exhibit 6
Exhibit 6
EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
This EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is entered
into by and among Make Your Move, Inc., a Nevada corporation, and its assignees
("Purchaser"), and Xxxx Xxx Ban, an unmarried woman ("Seller"), with reference
to the following facts:
A. Allpaq Technologies Corporation, a California corporation is engaged in
the business of TN, STN and TFT LCD Technology, designing and manufacturing
computers, computer Liquid Crystal Display (LCD) monitors, Game Board Systems,
MP3 Players and LCD panels, and providing other original equipment manufacturers
services under the Allpaq trade name and xxxx. LCD Displays are frequently used
in electronic computer games.
B. Seller is the owner of one hundred thousand (100,000) shares of
one-tenth of one cent ($.001) par value common stock of the described
corporation representing all the issued and outstanding capital stock of the
described corporation.
C. Seller wishes to sell, and Purchaser wishes to acquire, all of the
capital stock of the described corporation, on the terms and subject to the
conditions hereinafter set forth.
Based upon the foregoing, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows.
1. DEFINITIONS . In addition to the terms defined elsewhere in this
Agreement, as used in this Agreement, the following terms shall have the
following meanings:
1.1 "Aboveground Storage Tanks" and "Underground Storage Tanks" shall
have the meaning given them in Section 6901 et seq., as amended, of RCRA,
or any applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage Tanks or
Underground Storage Tanks.
1.2 "Affiliate" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, as in effect on the date hereof.
1.3 "Assets" means all of the assets and properties of Corporation,
including, without limitation, all assets and properties necessary for the
conduct of the Business in the manner in which and to the extent to which
such business is currently being conducted and include, without limitation,
all tangible and intangible assets owned by Corporation including all
vehicles, equipment and inventory and all Contracts, customer lists,
intellectual property, cash and accounts receivable and all other
facilities whether contemplated or under development, and licenses and
permits of Corporation.
1.4 "Business" means the business of TN, STN and TFT LCD Technology,
designing and manufacturing computers, computer Liquid Crystal Display
(LCD) monitors, Game Board Systems, MP3 Players and LCD panels, and
providing other original equipment manufacturers services under the Allpaq
trade name and xxxx.
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1.5 "Charter Documents" means the Articles of Incorporation, Bylaws,
restrictive stock agreements of Corporation, including all amendments
thereto.
1.6 "Closing" means the closing of the transactions under this
Agreement.
1.7 "Code" means the Internal Revenue Code of 1986, as amended.
1.8 "Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust, commitment,
obligation or other contract, agreement or instrument, whether written or
oral.
1.9 "Corporation" means Allpaq Technologies Corporation, a California
corporation, and its subsidiaries, collectively.
1.10 "Corporation Shares" means the one hundred thousand (100,000)
shares of one-tenth of one cent ($.001) par value stock of Corporation
collectively owned by Seller.
1.11 "Environmental, Health and Safety Laws" means all federal, state,
regional or local statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings, and changes or ordinances or judicial or
administrative interpretations thereof, whether currently in existence or
hereafter enacted or promulgated, any of which govern (or purport to
govern) or relate to pollution, protection of the environment, public
health and safety, air emissions, water discharges, hazardous or toxic
substances, solid or hazardous waste or occupational health and safety, as
any of these terms are or may be defined in such statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings and
changes or ordinances, or judicial or administrative interpretations
thereof, including, without limitation, the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and
subsequent Hazardous and Solid Waste Amendments of 1984 (collectively,
"RCRA"); the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and
Reauthorization Act (collectively, "CERCLA"); the Hazardous Materials
Transportation Act; the Toxic Substances Control Act; the Clean Air Act;
the Clean Water Act; the Federal Insecticide, Fungicide and Rodenticide
Act, as amended ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986, as amended ("EPCRA"); the Occupational Safety
and Health Act of 1970, as amended ("OSHA"); and all applicable foreign
laws.
1.12 "Exchange Shares" means two hundred thousand (200,000) shares of
one-tenth of one cent ($.001) par value common stock of Purchaser.
1.13 "Financial Statements" means the Balance Sheet dated not earlier
than December 31, 2000 and related Statement of Earnings, Statement of Cash
Flow and related notes of Corporation for the year ended December 31, 2000,
audited by reputable CPA firm such as Pricewaterhouse Xxxxxx.
1.14 "GAAP" means generally accepted accounting principles.
1.15 "Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
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1.16 "Insurance Policies" means valid, outstanding and enforceable
policies of insurance issued to Corporation by reputable insurers covering
the Assets and the Business against risks of the nature normally insured
against by corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such corporations
1.17 "Intellectual Property" means (i) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof,
(ii) all trademarks, service marks, trade dress, logos, together with all
translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (iii) all
copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (iv) all mask works and all
applications, registrations, and renewals in connection therewith, (v) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (vi) all computer software
(including data and related documentation), (vii) all registered domain
names, website content, website related software, and all other Internet
related tools and applications, (viii) all other proprietary rights, and
(ix) all copies and tangible embodiments thereof (in whatever form or
medium).
1.18 "Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including, but not
limited to, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law or
any jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
1.19 "Material Adverse Change (or Effect)" means a change (or effect),
in the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects of Corporation which
change (or effect) individually or in the aggregate, is materially adverse
to such condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
1.20 "Percentage Interest" means each Seller's proportionate interest
in the Exchange Shares calculated by dividing (i) the number of Corporation
Shares owned by such Seller immediately prior to the transfer thereof at
the Closing by (ii) the total number of Corporation Shares transferred to
Purchaser at the Closing.
1.21 "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, estate, trust,
unincorporated association, joint venture, Governmental Authority or other
entity, of whatever nature.
1.22 "Permits" means all licenses and required governmental or
official approvals, permits or authorizations for the Business and
operations.
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1.23 "Securities Act" means the Securities Act of 1933, as amended.
1.24 "Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to any
Taxes.
1.25 "Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any federal,
state, local or foreign governmental agency, and any interest or penalties
related thereto.
2. EXCHANGE OF SHARES.
2.1 Exchange. Upon the Closing, in accordance with the terms and
conditions hereof, Seller shall sell, transfer, convey and assign to
Purchaser the Corporation Shares and, in consideration for the conveyance
to Purchaser of the Exchange Shares, Purchaser shall issue to Seller the
Exchange Shares. The Exchange Shares shall be adjusted for Purchaser stock
splits and stock dividends issued prior to the Closing Date.
2.2 Contingent Consideration. As additional consideration for the
conveyance to Purchaser of the Corporation Shares, Purchaser agrees to pay
to Seller the sum of One Million, Two Hundred Thousand Dollars
($1,200,000), in the form of a (5%) royalty payment based on yearly net
sales. Once the total of said royalty is satisfied, the Purchaser will be
under no further obligation to make said royalty payment. The Purchaser
reserves the right to make a lump sum payment of One Million, Two Hundred
Thousand Dollars ($1,200,000) to satisfy its royalty obligation.
2.3 Tax Treatment . Purchaser and Seller intend that the transactions
contemplated by this Agreement qualify as a reorganization under the
provisions of Section 368(a) of the Code; provided that no party hereto
makes any representations to any other party hereto that this transaction
will in fact qualify as such.
3. CLOSING, ITEMS TO BE DELIVERED, FURTHER ASSURANCES AND EFFECTIVE
DATE.
3.1 Time and Place . Subject to the terms and conditions of this
Agreement, the Closing of the exchange shall take place at 9:00 a.m. on or
before June 30, 2001, at the offices of Purchaser's counsel, or such other
time and place as the parties may otherwise agree.
3.2 Closing Obligations. At the Closing:
(a) Seller's Deliveries. Seller shall deliver to Purchaser: (1)
Certificates representing the Corporation Shares with duly executed and
notarized stock powers attached, for transfer to Purchaser;
(2) A release in the form of Exhibit 3.2(a)(ii) executed by
Seller (the "Release");
(3) A written opinion of counsel dated as of the Closing Date in
substantially the form of Exhibit 3.2(a)(iii) with only such changes
therein as shall be in form and substance reasonably satisfactory to
Purchaser (the "Opinion of Seller's Counsel");
(4) Employment agreement in the form of Exhibit 3.2(a)(iv),
executed by Seller (the "Seller Employment Agreement");
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(5) Duly adopted resolutions of Corporation's Board of Directors
satisfactory to Purchaser in its sole discretion (A) terminating
Corporation's Employee Benefits Plans (other than employee welfare
benefit plans), with such termination effective prior to the Closing
Date, (B) providing that no contributions shall be made to
Corporation's 401(k) Plan after such date, and (C) directing
Corporation's legal counsel to apply for a determination letter from
the Internal Revenue Service with respect to the termination of the
401(k) Plan and to submitting Notice of Intent to Terminate to all
participants and beneficiaries under the 401(k) Plan; and
(6) A certificate executed by Seller representing and warranting
to Purchaser that Seller's representations and warranties hereunder
was accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Schedules
that were delivered by Seller to Purchaser prior to the Closing Date).
