AMP Stock Purchase Agreement
Exhibit
2.1
This
Stock Purchase Agreement (the
“Agreement”) is
made and entered into this 16thh
day of
January, 2008, by and among MISCOR Group, Ltd., an Indiana corporation (the
“Purchaser”),
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇▇▇▇▇▇”),
▇▇▇▇▇▇ ▇▇▇▇▇▇ (“▇▇▇▇▇▇”), ▇▇▇▇▇▇
▇▇▇▇
(“Coll”),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (“Rizzieri”), and ▇▇▇▇
▇▇▇▇▇ (“▇▇▇▇▇”
and, collectively
with Mehlenbacher, Fearon, Coll and Rizzieri, the “Shareholders”).
Recitals:
A.
Shareholders own all of the issued and outstanding capital stock of American
Motive Power, Inc., a Nevada corporation (the “Company”), with such
capital stock consisting of two hundred thousand (200,000) shares of common
stock, of which one hundred thousand (100,000) shares are Voting Common Stock,
$.01 par value per share (“Voting Common
Stock”), and one hundred thousand (100,000) shares are Non-Voting Common
Stock, $.01 par value per share (together with the Voting Common Stock, the
“Shares”).
B.
The Company is engaged in the repair, remanufacturing and rebuilding of
locomotive engines, as well as providing related goods and services to the
railroad industry (the “Business”).
C.
Shareholders desire to sell the Shares to Purchaser, and Purchaser desires
to
purchase the Shares from Shareholders, at the price and subject to the terms
and
conditions set forth in this Agreement.
Now
therefore, in consideration of the
promises hereinafter made, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the recital provisions
above are incorporated into the body of this Agreement as if fully set forth
therein, and the parties agree as follows:
Article
I. Purchase and Sale of Shares
1.01
Purchase and Sale of
Shares. On and subject to the terms and conditions set forth
herein, on the Closing Date, Shareholders shall sell, assign, convey, transfer
and deliver to Purchaser, and Purchaser shall purchase from Shareholders, the
Shares, free and clear of any and all liens, claims, pledges, hypothecations, mortgages,
deeds of trust, security interests, leases, charges, options, rights of first
refusal, easements, servitudes, proxies, voting trusts or agreements, transfer
restrictions under any shareholder or similar agreement, encumbrances or other
restrictions or limitations of any nature whatsoever (collectively,
“Liens”).
1.02
The
Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take
place on the date hereof or such other time as may be mutually agreed upon
by
the parties to this Agreement (the “Closing Date”) by
exchange of signed documents or by such other method as may be
mutually agreed upon by the parties to this Agreement.
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Article
II. Payment of Consideration
2.01
Purchase
Price. The purchase price (the “Purchase
Price”) for
the Shares shall be an aggregate amount in cash and Purchaser Shares equal
to
(a) Eleven Million Dollars ($11,000,000), less the value of the Capital Advance
defined in Section 2.03(b) and (b) further adjusted as necessary by the Closing
Adjustment Amount and Post-Closing Adjustment Amount determined in accordance
with Section 2.02, payable as set forth in Section 2.03.
2.02
Working Capital
Adjustment. At least one business day prior to Closing,
Shareholders will deliver a statement to Purchaser setting forth Company’s good
faith estimate of the Closing Working Capital (the “Estimate”), which Estimate
is expected to be reasonably close to what the actual Closing Working Capital
number will later be determined to be. At the Closing, based upon the
Estimate, the Purchase Price shall be adjusted (i) downward on a
dollar-for-dollar basis to the extent the Closing Working Capital is less than
Three Hundred Fifty Thousand Dollars ($350,000.00), or (ii) upward on a
dollar-for-dollar basis to the extent the Closing Working Capital is greater
than Five Hundred Thousand Dollars ($500,000.00). The amount of the adjustment
to the Purchase Price at Closing (which may be a positive or negative number),
if any, shall be referred to herein as the “Closing Adjustment
Amount.” For purposes of this Agreement, “Closing Working
Capital” means the current assets of Company (cash + accounts receivable
collectible in the ordinary course of business + inventory usable or saleable
in
the ordinary course of business + work in progress (to the extent not already
included in inventory) + prepaid expenses) less the current liabilities of
the
Company (current liabilities + accounts payable (other than amounts payable
to
the LMC Creditor Group and the Outside Creditor Group, each as hereinafter
defined)) as of the close of business on December 31, 2007, determined in
accordance with United States generally accepted accounting principles
consistently applied (“GAAP”).
Based
upon its own post-closing inspection and access to Company financial
information, Purchaser shall make its own analysis of the Closing Working
Capital and send a notice to the Shareholder Representative detailing such
finding and no later than seventy-five (75) days after the Closing Date (the
“Purchaser
Notice”). The Purchaser Notice shall include a detailed
balance sheet of the Company and a statement whether a post-Closing adjustment
to the Purchase Price is necessary to correct for the difference between the
Estimate and the actual Closing Working Capital. The amount of such
adjustment shall be referred to as the “Post-Closing Adjustment
Amount.” Following the delivery of the Purchaser Notice to the
Shareholder Representative, the Purchaser shall give and shall cause the Company
to give the Shareholder Representative and its representatives reasonable access
to all of the books and records of the Company, on reasonable notice and during
normal business hours, for so long and so often as reasonably required by them,
so that the Shareholder Representative can determine whether or not the Closing
Working Capital and Post-Closing Adjustment Amount as set forth in the Purchaser
Notice are accurate. If the Shareholder Representative determines that the
Purchaser Notice (and the computation of Closing Working Capital and
Post-Closing Adjustment Amount indicated thereon) was inaccurate, it shall
give
notice (the “Shareholder Notice”)
of such finding to the Purchaser no later than forty-five (45) days after
delivery to the Shareholder Representative of the Purchaser
Notice. Such Shareholder Notice shall specify any
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items
or
amounts as to which the Shareholder Representative disagrees and a detailed
statement of the basis of each of the Shareholder Representative’s
objections. If no such Shareholder Notice is given in accordance with
this Section 2.02, the Purchaser Notice (and the computation of Closing Working
Capital and Post-Closing Adjustment Amount indicated thereon) delivered by
Purchaser to the Shareholder Representative shall be conclusive and binding
upon
the parties and shall be the Closing Working Capital and Post-Closing Adjustment
Amount for purposes of this Agreement.
