STOCK PURCHASE AGREEMENT
by
and among
CJ’s
SALES AND SERVICE OF OCALA, INC.
and
XX.
XXXXXX XXXXXXXX
Dated
as of August 12, 2008
TABLE
OF CONTENTS
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Page
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ARTICLE
1. DEFINITIONS
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1
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1.1
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Certain
Definitions
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1
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1.2
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Glossary
of Other Defined Terms
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9
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ARTICLE
2.
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10
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| SALE AND TRANSFER OF SHARES; PURCHASE PRICE; |
10
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| ASSUMPTION OF COMPANY ASSETS AND DEBTS |
10
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2.1
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Shares
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10
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2.2
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Purchase
Price
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10
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2.4
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Further
Agreements Regarding Scheduled Debt. .
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12
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2.5
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Consideration
for Non-Competition
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12
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ARTICLE
3
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14
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| CLOSING |
14
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3.1
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Closing
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14
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3.2
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Closing
Obligations
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14
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ARTICLE
4.
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16
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| REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER |
16
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4.1
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Organization
and Good Standing.
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16
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4.2
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Authority;
No Conflict.
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16
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4.3
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Required
Consents
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17
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4.4
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Capitalization
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17
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4.5
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Financial
Statements
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18
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4.6
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Books
and Records
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18
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4.7
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Title
To Properties; Shares; Encumbrances
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18
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4.8
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Accounts
Receivable
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19
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4.9
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Inventory
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19
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4.10
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No
Undisclosed Liabilities
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19
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4.11
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Indebtedness
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19
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4.12
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Taxes.
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19
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4.13
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No
Material Adverse Effect
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20
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4.14
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Employee
Benefits.
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20
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4.15
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Compliance
with Legal Requirements; Governmental Authorizations.
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23
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4.16
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Legal
Proceedings.
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24
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4.17
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Absence
of Certain Changes and Events
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24
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4.18
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Contracts;
No Defaults.
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25
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4.19
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Insurance
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27
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4.21
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Environmental
Matters.
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29
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4.22
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Employees.
|
30
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4.23
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Labor
Relations; Compliance
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31
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i
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4.25
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Customers
and Suppliers
|
33
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4.26
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Relationships
With Related Persons
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33
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4.27
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Credit,
Rebate, Product Warranties and Related Matters
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33
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4.28
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Brokers
or Finders
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34
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4.29
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Disclosure
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34
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ARTICLE
5. REPRESENTATIONS AND WARRANTIES OF BUYER
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34
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5.1
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Organization
and Good Standing
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34
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5.2
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Authority;
No Conflict.
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34
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5.3
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Consents
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35
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5.4
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Certain
Proceedings
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34
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5.5
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Brokers
or Finders
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35
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5.6
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SEC
Filings.
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35
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5.7
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Valid
Issuance.
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36
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ARTICLE
6. PRE-CLOSING COVENANTS
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36
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6.1
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Access
and Investigation
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36
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6.2
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Operation
of the Businesses of the Company.
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36
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6.3
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Required
Approvals.
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39
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6.4
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Efforts
to Satisfy Conditions.
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39
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6.5
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Notification
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39
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6.6
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No
Negotiation
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40
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6.7
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Bank
Accounts; Powers of Attorney
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40
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6.8
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Supplements
to Disclosure Schedule.
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40
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6.9
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Certain
Tax Matters.
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40
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6.10
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Audit
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41
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ARTICLE
7. POST-CLOSING COVENANTS
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41
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7.1
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Covenant
Not to Compete
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41
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7.2
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Certain
Tax Matters.
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42
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7.3
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Further
Assurances
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43
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7.4
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Litigation
Support
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43
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7.5
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Cooperation:
Audited Financial Statements
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43
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ARTICLE
8. CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
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43
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8.1
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Accuracy
of Representations and Warranties
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43
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8.2
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Seller’s
Performance.
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44
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8.3
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Consents
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44
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8.4
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No
Proceedings
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44
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8.5
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No
Claim Regarding Stock Ownership or Sale Proceeds
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44
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8.6
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No
Prohibition
|
44
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8.7
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No
Material Adverse Effect.
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44
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8.8
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Confirmation
of Audited Financial Statements
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45
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ARTICLE
9. CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
|
45
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9.1
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Accuracy
of Representations and Warranties
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45
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9.2
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Buyer’s
Performance.
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45
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9.3
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No
Injunction
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46
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ii
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ARTICLE
10. TERMINATION
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46
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10.1
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Termination
Events
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46
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10.2
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Effect
of Termination
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46
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ARTICLE
11. INDEMNIFICATION
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46
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11.1
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Survival
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46
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11.2
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Indemnification
by Seller
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47
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11.3
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Indemnification
by Buyer
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47
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11.4
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Procedure
for Indemnification
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47
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11.5
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Additional
Agreements Regarding Indemnity.
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49
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11.6
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Setoff
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49
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ARTICLE
12. GENERAL PROVISIONS
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50
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12.1
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Expenses
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50
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12.2
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Public
Announcements; Market Stand-Off
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50
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12.3
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Confidentiality
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50
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12.4
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Notices
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50
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12.5
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Jurisdiction
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52
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12.6
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Waiver
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52
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12.7
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Entire
Agreement and Modification
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52
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12.8
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Disclosure
Schedule
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52
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12.9
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Assignments,
Successors, and No Third-Party Rights
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52
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12.10
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Severability
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53
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12.11
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Interpretation
and Rules of Construction
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53
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12.12
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Time
of Essence
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53
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12.13
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Governing
Law
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53
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12.14
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Counterparts
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53
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Exhibits:
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Consulting
Agreement
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Exhibit
B -
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Licensing
Agreement
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Exhibit
C -
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Series
E Certificate
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Exhibit
D -
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Stock
Restriction Agreement
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Exhibit
E -
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Promissory
Note
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Seller’s
Release
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Exhibit
G -
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Lease
Agreement
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iii
This
Stock Purchase Agreement (this “Agreement”)
is
made as of August 12, 2008 (the “Effective
Date”),
by
and among Titan Energy Worldwide, Inc., a Nevada corporation (“Buyer”),
CJ’s
Sales and Service of Ocala, Inc., a Florida corporation (the “Company”),
and
Xx. Xxxxxx Xxxxxxxx, an individual resident of Florida (the “Seller”).
RECITALS
A. The
Company is engaged in
the
sales, service, rental, and supply of parts for generator sets and automatic
transfer switches (the
“Business”).
B. Seller
owns all of the outstanding capital stock of the Company.
C. Seller
desires to sell, and Buyer desires to purchase, all of the issued and
outstanding shares (the “Shares”)
of
capital stock of the Company, for the consideration and on the terms set forth
in this Agreement.
AGREEMENT
In
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer, the Company and Seller agree as follows:
ARTICLE
1.
DEFINITIONS
1.1 Certain
Definitions.
For
purposes of this Agreement, the following terms have the following
meanings:
“Adverse
Consequence”
means
any loss, Liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys’ fees) diminution of value, or costs of cleanup, containment, or other
remediation, whether or not involving a third-party claim.
“Affiliate”
of
a
specified Person means a Person who, directly or indirectly through one or
more
intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
“Applicable
Contract”
of
either the Buyer or the Company means any Contract (a) under which such party
has or may acquire any rights, (b) under which such party has or may become
subject to any Liability, or (c) by which such party or any of the assets owned
or used by it is or may become bound.
A
“Breach”
of
a
representation, warranty, covenant, obligation, or other provision of this
Agreement or any instrument delivered pursuant to this Agreement will be deemed
to have occurred if there is or has been (a) any inaccuracy in or breach of,
or
any failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision, or (b) any claim (by any Person) or other
occurrence or circumstance that is or was inconsistent with such representation,
warranty, covenant, obligation, or other provision, and the term “Breach” means
any such inaccuracy, breach, failure, claim, occurrence, or
circumstance.
1
“Buyer
Common Stock”
means
the common stock of Buyer, $0.0001 par value.
“Buyer
Indemnified Persons”
means
Buyer and its Representatives, Related Persons and Affiliates, including,
from
and after the Closing, the Company.
“Buyer
Series D Preferred Stock”
means
the Series D preferred stock of Buyer, $0.0001 par value.
“Buyer
Series E Preferred Stock”
means
the
Series E preferred stock of Buyer, $0.0001 par value.
“Closing
Date”
means
the date and time as of which the Closing actually takes place.
“Consent”
means
any approval, consent, ratification, waiver, or other authorization (including
any Governmental Authorization).
“Consulting
Agreement” means
the
consulting agreement between the Company and Seller dated as of the Closing
Date, in the form attached hereto as Exhibit
A.
“Contemplated
Transactions”
means
all of the transactions contemplated by this Agreement, including: (a) the
sale
of the Shares by Seller to Buyer; (b) the issuance of shares of Buyer Series
E
Preferred Stock to the Seller; (c) the execution, delivery, and performance
of
the Note, the Consulting Agreement, Licensing Agreement, Seller’s Release, Lease
Agreement and Stock Restriction Agreement; (d) the performance by Buyer, the
Company and Seller of their respective covenants and obligations under this
Agreement and any agreement executed and delivered pursuant to the terms hereof
and the Seller’s Closing Documents; and (e) Buyer’s acquisition and ownership of
the Shares and exercise of control over the Company.
“Contract”
means
any agreement, contract, obligation, promise, or undertaking (whether written
or
oral and whether express or implied) that is legally binding.
“Encumbrance”
means
any charge, claim, community property interest, condition, equitable interest,
lien, option, pledge, security interest, hypothecation, mortgage, right of
first
refusal, or similar encumbrance or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
“Enforceability
Exceptions”
means
(a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws
now
or hereafter in effect affecting the enforceability of creditors’ rights
generally, and (b) general principles of equity which may limit the availability
of remedies (regardless of whether enforceability is considered in a proceeding
in equity or at law).
2
“Environment”
means
soil, land surface or subsurface strata, surface waters (including navigable
waters, ocean waters, streams, ponds, drainage basins, and wetlands),
groundwaters, drinking
water
supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
“Environmental,
Health, and Safety Liabilities”
means
any cost, damages, expense, Liability, obligation, or other responsibility
arising from or under Environmental Law or Occupational Safety and Health Law
and consisting of or relating to: (a) any environmental, health, or safety
matters or conditions (including on-site or off-site contamination, occupational
safety and health, and regulation of chemical substances or products); (b)
fines, penalties, judgments, awards, settlements, legal or administrative
proceedings, damages, losses, claims, demands and response, investigative,
remedial, or inspection costs and expenses arising under Environmental Law
or
Occupational Safety and Health Law; (c) financial responsibility under
Environmental Law or Occupational Safety and Health Law for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment,
or other remediation or response actions (“Cleanup”)
required by applicable Environmental Law or Occupational Safety and Health
Law
(whether or not such Cleanup has been required or requested by any Governmental
Body or any other Person) and for any natural resource damages; or (d) any
other
compliance, corrective, investigative, or remedial measures required under
Environmental Law or Occupational Safety and Health Law. The terms “removal,”
“remedial,” and “response action,” include the types of activities covered by
the United States Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9601 et seq., as amended (“CERCLA”).
“Environmental
Law”
means
any Legal Requirement that requires or relates to: (a) advising appropriate
authorities, employees, and the public of intended or actual releases of
pollutants or hazardous substances or materials, violations of discharge limits,
or other prohibitions and of the commencements of activities, such as resource
extraction or construction, that could have significant impact on the
Environment; (b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment; (c)
reducing the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated; (d) assuring that products are
designed, formulated, packaged, and used so that they do not present
unreasonable risks to human health or the Environment when used or disposed
of;
(e) protecting resources, species, or ecological amenities; (f) reducing to
acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil, or other potentially harmful substances; (g)
cleaning up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean up or prevention; or (h) making
responsible parties pay private parties, or groups of them, for damages done
to
their health or the Environment, or permitting self-appointed representatives
of
the public interest to recover for injuries done to public assets.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
3
“Facilities”
means
any real property, leaseholds, or other interests currently or formerly owned
or
operated by the Company and any buildings, plants, structures, or equipment
(including motor vehicles) currently or formerly owned or operated by the
Company.
“Financial
Statements”
means,
collectively, the Unaudited Balance Sheet of the Company and the Compiled
Financial Statements.
“GAAP”
means
generally accepted United States accounting principles, applied on a basis
consistent with the basis on which the Financial Statements were
prepared.
“Governmental
Authorization”
means
any approval, consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
“Governmental
Body”
means
any federal, state, local or other applicable authority.
“Hazardous
Activity”
means
the distribution, generation, handling, importing, management, manufacturing,
processing, production, refinement, Release, storage, transfer, transportation,
treatment, or use (including any withdrawal or other use of groundwater) of
Hazardous Materials in, on, under, about, or from the Facilities or any part
thereof into the Environment, and any other act, business, operation, or thing
that increases the danger, or risk of danger, or poses an unreasonable risk
of
harm to persons or property on or off the Facilities, or that may affect the
value of the Facilities or the Company.
“Hazardous
Materials”
means
any waste or other substance that is listed, defined, designated, or classified
as, or otherwise determined to be, hazardous, radioactive, or toxic or a
pollutant or a contaminant under or pursuant to any Environmental Law, including
any admixture or solution thereof, and specifically including petroleum and
all
derivatives thereof or synthetic substitutes therefor, silica or
silica-containing materials and asbestos or asbestos-containing
materials.
“Income
Taxes”
means
all Taxes based upon or measured by gross or net receipts or gross or net
income, including Taxes in the nature of minimum taxes, tax preference items,
and alternative minimum taxes, and Taxes on capital or net worth or capital
stock, but excluding Taxes that are in the nature of sales, use, property,
Transfer, recording, or similar Taxes.
“Indebtedness”
of
any
Person means the principal of, premium, if any, and unpaid interest on (a)
indebtedness for money borrowed from others; (b) indebtedness guaranteed,
directly or indirectly, in any manner by such Person, or in effect guaranteed,
directly or indirectly, in any manner by such Person through an agreement,
contingent or otherwise, to supply funds to, or in any other manner invest
in,
the debtor, or to purchase indebtedness, or to purchase and pay for property
if
not delivered, or pay for services if not performed, primarily for the purpose
of enabling the debtor to make payment of the indebtedness or to assure the
owners of the indebtedness against loss; (c) all indebtedness secured by any
Encumbrance upon property or assets owned by such Person, even though such
Person has not in any manner become liable for the payment of such indebtedness;
(d) all indebtedness or other liabilities of such Person created or arising
under any capitalized lease, conditional sale, lease (intended primarily as
a
financing device) or other title retention or security agreement with respect
to
property acquired by such Person even though the rights and remedies of Seller,
lessor or lender under such agreement or lease in the event of default may
be
limited to repossession or sale of such property; and (e) renewals, extensions
and refundings of any such indebtedness.
4
“Intellectual
Property”
means
(a)
patents, patent applications and inventions
and discoveries that may be patentable,
(b)
trademarks, service marks, trade names, fictional business names, service marks,
trade dress and domain names, together with the goodwill associated therewith,
(c) copyrights,
including copyrights in computer software, (d) all
rights in mask works, (e)
confidential and proprietary information, including trade secrets,
know-how,
customer
lists, software, technical information, data, process technology, plans,
drawings, and blue prints,
(f)
registrations and applications for registration of the foregoing, and (g) all
causes of action, if any, for infringement, conversion or misuse of any of
the
foregoing, and all rights of recovery related thereto.
“Inventory”
means
all inventories of raw materials, work in process, component parts and finished
goods (including goods in transit from or to the locations at which the Business
is conducted), office supplies, backlog, and service and repair parts, supplies
and components held for resale, including any of the foregoing purchased subject
to conditional sales or title retention agreements in favor of any third party,
together with related packaging materials and all rights of the Company against
suppliers of such inventories.
“IRC”
or
“Code”
means
the Internal Revenue Code of 1986, as amended, or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
“IRS”
means
the United States Internal Revenue Service or any successor agency, and, to
the
extent relevant, the United States Department of the Treasury.
“Knowledge”
means
an individual will be deemed to have “Knowledge” of a particular fact or other
matter if: (a) such individual is actually aware of such fact or other matter;
or (b) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter. A Person (other than an individual) will be deemed to have “Knowledge”
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor, or trustee
of
such Person (or in any similar capacity) has, or at any time had, Knowledge
of
such fact or other matter.
“Legal
Requirement”
means
any federal, state, local, or other applicable, law, statute, regulation,
administrative code or ordinance.
“Liability”
means,
with respect to any Person, any liability or obligation of such Person of any
kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due to become due, vested
or unvested, executory, determined, determinable or otherwise, and whether
or
not the same is required to be accrued on the financial statements of such
Person.