(b) Purchaser Deliveries. Purchaser shall deliver to Seller:
(1) Certificates representing the number of Exchange Shares to be
issued to Seller at the Closing pursuant to Section 2.1 hereof;
(2) A written opinion of counsel dated as of the Closing Date in
substantially the form of Exhibit 3.2(b)(ii) with only such changes
therein as shall be in form and substance reasonably satisfactory to
Purchaser (the "Opinion of Purchaser's Counsel");
(3) The Seller Employment Agreement, executed by Purchaser; and
(4) A certificate executed by Purchaser to the effect that,
except as otherwise stated in such certificate, each of Purchaser's
representations and warranties in this Agreement was accurate in all
respects as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date.
(c) Mutual Performance. At or prior to the Closing, the parties shall
also deliver to each other the agreements, certificates, and other
documents and instruments referred to in Articles 7. and 8. hereof.
3.3 Third Party Consents. To the extent that the Corporation Shares may not
be transferred to Purchaser hereunder without the consent of another Person
which has not been obtained, this Agreement shall not constitute an agreement to
transfer the same if an attempted transfer would constitute a breach thereof or
be unlawful, and Seller, at her expense, shall use their best efforts to obtain
any such required consent(s) as promptly as possible. If any such consent shall
not be obtained or if any attempted transfer would be ineffective or would
impair Purchaser's rights so that Purchaser would not in effect acquire the
benefit of all such rights, Seller, to the maximum extent permitted by law,
shall act after the Closing as Purchaser's agent in order to obtain for it the
benefits thereunder and shall cooperate, to the maximum extent permitted by law,
with Purchaser in any other reasonable arrangement designed to provide such
benefits to Purchaser.
3.4 Further Assurances. Each of the parties hereto will cooperate with the
others and execute and deliver to the other parties such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by such other party as necessary to carry out, evidence and confirm the
intended purposes of this Agreement.
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3.5 Effective Date. The effective date of this Agreement and all related
instruments executed at the Closing shall be the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As a material inducement to
Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, Purchaser makes the following representations and
warranties to Seller.
4.1 Corporate Status . Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.
4.2 Corporate Power and Authority . Purchaser has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Purchaser has
taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby.
4.3 Enforceability . This Agreement has been duly executed and delivered by
Purchaser and constitutes a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as the same
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
4.4 No Commissions . Other than pursuant to ongoing contracts or
arrangements with employees or consultants of Purchaser or any of its
subsidiaries, Purchaser has not incurred any obligation for any finder's or
broker's or agent's fees or commissions or similar compensation in connection
with the transactions contemplated hereby, other than such compensation as may
be due and payable to its officers or employees.
4.5 Capitalization. All of the Purchaser Shares (i) have been duly
authorized and validly issued and are fully paid and non-assessable, (ii) were
issued in compliance with all applicable state and federal securities laws,
(iii) were not issued in violation of any preemptive rights or rights of first
refusal, and (iv) represent sixteen and 67/100ths percent (16.67%) of the issued
and outstanding shares of capital stock of Purchaser on a fully diluted basis as
of the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. As a material inducement to
Purchaser to enter into this Agreement and to consummate the transactions
contemplated hereby, Seller makes the following representations and warranties
to Purchaser.
5.1 Corporate Status . Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and has
the requisite power and authority to own or lease the Assets and to carry on the
Business as now being conducted. Corporation is duly authorized and qualified,
under all applicable laws, regulations, ordinances and orders of public
authorities, to carry on the Business in the places and in the manner as now
conducted, except as disclosed on Schedule 5.1, where the failure to be so
authorized or qualified would not have a Material Adverse Effect on the Business
or on the operations, Assets or condition (financial or otherwise), of
Corporation. 5.2 Power and Authority . Seller has the power and authority to
execute and deliver this Agreement, to perform their obligations hereunder and
to consummate the transactions contemplated hereby. Seller has taken all action
necessary to authorize the execution and delivery of this Agreement, the
performance of their obligations hereunder, and the consummation of the
transactions contemplated hereby.
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5.3 Enforceability . This Agreement has been duly executed and delivered by
Seller, and constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
5.4 Capitalization . Seller is the record and beneficial owner of all of
the outstanding shares of stock of Corporation. Seller owns the Corporation
Shares free and clear of all Liens, restrictions and claims of any kind. All of
the Corporation Shares (i) have been duly authorized and validly issued and are
fully paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, (iii) were not issued in violation
of any preemptive rights or rights of first refusal, (iv) were issued for fair
market value in exchange for cash, and (v) no preemptive rights or rights of
first refusal exist, and no such rights arise by virtue of or in connection with
the transactions contemplated hereby. There are no outstanding or authorized
rights, options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or commitments of any
kind that could require Corporation to issue or sell, or require any Seller to
sell or transfer, any shares of Corporation's capital stock (or securities
convertible into or exchangeable for shares of its capital stock). There are no
outstanding stock appreciation, phantom stock, profit participation or other
similar rights with respect to Corporation. There are no proxies, voting rights
or other agreements or understandings with respect to the voting or transfer of
the shares of Corporation. Except as set forth on Schedule 5.4, (i) Corporation
is not obligated to redeem or otherwise acquire any of its shares of stock, and
(ii) there has been no transaction or action taken with respect to the equity
ownership of Corporation in contemplation of the transactions described in this
Agreement.
5.5 Subsidiaries . Schedule 5.5 lists the name of each of Corporation's
subsidiaries and sets forth the number and class of the authorized capital stock
of each of Corporation's subsidiaries and the number of shares of each of
Corporation's subsidiaries which are issued and outstanding, all of which shares
(except as set forth on Schedule 5.5) are owned by Corporation, free and clear
of all Liens and claims of every kind. In addition, Schedule 5.5 also sets forth
all rights, options, warrants, convertible securities, subscription rights,
conversion rights, exchange rights or other agreements or commitments of any
kind that could require any such subsidiary to issue or sell any shares of the
its capital stock (or securities convertible into or exchangeable for shares of
its capital stock). Except as set forth in Schedule 5.5, Corporation does not
presently own of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock, or any other equity
interest in any corporation, association or business entity, nor is Corporation,
directly or indirectly, a participant in any joint venture, partnership or other
non-corporate entity.
5.6 No Violation . The execution and consummation of this Agreement will
not (i) contravene any provision of the Charter Documents, (ii) violate or
conflict with any law, statute, ordinance, rule, regulation, decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against Corporation or Seller, or the assets of Corporation, (iii) conflict
with, result in any breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or enforceable
against Seller or the Assets, (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the assets of Corporation,
or (v) require the consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority, any court or tribunal or any
other Person.
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5.7 No Commissions. Seller and Corporation have not incurred any obligation
for any finder's or broker's or agent's fees or commissions or similar
compensation in connection with the transactions contemplated hereby.
5.8 Financial Statements . Seller has delivered to Purchaser the Financial
Statements, a copy of which is attached hereto as Schedule 5.8. The balance
sheet dated as of May 31, 2001 of Corporation included in the Financial
Statements is referred to herein as the "Current Balance Sheet." The Financial
Statements have been audited by Xxxx Xxxxx, CPA, have been prepared in
accordance with GAAP, and fairly present the financial position of Corporation
at each of the balance sheet dates and the results of operations for the periods
covered thereby. The books and records of Corporation fully and fairly reflect
all transactions, properties, assets and liabilities of Corporation. There are
no material special or non-recurring items of income or expense during the
periods covered by the Financial Statements, and the Current Balance Sheet does
not reflect any write up or revaluation increasing the book value of any assets,
except as specifically disclosed in the notes thereto. The Financial Statements
reflect all adjustments necessary for a fair presentation of the financial
information contained therein.