If
a
Shareholder Notice is provided in accordance with this Section 2.02 and the
parties are unable to resolve any disagreements as to the Post-Closing
Adjustment Amount within thirty (30) days after the Shareholder Notice has
been
given to the Purchaser, the items or amounts in dispute shall be referred for
resolution to the firm of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ & Co., LLP (the “Independent
Accountants”). In the event that such
firm declines to serve or
is
unable to serve due to a conflict or
similar reason, the firm of ▇▇▇▇▇▇▇▇▇ & Co., LLP shall be engaged as
the Independent
Accountants. Promptly, but no later than 20 days after
acceptance of the appointment as Independent Accountants, the Independent
Accountants shall determine (it being understood that in making such
determination, the Independent Accountants shall be functioning as an expert
and
not as an arbitrator), based primarily on written submissions by Purchaser
and
the Shareholder Representative, which may be confirmed by independent review
if
the Independent Accountants deem such review to be necessary, only those issues
in dispute and shall render a written report as to the resolution of the dispute
and the resulting computation of the Closing Working Capital and Post-Closing
Adjustment Amount which shall be conclusive and binding on the
parties. In resolving any disputed item, the Independent Accountants
(x) shall be bound by the provisions of this Section 2.02 and (y) may
not assign a value to any item greater than the greatest value for such items
claimed by either party or less than the smallest value for such items claimed
by either party. Purchaser and the Shareholders (in the aggregate)
shall each be responsible for one-half (½) of the fees and expenses charged by
the Independent Accountants for their services. Purchaser shall
permit the Independent Accountants to review the books and records of the
Company that relate to the items in dispute, during normal business hours and
upon reasonable notice.
No
later
than the third (3rd) business day following the date of final determination
of
the Post-Closing Adjustment Amount in accordance with this Section 2.02, (i)
if
such Post-Closing Adjustment Amount is a positive number, then Shareholders
will
pay such Post-Closing Adjustment Amount (together with interest thereon) to
Purchaser by wire transfer of immediately available United States funds into
an
account designated in writing by Purchaser and (ii) if the final Post-Closing
Adjustment Amount is a negative number, then Purchaser will pay such
Post-Closing Adjustment Amount (together with interest thereon) to the
Shareholders (pro rata to the number of Shares being sold by each of them)
by
wire transfer of immediately available United States funds into an account
designated in writing by the Shareholder Representative. For the
purposes of this Section 2.02, interest will be payable at the “prime
rate”, as announced by The Wall Street Journal, Eastern Edition, from time to
time to be in effect, calculated based on a 365 day year and the actual number
of days elapsed between the Closing Date and the date of payment.
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2.03
Payment of Purchase
Price. On the Closing Date, Purchaser shall pay the Purchase
Price as follows:
(a)
Purchaser
Shares. Such number of non-registered shares of Purchaser’s
common stock (the “Purchaser Shares”)
with an aggregate market value of Three Million Five Hundred Thousand Dollars
($3,500,000.00), with each Purchaser Share being valued at an amount equal
to
the average closing price reported for the five (5) trading days immediately
preceding the Closing Date, shall (subject to the provisions of Section 2.03(b))
be issued to Shareholders pro rata in proportion to the number of Shares sold
to
Purchaser by each of the Shareholders, as indicated on Schedule 3.03, or in
a different proportion as may be agreed to among and between the Shareholders
in
writing, a copy of which shall be provided to Purchaser at Closing. The
number of Purchaser Shares to be issued to the Shareholders pursuant to this
Section 2.03 shall be reduced by the number of shares issued to the LMC Creditor
Group pursuant to the provisions of Section 2.03(b).
The
Purchaser Shares will be issued
by
Purchaserto Shareholders on
or before March 1,
2008. If
Purchaser fails to issue the Purchaser Shares on or before March 1, 2008, then
Shareholders will have the option of either (a) receiving the Purchaser Shares
as soon as they can be issued by Purchaser and, in the interim, receiving
interest on the Three Million Five Hundred Thousand Dollars
($3,500,000.00) amount, paid in cash monthly at the “Prime Rate”, as published in the
Wall
Street Journal; or (b) receive a promissory note from the Purchaser for
the full Three Million Five Hundred Thousand Dollars ($3,500,000.00) (the
“Principal Amount”), with interest paid in cash monthly at the “Prime Rate”, as published in the
Wall
Street Journal,
(the “Interest Rate”), with the
Principal Amount paid in full within three (3) years of the Closing
Date.
(b)
Cash at
Closing. A total of Seven Million Five Hundred Thousand
Dollars ($7,500,000.00), plus or minus the Closing Adjustment Amount, shall
be
paid by Purchaser at the Closing (“Cash at Closing”),
directly to the creditors listed on Schedule 2.03(b),
which shall include all amounts owed to:
(i)
General Electric Capital Corporation; Magnetech Industrial Services, Inc.;
HK
Engine Components, LLC; Chemung Bank; ▇▇▇▇▇ Fargo (formerly Encore Leasing)
and
New York State Business Development Corporation (SBA Loan) (collectively the
“Outside Creditor
Group”) and
(ii)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, LMC Industrial Contractors, Inc. (“LMCIC”); LMC Power
Systems, Inc. (“LMC
Power”); and Dansville Properties, LLC (the “Landlord”)
(collectively the “LMC
Creditor Group”).
These
payments, made by Purchaser on behalf of the Company at Closing, shall be deemed
a capital contribution to the Company (the “Capital Advance”) and
shall extinguish the debt listed on Schedule
2.03(b).
