STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is made and entered into
as of January 13, 2006, by and among 360 Global Wine Company, a Nevada
corporation ("Buyer"), BMAC Corp., a Nevada corporation (the "Company"), and the
stockholders of the Company listed on the Schedule of Stockholders attached
hereto (each, referred to as a "Seller," and collectively, the "Sellers").
Certain other capitalized terms used in this Agreement are defined in Exhibit A
attached hereto.
RECITALS
A. The Sellers are the record and beneficial owners of the number of
shares of common stock of the Company as set forth opposite their respective
names on the Schedule of Stockholders attached hereto (collectively, the
"Shares").
B. The Sellers, collectively, at the Closing, will be the owners of all of
the outstanding Shares of capital stock of the Company, taking into effect the
cancellation of 140 shares of the Company held by Xxx Xxxxx as of the date of
this Agreement but which shares will be cancelled and extinguished and not be
issued and outstanding prior to Closing.
C. Each of the Sellers desires to sell to Buyer, and Buyer desires to
purchase from each of the Sellers, all of the outstanding Shares of capital
stock of the Company held by each Seller, which collectively will represent all
of the outstanding Shares of capital stock of the Company at the Closing.
D. The Company, the Sellers and Buyer intend, for federal income tax
purposes, that the acquisition constitute a "qualified stock purchase"
transaction as defined in Section 338(d) of the Code.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
THE TRANSACTION
1.1 Sale and Purchase of Shares. At the Closing, upon the terms and
subject to the conditions of this Agreement, each of the Sellers shall sell to
Buyer, and Buyer shall purchase from each of the Sellers, all of the Shares held
by each Seller. As consideration and in exchange for the Shares, Buyer shall pay
to the Sellers an aggregate purchase price of One Million Four Hundred
Sixty-Five Thousand Eight Hundred Seventy-Five and 25/100 Dollars
($1,465,875.25) (which is based on $1.75 per share of 837,643 shares of First
Montauk Financial Corporation that the Company will own at the Closing) (the
"Purchase Price") in shares of the Common Stock of Buyer ("Buyer Common Stock")
in accordance with this Section 1.1. Buyer shall instruct its transfer agent to
issue to the Sellers an aggregate number of whole shares of Buyer Common Stock,
rounded down to the nearest whole share, equal to the Purchase Price divided by
the average closing sale price per share of Buyer Common Stock reported on the
OTC Bulletin Board for the sixty (60) trading days prior to (and not including)
the Closing Date (the "Common Stock Payment"); provided, however, in the event
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that such average trading price is below $3.50 per share (on a post-Reverse
Stock Split basis), then the per-share price in the denominator for the
calculation of the number of shares of Buyer Common Stock payable pursuant to
this sentence shall be $3.50. The Common Stock Payment shall be allocated among
the Sellers according to each Seller's Proportionate Ownership Interest. Each
Seller's portion of the Common Stock Payment shall be issued in the name of the
Seller and for the number of shares of Buyer Common Stock based on such Seller's
Proportionate Ownership Interest set forth opposite such Seller's name on the
Schedule of Stockholders, and Buyer shall cause certificates representing such
Common Stock Payments to be sent by overnight delivery to the Sellers at the
addresses set forth on the Schedule of Stockholders. The Buyer Common Stock will
be issued pursuant to an exemption from registration under the Securities Act
and will be restricted securities, as such term is defined in Rule 144
promulgated under the Securities Act.
1.2 Closing. The closing of the sale of the Shares (the "Closing") shall
take place at the offices of Xxxxx Xxxx LLP at 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000 and at such other time and place as Buyer, the Company
and the Sellers mutually agree upon orally or in writing (the "Closing Date");
provided, however, the Closing shall be no later no later than April 15, 2006,
subject to a 30-day extension from such date by if requested by either party, so
that in no event shall the Closing Date be later than May 15, 2006.
1.3 Tax Consequences. It is intended by the parties hereto that the
acquisition shall constitute a "qualified stock purchase" within the meaning of
Section 338(d) of the Code. Moreover, the parties intend for such stock purchase
to be treated as a taxable transaction in which each of Buyer and the Sellers
will make a timely joint election under Section 338(h)(10) of the Code to treat
such exchange as a sale of the Company's assets to Buyer for tax purposes.
However, Buyer makes no representations or warranties to the Company or to the
Sellers regarding the tax treatment of the acquisition, or any of the tax
consequences to the Company or the Sellers of this Agreement, the acquisition or
any of the other transactions or agreements contemplated hereby. The Company and
the Sellers acknowledge that they are relying solely on their own tax advisors
in connection with this Agreement, the acquisition and the other transactions
and agreements contemplated hereby.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer that, except as set
forth in the disclosure schedules delivered by the Company to Buyer (the
"Company Disclosure Schedule"), which have been provided to Buyer:
2.1 Corporate Existence and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada. The Company has all corporate powers and authority and all
governmental licenses, authorizations, permits, consents and approvals required
to own, lease and operate its properties and to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company delivered to Buyer true and
complete copies of its charter and Bylaws as currently in effect (the "Charter
Documents").
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2.2 Company Capital Structure.
(a) The authorized capital stock of the Company consists solely of
the Shares, all of which are issued and outstanding and owned by the Sellers
free and clear of all Liens. The Shares are duly authorized, validly issued,
fully paid and non-assessable and are not subject to, nor were they issued in
violation of, any preemptive rights created by statute, the Charter Documents,
or any agreement or document to which a Seller is a party or by which a Seller
is bound.
(b) At the Closing, and upon satisfaction of the conditions to
Closing, Buyer shall receive the Shares free and clear of any Liens.
(c) Except for the Shares, there are no outstanding (i) shares of
capital stock or other voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company, or (iii) options, restricted stock, stock
appreciation rights, other stock-based compensation awards or other rights to
acquire from the Company, or other obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of the Company.
(d) All of the Shares were issued or granted in compliance with all
applicable federal and state securities laws.
2.3 Authorization and Validity of Agreement. The Company has the corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized, and this Agreement,
when executed and delivered by the Company, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that (i) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other Laws, now
or hereafter in effect, relating to or limiting creditors' rights generally and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief, may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.
2.4 Governmental Authorization. No action by or in respect of, or filing
with, any governmental body, agency, official or authority is required by or
with respect to the Company, which, if not obtained, would not, individually or
in the aggregate, have a Material Adverse Effect on the Company or impair the
ability of parties to consummate the transactions contemplated by this
Agreement.
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2.5 No Violations. The execution, delivery and performance by the Sellers
and the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene or conflict with the
Charter Documents, (ii) contravene or conflict with or constitute a violation of
any provision of any Law, judgment, injunction, order or decree binding upon or
applicable to the Company, (iii) require the consent or other action of any
Person under, constitute a Default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Company or to a loss of any benefit to which the Company is entitled under any
provision of any Material agreement or other instrument binding upon the Company
or any Material license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the Assets or
business of the Company, or (iv) result in the creation or imposition of any
Material Lien on any Asset of the Company.
2.6 Compliance with Law and Other Instruments.
(a) The Company holds all licenses, permits and authorizations
necessary for the lawful conduct of its business as now being conducted pursuant
to all applicable Laws of all governmental bodies, agencies and other
authorities having jurisdiction over the Company or any part of its operations,
and there are no violations or claimed violations by the Company, or action or
proceeding pending against either the Company with respect to any such license,
permit or authorization or any such Law.
