 or if a conflict of interest exists between Indemnitee and the Indemnifying
Party, the Indemnitee shall have the right to defend, compromise or settle such
claim or suit; and, provided, further, that such settlement or compromise shall
not, unless consented to in writing by such Indemnifying Party, which shall not
be unreasonably withheld, be conclusive as to the liability of such Indemnifying
Party to the Indemnitee. In any event, the Indemnitee, such Indemnifying Party
and its counsel shall cooperate in the defense against, or compromise of, any
such asserted liability, and in cases where the Indemnifying Party shall have
assumed the defense, the Indemnitee shall have the right to participate in the
defense of such asserted liability at the Indemnitee's own expense. In the event
that such Indemnifying Party shall decline to participate in or assume the
defense of such action, prior to paying or settling any claim against which such
Indemnifying Party is, or may be, obligated under this Section 6 to indemnify an
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Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a
copy of a final court judgment or decree holding the Indemnitee liable on such
claim or, failing such judgment or decree, the terms and conditions of the
settlement or compromise of such claim. An Indemnitee's failure to supply such
final court judgment or decree or the terms and conditions of a settlement or
compromise to such Indemnifying Party shall not relieve such Indemnifying Party
of any of its indemnification obligations contained in this Section 6, except
where, and solely to the extent that, such failure actually and Materially
prejudices the rights of such Indemnifying Party. If the Indemnifying Party is
defending the claim as set forth above, the Indemnifying Party shall have the
right to settle the claim only with the consent of the Indemnitee.
D. Exclusive Remedy. Each of the parties hereto acknowledges and
hereby agrees that its sole and exclusive remedy with respect to any and all
claims relating to a default under this Section 6." Shall be limited to monetary
damages incurred by the non-breaching party for fines, reasonable legal fees,
expert fees and other related costs and disbursements incurred by the
Indemnitee, provided, however, that in no event shall any party who is found
liable under this Section "6" be required to pay damages in excess of the
aggregate sum of ONE-HUNDRED THOUSAND AND NO/100 ($100,000.00) DOLLARS relating
to all aggregate claims filed pursuant to this Section "6." Finally,
notwithstanding anything in this Agreement to the contrary any notice of claim
filed by Indemnitee under this Agreement shall be filed within Sixty (60) days
of date of Closing. In the event no claims has been filed by either party within
Sixty (60) days of Closing the indemnifications set-forth under this Section 6
shall end and the Indemnifying Party shall be released from any further
obligation in connection therewith.
7. Closing.
A. Conditions to Closing. The following conditions must all be
satisfied by SELLER on or before the Closing Date or else this Agreement will be
terminated and any other understandings between the parties will immediately
17
become null and void, and the Deposit and Closing Consideration shall be
returned to PURCHASER:
(i) The representations and warranties of the SELLER contained in
Section 3 shall be true in all Material respects on and as of the Closing with
the same effect as if made on and as of the Closing.
(ii) SELLER shall have performed or fulfilled in all material
respects all agreements, obligations, and conditions contained herein required
to be performed or fulfilled by the SELLER before the Closing.
(iii) All authorizations, approvals, or permits, if any, of any
Governmental Entity or Regulatory Bodies that are required in connection with
the lawful sale of the Shares contemplated by this Agreement shall be duly
obtained effective as of the Closing.
(iv) The SELLER shall have delivered to the PURCHASER a
certificate dated as of the Closing Date, signed by the Company's Chairman of
the Board and Secretary, certifying that the conditions set forth in Sections
7(A)(i), (ii) and (iii) have been satisfied.
B. Closing Date. The Closing shall take place on or before February
15th, 2006, or such time as otherwise agreed by the parties (The "Closing
Date").
C. Location. The Closing shall take place at the law office of
Xxxxxxxxxx and Gubits, Esqs., 000 Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 with
Xxxxxxx Xxxxxx, Esq. Or his appointee presiding.
D. Documents and Payment. At the Closing the SELLER and PURCHASER
shall exchange any and all documents required by the terms of this Agreement, in
order to complete and perfect the transactions contemplated by this Agreement,
and PURCHASER shall pay to SELLER the Closing Consideration.