The
Purchaser will hold Three Hundred Twenty Five Thousand Dollars ($325,000.00)
of
the Capital Advance, pending receipt of the payoff statements for the debt
owed
to General Electric Capital Corporation on the eight (8) remaining
accounts
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|
(Accounts
▇▇▇▇▇▇▇-001 through 008) (the “Remaining GECC Debt”). Upon
receipt of such payoff statements, the Purchaser shall pay and
extinguish
the Remaining GECC Debt. In the event that the $325,000.00 held
back by the Purchaser is less than or greater than the actual amount
of
the Remaining GECC Debt, such deficiency or excess, as the case
may be,
shall be paid as set forth in the following paragraph.
|
If
the
sum of the debt listed on Schedule 2.03(b) exceeds the amount of the Cash
at
Closing, then the Company shall first satisfy and extinguish the debt owed
to
the Outside Creditor Group, with the remaining balance of the Capital Advance
to
be paid to the LMC Creditor Group (with each member of the LMC Creditor Group
receiving a portion of the cash based upon its pro rata share of the total
amount owed by the Company to the entire LMC Creditor Group). In the
event that the debt listed on Schedule 2.03(b) exceeds the amount of the
Cash at
Closing, the Purchaser will issue to the LMC Creditor Group, pro rata to
the
amounts owned by them, that portion of the Creditor Shares as has a value
(valued as set forth in Section 2.03(a)) equal to the amount by which such
indebtedness exceeds the amount of the Cash at Closing available for payment
to
the LMC Creditor Group.
(2)
The second payment (if any) of the cash portion of the Purchase Price shall
be
(a) the amount of the Cash at Closing, less (b) the amount of the Capital
Advance, which net amount (if any) shall be allocated among and paid to the
Shareholders pro rata in proportion to the number of Shares sold to Purchaser
by
each of the Shareholders, as indicated on Schedule 3.03, and
shall be payable at the Closing by wire transfer to such accounts as shall
be
designated by the Shareholder Representative.
Whether
or not the Cash at Closing and the Purchaser Shares to be issued to the LMC
Creditor Group pursuant to the provisions of Section 2.3(b) are sufficient
to
fully extinguish the debt listed on Schedule 2.03(b), each of the members
of the
LMC Creditor Group shall provide the Company with a full release of any and
all
pre-Closing liability or obligation owed them by the Company.
Article
III. Representations and Warranties of Shareholders
The
Shareholders hereby jointly and
severally represent and warrant to Purchaser, as of the Closing Date, as
follows:
3.01
Organization and
Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada,
with all requisite power and authority to own, lease and operate its facilities
and assets as presently owned, leased and operated and to carry on its Business
as it is now being conducted. The Company does not own, or have any
contract or other commitment to acquire, directly or indirectly, an interest
in
any corporation, partnership or other entity. The Company is in good
standing and qualified to do business as a foreign corporation in New York
and
all jurisdictions in which the character of the properties owned or leased
by it
therein or in which the transaction of business makes such qualification
necessary. Schedule 3.01
attached hereto is a complete and correct copy of the Company’s Articles of
Incorporation and Bylaws, which are in full force and effect as of the
date
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of
this
Agreement and which will be in full force and effect as of Closing.
3.02
Authority. Shareholders
have all requisite right, power, authority and legal capacity to execute,
deliver and carry out the terms of this Agreement and all documents and
agreements necessary to give effect to the provisions of this Agreement, and
to
consummate the transactions contemplated hereby. Except as required
by the agreements listed on Schedule 3.03, no
other action, consent, waiver, filing, authorization or approval on the part
of
the Company, Shareholders or any other person or entity, is necessary or
required to authorize the Shareholders’ due and valid execution, delivery and
consummation of this Agreement and all other agreements and documents executed
in connection herewith or contemplated hereby.
3.03
Ownership of Shares;
Capitalization.
(a)
The Shareholders are the sole record and beneficial owners of all of the Shares,
free and clear of any and all Liens, in the amounts set forth next to their
names on Schedule
3.03. Except as set forth on Schedule
3.03 hereto:
(i) Shareholders are in possession of all certificates evidencing the ownership
of the Shares, all of which are fully paid and non-assessable; (ii) Shareholders
have good and marketable title to the Shares, with no restrictions on voting
rights and the other incidents of record and beneficial ownership, and the
absolute right to sell and transfer the Shares free and clear of any and all
Liens; and (iii) there are no voting trusts, shareholder agreements or other
understandings between any of the Shareholders and any other person or entity
with respect to the voting of or any other matters with respect to the
Shares.
(b)
The authorized capital stock of the Company consists solely of the Shares,
all
of which are issued and outstanding. All of the Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are owned
by
the Shareholders as identified in Schedule 3.03
attached hereto.
(c) There
are no
outstanding or authorized options, calls, puts, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or
commitments that could require the Company to issue, sell, or otherwise cause
to
become outstanding any of its capital stock. There are no outstanding
securities or other rights which are convertible or exchangeable into capital
stock of or any other equity interest in the Company. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company. Neither
the Company nor any of the Shareholders is subject to any obligation to
repurchase or retire or to register any shares of such capital stock of the
Company or any other equity interest in the Company. No prior offer,
issue, redemption, call, purchase, sale, transfer, negotiation or other
transaction of any nature with respect to such capital stock of the Company
has
given rise to any claim or action of any nature whatsoever by any person or
entity and, to the knowledge of Company or any of the Shareholders, no fact
or
circumstance exists which could reasonably be expected to give rise to any
such
claim or action on behalf of any person or entity. There are no
dividends that have accrued or been declared but are unpaid on such capital
stock of the Company.
(d) The
Company does not
have any subsidiaries or own, directly or indirectly, any share capital, voting
securities or other equity interests of any entity.
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3.04
Enforceability. This
Agreement and all other agreements and documents executed in connection herewith
by any of the Shareholders, upon due execution and delivery thereof, shall
constitute the valid and binding obligations of each of the Shareholders and
are
enforceable against each of them in accordance with their respective terms,
except as the enforcement hereof (or thereof) may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
in general or by general principles of equity .