(b) The business of the Company has been and is being conducted in
compliance with all applicable Laws, except for violations or failures to so
comply that would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Company has not received any written communication in
the past three years from a Regulatory Authority that alleges that the Company
is not in compliance with any applicable Law.
2.7 Absence of Undisclosed Liabilities. Except as set forth in Section 2.7
of the Company Disclosure Schedule, the Company does not have any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise).
2.8 Absence of Certain Changes. As of December 31, 2005, the business of
the Company has been conducted in the ordinary course consistent with past
practice and there has not been any:
(a) event, occurrence or development of a state of circumstances or
facts which would, individually or in the aggregate, have a Material Adverse
Effect on the Company (other than adverse effects arising from the execution and
performance of this Agreement or changes in general economic conditions) or any
event, occurrence or development which would have a Material Adverse Effect on
the ability of the parties to consummate the transactions contemplated by this
Agreement;
(b) declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company of any outstanding
shares of capital stock or other securities of, or other ownership interests in
the Company;
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(c) split, combination, re-classification of any security of the
Company or any amendment of any term of any outstanding security of the Company;
(d) incurrence, assumption or guarantee by the Company of any
indebtedness for borrowed money other than in the ordinary course and in amounts
and on terms consistent with past practices;
(e) creation or other incurrence by the Company of any Lien on any
Asset of the Company other than in the ordinary course consistent with past
practices;
(f) transaction or commitment made, or any contract or agreement
entered into, by the Company relating to its Assets or business (including the
acquisition or disposition of any Assets) or any relinquishment by the Company
of any Contract or other right, in either case, Material to the Company, other
than transactions and commitments in the ordinary course consistent with past
practices and those contemplated by this Agreement;
(g) change in any method of accounting, method of tax accounting or
accounting practice by the Company, except for any such change that is
consistent with GAAP or required by reason of a concurrent change in GAAP;
(h) (i) grant of any severance or termination pay to any current or
former director, officer, employee or consultant of the Company, (ii) entering
into of any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any current or former director,
officer, employee or consultant of the Company, (iii) increase in benefits
payable under any existing severance or termination pay policies or employment
or consulting agreements, (iv) increase in compensation, bonus or other benefits
payable or otherwise made available to current or former directors, officers,
employees or consultants of the Company, (v) the declaration or payment of any
bonuses or year-end payments to any current or former directors, officers,
employees or consultants of the Company, or (vi) establishment, adoption, or
amendment (except as required by applicable Law), of any collective bargaining,
bonus, profit sharing, thrift, pension, retirement, deferred compensation,
compensation, stock option, restricted stock or other benefit plan or
arrangement covering any current or former director, officer, employee or
consultant of the Company;
(i) tax election or any settlement of tax liability, in either case
that is Material to the Company;
(j) asset acquisition or expenditure in excess of $25,000
individually or $50,000 in the aggregate;
(k) payment, prepayment or discharge of liability other than in the
ordinary course of business or any failure to pay any liability when due;
(l) write-offs or write-downs of any Assets of the Company;
(m) creation, termination or amendment of, or waiver of any right by
the Company under, any Material Contract of the Company;
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(n) damage, destruction or loss having, or reasonably expected to
have, a Material Adverse Effect on the Company; or
(o) agreement or commitment to do any of the foregoing.
2.9 Litigation. There is no action, suit, investigation, audit or
proceeding pending or, threatened against or affecting, the Company, their
officers or directors or any of its properties, or against any of the Sellers
and affecting the Shares, before any court or arbitrator or any governmental
body, agency or official. No former stockholder, employee, officer or director
of the Company has any claim pending or, to the Knowledge of the Company,
threatened against the Company, its officers or directors or any of its
properties. Neither the Company nor any of its officers and directors nor any of
its properties are subject to any order, writ, judgment, decree or injunction of
any court or arbitrator or any governmental body, agency or official. To the
Knowledge of the Company, there are no facts or circumstances that could
reasonably be expected to give rise to any actions as described in this Section
2.9.
2.10 Taxes. Except as set forth in (or resulting from matters set forth
in) Section 2.10 of the Company Disclosure Schedule:
(a) the Company has 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 the Company;
(b) all Taxes required to be paid by the Company shown on such
Returns to be due or payable have been timely paid in full to the proper
authorities, other than such Taxes as are adequately reserved for in accordance
with GAAP;
(c) all deficiencies resulting from Tax examinations of income,
sales and franchise and all other Returns filed by the Company in any
jurisdiction in which such Returns are required to be so filed have been paid
and no claim has been made by an authority in a jurisdiction where the Company
does not file Returns that the Company is or may be subject to taxation by that
jurisdiction;
(d) no deficiency has been asserted or assessed against the Company
that has not been satisfied or otherwise resolved, and no examination of the
Company is pending or, to the Knowledge of the Company, threatened for any
Material amount of Tax by any taxing authority and there is no dispute or claim
concerning any Tax liability of the Company either claimed by any authority in
writing, or to the Knowledge of the Company, reasonably expected to be claimed;
(e) no extension of the period for assessment or collection of any
Material Tax is currently in effect and no extension of time within which to
file any Material Return has been requested;
(f) all Returns filed by the Company are correct and complete in all
respects or adequate reserves have been established with respect to any
additional Taxes that may be due (or may become due) as a result of such Returns
not being correct or complete;
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(g) to the Knowledge of the of the Company and the Sellers, no Tax
liens have been filed with respect to any Taxes;
(h) the Company has not: (i) filed a consent under Code Section
341(f) concerning collapsible corporations; (ii) executed, become subject to, or
entered into any closing agreement pursuant to Section 7121 of the Code or any
similar or predecessor provision thereof under the Code or other Tax Law, (iii)
received approval to make or agreed to a change in accounting method, or (iv)
incurred or assumed any liability for the Taxes of any Person. The Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code:
(i) no Company Asset is property that is required to be treated as
being owned by any other Person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code; the Company has not agreed
to make, nor is it required to make, any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise; the transaction
contemplated herein is not subject to the Tax withholding provisions of Code
Section 3406, or of subchapter A of Chapter 3, of the Code or of any other
provision of Law; and 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;
(j) the Company has not entered, nor does it plan to enter into, any
agreement, arrangement, plan or similar circumstance with any Person that could
result in a distribution, apportionment or reallocation under Section 482 of the
Code or other similar provision of the Tax Law;
(k) the Company has made timely payments of the Taxes required to be
deducted and withheld in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party;
(l) the Company is not a party to any Tax sharing or Tax matters
agreement;
(m) the Company is not liable to suffer any recapture, c1awback or
withdrawal of any relief or exemption from Tax howsoever arising, and whether by
virtue of any act or omission by the Company or by any other Person or Persons;
(n) to the Knowledge of the Company, the Company is not liable to be
assessed for or made accountable for any Tax for which any other Person or
Persons may be liable to be assessed or made accountable whether by virtue of
consummating the transactions contemplated by this Agreement or by virtue of any
act or acts done by or which may be done by or any circumstance or circumstances
involving or which may involve any other Person or Persons;
(o) 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; and
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(p) the Company shall not be liable for any Tax under Code Section
1374 in connection with the deemed sale of the Company's assets caused by the
Section 338(h)(l0) election. The Company has not, in the past 10 years, (i)
acquired assets from another corporation in a transaction in which the Company's
Tax basis for the acquired assets was determined, in whole or in part, by
reference to the Tax basis of the acquired assets (or any other property) in the
hands of the transferor or (ii) acquired the stock of any corporation that is a
qualified subchapter S subsidiary.