5
“Licensing
Agreement” means
the
licensing agreement between the Company and Seller dated as of the Closing
Date,
in the form attached hereto as Exhibit
B.
“Material
Adverse Effect”
means
a
material adverse change in the financial condition, business, assets,
liabilities, properties, results of operations or prospects of the
Company.
“Neutral
Accountant”
means,
unless otherwise agreed in writing by Seller and Buyer, an accountant mutually
satisfactory to Seller and Buyer who satisfies each of the following
requirements (unless otherwise agreed by Seller and Buyer): (i) neither the
accountant nor the firm that employs the accountant shall have performed any
accounting or consulting services for any party or any Affiliate of any party
at
any time during the three year period prior to the date of this Agreement;
(ii)
the accountant is not related in any way by blood or marriage to any party
or
any executive officer or director of any party or any Affiliate of such party;
(iii) the accountant has been a certified public accountant duly licensed
to practice in the state where he or she has his or her primary office for
a
period of not less than ten years; and the accountant is willing to accept
engagement as a Neutral Accountant on the terms and conditions of this
Agreement.
“Occupational
Safety and Health Law”
means
any Legal Requirement designed to provide safe and healthful working conditions
and to reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe and healthful
working conditions.
“Ordinary
Course of Business”
means
an action taken by a Person will be deemed to have been taken in the “Ordinary
Course of Business” only if: (a) such action is consistent with the past
practices of such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person; (b) such action is not required to be
authorized by the board of directors of such Person (or by any Person or group
of Persons exercising similar authority) and is not required to be specifically
authorized by the parent company (if any) of such Person; and (c) such action
is
similar in nature and magnitude to actions customarily taken, without any
authorization by the board of directors (or by any Person or group of Persons
exercising similar authority), in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business as such
Person.
“Organizational
Documents”
means
(a) the articles or certificate of incorporation and the bylaws of a
corporation; (b) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a corporation;
(c)
any agreements relating to the ownership of the capital stock of a corporation
and/or the governance of such corporation to which shareholders of such
corporation are parties; and (d) any amendment to any of the
foregoing.
6
“Permitted
Encumbrances”
means
(a)
liens
for Taxes, assessments or government charges not yet due and payable or the
amount or validity of which is being contested in good faith by appropriate
proceedings and which are subject to reasonable reserves; (b)
mechanic’s,
materialman’s, carrier’s, warehouseman’s, or repairman’s liens and similar
Encumbrances incurred
in the ordinary course of business consistent with past practice securing
amounts not yet due and payable or being contested in good faith by appropriate
proceedings and which are subject to reasonable reserves; (c) zoning,
entitlement, building and other land use regulations that are not violated
by
the current use and operation of such real property; (d) covenants, conditions,
restrictions, easements and other similar matters that appear in the title
commitments or insurance policies regarding real property that do not,
individually or in the aggregate, materially impair the ownership, occupancy,
use, or insurability of such real property as currently owned, used and operated
by the Companies and (e) any Encumbrance created by Buyer and (f) those
Encumbrances listed on Schedule 1.1(a) attached hereto.
“Person”
means
any individual, corporation (including any non-profit corporation), general
or
limited partnership,
limited
liability company, joint venture, estate, trust, association, organization,
labor union, or other entity or Governmental Body.
“Privacy
Legislation”
means
all legal requirements that govern the collection, use and disclosure of
personal information about individuals.
“Proceeding”
means
any action, arbitration, audit, hearing, investigation, litigation, or suit
(whether civil, criminal, administrative, investigative, or informal) commenced,
brought, conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
“Related
Person”
means,
(a) with respect to a particular individual, (i) each other member of such
individual’s Family; (ii) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual’s Family; (iii) any
Person in which such individual or members of such individual’s Family hold
(individually or in the aggregate) a Material Interest; and (iv) any Person
with
respect to which such individual or one or more members of such individual’s
Family serves as a director, officer, partner, executor, or trustee (or in
a
similar capacity); (b) with respect to a specified Person other than an
individual, (i) any Person that directly or indirectly controls, is directly
or
indirectly controlled by, or is directly or indirectly under common control
with
such specified Person; (ii) any Person that holds a Material Interest in such
specified Person; (iii) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity); (iv)
any Person in which such specified Person holds a Material Interest; (v) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity); and (vi) any Related Person of any
individual described in clause (ii) or (iii). For purposes of this definition,
(x) the “Family”
of
an
individual includes (i) the individual, (ii) the individual’s spouse and
children who reside with such individual, and (y) “Material
Interest”
means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of voting securities or other voting interests
representing at least 10% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person.
7
“Release”
means
any spilling, leaking, emitting, discharging, depositing, escaping, leaching,
dumping, or other releasing into the Environment, whether intentional or
unintentional.
“Representative”
means
with respect to a particular Person, any director, officer, employee, agent,
consultant, advisor, or other representative of such Person, including legal
counsel, accountants, and financial advisors.
“Securities
Act”
means
the Securities Act of 1933, as amended, or any successor law, and regulations
and rules issued pursuant to that Act or any successor law.
“Seller’s
Disclosure Schedule”
means
the
disclosure schedule attached hereto and delivered by Seller to Buyer in
connection with this Agreement.
“Subsidiary”
means
with respect to any Person (the “Owner”),
any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation’s or other Person’s board of
directors or similar governing body, or otherwise having the power to direct
the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries;
when used without reference to a particular Person, “Subsidiary” means a
Subsidiary of the Company.
“Target
Working Capital”
means an
amount equal to $______________.
“Tax”
means
all taxes, charges, fees, levies or other similar assessments or liabilities,
including, without limitation, income, gross receipts, ad valorem, premium,
value-added, excise, real property, personal property, sales, use, services,
transfer, withholding, employment, payroll and franchise taxes imposed by the
United States of America or any state, province, government, foreign taxing
authority or any agency thereof, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof.
“Tax
Return”
means
any return (including any information return), report, statement, schedule,
notice, form, or other document or information filed with or submitted to,
or
required to be filed with or submitted to, any Governmental Body in connection
with the determination, assessment, collection, or payment of any Tax or in
connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any Tax.
“Threat
of Release”
means
a
substantial likelihood of a Release that may require action in order to prevent
or mitigate damage to the Environment that may result from such
Release.
“Threatened”
means
a
claim, proceeding, dispute, action, audit or other matter will be deemed to
have
been “Threatened” if any demand or statement has been made (orally or in
writing) or any notice has been given (orally or in writing), or if any other
event has occurred or any other circumstances exist, that would lead a prudent
Person to conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise pursued in
the
future.
8
“Threshold
Amount”
means
Twenty Thousand Dollars ($20,000).
1.2 Glossary
of Other Defined Terms. The
following sets forth the location of definitions of capitalized terms defined
in
the body of this Agreement:
|
“Accounts
Receivable”
|
Section
4.8
|
|
|
“Agreement”
|
Preamble
|
|
|
“Audited
Financial Statements”
|
Section
6.10
|
|
|
“Business”
|
Recitals
|
|
|
“Buyer”
|
Preamble
|
|
|
“Buyer’s
Closing Documents”
|
Section
5.2(a)
|
|
|
“Buyer
Consents”
|
Section
5.3
|
|
|
“Buyer’s
Advisors”
|
Section
6.1
|
|
|
“Claim
Notice”
|
Section
11.4(b)
|
|
|
“Closing”
|
Section
3.1
|
|
|
“Closing
Date Balance Sheet”
|
Section
2.6(a)
|
|
|
“Closing
Date Working Capital”
|
Section
2.6(a)
|
|
|
“Closing
Payment”
|
Section
2.3(b)(i)
|
|
|
“Company”
|
Preamble
|
|
|
“Company
Benefit Plan”
|
Section
4.14
|
|
|
“Competing
Business”
|
Section
4.26
|
|
|
“Compiled
Financial Statements”
|
Section
4.5(a)
|
|
|
“Effective
Date”
|
Preamble
|
|
|
“ERISA
Affiliate”
|
Section
4.14
|
|
|
“Excess
Working Capital”
|
Section
2.6(d)(i)
|
|
|
“Leased
Real Property”
|
Section
4.20(a)
|
|
|
“March
Payment”
|
Section
2.3(a)
|
|
|
“Material
Contracts”
|
Section
4.18(a)
|
|
|
“Materiality
Qualifier”
|
Section
8.1
|
|
|
“Multiemployer
Plan”
|
Section
4.14
|
|
|
“Note”
|
Section
2.3(d)
|
|
|
“Notice
of Indemnifiable Loss”
|
Section
11.4(a)
|
|
|
“Outside
Date”
|
Section
10.1(d)
|
|
|
“Pre-Closing
Period”
|
Section
6.2
|
|
|
“Proprietary
Rights Agreement”
|
Section
4.22(c)
|
|
|
“Purchase
Price”
|
Section
2.2
|
|
|
“Required
Consents”
|
Section
4.3
|
|
|
“Scheduled
Debt”
|
Section
4.11
|
|
|
“Seller”
|
Preamble
|
|
|
“Seller’s
Closing Documents”
|
Section
4.2(a)
|
|
|
“Seller
Personal Accounts”
|
Section
2.4
|
|
|
“Seller’s
Release”
|
Section
3.2
|
|
|
“Series
E Certificate”
|
Section
2.3(c)
|
|
|
“Shares”
|
Recitals
|
|
|
“Stock
Consideration”
|
Section
2.3(b)
|
|
|
“Stock
Restriction Agreement”
|
Section
2.3(b)
|
|
|
“Unaudited
Balance Sheet”
|
Section
4.5(a)
|
|
|
“Working
Capital Shortfall”
|
Section
2.6(d)(i)
|
9
ARTICLE
2.
SALE
AND TRANSFER OF SHARES;
PURCHASE PRICE;
ASSUMPTION
OF COMPANY ASSETS AND DEBTS
2.1 Shares.
Subject
to the terms and conditions of this Agreement, Seller will sell and transfer
the
Shares to Buyer, and Buyer will purchase the Shares from Seller.
2.2 Purchase
Price.
The
purchase price (the “Purchase
Price”)
for
the Shares shall be (a) One Million One Hundred Fifty Thousand Dollars
($1,150,000.00), (b) plus the cost of health insurance for Seller and Seller’s
spouse as described in Section
2.3(d),
(c)
plus one hundred thousand (100,000) shares of Buyer Series E Preferred
Stock.
2.3 Payment
of Purchase Price.
In
addition to the consideration described in Section
2.4
and
subject to the provisions of Section
2.6
and
Section
11.6
of this
Agreement, the Purchase Price shall be paid by Buyer as follows:
(a) March
Payment. On
or
before the Closing Date, Buyer shall deliver to Seller a deposit payment of
Sixty Thousand Dollars ($60,000.00) by check or wire transfer of immediately
available funds, at Buyer’s sole discretion (the “March
Payment”).
If
the Closing occurs, the March Payment shall be credited toward the Purchase
Price. If the Closing does not occur (i) due to the failure of any of the
conditions set forth in Article
8
to be
satisfied or waived, (ii) due to a breach by Seller which results in termination
of this Agreement pursuant to Article
10,
or
(iii) due to Seller deciding to otherwise not close for any reason (provided
that Seller is not then in breach or default under this Agreement), Seller
shall
promptly refund the March Payment to Buyer. If the Closing does not occur (i)
due to the failure of any of the conditions set forth in Article
9
to be
satisfied or waived, (ii) due to a breach by Buyer which results in termination
of this Agreement pursuant to Article
10,
or
(iii) due to Buyer deciding to otherwise not close for any reason (provided
that
Buyer is not then in breach or default under this Agreement), Seller will retain
the March Payment. Seller covenants and agrees that of the March Payment will
be
used to fully satisfy the settlement agreement between the March Group, LLC,
the
Company and Seller.
(b) Closing
Payment; Stock Consideration.
At the
Closing, Buyer shall deliver to Seller the following:
(i) Forty
Thousand Dollars ($40,000) by check or wire transfer of immediately available
funds (the “Closing
Payment”);
and
(ii) one
hundred thousand (100,000) shares of Buyer Series E Preferred Stock (the
“Stock
Consideration”).
The
Buyer Series E Preferred Stock shall be junior to all other classes and series
of issued and outstanding preferred stock of Buyer, including, without
limitation, the Buyer Series D Preferred Stock. The Buyer Series E Preferred
Stock shall be subject to restrictions and other terms and provisions as
described in the Buyer’s Series E Certificate of Designation attached hereto as
Exhibit
C
(the
“Series
E Certificate”),
and
the Stock Restriction Agreement in the form attached hereto as Exhibit
D
(the
“Stock
Restriction Agreement”).
10
(c) Payment
of Scheduled Debt.
On or
before the Closing, Buyer shall pay in full, in a tax-efficient manner approved
by Buyer in its sole discretion, any amounts owed by the Company to Alarion
Bank
in connection with any bank notes extended by the Alarion Bank to the Company;
provided, however, such payment amount shall not exceed the balance at June
30,
2008. For purposes of clarity, with regard to the Company’s Scheduled Debt set
forth in Section
4.11
of the
Seller’s Disclosure Schedule, such Scheduled Debt shall remain obligations and
debt of the Company following Closing.
(d) Subsequent
Payments.
Buyer
shall deliver to Seller the following payments of immediately available funds
in
cash or by wire transfer, at Buyer’s sole discretion (collectively, the
“Subsequent
Payments”):
(i)
Five
Hundred Thousand Dollars ($500,000) on or before the date that is sixty (60)
days following the Closing Date; provided, however, that for the first three
(3)
months following such due date, for each month (but not counting any portion
thereof) that such amount is not paid, Buyer shall pay Seller a monthly late
fee
of Five Thousand Dollars ($5,000) and shall not be in default under the Note
with respect to such late payment.
(ii) Two
Hundred Thousand Dollars ($200,000.00) on August 1, 2009;
(iii) Two
Hundred Thousand Dollars ($200,000.00) on August 1, 2010; and
(iv) One
Hundred Fifty Thousand Dollars ($150,000.00) on August 1, 2011.
Buyer’s
obligation to deliver the Subsequent Payments to Seller shall be evidenced
by
Buyer’s execution of a Promissory Note on the Closing Date in substantially the
same form as the form note attached hereto as Exhibit
E
(the
“Note”).
Buyer
will be responsible for paying all documentary stamp taxes or other governmental
fees, taxes or other costs associated with the issuance of the Note; provided,
however, that Buyer shall not be responsible for and shall have no liability
with respect to any income taxes imposed upon or due from Seller in connection
with the Note. Buyer grants to Seller (and hereby acknowledges and agrees that
Seller will have) a security interest in the Shares being transferred to Buyer
under this Agreement. Seller’s security interest will attach upon Seller’s
delivery, at the Closing, to Buyer of certificates
representing the Shares, duly endorsed (or accompanied by duly executed stock
powers)
and will
transfer to and be equally applicable to any entity to which Buyer might assign
or transfer any or all of the assets of the Company subsequent to the Closing.
Such security interest shall be junior and subordinate to any security interest
of Buyer’s lenders with respect to the assets of Buyer and Seller agrees and
covenants to execute any and all subordination agreements or other documents
with respect thereto.
11
(e) Cost
of Health Insurance.
Buyer
shall pay to Seller, or pay directly on Seller’s behalf, an amount equal to the
cost of health and medical insurance coverage for Seller and Seller’s spouse for
a period commencing on the Closing Date and continuing until the first
(1st)
anniversary of the Closing Date. Such health and medical insurance shall be
of
the same type and cost as Seller’s and Seller’s spouse’s health and medical
insurance coverage in place as of March 31, 2008.
2.4 Further
Agreements Regarding Scheduled Debt.
As
additional consideration for Seller entering into the transactions contemplated
herein, with regard to certain of the Company’s Scheduled Debt as described on
Section
4.11
of the
Seller’s Disclosure Schedule, Buyer hereby agrees to, at the Closing: (a) pay
off all credit cards or accounts that Seller has in connection with his
involvement with the Company that are specifically listed (with corresponding
outstanding balances) on Section
4.11
of the
Seller’s Disclosure Schedule (the “Seller
Personal Accounts”);
(b)
indemnify Seller from any actual and demonstrable losses incurred by Seller
in
connection with Buyer’s failure to pay off the Seller Personal Accounts as
described in the preceding clause (a); (c) except as described below, indemnify
Seller from any actual and demonstrable liability incurred by Seller arising
out
of Seller’s status either a co-signer or personal guarantor on the Scheduled
Debt. Notwithstanding the above, Seller agrees and covenants that Seller’s
personal guarantees shall remain, and Seller agrees to take any and all action
to cause Seller’s personal guarantees to remain, outstanding following Closing
on the Company’s Ford Motor Credit truck notes and, with regard to such notes,
Buyer agrees to make available to Seller monthly proofs of payment, including
the monthly statements and copies of canceled checks showing payment of the
monthly statements. If Buyer fails to make any payment on such Ford Motor credit
obligations that are guaranteed by Seller following Closing, Seller must notify
Buyer and Buyer will have thirty (30) days following receipt of such
notification to make such payment. If, after thirty (30) days such payment
is
not made by the Buyer, the Seller shall have the remedies described under the
Note. Notwithstanding anything to the contrary contained herein, Seller and
the
Company covenant and agree that neither Seller nor the Company shall incur
additional obligations or debt with respect to the Seller Personal Accounts
prior to Closing without the advance written consent of Buyer.