3.05
Absence of Default;
Consents. None of the execution and delivery by each
Shareholder of this Agreement or any documents, instruments or agreements
contemplated by this Agreement, the consummation of the transactions
contemplated hereby or thereby, or compliance by each Shareholder with any
of
the provisions hereof or thereof will conflict with, or result in any violation
or breach of, conflict with or default (with or without notice or lapse of
time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or give rise
to
any obligation of the Company to make any payment under, or to the increased,
additional, accelerated or guaranteed rights or entitlements of any Person
under, or result in the creation of any Liens upon any of the properties or
Assets of Company under, any provision of: (A) the Articles of Incorporation
or
Bylaws of the Company; (B) any contract, lease, purchase order, agreement,
document, instrument, indenture, debt, obligation, liability, mortgage, pledge,
assignment, permit, license, approval or other commitment to which the Company
and/or any of the Shareholders are a party or by which the Company and/or any
of
the Shareholders are bound; (C) any judgment, decree, order, regulation or
rule
of any court or regulatory authority; (D) any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority or arbitration tribunal to which the Company and/or any of the
Shareholders are subject. None of the Shareholders or the Company is
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any governmental or regulatory agency
or
any other third party in order for each Shareholder to consummate the
transactions contemplated by this Agreement.
3.06
Financial
Statements. Attached hereto as Schedule
3.06 are
true and correct copies of the Company’s internally prepared balance sheets and
statements of income, stockholders’ equity and cash flows for each of the
twelve-month periods ending December 31, 2005 and 2006, and the eleven-month
period ending November 30, 2007 (collectively, the “Financial
Statements”). The Financial Statements accurately reflect the
books and accounts of Company in all material respects and represent accurately
the results of the Company’s operations for the periods
indicated. The books and records of Company are kept in accordance
with, and the Financial Statements were prepared in conformity with, GAAP
applied on a consistent basis, except that such Financial Statements do not
contain the notes required by GAAP and except, in the case of interim
statements, for normally recurring year-end adjustments which are
immaterial.
3.07
Operations Since December
31,
2006. Except as set forth in Schedule
3.07,
between December 31, 2006 and the Closing Date, the Company has conducted its
Business in the ordinary course of business consistent with prior practice,
and
(except as otherwise contemplated by this Agreement) has not:
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(a)
suffered any loss, damage or destruction of or to any Assets of the Company
which, individually or in the aggregate, is in excess of $1,000, whether or
not
covered by insurance;
(b)
paid, discharged or satisfied any liability other than in the ordinary course
of
business;
(c)
declared or made any salary, bonus or compensation increases to any officers,
employees, or agents, other than customary increases in the ordinary course
of
business or instituted any bonus, insurance, pension, profit-sharing or other
employee benefit plan or arrangement made to, for, or with the employees,
directors, independent contractors or agents of the Company;
(d)
written off as uncollectible any account receivable, or reduced any reserves,
other than in the ordinary course of business;
(e)
made any change in the accounting methods or practices employed by the Company
or change in depreciation or amortization policies;
(f)
issued or sold, or contracted or made any other commitment for the issuance
or
sale of, any shares of capital stock or securities convertible into or
exchangeable for capital stock of the Company;
(g)
entered into any commitments or transactions not in the ordinary course of
business involving an aggregate value in excess of $10,000, other than the
transactions with the LMC Creditor Group listed on Schedule 2.03(b)
(h)
except as set forth in Schedule 3.07, made
aggregate capital expenditures or commitments in excess of $10,000;
(i)
terminated or amended any contract or license or other instrument, or suffered
any loss or termination or threatened loss or termination of any customer or
contractual or business arrangement, other than in the ordinary course of
business, consistent with past practices;
(j)
to the best knowledge of the
Shareholders, had
any
federal, state or local
statutes, rule, regulation, order or case adopted, promulgated or decided which,
to the best knowledge of the Shareholders, adversely affects the
Company, except
federal,
state or local
statutes, rules,
regulations ororders
of general applicability. For
purposes of this
Agreement, the Shareholders and the Company will be deemed to have “knowledge”
of a particular fact or matter if any Shareholder is or was actually aware
of
such fact or matter or if a reasonable inquiry by such Shareholder on the
Closing Date or within thirty (30) days prior to the Closing Date would have
disclosed to him the existence of such fact or matter.
(k)
failed to pay when due or otherwise compromised any debts, claims, liabilities
or rights or disposed of any properties or other Assets other than in the
ordinary course of business;
(l)
subjected any Assets to any Lien, encumbrance or restriction of any
nature
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whatsoever,
other than capital leases, purchase money security interests and liens for
taxes
not yet due;
(m)
other than in the transactions with the LMC Creditor Group listed on Schedule
2.03(b), incurred any liability or obligation other than in the ordinary course
of business, all of which are accounted for and accurately reflected on the
Company’s books and records;
(n)
suffered any adverse effect or adverse change with its relationships with its
customers, suppliers, employees and other business partners, other than in
the
ordinary course of business, consistent with past practices;
(o)
other than amendments to its Articles of Organization that are reflected in
the
attached as Schedule 3.01, amended any organizational documents of the Company;
or
(p)
agreed, committed, arranged or entered into any understanding to do anything
set
forth in this Section 3.07, nor has any Shareholder agreed, committed, arranged
or entered into any understanding to do the same.
3.08
No Undisclosed
Liabilities. Except
as set forth in Schedule 3.08
attached hereto and in Schedule 3.15
attached hereto, the Company has no liabilities or obligations, whether known,
unknown, accrued, absolute, contingent, direct or indirect other than (a) those
set forth on the most recent balance sheet included in the Financial Statements
or (b) those that satisfy both of the following criteria: (a) the obligation
was
incurred after the date of such balance sheet in the ordinary course of business
and consistent with obligations incurred in the ordinary course of business
prior to such date, and (b) the obligation, either individually or when
aggregated with other obligations of the Company, has not had and is not
reasonably expected to have a Material Adverse Effect, which shall mean that
there has not been a material adverse effect on the business, assets,
liabilities, financial condition, property, or results of operations of the
relevant party and its subsidiaries considered as a whole. Except as set forth
on Schedule
3.08, there are no known or expected losses on uncompleted
jobs.