E. Rights to Possession. At the Closing, the PURCHASER shall have
the immediate right to take over possession and control of the Shares. In this
respect physical possession of the stock certificate(s) evidencing the Shares
18
shall be tendered as of the moment the Closing. At the Closing the PURCHASER is
to receive the keys, receive all records of the Company and its Subsidiary, and
shall receive access to all financial documentation, customer lists, and records
in the possession of the Estate having a bearing on the business of Cranberry
Creek and its Subsidiary.
8. Post Closing Covenants of SELLER.
A. Board of Directors. SELLER shall call a special meeting of the
Board of Directors of Cranberry Creek to elect Xxxx Xxxxxxx and Xxxxxx Xxxxxxx
to the Board in accordance with the Company's Bylaws then in effect. SELLER's
representatives on the Board of Directors of Cranberry Creek shall effectively
resign in writing on such date.
B. Officers. Xxxx Xxxxxxxxx shall provide a written letter of
resignation as Chairman of the Board of Cranberry Creek, and SELLER shall call a
special meeting of the Board of Directors of Cranberry Creek to appoint Xxxxxx
Xxxxxxx as interim Chief Executive Officer.
C. Filings. The Estate shall make any necessary filings with the
Surface Transportation Board on the change in controlling interest in Cranberry
Creek and M&NJ.
D. Certificates. SELLER shall deliver and assign to PURCHASER stock
certificate(s) evidencing ownership of the Shares.
9. Termination.
A. Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval of this Agreement and the
transactions contemplated thereby by the Board of Directors of the Company:
(i) by mutual written agreement duly authorized by the PURCHASER
and SELLER;
(ii) by either party, if the other party has breached any
representation, warranty, covenant or agreement of such other party set forth in
this Agreement and such breach has resulted or can reasonably be expected to
19
result in a Material Adverse Effect on the Company or would prevent or
materially delay the consummation of the sale of the Shares;
(iii) by either party, if all the conditions to the obligations
of such party for Closing shall not have been satisfied or waived on or before
the Closing Date other than as a result of a breach of this Agreement by the
terminating party;
(iv) by either party, if a permanent injunction or other order by
any Federal, State and/or County court which would make illegal or otherwise
restrain or prohibit the consummation of the sale of Shares shall have been
issued; or
(v) as otherwise provided for in this agreement.
B. Notice of Termination. Any termination of this Agreement under
Section 9(A) above will be effective by the delivery of written notice of the
terminating party to the other party hereto.
C. Effect of Termination. In the case of any termination of this
Agreement as provided in this Section 9, this Agreement shall be of no further
force and effect and nothing herein shall relieve any party from liability for
any breach of this Agreement.
D. Final Date. In the event any of the foregoing conditions are not
met by the SELLER and/or PURCHASER, on or before March 31, 2006, this Agreement
shall be null and void and SELLER shall refund the PURCHASER's Deposit and
Closing Consideration and any interest thereupon, whereupon neither party shall
have any further obligations hereunder this Agreement.
10. Amendments, Waivers, and Consents. For the purposes of this Agreement
and all agreements executed pursuant hereto, no course of dealing between or
among any of the parties hereto and no delay on the part of any party hereto in
exercising any rights hereunder or there under shall operate as a waiver of the
rights hereof and thereof. No covenant or other provision hereof may be waived
otherwise than by a written instrument signed by the party or parties so waiving
such covenant or other provision and accepted by the other. No amendment to this
Agreement may be made without the written consent of both of the parties hereto.
20
11. Governing Law. This Agreement shall be deemed to be a contract made
under, and shall be construed in accordance with, the laws of the State of New
York, as applied to agreements among New York residents entered into and to be
performed entirely within New York, without giving effect to conflict of laws
principles thereof.
12. Headings. The descriptive headings in this Agreement have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction or interpretation of any provision thereof or hereof.
13. Entire Agreement.This Agreement constitutes the entire agreement, and
supersedes all other prior or contemporaneous agreements, discussions,
correspondence and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
14. Survival of Representations, Warranties, and Covenants. The
warranties, representations and covenants of the Estate and Chartwell contained
in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing.
15. Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including permitted
transferees of any securities issued hereunder). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
16. Notices. Unless otherwise provided, all notices and other
communications required or permitted under this Agreement shall be in writing
and shall be mailed by United States first-class mail, postage prepaid, sent by
facsimile or delivered personally by hand or by a nationally recognized courier
addressed to the party to be notified at the address or facsimile number
indicated for such person at the address set forth below, or at such other
address, including email or facsimile number as such party may designate by ten
(10) days' advance written notice to the other parties hereto:
21
If to Chartwell: Chartwell International, Inc.
0000 Xxxxx Xxxxxx. Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx, Chairman
As needed: Fax: (000) 000-0000
As needed: Tel: (000) 000-0000
Email: xxxx@xxxxxxxxxxx.xxx
With a Copy to: Bullivant Xxxxxx Xxxxxx PC
0000 Xxxxxx Xxx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx X Xxx
As needed: Fax: (000) 000-0000
As needed: Tel: (000) 000-0000
Email: xxxx.xxx@xxxxxxxxx.xxx
If to the Estate: The Estate of Xxxxxx X. Xxxxxxxxx
c/o Jacobowitz and Gubits, LLC
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
As needed: Fax: 000 000 0000
As needed: Tel: 000 000 0000
Email: XXX@xxxxxxxxxx.xxx
With a Copy to: Xxxxxxxxxx and Gubits, LLP
000 Xxxxxx Xxxxxx
X.X. Xxx 000 Xxxxxx, XX 00000-0000
Attention: Xxxx. X. Xxxxx
As needed: Fax: (000) 000-0000
As needed: Tel: (000) 000-0000
Email: XXX@Xxxxxxxxxx.xxx
All such notices and other written communications shall be effective on the
date of mailing, confirmed facsimile transfer or delivery.
17. Attorneys Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to be reimbursed by the non-prevailing party for reasonable attorneys'
fees, costs and disbursements, in addition to any other relief to which such
22
party may be entitled. Any dispute or claim arising out of this Agreement shall
be commenced and maintained in a court of competent jurisdiction in Orange
County, New York.
18. Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were rewritten so as to be enforceable in accordance with its terms.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Expenses. Except as otherwise provided for in this Agreement, the
PURCHASER and SELLER will bear their respective legal and other fees and
expenses with respect to the Agreement and the transactions contemplated hereby.
To begin the process necessary to accomplish the above-referenced governance
issues the Estate initiated legal action in New Jersey State Court on or about
October 12, 2005. Should the Closing occur and transfer of title to the Shares
be accomplished as contemplated hereunder, Chartwell agrees that it will
reimburse the Estate for its reasonable legal costs and expenses exceeding
FIFTEEN THOUSAND AND NO/100 ($15,000.00) DOLLARS up to a maximum of THIRTY
THOUSAND AND NO/100 ($30,000.00) DOLLARS at Closing in connection with the
above-mentioned resolution of the governance issues provided, that, detailed
records are furnished to Chartwell. All Expenses discussed in this section in
excess of a total of FORTY-FIVE THOUSAND AND NO/100 ($45,000.00) DOLLARS shall
be the obligation of the SELLER. The incurring of expenses shall be with the
sole permission of the SELLER.
21. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
23
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other rights. Except as otherwise provided hereunder, all
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
SIGNATURES
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered by their proper and duly authorized officers as of the day and
year first above written. SELLER:
ESTATE OF XXXXXX X. XXXXXXXXX
By: _________________________________
Xxxx Xxxxxxxxx, Administratrix
PURCHASER:
CHARTWELL INTERNATIONAL, INC.
By: _______________________________
Xxxx Xxxxxxx, Chairman
By: _______________________________
Xxxxxx Xxxxxxx, Director
25
EXHIBIT A
CERTAIN DEFINITIONS
The following terms, as used in the Agreement, have the following meanings:
"Affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Alternative Acquisition" shall have the meaning as set forth in Section
5(A)(i) of the Agreement.
"Agreement" shall have the meaning as set forth in the Preamble.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person and wherever
located.
"Chartwell" shall have the meaning as set forth in the Preamble.