.
2.5 Consideration
for Non-Competition.
Seller
acknowledges and agrees that a portion of the Purchase Price equal to
Twenty-Five Thousand Dollars ($25,000.00) represents consideration for the
restrictive covenants contained in Section
7.1
of this
Agreement.
2.6 Post-Closing
Adjustment to Purchase
Price.
(a) Buyer
will promptly prepare and deliver within ninety (90) days after the Closing
Date, to Seller a balance sheet (the “Closing
Date Balance Sheet”)
for
the Company as of the close of business on the Closing Date (determined on
a pro
forma basis giving effect to the transactions contemplated by this Agreement
and
in accordance with GAAP (but excluding any assets or liabilities of the related
Entity). The Closing Date Balance Sheet will include a determination of the
Closing Date Working Capital of the Company as of the close of business on
the
Closing Date. “Closing
Date Working Capital”
means
the excess of current assets (excluding any cash applied to the repayment of
indebtedness for borrowed money) over current liabilities as shown on the
Closing Date Balance Sheet. Buyer will make the workpapers and back-up materials
used in preparing the Closing Date Balance Sheet available to Seller and
accountants and other representatives at reasonable times and upon reasonable
notice during (i) the review by Seller of the Closing Date Balance Sheet
and (ii) the resolution by Buyer and Seller of any objections to the
Closing Date Balance Sheet.
12
(b) If
Seller
has any objections to the Closing Date Balance Sheet or the Closing Date Working
Capital, Seller will deliver a detailed statement describing such objections
to
Buyer within fifteen (15) days after delivery of the Closing Date Balance Sheet.
Buyer and Seller will attempt in good faith to resolve any such objections.
If
Buyer and Seller do not reach a resolution of all objections within thirty
(30)
days after Buyer has received the statement of objections, Buyer and Seller
will
select a mutually acceptable accounting firm to resolve any remaining
objections. If Buyer and Seller are unable to agree on the choice of an
accounting firm, they will select a nationally recognized accounting firm by
lot
(after excluding the regular outside accounting firms of Buyer and the Company).
The accounting firm will determine, in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements, the amounts to
be
included in the Closing Date Balance Sheet and the Closing Date Working Capital.
The parties will provide the accounting firm, within ten (10) days of its
selection, with a definitive statement of the position of each party with
respect to each unresolved objection and will advise the accounting firm that
the parties accept the accounting firm as the appropriate Person to interpret
this Agreement for all purposes relevant to the resolution of the unresolved
objections. Buyer will provide the accounting firm access to the books and
records of the Company. The accounting firm will have twenty (20) days to carry
out a review of the unresolved objections and prepare a written statement of
its
determination regarding each unresolved objection. The determination of any
accounting firm so selected will be set forth in writing and will be conclusive
and binding upon the parties. Buyer will revise the Closing Date Balance Sheet
and the determination of the Closing Date Working Capital as appropriate to
reflect the resolution of any objections to the Closing Date Balance Sheet
pursuant to this Section 0.
(c)If
Buyer
and Seller submit any unresolved objections to an accounting firm for resolution
as provided in Section 0,
the
cost of such review and report shall be borne by Buyer, on the one hand, and
Seller, on the other hand, in inverse proportion as they may prevail on matters
resolved by the accounting firm, which proportionate allocation also shall
be
determined by the accounting firm at the time such report is rendered by the
accounting firm. Each of Buyer, on the one hand, and Seller, on the other hand,
will bear its or his own costs and expenses in connection with such review
and
report by the accounting firm (including legal fees and costs).
(d)Following
the final determination of the Closing Date Working Capital pursuant to this
Section 0:
(i)If
the
Closing Date Working Capital exceeds the Target Working Capital (the amount
of
such excess, the “Excess
Working Capital”),
Buyer
will pay to Seller an amount equal to the Excess Working Capital
by
increasing the final Subsequent Payment due to Seller under the Note by the
amount of such Excess Working Capital.
13
(ii)If
the
Closing Date Working Capital is less than the Target Working Capital, an amount
equal to such deficiency (the amount of such deficiency, the “Working
Capital Shortfall”)
will
be paid
by
Seller to Buyer by reduction of the first Subsequent Payment due under the
Note
by the amount of such Working Capital Shortfall.
(iii) In
the
event Buyer is required to or does, at any time prior to Closing, provide Seller
or the Company with any additional capital or other consideration (in any form),
other than as described herein, such amounts shall be deducted from the first
Subsequent Payment due under the Note.
(e)Any
payment made pursuant to this Section 0
will not
preclude any remedy provided in this Agreement or otherwise for any breach
of
representation, warranty or agreement, and the remedy provided in this Agreement
for any breach of representation, warranty or agreement or otherwise will not
preclude the adjustment provided in this Section 0.
Judgment upon the award rendered by the accounting firm may be entered in any
court of competent jurisdiction.
ARTICLE
3
CLOSING
3.1 Closing.
The
purchase and sale (the “Closing”)
provided for in this Agreement will take place at the offices of Seller or
a
place mutually agreed to on the date that is three (3) business days following
the satisfaction or waiver of the conditions set forth in Article
8
and
Article
9
(other
than delivery of items to be delivered at the Closing and other than
satisfaction of those conditions that by their nature are to be satisfied at
the
Closing, it being understood that the occurrence of the Closing shall remain
subject to the delivery of such items and satisfaction or waiver of such
conditions at the Closing), or at such other time and place as the parties
may
agree, which the parties currently anticipate to occur within sixty (60) days
following the Effective Date. By agreement of the parties the Closing may take
place by delivery of this Agreement and the other documents to be delivered
at
the Closing by facsimile or other electronic transmission. Subject to the
provisions of Article
10,
failure
to consummate the purchase and sale provided for in this Agreement on the date
and time and at the place determined pursuant to this Section
3.1
will not
result in the termination of this Agreement and will not relieve any party
of
any obligation under this Agreement.
3.2 Closing
Obligations.
At the
Closing:
(a) Deliveries
by Seller.
Seller
will deliver, or cause to be delivered, to Buyer:
(i) the
Consulting Agreement executed by Seller;
(ii) the
Licensing Agreement executed by Seller;
(iii) the
Stock
Restriction Agreement executed by Seller;
14
(iv) certificates
representing the Shares, duly endorsed (or accompanied by duly executed stock
powers);
(v) a
release
executed by Seller in the form attached hereto as Exhibit
F
(the
“Seller’s
Release”);
(vi) executed
letters of resignation from all officers and directors of the Company, effective
upon the Closing, in forms reasonably acceptable to Buyer;
(vii) a
certificate
signed
by Seller, certifying to the fulfillment of the conditions specified in
Sections
8.1
and
8.2;
(viii) an
opinion of counsel to Seller and the Company, dated as of the Closing Date,
in a
form reasonably acceptable to Buyer;
(ix) the
Required Consents;
(x) a
lease
executed by Seller and Seller’s spouse for the Company’s Leased Real Property,
in the form attached hereto as Exhibit
G
(the
“Lease
Agreement”);
(xi) the
Note,
countersigned by Seller; and
(xii) such
other documents as Buyer may reasonably request for the purpose of evidencing
the accuracy of any of Seller’s representations and warranties, evidencing the
performance by Seller of, or the compliance by Seller with, any covenant or
obligation required to be performed or complied with by such Seller, evidencing
the satisfaction of any condition referred to in Article
8,
or
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
(b) Deliveries
by Buyer.
Buyer
will deliver to Seller:
(i) the
Stock
Consideration;
(ii) the
Closing Payment;
(iii) the
Note
executed by the Buyer;
(iv) the
Consulting Agreement executed by the Company;
(v) the
Licensing Agreement executed by the Buyer;
(vi) the
Stock
Restriction Agreement executed by the Buyer;
(vii) the
Lease
Agreement executed by the Company;
15
(viii) a
certificate
signed
by Buyer, certifying to the fulfillment of the conditions specified in
Sections
9.1
and
9.2;
and
(ix) such
other documents as Seller may reasonably request for the purpose of evidencing
the accuracy of any of Buyer’s representations and warranties, evidencing the
performance by Buyer of, or the compliance by Buyer with, any covenant or
obligation required to be performed or complied with by such Buyer, evidencing
the satisfaction of any condition referred to in Article
9,
or
otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
ARTICLE
4.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND THE SELLER
The
Seller and the Company jointly and severally represent and warrant to Buyer
that
the statements contained in this Article
4
are true
and correct as of the date of this Agreement and as of the Closing Date, except
as set forth in the section of the Seller’s Disclosure Schedule numbered to
correspond to the Section of Article
4
to which
such exception relates:
4.1 Organization
and Good Standing.
(a) Good
Standing.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of Florida, with full corporate power and authority to conduct
its business as it is now being conducted, to own or use the properties and
assets that it purports to own or use, and to perform all of its obligations
under Applicable Contracts. The
Company is duly qualified to do business as a foreign corporation and is in
good
standing under the laws of each state or other jurisdictions where the failure
to be so qualified would have a Material Adverse Effect.
(b) Organizational
Documents.
Seller
has delivered to Buyer true and complete copies of the Organizational Documents
of the Company, as currently in effect.
(c) Subsidiaries.
The
Company has no subsidiaries. The Company does not own directly or indirectly
any
equity ownership interest in any other Person.
4.2 Authority;
No Conflict.
(a) Enforceability.
This
Agreement constitutes the legal, valid and binding obligation of Company and
Seller, enforceable against Company and Seller in accordance with its terms,
except that such enforceability may be limited by the Enforceability Exceptions.
Upon the execution and delivery by Seller of the Consulting Agreement, the
Licensing Agreement, the Stock Restriction Agreement, the Lease Agreement,
and
the Seller’s Release (collectively, the “Seller’s
Closing Documents”),
the
Seller’s Closing Documents will constitute the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, subject to the Enforceability Exceptions. Seller has the
absolute and unrestricted right, power, authority, and capacity to execute
and
deliver this Agreement and the Seller’s Closing Documents and to perform their
obligations under this Agreement and the Seller’s Closing
Documents.
16
(b) No
Conflict.
Except
as set forth in Section
4.2(b)
of the
Seller’s Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse
of
time):
(i)
contravene, conflict with, or result in a violation of (A) any provision of
the Organizational Documents of the Company, or (B) any resolution adopted
by the board of directors or the stockholders of the Company; (ii) contravene,
conflict with, or result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or
to
exercise any remedy or obtain any relief under, any Legal Requirement to which
the Company or either Seller, or any of the assets owned or used by the Company,
may be subject; (iii) contravene, conflict with, or result in a violation of
any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by, the Company; (iv) cause
Buyer or the Company to become subject to, or to become liable for the payment
of, any Tax; (v) cause any of the assets owned by the Company to be reassessed
or revalued by any taxing authority or other Governmental Body; (vi) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or
to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract; or (vii) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned or used by the
Company.
4.3 Required
Consents.
Except
as set forth on Section
4.3
of the
Seller’s Disclosure Schedule, neither the Seller nor the Company is or will be
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions (the matters set forth
in
Section
4.3
of the
Seller’s Disclosure Schedule, the “Required
Consents”).
4.4 Capitalization.
The
authorized equity securities of the Company consist of 100 shares of common
stock, $10 par value, of which the shares issued to the Seller and outstanding
as of the Closing Date constitute the Shares. Such Shares constitute all of
the
issued and outstanding shares of common stock of the Company as of the Effective
Date and as of the Closing Date. Seller is and will be on the Closing Date
the
sole record and beneficial owner and holders of the Shares, free and clear
of
all Encumbrances. Seller’s spouse has no interest, marital or otherwise, in the
Shares. No legend or other reference to any purported Encumbrance appears upon
any certificate representing equity securities of the Company. All of the
outstanding equity securities of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of the Company. There are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments relating
to
the capital stock of the Company or obligating either Seller or the Company
to
issue, sell or redeem any equity interests in the Company. None of the
outstanding equity securities or other securities of the Company was issued
in
violation of the Securities Act or any other Legal Requirement. The Company
does
not own, or have any Contract to acquire, any equity securities or other
securities of any Person (other than the Company) or any direct or indirect
equity or ownership interest in any other business.
17
4.5 Financial
Statements.
(a) Seller
has delivered to Buyer: (i) compiled balance sheets of the Company as of
December 31, 2005, 2006 and 2007, and the related statements of income,
statements of stockholders’ equity, and cash flow for each of the fiscal years
then ended, together with the notes thereto and the report thereon, and
(ii) an unaudited balance sheet of the Company as of July 15, 2008 (the
“Unaudited
Balance Sheet”)
and
related statements of income for the six-month period then ending, (all
financial statements referenced in this Section
4.5(a)
collectively, including the Unaudited Balance Sheet, the “Compiled
Financial Statements”).
(b) The
Compiled Financial Statements and the Unaudited Balance Sheet fairly and
accurately present the financial condition and the results of operations,
stockholders’ equity and cash flow of the Company as at the respective dates of
and for the periods referred to in such financial statements. The Compiled
Financial Statements and the Unaudited Balance Sheet reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. No financial
statements of any Person other than the Company are required by GAAP to be
included in the financial statements of the Company.
4.6 Books
and Records.
The
books of account, minute books, stock record books, and other records of the
Company, all of which have been made available to Buyer, are complete and
correct and have been maintained in accordance with sound business practices,
including the maintenance of an adequate system of internal controls. The minute
books of the Company contain accurate and complete records of all meetings
held
of, and corporate action taken by, the stockholders, the Board of Directors,
and
committees of the Board of Directors of the Company, and no meeting of any
such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the possession of the
Company.
4.7 Title
To Properties; Shares; Encumbrances.
The
Company owns (subject only to the matters permitted by the following sentence)
all of the properties and assets (whether real, personal, or mixed and whether
tangible or intangible) that they purport to own located in the facilities
owned
or operated by the Company or reflected as owned in the books and records of
the
Company, including all of the properties and assets reflected in the Unaudited
Balance Sheet (except for personal property sold since the date of the Unaudited
Balance Sheet (except for personal property sold since the date of the Unaudited
Balance Sheet in the Ordinary Course of Business). The Company has not purchased
or otherwise acquired assets in excess of the Threshold Amount since the date
of
the Unaudited Balance Sheet (except for personal property acquired and sold
since the date of the Unaudited Balance Sheet in the Ordinary Course of Business
and consistent with past practice). All material assets reflected in the
Unaudited Balance Sheet are free and clear of all Encumbrances other than
Permitted Encumbrances. Each Seller is the lawful record and beneficial owner
of
the Shares transferred hereby. The Shares represent all of the issued and
outstanding capital stock of the Company. Each Seller owns the Shares
transferred by such Seller hereby free and clear of all Encumbrances except
for
restrictions on transfer under federal and state securities laws. Upon the
delivery of the Shares in the manner contemplated under Article
2
of this
Agreement, Buyer will acquire the beneficial and legal, valid and indefeasible
title to such Shares, free and clear of all Encumbrances except for restrictions
on transfer under federal and state securities laws and the Seller’s security
interest imposed upon the Shares, as set forth in Section 2.3(c) above, until
the Note is paid in full.
18
4.8 Accounts
Receivable.
All
accounts receivable of the Company that are reflected on the Unaudited Balance
Sheet or on the accounting records of the Company as of the Closing Date
(collectively, the “Accounts
Receivable”)
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. Unless paid
prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current net of the respective reserves shown on the Unaudited
Balance Sheet or on the accounting records of the Company as of the Closing
Date
(which reserves are adequate and calculated consistent with past practice).
There is no contest, claim, or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
Section
4.8
of the
Disclosure Schedule contains a complete and accurate list of all Accounts
Receivable as of July 15, 2008, which list sets forth the aging of such Accounts
Receivable.
4.9 Inventory.
All
Inventory of the Company, whether or not reflected in the Balance Sheet,
consists of a quality and quantity usable and salable in the Ordinary Course
of
Business, except for obsolete items and items of below-standard quality, all
of
which have been written off or written down to net realizable value in the
Unaudited Balance Sheet or on the accounting records of the Company as of the
Closing Date, as the case may be.
4.10 No
Undisclosed Liabilities.
The
Company has no Liabilities except for Liabilities reflected or reserved against
in the Unaudited Balance Sheet and reflected in the notes to the Compiled
Financial Statements, and current Liabilities incurred in the Ordinary Course
of
Business since the respective dates thereof.