3.09
Employment
Discrimination. Except as disclosed in Schedule
3.09
attached hereto, no person or party (including, without limitation, any
governmental agency) has asserted, or to the best knowledge of the Shareholders,
has threatened to assert, any claim for any action or proceeding, against the
Company or any officer, director, employee, or agent of the Company (and the
Company and Shareholders are not aware of any facts which could serve as the
basis for such a claim), arising out of any statute, ordinance or regulation
relating to wages, collective bargaining, discrimination in employment or
employment practices or occupational safety and health standards (including,
without limitation, the Fair Labor Standards Act, Title VII of the Civil Rights
Act of 1964, as amended, the Occupational Safety and Health Act, the Age
Discrimination in Employment Act of 1967, the Americans With Disabilities Act
or
the Family and Medical Leave Act).
3.10
Licenses and
Permits. The Company has all local, state and federal
licenses, permits, registrations, certificates, contracts, consents,
accreditations and approvals necessary for Company to operate and conduct its
Business as heretofore conducted (collectively, the “Licenses and
Permits”), and there do not exist any defaults, waivers, investigations
or
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exemptions
relating thereto or which would be caused by the transactions contemplated
by
this Agreement. There exists no grounds for revocation, suspension or
limitation of any of the Licenses and Permits, nor to the knowledge of the
Shareholders will consummating the transactions contemplated by this Agreement
cause any such grounds for revocation, suspension or limitation of the Licenses
and Permits. No notices have been received by the Company or
Shareholders with respect to any threatened, pending, or possible revocation,
termination, suspension or limitation of any of the Licenses and
Permits. Copies of each of the Licenses and Permits have been made
available to the Purchaser
and are listed on Schedule 3.10
attached hereto.
3.11
Assets. All
of the Company’s material tangible assets are listed on Schedule 3.11
attached hereto. Information regarding which such assets are leased
and from whom is also set forth on Schedule
3.11. These assets, together with all of the Company’s other
tangible and intangible assets and interests of every kind and nature, wherever
situated, whether or not carried or reflected on the books and records of
Company, that are owned by Company (the “Assets”) constitute
all of the assets necessary to operate the Company’s Business as presently
conducted. Except as disclosed in Schedule 3.11
attached hereto, the Company owns all of the Assets free and clear of all
Liens. All of the Assets are in good condition and repair for
their current use in the ordinary course of the Business of the Company and
conform in all respects with all applicable ordinances, regulations and other
laws.
3.12
Insurance. Except
as described in Schedule 3.12
attached hereto, all of the Assets are insured in such amounts and against
such
losses, casualties or risks as are reasonably customary for similar properties
and businesses, and the Company has maintained such insurance continuously
from
the date of its inception. All policies and binders of insurance for
directors and officers, fire, liability, workers’ compensation, and other
customary matters held by or on behalf of the Company (“Company Insurance
Policies”) are described on Schedule
3.12
attached hereto and have been made available to Purchaser. The
Company Insurance Policies are in full force and effect. The Company
is not in default with respect to any provision contained in any of the Company
Insurance Policies that could have the effect of cancelling, suspending or
limiting the coverage thereunder. The Company has not received any
written notice of cancellation or modification in coverage amounts of, or
increase in any premiums for, any Company Insurance Policies, and the Company
is
not aware of any facts that would result in cancellation or modification in
coverage amounts of, or increase in premiums under, any Company Insurance
Policies, other than facts and circumstances affecting the availability of
such
policies of insurance generally.
3.13
Bonded
Projects. Except as set forth on Schedule
3.13
attached hereto, since its inception, the Company has not contracted for any
work with respect to which a bid bond or performance bond was or is
required. All bonds obtained by the Company (“Company Project
Bonds”) are described on Schedule
3.13
attached hereto and have been made available to Purchaser. The
Company is not in default with respect to any provision contained in any of
the
Company Project Bonds that could have the effect of cancelling, suspending
or
limiting the coverage thereunder. The Company has not received any
written notice of cancellation or modification in coverage amounts of, or
increase in any premiums for, any of the Company Project Bonds, and the Company
is not aware of any facts that would result in cancellation or
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modification
in coverage amounts of, or increase in premiums under, any of the Company
Project Bonds.
3.14
Intellectual
Property. Schedule
3.14
attached hereto sets forth an accurate and complete list of all trademarks,
trade names, trademark registrations, service names, service marks, patents
and
applications therefor, and all other intellectual property rights owned by
the
Company and/or used in the operation of the Business, including all software
of
any nature (other than “off-the-shelf” software and operating systems software)
owned, licensed and/or used by the Company (collectively, the “Intellectual
Property”). The Company has the valid right to use all
Intellectual Property, and all Intellectual Property will be available for
use
by the Company following the consummation of the transactions contemplated
hereby, subject to continued compliance by the Company with any applicable
license or other agreements. There is no asserted or, to the
Shareholders’ and/or the Company’s best knowledge, any threatened infringement
action, lawsuit, claim or complaint that asserts that the Company’s operations
violate or infringe any of the software or other intellectual property rights,
including the trade names, trademarks, trademark registrations, service names,
service marks or patents, of any other person or entity. The Company
has taken adequate and commercially reasonable steps to maintain all trade
secrets and protect the Intellectual Property that is owned by
it. None of the Intellectual Property is owned by or registered in
the name of any current or former owner, partner, director, executive, officer,
employee, salesman, agent, customer, representative or contractor of the Company
or any of the Shareholders, nor does any such person or entity have any interest
therein or right thereto, including the right to royalty
payments. The Company has, and shall continue to have following the
consummation of the transactions contemplated hereby, the right to use the
website ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ together with all Company-specific
information, images, and logos contained therein, as well as the logos and
images used in other marketing materials used or published by the
Company.