2.11 Banking and Finders' Fees. There is no investment banker, broker,
finder or other intermediary, which has been retained by or is authorized to act
on behalf of the Company who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
2.12 Environmental Compliance. The Company (i) is in compliance with all
Environmental Laws and all Environmental Permits (except where non-compliance
would not have a Material Adverse Effect upon the Company), (ii) has not
received any written notice regarding any violation of any Environmental Laws,
or any Environmental Liabilities, (iii) does not own or operate any property
that, to the Knowledge of the Company, is contaminated with any Hazardous
Materials which may reasonably be expected to require remediation under any
Environmental Law, (iv) is not subject to liability for any off-site disposal or
contamination and (v) is not subject to any other circumstance in connection
with any Environmental Law that could reasonably be expected to result in any
claims, liabilities, costs or restrictions on the business or the ownership, use
or transfer of any property.
2.13 Property.
(a) The Company does not own any real property.
(b) Schedule 2.13(b) of the Company Disclosure Schedule sets forth
the complete and correct list of all shares of capital stock of First Montauk
Financial Corporation ("FMFC") owned, of record or beneficially, by the Company,
and the stockholders of the Company to whom such shares are attributable on a
pro rata cost basis. This list does not reflect 142,857 shares of FMFC
attributable to Xxx Xxxxx as of the date of this Agreement. This list represents
all of the shares of FMFC that will be owned by the Company at Closing.
(c) The Company has good and marketable title, free and clear of all
title defects, Liens, options and restrictions of any nature whatsoever to all
of the shares listed in Schedule 2.13(b). At the Closing Date, the Company will
possess all of the personal property wherever located required to conduct
business as conducted prior to the Closing, including without limitation all of
the shares of FMFC set forth in Schedule 2.13(b).
2.14 Intellectual Property.
(a) The Company owns or possesses legally enforceable rights to use,
all Intellectual Property Material to the operation of its business as currently
conducted, or to products or services currently under development (collectively,
"Material Intellectual Property"), and has the right to use and license or
sublicense the same without liability to, or any requirement of consent from,
any other Person or party. Such Intellectual Property constitutes all
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Intellectual Property necessary for the conduct of the business of the Company
in the manner conducted immediately prior to the Closing. All Material
Intellectual Property is owned by the Company free and clear of all Liens or is
used pursuant to a license agreement; each such license agreement is valid and
enforceable and in full force and effect assuming enforceability as to the
parties other than the Company; the Company is not in Default thereunder; and to
the Knowledge of the Company, no corresponding licensor is in Default
thereunder. None of the Material Intellectual Property of the Company and, to
the Knowledge of the Company, none of the Third Party Technology infringes or
otherwise conflicts with any Intellectual Property or other right of any Person;
there is no pending or, to the Knowledge of the Company, threatened litigation,
adversarial proceeding, administrative action or other challenge or claim
relating to any Material Intellectual Property of the Company or, to the
Knowledge of the Company, any Third Party Technology; there is no outstanding
Order relating to any Material Intellectual Property of the Company or, to the
Knowledge of the Company, any Third Party Technology; and to the Knowledge of
the Company, there is currently no infringement by any Person of any Material
Intellectual Property of the Company.
(b) The Company has taken reasonable steps to protect, maintain and
safeguard the Material Intellectual Property, including any Material
Intellectual Property for which improper or unauthorized disclosure would impair
its value or validity, and has executed and required such nondisclosure
agreements as are reasonably necessary to protect the confidentiality of
Material Intellectual Property and made filings and registrations in connection
with the foregoing reasonably required to safeguard the Material Intellectual
Property. No Material confidential or trade secret information of the Company
has been provided to any Person except subject to written confidentiality
agreements.
(c) Except in the normal course of prosecution: (i) the Company has
not taken any action or failed to take any action that would result in the
abandonment, cancellation, forfeiture, relinquishment, invalidation or
unenforceability of any trademark, copyright, patent or any application for any
of the foregoing, (ii) all registered trademarks and all patents owned by the
Company, to the extent filed with the United States Patent and Trademark Office,
have been filed and obtained in accordance with all applicable legal
requirements and are currently in effect and in compliance with all applicable
legal requirements (including, in the case of registered trademarks, the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), and (iii) without limiting the generality of any of the
foregoing, the Company has timely paid all filing, examination, issuance, post
registration and maintenance fees, annuities and the like associated with or
required with respect to any of the foregoing.
(d) No trademark or patent owned by the Company, and to the
Knowledge of the Company, no trademark or patent licensed to the Company, has
been or is now involved in any interference, reissue, reexamination, opposition
or cancellation proceeding and, to the Knowledge of the Company, no such action
is or has been threatened with respect to any such trademarks or patents.
2.15 Contracts.
(a) Except as set forth in Section 2.15(a) of the Company Disclosure
Schedule, the Company is not a party to any contracts or agreements.
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(b) With respect to each Contract: (i) the Company is not in breach
or Default, and no event has occurred or circumstances exist which (with or
without notice or lapse of time or both) could reasonably be expected to
constitute a breach or Default of, or permit termination, modification or
acceleration under, the Contract; (ii) no party has repudiated any provision of
the Contract; (iii) the Contract is legally valid and binding and is enforceable
in accordance with its terms against the Company, and, to the Knowledge of the
Company, any other parties thereto, except that (A) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other Laws, now or hereafter in effect, relating to or limiting
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief, may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought; and (iv) the Company has not given to, or received
from any other Person, any notice or other communication regarding any actual or
alleged violation or breach thereof or Default thereunder.
2.16 Insurance. The Company has in full force and effect all insurance and
indemnity policies that are customary in coverage and amount for a company of
its size and industry. All premiums and other payments due with respect to all
contracts of insurance or indemnity in force at the date hereof have been or
will be paid, and the Sellers know of no circumstance (including without
limitation the consummation of the transactions contemplated by this Agreement),
which has caused, or might cause, any such contract to be canceled or
terminated. There are no Material claims by the Company under any insurance
policies of either the Company as to which coverage has been questioned, denied
or disputed by the underwriters of such policies.
2.17 Powers of Attorney and Suretyships. The Company does not have any
powers of attorney outstanding (other than a power of attorney issued in the
ordinary course of business with respect to tax matters or to customs agents and
customs brokers), and, except for obligations as an endorser of negotiable
instruments incurred in the ordinary course of business, the Company does not
have any obligations or liabilities (absolute or contingent) as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise respecting the
obligation of any other Person. 2.18 Minutes and Stock Records. The Company has
provided Buyer with copies of the minute books and stock records of the Company.
Such items contain stock certificates and/or affidavits of lost certificates and
resolutions from the Board of Directors of the Company required to demonstrate
that immediately prior to the Closing the Sellers are the only stockholders of
the Company.