5.9 Changes Since the Current Balance Sheet . Except as specifically set
forth in Schedule 5.9, since the date of the Current Balance Sheet, Corporation
has not (i) issued any capital stock or other securities; (ii) made any
distribution of or with respect to its capital stock or other securities or
purchased or redeemed any of its securities; (iii) paid any bonus to or
increased the rate of compensation of any of its officers or salaried employees,
or amended any other terms of employment of such persons; (iv) sold, leased or
transferred any of its properties or assets other than in the ordinary course of
business consistent with past practice; (v) made or obligated itself to make
capital expenditures other than in the ordinary course of business consistent
with past practice; (vi) made any payment in respect of its liabilities other
than in the ordinary course of business consistent with past practice; (vii)
incurred any obligations or liabilities (including any indebtedness) or entered
into any transaction or series of transactions involving in excess of Five
Thousand Dollars ($5,000) in the aggregate other than in the ordinary course of
business consistent with past practice, except for this Agreement and the
transactions contemplated hereby; (viii) waived, cancelled, compromised or
released any rights having a value in excess of Five Thousand Dollars ($5,000)
in the aggregate; (ix) made or adopted any change in its accounting practice or
policies; (x) made any adjustment to its books and records other than in respect
of the conduct of its business activities in the ordinary course consistent with
past practice; (xi) entered into any transaction with any Affiliate other than
intercompany transactions in the ordinary course of business consistent with
past practice; (xii) entered into any employment agreement; (xiii) terminated,
amended or modified agreements in the aggregate involving an amount in excess of
Five Thousand Dollars ($5,000); (xiv) imposed any security interest or other
Lien on any of its Assets; (xv) delayed paying any account payable which is due
and payable except to the extent being contested in good faith; (xvi) made or
pledged any charitable contribution; (xvii) entered into any other transaction
or was subject to any event which had or may have a Material Adverse Effect on
Corporation or the Business; (xviii) engaged in any transaction other than in
the ordinary course of the Business; (xix) suffered or incurred any work
interruptions, labor grievances, or claims filed, or any similar event which has
or would have a Material Adverse Effect on Corporation or the Business; or (xx)
agreed to do or authorized any of the foregoing.
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5.10 Litigation . Except as set forth in Schedule 5.10, there is no action,
suit, or other legal or administrative proceeding or governmental investigation
pending, threatened, anticipated or contemplated against, by or affecting
Seller, Corporation, the Business, or the Assets, or which questions the
validity or enforceability of this Agreement or the transactions contemplated
hereby, and there is no basis for any of the foregoing. There are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in any
proceeding to which Seller or Corporation is or was a party which have not been
complied with in full or which continue to impose any material obligations on
Seller, Corporation or the Assets.
5.11 Liabilities; Bank Accounts . Schedule 5.11 sets forth all liabilities
or obligations, whether accrued, absolute, contingent or otherwise, of
Corporation, including, without limitation, (i) liabilities and obligations
reflected on the Current Balance Sheet and not paid or discharged, (ii)
liabilities and obligations exceeding Ten Thousand Dollars ($10,000) in the
aggregate, incurred in the ordinary course of business consistent with past
practice since the date of the Current Balance Sheet, and (iii) liabilities
incurred in the ordinary course of business prior to the date of the Current
Balance Sheet which, in accordance with GAAP consistently applied, were not
required to be recorded thereon (the liabilities and obligations referenced in
(i), (ii) and (iii) above are referred to as the "Designated Liabilities"). None
of the Designated Liabilities relates to any breach of contract, breach of
warranty, tort, infringement, or violation of law, and none arose out of any
action, suit, claim, governmental investigation, or arbitration proceeding.
Schedule 5.11 also sets forth the outstanding principal amount of and
outstanding interest on (as of the date set forth in the Schedule) all
indebtedness for borrowed money and capitalized lease obligations (including the
outstanding principal amount and accrued but unpaid interest and the name of the
lender) owed to a bank or any other Person by Corporation. Schedule 5.11 also
lists the account numbers and names of each bank, broker or other depository
institution at which Corporation maintains a depository account, and the names
of all persons authorized to withdraw funds from each such account.
5.12 Undisclosed Liabilities. Corporation has no liabilities, and there is
no basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim or demand against Corporation giving rise to any
liability, except those liabilities reflected in the Financial Statements.
Corporation has not guaranteed the obligations of any third Person.
5.13 Environmental Matters .
(a) Corporation is and has at all times been in compliance with all
Environmental, Health and Safety Laws governing the Business and its
operations, Assets, including, without limitation, Environmental, Health
and Safety Laws with respect to discharges into the ground water, surface
water and soil, emissions into the ambient air, and generation,
accumulation, storage, treatment, transportation, transfer, labeling,
handling, manufacturing, use, spilling, leaking, dumping, discharging,
release or disposal of Hazardous Substances (as defined herein), or other
Waste (as described herein). Corporation is not currently liable for any
penalties, fines or forfeitures for failure to comply with any
Environmental, Health and Safety Laws. Corporation is in full compliance
with all notice, record keeping and reporting requirements of all
Environmental, Health and Safety Laws, and has complied with all
informational requests or demands arising under the Environmental, Health
and Safety Laws.
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(b) Corporation has not generated, manufactured, used, transported,
transferred, stored, handled, treated, spilled, leaked, dumped, discharged,
released or disposed, nor has it allowed or arranged for any third parties
to generate, manufacture, use, transport, transfer, store, handle, treat,
spill, leak, dump, discharge, release or dispose of, Hazardous Substances
or other Waste to or at any location other than a site lawfully permitted
to receive such Hazardous Substances or other Waste for such purposes, nor
has it performed, arranged for or allowed by any method or procedure such
generation, manufacture, use, transportation, transfer, storage, treatment,
transport, spillage, leakage, dumping, discharge, release or disposal in
contravention of any Environmental, Health and Safety Laws. Corporation has
not generated, manufactured, used, stored, handled, treated, transported,
spilled, leaked, dumped, discharged, released or disposed of, or allowed or
arranged for any third parties to generate, manufacture, use, store,
handle, treat, transport, spill, leak, dump, discharge, release or dispose
of, Hazardous Substances or other Waste upon property owned or leased by
it, except as permitted by law. For purposes of this Section, the term
"Hazardous Substances" shall be construed broadly to include any toxic or
hazardous substance, material, or waste, and any other contaminant,
pollutant or constituent thereof, whether liquid, solid, semi-solid, sludge
and/or gaseous, including without limitation, chemicals, compounds,
by-products, pesticides, asbestos containing materials, petroleum or
petroleum products, and polychlorinated biphenyls, the presence of which
requires investigation or remediation under any Environmental, Health and
Safety Laws or which are or become regulated, listed or controlled by,
under or pursuant to any Environmental Health and Safety Laws. For purposes
of this Section, the term "Waste" shall be construed broadly to include
agricultural wastes, biomedical wastes, biological wastes, bulky wastes,
construction and demolition debris, garbage, household wastes, industrial
solid wastes, liquid wastes, recyclable materials, sludge, solid wastes,
special wastes, used oils, white goods, and yard trash.
(c) Corporation has not caused, or allowed to be caused or permitted,
either by action or inaction, a Release or Discharge, or threatened Release
or Discharge, of any Hazardous Substance on, into or beneath the surface of
any property owned or leased by it (for purposes of this Section, the
"Premises"). There has not occurred, nor is there presently occurring, a
Release or Discharge, or threatened Release or Discharge, of any Hazardous
Substance on, into or beneath the surface of the Premises. For purposes of
this Section, the terms "Release" and "Discharge" shall have the meanings
given them in the Environmental, Health and Safety Laws.
(d) Corporation has not generated, handled, manufactured, treated,
stored, used, shipped, transported, transferred, or disposed of, nor has it
allowed or arranged, by contract, agreement or otherwise, for any third
parties to generate, handle, manufacture, treat, store, use, ship,
transport, transfer or dispose of, any Hazardous Substance or other Waste
to or at a site which, pursuant to CERCLA or any similar state law (i) has
been placed on the National Priorities List or its state equivalent; or
(ii) the Environmental Protection Agency or the relevant state agency has
notified Corporation that it has proposed or is proposing to place on the
National Priorities List or its state equivalent. Neither Corporation nor
Seller has received notice, and Corporation and Seller have no knowledge of
any facts which could give rise to any notice, that Corporation is a
potentially responsible party for a federal, state or local environmental
cleanup site or for corrective action under CERCLA, RCRA or any other
applicable Environmental Health and Safety Laws. Corporation has not
submitted nor was required to submit any notice pursuant to Section 103(c)
of CERCLA with respect to the Premises. Corporation has not received any
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written or oral request for information in connection with any federal or
state environmental cleanup site, or in connection with any of the real
property or premises where Corporation have transported, transferred or
disposed of other Wastes. Corporation has not been required to undertake,
nor has it undertaken, any response or remedial actions or clean-up actions
of any kind at the request of any Governmental Authorities or at the
request of any other third party. Corporation has no liability under any
Environmental, Health and Safety Laws for personal injury, property damage,
natural resource damage, or clean up obligations.
(e) Corporation does not use, nor has it used, any Aboveground Storage
Tanks or Underground Storage Tanks, and there are not now nor have there
ever been any Underground Storage Tanks on the Premises.
(f) Schedule 5.13 identifies the operations and activities, and
locations thereof, which have been conducted and are being conducted by
Corporation on the Premises which have involved the generation,
accumulation, storage, treatment, transportation, labeling, handling,
manufacturing, use, spilling, leaking, dumping, discharging, release or
disposal of Hazardous Substances. Schedule 5.13 also identifies the
locations to which Corporation has transferred, transported, hauled, moved,
or disposed of Waste over the past five (5) years and the types and volumes
of Waste transferred, transported, hauled, moved, or disposed of to each
such location.