3.15
Contracts. Except
as set forth in Schedule 3.15
attached hereto:
(a)
To the knowledge of the Shareholders, the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, including
the change in ownership and control of the Company will not have an adverse
effect on the rights and obligations of the Company under (and the legal
enforceability of) any agreements between the Company and customers, suppliers,
or any third parties, including but not limited to purchase orders, service
or
supply agreements, maintenance agreements, leases, or other agreements (the
“Contracts”).
(b)
All of the Contracts that are
material and currently pending and/or in effect are listed on Schedule
3.15, including, but not
limited to, all Contracts providing for payments by or to the Company in excess
of Ten Thousand Dollars ($10,000) in any fiscal year or Twenty-Five Thousand
Dollars ($25,000) in the aggregate during the term thereof;
(c)
All of the Contracts are in full force and effect, are valid and enforceable
in
accordance with their terms, except as the enforcement thereof may be limited
by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general or by general principles of equity. No condition
exists or event has occurred which, with notice or
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lapse
of
time or both, would constitute a default, accelerate the maturity or
performance, or permit modification, cancellation or termination by the other
party of any of the Contracts or any other contracts, agreements, or commitments
which involve the Company.
(d)
There are no renegotiations of, or (to the knowledge of the Company or the
Shareholders) attempts to renegotiate, or outstanding rights to renegotiate,
any
amounts paid or payable to the Company, under current or completed contracts,
agreements, or commitments with any person or entity having the contractual
or
statutory right to demand or require such renegotiation. No such person or
entity has made written demand for such renegotiation.
(e)
The Company is not a party to or bound by (i) any outstanding contracts with
officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by the Company
on notice of not longer than 10 days and without liability, penalty or premium;
(ii) any agreement or arrangement providing for the payment of any bonus or
commission based on sales or earnings; or (iii) any agreements that contain
any
severance or termination pay, liabilities or obligations.
(f)
The Company is not a party to any licensing agreement, either as licensor or
licensee, other than licenses of “off the shelf” software and operating systems
software entered into in connection with computers acquired by the Company
in
the ordinary course of its business.
(g)
The Company is not restricted or purported to be restricted by agreement or
otherwise (other than by laws, rules and regulations of general applicability)
from carrying on its Business anywhere in the United States or
elsewhere.
(h)
The Company is not a guarantor of or for the obligations or liabilities of
any
other person, firm or corporation, including without limitation, any of the
Shareholders.
3.16
Premises. The
Company owns no real estate. The Company leases the premises at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ (the “Premises”), under
a
Commercial Lease agreement with the Landlord. The Company leases no
other real property. In connection with or prior to the Closing, the
Company will execute a new lease agreement with Landlord, a complete copy the
form of which lease is attached as Exhibit 3.16 hereto
(the “New
Lease”). As of the Closing, the Company will have no
agreement, understanding, or obligation whatsoever with or to the Landlord
with
respect to the Premises other than as set forth in the New
Lease. Under the New Lease, the Company will have the right to
continue to occupy the Premises from the Closing Date through December 2014
under the terms and conditions of the New Lease.
3.17
Litigation. Except
as set forth in Schedule 3.17
attached hereto: (i) there are no claims, lawsuits, actions,
arbitrations, administrative or other proceedings pending against the Company
and, to the best knowledge of the Shareholders, no such matter is threatened
and
there is no basis for any such action; (ii) to the best knowledge of the
Shareholders, there are no governmental or administrative investigations or
inquiries pending that involve the Company; (iii) there are no judgments against
or consent decrees binding on the Company or its assets; and (iv) all claims,
lawsuits, actions, arbitrations, administrative or other proceedings pending
against
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the
Company have been reported to the appropriate insurance carrier and, except
as
indicated in Schedule
3.17 attached hereto, the Company has not received a notice of denial of
coverage or a reservation of rights. Except as set forth in Schedule 3.17
attached hereto there are no claims, lawsuits, actions, arbitrations,
administrative or other proceedings pending against any Shareholder which may
prevent, interfere with or otherwise delay the consummation of the transactions
contemplated by this Agreement or the valid sale of the Shares to Purchaser
and,
to the best knowledge of the Shareholders, no such proceeding is threatened
and
there is no basis for any such action.
3.18 Environment,
Health and Safety.
|
(a)
|
Except
as set forth on Schedule
3.18,
the Company and the Premises are, and at all times prior hereto
have been,
in compliance with any and all Environmental Laws and Health and
Safety
Laws, and no Claim relating to a violation of any such laws has
been made
with respect to the Company, the operation of the Business or the
Premises.
|
|
(b)
|
Except
as set forth on Schedule
3.18,
there is no Environmental or Health and Safety Circumstance related
to the
Premises or to past or present operations of the Company on or
off any of
the properties, facilities or premises on which the Business has
been
operated.
|
|
(c)
|
Except
as set forth on Schedule
3.18,
the Company has not, either expressly or by operation of law, assumed
or
undertaken any liability, including without limitation, any obligation
for
corrective or remedial action, of any other person or entity with
respect
to any Environmental Law, nor has the Company caused, permitted
or allowed
any “release” (as defined in 42 U.S.C. § 9601(22)) of any Hazardous
Substance, Pollutant or Contaminant on the Premises or on any other
real
property owned, leased, operated or used by the Company in connection
with
the Business.
|
|
(d)
|
Except
as set forth on Schedule
3.18,
the Company has obtained (or has pending timely filed applications
for)
any and all environmental permits legally required to operate the
Company
and any assets used in connection therewith.
|
|
(e)
|
The
Shareholders have provided Purchaser with copies of any and all
environmental reports conducted by or for them with respect to
the
Premises and any other real property owned, leased, operated or
used by
the Company in connection with its operations and the conduct of
the
Business.
|
|
(f)
|
For
purposes of this Section 3.18:
|
(i)
“Environmental
Law” means any federal, state or local statute, rule, regulation or
ordinance having as its primary purpose the protection of the environment or
the
protection of human health from the effects of environmental pollutants and
any
permit, license or authorization required thereunder, as well as common
law.