2.19 Full Disclosure. All of the representations and warranties made by
the Sellers and the Company in this Agreement, and all statements set forth in
the certificates delivered by the Company 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 statements,
in light of the circumstances under which they were made, misleading. The copies
of all documents furnished by the Company pursuant to the terms of this
Agreement are complete and accurate copies of the original documents.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each of the Sellers, severally and not jointly, hereby represents and
warrants to Buyer the representations and warranties set forth in Sections 2.2,
2.9 and 2.13. In addition, each of the Sellers, severally and not jointly,
hereby represents and warrants to Buyer that, except as set forth in the
disclosure schedules delivered by the Sellers to Buyer (the "Sellers Disclosure
Schedule"), which have been provided to Buyer:
3.1 Authorization and Validity of Agreement. Each Seller has all requisite
power and authority to execute and deliver the Agreement and to carry out and
perform its obligations under the terms of the Agreement. All action on the part
of the Seller necessary for the authorization, execution, delivery and
performance of the Agreement, and the performance of all of the Sellers'
obligations under the Agreement, have been taken or will be taken prior to the
Closing. The Agreement, when executed and delivered by the Sellers, will
constitute valid and legally binding obligations of each of the Sellers,
enforceable in accordance with their terms, except that (i) such enforcement may
be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other Laws, now or hereafter in effect, relating to or limiting
creditors' rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief, may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefore may be brought.
3.2 Government Authorization. No consent, approval, authorization, order,
filing, registration or qualification of or with any court, governmental
authority or third person is required to be obtained by the Sellers in
connection with the execution and delivery of the Agreement by the Sellers or
the performance of the Sellers' obligations hereunder.
3.3 Ownership of Shares. Each Seller is the sole beneficial and record
owner of the number of such Shares, and at the Closing each such Seller will
sell and convey to Buyer the number of such Shares, set forth opposite such
Seller's name on Schedule of Stockholders attached hereto, free and clear of any
Liens, other than restrictions imposed by federal and applicable state
securities laws which do not constitute an impediment to the transfer of such
Shares to Buyer pursuant to this Agreement. Each Seller has not, and as of the
Closing such Seller shall not have, sold or otherwise disposed of, or granted
any options or rights to purchase, and such Seller has not, and as of the
Closing shall not have, entered into any agreement obligating such Seller to
sell or otherwise dispose of, or to grant options or rights to purchase, any of
such Shares, except to Buyer.
3.4 No Violation. The execution, delivery and performance by each Seller
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not (i) contravene or conflict with or constitute a violation of
any provision of any Law, judgment, injunction, order or decree binding upon or
applicable to the Seller, (ii) require the consent or other action of any Person
under, constitute a Default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the Seller or to a
loss of any benefit to which the Seller is entitled under any provision of any
Material agreement or other instrument binding upon the Seller; or (iv) result
in the creation or imposition of any Material Lien on any Asset of the Seller.
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3.5 Banking and Finders' Fees. There is no investment banker, broker,
finder or other intermediary, which has been retained by or is authorized to act
on behalf of any of the Sellers who might be entitled to any fee or commission
in connection with the transactions contemplated by this Agreement.
3.6 Investment Representations.
(a) Each Seller understands that the shares to Buyer Common Stock
issued pursuant to Section 1.1 of the Agreement have not been registered under
the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Seller's representations as expressed herein or otherwise made pursuant
hereto. Each Seller is acquiring the Buyer Common Stock for its own account, not
as a nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act.
(b) Each Seller understands that the shares of Buyer Common Stock
issued pursuant to this Agreement will be "restricted securities" under the
federal securities Laws inasmuch as the Buyer Common Stock is being acquired
from Buyer in a transaction not involving a public offering and that under such
Laws such shares of Buyer Common Stock may not be resold without registration
under the Securities Act or an exemption therefrom. The shares of Buyer Common
Stock issued pursuant to this Agreement will be endorsed with a legend to such
effect.
(c) Each Seller has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to Buyer and acknowledges that such Seller can protect his own interests. Each
Seller has such knowledge and experience in financial and business matters so
that such Seller is capable of evaluating the merits and risks of its investment
in Buyer.
(d) Each Seller has been furnished with and has had access to such
information as it has considered necessary to make a determination as to the
purchase of the Buyer Common Stock.
(e) Each Seller is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company and the Sellers that:
4.1 Corporate Existence and Power. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Nevada. Buyer has all
requisite corporate powers and authority and all governmental licenses,
authorizations, permits, consents and approvals required to own, lease and
operate its properties and to carry on its business as now conducted, except for
those licenses, authorizations, permits, consents and approvals the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect on Buyer.
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4.2 Corporate Authorization. Buyer has the corporate power and authority
to execute and deliver this Agreement to which it is or will be party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all requisite corporate action
on the part of Buyer. This Agreement, when executed and delivered by Buyer,
constitutes a valid and binding agreement of Buyer, enforceable against Buyer in
accordance with their respective terms, except that (a) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally, and (b) the remedy of specific performance and
injunctive and other forms of equitable relief, may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
4.3 Governmental Consent. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of Buyer is required in connection with the valid execution and delivery of this
Agreement and the issuance of the shares of Buyer Common Stock pursuant to
Section 1.1 of the Agreement, or the consummation of any other transaction
contemplated by this Agreement, except the filing of such notices as may be
required under the Securities Act and such filings as may be required under
applicable state securities laws.
4.4 No Violations. Neither the execution, delivery and performance of this
Agreement by Buyer nor the consummation by Buyer of the transactions
contemplated hereby will (a) conflict with or result in any breach of any
provision of Buyer's Articles of Incorporation or Bylaws (or similar governing
documents), (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a Default under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Buyer is a party
or (c) violate any order, writ, injunction, decree or Law applicable to Buyer,
except in the case of (b) or (c) for violations, breaches or Defaults which
would not have a Material Adverse Effect on the ability of Buyer to consummate
the transactions contemplated by this Agreement.
4.5 SEC Filings of Buyer. To the Knowledge of Buyer, Buyer has filed with
the SEC all reports required to be filed by it since January 1, 2005 (the "SEC
Filings"). To the Knowledge of Buyer, the SEC Filings (a) complied in all
Material respects with the requirements of the Securities Act and the Exchange
Act as the case may be at the time they were filed (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing) and (b) did not as of the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of Material fact or omit to state a
Material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.6 Banking and Finders' Fees. There is and will be no investment banker,
broker, finder or other intermediary retained by or authorized to act on behalf
of Buyer who might be entitled to any fee or commission from Buyer upon
consummation of the transactions contemplated by this Agreement.
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4.7 Investment Representations. Buyer understands that the Sellers are
entering into this Agreement with Buyer in reliance upon Buyer's representation
to the Sellers, which, by Buyer's execution of this Agreement, Buyer hereby
confirms that the Shares will be acquired for investment for Buyer's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Buyer has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, Buyer further represents that Buyer does not have any
contract, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third party, with respect to any of the
Shares.
ARTICLE 5
COVENANTS OF THE PARTIES
5.1 Reasonable Efforts. The parties further agree to use their respective
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement,
including (A) the obtaining of all other necessary actions or nonactions,
waivers, consents, licenses, permits, authorizations, orders and approvals from
governmental authorities and the making of all other necessary registrations and
filings, (B) the obtaining of all consents, approvals or waivers from third
parties related to or required in connection with the transactions contemplated
by this Agreement or required to prevent a Material Adverse Effect on the
Company from occurring prior to or after the Closing Date, (C) the satisfaction
of all conditions precedent to the parties' obligations hereunder, and (D) the
execution and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.