5.14 Real Property, Leases and Significant Personal Property . Schedule
5.14 sets forth all real and personal property included (or that will be
included) on the Current Balance Sheet, all other real and personal property of
Corporation with a value in excess of Two Thousand, Five Hundred Dollars
($2,500) and acquired since the Current Balance Sheet Date, and all leases for
real and personal property to which Corporation is a party involving real or
personal property having a value in excess of Two Thousand, Five Hundred
($2,500), including, in each case, and indication as to which real and personal
property is currently owned, or was formerly owned, by Seller or Corporation or
their Affiliates. True, complete and correct copies of all such leases have been
provided to Purchaser. Except as set forth in Schedule 5.14, (i) all of the
trucks and other material machinery and equipment and all other tangible assets
of Corporation are in good working order and condition, ordinary wear and tear
excepted and have been maintained in accordance with all applicable
specifications and warranties; (ii) all leases set forth in Schedule 5.14, are
in full force and effect and constitute valid and binding agreements of
Corporation and constitute valid and binding agreements of the other parties
thereto in accordance with their respective terms; and (iii) all fixed assets
used by Corporation are either owned by Corporation or leased under a valid
agreement. Schedule 5.14 also sets forth a summary description of all plans or
projects involving the opening of new operations or the acquisition of any real
property or existing business, with respect to which Corporation has made any
expenditure in the two-year period prior to the date of the Agreement in excess
of Ten Thousand Dollars ($10,000) in the aggregate, or which if pursued by
Corporation would require additional expenditures of capital in excess of Ten
Thousand Dollars ($10,000) in the aggregate.
5.15 Good Title, Adequacy and Condition . Except as set forth in
Schedule 5.15, Corporation has, and at Closing will have, good, legal, and
marketable title to the Assets with full power to sell, transfer and assign the
same, free and clear of any Lien. The Assets constitute, in the aggregate, all
of the assets and properties necessary for the conduct of the Business in the
manner in which and to the extent to which such business is currently being
conducted and include, without limitation, all tangible and intangible assets
owned by Corporation including all vehicles, equipment and inventory (more
particularly described in Schedule 5.15), and all Contracts, customer lists,
Intellectual Property, cash and accounts receivable, and Permits of Corporation.
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5.16 Compliance with Laws . Corporation is not in violation of any law or
regulation or any order of any court or federal, state, local or other
Governmental Authority having jurisdiction over Corporation, and, except to the
extent set forth on Schedule 5.16, there are no claims, actions, suits or
proceedings pending or, to the knowledge of Corporation, threatened, against or
affecting Corporation or the Business, at law or in equity, or before or by any
federal, state, local or other Governmental Authority having jurisdiction over
any of them, and no notice of any such claim, action, suit or proceeding,
whether pending or threatened, has been received. Corporation has conducted and
is conducting the Business in compliance with the requirements, standards,
criteria and conditions set forth in applicable federal, state and local
statutes, ordinances, orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing.
5.17 Employee Benefit Plans.
(a) Schedule 5.17 contains a list setting forth each employee benefit
plan or arrangement of Corporation, including but not limited to employee
profit sharing plans, as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), multiemployer plans, as
defined in Section 3(37) of ERISA, employee welfare benefit plans, as
defined in Section 3(1) of ERISA, deferred compensation plans, stock option
plans, bonus plans, stock purchase plans, hospitalization, disability and
other insurance plans, severance or termination pay plans and policies,
whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents, of Corporation participate ("Employee Benefit
Plans") (true and accurate copies of which, together with the most recent
annual reports on Form 5500 and summary plan descriptions with respect
thereto, were furnished to Purchaser). With respect to each Employee
Benefit Plan (i) each has been administered in all material respects in
compliance with its terms and with all applicable laws, including, but not
limited to, ERISA and the Code; (ii) no actions, suits, claims or disputes
are pending, or threatened; (iii) no audits, inquiries, reviews,
proceedings, claims, or demands are pending with any governmental or
regulatory agency; (iv) there are no facts which could give rise to any
material liability in the event of any investigation, claim, action, suit,
audit, review, or other proceeding; (v) all material reports, returns, and
similar documents required to be filed with any governmental agency or
distributed to any plan participant have been duly or timely filed or
distributed; and (vi) no "prohibited transaction" has occurred within the
meaning of the applicable provisions of ERISA or the Code.
(b) With respect to each Employee Benefit Plan intended to qualify
under Code Section 401(a) or 403(a): (i) the Internal Revenue Service has
issued a favorable determination letter, true and correct copies of which
have been furnished to Purchaser, that such plans are qualified and exempt
from federal income taxes; (ii) no such determination letter has been
revoked nor, to the best knowledge of Corporation and Seller, has
revocation been threatened, nor has any amendment or other action or
omission occurred with respect to any such plan since the date of its most
recent determination letter or application therefor in any respect which
would adversely affect its qualification or materially increase its costs;
(iii) no such plan has been amended in a manner that would require security
to be provided in accordance with Section 401(a)(29) of the Code; (iv) no
reportable event (within the meaning of Section 4043 of ERISA) has
occurred, other than one for which the 30-day notice requirement has been
waived; and (v) as of the Closing Date, the present value of all
liabilities that would be "benefit liabilities" under Section 4001(a)(16)
of ERISA if benefits described in Code Section 411(d)(6)(B) were included
will not exceed the then current fair market value of the assets of such
plan (determined using the actuarial assumptions used for the most recent
actuarial valuation for such plan).
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(c) None of the Employee Benefit Plans obligates Corporation to pay
separation, severance, termination or similar benefits solely as a result
of any transaction contemplated by this Agreement or solely as a result of
a "change of control" (as such term is defined in Section 280G of the
Code), and all required or discretionary (in accordance with historical
practices) payments, premiums, contributions, reimbursements, or accruals
for all periods ending prior to or as of the Closing shall have been made
or properly accrued on the Current Balance Sheet of Corporation as of the
Closing, and none of the Employee Benefit Plans has any unfunded
liabilities which are not reflected on the Current Balance Sheet of
Corporation.
5.18 Tax Returns and Examinations. Except as set forth on Schedule
5.18, (i) all Tax Returns required to have been filed by or with respect to
Corporation and any affiliated, combined, consolidated, unitary or similar
group of which Corporation is or was a member (a "Relevant Group") with any
Governmental Authority have been duly filed, and each such Tax Return
correctly and completely reflects the income, franchise or other Tax
liability and all other information, including the tax basis and recovery
periods for assets, required to be reported thereon; (ii) Corporation has
furnished or made available to Purchaser complete and accurate copies of
all income and franchise tax returns, and any amendments thereto, filed by
Corporation for all taxable years ending on or after December 31, 2000;
(iii) all Taxes (whether or not shown on any Tax Return and whether or not
assessed) owed by Corporation have been paid; (iv) the provisions for Taxes
due by Corporation (as opposed to any reserve for deferred Taxes
established to reflect timing differences between book and tax income) in
the Financial Statements are sufficient for, and adequate to cover, all
unpaid Taxes of Corporation; (v) Corporation is not a party to any current
agreement extending the time within which to file any Tax Return; (vi) no
claim has ever been made by any Taxing Authority in a jurisdiction in which
Corporation does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction; (vii) Corporation has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, creditor, independent contractor or other
third party; (viii) Corporation does not expect any Governmental Authority
to assess any additional Taxes against or in respect of it for any past
period; (ix) there is no dispute or claim concerning any Tax liability of
Corporation either (a) claimed or raised by any Governmental Authority or
(b) otherwise known to Corporation; (x) no issues have been raised in any
examination by any Governmental Authority with respect to which, by
application of similar principles, reasonably could be expected to result
in a proposed deficiency for any other period not so examined; (xi)
Schedule 5.18 lists all federal, state, local and foreign income Tax
Returns filed by or with respect to Corporation for all taxable periods
ended on or after January 1, ____, and indicates those tax returns that
currently are the subject of audit; (xii) Corporation has delivered to
Purchaser complete and correct copies of all federal, state, local and
foreign income Tax Returns filed by, and all Tax examination reports and
statements of deficiencies assessed against or agreed to by, Corporation
since January 1, 2001; (xiii) Corporation has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to any Tax assessment or deficiency; (xiv) Corporation has not made
any payments, is not obligated to make any payments, and is not a party to
any agreement that under certain circumstances could require it to make any
payments, that would not be deductible by reason of the application of
Section 280G of the Code; (xv) Corporation is not a party to any Tax
allocation or sharing agreement; (xvi) none of the assets of Corporation
constitutes tax-exempt bond-financed property or tax-exempt use property,
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within the meaning of Section 168 of the Code; (xvii) Corporation is not a
party to any "safe harbor lease" that is subject to the provisions of
Section 168(f)(8) of the Code as in effect prior to the Tax Reform Act of
1986, or to any "long-term contract" within the meaning of Section 460 of
the Code; (xviii) Corporation is not a party to any joint venture,
partnership or other arrangement that is treated as a partnership for
federal income Tax purposes; (xix) there are no accounting method changes,
or proposed or threatened accounting method changes, of Corporation that
could give rise to any adjustment under Section 481 of the Code for periods
after the Closing Date; (xx) Corporation has not received any written
ruling of a Governmental Authority related to Taxes or entered into any
written and legally binding agreement with a Governmental Authority
relating to Taxes; (xxi) Corporation has substantial authority for the
treatment of, or has disclosed (in accordance with Section 6662(d)(2)(ii)
of the Code) on its federal income Tax Returns, all positions taken on its
relevant federal income Tax Returns that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662(d)
of the Code; (xxii) Corporation has no liability for Taxes of any Person
other than Corporation (a) under Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local or foreign law), (b)
as a transferee or successor, (c) by contract or (d) otherwise; (xxiii) no
consent has been filed relating to Corporation pursuant to Section 341(f)
of the Code, nor has Corporation made any tax election that would
materially increase the amount of Taxes payable by Corporation in any
period after the Closing; (xxiv) Seller will pay her respective expenses
incurred in connection with this transaction; (xxv) Corporation is not an
investment company defined in Section 368(a)(2)(F)(iii) and (iv) of the
Code; and (xxvi) the fair market value of the Assets of Corporation exceeds
the sum of its liabilities, plus the amount of liabilities, if any, to
which the transferred assets are subject; (xxvii) Corporation is not under
the jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
5.19 Insurance . Corporation and the Business are covered by valid,
outstanding and enforceable policies of insurance issued to Corporation by
reputable insurers covering its properties, Assets and the Business against
risks of the nature normally insured against by corporations in the same or
similar lines of business and in coverage amounts typically and reasonably
carried by such corporations (the "Insurance Policies"). The Insurance Policies
are in full force and effect, and all premiums due thereon have been paid.