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(ii)
“Health and Safety
Law” means any federal, state or local statute, rule, regulation or
ordinance having as its primary purpose the protection of worker safety or
health in the workplace.
(iii)
“Hazardous Substance,
Pollutant or Contaminant” means any “hazardous substance” as defined in
42 U.S.C. § 9601(14), any “pollutant or contaminant” as defined in 42
U.S.C. § 9601(33), and petroleum, including crude oil or any fraction
thereof.
(iv)
“Claim” means
and includes any claim, action, suit, demand, administrative proceeding, notice
of violation, notice of deficiency, or general notice of potential liability
alleging any failure to comply with or any liability under any Environmental
Law
or Health and Safety Law, including, without limitation, any liability under
common law for damages or injury to person or property.
(v)
“Environmental or
Health and Safety Circumstance” means any fact, circumstance, activity,
practice, incident, action, plan or condition which would constitute a failure
to comply with any Environmental Law or Health and Safety Law, or would give
rise to potential liability under any such Law.
3.19
Labor
Matters. The Company is not a party to any collective
bargaining agreement and has not been the subject of any union activity or
labor
dispute. There has not been any strike of any kind called or
threatened to be called against the Company. The Company is not
experiencing any labor troubles or strikes, work stoppages, slow-downs or other
material interference with the Business by labor.
3.20
Tax
Matters.
(a)
For purposes of this Agreement, (i) “Tax” means any
federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Internal Revenue Code
of
1986, as amended (the “Code”), customs
duties, capital stock, franchise, profits, withholding, social security,
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, and (ii) “Tax Return” means any
return, report, information return, or other document (including any related
or
supporting information) filed or required to be filed with any taxing authority
in connection with its determination, assessment, collection, administration,
or
imposition of any Tax.
(b)
Except as set forth in Schedule 3.20(b), the
Company has or on the Closing Date will have duly and timely filed each and
every Tax Return then due and has duly and timely paid all Taxes and other
charges (whether or not shown on any Tax Return) due or claimed to be due from
it by federal, foreign, state, or local taxing authorities or has or will have
set up an adequate reserve in the Financial Statements in accordance with GAAP
for all Taxes payable. True and correct copies of all Tax Returns
relating to federal taxes and state income and sales taxes and other charges
for
the periods ending December 31, 2005 and 2006 have been
heretofore
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delivered
to Purchaser, together with any exemption certificates or other material Tax
documents and correspondence with any taxing authority. The Company
has not received any written notice of any deficiencies for any
Taxes. There are no Liens for Taxes upon any properties or assets of
the Company (whether real, personal, or mixed, tangible or intangible) other
than for Taxes not yet due, and there are no pending or, to the Shareholders’
knowledge, threatened audits or examinations relating to, or claims asserted
for, Taxes or assessments against the Company, and the Shareholders have no
knowledge of any basis for any such claims. The Company has not been
granted or been requested to grant any extension of the limitation period
applicable to any claim for Taxes or assessments with respect to
Taxes. The Company is not a party to any Tax allocation or sharing
agreement. The Company is not liable for the Taxes of any “Affiliated
Group” under Treasury Regulation 1.1502-6 (or any similar provision of state,
local, or foreign law). The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or
owing
to any employee, independent contractor, creditor, or stockholder.
(c)
Schedule
3.20(c) attached hereto lists each jurisdiction in which the Company
files or has filed Tax Returns for each period or portion thereof ending on
or
before the date of this Agreement.
(d)
Schedule
3.20(d) attached hereto lists each state within the United States and
also each country other than the United States in which the Company has either
had (a) sales; (b) employees physically working; or (b) equipment physically
located since January 1, 2005.
(e)
Except as set forth in Schedule 3.20(e)
attached hereto, there is no claim that has been made and is outstanding against
the Company by any taxing authority in a jurisdiction where the Company does
not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(f)
The Company is not a party to any agreement, contract, arrangement or plan
that
has resulted or would result, separately or in the aggregate, in the payment
of
any “excess parachute payment” within the meaning of Code § 280G (or any
corresponding provision of state, local, or foreign Tax law). The
Company has not been a United States real property holding corporation within
the meaning of Code § 897(c)(2) during the applicable period specified in Code §
897(c)(1)(A)(ii).
(g)
The unpaid Taxes of Company (i) did not, as of the date of the Financial
Statements, 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 balance sheet contained in such Financial
Statements (rather than in any notes thereto) and (ii) will not exceed that
reserve as adjusted for operations and transactions through the Closing Date
in
accordance with the past custom and practice of Company in filing its Tax
Returns.
(h)
The Company will not be required to include any item of income in, or exclude
any item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any:
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(i)
change in method of accounting for a taxable period on or prior to the Closing
Date;
(ii)
“closing agreement” as described in Code § 7121 (or any corresponding or similar
provision of state, local or foreign income Tax law) executed on or prior to
the
Closing Date;
(iii)
installment sale or open transaction disposition made on or prior to the Closing
Date; or
(iv)
prepaid amount received on or prior to the Closing Date.
(i)
As of the date hereof, the Company currently receives, and has met or fulfilled,
and as of the Closing Date the Company will have met or fulfilled, all
conditions necessary as of such dates to maintain eligibility for, the Empire
Zone income tax credits that are listed on Schedule 3.20(i), and
the change of ownership or control and performance of the transactions
contemplated by this Agreement will not affect the Company’s eligibility for, or
the continued receipt or enjoyment of, such credits. Purchaser
acknowledges that the Company will have to satisfy certain requirements after
the Closing Date to maintain eligibility for such credits (the “Empire Zone
Requirements”). For avoidance of doubt, the Shareholders shall
have no liability or responsibility to the Purchaser if and to the extent that
the benefits of any such credits are lost by reason of any action or failure
to
act on the part of the Purchaser, the Company, or any agent of the Purchaser
or
the Company (other than the execution, delivery and performance of this
Agreement), on or after the Closing Date, with respect to the Empire Zone
Requirements.
