STOCK PURCHASE AGREEMENT
Exhibit
10.1
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”) is made
and entered into as of April __, 2008, by and among TERMINUS, INC., a Nevada
corporation (the “Purchaser”), THE
BLACKHAWK FUND, a Nevada corporation (the “Company”), and
Palomar Enterprises, Inc., a Nevada corporation (the “Seller”). Capitalized
terms used in this Agreement without definition shall have the meanings set
forth or referenced in Article
VIII.
ARTICLE
I
1.1 Agreement to Purchase and
Sell. Upon the terms and subject to the conditions set forth herein, the
Seller agrees to sell to the Purchaser, and the Purchaser agrees to purchase
from the Seller, at the Closing, all of the Shares owned by the Seller, free and
clear of all Liens.
1.2 Purchase Price. The
aggregate purchase price (the “Purchase Price”) for
the Shares shall be THREE HUNDRED SIXTY THREE THOUSAND DOLLARS
($363,000).
1.3 Payment of the Purchase
Price. The Purchase Price shall be paid by a certified or back check made
payable to the Seller, or by wire transfer pursuant to instructions provided by
the Seller, at the Closing.
ARTICLE
II
2.1 Representations and
Warranties concerning the Company. The Seller and the Company, jointly
and severally, hereby represent and warrant to the Purchaser as
follows:
(a) Authority. The
Company has all necessary power and authority to enter into and deliver this
Agreement and each of the other agreements, certificates, instruments and
documents contemplated hereby (collectively, the “Ancillary Documents”)
to which it is a party, to carry out its obligations hereunder and under any
Ancillary Document and to consummate the transactions contemplated hereby and by
the Ancillary Documents. All actions, authorizations and consents required by
Law for the execution, delivery and performance by the Company of this Agreement
and each Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, have been properly taken or
obtained, including without limitation, the approval of this Agreement and the
transactions contemplated by it by the Board of Directors of the
Company.
(b) Execution and
Delivery. This Agreement has been, and each Ancillary Document to which
the Company is a party will be at the Closing, duly authorized, executed, and
delivered by the Company and constitutes a legal, valid, and binding obligation
of the Company, enforceable against the Company in accordance with their
respective terms and conditions, except as enforceability thereof may be limited
by applicable bankruptcy, reorganization, insolvency or other similar laws
affecting or relating to creditors’ rights generally or by general principles of
equity.
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(c) No Conflicts. The
execution, delivery and performance by the Company of this Agreement and each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in a breach of any term, condition or provision of, or
require the consent of any Person under, or result in the creation of or right
to create any Lien upon any of the assets of the Company under, (i) any Laws to
which the Company or any of its assets are subject, (ii) any permit, judgment,
order, writ, injunction, decree or award of any Governmental Authority to which
the Company or any of its assets are subject, (iii) the certificate or articles
of incorporation or bylaws of the Company, or (iv) any license, indenture,
promissory note, bond, credit or loan agreement, lease, agreement, commitment or
other instrument or document to which the Company is a party or by which the
Company or any of its assets are bound.
(d) Governmental
Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority, is
required to be obtained by the Company in connection with or as a result of the
execution and delivery of this Agreement or any of the Ancillary Documents, or
the performance of its obligations hereunder and thereunder.
(e) Organization, Standing and
Qualification. The Company is a corporation duly organized, validly
existing, and in good standing under the Laws of the jurisdiction of its
organization. The Company has all requisite power and authority to own, lease,
and operate its properties and to carry on its business as now being conducted,
to use its name and is duly qualified, licensed, or authorized to do business
and in good standing, in each jurisdiction where the nature of the activities
conducted by it or the character of the properties owned, leased or operated by
it require such qualification, licensing or authorization. Each such
jurisdiction is identified on Schedule 2.1(e). The
Company’s corporate minute books reflect all resolutions approved and other
actions taken by its shareholders or Board of Directors and any committees
thereof since the date of its incorporation. The Seller or the Company have
previously delivered to the Purchaser true, correct, and complete copies of the
Certificates of Incorporation and Bylaws of the Company, each as currently in
effect (collectively, the “Organization
Documents”).
(f) Capitalization. The
authorized capital stock of the Company consists solely of 4,000,000,000 shares
of common stock, par value $0.001 per share (the “Common Stock”), of which
562,293,791 shares are issued and outstanding, 150,000,000 shares of Class B
common stock, par value $0.001 per share (the “Class B Common Stock”), of which
30,000,000, and 50,000,000 shares of preferred stock, $0.001 par value, of which
no shares are issued and outstanding as Series A Preferred Stock, 10,000,000
shares are issued and outstanding as Series B Preferred Stock, and 10,000,000
shares are issued and outstanding as Series C Preferred Stock. As of the date
hereof, each person owns of record such number, class, and series of capital
stock as is set forth opposite such person’s name on Schedule 2.1(f). All
of the issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid, nonassessable, and were issued in
compliance with all federal and state securities laws. No shares of
Common Stock are held in treasury. Except as disclosed in Schedule 2.1(f),
there are no outstanding subscriptions, options, warrants, calls, contracts,
demands, commitments, convertible or exchangeable securities, profits interests,
conversion rights, preemptive rights, rights of first refusal or other rights,
agreements, arrangements or commitments of any nature whatsoever under which the
Company is or may become obligated to issue, redeem, assign or transfer any
shares of capital stock or purchase or make payment in respect of any shares of
capital stock of the Company now or previously outstanding, and there are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to or any shares of its capital stock. There are no stockholders
agreements, voting agreements, or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders.
(g) No Subsidiaries or Other
Equity Interests. The Company does not, nor has it ever at any time since
its organization, had a direct or indirect Subsidiary or owned, directly or
indirectly, any equity, investment or other equity interest, or any
right (contingent or otherwise) to acquire the same, in any other
Person.
(h) Reporting Company.
The Company is a publicly-held company subject to reporting obligations pursuant
to Section 13 of the Exchange Act, and its Common Stock is registered pursuant
to Section 12(g) of the Exchange Act.
(i) Listing. The Common
Stock is quoted on the OTC Bulletin Board. The Company has not
received any oral or written notice that its common stock is not eligible nor
will become ineligible for quotation on the OTC Bulletin Board nor that its
common stock does not meet all requirements for the continuation of such
quotation. The Company satisfies all the requirements for the
continued quotation of its common stock on the OTC Bulletin Board.
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(j) SEC Documents; Financial
Statements. The Company has filed all SEC Documents required to be filed
by it under the Securities Laws, including pursuant to Section 13(a) or 15(d) of
the Exchange Act, and for the twelve months preceding the date hereof, such SEC
Documents have filed on a timely basis or the Company has received a valid
extension of such time of filing and has filed any such SEC Documents prior to
the expiration of any such extension. Except as may have been corrected or
supplemented in a subsequent SEC Document, as of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder,
and none of the SEC Documents, when filed, 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 light of the
circumstances under which they were made, not misleading. Except as
may have been corrected or supplemented in a subsequent SEC Document, the
financial statements of the Company included in the SEC Documents (the “Financial
Statements”) comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing. Except as may have been corrected or supplemented
in a subsequent SEC Document, the Financial Statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such Financial Statements or the notes thereto, or, in
the case of unaudited financial statements, as permitted by Item 310(b) of
Regulation S-B promulgated under the Securities Act and the Exchange Act, and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, year-end audit adjustments
and the lack of footnotes. The Company has not received any letters of comment
from the Staff of the SEC which have not been satisfactorily resolved as of the
date hereof.
(k) Material Changes.
Since the date of the latest balance sheet included within the SEC Documents,
except as specifically disclosed in Schedule 2.1(k), (i)
there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any Liabilities (contingent or otherwise), (iii) the Company
has not materially altered its method of accounting or the identity of its
auditors, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock, and (v) the
Company has not issued any equity securities. The Company does not have pending
before the SEC any request for confidential treatment of
information.
(m) Xxxxxxxx-Xxxxx Act.
The Company is in compliance with applicable requirements of the Xxxxxxxx-Xxxxx
Act of 2002 and applicable rules and regulations promulgated by the SEC
thereunder in effect as of the date of this Agreement, except where such
noncompliance could not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.
(n) Absence of Undisclosed
Liabilities. Except to the extent adequately reflected on or reserved
against in the Financial Statements and except for recurring Liabilities
incurred in the ordinary course of business consistent with recent past
practice, as of December 31, 2007 (the “Balance Sheet Date”),
the Company had no direct or indirect Liabilities for any period prior to such
date or arising out of transactions entered into or any set of facts existing
prior thereto. Since the Balance Sheet Date, the Company has not
incurred any Liabilities except as set disclosed on Schedule
2.1(n).
(o) Ordinary Course.