4.11 Indebtedness.
Section
4.11
of the
Seller’s Disclosure Schedule sets forth all of the outstanding Indebtedness of
the Company (the “Scheduled
Debt”)
as of
the date hereof, together with any prepayment or other penalties that would
result from the prepayment or refinancing of such Indebtedness. All of the
Scheduled Debt has been incurred in the Ordinary Course of Business and has
been
used for valid corporate purposes and not to pay, reimburse, or otherwise
compensate any Seller or to make a distribution with respect thereto. The
Company does not have any Indebtedness other than the Scheduled
Debt.
As of
the Closing, there are no outstanding loans between Seller and the Company.
4.12 Taxes.
(a) Compliance.
The
Company and Seller have timely filed or will timely file with the appropriate
Governmental Bodies all Tax Returns required to have been filed by the Closing,
the information included in the Tax Returns filed is complete and accurate
in
all material respects, and the Company has paid all Taxes shown to be due and
payable on such returns. Neither the Company nor Seller has requested any
extension of time within which to file Tax Returns, other than with respect
to
Tax Returns that thereafter were timely filed (after giving effect to such
extension). All Taxes attributable to fiscal periods ending on or before the
Closing Date (including, without limitation, any built-in gain tax that will
be
incurred by the Company as a result of the Closing and any Taxes attributable
to
the portion of any fiscal period that precedes, but does not end on, the Closing
Date) have either been paid or are reflected as a liability on the books and
records of the Company. The Company has, within the time and manner prescribed
by applicable law, rules and regulations, withheld and paid over to proper
taxing or other Governmental Bodies all Taxes required to be withheld and paid
over.
19
(b) Audits.
No
deficiencies for Taxes have been claimed, proposed, or assessed by any
Governmental Body with respect to the Company or Seller for any period ending
before the Closing Date that have not been resolved, and there are no pending
or, to the Knowledge of Seller and the Company, Threatened, audits,
investigations, or claims for or relating to any liability in respect of Taxes,
and there are no matters under discussion with any Governmental Body with
respect to Taxes that are likely to result in an additional amount of Taxes.
No
audits of federal, state, and local Tax Returns by the relevant Governmental
Bodies have been initiated or completed and neither the Company nor Seller
has
been notified that any Governmental Body intends to audit a Tax Return for
any
period. No extension or waiver of a statute of limitations relating to Taxes
is
in effect with respect to the Company. Prior to the Closing, none of Seller
or
the Company will file amended Tax Returns or take positions inconsistent with
filed Tax Returns.
(c) S
Corporation Election.
The
Company is a validly electing S corporation, within the meaning of Code Sections
1361 and 1362, and will be an S corporation up to and including the day
immediately prior to the Closing Date. The Company has also validly elected
to
be an “S corporation” in all state and local jurisdictions that recognize such
status and in which it would, absent such an election, be subject to corporate
income tax, and has maintained its status as an “S corporation” in each such
jurisdiction at all times since the date of such election.
(d) Other.
The
Company has not applied for any Tax ruling or entered into a closing agreement
as described in Section 7121 of the Code (or any similar provision of state,
local or foreign Tax law), or any other Contract related to Taxes with any
Governmental Authority, which may be binding on any Company following the
Closing Date.
4.13 No
Material Adverse Effect.
Since
March 31, 2008, there has not been any Material Adverse Effect on the Company,
and no event has occurred or circumstance exists that may result in such a
Material Adverse Effect.
4.14 Employee
Benefits.
(a) List
of Plans.
Section
4.14(a)
of the
Seller’s Disclosure Schedule sets forth a complete list of each “employee
benefit plan” as defined in Section 3(3) of the ERISA (whether or not subject to
ERISA) sponsored or maintained by the Company or to which the Company
contributes and any other plan, policy, program practice, agreement,
understanding or arrangement (whether written or oral) providing compensation
or
other benefits to any current or former director, officer, employee or
consultant (or to any dependent or beneficiary thereof of the Company or any
ERISA Affiliate (as defined below)), which are now, or were within the past
six
(6) years, maintained, sponsored or contributed to by the Company or any ERISA
Affiliate, or under which the Company or any ERISA Affiliate has any obligation
or liability, whether actual or contingent, including, without limitation,
all
incentive, bonus, deferred compensation, vacation, holiday, cafeteria, medical,
disability, stock purchase, stock option, stock appreciation, phantom stock,
restricted stock or other stock-based compensation plans, policies, programs,
practices or arrangements (each, a “Company
Benefit Plan”).
For
purposes of this Section
4.14,
“ERISA
Affiliate”
means
any entity (whether or not incorporated) other than the Company that, together
with the Company, is (or at the relevant time was) considered under common
control and treated as one employer under Section 414(b), (c), (m) or (o) of
the
Code. Neither the Company nor any other Person has any express or implied
commitment, whether legally enforceable or not, to modify, change or terminate
any Company Benefit Plan, other than with respect to a modification, change
or
termination required by ERISA or the Code.
20
(b) Deliveries.
With
respect to each Company Benefit Plan, the Company has delivered to Buyer
complete copies of (i) the Company Benefit Plan (or, if not written a written
summary of its material terms), including, without limitation, all plan
documents, trust agreements, insurance contracts or other funding vehicles
and
all amendments thereto, (ii) all summaries and summary plan descriptions,
including any summary of material modifications (iii) the most recent annual
reports (Form 5500 series) filed with the IRS with respect to such Company
Benefit Plan (and, if the most recent annual report is a Form 5500R, the most
recent Form 5500C filed with respect to such Company Benefit Plan), (iv) the
most recent actuarial report or other financial statement relating to such
Company Benefit Plan, (v) the most recent determination or opinion letter,
if
any, issued by the IRS with respect to the Company Benefit Plan and any pending
request for such a determination letter, (vi) the most recent nondiscrimination
tests performed under the Code (including 401(k) and 401(m) tests) for the
Company Benefit Plan, (vii) all filings, other than routine tax return filings,
made with any Governmental Bodies, including, but not limited to, any filings
under the Voluntary Compliance Resolution or Closing Agreement Program or the
Department of Labor Delinquent Filer Program.
(c) General
Compliance.
Each
Company Benefit Plan has been administered in all material respects in
accordance with its terms and all applicable Laws, including ERISA and the
Code,
and contributions required to be made under the terms of any of the Company
Benefit Plans as of the date of this Agreement have been timely made or, if
not
yet due, have been properly reflected on the most recent consolidated balance
sheet filed or incorporated by reference in the financial statements of the
Company prior to the date of this Agreement. All Tax, annual reporting and
other
governmental filings required by ERISA and the Code have been timely filed
with
the appropriate Governmental Body and all notices and disclosures have been
timely provided to participants. With respect to each Company Benefit Plans,
no
event has occurred and there exists no condition or set of circumstances in
connection with which the Company or any of its Subsidiaries could be subject
to
any material liability (other than for routine benefit liabilities) under the
terms of, or with respect to, such Company Benefit Plans, ERISA, the Code or
any
other applicable Law.
(d) Tax
Qualification of Plans.
Each
Company Benefit Plan which is intended to qualify under Section 401(a), Section
401(k), Section 401(m) or Section 4975(e)(6) of the Code has either (i) received
a favorable determination letter from the IRS as to its qualified status, (ii)
may rely upon a prototype opinion letter or (iii) the remedial amendment period
for such Company Benefit Plan has not yet expired, and each trust established
in
connection with such Company Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code is so exempt and no
fact or event has occurred that could adversely affect the qualified status
of
any such Company Benefit Plan or the exempt status of any such
trust.
21
(e) Prohibited
Transactions, Legal Actions, Ability to Amend, and Deductibility.
(i)
There has been no prohibited transaction (within the meaning of Section 406
of
ERISA or Section 4975 of the Code and other than a transaction that is exempt
under a statutory or administrative exemption) with respect to a Company Benefit
Plan that could result in liability to the Company or an ERISA Affiliate, (ii)
each Company Benefit Plan can be amended, terminated or otherwise discontinued
after the Closing Date in accordance with its terms, without liability (other
than (A) liability for ordinary administrative expenses typically incurred
in a
termination event or (B) if any Company Benefit Plan is a pension benefit plan
subject to Part 2 of Title I of ERISA, liability for the accrued benefits as
of
the date of such termination (if and to the extent required by ERISA) to the
extent that either there are sufficient assets set aside in a trust or insurance
contract to satisfy such liability or such liability is reflected on the most
recent balance sheet included in the financial statements of the Company prior
to the date of this Agreement), (iii) no suit, administrative proceeding, action
or other litigation has been brought, or to the Knowledge of Seller and the
Company, is Threatened, against or with respect to any such Company Benefit
Plan, including any audit or inquiry by the IRS or United States Department
of
Labor (other than routine benefits claims), (iv) none of the Company or any
ERISA Affiliate has any liability under ERISA Section 502, (v) all contributions
and payments to such Company Benefit Plan are deductible and have been
deductible under Code sections 162 or 404, and (vi) no excise tax could be
imposed upon the Company under Chapter 43 of the Code.
(f) Title
IV of ERISA.
No
Company Benefit Plan is a multiemployer pension plan (as defined in Section
3(37) of ERISA) (“Multiemployer
Plan”)
or
other pension plan subject to Title IV of ERISA and neither the Company nor
any
ERISA Affiliate has sponsored or contributed to or been required to contribute
to a Multiemployer Plan or other pension plan subject to Title IV of ERISA.
No
material liability under Title IV of ERISA has been incurred by the Company
or
any ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to the Company or any ERISA Affiliate of incurring
or being subject (whether primarily, jointly or secondarily) to a material
liability thereunder. None of the assets of the Company or any ERISA Affiliate
is, or may reasonably be expected to become, the subject of any lien arising
under ERISA or Section 412(n) of the Code.
(g) Change
in Control.
No
amount that has been or could be received (whether in cash or property or the
vesting of property), by any employee, officer or director of the Company or
any
of its Subsidiaries who is a “disqualified individual” (as such term is defined
in Treasury Regulation Section 1.280G-1) under any Company Benefit Plan could
be
characterized as an “excess parachute payment” (as defined in Section 280G(b)(1)
of the Code), as a result of the consummation of the Contemplated Transactions.
Set forth in Section
4.14 of
the
Seller’s Disclosure Schedule is (i) the estimated maximum amount that could be
paid to any disqualified individual as a result of the Contemplated Transactions
under all employment, severance and termination agreements, other compensation
arrangements and Company Benefit Plans currently in effect, and (ii) the “base
amount” (as defined in Section 280G(b)(e) of the Code) for each such individual
as of the date of this Agreement.
22
(h) Retiree
Health/COBRA.
Except
as required by Law, no Company Benefit Plan provides any of the following
retiree or post-employment benefits to any Person: medical, disability or life
insurance benefits. No Company Benefit Plan is a voluntary employee benefit
association under Section 501(a)(9) of the Code. The Company and the ERISA
Affiliates are in material compliance with (i) the requirements of the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, and the regulations
(including proposed regulations) thereunder and any similar state Law and (ii)
the applicable requirements of the Health Insurance Portability and
Accountability Act of 1996, as amended, and the regulations (including the
proposed regulations) thereunder.
(i) 409A
/
Deferred Compensation/Backdating.
No
payment or benefit provided pursuant to a Company Benefit Plan between the
Company and any “service provider” (as such term is defined in Section 409A of
the Code and the Treasury Regulations and Internal Revenue Service guidance
thereunder), including the grant, vesting or exercise of any option to purchase
capital stock of the Company or stock appreciation right, will or may provide
for the deferral of compensation subject to Section 409A of the Code, whether
pursuant to the execution and delivery of this Agreement by Seller or the
consummation of the Contemplated Transactions (either alone or upon the
occurrence of any additional or subsequent events) or otherwise. The Company
has
never granted or issued stock options or stock appreciation rights except in
compliance with applicable Law and with an exercise price that was not less
than
the fair market value of the underlying Company common stock on the date the
option or right was granted based upon a reasonable valuation method. The
Company is not a party to, or otherwise obligated under, a Company Benefit
Plan,
that provides for the gross-up of the Tax imposed by Section 409A(a)(1)(B)
of
the Code. The execution and delivery of this Agreement and the consummation
of
the Contemplated Transactions will not (either alone or upon the occurrence
of
any additional or subsequent events) constitute an event under a Company Benefit
Plan or Contract that will or may result in any payment of deferred compensation
which will not be in compliance with Section 409A of the Code.
(j) Unfunded
Liabilities.
Neither
the Company nor any of its ERISA Affiliates has any unfunded Liabilities
pursuant to any Company Benefit Plan that is not intended to be qualified under
Section 401(a) of the Code and is an employee pension benefit plan within the
meaning of Section 3(2) of ERISA, a nonqualified deferred compensation plan
or
an excess benefit plan. No Company Benefit Plan is a “nonqualified deferred
compensation plan” (as defined under Section 409A(d)(1) of the
Code).
4.15 Compliance
with Legal Requirements; Governmental Authorizations.
(a) Compliance.
The
Company is, and at all times since March 31, 2008 has been, in full compliance
with each Legal Requirement that is or was applicable to it or to the conduct
or
operation of its business or the ownership or use of any of its assets,
including, without limitation, all applicable import and export control
laws.
(b) Governmental
Authorizations.
Section
4.15
of the
Disclosure Schedule contains a complete and accurate list of each Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or to any of the assets owned or used by, the Company. Each
Governmental Authorization listed or required to be listed in Section
4.15
of the
Disclosure Schedule is valid and in full force and effect. Except as set forth
in Section
4.15
of the
Disclosure Schedule the Company is, and at all times since March 31, 2008 has
been, in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in
Section
4.15
of the
Disclosure Schedule. The Governmental Authorizations listed in Section
4.15
of the
Disclosure Schedule collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its business in the manner it currently conducts and operate such business
and
to permit the Company to own and use its assets in the manner in which it
currently own and use such assets.
23
4.16 Legal
Proceedings.There
is
no pending Proceeding: (i) that has been commenced by or against the Company
or
that otherwise relates to or may affect the business of, or any of the assets
owned or used by, the Company, or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions. To the Knowledge of Seller and the
Company, no such Proceeding has been Threatened. No event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding.
4.17 Absence
of Certain Changes and Events.
Except
as set forth in Section
4.17
of the
Disclosure Schedule, since the date of the Unaudited Balance Sheet, the Company
has conducted its business only in the Ordinary Course of Business and there
has
not been any: (a) event that has had a Material Adverse Effect; (b) change
in
the Company’s authorized or issued capital stock; grant of any stock option or
right to purchase shares of capital stock of the Company; issuance of any
security convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by the Company of any
shares of any such capital stock; or declaration or payment of any dividend
or
other distribution or payment in respect of shares of capital stock; (c)
amendment to the Organizational Documents of the Company; (d) payment or
increase by the Company of any bonuses, salaries, or other compensation to
any
stockholder, director, officer, or (except in the Ordinary Course of Business)
employee or entry into any employment, severance, or similar Contract with
any
director, officer, or employee; (e) adoption of, or increase in the payments
to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with
any
employees of the Company; (f) damage to or destruction or loss of any asset
or
property of the Company, whether or not covered by insurance; (g) entry into,
termination of, or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit, or similar
agreement, or (ii) any Contract or transaction involving a total remaining
commitment by or to the Company of at least the Threshold Amount; (h) sale
(other than sales of Inventory in the Ordinary Course of Business), lease,
or
other disposition of any asset or property of the Company or mortgage, pledge,
or imposition of any lien or other encumbrance on any material asset or property
of the Company, including the sale, lease, or other disposition of any of the
Intellectual Property Assets; (i) cancellation or waiver of any claims or rights
with a value to the Company in excess of the Threshold Amount; (j) material
change in the accounting methods used by the Company; or (k) agreement, whether
oral or written, by the Company to do any of the foregoing.
24
4.18 Contracts;
No Defaults.
(a) Material
Contracts.