"Claims and Liabilities" shall have the meaning as set forth in Section
6(A) of the Agreement.
"Closing" shall have the meaning as set forth in Section 7(A) of the
Agreement.
"Closing Consideration" shall have the meaning as set forth in Section 2(B)
of the Agreement. "Closing Date" shall have the meaning as set forth in Section
7(B) of the Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the Recitals.
"Company Stock" shall mean the total outstanding capital stock of Cranberry
Creek and M&NJ as of the Closing Date.
26
"Contract" means any written or oral agreement, arrangement, commitment,
contract, indenture, instrument, lease, obligation, plan, restriction,
understanding or undertaking of any kind or character, or other document to
which any Person is a party or by which such Person is bound or affecting such
Person's capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or default under any
Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
"Environmental Laws" mean any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions, relating to
human health, the environment or to emissions, discharges or releases of
pollutants, contaminants or other Hazardous Substances or wastes into the
environment, including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or other Hazardous Substances or wastes or the clean-up
or other remediation thereof.
"Environmental Permits" means, with respect to any Person, all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of governmental authorities relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such Person as currently
conducted.
"Estate" shall have the meaning as set forth in the Preamble.
"Final Date" shall have the meaning as set forth in Section 9(D) of the
Agreement.
27
"Governmental Entity" shall mean any government or any agency, bureau,
board, directorate, commission, court, department, official, political
subdivision, tribunal, or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
"Hazardous Material" means any toxic, radioactive, corrosive or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics, which in any event is regulated under any
Environmental Law.
"Indemnified Party" shall have the meaning as set forth in Section 6(C) of
the Agreement.
"Indemnifying Party" shall have the meaning as set forth in Section 6(C) of
the Agreement.
"Indemnitee" shall have the meaning as set forth in Section 6(C) of the
Agreement.
"Knowledge" means the actual knowledge of the officers of a party, and
knowledge that a reasonable person in such capacity should have after due
inquiry.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
liabilities or business, including those promulgated, interpreted or enforced by
any Regulatory Authority.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect to such asset.
"Material" and "Materially" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"Material Adverse Effect" means, with respect to any Person, a Material
adverse effect on the condition (financial or otherwise), business, assets,
liabilities or the reported or future results or prospects of such Person and
its Subsidiaries taken as a whole.
"PURCHASER" shall have the meaning as set forth in the Preamble.
28
"Person" means an individual, a corporation, a partnership, an association,
a trust, a limited liability company or any other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof.
"Probate Court" means the probate court in the County of Orange in the
State of New York overseeing and managing the Estate's affairs and the
disposition of the assets of the Estate.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, United States Department of
Transportation, Federal Railroad Administration, United States Environmental
Protection Agency, and all foreign, federal, state and local regulatory agencies
and other Governmental Entities or bodies having jurisdiction over the parties
and their respective Assets, employees, businesses and/or Subsidiaries,
including the NASD and the SEC.
"SELLER" shall have the meaning as set forth in the Preamble.
"SELLER'S Advisors" shall mean Xxx Xxxx, Xxxx Xxxxxx, Esq. and Xxxxxxxxxx &
Gubits,LLP
"Share" or "Shares" shall have the meaning as set forth in the Recitals.
"Subsidiary" means, with respect to any Person, (i) any corporation,
limited liability company, association or other business entity of which more
than 50% of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Tax" or "Taxes" shall mean all United States federal, state, provincial,
local or foreign taxes and any other applicable duties, levies, fees, charges
and assessments that are in the nature of a tax, including income,gross
29
receipts, property, sales, use, license, excise, franchise, ad valorem,
value-added, transfer, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs, capital
stock, real property, personal property, alternative or add-on minimum,
estimated, social security payments, and health taxes and any deductibles
relating to wages, salaries and benefits and payments to subcontractors,
together with all interest, penalties and additions imposed with respect to such
amounts.
30
EXHIBIT B
HANDLING AGREEMENT
(To be Attached)
31
EXHIBIT C
ESCROW AGREEMENT
(To be Attached)
32
SELLER DISCLOSURE SCHEDULE
33