Since the Balance Sheet Date, except as otherwise disclosed on Schedule 2.1(o), the
Company has operated its business in the ordinary course consistent with past
practice and there has not occurred:
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(i) any
change in the condition (financial or otherwise), properties, assets,
liabilities, business, prospects, operations or results of operations that has
had or could reasonably be expected to have a Material Adverse Effect on the
Company;
(ii) any
amendments or changes in any of its Organization Documents;
(iii) any
issuance or sale of any shares of or interests in, or rights of any kind to
acquire any shares of or interests in, or receipt of any payment based on the
value of, its capital stock or any securities convertible or exchangeable into
shares of its capital stock (including, without limitation, any stock options,
phantom stock or stock appreciation rights) or any adjustment, split,
combination or reclassification of its capital stock, or any declaration or
payment of any dividend or any distribution on, or any redemption, purchase,
retirement or other acquisition, directly or indirectly, of any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock;
(iv) any
investment of a capital nature on its own account;
(v) any
entering into, amendment of, modification in, relinquishment, termination or
non-renewal by the Company of any contract, lease, transaction, commitment or
other right or obligation, except for purchase and sale commitments entered into
in the ordinary course of business consistent with recent past
practice;
(vi) any
waiver, forfeiture or failure to assert any rights of a material value or made,
whether directly or indirectly, any payment of any material Liability before the
same came due in accordance with its terms;
(vii) any
material damage, destruction or loss of the Company’s assets or properties,
whether covered by insurance or not;
(viii)
any payment of (or any making of oral or written commitments or representations
to pay) any bonus, increased salary or special remuneration to any director,
officer, employee or consultant or any entry into or alterations of the terms of
any employment, consulting or severance agreement with any such person; any
payment of any severance or termination pay (other than payments made in
accordance with existing plans or agreements); any grant of stock option or
issuance of any restricted stock; any entry into or modification of any
agreement or Employee Benefit Plan (except as required by law) or any similar
agreement;
(ix) any
modification of any term of benefits payable under any Employee Benefit
Plan;
(x) (A)
any creation, incurrence or assumption of any Liability for borrowed money
except those Liabilities incurred in the ordinary course of business consistent
with recent past practice, (B) issuance or sale of any securities convertible
into or exchangeable for debt securities of the Company; or (C) issuance or sale
of options or other rights to acquire from the Company, directly or indirectly,
debt securities of the Company or any securities convertible into or
exchangeable for any such debt securities;
(xi) any
material change in the amounts or scope of coverage of insurance
policies;
(xii) any
merger or consolidation with any other Person, acquisition of any capital stock
or other securities of any other Person, or acquisition of all or a significant
portion of the assets of any other Person, or acquisition of any assets or
properties from any Seller or its affiliate or family member;
(xiii)
any assumption or guarantee of any Liability or responsibility (whether
primarily, secondarily, contingently or otherwise) for the obligations of any
other Person;
(xiv) any
loan, advance (including, without limitation, any loan or advance to any
stockholder, officer, director or employee of such Company) or capital
contribution to, or investment in, any Person;
(xv) any
sale, transfer or lease to others of, any grant, creation or assumption of Liens
against, or otherwise disposed of, any of its material assets, whether tangible
or intangible;
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(xvi) any
lapse, failure to take any actions to protect, or any adverse change in respect
of any of its Proprietary Rights;
(xvii)
any consummation of any other transaction that is not in the Company’s ordinary
course of business consistent with recent past practice;
(xviii)
any collection of the Company’s accounts receivable, or any payment of the
Company’s accounts payable, in each case that is not in the Company’s ordinary
course of business consistent with recent past practice; or
(xix) any
agreement or commitment, in writing or otherwise, to take any of the actions
described in the foregoing subclauses (i) through (xviii).
(p) Title to Assets.
Except as disclosed on Schedule 2.1(p), the
Company has good and marketable title to all of the tangible and intangible
assets owned by it, free and clear of any Liens, and none of such assets are
owned by any Person other than the Company. The Company owns, leases,
licenses or otherwise has the contractual right to use all of the assets used in
or necessary for the conduct of its business as currently conducted. The Company
has delivered to the Purchaser a schedule of the fixed assets of the Company
dated within thirty (30) days prior to the date hereof. All personal property
owned or leased by the Company, taken as a whole, is in good repair and is
operational and usable in the operation of the Company, subject to ordinary wear
and tear.
(q) Receivables and
Payables. Except as disclosed on Schedule 2.1(q), (i)
the accounts and notes receivable reflected on the Financial Statements or
arising since the Balance Sheet Date (collectively, the “Receivables”), are
bona fide, represent valid obligations to the Company, and have
arisen or were acquired in the ordinary course of business and in a manner
consistent with recent past practice and with the Company’s regular credit
practices; (ii) the Company’s provision for doubtful accounts reflected on its
Financial Statements or reserved on its books since the Balance Sheet Date has
been determined in accordance with the generally accepted accounting principles
consistently applied; (iii) the Receivables have been collected or are
collectible in full, net of any allowance for uncollectibles recorded on the
Financial Statements or properly reserved on its books since the Balance Sheet
Date, in a manner consistent with past practice in the ordinary course of
business and without resort to litigation; (iv) none of the Receivables is or
will at the Closing Date be subject to any defense, counterclaim or setoff; (v)
since the Balance Sheet Date, the Company has not canceled, reduced, discounted,
credited or rebated or agreed to cancel, reduce, discount, credit or rebate, in
whole or in part, any Receivables; and (vi) there has been no material adverse
change since the Balance Sheet Date in the amounts of Receivables or the
allowances with respect thereto, or accounts payable of the Company, from those
reflected in the balance sheet of the Company as of such date. The Company has
provided to the Purchaser a schedule of aged Receivables and payables for the
Company as of a date which is within three (3) business days of the date
hereof.
(r) Real
Property.
(i) Schedule 2.1(r) sets
forth a true and complete list of all real property owned, leased, or otherwise
used by the Company, identifying whether it is owned or leased, and if leased,
the lessor or other owner thereof (the “Real Property”).
Except as set forth on Schedule 2.1(r), the
Company does not now own, and has never owned, any real property.
(ii)
There is not existing or proposed as a matter of public record or, to the
Knowledge of the Company, presently contemplated, any condemnation or similar
action, or zoning action or proceeding, with respect to any portion of the Real
Property. None of the existing buildings and improvements which in
part comprise the Real Property fails to comply fully with all size, height, set
back, use and other zoning restrictions and regulations applicable thereto,
including, without limitation, the parking space requirements of all applicable
zoning ordinances and regulations. The Company or its landlord has obtained all
licenses, permits, approvals, certificates, and other authorizations required by
applicable Laws for the use and occupancy of the Real Property as it is
currently being utilized. None of the Real Property is subject to any
encumbrance, easement, right-of-way, building or use restriction, exception,
variance, reservation, limitation or other Liens which might in any material
respect interfere with or impair the continued use thereof as currently utilized
or proposed to be utilized by the Company.
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(s) Proprietary
Rights.
(i) The
Company owns or possesses licenses or other rights to use all trademarks, trade
and business names, internet domain names, service marks, service names,
copyrights, customer lists, trade secrets and inventions (whether or not
patentable) (collectively, “Proprietary Rights”) that are necessary to the
conduct of the Company’s business as currently conducted or
anticipated.
(ii)
Schedule
2.1(s)(ii) sets forth a true and complete list of all trademarks, trade
names, service marks, service names, internet domain names, copyrights and
patents included in the Proprietary Rights of the Company (identifying which are
owned and which are licensed), including all United States, state and foreign
registrations or applications for registration thereof and all agreements
relating thereto. All filing, registration, maintenance or similar
fees payable in connection with each registration (or application therefor) of
Proprietary Rights set forth on Schedule 2.1(s)(ii)
have been paid and each such registration is valid and in full force and
effect.
(iii)
Except as disclosed in Schedule 2.1(s)(iii),
the Company is not required to pay any royalty, license fee or similar
compensation in connection with the conduct of its business as currently
conducted.
(iv) The
Company has not interfered with, infringed upon, misappropriated or otherwise
come into conflict with the Proprietary Rights of any other Person or committed
any acts of unfair competition and no claims have been asserted by any Person
alleging such interference, infringement, misappropriation, conflict or act of
unfair competition.
(v)
To the Knowledge of the Company, no Person is infringing upon its Proprietary
Rights.
(vi) There
are no Proprietary Rights developed by any shareholder, director, officer,
consultant or employee of the Company that are used in the Company’s business
and that have not been transferred to, or are not owned free and clear of any
Liens by, the Company.
(t) Material Agreements.
Schedule
2.1(t)(1) sets forth a true and complete list, and the Seller has
provided to the Purchaser complete copies (including all amendments and
extensions thereof and all waivers thereunder) or, if oral, an accurate and
complete description, of each of the following, whether written or oral, to
which the Company is a party or is otherwise bound (each, a “Material
Agreement”):
(i) all
loan agreements, indentures, mortgages, notes, installment obligations, capital
leases or other agreements or instruments relating to the borrowing of money (or
guarantees thereof);
(ii) all
continuing contracts or commitments for the future purchase, sale or manufacture
of products, materials, supplies, equipment or services requiring payment to or
from the Company;
(iii) all
contracts with any Governmental Authority;
(iv) all
leases, subleases or any other agreements or arrangements under which the
Company has the right or license to use any personal property, whether tangible
or intangible, owned or licensed by another Person;
(v) all
agreements or arrangements under which any other Person has the right or license
to use any real property or personal property, whether tangible or intangible,
owned, leased or licensed by the Company;
(vi) all
contracts or understandings which by their terms restrict the ability of the
Company to conduct its business or to otherwise compete, including as to manner
or place;
(vii) all
joint venture or similar agreements or understandings;
(viii)
lease and other agreements pertaining to the Real Property;
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(ix) all
collective bargaining, employment, severance, consulting, nondisclosure or
confidentiality agreements, and agreements requiring a charge of control or
parachute payments, or any other type of contract or understanding with any
officer, employee or consultant, other than pursuant to Employee Benefit Plans,
which is not immediately terminable by the Company without cost or other
liability to the Company;
(x) all
agreements with sales agents or representatives, wholesalers, distributors and
dealers;
(xi) all
agreements concerning any Hazardous Materials; and
(xii) all
other agreements, without regard to monetary amount, to which the Company has
been a party since January 1, 2007.
Except as
disclosed on Schedule
2.1(t)(2), the Company is not, and to the Knowledge of the Company, any
other party thereto is not, in default under any Material Agreement and no event
has occurred or is reasonably expected to occur which (after notice or lapse of
time or both) would become a breach or default under, or would otherwise permit
modification, cancellation, acceleration, or termination of, any Material
Agreement or would result in the creation of or right to obtain any Lien upon,
or any Person obtaining any right to acquire, any assets, rights or interests of
the Company. Except as disclosed on Schedule
2.1(t)(3): (i) each Material Agreement is in full force and
effect and is a valid and binding obligation of the Company, and, to the
Knowledge of the Company, the other parties thereto; (ii) there are no
unresolved disputes with respect to any Material Agreement; and (iii) the
Company has no reasonable basis to believe that any party to a Material
Agreement intends either to modify, cancel or terminate such Material
Agreement.