Section
4.18(a) of
the
Disclosure Schedule contains a complete and accurate list, and Seller has
delivered to Buyer true and complete copies, of the following Contracts (the
“Material
Contracts”):
(i) each
Applicable Contract that involves performance of services or delivery of goods
or materials by the Company of an amount or value in excess of the Threshold
Amount;
(ii) any
Applicable Contract for the purchase of any materials, supplies, equipment,
merchandise or services that contains an escalation clause or that obligates
the
Company to purchase all or substantially all of its requirements of a particular
product or service from a supplier or to make periodic minimum purchases of
a
particular product or service from a supplier;
(iii) any
Applicable
Contract
for the sale of any of the assets, properties or securities of the Company
other
than in the Ordinary Course of Business or for the grant to any Person of any
option, right of first refusal or preferential or similar right to purchase
any
such assets, properties or securities;
(iv) any
Applicable Contract relating to the acquisition by the Company of
any
operating business or the equity of any other Person;
(v) any
Applicable Contract with customers or suppliers including provisions
for
rebates,
credits, discounts or the sharing of fees (but excluding Applicable Contracts
containing such provisions relating only to prompt payment of amounts due
thereunder);
(vi) any
Applicable Contract obligating the Company to deliver future product
enhancements or containing a “most favored nation” pricing clause;
(vii) each
lease, rental or occupancy agreement, license, installment and conditional
sale
agreement, and other Applicable Contract affecting the ownership of, leasing
of,
title to, use of, or any leasehold or other
interest
in, any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than he Threshold Amount and with terms of less
than
one year);
(viii) each
licensing agreement or other Applicable Contract with respect to patents,
trademarks, copyrights, or other intellectual property, including agreements
with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the Intellectual
Property Assets, and any
Applicable Contract involving the assignment, transfer pledge or encumbrance
of
any of the Intellectual Property Assets;
(ix) each
employment
contract
binding on the Company;
25
(x) each
collective bargaining agreement and other Applicable Contract with
any
labor union or other employee representative of a group of
employees;
(xi) each
joint venture, partnership, and other Applicable Contract (however named)
involving a sharing of profits, losses, costs or Liabilities by the Company
with
any other Person;
(xii) each
Applicable Contract containing covenants that in any way purport to restrict
the
business activity of the Company or any Affiliate of the Company
or limit
the freedom of the Company or any Affiliate of the Company to engage in any
line
of business or to compete with any Person or in any geographic
area;
(xiii) each
Applicable Contract providing for payments to or by any Person based
on
sales, purchases, or profits, other than direct payments for goods;
(xiv) each
Applicable Contract entered into other than in the Ordinary Course of Business
that contains or provides for an express undertaking by the Company to be
responsible for consequential damages;
(xv) each
Applicable Contract for capital expenditures in excess of the Threshold
Amount;
(xvi) each
written warranty, guaranty, and or other similar undertaking with respect to
contractual performance extended by the Company other than in the Ordinary
Course of Business;
(xvii) any
Applicable Contract requiring the payment to any Person of a brokerage or sale
commission or a finder’s or referral fee (other than arrangements to pay
commissions or fees to employees, agents or recruiters in the Ordinary Course
of
Business);
(xviii) any
Applicable Contract relating to or evidencing outstanding indebtedness of the
Company for borrowed money (including capitalized lease
obligations);
(xix) any
other
Contract that is material to the Business of the Company; and
(xx) each
amendment, supplement, and modification (whether oral or written) in respect
of
any of the foregoing.
(b) Compliance.
Each
Contract identified or required to be identified in Section
4.18(a)
of the
Disclosure Schedule is in full force and effect and is valid and enforceable
in
accordance with its terms
and:
(i) the
Company is, and at all times since March
31,
2008
has
been, in full compliance with all applicable terms and requirements of each
Contract under which
such
Company has or had any Liability or by which such Company or any of the assets
owned or used by such Company is or was bound;
26
(ii) each
other Person that has or had any Liability under any Contract under which the
Company has or had any rights is, and at all times since March
31,
2008
has
been, in full compliance with all applicable terms and requirements of such
Contract;
(iii) no
event
has occurred or circumstance exists that (with or without notice or lapse of
time) may contravene, conflict with, or result in a violation or breach of,
or
give the Company or other Person the right to declare a default or exercise
any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) the
Company has not given to or received from any other Person, at any time since
March
31,
2008,
any
notice or other communication (whether oral or written) regarding any actual,
alleged, possible, or potential violation or breach of, or default under, any
Contract.
(c) Renegotiations.
There
are no renegotiations of, attempts to renegotiate, or outstanding rights to
renegotiate any material amounts paid or payable to the Company under current
or
completed Contracts with any Person and no such Person has made written demand
for such renegotiation.
4.19 Insurance.
Set
forth in Section
4.19
of the
Disclosure Schedule is a complete and accurate list and description of all
insurance policies, including life, fire, liability, product liability, workers
compensation, health and other forms of insurance, currently issued to the
Company or paid for by the Company for the benefit of the Seller with respect
to
its Business, properties or assets, including any self-insurance arrangement
by
or affecting the Company, any contract or arrangement, other than a policy
of
insurance, for the transfer or sharing of any risk by the Company, and all
obligations of the Company to third parties with respect to insurance (including
such obligations under leases and service agreements) (collectively, the
“Insurance
Policies”),
which
description includes the following: the name, address, and telephone number
of
the agent; the name of the insurer, the name of the policyholder, and the name
of each covered insured; the policy number and the period of coverage; the
scope
(including an indication of whether the coverage was on a claims made,
occurrence, or other basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of coverage; and
description of any retroactive premium adjustments or other loss sharing
arrangements. Seller has delivered or made available to Buyer true and complete
copies of the Insurance Policies. With respect to each Insurance Policy, and
except as set forth in Section
4.19
of the
Disclosure Schedule, (a) the policy is legal, valid, binding and in full force
and effect; and (b) the Company is not in Default under the policy. The Company
has given notice to the insurer of all claims that may be insured thereby,
and
there is no claim by the Company pending under any such policies as to which
such Company has been informed that coverage has been questioned, denied or
disputed by the underwriters of such policies. Section
4.19
of the
Disclosure Schedule sets forth a summary of the loss experience under each
Insurance Policy and a statement describing each claim under an insurance policy
for an amount in excess of the Threshold Amount. The Insurance Policies, taken
together, are sufficient for compliance with all Legal Requirements and
Contracts which specify insurance coverage requirements to which the Company
is
a party or by which any of them is bound, will continue in full force and effect
following the consummation of the Contemplated Transactions; and do not provide
for any retrospective premium adjustment or other experienced-based Liability
on
the part of the Company. The Company has paid all premiums due, and has
otherwise performed all of their respective obligations, under each policy
to
which the Company is a party or that provides coverage to the Company or
director thereof.
27
4.20 Real
Property.
(a) Real
Property.
The
Company owns no real Property. The Company leases the Facilities identified
as
being so leased on Section
4.20
of the
Seller’s Disclosure Schedule (the “Leased
Real Property”).
Except as set forth on Section
4.20
of the
Seller’s Disclosure Schedule, there
are
no pending or, to the Knowledge of Seller and the Company, Threatened,
condemnation or other Proceedings relating to the Leased Real Property or other
matters adversely affecting the current use or occupancy of the Leased Real
Property. The Company has received
all requisite approvals of Governmental Bodies (including licenses and permits)
required in connection with the operation of the Leased Real Property and the
Leased Real Property has been operated and maintained in accordance with
applicable Laws. The
Company has not entered into any leases, subleases, licenses, concessions,
or
other agreements, written or oral, granting to any party the right of use or
occupancy of any portion of the Leased Real Property. To Seller’s Knowledge,
there are no outstanding options or rights of first refusal to purchase the
Real
Property, or any portion thereof or interest therein. Seller has delivered
to Buyer copies of leases relating to the Leased Real Property.
(b) Operation
and Use of the Real Property.
All of
the Leased Real Property has parking and other amenities necessary for the
operation of the businesses currently conducted thereon which are adequate
in
relation to the premises and location of the Facilities. All public roads and
streets necessary for service of and access to the Facilities for the current
or
contemplated use thereof have been completed, are serviceable and all-weather
and are physically and legally open for use by the public. All
buildings, structures and improvements located on or included within the Leased
Real Property are structurally sound and in good repair and in good working
order and condition, reasonable wear and tear excepted), all mechanical,
electrical, heating, air conditioning, drainage, sewer, water and plumbing
systems are in good repair, and the Leased Real Property is supplied with
utilities and other services necessary for the operation of such Real Property,
including gas, electricity, water, telephone, sanitary sewer, and storm sewer
and are provided via public roads or via permanent, irrevocable, appurtenant
easements benefiting such real property. To Seller’s Knowledge, no Leased Real
Property relies on any other facility located on any property not included
within the legal description of each Leased Real Property to fulfill any
municipal or governmental requirement or for the furnishing to any facility
of
any essential building systems or utilities, including, but not limited to,
electrical, plumbing, mechanical and heating. All sewer, water and public
utility services that presently service the Leased Real Property either enter
the Leased Real Property through adjoining public streets or, if they pass
through adjoining public land, do so in accordance with valid public and private
easements which inure to the benefit of the Company.
(c) No
Other Agreements.
Except
as set forth in Section
4.20(c)
of the
Seller’s Disclosure Schedule, to Seller’s Knowledge there are no (i) unrecorded
agreements between the Company and any third parties or Governmental Bodies
which affect any of the Leased Real Property; (ii) variances or special or
conditional use permits with respect to the Leased Real Property, (iii)
unrecorded restrictions, easements, licenses, conditions, limitations or
covenants specifically affecting any facility which have been imposed upon
any
Leased Real Property and/or the Company by any third party or Governmental
Body,
whether imposed in connection with platting, subdivision, zoning, issuance
of
permits or certificates of occupancy or otherwise, (iv) xxxxx on any Leased
Real
Property, (v) underground or above ground storage tanks on any Leased Real
Property, or (vi) private sewage disposal systems on any Leased Real Property.
All of the assets of the Company are located at the Leased Real Property, other
than with respect to Inventory in transit.
28
4.21 Environmental
Matters.
(a) The
Company is, and at all times has been, in full compliance with, and has not
been
and is not in violation of or liable under, any Environmental Law. No Seller
or
Company has any basis to expect, nor has any of them or any other Person for
whose conduct they are or may be held to be responsible received, any actual
or
Threatened order, notice, or other communication from (i) any Governmental
Body
or private citizen acting in the public interest, or (ii) the current or prior
owner or operator of any Facilities, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which Seller or the Company
has
had an interest, or with respect to any property or facility at or to which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by Seller, the Company, or any other Person for
whose conduct they are or may be held responsible, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(b) There
are
no pending or, to the Knowledge of Seller and the Company, Threatened claims,
Encumbrances, or other restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant
to
any Environmental Law, with respect to or affecting any of the Facilities or
any
other properties and assets (whether real, personal, or mixed) in which Seller
or the Company has or had an interest.
(c) Neither
Seller nor the Company has any basis to expect, nor has any of them or any
other
Person for whose conduct they are or may be held responsible, received, any
citation, directive, inquiry, notice, Order, summons, warning, or other
communication that relates to Hazardous Activity, Hazardous Materials, or any
alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or any other properties or assets (whether
real, personal, or mixed) owned or operated by the Company, or with respect
to
any property or facility to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used, or processed by Seller, the Company,
or
any other Person for whose conduct they are or may be held responsible, have
been transported, treated, stored, handled, transferred, disposed, recycled,
or
received.
(d) None
of
Seller, the Company or any other Person for whose conduct they are or may be
held responsible, has any Environmental, Health, and Safety Liabilities with
respect to the Facilities or with respect to any other properties and assets
(whether real, personal, or mixed) in which Seller or the Company (or any
predecessor), has or had an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or
assets.
29
(e) There
are
no Hazardous Materials present on or in the Environment at the Facilities or
at
any geologically or hydrologically adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage tanks, landfills,
land deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon. No Seller, Company, any other Person
for
whose conduct they are or may be held responsible, or to the Knowledge of Seller
and the Company, any other Person, has permitted or conducted, or is aware
of,
any Hazardous Activity conducted with respect to the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Seller or
the
Company has or had an interest.
(f) There
has
been no Release or, to the Knowledge of Seller and the Company, Threat of
Release, of any Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the Facilities,
or from or by any other properties and assets (whether real, personal, or mixed)
in which Seller or the Company has or had an interest, or to the Knowledge
of
Seller and the Company, any geologically or hydrologically adjoining property,
whether by Seller, the Company, or any other Person.
(g) Seller
has delivered to Buyer true and complete copies and results of any reports,
studies, analyses, tests, or monitoring possessed or initiated by Seller or
the
Company pertaining to Hazardous Materials or Hazardous Activities in, on, or
under the Facilities, or concerning compliance by Seller, the Company, or any
other Person for whose conduct they are or may be held responsible, with
Environmental Laws.
4.22 Employees.
(a) Section
4.22(a)
of the
Disclosure Schedule contains a complete and accurate list of the following
information for each employee of the Company, including each employee on leave
of absence or layoff status: name; job title; current compensation paid or
payable; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under the Company’s pension, retirement,
profit-sharing, thrift-savings, deferred compensation, stock bonus, stock
option, cash bonus, employee stock option (including investment credit or
payroll stock ownership), termination notice or pay, severance pay, insurance,
medical, welfare, vacation plan or any other employee benefit plan. For any
employee who is on leave of absence, Section
4.22(a)
of the
Seller’s Disclosure Schedule indicates the reason for absence and the expected
duration. All employees of the Company are employees at will, and no severance
or other amounts are payable to such employees upon termination of employment,
other than with respect to vested rights under the Company Benefit Plans.
30
(b) The
Company is in compliance in all material respects with all applicable Laws
relating to employment and employment practices, workers’ compensation, terms
and conditions of employment, worker safety, pay equity, employment insurance,
wages and hours and the Worker Adjustment and Retraining Notification Act.
There
have been no claims of harassment, discrimination, retaliatory act or similar
actions against any officer, director or employee of the Company at any time
since the formation of the Company and no facts exist that would reasonably
be
expected to give rise to such claims or actions. The Company has made all
required payments to its unemployment compensation reserve accounts with the
appropriate governmental departments of the states and provinces where it is
required to maintain such accounts, and each of such accounts has a positive
balance. Section
4.22(b)
of the
Disclosure Schedule also describes, and the Company has delivered to Buyer
copies of, all reports of the Company required under the Federal Occupational
Safety and Health Act of 1970, as amended, and under all other applicable health
and safety Laws and regulations. The deficiencies, if any, noted on such reports
or any reports prepared by independent consultants have been corrected to the
satisfaction of the Governmental Body that gave notice of such deficiency,
which
satisfaction has been confirmed in writing by such applicable Governmental
Body
and copies of which have been delivered to Buyer.
(c) No
employee of the Company is a party to, or is otherwise bound by, any agreement
or arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee and any other Person (“Proprietary
Rights Agreement”)
that
in any way adversely affects or will affect (i) the performance of his duties
as
an employee of the Company, or (ii) the ability of the Company to conduct its
business, including any Proprietary Rights Agreement with Seller or the Company
by any such employee. To the Knowledge of Seller and the Company, no officer
or
other key employee of the Company, except for Seller and his wife and daughter,
intends to terminate his/her employment with the Company. Seller and his wife
will remain on the Company’s payroll as employees of the Company until first
Note payment is received. After the first payment under the Note, Seller’s
relationship to Buyer and the Company will be governed by the Consulting
Agreement and Licensing Agreement to be signed and delivered at
Closing.
(d) No
retired employee or director of the Company, or their dependents, receives
benefits or scheduled to receive benefits in the future.
4.23 Labor
Relations; Compliance.
The
Company is not a party to a collective bargaining or other labor Contract.
Since
March 31, 2008, there has not been, there is not presently pending or existing,
and to the Knowledge of Seller and the Company there is not Threatened, (a)
any
strike, slowdown, picketing, work stoppage, or employee grievance process or
(b)
any Proceeding against or affecting the Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting any of the Company or its premises, or (c) any application
for certification of a collective bargaining agreement. No event has occurred
or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by the Company, and no
such
action is contemplated by the Company. The Company has complied in all respects
with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, pay equity, workers’ compensation, and plant closing. The
Company is not liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
31
4.24 Intellectual
Property.
(a) Sufficiency.
The
Company owns or has the right to use pursuant to licenses or sublicenses, all
Intellectual Property necessary or desirable for the operation of its business.
Each item of Intellectual Property owned or used by the Company immediately
prior to the Closing will be owned or available for use by Buyer on identical
terms and conditions immediately subsequent to the Closing. The Company has
taken reasonable action to maintain and protect each item of Intellectual
Property that it owns.
(b) Non-Interference.
The
Company has not interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property of third parties, received
any
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Company must license or refrain from using any Intellectual Property of any
third party). To the Knowledge of Seller and the Company, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property owned by the Company.
(c) Owned
Intellectual Property.
Section
4.24
of the
Seller’s Disclosure Schedule sets forth a true and complete list of (i) each
registration that has been issued to the Company with respect to any of its
Intellectual Property, (ii) each outstanding application for registration that
the Company has made with respect to any of its Intellectual Property, and
(iii)
each outstanding license or sublicense that the Company has granted to any
third
party with respect to any of its Intellectual Property (together with any
exceptions). Seller has made available to Buyer true, correct and complete
copies of all such registrations, applications, licenses or sublicenses (as
amended to date) and copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section
4.24
of the
Seller’s Disclosure Schedule also sets forth a true and complete list of each
trade name or unregistered trademark now owned by the Company and used in
connection with the Business. With respect to each item of Intellectual Property
owned by the Company and required to be identified in Section
4.24
of the
Seller’s Disclosure Schedule, except as set forth in such Section
4.24,
the
Company:
(i) possesses
all right, title, and interest in and to the item, free and clear of any Lien,
license or other restriction other than a Permitted Encumbrance;
(ii) has
not
received any written notice that action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of Seller and the Company, is Threatened, that challenges the
legality, validity, enforceability, use, or ownership of the item;
and
32
(iii) except
for any express warranties with respect to products sold, has no outstanding
obligations to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to the
item.