Corporation has complied with the provisions of the Insurance Policies.
Corporation has not failed to give, in a timely manner, any notice required
under any of the Insurance Policies to preserve its rights thereunder. 5.20
Receivables . All of the receivables being transferred to Purchaser hereunder
are valid and legally binding, represent bona fide transactions, and arose in
the ordinary course of business of Corporation. All of such receivables are good
and collectible receivables, and will be collected in full in accordance with
the terms of such receivables (and in any event within six months following the
Closing), without setoff or counterclaims.
5.21 Licenses and Permits . Corporation possesses all Permits for its
Business and operations. All Permits are valid and in full force and effect,
Corporation is in compliance in all material respects with their requirements,
and no proceeding is pending or threatened to revoke or amend any of the
Permits. None of the Permits is or will be impaired or in any way affected by
the execution and delivery of this Agreement or the transactions contemplated
hereby.
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5.22 Contracts, Customer Lists and Employment Matters . Schedule 5.22 lists
all customers and Contracts of Corporation, including, without limitation, (i)
any written arrangement (or group of written arrangements) for the furnishing or
receipt of services that calls for performance over a period of more than one
(1) year; (ii) any written arrangement concerning a partnership or joint
venture; (iii) any written arrangement (or group of written arrangements) under
which Corporation has created, incurred or assumed or may create, incur or
assume indebtedness (including capitalized lease obligations) involving more
than Ten Thousand Dollars ($10,000) or under which it has imposed (or may
impose) a security interest on any of its Assets, tangible or intangible; (iv)
any employment agreement; (v) any written arrangement concerning confidentiality
or non-competition; (vi) any written arrangement involving Corporation and its
present or former affiliates, officers, directors or shareholders; (vii) any
written arrangement under which the consequences of a default or termination
could have a material adverse effect on the assets, liabilities, business,
financial condition, operations or future prospects of Corporation; (viii) any
other written arrangement (or group of related arrangements) either involving
more than Ten Thousand Dollars ($10,000) or not entered into in the ordinary
course of Business; and (ix) that account for more than one percent (1%) of
Corporation's annual revenue for the twelve-month period ending May 31, 2001.
All of the Contracts (i) are valid and binding obligations of the parties, (ii)
are not in default nor will become in default solely upon notice or the passage
of time without curative action and (iii) will remain in full force and effect
following the Closing, without requiring the consent of the other parties
thereto and without causing a default, right to terminate or right to modify any
terms under any such Contracts. Corporation has delivered to Purchaser true,
complete and correct copies of all Contracts. None of the parties to the
Material Contracts (which include all of Corporation's significant customers)
has cancelled or substantially reduced or, to the knowledge of Corporation or
Seller, is currently attempting or threatening to cancel any Contract or
substantially reduce utilization of the services provided by Corporation, and
Corporation has complied with all commitments and obligations pertaining to any
Contract, and is not in default under any such Contract, and no notice of
default has been received. Corporation has not been the subject of any election
in respect of union representation of employees and is not bound by or subject
to any arrangement with any labor union. No employees of Corporation are
represented by any labor union or covered by any collective bargaining agreement
and no campaign to establish such representation has ever occurred or is in
progress. There is no pending, or to Seller's knowledge, threatened labor
dispute involving Corporation and any group of employees, nor has Corporation
experienced any labor interruptions over the past three years and Corporation
considers its relationship with employees to be good, except as set forth on
Schedule 5.22. The Corporation is not a party to any verbal contract, agreement
or other arrangement which, if reduced to written form, would be required to be
listed in Schedule 5.22. Seller has delivered to Purchaser a correct and
complete copy of each written arrangement, as amended to date, listed in
Schedule 5.22.
5.23 Officers, Directors and Key Employees; Employment Agreements;
Compensation . Schedule 5.23 sets forth an accurate list showing all officers,
directors and key employees of Corporation, listing all employment agreements
with such officers, directors and key employees (and any other employees having
employment agreement with Corporation) and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each of such persons. Schedule 5.23 also lists any increase in
compensation or any special bonus payable to any officer, director, key employee
or other employee of Corporation.
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5.24 Predecessor Status, etc. Schedule 5.24 sets forth all names of all
predecessor corporations for the past five years of Corporation, including the
names of any entities from whom Corporation previously acquired material assets.
Except as disclosed in Schedule 5.24, Corporation has not been a subsidiary or
division of another corporation or a part of an acquisition which was later
rescinded.
5.25 Spin-Off by Corporation . Except as set forth in Schedule 5.25, there
has not been, within the preceding two (2) years, any sale, spin-off or split-up
of material assets of Corporation or any other person or entity that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, Corporation other than in the ordinary course
of business.
5.26 Securities Law Representations.
(a) Seller was granted access to the business premises, offices,
properties, and business, corporate and financial books and records of
Purchaser. Seller was permitted to examine the foregoing records, to
question officers of Purchaser, and to make such other investigations as
they considered appropriate to determine or verify the business and
financial condition of Purchaser. Purchaser furnished to Seller all
information regarding its business and affairs that Seller requested.
(b) Seller recognizes that the Exchange Shares will not be registered
under the Securities Act and will therefore constitute "restricted
securities" as defined pursuant to Rule 144(a)(3) under the Securities Act
under which means, among other things, that Seller generally will not be
able to sell the Exchange Shares for a period of at least one (1) year
following the Closing Date, and may not be sold, offered for sale,
transferred, pledged, hypothecated or otherwise disposed of except in
compliance with the Securities Act, as such, by way of illustration but
without limitation, in compliance the safe harbor provisions of Rule 144;
further, the legal consequences of the foregoing mean that Seller must bear
the economic risk of the investment in the Exchange Shares for an
indefinite period of time; further, if either Seller desires to sell or
transfer all or any part of the Exchange Shares, Purchaser may require such
Seller's counsel to provide a legal opinion that the transfer may be made
without registration under the Securities Act; further, other restrictions
discussed elsewhere herein may be applicable; further, Seller is subject to
the restriction on transfer described herein and Purchaser will issue stop
transfer orders with Purchaser's transfer agent to enforce such
restrictions; further, the Exchange Shares will bear a legend restricting
transfer; and further, the following paragraph, or language substantially
equivalent thereto, will be inserted in or stamped on the certificates
evidencing the same:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT. THIS STOCK MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THE SAME UNDER THE SECURITIES
ACT OF 1933 OR OPINION OF COUNSEL SATISFACTORY TO CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE SECURITIES LAWS.
(c) Because of their considerable knowledge and experience in
financial and business matters, Seller is able to evaluate the merits,
risks, and other factors bearing on the suitability of the Exchange Shares
as an investment. Seller, individually or by virtue of a "purchaser
representative" (as defined pursuant to Rule 501(h) under the Securities
Act), qualifies as an "accredited investor" as defined under Rule 501(a)
under the Securities Act.