(u) Litigation. Except as
disclosed on Schedule
2.1(u), there is no claim, legal action, suit, arbitration, investigation
or other proceeding pending, or to the Knowledge of the Company, threatened
against or relating to the Company or its assets. Neither the Company
nor any of its assets are subject to any outstanding judgment, order, writ,
injunction or decree of any Governmental Authority. There is
currently no investigation or review by any Governmental Authority with respect
to the Company pending or, to the Knowledge of the Company, threatened, nor has
any Governmental Authority notified the Company of its intention to conduct the
same.
(v) Compliance with Laws.
The Company has all licenses, permits, and other authorizations from all
applicable Governmental Authorities necessary or desirable for the conduct of
its business as currently conducted or as currently expected to be conducted
following the Closing Date. Schedule 2.1(v)
hereto sets forth a true and complete list of all such licenses, permits and
other authorizations obtained by the Company, each of which is in full force and
effect and no violations thereunder have been recorded. The Company is in
compliance, and has complied, with all Laws applicable to it and has not
received any notice of any violation thereof.
(w) Environmental
Matters. Except as disclosed in Schedule
2.1(w):
(i)
During the period that the Company has owned, leased, or operated any properties
or facilities, neither it nor any other Person has disposed, released, or
participated in or authorized the release or threatened release of Hazardous
Materials on, from or under such properties or facilities. There is
not now nor has there ever been any presence, disposal, release or threatened
release of Hazardous Materials on, from or under any of such properties or
facilities, which may have occurred prior to the Company having taken possession
of any of such properties or facilities. For the purposes of this Agreement, the
terms “disposal,” “release,” and “threatened release” shall have the definitions
assigned thereto by the Comprehensive Environmental Response Compensation and
Liability Act of 1980, 42 U. S.C. § 9601 et seq., as amended (“CERCLA”).
(ii) The
operations of the Company and properties that the Company owns, leases, or
operates, are in compliance with Environmental Law. During the time
that the Company has owned, leased or operated its properties and facilities,
neither the Company nor any other Person has used, generated, manufactured or
stored on, under or about such properties or facilities or transported or
arranged for disposal to or from such properties or facilities, any Hazardous
Materials which may be considered a violation of applicable Environmental
Law.
(iii)
During the time that the Company has owned, leased or operated its properties
and facilities, there has been no litigation or proceeding brought or, to the
Knowledge the Company, threatened against the Company by, or any settlement
reached the Company with, any Persons alleging the presence, disposal, release
or threatened release of any Hazardous Materials, on from or under any of such
properties or facilities.
(iv)
There are no facts, circumstances or conditions relating to the properties and
facilities owned, leased or operated by the Company which could give rise to a
claim under any Environmental Law or to any material Environmental Costs and
Liabilities.
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(x) Related Party
Transactions. Except as disclosed on Schedule 2.1(x),
since January 1, 2005, no Related Party has been directly or indirectly a party
to any contract or other arrangement (whether written or oral) with the Company
providing for services (other than as an employee of the Company), products,
goods or supplies, rental of real or personal property, or otherwise requiring
payments from or to the Company. For purposes hereof, the term “Related Party” shall
mean any Seller or a director or officer of the Company or any member of his or
her family or any corporation, partnership, limited liability company, other
business entity or trust in which he or she or any member of his or her family
has greater than a ten percent (10%) interest, or of which he or she or any
member of his or her family is an officer, director, general partner, member or
trustee.
(y) Insurance. Schedule 2.1(y)(l)
sets forth a list of the Company’s insurance policies (including property,
casualty, liability (general, professional and directors and
officers) and workers’ compensation), listing for each policy the
identity of the insurance carrier, the policy period, the limits and retentions
and any special exclusions. Except as set forth on Schedule 2.1(y)(2),
such insurance coverage and coverage amounts are customary for the business
engaged in by the Company. Such policies are currently in full force
and effect, all premiums have been paid in full with respect thereto and the
Company has not received any notice of termination or modification from the
insurance carriers. All of the Company’s assets are insured, pursuant
to the insurance policies described in Schedule
2.1(y)(1),with respect to loss due to general liability, fire and other
risks in accordance with good industry practice and consistent with claims
historically incurred. Schedule 2.1(y)(l)
also sets forth a true and complete description of any self-insurance
arrangement by or affecting the Company, including any reserves established
thereunder, if any.
(z) Taxes.
(i) The
Company has timely filed with the appropriate taxing authorities all returns and
reports in respect of Taxes (“Returns”) required to
be filed by it (taking into account any extension of time to file granted to or
on the account of the Company). The information on such Returns is
complete and accurate in all material respects. The Company has paid
on a timely basis all Taxes (whether or not shown on any Return) due and
payable. There are no Liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of the Company. As used in
this Section
2.1(z), the Company shall mean, individually and collectively, (i) the
Company and (ii) any individual, trust, corporation, partnership or other entity
as to which the Company may be liable for Taxes incurred by such individual or
entity as a transferee or pursuant to any provision of federal, state, local or
foreign law or regulation.
(ii) No
unpaid (or unreserved in accordance with generally accepted accounting
principles applied on a consistent basis) deficiencies for Taxes have been
claimed, proposed or assessed by any taxing authority or other Governmental
Authority with respect to the Company for any Pre-Closing Period and, to the
best knowledge of the Company or the Seller, there are no pending audits,
investigations or claims for or relating to any liability in respect of Taxes of
the Company, nor has the Company been notified of any request for such an audit,
investigation or claim. The Company has not requested any extension
of time within which to file any currently unfiled returns in respect of any
Taxes and no extension of a statute of limitations relating to any Taxes is in
effect with respect to the Company.
(iii) (1)
The Company has made or will make provision for all Taxes payable by it with
respect to any Pre-Closing Period which are not payable prior to the Closing
Date; (2) the provisions for Taxes with respect to the Company for the
Pre-Closing Period are adequate to cover all Taxes with respect to such period;
(3) the Company has withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder or other third party; (4) all material
elections with respect to Taxes made by or, to the Knowledge of the Company,
affecting the Company as of the date hereof are set forth in Schedule
2.1(z)(iii)(4); (5) the Company is not a “consenting corporation” under
Section 341(f) of the Code, or any corresponding provision of state, local or
foreign law; (6) there are no private letter rulings in respect of any Tax
pending between the Company and any taxing authority; (7) the Company has never
been a member of an affiliated group within the meaning of Section 1504 of the
Code, or filed or been included in a combined, consolidated or unitary return of
any Person other than the Company; (8) the Company is not liable for Taxes of
any other Person, or is currently under any contractual obligation to indemnify
any Person with respect to Taxes, or is a party to any tax sharing agreement or
any other agreement providing for payments by the Company with respect to Taxes;
(9) the Company is not, and has not been, a real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (10) the Company is not a
person other than a United States person within the meaning of the Code; (11)
the Company is not a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a partnership for federal
income tax purposes; (12) the Company has not entered into any sale leaseback or
any leveraged lease transaction that fails to satisfy the requirements of
Revenue Procedure 75-21 (or similar provisions of foreign law); (13) the Company
has not agreed and is not required, as a result of a change in method of
accounting or otherwise, to include any adjustment under Section 481 of the Code
(or any corresponding provision of state, local or foreign law) in taxable
income; (14) the Company is not a party to any agreement, contract, arrangement
or plan that would result (taking into account the transactions contemplated by
this Agreement), separately or in the aggregate, in the payment of any “excess
parachute payments” within the meaning of Section 280G of the Code; (15) the
Company has never been a Subchapter S corporation (as defined in Section
1361(a)(1) of the Code); (16) Schedule 2.1(z)(iii)
contains a list of all jurisdictions to which any Tax is properly payable by the
Company; (17) the Company is not a personal holding company within the meaning
of Section 542 of the Code; (18) the Company has not made an election and is not
required to treat any of its assets as owned by another Person for federal
income tax purposes or as tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Code (or any corresponding
provision of state, local or foreign law).
8
(aa)
Employee Benefit
Plans.
(i) Schedule 2.1(aa)(i)
lists all Employee Benefit Plans which have been maintained or contributed to by
the Company or to which the Company has been obligated to contribute. Except as
set forth on Schedule
2.1(aa)(ii), neither the Company nor any of its ERISA Affiliates (as
defined below), maintains or has maintained, contributed to or been obligated to
contribute to a Pension Plan subject to Title IV of ERISA or Section 412 of the
Code. Except as set forth on Schedule
2.1(aa)(iii), each Pension Plan and Welfare Plan disclosed on Schedule 2.1(a)(i)
has been maintained in compliance with its terms and all material provisions of
ERISA and the Code, applicable thereto (including rules and regulations
thereunder).
(ii) The
Company has delivered or made available to Purchaser prior to the date hereof
complete and correct copies of (a) any employment agreements and any procedures
and policies relating to the employment of employees of the Company and the use
of temporary employees and independent contractors by the Company (including
summaries of any procedures and policies that are unwritten), (b) plan
instruments and amendments thereto for all Employee Benefit Plans and related
trust agreements, insurance and other contracts, summary plan descriptions,
summaries of material modifications and material communications distributed to
the participants of each Employee Benefit Plan (and written summaries of any
unwritten Employee Benefit Plans, modifications to Employee Benefit Plans and
employee communications), (c) to the extent annual reports on Form 5500 are
required with respect to any Employee Benefit Plan, the three most recent annual
reports and attached schedules for each Employee Benefit Plan as to which such
report is required to be filed, (d) where applicable, the most recent (A)
opinion, notification and determination letters, (B) actuarial valuation
reports, and (C) nondiscrimination tests performed under the Code (including
401(k) and 401(m) tests) for each Employee Benefit Plan, (e) all material
communications received from or sent to the Internal Revenue Service or the
Department of Labor (including a written description of any oral communication),
and (f) any Forms 5330 required to be filed by the Company or any Affiliate,
whether related to an Employee Benefit Plan or otherwise.