(d) Intellectual
Property Licensed to the Company.
Section
4.24
of the
Seller’s Disclosure Schedule sets forth a true and complete list of each
item of Intellectual Property that any third party owns and that the Company
uses pursuant to license or sublicense granted to the Company; provided,
however,
that
Section
4.24
of the
Seller’s Disclosure Schedule need not identify licenses for commercially
available personal computer software. Seller have delivered or made available
to
Buyer true, correct and complete copies of all such licenses and sublicenses,
as
amended to date. With respect to each item of Intellectual Property licensed
by
the Company and required to be identified in Section
4.24
of the
Seller’s Disclosure Schedule, and except as specified in such Section
4.24,
(i) the
Company is not Default thereunder;
(ii)
the
license or sublicense covering the item is legal, valid, binding, enforceable
against the Company, and in full force and effect; and
(iii)
no
third
party to the license or sublicense is in Default thereunder.
4.25 Customers
and
Suppliers.
Section
4.25
of the
Seller’s Disclosure Schedule sets forth (a) the ten (10) largest customers of
the Company, on the basis of revenues for goods sold or services provided for
the most recent fiscal year and (b) the ten (10) largest suppliers to the
Company, on the basis of cost of goods or services purchased for the most recent
fiscal year. Neither Seller nor the Company know of any plan or intention of
any
of such customers or any suppliers to terminate, cancel or otherwise adversely
modify its relationship with any of the Company or to decrease materially or
limit any of its products or services to the Company or its usage or purchase
of
any of the services or products of the Company, or to change the prices at
which
such products are purchased or sold.
4.26 Relationships
With Related Persons.
No
Seller or any Related Person of Seller or of the Company has, or since March
31,
2008 has had, any interest in any property (whether real, personal, or mixed
and
whether tangible or intangible), used in or pertaining to the Business. Except
as set forth in Section
4.26
of the
Seller’s Disclosure Schedule, no Seller or any Related Person of Seller or of
the Company is, or since the March 31, 2008 has owned (of record or as a
beneficial owner) an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial interest
in any transaction with the Company other than business dealings or transactions
conducted in the Ordinary Course of Business with the Company at substantially
prevailing market prices and on substantially prevailing market terms, or (ii)
engaged in competition with the Company with respect to any line of the products
or services of the Company (a “Competing
Business”)
in any
market presently served by such Company except for less than one percent (1%)
of
the outstanding capital stock of any Competing Business that is publicly traded
on any recognized exchange or in the over-the-counter market. Except as set
forth in Section
4.26
of the
Seller’s Disclosure Schedule, no Seller or any Related Person of Seller or of
the Company is a party to any Contract with, or has any claim or right against,
the Company.
33
4.27 Credit,
Rebate, Product Warranties and Related Matters. Section
4.27
of the
Seller’s Disclosure Schedule contains a true, correct and complete (a) list of
the names and amounts of credits and rebates with any customers totaling more
than the Threshold Amount per customer in 2005, 2006 or 2007, and the current
oral or written credit and rebate policies of the Company, (b) list of the
names
and amounts of rebates received from any supplier of the Company totaling more
than the Threshold Amount per supplier in 2005, 2006 or 2007, and (c) a copy
of
the Company’ standard warranty or warranties for sales of products and
any
return, repair or replacement policies for products. Except as set forth in
Section
4.27
of the
Seller’s Disclosure Schedule and for manufacturer warranties passed through to
customers, there are no warranties, commitments or obligations with respect
to
the return, repair or replacement of any products manufactured, distributed
or
sold by the Company by reason of alleged overshipments, defective merchandise
or
otherwise, or of merchandise in the hands of wholesalers, distributors,
retailers or customers under an understanding that such merchandise would be
returnable. Section
4.27
of the
Seller’s Disclosure Schedule sets forth the aggregate annual cost to Seller of
performing warranty obligations, returns, repairs or replacements for customers
for each of the three (3) preceding fiscal years and the current fiscal year.
No
facts or conditions exist which could reasonably be expected to result in the
Company’ products being subject to a replacement, modification or recall
campaign.
4.28 Brokers
or Finders.
Except
as set forth in Section
4.28
of the
Seller’s Disclosure Schedule, the Company, Seller and their agents have incurred
no Liability for brokerage or finders’ fees or agents’ commissions or other
similar payment in connection with this Agreement.
4.29 Disclosure.
No
representation or warranty of Seller in this Agreement and no statement in
the
Seller’s Disclosure Schedule or any certificate delivered pursuant hereto or
otherwise in connection with the Contemplated Transactions omits to state a
material fact necessary to make the statements herein or therein, in light
of
the circumstances in which they were made, not misleading. No notice given
pursuant to Section
6.5
will
contain any untrue statement or omit to state a material fact necessary to
make
the statements therein or in this Agreement, in light of the circumstances
in
which they were made, not misleading. There is no fact known to Seller that
has
specific application to the Seller or the Company (other than general economic
or industry conditions) and that materially adversely affects or, as far as
Seller can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of the Company (on
a
consolidated basis) that has not been set forth in this Agreement or the
Seller’s Disclosure Schedule.
ARTICLE
5.
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Seller as follows:
5.1 Organization
and Good Standing.
Buyer
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Nevada. Buyer is duly qualified or licensed to do
business and is in good standing, in each jurisdiction where the assets and
properties owned, leased or operated by it or the nature of its business make
such qualification or licensing necessary, except for failures to be so
qualified or licensed and in good standing that do not have a Material Adverse
Effect on Buyer.
34
5.2 Authority;
No Conflict.
(a) Enforceability.
This
Agreement constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to the
Enforceability Exceptions. Buyer has all necessary corporate power and authority
to execute and deliver this Agreement and to perform its obligations under
this
Agreement. Upon the execution and delivery by Buyer of the Stock Restriction
Agreement and Lease (collectively, the “Buyer’s
Closing Documents”),
the
Buyer’s Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, subject to the Enforceability Exceptions.
(b) No
Conflict.
Neither
the execution and delivery of this Agreement by Buyer nor the consummation
or
performance of any of the Contemplated Transactions by Buyer will give any
Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to: any provision of Buyer’s Organizational
Documents; any resolution adopted by the board of directors or the stockholders
of Buyer; any Legal Requirement or Order to which Buyer may be subject; or
any
Contract to which Buyer is a party or by which Buyer may be bound.
5.3 Consents.
Except
for such Consents as Buyer may be required to obtain prior to Closing (the
“Buyer
Consents”),
Buyer
is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
5.4 Certain
Proceedings.
As of
the date hereof, there is no pending Proceeding that has been commenced against
Buyer and that challenges, or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer’s Knowledge, no such Proceeding has been Threatened as of
the date hereof.
5.5 Brokers
or Finders.
Buyer
and its officers and agents have incurred no Liability for brokerage or finders’
fees or agents’ commissions or other similar payment in connection with this
Agreement or any of the Contemplated transactions.
5.6 SEC
Filings.
Buyer
has made available to the Seller or the Seller has had access through the XXXXX
filing system to accurate and complete copies (excluding copies of exhibits)
of
each report, registration statement (on a form other than Form S-3 or S-8)
and
definitive proxy statement filed by Buyer with the Securities and Exchange
Commission (the “SEC”)
between
December 31, 2006 and the date of this Agreement (the “Buyer
SEC Documents”).
As of
the time it was filed with the SEC (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i)
each
of the Buyer SEC Documents complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be;
and
(ii) none of the Buyer SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances and each of the Buyer SEC Documents: (i) complied as to form
in
all material respects with the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered, except as may be indicated in the notes to such financial statements
and (in the case of unaudited statements) as permitted by Form 10-Q, and except
that unaudited financial statements may not contain footnotes and are subject
to
year-end audit adjustments; and (iii) fairly present the consolidated financial
position of the Buyer as of the respective dates thereof and the consolidated
results of operations of the Buyer for the periods covered thereby.
35
5.7 Valid
Issuance.
The
Buyer Series E Preferred Stock to be issued in the Contemplated Transactions
has
been duly authorized and will, when issued in accordance with the provisions
of
this Agreement, be validly issued, fully paid and nonassessable and will not
be
subject to any restriction on resale under the Securities Act, other than
restrictions imposed under the Securities Act and other securities laws, this
Agreement or the Stock Restriction Agreement.
ARTICLE
6.
PRE-CLOSING
COVENANTS
6.1 Access
and Investigation.
Between
the date of this Agreement and the Closing Date, Seller and the Company will,
and will cause each of their respective Representatives to, (a) afford Buyer
and
its Representatives and prospective lenders and their Representatives
(collectively, “Buyer’s
Advisors”),
upon
reasonable advance notice and during regular business hours, full and free
access to the Company’s personnel, properties, contracts, books and records, and
other documents and data, (b) furnish Buyer and Buyer’s Advisors with copies of
all such contracts, books and records, and other existing documents and data
as
Buyer may reasonably request, and (c) furnish Buyer and Buyer’s Advisors with
such additional financial, operating, and other data and information as Buyer
may reasonably request.
6.2 Operation
of the Businesses of the Company.
(a) Ordinary
Course.
Except
as expressly provided or permitted herein, or as consented to in writing by
Buyer, during the period commencing on the date of this Agreement and ending
on
the Closing Date or such earlier date as this Agreement may be terminated in
accordance with its terms (the “Pre-Closing
Period”),
Seller will cause the Company to act and carry on the Company’s businesses in
the Ordinary Course of Business, maintain and preserve the Company’s business
organization, assets and properties, preserve the Company’s business
relationships with customers, strategic partners, suppliers, distributors and
others having business dealings with it and keep available the services of
the
present officers, employees and consultants of the Company. Without limiting
the
generality of the foregoing, except as expressly provided or permitted herein,
during the Pre-Closing Period, the Company shall not, directly or indirectly,
do
any of the following without the prior written consent of Buyer:
(i) declare,
set aside or pay any distributions or dividends on, or make any other
distributions (whether in cash, securities or other property) in respect of,
any
of its capital stock or other equity securities, except that the Company may
make distributions to the Seller in sufficient amount to pay federal, state
and
local income taxes, at the highest marginal tax rates applicable to Seller
on
the net distributive share of the Company’s income, losses, deductions and
credits that have been separately stated and passed through to the Seller under
Section 1366 of the Code, provided that the Buyer shall be notified in advance
of such distributions; split, combine or reclassify any of its capital stock
or
other equity securities or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for capital stock or
any
of its other securities; or purchase, redeem or otherwise acquire any capital
stock or any of its other securities or any rights, warrants or options to
acquire any such capital stock or other securities;
36
(ii) issue,
deliver, sell, grant, pledge or otherwise dispose of or encumber any capital
stock, any other voting securities or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such
capital stock, voting securities or convertible or exchangeable securities
(other than the issuance of shares of capital stock upon the exercise of options
or warrants outstanding on the date of this Agreement);
(iii) amend
any
of the Organizational Documents or other comparable charter or organizational
documents or enter into any new line of business or discontinue any existing
line of business;
(iv) acquire
by merging or consolidating with, or by purchasing all or a substantial portion
of the assets or any stock of, or by any other manner, any business or any
corporation, partnership, joint venture, limited liability company, association
or other business organization or division thereof, or any assets that are
material, in the aggregate, to the Company;
(v) sell,
lease, license, pledge, or otherwise dispose of or encumber any material
properties or material assets of the Company other than in the Ordinary Course
of Business;
(vi) knowingly
or irrevocably waive any material right of the Company under any Material
Contract;
(vii) (A)
incur
any Indebtedness other than draws under such Company’s existing line of credit
in the Ordinary Course of Business, make any payments on any existing
Indebtedness other than regular payments made pursuant to the terms of such
existing Indebtedness, or pay any guaranty fees or other fees to any guarantor
of any Indebtedness of the Company, (B) issue, sell or amend any debt securities
or warrants or other rights to acquire any debt securities of the Company,
guarantee any debt securities of another Person, enter into any “keep well” or
other agreement to maintain any financial statement condition of another Person
or enter into any arrangement having the economic effect of any of the
foregoing, (C) make any loans, advances or capital contributions to, or
investment in, any other Person; provided,
however,
that
the Company may, in the Ordinary Course of Business, invest in debt securities
maturing not more than ninety (90) days after the date of investment, or (D)
other than in the Ordinary Course of Business, enter into any hedging agreement
or other financial agreement or arrangement designed to protect the Company
against fluctuations in commodities prices or exchange rates;
37
(viii) make
any
capital expenditures or other expenditures with respect to property, plant
or
equipment in excess of the Threshold Amount in the aggregate;
(ix) make
any
changes in accounting methods, principles or practices, except insofar as may
have been required by a change in GAAP;
(x) except
as
required to comply with applicable Law or agreements, plans or arrangements
existing on the date hereof, (A) adopt, enter into, terminate or materially
amend any employment, severance or similar agreement or material benefit plan
for the benefit or welfare of any current or former director, officer or
employee, including a Company Benefit Plan or any collective bargaining
agreement, (B) increase in any material respect the compensation or fringe
benefits of, or pay any bonus to, any director, officer or employee, (C)
accelerate the payment, right to payment or vesting of any material compensation
or benefits, including any outstanding options or restricted equity awards,
other than as contemplated by this Agreement, (D) grant any options to purchase
capital stock, equity appreciation rights, equity based or equity related
awards, performance units or restricted equity, or (E) take any action other
than in the Ordinary Course of Business to fund or in any other way secure
the
payment of compensation or benefits under a Company Benefit Plan;
(xi) make
or
change any election in respect of Taxes, adopt or change any accounting method
in respect of Taxes, file any amendment to a Tax Return, settle any claim or
assessment in respect of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of
Taxes;
(xii) enter
into or amend any contract or agreement other than in the Ordinary Course of
Business or terminate any Material Contract or amend any of its material terms
(other than amendments designed to remedy defaults thereunder);
(xiii) commence,
pay, discharge, settle or satisfy any lawsuits, 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 of liabilities reflected or reserved against in the Unaudited
Balance Sheet and financial statements or incurred in the Ordinary Course of
Business, or waive any material benefits of any confidentiality, standstill
or
similar agreements to which the Company is a party;
(xiv) permit
any material increase in the number of employees employed by the Company on
the
date hereof;
(xv) terminate
or fail to renew any Governmental Authorization that is required for continued
operations;
(xvi) enter
into any collective bargaining agreement or union contract with any labor
organization or union;
(xvii) accelerate
or defer any obligation or payment by or to the Company, or not pay any accounts
payable or other obligation of such Company when due and other than in the
Ordinary Course of Business;
38
(xviii) decrease
or defer in any material respect the level of training provided to the employees
of such Company or the level of costs expended in connection therewith;
and
(xix) fail
to
maintain insurance at levels at least comparable to current levels or otherwise
in a manner inconsistent with past practice.
(b) Negative
Covenant.
Except
as otherwise expressly permitted by this Agreement, between the date of this
Agreement and the Closing Date, neither the Seller nor the Company will, without
the prior consent of Buyer, take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of which any of
the
changes or events listed in Section
4.17
is
likely to occur.
6.3 Required
Approvals.
(a) Seller.
As
promptly as practicable after the date of this Agreement, Seller and the Company
will make all filings required by Legal Requirements to be made by them in
order
to consummate the Contemplated Transactions. Between the date of this Agreement
and the Closing Date, Seller and the Company will (a) cooperate with Buyer
with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, (b)
cooperate with Buyer in obtaining all consents required by Buyer to consummate
the Contemplated Transactions, and (c) take all actions necessary to obtain
the
Required Consents.
(b) Buyer.
As
promptly as practicable after the date of this Agreement, Buyer will, and will
cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will, and will
cause each Related Person to, (a) cooperate with Seller and the Company with
respect to all filings that Seller are required by Legal Requirements to make
in
connection with the Contemplated Transactions, and (b) reasonably cooperate
with
Seller and the Company in obtaining all Required Consents; provided,
that
this Agreement will not require Buyer to dispose of or make any change in any
portion of its business or to incur any other burden to obtain a Governmental
Authorization.
6.4 Efforts
to Satisfy Conditions.
(a) Seller.
Seller
and the Company will use commercially reasonable efforts to cause the conditions
in Article
8
and
Article
9
to be
satisfied.
(b) Buyer.