16
(d) Each Seller's annual income and net worth are such that he would
not now be, and does not contemplate being, required to dispose of any
investment in the Exchange Shares, including the risk of losing all or any
part of his investment and the inability to sell, transfer, pledge, or
otherwise dispose of any of the Exchange Shares for an indefinite period.
(e) Each Seller's acquisition of the Exchange Shares will be solely
for his own account, as principal, for investment, and not with a view to,
or for resale in connection with, any underwriting or distribution.
(f) Lock-up Agreement. At any time before or after the Closing Date,
Seller agrees to execute any and all stock restriction agreements, lock-up
agreements, and other agreements affecting the transfer of the Exchange
Shares consistent with agreements executed by other stockholders of
Purchaser.
5.27 Intellectual Property.
(a) Corporation owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary or
desirable for the operation of the businesses of Corporation as presently
conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by Corporation immediately prior to the
Closing hereunder shall be owned or available for use by Purchaser on
identical terms and conditions immediately subsequent to the Closing
hereunder. Corporation has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that it owns or
uses.
(b) Corporation has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and Seller nor the directors and officers
(and employees with responsibility for Intellectual Property matters) of
Corporation has ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that Corporation must license or refrain
from using any Intellectual Property rights of any third party). No third
party has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of Corporation.
(c) Schedule 5.28(c) identifies each patent issued in Corporation's
name, each patent application filed or pending, trade name and registered
or unregistered trademark or service xxxx used by Corporation, license,
agreement, or other permission that Corporation has granted to any third
party with respect to any of its Intellectual Property (together with any
exceptions). Corporation has delivered to Purchaser correct and complete
copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and has made available to
Purchaser correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such item..
With respect to each item of Intellectual Property required to be
identified in Schedule 5.28(c):
(1) Corporation possesses all right, title, and interest in and
to the item, free and clear of any security interest, license, or
other restriction;
(2) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
17
(3) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened that
challenges the legality, validity, enforceability, use, or ownership
of the item; and
(4) Corporation has never agreed to indemnify any person or
entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(d) Schedule 5.28(d) identifies each item of Intellectual Property
that any third party owns and that Corporation uses pursuant to license,
sublicense, agreement, or permission. Corporation has delivered to
Purchaser correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each item
of Intellectual Property required to be identified in Schedule 5.28(d):
(1) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect;
(2) the license, sublicense, agreement, or permission shall
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby;
(3) no party to the license, sublicense, agreement, or permission
is in breach or default, and no event has occurred that with notice or
default or permit termination, modification, or acceleration
thereunder;
(4) no party to the license, sublicense, agreement, or permission
has repudiated any provision thereof;
(5) with respect to each sublicense, the representations and
warranties set forth in clauses (i) through (iv) above are true and
correct with respect to the underlying license;
(6) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(7) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of Seller
or Corporation, is threatened that challenges the legality, validity,
or enforceability of the underlying item of Intellectual Property; and
(8) Corporation has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(e) Corporation shall not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the continued operation of
its Businesses as presently conducted and as presently proposed to be
conducted.
5.28 No Misrepresentations. None of the representations and warranties of
Seller set forth in this Agreement or in the attached Schedules, notwithstanding
any investigation thereof by Purchaser, contains any untrue statement of a
material fact, or omits the statement of any material fact necessary to render
the statements made not misleading.
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6. CONDUCT OF BUSINESS PENDING THE CLOSING.
6.1 Conduct of Business by Corporation Pending the Closing . Seller
covenants and agrees that, except as otherwise expressly required or permitted
by the terms of this Agreement, between the date of this Agreement and the
Closing, the Business of Corporation shall be conducted only in, and Corporation
shall not take any action except in, the ordinary course of business consistent
with past practice. Corporation and Seller shall use its or their reasonable
best efforts to preserve intact Corporation's Business organizations, to keep
available the services of its current officers, employees and consultants, and
to preserve its present relationships with customers, suppliers and other
Persons with which it has business relations. By way of amplification and not
limitation, Corporation shall not, except as expressly required or permitted by
the terms of this Agreement between the date of this Agreement and the Closing,
directly or indirectly, do or propose or agree to do any of the following
without the prior written consent of Purchaser:
(a) amend or otherwise change its Charter Documents;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any of its
Assets, tangible or intangible, except in the ordinary course of business
consistent with past practice; or any shares of its capital stock of any
class, or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of such capital stock;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock or other securities;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or
other securities;
(a) sell, lease or transfer any of its Assets (other than in the
ordinary course of business consistent with past practice), or acquire
(including, without limitation, for cash or shares of stock, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof
or any assets; or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or purchase any
property or assets of any other Person (except in the ordinary course of
business consistent with past practice); make or obligate itself to make
capital expenditures other than in the ordinary course of business
consistent with past practice; other than in the ordinary course of
business consistent with past practice, incur any obligations or
liabilities including, without limitation, any indebtedness for borrowed
money, issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of
any Person, or make any loans or advances, modify, terminate, amend or
enter into any Contract other than as expressly required or permitted
herein or in the ordinary course of business consistent with past practice,
or impose any security interest or other Lien on any of its assets other
than in the ordinary course of business consistent with past practice;
(b) pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to,
19
or enter into any employment or severance agreement with, any of its
directors, officers or employees, or establish, adopt, enter into or amend
or take any action to accelerate any rights or benefits which any
collective bargaining, bonus, profit sharing trust, compensation, stock
option, restricted stock pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any directors, officers or
employees;
(c) take any action with respect to accounting policies or procedures
other than in the ordinary course of business and in a manner consistent
with past practices;
(d) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of due and
payable liabilities reflected or reserved against in the Financial
Statements, as appropriate, or liabilities incurred after the date thereof
in the ordinary course of business and consistent with past practice or
delay paying any amount payable beyond forty-five (45) days following the
date on which it is due, except to the extent being contested in good
faith;
(e) enter into any transaction or agreement with Seller or an
Affiliate thereof except for such transactions or agreements expressly
permitted herein;
(f) make or pledge any charitable contributions in excess of Five
Thousand Dollars ($5,000) in the aggregate; or
(g) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or
warranty in Article V untrue or incorrect in any respect.
7. CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES.
7.1 Further Assurances . Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby and to
satisfy the conditions set forth in Articles 8. and 9. Seller shall cause
Corporation to comply with all of the covenants under this Agreement.
7.2 Confidentiality; Publicity . Seller and Corporation shall not disclose
the terms of this transaction to any third party nor make any public
announcement related to this Agreement or the transactions contemplated hereby
without the prior written approval of Purchaser.
7.3 No Other Discussions . Seller, Corporation and their respective
Affiliates, employees, agents and representatives will not (i) initiate,
encourage the initiation by others of or entertain discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets, the
Business or the properties of Corporation (whether by merger, consolidation,
sale of stock, sale of assets, or otherwise), or (ii) enter into any agreement
or commitment (whether or not binding) with respect to any of the foregoing
transactions. Seller will immediately notify Purchaser if any third party
attempts to initiate any solicitation, discussion or negotiation with respect to
any of the foregoing transactions.
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7.4 Due Diligence Investigation . Purchaser shall be entitled to conduct,
prior to Closing, a due diligence investigation of Corporation, the Assets and
the Business. Corporation shall provide Purchaser and its designated agents and
consultants with the access to Corporation's Business and the Assets and all
books, records, documents, correspondence and other materials related thereto
which Purchaser, its agents and consultants require to conduct such due
diligence review. If the results of Purchaser's due diligence review are not
satisfactory to Purchaser in its sole and absolute discretion, then Purchaser
may elect not to close the transactions contemplated by this Agreement by
delivery of written notice to Seller on or before the Closing Date.
7.5 Access to Information. Upon reasonable notice, Seller shall cause to
afford to the officers, employees, accountants, counsel, and other authorized
representatives of Purchaser full access, during the period prior to the Closing
Date, to all of the properties, books, contracts, commitments, records, and
senior management of . Unless otherwise required by law, Purchaser will hold any
such information that is nonpublic in confidence, will not use such information
in its business if the transaction does not close, and will return such
information if the transaction does not close.
7.6 Covenant not to Compete . Seller agrees that for the period of five (5)
years immediately following the Closing, Seller shall not, directly or
indirectly:
(a) alone or as a partner, joint venturer, officer, director,
employee, consultant, agent, independent contractor, or security holder, of
any Person, engage in any business activity which is directly or indirectly
in competition with the Business; provided, however, that the beneficial
ownership of less than five percent (5%) of any class of securities of any
entity having a class of equity securities actively traded on a national
securities exchange or the Nasdaq Stock Market shall not be deemed, in and
of itself, to violate the prohibitions of this Section;
(b) induce any customer acquired hereunder or any other customer of
Purchaser or any of its Affiliates to patronize any business which is
directly or indirectly in competition with the Business; (ii) canvass,
solicit or accept for or on behalf of any such competitive business any
customer of Purchaser or any of its Affiliates; or (iii) request or advise
any customer of Purchaser or any of its Affiliates to withdraw, curtail or
cancel any such customer's business with Purchaser or any of its Affiliates
or their successors;
(c) employ any person who was employed by Purchaser or any of its
Affiliates, within one year prior to the date being employed by Seller or
any of its Affiliates, or in any manner seek to induce any employee of
Purchaser or any of its Affiliates to leave his or her employment;
(d) in any way utilize, disclose, copy, reproduce or retain in his
possession any of the proprietary rights, or records acquired by Purchaser
hereunder, including, but not limited to, any customer lists.