(iii)
Each Pension Plan identified in Schedule 2.1(aa)(i)
hereto which is intended to be “qualified” within the meaning of Section 401(a)
of the Code has been determined by the Internal Revenue Service (the “IRS”) to be so
qualified as of the date of the determination letter set forth on Schedule
2.1(aa)(iii), and the Company is not aware of any fact which would
indicate that the qualified status of each such Pension Plan or the tax exempt
status of each trust created thereunder has been adversely
affected. None of the Pension Plans identified in Schedule 2.1(aa)(i)
hereto are currently the subject of an audit or other investigation by the IRS,
the Department of Labor, the Pension Benefit Guaranty Corporation (the “PBGC”) or any other
Governmental Authority nor are any the subject of any law suits, complaints,
claims or legal proceedings of any kind.
(iv) No
“prohibited transaction,” as such term is defined in Section 406 of ERISA, has
occurred with respect to any Pension Plan or Welfare Plan identified in Schedule 2.1(aa)(i)
hereto which has resulted or may result in Liability to the Company or any of
the ERISA Affiliates. No breach of fiduciary responsibility under Part 4 of
Title I of ERISA has occurred which has resulted or may result in Liability to
the Company such Pension Plan or Welfare Plan. Except as disclosed on Schedule 2.1(aa)(iv),
no ERISA Affiliate has incurred any material Liability for any penalty or Tax,
nor, to the Knowledge of the Company, does any fact exist which would subject
the Company to any penalty or Tax under Sections 4971, 4972, 4975, 4976, 4977,
4978, 4979, 4980, 4980B, 4980D, 5000 of the Code or Section 502 of ERISA with
respect to any such Pension Plan or Welfare Plan.
(v)
Except as disclosed in Schedule 2.1(aa)(v),
each Welfare Plan identified thereon has, to the extent applicable, at all times
been in compliance with the provisions of Section 4980B of the Code and Parts 6
and 7 of Title I of ERISA. Except as disclosed on Schedule 2.1(aa)(v)
and except as described in the immediately preceding sentence, none of the
Welfare Plans provides or promises post-retirement health or life benefits to
current employees or retirees of the Company or its ERISA
Affiliates.
(vi)
Except as disclosed on Schedule 2.1(aa)(vi), all contributions required to be
paid under the terms of each Employee Benefit Plan identified in Schedule
2.1(aa)(i) hereto have been made. As of and including the Closing
Date, the Company shall have made all contributions required to be made by it up
to and including the Closing Date with respect to each Employee Benefit Plan, or
adequate accruals therefor will have been provided for and will be reflected on
an unaudited balance sheet of the Company provided to Purchaser by the
Company.
(vii)
Except as disclosed in Schedule 2.1(aa)(vii)
and in subsection (ix) below, no Pension Plan identified in Schedule 2.1(aa)(i)
hereto or trust created thereunder has been terminated or partially terminated
by the Company and the Company has no knowledge of any events which would cause
a voluntary or involuntary termination of any such Pension Plan.
(viii)
Neither the Company nor any of its ERISA Affiliates has maintained or
contributed to, been obligated or required to contribute to, or withdrawn in a
partial or complete withdrawal from, a “Multiemployer Plan,” as such term is
defined in Section 4001(a)(3) of ERISA.
9
(ix) With
respect to each Pension Plan identified in Schedule 2.1(aa)(i)
subject to Title IV of ERISA (A) neither the Company nor any ERISA Affiliate has
withdrawn from any such Plan during a plan year in which it was a “substantial
employer” (within the meaning of Section 4001 (a)(2) of ERISA), (B) neither the
Company nor any ERISA Affiliate has filed a notice of intent to terminate any
such Pension Plan or adopted any amendment to treat any such Pension Plan as
terminated, (C) the PBGC has not instituted proceedings to terminate any such
Pension Plan, and no other event or condition has occurred which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Pension Plan, (D) no
accumulated funding deficiency, whether or not waived, exists with respect to
any such Pension Plan and no condition has occurred or exists which by the
passage of time would be expected to result in an accumulated funding deficiency
as of the last day of the current plan year of any such Pension Plan, (E) all
required premium payments to the PBGC have been paid when due, (F) no reportable
event (as described in Section 4043 of ERISA) for which the notice requirements
to the PBGC have not been waived, has occurred with respect to any such Pension
Plan, (G) no amendment with respect to which security is required under Section
307 of ERISA has been made or is reasonably expected to be made to any Pension
Plan, and (H) as of the last day of the most recent prior plan year, the market
value of assets under each such Pension Plan subject to the minimum funding
standards equaled or exceeded the present value of benefit liabilities
thereunder as determined in accordance with the actuarial valuation assumptions
set forth in such Pension Plan.
(x)
Except as required by law or by the terms of an Employee Benefit Plan, the
Company has not proposed or agreed to any changes to any Employee Benefit Plan
that would cause an increase in benefits under any such Employee Benefit Plan
(or the creation of new benefits or plans) nor to change any employee coverage
which would cause an increase in the expense of maintaining any such Employee
Benefit Plan.
(xi) No
Employee Benefit Plan provides benefits or payments based on or measured by the
value of an equity security of or interest in the Company or any ERISA
Affiliate.
(xii)
Except as disclosed on Schedule 2.1(aa)(ii),
no Employee Benefit Plan is a plan, agreement or arrangement providing for
benefits, in the nature of severance benefits, and the Company does not have
outstanding any liabilities with respect to any severance benefits available
under any Employee Benefit Plan.
(bb)
Employee
Matters.
(i) The
Company has provided to the Purchaser lists all current employees of the Company
and their hourly rates of compensation or base salaries (as applicable), the
date of last increase in such compensation or salaries, and all other
compensation paid to such employees. To the Knowledge of the Company,
no employee of the Company has any plans to terminate employment with the
Company. The Company has complied with all Laws relating to the
hiring of employees and the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the
withholding and payment of social security and other Taxes.
(ii)
Except as set forth on Schedule
2.1(bb): (A) the Company is not delinquent in payments to any
of its employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them to date or amounts required to
be reimbursed to such employees and, upon termination of the employment of any
such employees, neither the Purchaser nor the Company will by reason of any
event, fact or circumstance occurring or existing prior to the Closing be liable
to any of such employees for severance pay or any other payments; (B) there is
no unfair labor practice complaint against the Company pending before the
National Labor Relations Board or any other Governmental Authority; (C) there is
no labor strike, material dispute, slowdown or stoppage actually pending or, to
the Knowledge of the Company, threatened against the Company; (D) the Company
has not experienced any significant deterioration in its relationship with its
employees; and (E) no labor union currently represents the employees of the
Company and, to the Knowledge of the Company, no labor union has taken any
action with respect to organizing the employees of the Company.
(iii)
Except for payment of the Purchase Price to the Seller, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will: (A) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of the Company, under any
Employee Benefit Plan or otherwise; (B) increase any compensation or benefits
payable under any Employee Benefit Plan or otherwise; or (C) result in the
acceleration of the time of payment or vesting of any such compensation
benefits. No Employee Benefit Plan or other arrangement provides
benefits or payments contingent upon, triggered by or increased as a result of a
change in the ownership or effective control of the Company.
10
(cc)
Bank Accounts and
Powers of Attorney. Schedule 2.1(cc) sets
forth a true and complete list of (i) each bank, broker, or other financial
institution in or with which the Company has a depository account, investment or
brokerage account, checking account, trust account, escrow account or safe
deposit box; (ii) all account numbers for such accounts; and (iii) the names of
all Persons who are authorized signatories on such accounts or who otherwise
have access thereto. Except as set forth on Schedule 2.1(cc), the
Company has not granted any general or special powers of attorney to act on its
behalf.
(dd)
Brokerage Fees.
The Company has not engaged or authorized any broker, investment banker or other
Person to act on its behalf, directly or indirectly, as a broker or finder who
might be entitled to a fee, commission or other remuneration in connection with
the transactions contemplated by this Agreement.
(ee)
Inventory. The
inventory of the Company (including that reflected on the Financial Statements)
is in merchantable condition, and suitable and usable or salable in the ordinary
course of business for the purposes for which it was intended, and has been
reflected on the Financial Statements and carried on the books of account of the
Company in accordance with GAAP applied on a consistent
basis. Without limiting the generality of the foregoing, such
inventory does not include any obsolete or defective materials or any excess
stock items, except as have been reserved against as reflected on the Financial
Statements or the books of the Company. The reserves created by the
Company to cover returns have been calculated and carried on the books of
account of the Company in accordance with GAAP applied on a consistent
basis.
(ff)
Restrictions on
Business Activities. There is no agreement, judgment, injunction, order,
or decree binding upon the Company or any Seller or, to the Knowledge of the
Company, any employee of the Company, that has or could reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
of the Company or the conduct of business by the Company as currently conducted
or as currently expected to be conducted by the Company following the
Closing.
(gg)
Books and
Records. All accounts, books, ledgers and official and other records
prepared and kept by the Company are true, complete, and accurate in all
material respects and have been kept in accordance with sound business
practices.
(hh)
Trade
Relations. Schedule 2.1(hh) sets
forth the top ten (10) customers and top ten (10) suppliers of the Company for
the year ended December 31, 2007. The Company has not received any
written or oral notice from any material customers of the Company, or any
material suppliers to the Company, that such customer or supplier intends to
terminate, cancel or limit or adversely modify or change its business
relationship with the Company. To the Knowledge of the Company, no
such termination, cancellation or limitations or any adverse modification or
change will arise as a result of the execution, delivery, or performance of this
Agreement or any Ancillary Documents to which the Company is a
party.
(ii)
Investment
Company. The Company is not, and is not an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended.
(jj)
Application of
Takeover Protections. The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchaser as a
result of the Purchaser and the Company fulfilling their obligations or
exercising their rights under this Agreement and the Ancillary Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Purchaser’s ownership of the Shares.
