STOCK PURCHASE AND SUBSCRIPTION AGREEMENT
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THIS STOCK PURCHASE AND SUBSCRIPTION AGREEMENT, dated as of April, 1999, is by
and among CTI Acquisition Corporation, a Washington corporation ("Purchaser"),
Upgrade International Corporation, a Nevada corporation ("Upgrade"), and
Centurion Technologies, Incorporated ("Centurion" or the "Company"), Xxxx X.
French ("French" or a "Shareholder"), Xxxxxx X. Xxxxxxx, MD ("RHighley" or a
"Shareholder"), Xxxx X. Xxxxx ("Xxxxx" or a "Shareholder"), Xxxxx X. Xxx ("Xxx"
or a "Shareholder"), Xxxxxx X. Xxxx ("Rich" or a "Shareholder"), Xxxxxxx Xxxx
("Xxxx" or a "Shareholder"), Xxxxx X. Xxxxxxx ("PHighley" or a "Shareholder"),
Xxxxx Xxxxx ("Xxxxx" or a "Shareholder"), Xxxxx Xxxxxx ("Xxxxxx" or a
"Shareholder"), Xxx Xxxxxxx ("Xxxxxxx" or a "Shareholder"), Xxxxxxxxx Xxxxxx
("CPeters" or a "Shareholder"), Xxxxxxx Xxxxxx ("GPeters" or a "Shareholder"),
Xxxx X. Vitkainen ("Vitkainen" or a "Shareholder"), Xxxx Xxxxxxxxx ("Xxxxxxxxx"
or a "Shareholder"), Xxx Xxxxxxx ("Xxxxxxx" or a "Shareholder"), and Cardiac
Dimensions, Inc., a corporation ("Cardiac Dimensions" or a
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"Shareholder," and with French, RHighley, Smith, Lee, Xxxx, Xxxx, PHighley,
Feely, Gainer, Coulter, CPeters, GPeters, Vitkainen, Xxxxxxxxx, and Xxxxxxx, the
"Shareholders").
RECITALS
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WHEREAS, the Shareholders own all of the issued and outstanding capital
stock of the Company; and
WHEREAS, the Shareholders and Abacus Capital L.L.C. ("Abacus") have entered
into a Letter of Intent dated September 23, 1998 (the "Letter of Intent"), with
respect to the acquisition by Abacus or its assigns of 60% of the issued and
outstanding stock of the Company; and
WHEREAS, Abacus has assigned its rights under the Letter of Intent to
Upgrade pursuant to a letter agreement between Abacus and Upgrade dated January
22, 1999 (the "Assignment Letter"), pursuant to which Upgrade, through the
Purchaser, its wholly-owned subsidiary, intends to acquire 50% of the issued and
outstanding shares of stock of the Company and Abacus will acquire 10% (or such
lesser amount as shall be agreed by Abacus and the Shareholders) of the total
issued and outstanding shares of stock of the Company, upon the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, the Shareholders desire that the Purchaser and Abacus enter into
the transactions contemplated herein, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
1. DEFINITIONS.
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"Adverse Consequences" means all charges, complaints, actions, suits,
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proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, Obligations, Taxes, liens, losses,
expenses, and fees, including all attorneys' fees and court costs.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
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promulgated under the Securities Exchange Act of 1934, as amended.
"Affiliated Group" has the meaning set forth in Code Sec. 1504(a).
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"Applicable Rate" means the announced prime rate in effect from time to
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time at Bank of America or any successor thereto.
"Basis" means any past or present fact, situation, circumstance, status,
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condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Purchaser" has the meaning set forth in the preface above.
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"Closing" has the meaning set forth in Sec. 3(a) below.
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"Closing Date" has the meaning set forth in Sec. 3(a) below.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
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time.
"Company" has the meaning set forth in the preface above.
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"Company Share" means any share of capital stock of the Company acquired by
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Purchaser hereunder.
"Confidential Information" means any information concerning the business
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and affairs of the Company which is proprietary to the Company.
"Disclosure Schedule" has the meaning set forth in Sec. 4 below.
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"Employee Benefit Plan" means a qualified defined contribution retirement
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plan or arrangement, which is a Code Section 401(k) Plan or a Company, or
Sellers provided retirement plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sac.
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3(2).
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"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
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3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
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the Emergency Planning and Community Right-to-Know Actor 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
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"Financial Statement" has the meaning set forth in Sec. 4h below.
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"GAAP" means United States generally accepted accounting principles as in
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effect from time to time.
"Indemnified Party" has the meaning set forth in Sec. 9 below.
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"Indemnifying Party" has the meaning set forth in Sec. 9 below.
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"Intellectual Property" means all (a) trademarks, service marks, trade
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dress, Iogos, trade names, and corporate names and registrations and
applications for registration thereof, (b) copyrights and registrations, and
applications for registration thereof, (c) mask works and registrations, and
applications for registration thereof, (d) computer software, data, and
documentation, (e) trade secrets and confidential business information
(including ideas, formulas, compositions, Inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development, information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, (f) other proprietary rights, and (g) copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge or Known" means what a reasonable person would or should know
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after reasonable investigation and due inquiry with respect thereto.
"Liability" means any liability, Known or unknown at the time of Closing
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(whether absolute or contingent, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet dated March 31, 1999
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contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Sec. 4h
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below.
"Most Recent Fiscal Month End" has the meaning set forth in Sec. 4h below.
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"Most Recent Fiscal Year End" has the meaning set forth in Sec. 4h below.
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"Multi-employer Plan" has the meaning set forth in ERISA Sac. 3(37).
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"Ordinary Course of Business" means the ordinary course of business
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consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" has the meaning set forth in the preface above.
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"PBGC" means the Pension Benefit Guaranty Corporation.
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"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
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Code Sec. 4975.
"Purchase Price" has the meaning set forth in Sec. 2(b) below.
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"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Security Interest" means any mortgage, pledge, security interest,
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encumbrance, charge, or other lien, other than: (a) mechanic's, materialmen's
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and similar liens arising by operation of law in the ordinary course of business
with respect to obligations not yet delinquent, (b) liens for Taxes not yet due
and payable, (c) liens arising under worker's compensation, unemployment
Insurance, social security, retirement, and similar legislation, (d)liens
arising in connection with sales of foreign receivables, (e) liens on goods in
transit incurred pursuant to documentary letters of credit, (f) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(g)other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Shareholder(s)" has the meaning set forth in the preface above.