5.2 Public Announcements. Except as otherwise agreed to by the parties
hereto, the parties hereto shall not issue any report, statement or press
release or otherwise make any public statements with respect to this Agreement
and the transactions contemplated hereby, except as may be required by Law, in
which case the parties will use their reasonable best efforts to reach mutual
agreement as to the language of any such report, statement or press release.
5.3 Blue Sky Laws. Buyer shall take any action required to be taken under
any applicable provincial or state securities laws (including "Blue Sky" laws)
in connection with the issuance of the Buyer Common Stock pursuant to this
Agreement; provided, however, that neither Buyer nor the Company shall be
required to register or qualify as a foreign corporation or to take any action
that would subject it to service of process in any jurisdiction where any such
entity is not now so subject, except as to matters and transactions arising
solely from the offer and sale of Buyer Common Stock.
5.4 Registration Rights.
(a) Mandatory Registration. Buyer shall file with the SEC a
registration statement on Form SB-2 (or, if Form SB-2 is not then available to
Buyer, on such form of registration statement as is then available to effect a
registration for resale of the Registrable Securities), registering all of the
Registrable Securities for resale within 10 business days of the date that
Buyer's registration statement on Form SB-2 (registration file no. 333-127239)
has been declared effective by the SEC. If Form SB-2 is not available at that
time, then Buyer will file a registration statement on such form as is then
available to effect a registration of all of the Registrable Securities.
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(b) Piggyback Rights. If, at any time prior to the filing of a
registration statement covering all of the Registrable Securities, Buyer decides
to register any of its securities for its own account or for the account of
others, (but without any obligation to do so) Buyer proposes to register
(including for this purpose a registration effected by Buyer for stockholders
other than the Sellers) any of its securities under the Securities Act in
connection with the public offering of such securities solely for cash (other
than a registration relating solely to the sale of securities to participants in
a Buyer stock plan or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), Buyer
shall, at such time, promptly give the Sellers written notice of such
registration. Upon the written request of a Seller given within twenty (20) days
after mailing of such notice by Buyer in accordance with Section 9.1, Buyer
shall, subject to the provisions of Section 5.4(f), cause to be registered under
the Securities Act, and included in any underwriting involved, all of the
Registrable Securities that such Seller has requested to be registered. The
provisions of this Section 5.4(b) shall not apply to Buyer's Registration
Statement on Form SB-2 (including the filing of any amendments and supplements
thereto, whether before or after the Closing Date) filed with the SEC on August
5, 2005 (registration file no. 333-127239).
(c) Obligations of Buyer. Whenever required under this Section 5.4
to effect the registration of any Registrable Securities, Buyer, at its expense,
shall, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its reasonable best efforts
to cause such registration statement to become effective and, subject to the
proviso in this Section 5.4(c)(i), keep such registration statement effective
for a period of up to ninety (90) days or until the distribution contemplated in
the registration statement has been completed; provided, however, that
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
that (i) includes any prospectus required by Section 10(a)(3) of the Securities
Act, or (ii) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (i) and
(ii) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus in connection with
such registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement.
(iii) Furnish to the Sellers such numbers of copies of a
prospectus in conformity with the requirements of the Securities Act, and such
other documents as the Sellers may reasonably request from time to time in order
to facilitate the disposition of Registrable Securities owned by it.
15
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Sellers; provided that Buyer shall not be required in connection therewith or as
a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless Buyer is already
required to qualify to do business or subject to service in such jurisdiction
and except as may be required by the Securities Act.
(v) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. If a Seller
makes such request referenced in Section 5.4(b) above to have his Registrable
Securities included in such registration and underwriting, the Seller shall also
enter into and perform his obligations under such an underwriting agreement.
(vi) Notify each Seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and, at the request of a Seller, prepare and furnish to such Seller a
reasonable number of supplements to, or amendment of, such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such share, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in light of the circumstances
then existing.
(vii) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(viii) Make available for inspection by any underwriter
participating in any disposition pursuant to such registration, and any attorney
or accountant retained by the underwriter, all financial and other records,
pertinent corporate documents and properties of Buyer, and cause Buyer's
officers and directors to supply all information reasonably requested by the
underwriter, attorney or accountant in connection with such registration
statement; provided, however, that the underwriter, attorney or accountant shall
agree to hold in confidence and trust all information so provided.
(ix) Make available to each Seller participating in such
registration, upon the request of such Seller:
(A) in the case of an underwritten public offering, a
copy of any opinion of counsel for Buyer provided to the underwriters
participating in such offering, dated the date such shares are delivered to such
underwriters for sale in connection with the registration statement;
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(B) in the case of an underwritten public offering, a
copy of any "comfort" letters provided to the underwriters participating in such
offering and signed by Buyer's independent public accountants who have examined
and reported on Buyer's financial statements included in the registration
statement, to the extent permitted by the standards of the AICPA or other
relevant authorities; and
(C) a copy of all documents filed with and all
correspondence from or to the SEC in connection with any such offering other
than non-substantive cover letters and the like.
(x) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC, and timely make available to
its security holders an earnings statement covering the period of at least 12
months, but not more than 18 months, beginning with the first month after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Exchange Act.
(d) Furnish Information. It shall be a condition precedent to the
obligations of Buyer to take any action pursuant to this Section 5.4 with
respect to Registrable Securities of any Seller registering securities that such
Seller shall furnish to the Company such information regarding itself, its
affiliates, the Registrable Securities held by it, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Seller's Registrable Securities.
(e) Expenses of Buyer Registration. Buyer shall bear and pay all
expenses incurred by it in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Sections 5.4(a) and 5.4(b) for the Sellers and compliance with the
terms hereof, including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of counsel for Buyer, but excluding
underwriting discounts and commissions relating to Registrable Securities.
(f) Reductions of Registrable Securities to be Included. In
connection with any offering involving an underwriting of shares of Buyer's
capital stock, Buyer shall not be required under Section 5.4(b) to include a
Seller's securities in such underwriting unless such Seller accepts the terms of
the underwriting as agreed upon between Buyer and the underwriters selected by
Buyer and then only in such quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by Buyer. If the
total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by Buyer that the underwriters determine in their sole
discretion is compatible with the success of the offering, then Buyer shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders).
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(g) Delay of Registration. The Sellers shall not have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 5.4.
(h) Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 5.4:
(i) To the extent permitted by law, Buyer will indemnify and
hold harmless the Sellers, each officer and director of the Sellers, any
underwriter (as defined in the Securities Act) of the Sellers and each person,
if any, who controls the Sellers or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (iii) any violation or alleged
violation by Buyer of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any state securities law; and Buyer will pay to the Sellers, underwriter
or controlling person any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this Section 5.4(h)(i) shall not apply to (1) a Seller if he is either an
officer or director of Buyer at the time of the statement, omission or violation
(a "Management Holder") unless such Management Holder has sold shares included
in the registration statement, (2) amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of Buyer (which consent shall not be unreasonably withheld), or (3) any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by a Seller (including each officer and director of such Seller),
underwriter or controlling person.