(kk)
No Market
Manipulation. The Company and its Affiliates have not taken, and will not
take, directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Common Stock or affect
the price at which the Common Stock may be issued or resold, provided, however,
that this provision shall not prevent the Company from engaging in investor
relations/public relations activities consistent with past
practices.
(ll)
No Disagreements with
Accountants and Lawyers. There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company, including but not limited to disputes or conflicts over
payment owed to such accountants and lawyers.
11
(mm) DTC
Status. The Company’s transfer agent is a participant in and
the Common Stock is eligible for transfer pursuant to the Depository Trust
Company Automated Securities Transfer Program. The name, address,
telephone number, fax number, contact person and email address of the Company
transfer agent is set forth on Schedule 2.1(mm)
hereto.
(nn)
Disclosure. No
representation or warranty made by the Company in this Agreement, nor any
information contained in any Ancillary Document to be delivered by the Company
or the Seller pursuant hereto, or any information relating to the Company
provided or made available to the Purchaser in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
or will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading in any material respect in light of
the circumstances under which they were made.
2.2 Representations and
Warranties of the Seller. The Seller hereby represents and warrants to
the Purchaser as follows:
(a) Authority. The
Seller has all necessary power or legal capacity and authority to enter into and
deliver this Agreement and each of the Ancillary Documents to which the Seller
is a party, to carry out the Seller’s obligations hereunder and under such
Ancillary Document and to consummate the transactions contemplated hereby and by
such Ancillary Documents. All actions, authorizations, and consents
required by Law for the execution, delivery, and performance by the Seller of
this Agreement and each Ancillary Document to which the Seller is a party, and
the consummation of the transactions contemplated hereby and thereby, have been
properly taken or obtained.
(b) Execution and
Delivery. This Agreement has been, and each Ancillary Document to which
it is a party will be at the Closing, duly authorized, executed, and delivered
by the Seller and constitutes, or will constitute at the Closing, a legal, valid
and binding obligation of the Seller, enforceable against the Seller in
accordance with their respective terms and conditions, except as enforceability
thereof may be limited by applicable bankruptcy, reorganization, insolvency, or
other similar laws affecting or relating to creditors’ rights generally or by
general principles of equity.
(c) No Conflicts. The
execution, delivery and performance by the Seller of this Agreement and each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in a breach of any term, condition or provision of, or
require the consent of any Person under, or result in the creation of or right
to create any Lien upon any of the assets of the Seller under, (i) any Laws to
which the Seller or any of its assets are subject, (ii) any permit, judgment,
order, writ, injunction, decree, or award of any Governmental Authority to which
the Seller or any of its assets are subject, (iii) the certificate of formation
or incorporation or the operating agreement or bylaws of the Seller (or their
equivalent), or (iv) any license, indenture, promissory note, bond, credit or
loan agreement, lease, agreement, commitment or other instrument or document to
which the Seller is a party or by which the Seller or any of its assets are
bound.
(d) Governmental
Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority, is
required to be obtained by the Seller in connection with or as a result of the
execution and delivery of this Agreement or any of the Ancillary Documents, or
the performance of the Seller’s obligations hereunder or
thereunder.
(e) Organization,
Standing, and Qualification. The Seller is a corporation duly organized, validly
existing, and in good standing under the Laws of the jurisdiction of its
organization. The Seller has all requisite power and authority to own, lease,
and operate its properties and to carry on its business as now being
conducted.
(f) Ownership. The Seller
owns, beneficially and of record, free and clear of any Liens, such number,
class, and series of Shares as set forth on Schedule 2.2(f). At
the Closing, upon delivery of and payment for such Shares as provided in this
Agreement, all of the Shares owned by the Seller shall be transferred to the
Purchaser, and the Purchaser shall have good and valid title to the Shares, free
and clear of any Liens. There are no outstanding subscriptions,
options, warrants, calls, contracts, demands, commitments, convertible or
exchangeable securities, profits interests, conversion rights, preemptive
rights, rights of first refusal or other rights, agreements, arrangements or
commitments of any nature whatsoever under which the Seller is or may become
obligated to sell, assign, or transfer any shares of capital stock of the
Company owned by the Seller.
(g) Brokerage Fees. The
Seller has not engaged or authorized any broker, investment banker, or other
Person to act on its behalf, directly or indirectly, as a broker or finder who
might be entitled to a fee, commission, or other remuneration in connection with
the transactions contemplated by this Agreement.
12
2.3 Representations and
Warranties of the Purchaser. The Purchaser hereby represents and warrants
to the Sellers as follows:
(a)
Authority. The
Purchaser has all necessary power and authority to enter into and deliver this
Agreement and each of the Ancillary Documents to which it is a party, to carry
out its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and by the Ancillary Documents. All actions,
authorizations, and consents required by Law for the execution, delivery, and
performance by the Purchaser of this Agreement and each Ancillary Document to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby, have been, or prior to the Closing will have been, properly
taken or obtained.
(b) Execution and
Delivery. This Agreement has been, and each Ancillary Document to which
the Purchaser is a party will be at the Closing, duly authorized, executed and
delivered by the Purchaser and constitutes a legal, valid, and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms and conditions, except as enforceability thereof may be limited
by applicable bankruptcy, reorganization, insolvency or other similar laws
affecting or relating to creditors’ rights generally or by general principles of
equity.
(c) No Conflicts. The
execution, delivery, and performance by the Purchaser of this Agreement and each
Ancillary Document to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not violate,
conflict with or result in a breach of any term, condition or provision of, or
require the consent of any Person under, or result in the creation of or right
to create any Lien upon any of the assets of the Purchaser under, (i) any Laws
to which the Purchaser or any of its assets are subject, (ii) any judgment,
order, writ, injunction, decree or award of any Governmental Authority to which
the Purchaser or any of its assets are subject, (iii) the Certificate of
Incorporation or Bylaws of the Purchaser, or (iv) any license, indenture,
promissory note, bond, credit or loan agreement, lease, agreement, commitment or
other instrument or document to which the Purchaser is a party or by which any
of its assets are bound, except where, in the case of clause (iv), such
violation, conflict, breach, etc. would not, individually or in the aggregate,
have a Material Adverse Effect on the Purchaser.
(d) Governmental
Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority, is
required to be obtained by the Purchaser in connection with or as a result of
the execution and delivery of this Agreement or any of the Ancillary Documents,
or the performance of its obligations thereunder.
(e) Organization,
Standing and Qualification. The Purchaser is a corporation duly incorporated,
validly existing, and in good standing under the Laws of the State of Nevada.
The Purchaser has all requisite power and authority to own, lease, and operate
its properties and to carry on its business as now being conducted.
(f) Brokerage Fees. The
Purchaser has not engaged or authorized any broker, investment banker, or other
Person to act on its behalf, directly or indirectly, as a broker or finder who
might be entitled to a fee, commission, or other remuneration in connection with
the transactions contemplated by this Agreement.
ARTICLE
III
3.1 Conduct of Business Pending
the Closing. The Company hereby covenants and agrees that, prior to the
Closing, except as contemplated by this Agreement or as set forth in Schedule 3.1, it
shall (and each of the Sellers hereby covenants and agrees to cause the Company
to comply with the provisions of this Section
3.1):
(a)
conduct its business in the usual, regular and ordinary course consistent with
recent past practice and use its commercially reasonable efforts to take, or
refrain from taking, as the case may be, any action which would cause the
representations and warranties made in Section 2.1,
including, without limitation, Section 2.1(o), to
become untrue or inaccurate; and
(b) use
its commercially reasonable efforts to maintain and preserve its business
organization and relationships with its customers, vendors, suppliers and others
having business dealings with it and retain the services of its officers and
employees.
13
3.2 No Solicitation. The
Company shall not, and the Seller shall not, directly or indirectly (through
their respective Affiliates, employees, agents or representatives), initiate
contact with, solicit, encourage, respond to or participate in any way in
discussions or negotiations with, or provide any information or assistance to,
or take any other action intended or designed to facilitate the efforts of
(including without limitation, the execution of any letter of intent, term sheet
or definitive agreement), any Person other than the Purchaser concerning any
acquisition of equity interests in the Company or any significant portion of the
assets of the Company (including by merger or other similar transaction). The
Company or the Seller shall promptly notify the Purchaser if they are contacted
or approached in respect of any such transaction, as well as the material terms
of the proposed transaction and the identity of the contacting
party.
3.3 Reasonable Efforts;
Assurances. Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use all reasonable efforts to take
or cause to be taken all action, and to do or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including using commercially
reasonable efforts to (a) obtain all consents or approvals required or desirable
in connection with the transactions contemplated hereby, (b) effect promptly all
necessary or appropriate registrations or filings with any Governmental
Authorities, and (c) fulfill or cause the fulfillment of the conditions to
Closing set forth in Article IV. The
parties shall use their respective reasonable efforts to consummate the
transactions contemplated by this Agreement on or before April 30, 2008, and
agree to act in good faith with respect to the consummation of such
transactions. In case at any time after the Closing Date any further
action is reasonably necessary or desirable to carry out the purposes of this
Agreement, each of the parties hereto shall take such further action without
additional consideration.
(a) Prior
to the Closing, the Company shall afford to the Purchaser and its accountants,
counsel, and other representatives full access upon reasonable prior notice and
during normal business hours to all of the Company’s properties, books,
accounts, records, contracts, and personnel and, during such period, the Company
shall, and shall cause its accountants, counsel, and other representatives to,
furnish promptly to the Purchaser and its representatives all information
concerning the Company’s business, properties and personnel as the Purchaser or
its representatives may reasonably request; provided, however, that such
investigation shall be conducted in a manner so as to minimize any unreasonable
disruptions to the operations of the business and, consistent with the
confidential nature of the transaction, the Purchaser shall not contact any
customers or employees of the Company without the prior consent of the
Company.
(b) From
time to time for a period of three (3) years after the Closing, the Purchaser
shall afford, and shall cause the Company to afford, upon reasonable prior
notice and during normal business hours of the Company, to the Seller and its
accountants, counsel, and other representatives access to the books, records,
and personnel of the Company with respect to matters relating to the operations
of the Company prior to the Closing Date to the extent that they have a
legitimate business purpose for the same (e.g., for Tax purposes or for purposes
of defending claims) and provided that such access does not unreasonably
interfere with the operations of the Company.