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"Subsidiary" means any corporation with respect to which another specified
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corporation has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
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license, payroll, employment, excise, severance, occupation, premium,
environmental (including taxes under Code Sac. 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund, or
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information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. PURCHASE AND SALE OF COMPANY SHARES
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a. Subscription for Shares. Subject to the terms and conditions of
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this Agreement, on the Closing Date, Purchaser shall subscribe for and be issued
by the Company Five Million (5,000,000) shares of the common stock of the
Company (the "Company Shares"), which shall constitute fifty percent (50%) of
the total issued and outstanding stock of the Company (including shares issued
to Abacus or any other shareholder in connection with this transaction).
b. Consideration; Payment. The purchase price for the Company
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Shares shall be up to Three Million Dollars ($3,000,000), payable as follows:
(i) One Million Dollars ($1,000,000) will be paid by the delivery
of and performance under and pursuant to the terms and conditions
of a Promissory Note in substantially the form attached hereto as
Exhibit 2b(i) (the "Purchase Note") to be executed and delivered
by Purchaser in favor of the Company. All amounts advanced by
Upgrade to the Company prior to the Closing shall be credited
against amounts due under the Purchase Note. All amounts advanced
shall be disbursed by Xxxxx X. Xxxxx ("Xxxxx") in accordance with
the provisions of section 7(c) hereto. Upgrade has previously
advanced $150,000 to the Company and shall advance an additional
$100,000 at Closing. Upgrade shall deliver to the Company at
Closing the Promissory Note of the Company dated February 4, 1999
in the principal amount of $100,000, and shall release the
security therefor.
(ii) During the second twelve month period following the Closing
Date, Upgrade will use its best efforts to enable the Company to
raise up to Two Million Dollars ($2,000,000) (the "Raise"). The
Raise may be in either the form of debt or equity securities of
the Company, in Upgrade's sole discretion, provided, however,
that the Raise shall not result in dilution to the Shareholders,
except as set forth in subsection (iii) below. The Shareholders
covenant and agree to cooperate with and to take all actions
necessary or appropriate to enable Upgrade to fulfill its
obligations under this paragraph.
(iii) In the event that the Raise is in the form of equity,
Upgrade shall have the right, in its sole discretion, to exchange
with the Shareholders, on a pro rata basis, shares of Upgrade to
the extent necessary to allow Upgrade to maintain at least a 50%
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ownership interest in the Company. For purposes of such exchange,
shares of the Company t, hall be valued using a market
capitalization of Five Million Dollars ($5,000,000) and shares of
Upgrade shall be valued by averaging the closing between the bid
and the ask price for the 20 trading days immediately prior to
such exchange.
3. CLOSING. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of Xxxxxxx & Biagi,
X.X.XX. in Seattle, Washington commencing at 11:00 a.m. local time on May 12,
1999 or such other date, time or place as the Parties may mutually determine and
agree to (the "Closing Date").
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.
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The Company and the Shareholders, jointly and severally, represent and warrant
to the Purchaser and Upgrade that the statements contained in this Sec. 4 are
correct and complete as of the date hereof and will be correct and complete as
of the Closing Date, except as set forth in the Disclosure Schedule attached
hereto. Nothing in the Disclosure Schedule shall be deemed adequate to disclose
an exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the exception and the representation and warranty
to which it relates with reasonable particularity. Without limiting the
generality of the foregoing, the listing (or inclusion of a copy) of a document,
or reference to a document, as an exhibit, schedule or otherwise part of this
Agreement, may not be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document itself). The Disclosure Schedule is
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Sec. 4.
a. Authorization of Transaction. Each of the Company and the
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Shareholders has full power and authority to execute and deliver this Agreement
and to perform his or its obligations hereunder. This Agreement constitutes the
valid and legally binding obligation of the Company and each Shareholder,
enforceable in accordance with its terms and conditions. Neither the Company nor
any Shareholder need give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
b. [Intentionally Omitted.]
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c. Brokers' Fees. Neither the Company nor any Shareholder has any
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Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement for which
the Purchaser or Upgrade could become liable or obligated.
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d. Organization, Qualification and Corporate Power. The Company is
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a corporation duly organized, validly existing, and in good standing under the
laws of the state of Washington. The Company is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the nature of its businesses or the ownership or leasing of its properties
requires such qualification, each of which is identified in the Disclosure
Schedule. The Company has full corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it. Section 4(d) of the Disclosure Schedule lists the directors and
officers of the Company. The Company has delivered to the Purchaser and Upgrade
correct and complete copies of the charter and bylaws of the Company (as amended
to date). The minute books containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors, the stock certificate books, and the stock record books of the
Company are correct and complete, The Company is not in default under or in
violation of any provision of its charter or bylaws.
e. Capitalization. The entire authorized capital stock of the
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Company consists of 50,000,000 shares of Common Stock, .001 par value, and
10,000,000 shares of Preferred Stock, .001 par value of which Five Million
(5,000,000) shares of Common Stock are issued and outstanding. All of the issued
and outstanding shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held beneficially and of record by the
Shareholders in the amounts set forth in Sec.4(e) of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments to which the Company is a party or which are binding upon the
Company providing for the issuance, disposition, or acquisition of any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, or similar rights with respect to the Company. There are no
voting trusts, proxies, or any other agreements or understandings with respect
to the voting of the capital stock of the Company.
f. Noncontrevention. Neither the execution and delivery of this
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Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental agency,
or court to which the Company or any Shareholder is subject or any provision of
the charter or bylaws of the Company, or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Company or
any Shareholder is a party or by which the Company or any Shareholder is bound
or to which any of their respective assets is subject (or result in the
imposition of any Security Interest upon any of such assets). Neither the
Company nor any Shareholder needs to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to
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consummate the transactions contemplated by this Agreement, except for notices,
filings, authorizations, consents or appeals the failure of which to obtain
would not have material Adverse Consequences.
g. Subsidiaries. The Company has no Subsidiaries, and owns no
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interest in any corporation, partnership, joint venture or other entity.
h. Financial Statements. Attached hereto as Exhibit 4(h) are the
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following financial statements (collectively the "Financial Statements"):
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(i) unaudited balance sheets and statements of income as of and
for the fiscal years ended December 31, 1996, 1997 and 1998
(December 31, 1998 being the "MOST RECENT FISCAL YEAR END") for
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the Company; and
(ii) unaudited balance sheets and statements of income (the "MOST
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RECENT FINANCIAL STATEMENTS") as of and for the three months
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ended March 31, 1999 (the "MOST RECENT FISCAL MONTH END") for the
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Company.
The Financial Statements are, and all financial statements, balance sheets and
similar financial information prepared by or for the Company from the Most
Recent Fiscal Month End (the "Interim Financials") shall be, true, correct and
complete in all material respects, prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, and consistent with the
books and records of the Company (which books and records are correct and
complete). The accounts receivable shown thereon are and shall be valid and
collectible (net of reserves), subject to no offsets or defenses of any kind or
nature, due and payable within thirty (30) days of invoice or in accordance with
their terms, without resort to collection activity. All inventories shown on the
Financial Statements and the Interim Statements are and shall be properly
valued, and all reserves shown thereon are and shall be accurate.