Except
as set forth in the proviso to Section
6.3(b),
between
the date of this Agreement and the Closing Date, Buyer will use commercially
reasonable efforts to cause the conditions in Article
8
and
Article
9
to be
satisfied.
6.5 Notification.
Between
the date of this Agreement and the Closing Date, Seller and Company will each
promptly notify Buyer in writing if such Seller or Company becomes aware of
any
fact or condition that causes or constitutes a Breach of any of Seller’s and the
Company’ representations and warranties as of the date of this Agreement, or if
such Seller or Company becomes aware of the occurrence after the date of this
Agreement of any fact or condition that could (except as expressly contemplated
by this Agreement) cause or constitute a Breach of any such representation
or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Seller’s Disclosure Schedule if the Seller’s
Disclosure Schedule were dated the date of the occurrence or discovery of any
such fact or condition, Seller and the Company will promptly deliver to Buyer
a
proposed supplement to the Seller’s Disclosure Schedule specifying such change.
Any update to the Seller’s Disclosure Schedule shall require Buyer’s prior
written approval, in its discretion. During the same period, Seller and the
Company will promptly notify Buyer of (a) the occurrence of any Breach of any
covenant of Seller and the Company in this Article
6
or of
the occurrence of any event that may make the satisfaction of the conditions
in
Article
8
impossible or unlikely, and (b) the receipt by such party of any notice or
other
communication from any Governmental Body or third party in connection with
any
consent or approval of such Governmental Body or third party that is or may
be
required in connection with the Contemplated Transactions or relating to any
plan or intention of any of third party to terminate, cancel or otherwise
adversely modify its commercial relationship with the Company or to decrease
materially or limit materially any of its products or services to the Company
or
its usage or purchase of any of the services or products of the
Company.
39
6.6 No
Negotiation.
Until
such time, if any, as this Agreement is terminated pursuant to Article
10,
Seller
and the Company and each of their respective Representatives shall not, directly
or indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than Buyer) relating to any transaction involving the sale of the business
or
assets (other than in the Ordinary Course of Business) of the Company, or any
of
the capital stock of the Company, or any merger, consolidation, business
combination, or similar transaction involving the Company. Seller and the
Company will promptly forward to Buyer copies of any such inquiries or proposals
received from any Person.
6.7 Bank
Accounts; Powers of Attorney.
As of
the Closing, at Buyer’s request, Seller and the Company shall cause Buyer’s
designees to be added, and the Company’s designees to be removed, as signatories
with respect to each of the Company’s bank accounts and to terminate any powers
of attorney.
6.8 Supplements
to Disclosure Schedule.
Seller
shall have the right until the Closing Date to amend or supplement Seller’s
Disclosure Schedules with respect to any matter hereafter arising (excluding
matters existing as of the date hereof). No information provided pursuant to
this Section
6.8,
however, shall be deemed to modify, or to cure any breach of, any
representation, warranty or covenant in this Agreement existing at the date
hereof.
6.9 Certain
Tax Matters.
(a) Tax
Status and Elections.
Seller
and the Company shall cause all tax sharing agreements or similar arrangements
with respect to or involving the Company to be terminated as to such entity
as
of the Closing Date, and, after the Closing Date, the Company shall not be
bound
thereby or have any liability thereunder. No new elections, and no changes
in
current elections, with respect to Taxes affecting the Company shall be made
after the date of this Agreement without the prior written consent of Buyer.
40
(b) Pre-Closing
Tax Returns.
The
Company shall prepare (or cause to be prepared for the Company) all Tax Returns
of the Company required to be filed prior to Closing. All such Tax returns
shall
be prepared in accordance with past practice (unless a contrary position is
required by Law), to the extent any position taken in such returns may affect
the tax liability of Buyer and the Company after the Closing. The Company shall
timely pay, or cause to be paid, all Taxes relating to such Tax Returns. Seller
shall provide Buyer or its designee the opportunity to review a substantially
completed draft of each pre-Closing Tax Return reasonably prior to the filing
of
the applicable pre-Closing Tax Return, and reasonable access to the Person(s)
actually responsible for preparing the same; provided,
however,
that
the foregoing rights provided to Buyer (or its designee) will in no way affect
(whether or not and regardless of the extent to which Buyer exercises such
rights) the nature and scope of any of the representations, warranties,
covenants and indemnities of Seller contained in this Agreement.
6.10 Audit(k) .
The
Company shall retain an independent SEC-qualified auditing firm mutually
acceptable to the Seller and the Buyer and cause such auditing firm to prepare
the audited financial statements for the Company’s fiscal year ended December
31, 2007 (the “Audited
Financial Statements”).
All
reasonable costs of such audit shall be the sole responsibility of the Buyer.
6.11 Distribution
of Certain Assets.
Prior
to Closing, the Company shall distribute and assign to Seller and Seller shall
accept and assume the assets and liabilities described on Schedule
6.11
hereof.
ARTICLE
7.
POST-CLOSING
COVENANTS
7.1 Covenant
Not to Compete.
From and
after Closing, Seller covenants and agrees as follows:
(a) Restricted
Period.
As used
in this Article
7,
the
term “Restricted
Period”
means
the
period commencing upon the termination or expiration of the Consulting Agreement
and ending on the date two (2) years following such termination or
expiration.
(b) Non-Competition;
Non-Solicitation.
In
order to allow Buyer to realize the full benefit of its bargain in connection
with the purchase of the Shares, the Seller shall not at any time during the
Restricted Period, directly or indirectly, acting alone or as a member of a
partnership or as a holder of any security of any class, or as an employee,
consultant to or representative of, any corporation or other business entity:
(i) engage
in, continue in or carry on any business which competes with the Business as
conducted by the Company or Buyer or its Affiliates as of the Closing Date,
or
is substantially similar thereto, including owning or controlling any financial
interest in any corporation, partnership, firm or other form of business
organization which is so engaged;
41
(ii) solicit
any customers of the Company or of Buyer or its Affiliates for purposes of
offering products that are competitive with the products offered by the Business
or of Buyer or its Affiliates as of the Closing Date;
(iii) solicit
any supplier of the Company or of Buyer or its Affiliates for purposes of
supplying products that are competitive with the products purchased by the
Company or the Buyer or its Affiliates as of the Closing Date; or
(iv) hire,
offer to hire, or solicit for employment any employee of the Company, Buyer
or
its Affiliates, without the prior consent of Buyer, until such employee has
been
separated from employment by the Company, Buyer or its Affiliates for at least
one year;
provided
this
Section
7.1
shall
not prohibit Seller’s Consulting Agreement and Licensing Agreement with Buyer or
Seller’s ownership of Buyer’s capital stock.
(c) Severability;
Reformation; Equitable Relief.
Seller
acknowledges that if the scope of the covenants set forth in this Section
7.1
is
deemed to be too broad in any court proceeding, the court may reduce the scope
as it deems reasonable under the circumstances. Buyer would not have any
adequate remedy at law for the breach or threatened breach by Seller or any
of
his respective Affiliates or Related Persons of the covenants and agreements
set
forth in this Section
7.1
and,
accordingly, Buyer and the Company may, in addition to the other remedies which
may be available to it hereunder, file suit in equity to enjoin Seller or any
of
his respective Affiliates or Related Persons from such breach or threatened
breach and Seller consent to the issuance of injunctive relief hereunder. The
act of Buyer in entering into this Agreement, and Buyer’s covenants and payments
hereunder, constitute sufficient consideration for Seller to agree not to
compete against Buyer or the Company as set out in this Section
7.1.
7.2 Certain
Tax Matters.
(a) Income
Tax Returns.
Buyer
shall prepare, or cause to be prepared, all Income Tax Returns of the Company
required to be filed after Closing for all periods ending on or before the
Closing Date, including all short taxable years ending on the Closing Date.
Buyer shall provide Seller or their designees the opportunity to review a
substantially completed draft of each such Income Tax Return at least ten (10)
business days prior to the filing of such Income Tax Return, and reasonable
access to the Person(s) actually responsible for preparing such Income Tax
Returns; provided,
however,
that
the foregoing rights provided to Seller or their designee will in no way affect
(whether or not and regardless of the extent to which Seller exercise such
rights) the nature and scope of any of the representations, warranties,
covenants and indemnities of Seller contained in this Agreement. Seller shall
timely file such Income Tax Returns and pay (or cause to be paid) all Taxes
relating to all periods ending on or before the Closing Date (including, without
limitation, any built-in gain tax that will be incurred by the Company as a
result of the Closing).
(b) Cooperation;
Tax Audit.
After
the Closing Date, Buyer and Seller shall, and shall cause their respective
Affiliates, including the Company, to, cooperate in the preparation of all
Tax
Returns and shall provide, or cause to be provided, to the requesting party
any
records or other information requested by such party in connection therewith
as
well as access to, and the cooperation of, the auditors of Buyer and Seller.
Seller, on the one hand, and Buyer, on the other hand, shall give prompt notice
to each other of any proposed adjustment to Taxes for periods ending on or
before the Closing Date (or beginning on or before the Closing Date and ending
after the Closing Date). Promptly upon receipt by either party of any
notification or indication (whether written or oral) from the IRS or any state
or other taxing authority that it intends to investigate or audit any
pre-Closing Tax Return, the party receiving such information shall notify the
other party and convey such information to the other party in writing. Each
party shall cooperate with the other in connection with any Tax investigation,
Tax audit, or other Tax proceeding. A party shall be reimbursed for reasonable
out-of-pocket expenses incurred in taking any action requested by the other
party or parties under this Section
7.2(b);
provided,
however,
that
the foregoing shall not alter any indemnification rights to which Buyer or
Seller are entitled under this Agreement, including, without limitation, under
Article
11.
42
7.3 Further
Assurances.
The
parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents,
and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
7.4 Litigation
Support.
In the
event and for so long as Buyer or Company is actively contesting or defending
against any litigation or claim in connection with any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction existing or occurring on or
prior to the Closing Date involving the Company or the Business, Seller will
cooperate in the contest or defense and provide such testimony as may be
necessary in connection with the contest or defense, at the cost and expense
of
Buyer (unless and to the extent Buyer is entitled to indemnification therefor
hereunder).
7.5 Cooperation:
Audited Financial Statements.
In the
event the audit required pursuant to Section
6.10
is not
completed prior to the Closing, Seller shall, and shall cause his Affiliates
to,
cooperate in the preparation of the Audited Financial Statements and shall
provide, or cause to be provided, to the requesting party any records or other
information requested by Buyer or the Company in connection therewith as well
as
access to, and the cooperation of, the auditors of Buyer and Seller.
ARTICLE
8.
CONDITIONS
PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
Buyer’s
obligation to purchase the Shares and to take the other actions required to
be
taken by Buyer at the Closing is subject to the satisfaction, at or prior to
the
Closing, of each of the following conditions (any of which may be waived by
Buyer, in whole or in part):
8.1 Accuracy
of Representations
and
Warranties.
The
representations and warranties of Seller set forth in this Agreement that are
qualified by a reference to materiality or a Material Adverse Effect (any such
qualification referred to herein as a “Materiality
Qualifier”)
shall
be true and correct in all respects when made and (after giving effect to any
schedule updates deemed made or otherwise permitted under Section
6.8)
on and
as of the Closing as if made at and as of the Closing (other than
representations and warranties that are so qualified and relate to a particular
date, which representations and warranties shall be true and correct in all
respects as of such date), and the representations and warranties of Seller
set
forth in this Agreement that are not so qualified shall be true and correct
in
all material respects when made and (after giving effect to any schedule updates
deemed made or otherwise permitted under Section
6.8)
on and
as of the Closing Date as if made on and as of such time (except for those
representations and warranties that are not so qualified and relate to a
particular date, which representations and warranties shall be true and correct
in all material respects as of such date).
43
8.2 Seller’s
Performance.
(a) Covenants;
Etc.
All of
the covenants and obligations that Seller is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material
respects.
(b) Documents,
Etc.
Each
document required to be delivered by Seller pursuant to Section
3.2
must
have been delivered, and each of the other covenants and obligations in
Article
6
must
have been performed and complied with in all respects.
8.3 Consents.
Each of
the Required Consents and the Buyer Consents must have been obtained and must
be
in full force and effect.
8.4 No
Proceedings.
Since
the date of this Agreement, there must not have been commenced or Threatened
against Buyer, or against any Person affiliated with Buyer, any Proceeding
(a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
8.5 No
Claim Regarding Stock Ownership or Sale Proceeds.
There
must not have been made or Threatened by any Person any claim asserting that
such Person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, any of the Company, or (b) is
entitled to all or any portion of the Purchase Price payable for the
Shares.
8.6 No
Prohibition.
Neither
the consummation nor the performance of any of the Contemplated Transactions
will, directly or indirectly (with or without notice or lapse of time),
materially contravene, or conflict with, or result in a material violation
of,
or cause Buyer or any Person affiliated with Buyer to suffer any material
adverse consequence under, (a) any applicable Legal Requirement or Order,
or (b) any Legal Requirement or Order that has been published, introduced,
or otherwise proposed by or before any Governmental Body.
8.7 No
Material Adverse Effect.
Since
the date of this Agreement, there shall not have occurred any event or
occurrence creating or reasonably likely to create a Material Adverse
Effect.
44
8.8 Confirmation
of Audited Financial Statements.
The
Seller shall have delivered to the Buyer the Audited Financial Statements,
which
shall reflect no material adverse change to the financial condition of the
Company from the financial condition of the Company reflected in the Compiled
Financial Statements.
8.9 Due
Diligence.
Buyer
and its Representatives shall have completed their due diligence investigation
of the Company, its properties and assets, the Business and related matters,
and
the results of such diligence shall be satisfactory to Buyer in its sole and
absolute discretion.
8.10 Financing.
Buyer
shall have obtained, on terms and conditions satisfactory to Buyer in its sole
discretion, any and all financing it needs in order to consummate the
transactions contemplated hereby, which Buyer anticipates, but does not
guarantee, receiving within sixty (60) days of the Effective Date.
ARTICLE
9.
CONDITIONS
PRECEDENT TO SELLER’S OBLIGATION TO CLOSE
Seller’s
obligation to sell the Shares and to take the other actions required to be
taken
by Seller at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Seller, in whole or in part):
9.1 Accuracy
of Representations
and
Warranties.
The
representations and warranties of Buyer set forth in this Agreement that are
qualified by a reference to a Materiality Qualifier shall be true and correct
in
all respects when made and (after giving effect to any schedule updates deemed
made or otherwise permitted under Section
6.8)
on and
as of the Closing as if made at and as of the Closing (other than
representations and warranties that are so qualified and relate to a particular
date, which representations and warranties shall be true and correct in all
respects as of such date), and the representations and warranties of Buyer
set
forth in this Agreement that are not so qualified shall be true and correct in
all material respects when made and (after giving effect to any schedule updates
deemed made or otherwise permitted under Section
6.8)
on and
as of the Closing Date as if made on and as of such time (except for those
representations and warranties that are not so qualified and relate to a
particular date, which representations and warranties shall be true and correct
in all material respects as of such date).
9.2 Buyer’s
Performance.
(a) Covenants;
Etc.
All of
the covenants and obligations that Buyer is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.
(b) Documents,
Etc.
Buyer
must have delivered each of the documents required to be delivered by Buyer
pursuant to Section
3.2
and must
be prepared to make the cash payments required to be made by Buyer pursuant
thereto.
45
9.3 No
Injunction.
There
must not be in effect any Legal Requirement or any injunction or other Order
that (a) prohibits the sale of the Shares by Seller to Buyer, and
(b) has been adopted or issued, or has otherwise become effective, since
the date of this Agreement.
ARTICLE
10.
TERMINATION
10.1 Termination
Events.
This
Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) Breach.
By
either Buyer or Seller if a material Breach of any provision of this Agreement
has been committed by the other party and such Breach has not been
waived.
(b) Failure
of Conditions Precedent.
(i) By
Buyer if any of the conditions in Article
8
has not
been satisfied as of the Closing Date or if satisfaction of such a condition
is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition
on
or before the Closing Date; or (ii) by Seller, if any of the conditions in
Article
9
has not
been satisfied of the Closing Date or if satisfaction of such a condition is
or
becomes impossible (other than through the failure of Seller to comply with
their obligations under this Agreement) and Seller have not waived such
condition on or before the Closing Date.
(c) Mutual
Consent.
By
mutual written consent of Buyer and Seller.
(d) Outside
Date.
By
either Buyer or Seller if the Closing has not occurred (other than through
the
failure of any party seeking to terminate this Agreement to comply fully with
its obligations under this Agreement) on or before the date sixty (60) days
from
the Effective Date, or such later date as the parties may agree upon (the
“Outside
Date”).
10.2 Effect
of Termination.
Each
party’s right of termination under Section
10.1
is in
addition to any other rights it may have under this Agreement or otherwise,
and
the exercise of a right of termination will not be an election of remedies.