3.5 Notification of Certain
Matters. The Company and Purchaser shall promptly notify each other in
writing:
(a) if,
subsequent to the date of this Agreement and prior to the Closing Date, either
of them becomes aware of the occurrence of any event or the existence of any
fact that would render any of the representations and warranties made by it
(and, in case of the Company, made by the Seller) in Sections 2.1, 2.2 or
2.3, as the
case may be, if made on or as of the date of such event or the Closing Date,
inaccurate or untrue (other than with respect to representations and warranties
made as of a specified date);
(b) of
any breach by either of them of any of its (and, in case of the Company, the
Seller’s) covenant or agreement contained in this Agreement;
(c) of
any notice or other communication from any third party alleging that the consent
of such third party is or may be required in connection with the transactions
contemplated by this Agreement;
(d) of
any notice or other commuznication from any Governmental Authority in connection
with or relating to the transactions contemplated hereby; or
(e) if
the Company or the Seller become aware of any material deterioration in the
relationship with any customer, supplier, or employee of the
Company.
14
3.6 Public Announcements.
No party will issue or make or cause the publication of, any press release or
other public announcement with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties
hereto; provided, however, that nothing herein will prohibit any party from
issuing, making, or causing the publication of any such press release or public
announcement to the extent that such party is advised by its legal counsel that
such action is required by Law, in which case the party making such
determination will use reasonable efforts to allow the other parties reasonable
time to review and comment on such release or announcement in
advance. For the purposes of this Section, the Company shall be
entitled to give such prior written consent on behalf of the
Seller.
3.7 Transfer Taxes. The
Seller shall pay all transfer taxes, if any, payable in connection with the
consummations of the transactions contemplated by this Agreement.
3.8 Further Assurances;
Cooperation. Each party hereto will, before, at, and after the Closing,
execute and deliver such instruments and take such other actions as the other
party or parties, as the case may be, may reasonably require in order to carry
out the intent of this Agreement. Without limiting the generality of
the foregoing, at any time after the Closing, at the request of the Company or
the Purchaser, and without further consideration, the Seller (a) will execute
and deliver such instruments of sale, transfer, conveyance, assignment and
confirmation and take such action as the Company or the Purchaser may reasonably
deem necessary or desirable in order to more effectively transfer, convey and
assign to the Purchaser, and to confirm the Purchaser’s title to, the Shares,
and (b) will execute such documents, take such action, and provide such
assistance (and shall cause its agents and representatives to provide such
assistance) as the Company or the Purchaser may reasonably deem necessary or
desirable in order to prepare and file any future SEC Documents that the Company
seeks to file with the SEC under the Securities Act or the Exchange
Act.
ARTICLE
IV
4.1 Conditions to Obligation of
the Seller. The obligation of the Seller to consummate the transactions
contemplated hereby shall be subject to the satisfaction on or prior to the
Closing of the following conditions (any of which may be waived on behalf of the
Seller in writing by the Company):
(a) the
Purchaser shall have performed and complied with all obligations and agreements
required to be performed and complied with by it hereunder on or prior to the
Closing;
(b) the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct as of the Closing Date as if made as of such date
(other than those representations and warranties that address matters only as of
a particular date or only with respect to a specific period of time, which need
only be true and correct as of such date or with respect to such
period);
(c) there
shall be no order, decree, or ruling by any Governmental Authority nor any
action, suit, claim or proceeding by or before any Governmental Authority shall
be pending, which seeks to restrain, prevent or materially delay or restructure
the transactions contemplated hereby or by any Ancillary Document, or which
otherwise questions the validity or legality of any such
transactions;
(d) there
shall be no statute, rules, regulation, or order enacted, entered, or enforced
or deemed applicable to the transactions contemplated hereby which would
prohibit or, render illegal the transactions contemplated by this Agreement or
the Ancillary Documents;
(e) each
of the documents to be delivered by the Purchaser pursuant to Section 5.3 shall
have been so delivered by the Purchaser at the Closing.
4.2 Conditions to Obligation of
the Purchaser. The obligation of the Purchaser to consummate the
transactions contemplated hereby shall be subject to the satisfaction on or
prior to the Closing of the following conditions (any of which may be waived in
writing by the Purchaser):
(a) the
Seller and the Company shall have performed or complied with all obligations and
agreements required to be performed or complied with by any of them hereunder on
or prior to the Closing (including, without limitation, those specified in Section
5.2);
15
(b) the
representations and warranties of the Seller and the Company contained in this
Agreement shall be true and correct as of the Closing Date as if made as of such
date (other than those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time, which
need only be true and correct as of such date or with respect to such
period);
(c) there
shall be no order, decree, or ruling by any Governmental Authority nor any
action, suit, claim, or proceeding by or before any Governmental Authority shall
be pending, which seeks to restrain, prevent, or materially delay or restructure
the transactions contemplated hereby or any Ancillary Document, or which
otherwise questions the validity or legality of any such
transactions;
(d) there
shall be no statute, rules, regulation, or order enacted, entered, or enforced
or deemed applicable to the transactions contemplated hereby which would
prohibit or render illegal the transactions contemplated by this Agreement or
the Ancillary Documents;
(e) the
Company and the Seller shall have obtained on terms and conditions satisfactory
to the Purchaser all consents and approvals of third parties (including
Governmental Authorities) that are required (i) for the consummation of the
transactions contemplated hereby or any Ancillary Document, or (ii) in order to
prevent a breach of, a default under or a termination, material change in the
terms or conditions or material modification of, any Material Agreement as a
result of the consummation of the transactions contemplated hereby;
(f) the
Company and the Seller shall have delivered evidence satisfactory to the
Purchaser that all Liabilities of the Company have been satisfied, compromised,
or otherwise extinguished as of the Closing; and
(g) each
of the documents to be delivered by Sellers or the Company pursuant to Section
5.2 shall have been so delivered by Sellers or the Company at the
Closing.
ARTICLE
V
5.1 Closing. The closing
of the transactions contemplated hereby (the “Closing”) shall take
place at the offices of Indeglia & Xxxxxx, 0000 Xxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000, as soon as practicable but in no event later than
10:00 a.m., Pacific time, on the third (3rd) Business Day after the date on
which each of the conditions set forth in Sections 4.1 and
4.2 have been
satisfied or waived by the party or parties entitled to the benefit of such
conditions, or at such other place, at such other time or on such other date as
the parties may mutually agree. The date on which the closing
actually occurs is referred to herein as the “Closing
Date”.
5.2 Deliveries by the Seller and
the Company. Subject to the terms and conditions hereof, the Seller and
the Company shall deliver the following to the Purchaser at or before the
Closing:
(a)
certificates, duly endorsed for transfer or accompanied by a duly executed blank
stock power, in either case with medallion signature guarantees, and with
evidence of payment of any applicable stamp or transfer taxes, representing all
of the Shares;
(b)
certified resolutions of the Seller’s board of directors authorizing the
transactions contemplated by this Agreement and the endorsement and negotiation
of the certificates representing all of the Shares;
(c) the
corporate minute book of the Company, including the articles of incorporation,
as amended, the bylaws, as amended, all minutes of the stockholders, board of
directors, and committees thereof, and the corporate seal;
(d) all
stock ledgers for all series of preferred stock of the Company;
(e) a
certified list of common stockholders from the Company’s transfer agent, dated
as of the date of Closing;
16
(f) all
accounting books and records for the Company commencing January 1, 2001 through
the present;
(g) all
SEC XXXXX codes for the Company;
(h)
resolutions of the board of directors appointing Xxxxx Xxxxxxx as a director of
the Company, effective as of the Closing;
(i)
resignations of all officers and directors of the Company, effective [as of the
Closing];
(j) a
letter of instruction to the Company’s transfer agent signed by Xxxxxx
Xxxxxxxxxxx on behalf of the Company advising the transfer agent of the change
of officers and directors contemplated by this Agreement;
(k) a
letter to the Company’s current certifying accountants signed by Xxxxxx
Xxxxxxxxxxx on behalf of the Company advising the certifying accountants of the
change of officers and directors contemplated by this Agreement;
(l)
evidence satisfactory to the Purchaser that all Liabilities of the Company have
been satisfied, compromised, or otherwise extinguished as of the
Closing;
(m)
evidence that the Company and/or the Seller have obtained on terms and
conditions reasonably satisfactory to the Purchaser all consents and approvals
of third parties (including Governmental Authorities) that are required (i) for
the consummation of the transactions contemplated hereby or (ii) in order to
prevent a material breach of, a default under or a termination, material change
in the terms or conditions or material modification of, any Material Agreement
as a result of the consummation of the transaction contemplated hereby;
and
(n)
certificates of the Company and the Seller, in form and substance reasonably
satisfactory to the Purchaser, dated the Closing Date, certifying compliance
with the conditions set forth in Sections 4.2(a) and
4.2(b).
5.3 Actions or Deliveries by the
Purchaser. Subject to the terms and conditions hereof, the Purchaser
shall deliver the following to the Seller at or before the Closing:
(a) the
Purchase Price in accordance with Section 1.3;
and
(b) a
certificate of the Purchaser, in form and substance reasonably satisfactory to
the Seller, dated the Closing Date and signed by the President of the Purchaser
evidencing compliance with the conditions set forth in Sections 4.1(a) and
4.1(b).
5.4 Other Documents. The
parties agree to execute and deliver on or before the Closing all other
documents that are reasonably necessary or desirable in order to consummate the
transactions contemplated hereby and to carry out the intent of this
Agreement.
5.5 Expenses. Except as
otherwise specifically provided herein, the Seller and the Company, on one hand,
and the Purchaser, on the other hand, shall pay their own expenses, including,
but not limited to, attorneys’, accountants’, financial advisors’ and brokers’
or finders’ fees, incurred in connection with the transactions contemplated
hereby (“Expenses”). It is the
express intention of the parties that the Seller shall personally be responsible
for all Expenses incurred by the Company, its Affiliates, or their respective
agents in connection with the transactions contemplated hereby.