i. Events Subsequent to Most Recent Fiscal Month End. Since the
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Most Recent Fiscal Month End, there has not been any adverse change in the
assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company taken as a whole. Without
limiting the generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred, or assigned
any material assets, tangible or intangible, in an amount of more
than $5,000 other than for a fair consideration or in the
Ordinary Course of Business;
(ii) the Company has not entered into any contract, lease,
sublease, license, or sublicense (or series of related contracts,
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leases, subleases, licenses, and sublicenses) either involving more than $5,000
or outside the Ordinary Course of Business or involving a contract for a term of
more than one year;
(iii) no party (including the Company) has accelerated,
terminated, modified, or cancelled any contract, lease, sublease,
license, or sublicense (or series of related contracts, leases,
subleases, licenses, and sublicenses) outside the Ordinary Course
of business involving more than $5,000 to which the Company is a
party or by which the Company is bound;
(iv) the Company has not granted any Security Interest on any of
its assets, tangible or intangible;
(v) the Company has not made any capital expenditure (or series
of related capital expenditures) involving more than $5,000 or
which is outside the Ordinary Course of Business;
(vi) the Company has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and
acquisitions) either involving more than $5,000 or outside the
Ordinary Course of Business;
(vii) the Company has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease
obligations) either involving more than $5,000 singly or $5,000
in the aggregate or outside the Ordinary Course of Business;
(viii) the Company has not delayed or postponed (beyond its
normal practice) the payment of accounts payable and other
Liabilities;
(ix) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and
claims) either involving more than $5,000 or outside the Ordinary
Course of Business;
(x) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the charter
or bylaws of the Company;
(xii) the Company has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or
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other rights to purchase or obtain (including upon conversion or
exercise) any of its capital stock;
(xiii) the Company has not declared, set aside, or paid any
dividend or distribution with respect to its capital stock or
redeemed, purchased, or otherwise acquired any of its capital
stock;
(xiv) the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property involving an amount in excess of $5,000;
(xv) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and
employees either involving more than $5,000 or outside the
Ordinary Course of Business giving rise to any claim or right on
its part against the person or on the part of the person against
it;
(xvi) the Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(xvii) the Company has not granted any increase outside the
Ordinary Course of Business in the base compensation of any of
its directors, officers, and employees;
(xviii) the Company has not adopted any (A)bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E)
retirement, (F) medical, hospitalization, life, or other
insurance, (G) severance, or (H) contract, or commitment for any
of its directors, officers, and employees, or modified or
terminated any existing such plan, contract, or commitment;
(xix) the Company has not made any other material change in
employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xx) the Company has not made or pledged to make any charitable
or other capital contribution outside the Ordinary Course of
Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving the Company; and
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(xxii) the Company has not committed to any of the foregoing in
this Section 4(i) except as qualified above.
j. Undisclosed Liabilities. The Company does not have any
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Liability (and there is no Basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against the
Company giving rise to any Liability), except for (i) Liabilities set forth on
the face of the Most Recent Balance Sheet (rather than in any notes thereto),
none of which will be greater than the amount set forth and (ii) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business (none of which relates to any breach of contract, breach of
warranty, tort, infringement, or violation of law or arise out of any charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand).
k. Tax Matters.
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(i) Each Shareholder and the Company have filed all Tax Returns
that each was required to file. All such Tax Returns were correct
and complete in all material respects, All Taxes owed by each of
the Shareholders and the Company (whether or not shown on any Tax
Return) have been paid. The Company currently is not the
beneficiary of any extension of time within which to file any Tax
Return. No claim has been made by an authority in a jurisdiction
where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) 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, creditor, independent contractor, or other third
party.
(iii) No Shareholder or any director or officer (or employee
responsible for Tax matters) of the Company expects any authority
to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim concerning
any Tax Liability of any Shareholder or the Company either (A)
claimed or raised by any authority in writing, or (B) as to which
any Shareholder or the directors and officers (and employees
responsible for Tax matters) of the Company has Knowledge based
upon personal contact with any agent of such authority. Since the
Company's incorporation, no Tax Returns have been audited, nor
are any Tax Returns currently subject to audit. The Company has
delivered to the Purchaser correct and complete copies of all
federal income Tax Returns, examination reports,
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and statements of deficiencies assessed against or agreed to by
the Company since the Company's inception.
(iv) Section 4(k) of the Disclosure Schedule lists all federal,
state, local, and foreign income Tax Returns filed since the
Company's incorporation. The Company has delivered to the
Purchaser correct and complete copies of all federal income Tax
Returns.
(v) No Shareholder or the Company has waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(vi) The Company has not filed a consent under Code Sec, 341(f)
concerning collapsible corporations. The Company has not made any
payments, is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible
under Code Sec. 280G or 162(m). The Company has not been a United
States real property holding corporation within the meaning of
Code Sec. 897(c)(2) during the applicable period specified in
Code Sec. 897(c)(1)(A)(ii). The Company has disclosed on its
federal income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax
within the meaning of Code Sec. 6661. The Company is not a party
to any Tax allocation or sharing agreement. The Company never has
been (or has any Liability for unpaid Taxes because it once was)
a member of an Affiliated Group. The Company has never filed a
consolidated return with any other affiliated company.
(vii) Section 4(k) of the Disclosure Schedule sets forth the
following information with respect to the Company: (A) the basis
of the Company in its assets; and (B)the amount of any net
operating loss, net capital loss, unused investment or other
credit, unused foreign tax, or excess charitable contribution
allocable to the Company.
(viii) The unpaid Taxes of the Company do not exceed the reserve
for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax
income) set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom
and practice of the Company in filing its Tax Returns.
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l. Tangible Assets. The Company owns or leases all tangible assets
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necessary for the conduct of its businesses as presently conducted and as
presently proposed to be conducted. Each such tangible asset is free from
Security Interests and defects (patent and latent), has been maintained in
accordance with normal industry practice, is, to the best of the Company's and
each Shareholder's Knowledge, in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used. The Company has good and marketable title to all of its owned assets.
m. Real Property. The Company does not own any real property.
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n. Intellectual Property.
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(i) The Disclosure Schedule sets forth a complete list and brief
description of each item of Intellectual Property owned or used
by the Company. The Company owns or has adequate rights to use
all Intellectual Property now or heretofore used in the conduct
of its business, in each case free and clear of any and all
liens, claims, pledges, encumbrances, charges, agreements,
options or other restrictions. Each item of Intellectual Property
owned or used by the Company immediately prior to the Closing
hereunder will be owned or available for use by the Company on
identical terms and conditions immediately subsequent to the
Closing hereunder. The Company has taken all reasonably necessary
action to protect each item of Intellectual Property that it owns
or uses.
(ii) The Company has not interfered with, infringed upon,
misappropriated, or, to the best of the Company's or any
Shareholder's Knowledge, otherwise come into conflict with any
Intellectual Property rights of third parties, and no Shareholder
or the directors and officers (and employees with responsibility
for Intellectual Property matters) of the Company has ever
received any charge, complaint, claim, or notice alleging any
such interference, infringement, misappropriation, or violation.
To the Knowledge of each Shareholder and the directors and
officers (and employees with responsibility for Intellectual
Property matters) of the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(iii) The Company has delivered to the Purchaser correct and
complete copies of all registrations, applications and licenses,
agreements, and permissions (as amended to date) and has made
available to the Purchaser correct and complete copies of all
other written documentation evidencing ownership and
-13-
prosecution (if applicable) of each such item. With respect to
each item of Intellectual Property that the Company owns:
(1) the Company possesses all right, title, and interest in
and to the item;
(2) the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
(3) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending or, to the
Knowledge of the Seller and the directors and officers (and
employees with responsibility for Intellectual Property
matters) of the Company, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the
item; and
(4) the Company has never agreed to indemnify any person or
entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the
item.