(ii) To the extent permitted by law, the selling Sellers will
indemnify and hold harmless Buyer, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who controls
Buyer within the meaning of the Securities Act, any underwriter and any
controlling person of any such underwriter, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by the Seller, or by
18
an officer or director of the Sellers expressly for use in connection with such
registration; and the Sellers will pay any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section
5.4(h)(ii) in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this Section 5.4(h)(ii) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Seller, which consent shall
not be unreasonably withheld; provided, further, that in no event shall any
indemnity under this Section 5.4(h)(ii) exceed the gross proceeds from the
offering received by the Sellers net of underwriters' commissions and discounts.
(iii) Promptly after obtaining actual knowledge of any third
party claim or action as to which it may seek indemnification under this Section
5.4(h), an indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 5.4(h), deliver to the
indemnifying party a written notice thereof and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5.4(h), if, and to the extent that, such
failure is prejudicial to such indemnifying party's ability to defend such
action, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.4(h).
(iv) If the indemnification provided for in this Section
5.4(h) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense (including, without limitation, legal and other expenses incurred by
such indemnified party in investigating or defending any such action or claim)
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. Notwithstanding the provisions of this Section 5.4(h),
the Sellers shall not be required to contribute any amount or make any other
payments under this Agreement which in the aggregate exceed the net proceeds
received by the Sellers from the offering covered by the applicable registration
statement.
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(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(vi) The obligations of Buyer and Sellers under this Section
5.4(h) shall survive the completion of any offering of Registrable Securities in
a registration statement under this Section 5.4, and otherwise.
(i) Transfer of Registration Rights. The rights to cause Buyer to
register Registrable Securities pursuant to this Section 5.4 may be transferred
only to any person or entity that is a relative or an affiliate of the
transferring Seller in connection with a permitted transfer of the Registrable
Securities exempt from registration under the Securities Act.
(j) Market Stand-Off Agreement. Each Seller hereby agrees that such
Seller will not sell or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any Registrable Shares during a period not to
exceed 90 days following the effective date of a registration statement in
connection with an underwritten public offering of Buyer if so requested by
Buyer or any representative of its underwriters, and each Seller shall enter
into such underwriter's standard form of "lockup" or "market standoff' agreement
in a form satisfactory to Buyer and such underwriter. In order to enforce the
foregoing covenant, Buyer may impose stock transfer restrictions with respect to
the Registrable Shares of each Seller until the end of the lockup period.
(k) Termination of Registration Rights. The Sellers shall not be
entitled to exercise any right provided for in this Section 5.4 five (5) years
after the Sellers have tendered consideration for the relevant Registrable
Securities.
5.5 Code Section 338(h)(l0) Election.
(a) Preparation, Execution, Delivery and Filing of Section
338(h)(10) Election Form. Buyer and the Sellers shall jointly complete and make
a timely election under Section 338(h)(10) of the Code, with respect to Buyer's
qualified stock purchase of the Shares pursuant to this Agreement, on IRS Form
8023 ("Elections Under Section 338 for Corporations Making Qualified Stock
Purchases"), including all schedules and exhibits thereto. Buyer and the Sellers
shall also jointly make a timely election in the manner required under any
analogous provisions of state or local law concerning the acquisition. Moreover,
the Company, the Sellers and Buyer shall individually file, as applicable, Form
8883 ("Asset Allocation Statement Under Section 338"), including all schedules
and exhibits thereto.
(b) Cooperation. Buyer shall, with the assistance and cooperation of
the Company and the Sellers, prepare drafts of all Section 338(h)(10) election
forms and related schedules, exhibits and worksheets required as attachments to
IRS Form 8023 and IRS Form 8883 (and all forms under analogous provisions of
state or local Law) in accordance with applicable Tax laws. In connection with
the Section 338(h)(10) election, prior to the Closing, or as soon as practicable
thereafter, Buyer, the Company, and the Sellers shall together in good faith
attempt to (i) determine and agree upon a "Aggregate Deemed Sale Price" of the
Company (within the meaning of and in accordance with, Treas. Reg. ss.
1.338-4(a)) and (ii) determine and agree upon the proper allocations (the
"Allocations") of the "Aggregate Deemed Sale Price" among the respective assets
of the Company (in accordance with Section 338(b)(5) of the Code and Treasury
regulations promulgated thereunder).
20
(c) Consistency. Buyer, the Company and the Sellers shall, to the
extent, and only to the extent, of the agreements described in the preceding
paragraph be bound by such determinations and such Allocations for purposes of
determining any taxes. Buyer, the Company and the Sellers shall take no position
inconsistent with any such agreed determinations and Allocations on any
applicable tax return, in any proceeding before any taxing authority or
otherwise. Buyer and the Sellers shall complete the IRS Form 8023 Section
338(h)(10) election form and then timely file it and their tax returns on a
basis consistent with such determinations and such Allocations. The Company and
the Buyer shall also complete the IRS Form 8883 and then timely file it with the
appropriate tax returns on a basis consistent with such determinations and such
Allocations.
ARTICLE 6
CLOSING DELIVERABLES
6.1 Closing Deliverables of the Sellers and the Company. At the Closing,
the Sellers and the Company, as the case may be, shall deliver to Buyer the
following (anyone or more of which may be waived in whole or in part by Buyer at
its sole option):
(a) Secretary's Certificate of the Company. The Company shall have
delivered to Buyer a certificate executed by the Secretary of the Company
certifying (i) the resolutions duly adopted by the Board of Directors of the
Company authorizing this Agreement and the transactions contemplated hereby; and
(ii) the Charter Documents as in effect immediately prior to the Closing Date,
including all amendments thereto.
(b) Assignment of the Shares. The Sellers shall have delivered to
Buyer stock certificates evidencing the Shares and a duly executed assignment
separate from certificate assigning the Shares to Buyer.
(c) Consents. All consents, waivers, approvals or authorizations
required to be obtained by the Sellers and the Company to consummate the
transactions contemplated by this Agreement shall have been obtained and made by
the Sellers and the Company and evidence thereof shall have been delivered to
Buyer.
(d) Resignations. Buyer shall have received duly signed
resignations, effective immediately prior to the Closing Date, of all directors
and officers of the Company, which include resignations from Xxxxx Xxxxx as the
Company's President, CEO, Treasurer and Secretary, from Xxx Xxxxxx as director
and from Xxxx Xxxxx as director.
(e) Liabilities. The Company shall have paid in full all of its
liabilities, including all of those listed in Schedule 2.7 of the Company
Disclosure Schedule, except that the invoice from Vintage Filings LLC of
approximately $1,100 shall be paid by Buyer.
21
(f) Cancellation of Certain Shares. One Hundred Forty (140) shares
of the Company owned and held by Xxx Xxxxx as of the date of this Agreement
shall have been cancelled and extinguished prior to the Closing Date, such that
at Closing, the Shares as set forth on the Schedule of Stockholders will be all
of the issued and outstanding shares of the Company. The Company shall provide
the actual stock certificate duly cancelled and extinguished and any other
evidence of such cancellation as Buyer may request at Closing.