17
ARTICLE
VI
6.1 Termination. This
Agreement may be terminated at any time prior to the Closing:
(a) by
mutual consent of the Purchaser and the Seller;
(b) by
either the Purchaser or the Seller if the Closing shall not have been
consummated on or before April 30, 2008 (provided that the terminating party is
not otherwise in material breach of its obligations under this Agreement), which
date may be extended by written agreement of the Purchaser and the Seller;
or
(c) by
either the Purchaser or the Seller, if a permanent injunction or other order by
any Federal or state court which would make illegal or otherwise restrain or
prohibit the consummation of the transactions contemplated hereby shall have
been issued and shall have become final and non-appealable.
6.2 Effect of
Termination. In the event of the termination of this Agreement in
accordance with this Article VI, this
Agreement shall thereafter become void and there shall be no liability on the
part of any party hereto or their respective directors, officers, stockholders
or agents, except that any such termination shall be without prejudice to the
rights of any party hereto arising out of any breach by any other party of this
Agreement.
ARTICLE
VII
7.1
Survival;
Indemnity. The representations, warranties, covenants, and agreements of
the parties contained in this Agreement, and the indemnification rights set
forth in this Article
VII, shall survive the Closing. Notwithstanding the foregoing, the
representations and warranties of the parties shall only so survive until the
third anniversary of the Closing Date; provided, however, that the
representations and warranties contained in (A) Section 2.1(a), (b),
(e) (but only with respect to due organization) or (f) shall survive in
perpetuity, and (B) Section 2.1(w), (z), or
(aa) shall survive until sixty (60) days after the expiration of the
applicable statute of limitations (the period from the Closing Date to such
applicable date is hereinafter referred to as the “Survival Period”).
Nothing contained in the foregoing sentence shall prevent recovery under this
Article after the expiration of the Survival Period so long as the party making
a claim or seeking recovery complies with the provisions of clause (x) and (y)
of the following sentence. No party shall have any claim or right of recovery
for any breach of a representation, warranty, covenant, or agreement unless (x)
written notice is given in good faith by that party to the other party of the
representation, warranty, covenant, or agreement pursuant to which the claim is
made or right of recovery is sought setting forth in reasonable detail the basis
for the purported breach of the representation, warranty, covenant, or
agreement, the amount or nature of the claim being made, if then ascertainable,
and the general basis therefor and (y) such notice is given prior to the
expiration of the Survival Period.
7.2 General Indemnification by
the Seller and the Company. The Seller and the Company, jointly and
severally, agree to indemnify the Purchaser and its officers, directors,
shareholders, employees, Affiliates, attorneys, accountants and agents (the
“Purchaser
Parties”), and hold them harmless from and against any and all damages,
losses, liabilities, costs, and expenses (including, without limitation,
reasonable expenses of investigation and reasonable attorneys’ fees and expenses
in connection with any action, suit or proceeding) (collectively, “Purchaser Damages”)
incurred or suffered by the Purchaser Parties as a result of any breach or
inaccuracy of any representation, warranty, covenant, or agreement of the Seller
or the Company contained in this Agreement, or any certificate delivered by the
Seller or the Company pursuant to this Agreement.
18
7.3 Indemnification by
Purchaser. The Purchaser agrees to indemnify the Seller from and after
the Closing and to hold the Seller and its officers, directors, stockholders,
employees, Affiliates, attorneys, accountants and agents (the “Seller Parties”)
harmless from and against any and all damages, losses, liabilities, costs, and
expenses (including, without limitation, reasonable expenses of investigation
and reasonable attorneys ‘ fees and expenses in connection with any action, suit
or proceeding) (collectively, “Seller Damages”)
incurred or suffered by the Seller Parties arising out of any breach of any
representation, warranty, covenant or agreement of the Purchaser.
(a)
Notification of
Claims. Upon any party (the “Indemnified Party”)
becoming aware of a fact, condition, or event that constitutes a basis for a
claim for Purchaser Damages or Seller Damages, as the case may be, in respect
thereof against the other party (the “Indemnifying Party”)
under Section
7.2 or 7.3, if such a claim
is to be made, the Indemnified Party will with reasonable promptness and
specificity notify the Indemnifying Party or Parties in writing of such fact,
condition or event. The failure to notify the Indemnifying Party or
Parties under this Section 7.4 shall not
relieve any Indemnifying Party of any liability that it may have to the
Indemnified Party except to the extent that such failure to notify shall have
resulted in a waiver of any lawful and valid affirmative defense to any
third-party claim or otherwise materially prejudices the Indemnifying Party or
Parties in connection with the administration or defense of such third-party
claim.
(b) Third-Party
Claims.
(i) Upon
receipt by the Indemnifying Party or Parties of any notice of claim for
indemnification hereunder arising from a third-party claim, the Indemnifying
Party or Parties shall assume the administration and defense of such third-party
claim with counsel that is reasonably satisfactory to the Indemnified Party and
shall proceed with the administration and defense of such third-party claim
diligently and in good faith; provided, however, that any
Indemnifying Party shall be entitled to assume the administration and defense of
such third-party claim only if it agrees in writing with the Indemnified Party
that it is obligated to indemnify the Indemnified Party pursuant to this Article
with respect to such third-party claim; and provided, further that no
Indemnifying Party shall be entitled to assume the administration and defense of
any third-party claim that (A) seeks an injunction or other equitable relief
that might materially and adversely affect any Indemnified Party, or (B)
involves any criminal action or any claim that could reasonably be expected to
result in a criminal action against any Indemnified Party. Each
parties’ counsel in connection with this transaction shall be deemed to be
reasonably satisfactory to the other party for purposes of this Section 7.4(b)(i).
The Indemnified Party shall be fully consulted by the Indemnifying Party or
Parties and shall have the right to participate, at its own expense, in the
investigation, administration and defense of such third-party
claim. Any party hereto receiving notice of any proposed settlement
of any such third-party claim shall promptly provide a copy of such notice to
the other parties hereto. The Indemnifying Party or Parties shall not
have the right to settle or compromise any third-party claim for which
indemnification is being sought hereunder without the consent of the Indemnified
Party unless as a result of such settlement or compromise the Indemnified Party
is fully discharged and released from any and all liability with respect to such
third-party claim. The Indemnified Party shall make available to the
Indemnifying Party or Parties and its counsel all books, records, documents and
other information relating to any third-party claim for which indemnification is
sought hereunder, and the parties to this Agreement shall render to each other
reasonable assistance in the defense of any such third-party claim.
(ii)
Notwithstanding any other provision of this Agreement, if the Indemnified Party
is not entitled to defend a third-party claim under Section 7.4(b)(i),
the Indemnified Party shall have the absolute right, at its election (to be
exercised in its sole discretion by written notice to the Indemnifying Party or
Parties) to assume from the Indemnifying Party or Parties the administration and
defense of any such third-party claim against the Indemnified Party with counsel
that is reasonably satisfactory to the Indemnifying Party. In such event, the
Indemnified Party shall proceed with the administration and defense of such
third-party claim(s) diligently and in good faith, and the Indemnifying Party
shall be fully consulted by the Indemnified Party or Parties and shall have the
right to participate, at its own expense, in the investigation, administration
and defense of such third-party claim. The Indemnifying Party or Parties shall
be responsible for the costs and expenses of the administration and defense of
such claim(s) incurred prior to the Indemnified Party or Parties’ assumption of
the administration and defense of such claim(s) and shall not be responsible for
costs and expenses incurred after such assumption, and the Indemnifying Party
shall have the right to participate in, but not control, the defense of such
claim(s) at the sole cost and expense of the Indemnifying Party.
19
ARTICLE
VIII
8.1 Certain Definitions.
For purposes of this Agreement, the following terms and phrases shall have the
following meanings:
“Affiliate” shall have
the meaning ascribed to it in Rule 405 promulgated under the Securities
Act.
“Business Day” shall
mean any Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in the State of New York are authorized by law,
regulation or executive order to close.
“Code” shall mean the
Internal Revenue Code of 1986, as amended.
“Employee Benefit
Plan” shall mean any “employee benefit plan” as defined in Section 3(3)
of ERISA and any other plan, policy, program, practice, agreement, understanding
or arrangement (whether written or unwritten) 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,
which are now, or were within the past six years, maintained by the Company or
any ERISA Affiliate, or under which the Company or any ERISA Affiliate has or
could have any obligation or liability, whether actual or contingent (and
including, without limitation, any liability arising out of an indemnification,
guarantee, hold harmless or similar agreement), 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.
“Environmental Law”
shall mean any federal, state, local or foreign law (including any common law),
statute, code, ordinance, rule, regulation or other requirement relating to the
environment, natural resources or public or employee health and safety, and
includes, but not limited to, CERCLA, the Hazardous Materials Transportation
Act, 49 U.S.C. § 1801 et seq., as amended, the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq., as amended, the Clean Water Act, 33
U.S.C. § 2601 et seq., as amended, the Clean Air Act, 42 U.S.C. § 7401 et seq.,
as amended, the Toxic Substances Control Act, 15 U.S.C. § 6901 et seq., as
amended, the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136
et seq., as amended, the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., as
amended, the New York Navigation Law, as amended, and the Occupational Safety
and Health Act, 29 U.S.C. § 6901 et seq., as amended.
“Environmental Costs and
Liabilities” shall mean any and all losses, liabilities, obligations,
damages, fines, penalties, judgments, actions, claims, costs and expenses
(including, without limitation, fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and the costs of investigation and
feasibility studies and remedial activities) arising from or under any
Environmental Law or order or contract with any Governmental Authority or any
other Person.
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”
shall mean any entity that, together with the Company, is or was treated as a
single employer under Section 414(b), (c) or (m) of the Code.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
“GAAP” shall mean
generally accepted accounting principles as in effect in the United
States.