Seller agrees and acknowledges that the restrictions contained in this Section
are reasonable in scope and duration, and are necessary to protect Purchaser. If
any provision of this Section is adjudged by a court of competent jurisdiction
to be invalid or unenforceable, the same will in no way affect the validity or
enforceability of the remainder of this Agreement. If any such provision, or any
part thereof, is held to be unenforceable because of the duration of such
provision, the area covered thereby or otherwise, then the parties agree that
the court making such determination shall have the power to reduce the duration,
21
area or scope of such provision, and/or to delete specific words or phrases, and
in its reduced or modified form, such provision shall then be enforceable and
shall be enforced. Seller further agrees and acknowledge that any breach of this
Section will cause irreparable injury to Purchaser and upon any breach or
threatened breach of any provision of this Section, Purchaser shall be entitled
to injunctive relief, specific performance or other equitable relief, without
the necessity of posting bond; provided, however, that this shall in no way
limit any other remedies which Purchaser may have as a result of such breach,
including the right to seek monetary damages.
7.7 Termination of Related Party Agreements . All existing agreements
between Corporation and Seller or their Affiliates, other than those set forth
in Section 7.7, shall have been cancelled prior to the Closing.
7.8 Code Section 338(h)(10) Election. At Purchaser's election, Purchaser
may make, and Seller and Corporation shall join in making, an election under
Section 338(h)(10) of the Code with respect to the Assets and any comparable
election under state or local Tax law, and Seller shall cooperate with Purchaser
in the completion and timely filing of such elections in accordance with the
provisions of Treasury Regulation 1.338(h)(10)-1 (or any comparable provisions
of state or local Tax law) or any successor provision. Should Purchaser make
such election, Seller and Purchaser shall act together in good faith to (i)
determine and agree upon the amount of the modified aggregate deemed sales price
("MADSP") (within the meaning to Treas. Reg. 1.338(h)(10)-1(f) and (ii) agree
upon the proper allocations (the "Allocations") of the MADSP among the Assets in
accordance with Treas. Reg. 1.338(h)(10)-1(f). Seller and Purchaser will
calculate the gain or loss, if any, resulting from the election in a manner
consistent with the Allocations and will not take any position inconsistent with
the election or the Allocations in any tax return or otherwise. Seller will
allocate the MADSP among the Assets in a manner consistent with the Allocations
and will not take any position inconsistent with the election or the Allocations
in any tax return or otherwise.
8. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of Purchaser
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any or
all of which may be waived in whole or in part by Purchaser;
8.1 Accuracy of Representations and Warranties and Compliance with
Obligations . The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. Seller and Corporation shall have performed and complied with all of their
obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date, including these obligations set forth in Article 7.
herein. Seller and Corporation shall have delivered to Purchaser a certificate,
dated as of the Closing Date, duly signed, certifying that such representations
and warranties are true and correct and that all such obligations have been
performed and complied with.
8.2 No Material Adverse Change or Destruction of Property . Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change of Corporation, the Business, or the Assets, (ii) there shall have been
no adverse federal, state or local legislative or regulatory change affecting in
any material respect the service, or products of Corporation or the Business,
and (iii) none of the Assets shall have been damaged by fire, flood, casualty,
riot or other cause (regardless of insurance coverage for such damage), and
there shall have been delivered to Purchaser a certificate to that effect, dated
as of the Closing Date and signed by Seller.
22
8.3 Corporate Certificate . Corporation shall have delivered to Purchaser
(i) copies of the Charter Documents as in effect immediately prior to the
Closing Date, (ii) copies of resolutions adopted by its Board of Directors and
shareholders authorizing the transactions contemplated by this Agreement, (iii)
written resignations of Corporation's officers and Board of Directors and (iv) a
certificate of good standing issued by the Secretary of State of the State of
California as of a date not more than ten (10) days prior to the Closing Date,
certified in the case of subsections (i) and (ii) as of the Closing Date by the
Secretary of Corporation as being true, correct and complete.
8.4 Delivery of Shares . At Closing, Seller shall deliver to Purchaser
certificates representing the Corporation Shares accompanied by duly executed
stock powers, and such other instruments of transfer of title as are necessary
to transfer to Purchaser good and marketable title to the Corporation Shares.
8.5 Consents . Corporation and Seller shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of Corporation and Seller from any person
from whom such consent or waiver is required under any Contract to which Seller,
Corporation or the Assets are bound as of a date not more than ten (10) days
prior to the Closing Date, or who, as a result of the transactions contemplated
hereby, would have such rights to terminate or modify such contracts, either by
the terms thereof or as a matter of law.
8.6 No Adverse Litigation . There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of Purchaser,
makes it inadvisable to proceed with the transactions contemplated hereby.
8.7 Due Diligence Review . Purchaser shall have completed its due diligence
review of Corporation, the Assets and the Business pursuant to Section 7.4, and
shall be satisfied with the results of such review and assessment.
8.8 Seller Employment Agreement . Seller shall have entered into the Seller
Employment Agreement.
8.9 Opinion of Counsel . Purchaser shall have received the Opinion of
Seller's Counsel.
8.10 Release . At the Closing, Seller and such of her Affiliates as may be
designated by Purchaser shall deliver to Purchaser the Release.
8.11 Approvals. All authorizations, consents, orders, or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Authority, the failure to obtain which would have a material
adverse effect on , shall have been filed, occurred, or been obtained.
8.12 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transaction shall be in effect.
8.13 Termination of Employee Benefit Plans. Purchaser shall have received
copies of duly adopted resolutions of Corporation's Board of Directors
satisfactory to Purchaser in its sole discretion (i) terminating Corporation's
Employee Benefits Plans (other than Employee Welfare Benefit Plans), with such
termination effective prior to the Closing Date, (ii) providing that no
contributions shall be made to Corporation's 401(k) Plan after such date, and
(iii) directing Corporation's legal counsel to apply for a determination letter
from the Internal Revenue Service with respect to the termination of the 401(k)
Plan and to submit a Notice of Intent to Terminate to all participants and
beneficiaries under 401(k) Plan.
23
8.14 No Liens or Encumbrances. All liens, judgments, and other encumbrances
on the Corporation Shares shall have been satisfied and released prior to
Closing.
8.15 Spousal Consent. Pursuant to Nevada community property law, Purchaser
shall have received executed written consents to this Agreement and the
transactions contemplated herein from the spouse of Seller, if applicable.
9. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of Seller to
effect the transactions contemplated hereby shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, any or all of which
may be waived in whole or in part by Seller:
9.1 Accuracy of Representations and Warranties and Compliance with
Obligations . The representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. Purchaser shall have performed and complied in all material respects with
all of its obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date. Purchaser shall have delivered to Seller a
certificate, dated as of the Closing Date, and signed by an executive officer
thereof, certifying that such representations and warranties are true and
correct, and that all such obligations have been performed and complied with, in
all material respects.
9.2 Other Conditions . Purchaser shall have delivered to Seller the
Purchaser Shares.
9.3 Opinion of Counsel . Seller shall have received the Opinion of
Purchaser's counsel.
10. INDEMNIFICATIONS.
10.1 Survival of Representations, Warranties, Indemnities and Covenants.
The representations, warranties and indemnities set forth in this Agreement and
any right to bring an action at law, in equity, or otherwise for any
misrepresentation or breach of warranty under this Agreement shall survive for a
period of three (3) years from the Closing Date. All post-closing covenants
(including, without limitation, the obligation to pay contingent consideration
pursuant to Section 2.2 above) shall survive the Closing for the period
specified in this Agreement or, if not specified, for a period of three (3)
years following the Closing Date. Indemnification Provisions for the Benefit of
Purchaser. Seller agrees to indemnify and hold Purchaser, and their respective
officers, directors and affiliates harmless from and against any and all Adverse
Consequences (as defined below) that any of such parties may suffer or incur
resulting from, arising out of, relating to, or caused by (i) the breach of any
of Seller's representations, warranties, obligations or covenants contained
herein, or (ii) the operation of the Business or ownership of the Assets on or
prior to the Closing Date, including, without limitation, any claims or lawsuits
based on conduct of Corporation, its employees or Seller occurring before the
Closing. For purposes of this Article 10., the phrase "Adverse Consequences"
means all charges, complaints, actions, suits, proceedings, hearings,
investigations, claims, demands, judgments, orders, decrees, stipulations,
injunctions, damages, dues, penalties, fines, costs, amounts paid in settlement,
liabilities (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, and whether due or to become due), obligations,
24
taxes, liens, losses, expenses, and fees, including all attorneys' fees and
court xxxxx.Xx addition to and without limiting the foregoing, Seller agrees,
from and after the Closing, to indemnify Purchaser from and against the entirety
of any Adverse Consequences Purchaser may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any liability of for the unpaid
taxes of any person or entity (including Seller) under United States Treasury
Regulation 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
Indemnification Provisions for the Benefit of Seller.