6.2 Closing Deliverables of Buyer. At the Closing, Buyer shall: (a)
deliver to the Company and the Sellers a certificate executed by the Secretary
of Buyer certifying the resolutions duly adopted by the Board of Directors of
Buyer authorizing this Agreement and the transactions contemplated hereby; (b)
have paid for the benefit of the Company and the Sellers the invoice from
Vintage Filings LLC in connection with SEC filings in the amount of
approximately $1,100; (c) shall have effected its reverse stock split as
described in its preliminary information statement on Schedule 14C filed with
the SEC on December 28, 2005 (the "Reverse Stock Split"); and (d) shall have
issued an irrevocable instruction to Buyer's transfer agent to issue the shares
of Buyer common stock pursuant to Section 1.1. The delivery of any of Buyer's
closing deliverables pursuant to this Section 6.2 may be waived in whole or in
part by the Company and the Sellers.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification of Buyer. Subject to the limitations contained in this
Article 7, the Sellers shall defend, indemnify and hold harmless Buyer and its
officers, directors, stockholders, employees and agents from and against any and
all losses, claims, judgments, liabilities, demands, charges, suits, penalties,
costs or expenses, including court costs and reasonable attorneys' fees ("Claims
and Liabilities") with respect to or arising from:
(a) the breach of any warranty or any inaccuracy of any
representation made by the Sellers or by the Company in this Agreement; or
(b) the breach of any covenant or agreement made by the Sellers or
by the Company in this Agreement.
7.2 Indemnification of Sellers. Buyer shall defend, indemnify and hold
harmless the Sellers, and their officers, directors, stockholders, employees and
agents, as applicable, from and against any and all Claims and Liabilities with
respect to or arising from (i) breach of any warranty or any inaccuracy of any
representation made by Buyer or (ii) breach of any covenant or agreement made by
Buyer in this Agreement.
7.3 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 Article 7, 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
22
Party of any of its indemnification obligations contained in this Article 7,
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 Article 7 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 Article 7 to indemnify an
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 Article 7, 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; provided,
however, that if the Indemnitee shall fail to consent to the settlement of such
a claim by the Indemnifying Party, which settlement (i) the claimant has
indicated it will accept, and (ii) includes an unconditional release of the
Indemnitee and its Affiliates by the claimant and imposes no Material
restrictions on the future activities of the Indemnitee and its affiliates, the
Indemnifying Party shall have no liability with respect to any payment required
to be made to such claimant in respect of such claim in excess of the proposed
amount of settlement. If the Indemnitee is defending the claim as set forth
above, the Indemnitee shall have the right to settle or compromise any claim
against it after consultation with, but without the prior approval of, any
Indemnifying Party, provided, however, 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.
7.4 Limitations on Indemnification. Notwithstanding anything to the
contrary herein contained, the obligations of Buyer and the Sellers pursuant to
the provisions of Article 7 are subject to the following limitations:
23
(a) An Indemnitee shall not be entitled to recover under Section 7.1
or 7.2, as the case may be, until the total amount that such Indemnitee would
recover exceeds Five Thousand Dollars ($5,000) (the "Basket"), in which case the
Indemnitee shall be entitled to recover the full amount of Claims and
Liabilities to which such Indemnitee is entitled in accordance with the
provisions of this Article 7, including the Basket.
(b) Claims payable to an Indemnitee pursuant to Section 7.3 above
shall be net of any proceeds received by an Indemnitee from claims under
separate insurance policies. The Indemnitee shall seek full recovery under all
such insurance policies covering any claims to the same extent as they would if
such claims were not subject to indemnification under this Agreement.
(c) The total aggregate liability of the Sellers under Section 7.1
and the total aggregate liability of Buyer under Section 7.2, respectively,
shall in no event exceed the value of the Purchase Price paid by Buyer to the
Sellers.
7.5 Exclusive Remedy. Each of the parties hereto acknowledges and agrees
that, from and after the Closing Date, its sole and exclusive monetary remedy
with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in this
Article 7, except that nothing in this Agreement shall be deemed to constitute a
waiver of any injunctive or other equitable remedies or any tort claims of, or
causes of action arising from, intentionally fraudulent misrepresentation,
willful breach or deceit.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties of the parties contained in this
Agreement will remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the parties to this Agreement, until the
date that is the anniversary of the Closing Date, whereupon such representations
and warranties will expire.
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (c) five
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) two days after deposit with a nationally
recognized overnight courier, specifying two day delivery, with written
verification of receipt. All communications shall be sent to the parties at the
following addresses or facsimile numbers specified below (or at such other
address or facsimile number for a party as shall be designated by ten days
advance written notice to the other parties hereto):
24
(a) If to Buyer:
360 Global Wine Company
Xxx Xxxxxxxx Xxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
Attn: Chief Executive Officer
Ph: (000) 000-0000
Fax: ____________
with a copy to (which shall not constitute notice):
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Ph: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Company:
0000 Xxxxxxxxx Xxxx., #000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxx
If to the Sellers, at the address set forth on the
Schedule of Stockholders
9.2 Amendments and Waivers. Any provision of this Agreement may be amended
or waived if, but only if, such amendment or waiver is in writing and is signed
by the party against whom such amendment or waiver is to be effective.
9.3 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,
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.
9.4 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.5 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible, in a mutually acceptable manner, to the end that
transactions contemplated hereby are fulfilled to the extent possible.
25
9.6 Entire Agreement. This Agreement (including exhibits and schedules
attached hereto and thereto and the certificates referenced herein) constitutes
the entire agreement and supersedes all prior agreements and undertakings both
oral and written, among the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein.
9.7 Assignment. No party may assign this Agreement or assign its
respective rights or delegate their duties, without the prior written consent of
the other parties. This Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective permitted successors and
assigns.
9.8 Parties-In-Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation.
9.9 Governing Law. This Agreement will be governed by, and construed and
enforced in accordance with the laws of the State of Nevada as applied to
contracts that are executed and performed in Nevada, without regard to the
principles of conflicts of law thereof.
9.10 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. This Agreement shall
become effective when counterparts have been signed by each of the parties and
delivered by facsimile or other means to the other party. Any party who delivers
a signature page via facsimile agrees to later deliver an original counterpart
to all other parties.
9.11 Attorneys Fees. If any action or proceeding relating to this
Agreement, or the enforcement of any provision of this Agreement is brought by a
party hereto against any party hereto, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements (in addition to any
other relief to which the prevailing party may be entitled).
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
26
IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
BUYER:
360 GLOBAL WINE COMPANY,
a Nevada corporation
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
--------------------------------------
Title: Chief Executive Officer
-------------------------------------
THE COMPANY:
BMAC CORP.,
a Nevada corporation
By: /s/ Xxxxx Xxxxx
----------------------------------------
Title: President
-------------------------------------
THE SELLERS:
By: /s/ Xxxxxxx Xxxxx /s/ Xxxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx and Xxxxxxxx Xxxxx Trust
--------------------------------------
Title: Trustees
-------------------------------------
/s/ Zu Xxxxxxx
-------------------------------------------
Zu Xxxxxxx
/s/ Xxx Xxxxxx
-------------------------------------------
Dr. Eli and Xxx Xxxxxx
/s/ Xxx Xxxxxx
-------------------------------------------
Dr. Eli and Xxx Xxxxxx
27
By: /s/ Xxx Xxxxx
----------------------------------------
Name: JD Financial, LLC
--------------------------------------
Title: Member
-------------------------------------
/s/ Xxxx Xxxxx
-------------------------------------------
Xxxx Xxxxx
/s/ Xxxx Xxxxx
-------------------------------------------
Xx. Xxxx Xxxxx
By: /s/ Xxx Xxxx
----------------------------------------
Name: AMVA Holdings, LLC
--------------------------------------
Title: President
-------------------------------------
28
SCHEDULE OF STOCKHOLDERS
Proportionate Interest of Buyer
Name and Address Number of BMAC Shares Held Common Stock (Percentage)
---------------- -------------------------- -------------------------
Xxxxxxx and Xxxxxxxx Xxxxx Trust 190 22.57%
0000 X. Xxxxxx Xxxx
Xxxxxx, XX 00000
Zu Xxxxxxx 96 11.40%
0000 00xx Xxx.