“Governmental
Authority” shall mean any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or
foreign.
20
“Hazardous Materials”
shall mean any petroleum or petroleum products, radioactive materials,
asbestos-containing materials, radon gas, PCBs and any other hazardous or toxic
substance, material or waste which is or becomes prior to the Closing regulated
under, or defined as a “hazardous substance,” “pollutant,” “contaminant,”
“hazardous waste,” “toxic chemical,” “hazardous materials,” “toxic substance” or
“hazardous chemical” under any Environmental Law.
“Knowledge of the
Company” shall mean the actual knowledge of Xxxxxx Xxxxxxxxxxx and Xxxxx
Xxxxx, upon due inquiry.
“Laws” shall mean all
applicable statutes, rules, regulations, ordinances, orders, writs, injunctions,
judgements, decrees, awards or restrictions of any governmental
entity.
“Liabilities” shall
mean any liability or obligation, including without limitation, any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, whether known or unknown, fixed or
unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured.
“Liens” shall mean any
security interest, mortgage, lien, charge, claims, option and
encumbrance.
“Material Adverse
Effect” used in connection with a party shall mean any event, change or
effect that is or is reasonably likely to become materially adverse to the
condition (financial or otherwise), properties, assets, liabilities, businesses,
operations, results of operations or prospects of such party and its
subsidiaries, if any, on a consolidated basis.
“Pension Plan” shall
mean any qualified or non-qualified Employee Pension Benefit Plan (including,
any Multiemployer Plan), as such term is defined in Section 3(2) of
ERISA.
“Person” shall mean
any individual, firm, corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, governmental
entity of any kind.
“Pre-Closing Period”
shall mean all taxable periods ending on or before the Closing Date and the
portion ending on or before the Closing Date of any taxable period that includes
(but does not end on) the Closing Date.
“SEC” shall mean the
United States Securities and Exchange Commission.
“SEC Documents” shall
mean all reports and registration statements filed, or required to be filed, by
the Company pursuant to the Securities Laws.
“Securities Act” shall
mean the Securities Act of 1933, as amended.
“Securities Laws”
shall mean the Securities Act; the Exchange Act; the Investment Company Act of
1940, as amended; the Investment Advisers Act of 1940, as amended; the Trust
Indenture Act of 1939, as amended; and the rules and regulations of the SEC
promulgated thereunder.
“Subsidiary” shall
mean, as to any Person, any corporation, partnership, limited liability company
or other entity which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors, the general managers
or other persons performing similar functions, are at the time directly or
indirectly owned by such Person; unless otherwise specified, “Subsidiary” means
a Subsidiary of the Company.
“Taxes” shall mean
taxes, fees, levies, duties, tariffs, imposts, and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including (without
limitation) (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers’ compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto.
“Welfare Plan” shall
mean any Employee Welfare Benefit Plan, as such term is defined in Section 3(1)
of ERISA.
21
8.2 Other Defined Terms.
Each of the following terms have the meaning assigned to it in the Section
indicated:
|
Term
|
Section
|
|
Agreement
|
First
Paragraph
|
|
Ancillary
Documents
|
2.1(a)
|
|
Balance
Sheet Date
|
2.1(n)
|
|
CERCLA
|
2.1(r)
|
|
Closing
|
5.1
|
|
Closing
Date
|
5.1
|
|
Company
|
First
Paragraph
|
|
Evaluation
Date
|
2.1(l)
|
|
Expenses
|
5.5
|
|
Financial
Statements
|
2.1(j)
|
|
Indemnified
Party
|
7.4(a)
|
|
Indemnified
Plans
|
7.2(b)
|
|
Indemnifying
Party
|
7.4(a)
|
|
IRS
|
2.1(v)
|
|
Material
Agreements
|
2.1(o)
|
|
Organizational
Documents
|
2.1(e)
|
|
PBGC
|
2.1(v)
|
|
Proprietary
Rights
|
2.1(n)
|
|
Purchase
Price
|
1.2
|
|
Purchaser
|
First
Paragraph
|
|
Purchaser
Damages
|
7.2
|
|
Purchaser
Parties
|
7.2
|
|
Real
Property
|
2.1(n)
|
|
Receivables
|
2.1(l)
|
|
Related
Party
|
2.1(s)
|
|
Seller
|
First
Paragraph
|
|
Seller
Damages
|
7.3
|
|
Seller
Parties
|
7.3
|
|
Survival
Period
|
7.1
|
|
Tax
Returns
|
2.1(u)
|
22
ARTICLE
IX
9.1 Notices. All notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered personally (including delivery by courier
service), transmitted by telecopy or mailed by registered or certified mail,
postage prepaid, return receipt requested, or sent by a nationally recognized
overnight courier service, as follows:
(a) If to
the Purchaser, to:
|
Terminus,
Inc.
|
|
c/o
Indeglia & Xxxxxx
|
|
0000
Xxxx Xxxxxx, Xxxxx 000
|
|
Xxxxxx,
XX 00000
|
|
Telecopy:
(000) 000-0000
|
(b) If to
the Company or the Seller, to:
Before
the Closing:
|
The
Blackhawk Fund
|
|
000
Xxxxxxxxxx Xxxxx, Xxxxx 000-X
|
|
Xxxxxxx,
XX 00000
|
|
Telecopy:____________________
|
After the
Closing:
|
Palomar
Enterprises, Inc.
|
|
000
Xxxxxxxxxx Xxxxx, Xxxxx 000-X
|
|
Xxxxxxx,
XX 00000
|
|
Telecopy:____________________
|
or to
such other address as the Person to whom notice is to be given may have
previously furnished to the other parties in writing in accordance
herewith. Notice shall be deemed given on the date received (or, if
receipt thereof is refused, on the date of such refusal).
23
9.2 Amendments and
Waivers. This Agreement may not be amended, modified, or supplemented
except by written agreement of the parties hereto. No waiver by any
party of any non-compliance, default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent non-compliance, default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
9.3 Interpretation. The
headings preceding the text of Articles and Sections included in this Agreement
and the headings to Exhibits and Schedules attached to this Agreement are for
convenience only and shall not be deemed part of this Agreement or be given any
effect in interpreting this Agreement. The use of the masculine,
feminine or neuter gender herein shall not limit any provision of this
Agreement. The use of the terms “including” or “include” shall in all
cases herein mean “including, without limitation” or “include, without
limitation,” respectively. References to any “Article,” “Section,” “Exhibit,” or
“Schedule” shall refer to an Article or Section of, or an Exhibit or Schedule
to, this Agreement. In any case where the concept of materiality is
applied more than once to qualify any provision of this Agreement (whether by
cross-referencing or incorporation or otherwise), such provision shall be
interpreted as if only one, but the broadest one, of such materiality
qualification applied to it. Any due diligence review, audit, or
other investigation or inquiry undertaken or performed by or on behalf of a
party shall not limit, qualify, modify or amend the representations, warranties,
or covenants of, or indemnities made by any other party pursuant to this
Agreement, irrespective of the knowledge and information received (or which
should have been received) therefrom by the investigating party and consummation
of the transactions contemplated herein by a party shall not be deemed a waiver
of a breach of or inaccuracy in any representation, warranty, or covenant or of
any other party’s rights and remedies with regard thereto.
9.4 Assignment; Binding Upon
Successors and Assigns. None of the parties hereto may assign or delegate
any of its rights or obligations hereunder without the prior written consent of
the other parties hereto. This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors, heirs, legatees,
distributes, and assigns.
9.5 Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their respective successors, permitted assigns and legal
representatives, and nothing in this Agreement, express or implied, is intended
to confer upon any other Person any rights or remedies of any
nature.
9.6
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to constitute an original and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties.
9.7 Governing Law; Venue;
Jurisdiction. The laws of the State of California (irrespective of its
choice of law principles) will govern the validity of this Agreement, the
construction of its terms and the interpretation and enforcement of the rights
and duties of the parties hereto. This Agreement shall be enforceable in any
court of competent jurisdiction. In furtherance of and not in
limitation of the foregoing, the parties hereto (i) agree and consent to the
personal jurisdiction and venue of the state and Federal courts sitting in
Orange County, California in any action or proceeding arising out of or
connected in any way with this Agreement, (ii) irrevocably waive, to the fullest
extent permitted by law, any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum, and (iii) agree that service of
process in any such action or proceeding will be sufficient if sent by certified
mail, return receipt requested, to applicable address set forth above, and that
such service shall constitute “personal service,” and further agree to the
invocation of said jurisdiction by service of process in any other manner
authorized by law.
9.8 Severability. If any
term or provision of this Agreement shall, to any extent, be held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement or the application of such term or provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall not be affected thereby and this Agreement shall be deemed
severable and shall be enforced otherwise to the full extent permitted by
law.
9.9 Entire Agreement.
This Agreement (including the Schedules and Exhibits referred to herein and
which form a part hereof) and the Ancillary Documents constitute the entire
agreement among the parties hereto and supersedes all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof except for a confidentiality agreement by and among the
parties hereto, if any.
9.10
Schedules and
Exhibits. The Schedules and Exhibits attached hereto are incorporated
herein and made a part hereof for all purposes.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
24
IN
WITNESS WHEREOF, this Stock Purchase Agreement has been duly executed and
delivered by the parties hereto on the date first above written.
|
PURCHASER:
|
|
|
TERMINUS,
INC.
|
|
|
By:
__________________________
|
|
|
Name:
Xxxxx Xxxxxxx
|
|
|
Title:
President
|
|
|
COMPANY:
|
|
|
THE
BLACKHAWK FUND
|
|
|
By:___________________________
|
|
|
Name:
Xxxxxx Xxxxxxxxxxx
|
|
|
Title:
President
|
|
|
SELLER:
|
|
|
PALOMAR
ENTERPRISES, INC.
|
|
|
By:___________________________
|
|
|
Xxxxxx
Xxxxxxxxxxx
|
|
|
Title:
President
|
|
25