(iv) Section 4(n) of the Disclosure Schedule also identifies each
item of Intellectual Property that any third party owns and that
the Company uses pursuant to license, sublicense, agreement, or
permission. The Company has supplied the Purchaser with correct
and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to
each such item of used Intellectual Property.
(1) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and
in full force and effect;
(2) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and is
and will be in full force and effect on identical terms
following the Closing;
(3) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute
a breach or default, or permit termination, modification, or
acceleration thereunder;
-14-
(4) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(5) with respect to each sublicense, the representations and
warranties set forth in subsections (1) through (4) above
are true and correct with respect to the underlying license;
(6) the underlying item of Intellectual Property is not
subject to any outstanding judgment, order, decree,
stipulation, injunction, or charge;
(7) no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand is pending, or, to the
Knowledge of any Shareholder and the directors and officers
(and employees with responsibility for Intellectual Property
matters) of the Company, is threatened which challenges the
legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(8) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
o. Inventories. The values at which the Inventories of the Company
-----------
are shown on the Financial Statements and the Interim Statements have been and
will be determined in accordance with the normal valuation policies of the
Company and GAAP. The inventories of the Company shown on the Financial
Statements or the Interim Financials consist only of Items of a quality and
quantity commercially usable or salable in the ordinary course of business at
the values reflected thereon and on the books of the Company, except for items
of excess or obsolete material, all of which have been written down to
realizable market value as of the date of the Most Recent Fiscal Month End or
for which adequate reserves have been reflected on the Financial Statements and
the Interim Statements in accordance with past practices.
p. Real Property Leases. Section 4(p) of the Disclosure Schedule
----------------------
lists and describes briefly all real property leased or subleased to the
Company. The Seller has delivered to the Purchaser correct and complete copies
of the leases and subleases listed in Sec. 4(p) of the Disclosure Schedule (as
amended to date). With respect to each lease and sublease listed in Sec. 4(p) of
the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
-15-
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical
terms following the Closing;
(iii) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated any
provision thereof;
(v) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v) above are
true and correct with respect to the underlying lease;
(vii) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(ix) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of
said facilities; and
(x) to the best of the Company's and each Shareholder's
Knowledge, the owner of the facility leased or subleased has good
and marketable title to the parcel of real property, free and
clear of any Security Interest, easement, covenant, or other
restriction, except for (A) installments of special easements not
yet delinquent, and (B) recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy, or
value, or the marketability of title, of the property subject
thereto.
q. Contracts. Section 4(q) of the Disclosure Schedule lists the
---------
following contracts, agreements, and other written arrangements to which the
Company is a party;
-16-
(i) any written arrangement (or group of related written
arrangements) for the lease of real or personal property from or
to third parties providing for lease payments in excess of $5,000
per annum;
(ii) any written arrangement (or group of related written
arrangements) for the purchase or sale of raw materials,
commodities, supplies, products, or other personal property or
for the furnishing or receipt of services which either calls for
performance over a period of more than one year or involves more
than the sum of $6,000;
(iii) any written arrangement concerning a partnership or joint
venture;
(iv) any written arrangement (or group of related written
arrangements) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee)
indebtedness (including capitalized lease obligations) involving
more than $5,000 or under which it has imposed (or may impose) a
Security Interest on any of its assets, tangible or intangible;
(v) any written arrangement concerning confidentiality or
noncompetition;
(vi) any written arrangement involving or between the Company.
and any Shareholder or an Affiliate of any Shareholder;
(vii) any written arrangement with any of its directors,
officers, and employees in the nature of a collective bargaining
agreement, employment agreement, or severance agreement;
(viii) any written arrangement under which the consequences of a
default or termination could have a material adverse effect on
the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the
Company; or
(ix) any other written arrangement (or group of related written
arrangements) either involving more than $5,000 or not entered
into in the Ordinary Course of Business.
The Company has delivered to the Purchaser a correct and complete copy of each
written arrangement listed in Sec. 4(q) of the Disclosure Schedule (as amended
to date). With respect to each written arrangement so listed: (A) the written
arrangement is legal, valid, binding, enforceable, and in full force and effect;
(B) the written arrangement will continue to be legal, valid, binding, and
enforceable and in full force
-17-
and effect on identical terms following the Closing; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under the written arrangement; and (D) no party has repudiated any
provision of the written arrangement. The Company is not a party to any verbal
contract, agreement, or other arrangement which, if reduced to written form,
would be required to be listed in Sec. 4(q) of the Disclosure Schedule under the
terms of this Sec. 4(q). No unfilled customer order or commitment obligating the
Company to process, manufacture, or deliver products or perform services will
result in a loss to the Company upon completion of performance. No purchase
order or commitment of the Company is in excess of normal requirements, nor are
prices provided therein in excess of current market prices for the products or
services to be provided thereunder. No supplier of the Company has indicated
within the past twelve months that it will stop, or decrease the rate of,
supplying materials, products, or services to the Company, and no customer of
the Company has indicated within the past twelve months that it will stop, or
decrease the rate of, buying materials, products, or services from the Company.
r. Notes and Accounts Receivable. All notes and accounts
--------------------------------
receivable of the Company are reflected properly on its books and records, are
valid receivables subject to no setoffs or counterclaims, are presently current
and collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Most Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date, as reflected in the
Interim Statements.
x. Xxxxxx of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of the Company or any Shareholder.
t. Insurance. Section 4(t) of the Disclosure Schedule sets forth
---------
the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past two (2) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
-18-
(v) a description of any retroactive premium adjustments or other
loss sharing arrangements.
The Company has been covered during the past two years by insurance in scope and
amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period.
u. Litigation. The Company is not subject to any unsatisfied
----------
judgment, order, decree, stipulation, injunction, or charge and is not a party
or, to the Knowledge of the Seller and the directors and officers (and employees
with responsibility for litigation matters) of the Company, has not been
threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator.
v. Product Warranty. Each product manufactured, sold, leased,
-----------------
licensed or delivered by the Company has been in conformity with all applicable
contractual commitments and all express and implied warranties, and the Company
has no Liability (and there is no Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against the Company giving rise to any Liability) for replacement or repair
thereof or other damages in connection therewith, subject only to the reserve
for product warranty claims set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
Company. No product manufactured, sold, leased, licensed or delivered by the
Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease. Section 4(v) of the
Disclosure Schedule includes copies of the standard terms and conditions of sale
or lease for each of the Company's product lines (containing applicable
guaranty, warranty, and indemnity provisions).
w. Product Liability. The Company has no Liability (and there is
------------------
no Basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Company giving rise to any
Liability) arising out of any injury to persons or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased,
licensed or delivered by the Company prior to or as of the Closing Date.
x. Employees. None of the directors and officers (and employees
---------
with responsibility for employment matters) of the Company, no key employee or
group of employees has any plans to terminate employment with the Company,
except as otherwise required by Purchaser at Closing. The Company is not a party
to or bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. The Company has not committed any unfair labor practice.