Purchaser agrees to indemnify and hold Seller harmless from and against any and
all Adverse Consequences Seller may suffer or incur resulting from, arising out
of, relating to, or caused by the breach of any of Purchaser's representations,
warranties, obligations or covenants contained herein. Survival of
Representations, Warranties, Indemnities and Covenants. The representations,
warranties and indemnities set forth in this Agreement and any right to bring an
action at law, in equity, or otherwise for any misrepresentation or breach of
warranty under this Agreement shall survive for a period of three (3) years from
the Closing Date. All post-closing covenants (including, without limitation, the
obligation to pay contingent consideration pursuant to Section 2.2 above) shall
survive the Closing for the period specified in this Agreement or, if not
specified, for a period of three (3) years following the Closing Date.
Indemnification Provisions for the Benefit of Purchaser.
Seller agrees to indemnify and hold Purchaser, and their respective officers,
directors and affiliates harmless from and against any and all Adverse
Consequences (as defined below) that any of such parties may suffer or incur
resulting from, arising out of, relating to, or caused by (i) the breach of any
of Seller's representations, warranties, obligations or covenants contained
herein, or (ii) the operation of the Business or ownership of the Assets on or
prior to the Closing Date, including, without limitation, any claims or lawsuits
based on conduct of Corporation, its employees or Seller occurring before the
Closing. For purposes of this Article 10., the phrase "Adverse Consequences"
means all charges, complaints, actions, suits, proceedings, hearings,
investigations, claims, demands, judgments, orders, decrees, stipulations,
injunctions, damages, dues, penalties, fines, costs, amounts paid in settlement,
liabilities (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, and whether due or to become due), obligations,
taxes, liens, losses, expenses, and fees, including all attorneys' fees and
court costs.
In addition to and without limiting the foregoing, Seller agrees, from and after
the Closing, to indemnify Purchaser from and against the entirety of any Adverse
Consequences Purchaser may suffer resulting from, arising out of, relating to,
in the nature of, or caused by any liability of for the unpaid taxes of any
person or entity (including Seller) under United States Treasury Regulation
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
Indemnification Provisions for the Benefit of Seller.
Purchaser agrees to indemnify and hold Seller harmless from and against any and
all Adverse Consequences Seller may suffer or incur resulting from, arising out
of, relating to, or caused by the breach of any of Purchaser's representations,
warranties, obligations or covenants contained herein.
25
11. TERMINATION, AMENDMENT AND WAIVER
1.1 Termination . This Agreement may be terminated at any time prior to the
Closing:
(a) by notification from Purchaser as a result of Purchaser's due
diligence investigation pursuant to Section 7.4 above;
(b) by mutual written consent of all of the parties hereto at any time
prior to the Closing;
(c) by Purchaser in the event of a breach by Seller of any provision
of this Agreement; or
(d) by Purchaser or Seller if the Closing shall not have occurred by
September 1, 2001.
11.2 Effect of Termination . Except as provided in Article 10. and for the
provisions of Section 7.2, in the event of termination of this Agreement
pursuant to Section 12.1, this Agreement shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
breach of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
12. GENERAL PROVISIONS.
12.1 Notices . All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered (and shall
be deemed delivered) by certified or registered mail (first class postage
pre-paid), guaranteed overnight delivery, or facsimile transmission if such
transmission is confirmed by delivery by certified or registered mail (first
class postage pre-paid) or guaranteed overnight delivery, to the following
addresses and telecopy numbers (or to such other addresses or telecopy numbers
which such party shall designate in writing to the other party):
(a) if to Purchaser:
Make Your Move, Inc.
P. O. Xxx 00000
Xxxx, XX 00000-0000
Attn: Xxxxx X. Rolling, President
Facsimile: (000) 000-0000
with a copy to:
Walther, Key, Maupin, Oats, Cox & LeGoy
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
26
(b) if to Seller:
Xxxx Xxx Ban
c/o Allpaq Technologies
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxx, Esq.
c/o Allpaq Technologies
00000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Entire Agreement . This Agreement (including the Exhibits and Schedules
attached hereto) and other documents delivered at the Closing pursuant hereto,
contains the entire understanding of the parties in respect of its subject
matter and supersedes all prior agreements and understandings (oral or written)
between or among the parties with respect to such subject matter. The Exhibits
and Schedules constitute a part hereof as though set forth in full above.
12.2 Expenses . Except as otherwise provided herein, the parties shall pay
their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby. Seller
hereby agrees to pay any and all sales and/or use taxes which may become due and
owing as a result of the completion of the transactions contemplated hereby.
12.3 Amendment; Binding Effect; Assignment . This Agreement may not be
modified, amended, supplemented, canceled or discharged, except by written
instrument executed by all parties. The rights and obligations of this Agreement
shall bind and inure to the benefit of the parties and their respective
successors and assigns. Except as expressly provided herein, the rights and
obligations of this Agreement may not be assigned by Seller without the prior
written consent of Purchaser.
12.4 Counterparts . This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12.5 Governing Law; Interpretation . This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Nevada
applicable to contracts executed and to be wholly performed within such State.
12.6 Joint Efforts. This Agreement is the result of the joint efforts and
negotiations of the parties hereto, with each party being represented, or having
the opportunity to be represented, by legal counsel of its own choice, and no
singular party is the author or drafter of the provisions hereof. Each of the
parties assumes joint responsibility for the form and composition of this
Agreement and each party agrees that this Agreement shall be interpreted as
though each of the parties participated equally in the composition of this
Agreement and each and every provision and part hereof. The parties agree that
the rule of judicial interpretation to the effect that any ambiguity or
uncertainty contained in an agreement is to be construed against the party that
drafted the agreement shall not be applied in the event of any disagreement or
dispute arising out of this Agreement.
27
12.7 Headings. All paragraph headings herein are inserted for convenience
of reference only and shall not modify or affect the construction or
interpretation of any provision of this Agreement.
12.8 Severability. If any provision or covenant, or any part thereof, of
this Agreement should be held by any court to be illegal, invalid or
unenforceable, either in whole or in part, such illegality, invalidity or
unenforceability shall not affect the legality, validity or enforceability of
the remaining provisions or covenants, or any part thereof, all of which shall
remain in full force and effect.
12.9 Attorneys' Fees. The prevailing party in any proceeding brought to
enforce the provisions of this Agreement shall be entitled to an award of
reasonable attorneys' fees and costs incurred at both the trial and appellate
levels incurred in enforcing its rights hereunder.
Make Your Move, Inc., a
Nevada corporation
By: /s/ Xxxxx X. Rolling
--------------------------------
Name: Xxxxx X. Rolling
Title: President
"Purchaser"/s/Xxxxx Rolling
--------------------------------
Xxxxx Rolling
"Date"September 1, 2001
By: /s/ Xxxx Xxx Ban
--------------------------------
Name: Xxxx Xxx Ban
"Seller"/s/Xxxx Xxx Ban
--------------------------------
Xxxx Xxx Ban
"Date"September 1, 2001
SCHEDULES AND EXHIBITS
Schedule 5.1: Corporate Status
Schedule 5.4: Capitalization
Schedule 5.5: Corporation's Subsidiaries
Schedule 5.8: Financial Statements
Schedule 5.9: Current Balance Sheet
Schedule 5.10: Litigation
Schedule 5.11: Liabilities; Bank Accounts
Schedule 5.13: Environmental Matters
Schedule 5.14: Real Property, Leases and Significant Personal Property
Schedule 5.15: Good Title, Adequacy and Condition
Schedule 5.16: Compliance With Law
Schedule 5.17: Employee Benefit Plans
Schedule 5.18: Tax Returns
Schedule 5.22: Contracts, Customer Lists and Employment Matters
Schedule 5.23: Officers, Directors and Key Employees
Schedule 5.24: Predecessor Corporations
Schedule 5.25: Spin-Off by Corporation
Schedule 5.27(c): Trade Names and Service Marks
Schedule 5.27(d): Intellectual Property
Exhibit 3.2(a)(ii): Release
Exhibit 3.2(a)(iii): Opinion of Seller's Counsel
Exhibit 3.2(a)(iv): Seller Employment Agreement
Exhibit 3.2(b)(ii): Opinion of Purchaser's Counsel
28