If
this Agreement is terminated pursuant to Section
10.1,
all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section
12.1
and
Section
12.3
will
survive; provided,
however,
that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party’s obligations under this Agreement is not satisfied as a result of the
other party’s failure to comply with its obligations under this Agreement, the
terminating party’s right to pursue all legal remedies will survive such
termination unimpaired.
ARTICLE
11.
INDEMNIFICATION
11.1 Survival.
Except
as set forth below, all representations, warranties, covenants, and obligations
in this Agreement, the Seller’s Disclosure Schedule, the supplements to the
Seller’s Disclosure Schedule, any other certificate or document delivered
pursuant to this Agreement will survive the Closing.
46
(a) In
General.
Except
as set forth below, all of the representations and warranties of Seller and
Buyer contained in this Agreement or any agreement or document executed and
delivered pursuant to the terms of this Agreement shall survive the Closing
hereunder and continue in full force and effect after the Closing Date.
(b) Covenants
and Agreements.
The
covenants
and
agreements contained herein shall survive the Closing without limitation as
to
time unless the covenant or agreement
specifies a term, in which case such covenant or agreement shall survive for
such specified term.
11.2 Indemnification
by Seller.
Seller
will indemnify, defend and hold harmless the Buyer Indemnified Persons for,
and
will pay to the Buyer Indemnified Persons the amount of, any Adverse
Consequences arising, directly or indirectly,
from
or in connection with: (a) any Breach of any representation or warranty made
by
Seller or the Company in this Agreement, the Disclosure Schedule, the
supplements to the Disclosure Schedule, the Seller’s Closing Documents, or any
other certificate or document delivered by Seller or the Company pursuant to
this Agreement, or any claim by a third party that, if proven, would constitute
such a breach or misrepresentation;
(b) any
Breach by Seller or the Company of any covenant or obligation of Seller or
the
Company in this Agreement; (c) any claim by any Person for brokerage or finder’s
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person with Seller or the
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions; and/or (d) any claim by any Person with respect
to
the assets and liabilities listed on Schedule
6.11
distributed to Seller prior to Closing.
11.3 Indemnification
by Buyer.
Buyer
will indemnify, defend and hold harmless the Seller Indemnified Persons for,
and
will pay to the Seller Indemnified Persons the amount of, any Adverse
Consequences arising, directly or indirectly,
from
or in connection with: (a) any Breach of any representation or warranty made
by
Buyer in this Agreement, Buyer’s Closing Documents or in any certificate
delivered by Buyer pursuant to this Agreement;
(b) any
Breach by Buyer of any covenant or obligation of Buyer in this Agreement or
Buyer’s Closing Documents; and (c) any claim by any Person for brokerage or
finder’s fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer (or any Person
acting on its behalf) in connection with any of the Contemplated
Transactions.
11.4 Procedure
for Indemnification. Subject
to the other terms of this Article
11:
(a) Notice
of Indemnifiable Loss.
In the
event that a Person entitled to indemnification under this Article
11
(the
“Indemnitee”)
shall
suffer any Adverse Consequences in respect of which indemnification may be
sought under this Article
11
against
the party required to provide indemnification under this Article
11
(the
“Indemnitor”),
the
Indemnitee must assert a claim for indemnification by a written notice which
contains reasonably sufficient detail and information of the Indemnifiable
Losses as then known (the “Notice
of Indemnifiable Loss”)
to the
Indemnitor. The Notice of Indemnifiable Loss must be provided to the Seller
as
soon as practicable, but in no event later than 30 days after the Indemnitee
acquires knowledge of the basis for the claim for indemnification.
Notwithstanding the foregoing, any failure to provide the Indemnitor with a
Notice of Indemnifiable Loss in such a timely manner shall not relieve the
Indemnitor from any liability that it may have to the Indemnitee under this
Article
11
except
to the extent that the Indemnitor is materially prejudiced by the Indemnitee’s
failure to give such Notice of Indemnifiable Loss in such a timely
manner.
47
(b) Third
Party Claims.
(i) In
the
event that any third party (including any Governmental Body) asserts a claim
against an Indemnitee for which such Indemnitee intends to seek indemnity from
the Indemnitor, then the Indemnitee shall promptly notify the Indemnitor of
such
claim or demand and the amount thereof, if known, or an estimate thereof, if
reasonably capable of estimation (the “Claim
Notice”),
but
any failure to so notify the Seller shall not relieve it from any liability
that
it may have to the Indemnitee under this Article
11
except
to the extent that the Indemnitor is materially prejudiced by the Indemnitee
failure to give such notice.
(ii) The
Indemnitor shall have fifteen (15) days from Claim Notice to undertake, conduct
and control the defense of such third party claim; provided,
that
pending the Indemnitor’s decision whether to exercise its right to undertake the
conduct and control of the settlement or defense of any third party claim,
the
Indemnitee shall undertake, conduct and control the settlement or defense
thereof, through counsel of its own choosing if the failure to so act during
such period might reasonably be expected to have a material adverse effect
on
the Indemnitee, and provided further
that
(A) the Indemnitor notifies the Indemnitee, in writing, within such fifteen
(15) days that the Indemnitor will assume the defense of the third party claim
and pay all attorneys’ fees and other third party defense costs in connection
therewith, (B) the Indemnitor provides the Indemnitee with evidence
reasonably acceptable to the Indemnitee that the Indemnitor will have the
financial resources to defend against the third party claim and fulfill its
indemnification obligations hereunder, (C) the third party claim involves
only money damages and does not seek an injunction or other equitable relief,
(D) settlement of, or an adverse judgment with respect to, the third party
claim is not, in the good faith judgment of the Indemnitee, likely to establish
a precedential custom or practice adverse to the continuing business interests
of the Buyer, and (E) the Indemnitor conducts the defense of the Third
Party Claim actively and diligently.
(iii) All
costs
and expenses incurred by the Indemnitor in defending such third party claim
shall be paid by the Indemnitor. If the Indemnitor assumes such defense, the
Indemnitee may participate in, but not control, any such defense or settlement,
at its sole cost and expense. So long as the Indemnitor is defending such third
party claim in good faith, the Indemnitee shall not settle such claim.
Notwithstanding the foregoing, the Indemnitee shall have the right to pay or
settle any such third party claim; provided,
that in
such event it shall waive any right to indemnity therefor by the Indemnitor.
(iv) If
the
Indemnitor does not notify the Indemnitee within fifteen (15) days after the
receipt of the Indemnitee’s Claim Notice that it elects to undertake the
settlement or defense thereof, the Indemnitee shall have the right to conduct
and control the defense thereof and to contest, settle or compromise the third
party claim but shall not thereby waive any right to indemnity therefor pursuant
to this Agreement.
48
(v) The
Indemnitor shall not, without the prior written consent of the Indemnitee,
settle, compromise or offer to settle or compromise any third party claim
unless: (x) such settlement or judgment includes as an unconditional term
thereof the giving by the Person or Persons asserting such claim to all
Indemnified Parties an unconditional release from all Liability with respect
to
such claim and (y) the relief provided in connection with such settlement
or
judgment effected by the Indemnitor is satisfied entirely by the Indemnitor.
To
the extent the Indemnitor shall control or participate in the defense or
settlement of any third party claim or demand, the Indemnitee will give to
the
Indemnitor and its counsel access to, during normal business hours, the relevant
books and records, and shall permit them to consult with the employees and
counsel of the Indemnitee. The Indemnitee shall use commercially reasonable
efforts to cooperate in the defense of all such claims.
(vi) With
respect to any pending action or proceeding subject to indemnification under
this Article
11,
the
parties shall cooperate in such a manner as to preserve in full (to the extent
possible) the confidentiality of all confidential business records and the
attorney-client and work-product privileges. In connection therewith,
(A) each party shall use its commercially reasonable efforts, in any action
or proceeding in which he or it has assumed or participated in the defense,
to
avoid production of confidential business records (consistent with applicable
law and rules of procedure), and (B) all communications between any party
hereto and counsel responsible for or participating in the defense of any action
or proceeding shall, to the extent possible, be made so as to reserve any
applicable attorney-client or work-product privilege.
11.5 Additional
Agreements Regarding Indemnity.
(a) Waivers.
The
waiver of any condition based on the accuracy of any representation or warranty,
or on the performance of or compliance with any covenant or obligation, will
not
affect the right to indemnification, payment of Adverse Consequences, or other
remedy based on such representations, warranties, covenants, and
obligations.
(b) Reliance.
The
right to indemnification, payment of Adverse Consequences or other remedy based
on such representations, warranties, covenants, and obligations will not be
affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after
the
execution and delivery of this Agreement or the Closing Date, with respect
to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation.
(c) Other
Remedies.
The
remedies provided in this Article
11
will not
be exclusive of or limit any other remedies that may be available to the parties
or other Indemnified Persons.
11.6 Setoff.
In
addition to any other remedies available to Buyer, Buyer shall be entitled,
for
a period of twenty-four (24) months following the Closing, to set-off or recoup
any amounts due to Buyer pursuant to this Article
11
against
the Stock Consideration, and then the outstanding balance of the Note. For
purposes setting-off against the Stock Consideration, each share of Buyer Series
E Stock shall be valued equal to the average closing price per share of Buyer
Common Stock for the five (5) trading days prior to the date of the Notice
of
Indemnifiable Loss or Claim Notice, as applicable.
49
ARTICLE
12.
GENERAL
PROVISIONS
12.1 Expenses.
Except
as otherwise expressly provided in this Agreement, each of the Buyer and the
Seller will bear their respective investment banking, fairness opinion, legal,
accounting, and other fees and expenses relating to the Contemplated
Transactions; provided,
however,
all
reasonable expenses associated with the audit of the Company’s financial
statements required in connection with the Contemplated Transactions shall
be
paid by Buyer.
12.2 Public
Announcements;
Market Stand-Off.
Any
public announcement or similar publicity with respect to this Agreement or
the
Contemplated Transactions will be issued, if at all, at such time and in such
manner as Buyer determines. Buyer shall provide the Seller with a draft of
any
public announcement with respect to the Agreement or the Contemplated
Transactions and a reasonable opportunity to comment on such public
announcement. Unless consented to by Buyer in advance or required by Legal
Requirements, prior to the Closing, Seller and the Company shall keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Seller, the Company and Buyer will consult with each
other concerning the means by which the Company’ employees, customers, and
suppliers and others having dealings with the Company will be informed of the
Contemplated Transactions, and Buyer will have the right to be present for
any
such communication.
12.3 Confidentiality.
Between
the date of this Agreement and the Closing Date, Buyer, Seller and the Company
will maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Company to maintain in confidence, any
written, oral, or other information obtained in confidence from another party
or
the Company in connection with this Agreement or the Contemplated Transactions,
unless (a) such information is already known to such party or to others not
bound by a duty of confidentiality or such information becomes publicly
available through no fault of such party, (b) the use of such information is
necessary or appropriate in making any filing or obtaining any consent or
approval required for the consummation of the Contemplated Transactions, or
(c)
the furnishing or use of such information is required by legal proceedings.
If
the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request. Whether or not the Closing takes place, Seller and the Company waive
any cause of action, right, or claim arising out of the access of Buyer or
its
representatives to any trade secrets or other confidential information of the
Company except for the intentional competitive misuse by Buyer of such trade
secrets or confidential information.
12.4 Notices.
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered
by
hand (with written confirmation of receipt), (b) sent by telecopier or other
electronic transmission (with written confirmation of receipt), provided that
a
copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
telecopier numbers set forth below (or to such other addresses and telecopier
numbers as a party may designate by notice to the other parties):
50
If
to
Seller and the Company (prior to Closing):
CJ’s
Sales and Service of Ocala, Inc.
000
XX
00xx
Xxxxx
Xxxxx,
XX
00000
Attention:
Xx. Xxxxxx Xxxxxxxx
Facsimile
No.: (000) 000-0000
with
a
copy to:
Xxxxxxx
X. Xxxxxxx, Esq.
Xxxxxx
& Xxxxxxx, P.A.
0
Xxxx
Xxxxxx Xxxxxxx Xxxx., Xxxxx 000
Xxxxx,
XX
00000
Facsimile
No.: (000) 000-0000
If
to
Seller (after Closing):
Xx.
Xxxxxx Xxxxxxxx
000
X.X.
00xx
Xxxxxx
Xxxxx,
XX
00000
with
a
copy to:
Xxxxxxx
X. Xxxxxxx, Esq.
Xxxxxx
& Xxxxxxx, P.A.
0
Xxxx
Xxxxxx Xxxxxxx Xxxx., Xxxxx 000
Xxxxx,
XX
00000
Facsimile
No.: (000) 000-0000
If
to
Buyer:
Attention:
Chief Executive Officer
00000
Xxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxxx, XX 00000
Facsimile
No.: (000) 000-0000
51
with
a
copy to:
Xxxxxx
X.
Xxxxxx, Esq.
Xxxxxxxxxx
& Xxxxx, P.A.
000
Xxxxx
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
12.5 Jurisdiction.
Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the parties in
the
state and federal courts located in or serving Xxxxxx County in the State of
Florida, and each of the parties consents to the exclusive jurisdiction of
such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein.
12.6 Waiver.
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to
in
this Agreement will operate as a waiver of such right, power, or privilege,
and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or
the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement or the documents referred to in this Agreement can be discharged
by
one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may
be given by a party will be applicable except in the specific instance for
which
it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this
Agreement.
12.7 Entire
Agreement and Modification.
This
Agreement supersedes all prior agreements between the parties with respect
to
its subject matter (including the Letter of Intent among Buyer, Seller and
the
Company) and constitutes (along with the documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may
not
be amended except by a written instrument signed by Buyer and
Seller.
12.8 Disclosure
Schedule.
The
disclosures in the Seller’s Disclosure Schedule, and those in any Supplement
thereto, must relate only to the representations and warranties in the Section
of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement. In the event of any inconsistency
between the statements in the body of this Agreement and those in the Seller’s
Disclosure Schedule (other than an exception expressly set forth as such in
the
Seller’s Disclosure Schedule with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.
12.9 Assignments,
Successors, and No Third-Party Rights.
No
party may assign any of its rights under this Agreement without the prior
consent of the other parties, except that Buyer may assign any of its rights
under this Agreement to any Subsidiary of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give
any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are
for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
52
12.10 Severability.
If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
12.11 Interpretation
and Rules of Construction.
In this
Agreement, except to the extent otherwise provided or that the context otherwise
requires: (a) when a reference is made in this Agreement to an Article, Section,
Paragraph, Exhibit or Schedule, such reference is to an Article or Section
or
Paragraph of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated; the Exhibits and Schedules form part of and shall have effect as
if
set out in this Agreement and any reference to this “Agreement” includes the
Exhibits and the Schedules; (b) the table of contents and headings for this
Agreement, are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement; (c) whenever the words “include,”
“includes” or “including” are used in this Agreement, they are deemed to be
followed by the words “without limitation”; (d) the words “hereof,” “herein” and
“hereunder” and words of similar import, when used in this Agreement, refer to
this Agreement as a whole and not to any particular provision of this Agreement;
(e) all terms defined in this Agreement have the defined meanings when used
in
any certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein; (f) the terms defined in the singular shall have
a
comparable meaning when used in the plural, and vice versa; (g) references
to a
Person are also to its successors and permitted assigns; (h) the use of “or” is
not intended to be exclusive unless expressly indicated otherwise;
(i)
the term
“Dollars” or “$” shall refer to the currency of the United States of America;
and (j) all references to time shall refer to Eastern Standard
Time.
12.12 Time
of Essence.
With
regard to all dates and time periods set forth or referred to in this Agreement,
time is of the essence.
12.13 Governing
Law.
This
Agreement will be governed by the laws of the State of Florida without regard
to
conflicts of laws principles.
12.14 Counterparts.
This
Agreement may be executed in one or more counterparts (including by facsimile
and electronic transmission), each of which will be deemed to be an original
copy of this Agreement and all of which, when taken together, will be deemed
to
constitute one and the same agreement.
[Signature
pages follow]
53
IN
WITNESS WHEREOF, the parties have executed and delivered this Stock Purchase
Agreement as of the date first set forth above.
|
BUYER:
|
COMPANY:
|
|||
|
CJ’S
SALES AND SERVICE OF OCALA,
INC.
|
||||
|
By:
|
/s/
Xxxx Xxxxxx
|
By:
|
/s/
Xxxxxx Xxxxxxxx
|
|
|
Name:
|
Xxxx
Xxxxxx
|
Name:
|
Xxxxxx
Xxxxxxxx
|
|
|
Its:
|
Chief
Executive Officer
|
Its:
|
President
|
|
|
SELLER:
|
||
|
/s/
Xxxxxx Xxxxxxxx
|
||
|
Xxxxxx
Xxxxxxxx, individually
|
[Signature
page to Stock Purchase Agreement]