The Shareholders and the directors and officers (and employees with
responsibility for employment matters) of
-19-
the Company have no Knowledge of any organizational effort presently being made
or threatened by or 0n behalf of any labor union with respect to employees of
the Company.
y. Employee Benefits. Section 4(y) of the Disclosure Schedule
------------------
lists each Employee Pension Benefit Plan and Employee Welfare Benefit Plan that
the Company maintains or to which the Company contributes for the benefit of any
current or former employee of the Company.
(i) Each Employee Pension Benefit Plan and Employee Welfare
Benefit Plan (and each related trust or insurance contract)
complies in form and in operation in all respects with the
applicable requirements of ERISA and the Code.
(ii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-I's, and Summary
Plan Descriptions) have been filed or distributed appropriately
with respect to each Employee Pension Benefit Plan and Employee
Welfare Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980B have been met with
respect to each Employee Welfare Benefit Plan.
(iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been
paid to each Employee Pension Benefit Plan and all contributions
for any period ending on or before the Closing Date which are not
yet due have been paid to each Employee Pension Benefit Plan or
accrued in accordance with the past custom and practice of the
Company. All premiums or other payments owed by the employer for
all periods ending on or before the Closing Date have been paid
with respect to each Employee Welfare Benefit Plan.
(iv) Each Employee Pension Benefit Plan meets the requirements of
a "qualified plan" under Code Sec. 401(a) and a determination
letter is being applied for with the IRS.
(v) There have been no Prohibited Transactions with respect to
any Employee Pension Benefit Plan and Employee Welfare Benefit
Plan. No Fiduciary has any Liability for breach of fiduciary duty
or any other failure to act or comply in connection with the
administration or investment of the assets of any Employee
Pension Benefit Plan and Employee Welfare Benefit Plans. No
charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the
administration or the investment of the assets of any Employee
Pension Benefit Plan
-20-
and Employee Welfare Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of the Shareholders and
the directors and officers (and employees with responsibility for
employee benefits matters) of the Company, threatened. The
Shareholders and the directors and officers (and employees with
responsibility for employee benefits matters) of the Company have
no Knowledge of any Basis for any such charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand.
(vi) The Company has delivered to the Purchaser correct and
complete copies of the plan documents and summary plan
descriptions, Form 5500 Annual Reports, and all related trust
agreements, insurance contracts, and other funding agreements
which implement each Employee Benefit Plan.
The Company does not contribute to, has never contributed to, and never has been
required to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan, The Company has not
incurred, and the Shareholders and the directors and officers (and employees
with responsibility for employee benefits matters) of the Company have no reason
to expect that the Company will incur, any Liability to the PBGC (other than
PBGC premium payments) or otherwise under Title IV of ERISA (including any
withdrawal Liability) or under the Code with respect to any Employee Pension
Benefit Plan that the Company maintains or ever has maintained or to which it,
or any related Company (as described In Code Section 414(b)(c) or (m),
contributes, ever has contributed, or ever has been required to contribute. The
Company does not maintain and has never maintained and does not contribute, has
never contributed, and has never been required to contribute to any Employee
Welfare Benefit Plan providing health, accident, or life insurance benefits to
former employees, their spouses, or their dependents (other than in accordance
with Code Sec. 4980B).
z. Guarantees. The Company is not a guarantor and is not otherwise
----------
liable for any Liability or obligation (including indebtedness) of any other
person.
aa. Environment, Health, and Safety.
-----------------------------------
(i) No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or
commenced against the Company alleging any failure to comply with
any such law or regulation. The Company has complied with all
laws (including rules and regulations thereunder) of federal,
state, local, and foreign governments (and all agencies thereof)
concerning the environment, public health and safety, and
employee health and safety.
-21-
(ii) The Company has no Liability (and there is no Basis related
to the past or present operations, properties, or facilities of
the Company for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand
against the Company giving rise to any Liability) under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976,
the Federal Water Pollution Control Act of 1972, the Clean Air
Act of 1970, the Safe Drinking Water Act of 1974, the Toxic
Substances Control Act of 1976, the Refuse Act of 1989, or the
Emergency Planning and Community Right-to-Know Act of 1986 (each
as amended), or any other law (or rule or regulation thereunder)
of any federal, state, local, or foreign government (or agency
thereof), concerning release or threatened release of hazardous
substances, public health and safety, or pollution or protection
of the environment.
(iii) The Company has no Liability (and the Company has not
handled or disposed of any substance, arranged for the disposal
of any substance, or owned or operated any property or facility
in any manner that could form the Basis for any present or future
charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand (under the common law or pursuant
to any statute) against the Company giving rise to any Liability)
for damage to any site, location, or body of water (surface or
subsurface) or for illness or personal injury.
(iv) The Company has no Liability (and there is no Basis for any
present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Company
giving rise to any Liability) under the Occupational Safety and
Health Act, as amended, or any other law (or rule or regulation
thereunder) of any federal, state, local, or foreign government
(or agency thereof) concerning employee health and safety.
(v) The Company has no Liability (and the Company has not exposed
any employee to any substance or condition that could form the
Basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand (under the
common law or pursuant to statute) against the Company giving
rise to any Liability) for any illness of or personal injury to
any employee.
(vi) The Company has obtained and been in compliance with all of
the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with
-22-
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, local, and
foreign laws (including. rules, regulations, codes, plans,
judgments, orders, decrees, stipulations, injunctions, and
charges thereunder) relating to public health and safety, worker
health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(vii) All properties and equipment used in the business of the
Company have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins, dibenzo-
furans, and Extremely Hazardous Substances.
(viii) All product labeling of the Company has been in conformity
with applicable laws (including rules and regulations
thereunder).
(ix) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste ever has been buried,
stored, spilled, leaked, discharged, emitted, or released on any.
real property that the Company ever has owned or that the Company
leases or ever has leased.
bb. Legal Compliance.
------------------
(i) The Company has complied with all laws (including rules and
regulation, thereunder) of federal, state, local, and foreign
governments (and all agencies thereof). No charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand,
or notice has been filed or commenced against the Company
alleging any failure to comply with any such law or regulation.
(ii) The Company has complied with all applicable laws (including
rules and regulations thereunder) relating to the employment of
labor, employee civil rights, and equal employment opportunities.
(iii) The Company has not violated in any respect or received a
notice or charge asserting any violation of the Xxxxxxx Act, the
-23-
Xxxxxxx Act, the Xxxxxxxx-Xxxxxx Act, or the Federal Trade Commission Act, each
as amended.
(iv) The Company has not:
(1) made or agreed to make any contribution, payment, or
gift of funds or property to any governmental official,
employee, or agent where either the contribution, payment,
or gift or the purpose thereof was illegal under the laws of
any federal, state, local, or foreign jurisdiction;
(2) established or maintained any unrecorded fund or asset
for any purpose, or made any false entries on any books or
records for any reason; or
(3) made or agreed to make any contribution, or reimbursed
any political gift or contribution made by any other person,
to any candidate for federal, state, local, or foreign
public office.