Xxxxxxxx, XX 00000
Dr. Eli and Xxx Xxxxxx 96 11.40%
0000 Xxxxxx Xxx.
Xxxxxx, XX 00000
JD Financial, LLC 96 11.40%
00000 Xxxxxxx Xxxx. #000
Xxxxxxx, XX 00000
Xxxx Xxxxx 48 5.70%
0000 Xxxx Xxxx Xxxxxx Xx.
Xxxxxxx, XX 00000
Xx. Xxxx Xxxxx 40 4.75%
0000 Xxxxxxx Xxx.
Xxx Xxxxxxx, XX 00000
Xxxx Xxxxx 86 10.21%
0000 Xxxx Xxxx Xxxxxx Xx.
Xxxxxxx, XX 00000
AMVA Holdings, LLC 190 22.57%
00000 Xxxxxxxx Xxxx, Xxxx 000
Xxx Xxxxxxx,XX 00000
TOTAL BMAC SHARES OUTSTANDING 842 100%
A-29
EXHIBIT A
CERTAIN DEFINITIONS
The following terms, as used in the Stock Purchase Agreement, have the
following meanings:
"Affiliate" shall mean with respect to any Person, any individual,
corporation, partnership, firm, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization or
Governmental Entity, or other Person directly or indirectly controlling,
controlled by or under common control with such Person, including all officers
and directors of such Person.
"Agreement" shall have the meaning as set forth in the Preamble of this
Agreement.
"Allocations" shall have the meaning as set forth in Section 5.5(b) of
this Agreement.
"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 or any
Affiliate of such Person and wherever located.
"Asset Allocation Statement Under Section 338" shall have the meaning as
set forth in Section 5.5(a) of this Agreement.
"Basket" shall have the meaning as set forth in Section 7.4(a) of the
Agreement.
"Buyer" shall have the meaning as set forth in the Preamble of the
Agreement.
"Charter Documents" shall have the meaning as set forth in Section 2.1 of
the Agreement.
"Closing" shall have the meaning as set forth in Section 1.2 of the
Agreement.
"Closing Date" shall have the meaning as set forth in Section 1.2 of the
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Common Stock Payment" shall have the meaning as set forth in Section 1.1
of the Agreement.
"Common Stock Payment Value" shall have the meaning set forth in Section
1.1 of the Agreement.
"Company" shall have the meaning as set forth in the Preamble.
A-1
"Company Disclosure Schedule" shall mean the written disclosure schedule
pursuant to Article 2 of the Agreement delivered on or prior to the date hereof
to Buyer that is arranged in the numbered and lettered paragraphs corresponding
to the numbered and lettered paragraphs contained in the Agreement.
"Company Intellectual Property" means all Material Intellectual Property
other than Material Intellectual Property that is the subject of Third Party
Licenses.
"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.
"Elections Under Section 338 for Corporations Making Qualified Stock
Purchases" shall have the meaning as set forth in Section 5.5(a) of this
Agreement.
"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 Material 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 Material or wastes or the clean-up
or other remediation thereof.
"Environmental Liabilities" mean any and all liabilities of or relating to
the Company, whether contingent or fixed, actual or potential, known or unknown,
which (i) arise under or relate to matters covered by Environmental Laws and
(ii) relate to actions occurring or conditions existing on or prior to the
Closing Date.
"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.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder, as amended.
A-2
"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.
"Indemnitee" shall have the meaning as set forth in Section 7.3 of the
Agreement.
"Indemnifying Party" shall have the meaning as set forth in Section 7.3 of
the Agreement.
"Intellectual Property" shall mean all rights, privileges and priorities
provided under applicable Law relating to intellectual property, whether
registered or unregistered, including without limitation all (i) (a) inventions,
discoveries, processes, formulae, designs, methods, techniques, procedures,
concepts, developments, technology, mask works, new and useful improvements
thereof and know-how relating thereto, whether or not patented or eligible for
patent protection; (b) copyrights and copyrightable works, including computer
applications, programs, Products, Software, databases and related items; (c)
trademarks, service marks, trade names, brand names, product names, corporate
names, logos and trade dress, the goodwill of any business symbolized thereby,
and all common-law rights relating thereto; and (d) trade secrets, proprietary
data and other confidential information; and (ii) all registrations,
applications, recordings, and licenses or other similar agreements related to
the foregoing.
"Knowledge" means with respect to the Company or Buyer, the actual
knowledge of the officers of a party, and knowledge that a reasonable person in
such capacity should have after due inquiry, and with respect to the Sellers,
that actual knowledge of the Sellers, 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 operating results of such Person and its subsidiaries taken
as a whole.
"Material Intellectual Property" shall have the meaning as set forth in
Section 2.16(a) of the Agreement.
A-3
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"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.
"Permit" shall mean any federal, state, local, or foreign governmental
approval, authorization, certificate, consent, easement, filing, franchise,
letter of good standing, license, notice, permit, qualification, registration or
right of or from any Governmental Entity (or any extension, modification,
amendment or waiver of any of these) to which any Person is a party or that is
or may be binding upon or inure to the benefit of any Person or its securities,
Assets or business, or any notice, statement, filing or other communication to
be filed with or delivered to any Governmental Entity.
"Proportionate Ownership Interest" means, with respect to any Seller, such
Seller's proportionate ownership interest in the Company as is determined by
dividing the number of Shares owned by such Seller by the total number of
outstanding shares of capital stock of the Company at Closing.
"Purchase Price" shall have the meaning set forth in Section 1.1 of the
Agreement.
"Registrable Shares" means (i) the shares of Buyer Common Stock (subject
to appropriate adjustment for stock splits, stock dividends, combinations and
other recapitalizations after the date hereof and (ii) any common stock issued
as a dividend or other distribution with respect to, or in exchange for, or in
replacement of the shares referenced in (i) above, excluding in all cases,
however, any Registrable Shares that have been sold by a person privately,
pursuant to the provisions of Rule 144, or pursuant to a registration statement
under the 1933 Act covering such Registrable Securities that has been declared
effective by the SEC.
"Regulatory Authorities" shall mean 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.
"Returns" shall have the meaning as set forth in Section 2.10(a) of the
Agreement.
"Reverse Stock Split" shall have the meaning as set forth in Section 6.2
of the Agreement.
"Securities Act" shall mean the Securities Act of 1933 and the rules and
regulations promulgated thereunder, as amended.
"SEC" shall mean the United States Securities and Exchange Commission.
"Seller" and "Sellers" shall have the meanings as set forth in the
Preamble of the Agreement.
A-4
"Shares" shall have the meaning as set forth in the Recitals of the
Agreement.
"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
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.
"Third-Party Licenses" means all licenses and other agreements with third
parties relating to any Intellectual Property or products that the Company is
licensed or otherwise authorized by such third parties to use, market,
distribute or incorporate into products marketed and distributed by the Company.
"Third-Party Technology" means all Intellectual Property and products
owned by third parties and licensed pursuant to Third-Party Licenses.
A-5