(v) The Company has filed in a timely manner all reasonably
required reports, documents, and other materials it was required
to file (and the information contained therein was correct and
complete in all respects) under all applicable laws (including
rules and regulations thereunder) except for reports, documents
and other materials, the failure of which to file would not have
material Adverse Consequences.
(vi) The Company has possession of all material records and
documents it was reasonably required to retain under all
applicable laws (including rules and regulations thereunder).
-24-
cc. Year 2000 Compliance.
-----------------------
(i) The Information Technology (as defined below) is Year 2000
Compliant (as defined below) and will not cause an interruption
in the ongoing operations of the Company's business or give rise
to liability due to a problem arising from a failure of the
Information Technology relating to Year 2000 Compliance (as
defined below).
(ii) As used in this Agreement, "information Technology" means
all software, hardware, firmware, telecommunications systems,
network systems, embedded systems, and other systems or
components of the Company's business or any products of the
Company that utilize microprocessor technology.
(iii) As used in this Agreement, "Year 2000 Compliant" and "Year
2000 Compliance" mean, with respect to Information Technology,
that the Information Technology accurately processes date/time
data (including but not limited to, calculating, comparing, and
sequencing) from, into, and between (a) September 9, 1999 and
September 10, 1999; (b) the twentieth and twenty-first centuries;
and (c) the years 1999 and 2000 and leap year calculations, to
the extent that other hardware, software, firmware, network
systems, embedded systems, telecommunications systems, and other
systems or components used in combination with the Information
Technology, properly exchanges date/time data with it, and the
Information Technology hag been tested to verify these
capabilities.
dd. Certain Business Relationships With the Company. Except as
---------------------------------------------------
disclosed, the Shareholders and any Affiliate of the Shareholders have not been
involved in any business arrangement or relationship with the Company within the
past 12 months, and the Shareholders and the Shareholders' Affiliates do not own
any property or right, tangible or intangible, which is used in the business of
the Company.
ee. Brokers' Fees. The Company has no Liability or obligation to
--------------
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
ff. Disclosure. Without limiting the foregoing, subject to the
----------
exceptions above, the representations and warranties contained in this Sec. 4 do
not contain any untrue statement of a fact or omit to state any fact necessary
in order to make the statements and information contained in this Sec. 4 not
misleading.
-25-
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
----------------------------------------------------
represents and warrants to the Company and the Shareholders that the statements
contained in this Sec. 5 are correct and complete as of the date hereof and will
be correct and complete as of the Closing Date.
a. Organization of the Purchaser. The Purchaser is a corporation
-------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Washington.
b. Authorization of Transaction. The Purchaser has full power and
-----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Purchaser,
enforceable in accordance with its terms and conditions. The Purchaser need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement. Purchaser has the power and
authority to own the Company Shares acquired under this Agreement.
c. Noncontravention. Neither the execution and the delivery of
----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Purchaser is subject or any provision
of its charter or bylaws, or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
Security Interest, or other arrangement to which the Purchaser is a party or by
which it is bound or to which any of its assets is subject. In addition, all
governmental and other consents and approvals, if any, necessary to permit the
confirmation of the transaction contemplated by this Agreement shall have been
received.
d. Brokers' Fees. The Purchaser has no Liability or obligation to
-------------
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company or any
Shareholder could become liable or obligated.
6. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
-----------------------------------------------
a. Access to Records and Properties. The Company shall, and
-----------------------------------
the Shareholders shall cause the Company to, give to Purchaser and Purchaser's
counsel, accountants, lenders and their respective employees, agents and
representatives such access (during normal business hours) to, and opportunity
to
-26-
examine, the books, records, files, documents, properties and assets of the
Company end cause the officers end directors, employees, agents,
representatives, legal counsel, accountants, auditors and actuaries of the
Company to furnish such financial and operating data and other information as
Purchaser shall from time to time reasonably request. Any investigation pursuant
to this Sec.6(a) shall be conducted in such manner as not to interfere
unreasonably with the ordinary course of the business and operations of the
Company or with the confidentiality respecting the transactions contemplated by
this Agreement.
b. Operation of the Company. >From the date hereof to the Closing,
------------------------
except to the extent that the Purchaser shall consent in writing, the Company
shall, and the Shareholders shall cause the Company to, operate its business in
such a manner as would be the ordinary course consistent with recent past
practice. Without limiting the generality of the foregoing, the Company shall;
i. not merge or consolidate with any other entity, acquire any
other business or entity, or agree to do any of the foregoing;
ii. notify Purchaser of any significant loss of, damage to or
destruction of any of its material properties or assets, whether
or not covered by insurance or indemnity;
iii. maintain in full force and effect all present insurance
coverage and apply the proceeds received under any such coverage
as a result of any loss of, damage to or destruction of any
properties or assets to the repair, restoration or replacement
thereof;
iv. use its reasonable efforts to preserve the present managerial
employees, reputation and business relationships of the Company
with persons and entities having business dealings with them; and
v. refrain from taking any action which (if not remedied) would
render any representation and warranty contained in Section 4
inaccurate at and as of the Closing Date, and shall promptly
advise Purchaser of any such event or circumstance.
c. Best Efforts to Satisfy Conditions. Purchaser and Company and
------------------------------------
the Shareholders shall use their best efforts to cause the conditions to the
Closing set forth in Section 8 hereof to be satisfied, to the extent that the
satisfaction of such conditions is in the control of such party, as soon as
practicable after the date hereof; provided, however, the foregoing shall not
constitute a limitation upon the covenants and obligations of any party
otherwise expressly set forth in this Agreement.
-27-
7. POST-CLOSING COVENANTS.
------------------------
The Parties agree as follows with respect to the period following the
Closing.
a. General. In case at any time after the Closing any further
-------
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under Sec.
9 below).
b. Litigation Support. in the event and for so long as any Party
-------------------
actively is contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand in connection with (i)any
transaction contemplated under this Agreement, or (ii)any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with it and its
counsel in the contest or defense, make available their personnel, and provide
such testimony and access to their books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Sec. 9 below).
c. Disbursements of Purchase Note Advances. Advances under the
-------------------------------------------
Purchase Note shall be paid to an account of which Xxxxx is the sole signatory,
and shall be disbursed by Xxxxx to the Company only in accordance with the
budget attached hereto as Exhibit 7(c), or as otherwise consented to by
Purchaser.
8. CONDITIONS TO OBLIGATION TO CLOSE.
--------------------------------------
a. Conditions to Obligation of the Purchaser: The obligation of
--------------------------------------------
the Purchaser to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
i. the representations and warranties set forth in Sec.4 above
shall be true and correct in all material respects at and as of
the Closing Date;
ii. the Company and the Shareholders shall have performed and
complied with all of their respective covenants hereunder in all
material respects through the Closing;
-28-
iii. the Company shall have obtained all the necessary third
party consents before the Closing Date;
iv. no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation, or (C)affect adversely the right of the Purchaser
to own the Company Shares and to exercise all rights as a
shareholder of the Company (and no such judgment, order, decree,
stipulation, injunction, or charge shall be in effect);
v. there shall have been elected to the Board of Directors, the
following slate of members: Xxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxxxx X.
Xxxxx and Xxxxxx Xxxxx;
vi. The Shareholders' Agent Agreement, attached as Exhibit 10(p)
and as described in Section 10(p) shall have been executed and
delivered by the Shareholders and the Shareholders' Agents, as
contemplated therein;
vii. There shall have been delivered to Purchaser the legal
opinion of Xxxxx Xxxxx Xxxxxx PLLC, counsel for the Shareholders,
with respect to the matters set forth in Sections 4(a),(d) and
(e);
viii. all actions to be taken by the Company or the Shareholders
in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby
will be satin, factory in form and substance to the Purchaser;
and
ix. the Purchaser and its agents and representatives shall have
had the opportunity to complete a due diligence investigation of
the business, assets, liabilities, properties and financial
condition and prospects of the Company and its subsidiaries,
including without limitation, a review of the Financial
Statements, books and records, products, inventory, customers,
suppliers, facilities, employment matters, intellectual property
ownership and stock records of the Company, and the Purchaser
shall be completely satisfied, in its sole discretion, with the
results of its due diligence investigation.
-29-
The Purchaser may waive any condition specified in this Sec. 8(a) if it executes
a writing so stating at or prior to the Closing.
b. Conditions to Obligation of the Company. The obligation of the
----------------------------------------
Company to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
i. the representations and warranties set forth in Sec.5 above
shall be true and correct in all material respects at and as of
the Closing Date;
ii. the Purchaser shall have performed and complied with all of
its covenants hereunder in all material respects through the
Closing;
iii. no action, suit, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would
(A) prevent consummation of any of the transactions contemplated
by this Agreement, or (B)cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect); and
iv. all actions to be taken by the Purchaser in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to affect the transactions contemplated hereby will be
satisfactory in form and substance to the Sellers.
The Company and the Shareholders may waive any condition specified in this Sec.
8(b) if they execute a writing so stating at or prior to the Closing.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
---------------------------------------------
a. By the Shareholders. >From and after the Closing Date, the
---------------------
Shareholders, jointly and severally, shall indemnify the Purchaser against, and
hold the Purchaser harmless from, any and all losses directly or indirectly
incurred, suffered, sustained or required to be paid by, or sought to be imposed
upon, the Company or the Purchaser resulting from, relating to or arising out
of:
i. any breach of any of the representations or warranties of the
Shareholders and the Company set forth in Article 4 hereof or
-30-
any other document or instrument executed and delivered in
connection herewith (the "Transaction Documents");
ii. any breach of any covenant or agreement made by the
Shareholders or the Company under this Agreement or the
Transaction Documents;
iii. any loss or obligation that arises from an event that
occurred, or circumstances that arose, prior to the Closing Date
involving the Company, including events and circumstances
disclosed herein.
The Shareholders shall have no liability under this Section 9(a) or otherwise in
connection with the transactions contemplated by this Agreement unless the
Purchaser gives reasonably prompt written notice to the Shareholders' Agents
asserting a claim for losses, including reasonably detailed specific facts and
circumstances pertaining thereto.
b. By Purchaser. >From and after the Closing Date, Purchaser shall
------------
indemnify the Shareholders against, and hold the Shareholders harmless from, any
and all losses directly or indirectly incurred, suffered, sustained or required
to be paid by, or sought to be imposed upon, the Shareholders or the Company
resulting from, relating to or arising out of:
i. any breach of any representations or warranties of Purchaser
set forth in Article 5 hereof or the Transaction Documents;
ii. any breach of any covenant or agreement made by Purchaser
under this Agreement or the Transaction Documents.
The Purchaser shall have no liability under this Section 9(b) or otherwise in
connection with the transactions contemplated by this Agreement unless the
Shareholders' Agents give reasonably prompt written notice to Purchaser
asserting a claim for losses, including reasonably detailed specific facts and
circumstances pertaining thereto.
c. "Losses" Defined. In this Agreement, the term "Losses" means
----------------
and includes all losses, claims, liabilities, damages, judgments, liabilities,
payments, obligations, costs and expenses (including, without limitation, any
reasonable legal fees and costs and expenses incurred after the Closing Date in
defense or in connection with any alleged or asserted liability, payment or
obligation as to which indemnification may apply hereunder), regardless of
whether or not any liability, payment, obligation or judgment is ultimately
imposed against the indemnified party and whether or not the indemnified party
is made or becomes a party to an action, suit or proceeding in respect thereof,
voluntarily or involuntarily.
-31-
d. Notice of Claims. With respect to any matter as to which any
------------------
person or entity (the "Indemnified Person") is entitled to indemnification from
any other person or entity (the "Indemnifying Person") under this Article 9, the
Indemnified Person shall have the right, but not the obligation, to contest,
defend or litigate, and to retain counsel of its choice in connection with, any
claim, action, suit or proceeding by any third party alleged or asserted against
the Indemnified Person in respect of, resulting from, relating to or arising out
of such matter, and the costs and expenses thereof shall be subject to the
indemnification obligations of the Indemnifying Person hereunder; provided,
however, that if the Indemnifying Person acknowledges in writing its obligation
to indemnify the Indemnified Person in respect of such matter to the fullest
extent provided by this Article 9, then an Indemnifying Person shall be
entitled, at its option, to assume and control the defense of such claim,
action, suit or proceeding at its expense through counsel of its choice if it
gives prompt notice of its intention to do so to the indemnified Person. Neither
an indemnified Person nor an Indemnifying Person shall be entitled to settle or
compromise any such claim, action, suit or proceeding without the prior written
consent of the other party hereto and for purposes of this provision the "other
party hereto" shall be: (a) Purchaser, for any Indemnified Person or
Indemnifying Person who is a Sellers' Indemnified Person; and (b) the
Shareholders' Agents, for any Indemnified Person or Indemnifying Person who is a
Purchaser's Indemnified Person, which consent shall not be unreasonably
withheld, delayed or conditioned.
e. Survival of Provisions.
-------------------------
i. All representations and warranties contained herein or made
pursuant to this Agreement shall survive the Closing.
ii. All covenants and agreements of the parties contained in or
made pursuant to this Agreement and required to be performed
prior to the Closing Date shall not survive the Closing and shall
be deemed to have been waived by the party for whose benefit the
covenant or agreement exists. All other covenants and agreements
contained in or made pursuant to this Agreement (including
Section 9(a) and 9(b) shall survive the Closing so long as any
claim is made in respect of such matters under any applicable
statute of limitations.
f. Determination of Loss. The Parties shall make appropriate
-----------------------
adjustments for the time cost of money (using the Applicable Rate as the
discount rate) in determining the amount of loss for purposes of this Sec. 9.
g. Other Indemnification Provisions; Offsets. The foregoing
--------------------------------------------
indemnification provisions are in addition to, and not in derogation of, any
statutory or common law remedy any Party may have for breach of representation,
warranty, or covenant. Purchaser shall be entitled to offset against any amounts
payable by
-32-
Purchaser or the Company to the Company or the Shareholders, as the case may be,
pursuant to this transaction or otherwise, any amounts owing to Purchaser
hereunder.
h. Effect of Director and Officer Indemnification on Shareholders'
-----------------------------------------------------------------
Indemnification Obligation. For the purposes of this Section 9, any claim for
---------------------------
indemnification asserted by the Shareholders or the Shareholders' Affiliates or
employees relating to service as a current or former director or officer or
employee of the Company against the Company (either based on a contractual
right, on the Company's Articles of Incorporation or Bylaws or on applicable
state law) arising out of claims related to acts or omissions occurring on or
before Closing shall be indemnified by the Shareholders.
10. MISCELLANEOUS.
--------------
a. Press-Releases and Announcements. The Company and the
----------------------------------
Shareholders shall not issue any press release or announcement relating to the
subject matter of this Agreement prior to the closing without the prior written
approval of the Purchaser.
b. No Third Party Beneficiaries. This Agreement shall not confer
------------------------------
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
c. Entire Agreement. This Agreement (including the documents
-----------------
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, that may have related In any way to the subject
matter hereof.
d. Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Purchaser and the Shareholders; provided, however, that
-------- -------
the Purchaser may (i) assign any or all of its rights and interests hereunder to
one or more of its Affiliates and (ii) designate one or more of its Affiliates
to perform its obligations hereunder (in any or all of which cases the Purchaser
nonetheless shall remain liable and responsible for the performance of all of
its obligations hereunder).
e. Counterparts. This Agreement may be executed in one or more
------------
counterparts and by facsimile, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
-33-
f. Headings. The section headings' contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
g. Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Purchaser or to the Copy to:
----------------------------- -------
Company after Closing:
----------------------
Xxxxxx Xxxxx Xxxxx X. Xxxx, Esq,
CTI ACQUISITION CO. Xxxxxxx & Xxxxx, P.L.L.C.
0000 Xxxxxxxxx Xxx 000 - 0xx Xxxxxx, Xxxxx
Xxxxxx, XX 00000 5700
Fax No: (000) 000-0000 Xxxxxxx, XX 00000
Fax No: (000) 000-0000
-34-
If to the Purchaser or to the Copy to:
----------------------------- -------
Company after Closing:
----------------------
Xxxx X. French Xxxxxx X. Xxxxx, Esq.
CENTURION Xxxxx Xxxxx Xxxxxx, P.L.L.C.
TECHNOLOGIES, INC. 00000 XX Xxxxxx Xxxxxx
t 0000 XX 00xx Xxxxxx, Xxxxx 0 Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Fax No: (000) 000-0000 Fax No:(000) 000-0000
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
h. Resolution of Disputes. The Parties agree that, in the event of
----------------------
a dispute between them, arising from, concerning or in any way related to this
Agreement, the Parties shall undertake good faith efforts to negotiate the
resolution of the matter amicably between them for a period of no longer than
thirty (30) days following written notice of the dispute provided by either
Party. If these negotiations prove to be unsuccessful for any reason, either
Party may initiate a court action.
i. Amendments and Waivers. No amendment of any provision of this
------------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser and the Shareholders' Agents. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
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.
j. Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall
-35-
be enforceable as so modified after the expiration of the time within which the
judgment maybe appealed.
k. Expenses. Each of the Parties will bear its own costs and
--------
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Shareholders agree that
the Company has not borne and will not bear any of the Shareholders' costs and
expenses (including any of its legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
l. Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
m. Incorporation of Exhibits and Schedules. The Exhibits and
-------------------------------------------
Schedules Identified in this Agreement are incorporated herein by reference and
made a part hereof.
n. Specific Performance. The Shareholders, the Company and
---------------------
Purchaser each acknowledge and agree that the other Party(ies) would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, the Shareholders, the Company and Purchaser agree that a Party
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in addition to any other
remedy to which they may be entitled at law or in equity.
o. Currency. All dollar amounts used in this Agreement are in
--------
United States dollars.
[Remainder of page intentionally left blank]
-36-
p. Shareholders, Agents. Shareholders, pursuant to the
---------------------
Shareholders Agent Agreement attached hereto as Exhibit 10(p), have appointed
and authorized Xxxx X. Xxxxxx and Xxxxxx X. Xxxx as the Shareholders' Agents to
act on their individual behalves with respect to all matters concerning the
transactions contemplated in the Transaction Documents. In dealing with or
communicating with the Shareholders, Purchaser shall be entitled to rely on the
representations, agreements and actions of the Shareholders' Agents. Notices
given to or other actions taken with respect to the Shareholders' Agents by
Purchaser for the benefit of the Shareholders as contemplated hereby or the
other Transaction Documents shall be deemed made, taken or delivered to each of
the Shareholders. Purchaser and the Company shall be third party beneficiaries
of the Shareholders' Agent Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
SELLER:
CENTURION TECHNOLOGIES, INC.
/s/: Xxxx X. French /s/ Xxxxxx X. Xxxx
------------------------------------ ------------------------------------
Xxxx X. French, President Xxxxxx X. Xxxx
/s/: Xxxx X. French /s/ Xxxxxxx X. Xxxx
------------------------------------ ------------------------------------
Xxxx X. French, President Xxxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxx, Md /s/ Xxxxx X. Xxxxxxx 6/10-99
------------------------------------ ------------------------------------
Xxxxxx X. Xxxxxxx, Md Xxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxx /s/ Xxxxx Xxxxxx
------------------------------------ ------------------------------------
Xxxx X. Xxxxx Xxxxx Xxxxx
/s/ Xxxxx X. Xxx /s/ Xxxxx Xxxxxx
------------------------------------ ------------------------------------
Xxxxx X. Xxx Xxxxx Xxxxxx
-37-
/s/ Xxx X. Xxxxxxx
------------------------------------ ------------------------------------
Xxxxxx X. Xxxxxxx Xxx X. Xxxxxxx
CARDIAC DIMENSIONS, INC.
/s/ Xxxxxxxxx Xxxxxx 6-8-99
------------------------------------
Xxxxxxxxx Xxxxxx
By /s/ Xxxxx Xxxxxxx
----------------------------------
Xxxxx Xxxxxxx, its President
/s/ Xxxxxxx Xxxxxx 6-8-99 CARDIOTHORACIC SURGEONS
------------------------------------ 401K Saving Plan & Trust FOB
Xxxxxxx Xxxxxx
/s/ Xxxx X. Xxxxxxxxx 6/16/99 By
------------------------------------ ----------------------------------
Xxxx X. Xxxxxxxxx Xxxx X. Vitkainen
PURCHASER:
CTI ACQUISITION CORPORATION
/s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx, President
ABACUS CAPITAL L L.C. UPGRADE INTERNATIONAL CORP.
By /s/ Xxxxx X. Xxxxx By /s/ Xxxxxx Xxxxx
------------------------------------ ----------------------------------
Xxxxx X. Xxxxx, Manager Xxxxxx Xxxxx, President
-38-