3.21
Employees. Except
the agreements described in Schedule 3.21
attached hereto, the Company has no employment agreements with its employees
and
all such employees are employed on an “at will” basis. All wages,
benefits and other amounts due and owing to, or on behalf of, all of Company’s
employees have been paid by the Company in accordance with all applicable
agreements, laws and regulations.
3.22
Employee Benefit
Plans.
(a)
Except as set forth in Schedule 3.22 (“Company’s
Employee Benefit
Plans”), the Company does not maintain or contribute to (or have the
obligation to contribute to) any Employee Benefit Plans. Full titles
and descriptions of all of Company’s Employee Benefit Plans are attached to
Schedule 3.22
and copies of all such written Plans have been made available to
Purchaser. With respect to Company’s Employee Benefit Plans, the
Company has made all payments required to be made by it on or prior to the
Closing Date.
(b)
Except as set forth on Schedule 3.22 hereto,
each of the Company’s Employee Benefit Plans and any related trust agreements,
annuity contracts, insurance contracts or other instruments are in compliance
both as to form and operation with the requirements of applicable state and
federal law, including but not limited to ERISA and the Code, and have been
administered in accordance with their terms. Each of the Company’s
Employee Benefit Plans intended to qualify under Section 401(a) of the Code
is
so qualified, and no event or condition
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38
has
occurred that would reasonably be expected to have an adverse effect on the
qualified status of such plan.
(c)
The Company does not sponsor or contribute to, and no employees of the Company
participate in, a “pension plan” (within the meaning of Section 3(2) of ERISA)
that is subject to Section 302 of ERISA or Section 412 of the Code.
(d)
The Company is not now nor has ever been a contributing employer with respect
to
any “multiemployer plan” within the meaning of Sections 3(37) and 4001(a)(3) of
ERISA. For the avoidance of doubt, the Company is a
non-contributing employer with respect to a multiemployer plan as set forth
in
Schedule
3.22.
(e)
All reports and applications relating thereto required by any government agency
have been timely filed and all contributions required to be made to each
Employee Benefit Plan under the terms of such plan, ERISA, the Code or other
applicable law have been timely made.
(f)
The Company has not engaged in, and no fiduciary of any such employee benefit
plan has engaged in, any “prohibited transaction” in violation of Section 406 of
ERISA or within the meaning of Section 4975 of the Code for which no exemption
exists under ERISA or the Code. No investigation, audit, action,
claim or litigation has been commenced or, to the knowledge of Company or any
of
the Shareholders, threatened (other than routine claims for benefits) with
respect to any of the Company’s Employee Benefit Plans, nor is the Company or
any of the Shareholders aware of any facts which reasonably could be expected
to
form the basis of such investigation, audit, action, claim or
proceeding.
(g)
Except as disclosed on Schedule 3.22, the
Company does not maintain or contribute to any employee benefit plan which
provides, and has no liability or obligation to provide, life insurance, medical
or other employee welfare benefits to any employee (or such employee’s
beneficiary) upon such employee’s retirement or termination of employment,
except as may be required by federal, state or local laws, rules or regulations,
and the Company has never represented, promised or contracted to any employee
that such employee would be provided with life insurance, medical or other
employee welfare benefits upon such employee’s retirement or termination of
employment, except to the extent required by federal, state or local laws,
rules
or regulations.
(h)
Each of the Company’s Employee Benefit Plans which is a “group health plan” as
defined in Section 5000(b)(1) of the Code has been operated in compliance with
the requirements of Section 4980B of the Code and Sections 601 through 608
of
ERISA (COBRA), and each such plan, to the extent applicable, is in compliance
with the privacy, security and other provisions of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA).
(i)
Except as set forth on Schedule 3.22 hereto,
the consummation of the transactions contemplated by this Agreement will not
(A)
entitle any individual to severance pay or (B) accelerate the time of payment,
vesting or increase the amount of compensation due to any such
individual.
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(j)
Except as set forth on Schedule 3.22 hereto,
there is no circumstance, event or condition which reasonably could be expected
to cause the Company to incur any liability in respect of an employee benefit
plan maintained by any entity which is (or at any relevant time was) a member
of
a “controlled group of corporations” (within the meaning of Section 414(c) of
the Code) with the Company or under “common control” (within the meaning of
Section 414(c) of the Code) with the Company.
(k)
“Employee Benefit
Plan” means (i) any employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 as amended (“ERISA”), and (ii)
any
other plan, trust agreement or arrangement for any bonus, severance,
hospitalization, vacation, incentive or deferred compensation, pension or
profit-sharing, retirement, payroll savings, stock option, equity compensation,
group insurance, death benefit, fringe benefit, welfare or any other employee
benefit plan or fringe benefit arrangement of any nature whatsoever, including
those benefiting retirees or former employees.
3.23
Compliance with
Laws. Except as set forth in Schedule
3.23, the
Company is not and has not been in violation of, and the Company’s Businesses
have been and are being conducted in accordance with, all federal, state,
municipal, foreign and other laws, regulations, orders and other legal
requirements applicable thereto (collectively, “Rules”), except
where
such violation or non-compliance could reasonably be expected to have a Material
Adverse Effect, and neither the Company nor any of the Shareholders has
knowledge or reason to know of, nor received notice of, any violation or alleged
violation by the Company of any Rule. For purposes of this Section
3.23 only, the term Material Adverse Effect shall mean a Loss in excess of
$1,000.
3.24
Corporate Minute
Books. The minute books of the Company have been maintained in
the Company’s usual, regular and ordinary manner and contain, in all material
respects, complete minutes of annual and special meetings of the Board of
Directors and the shareholders and any consents in lieu thereof, and the
signatures therein are the true signatures of the persons purporting to have
signed them. The stock ledgers of the Company are complete and
accurate. Such minute books and stock ledgers have been delivered to
the Purchaser.
3.25
Bank
Accounts. Schedule
3.25 lists:
(i) all accounts, safe deposit boxes and current receivable collection boxes
maintained by the Company at any bank or other financial institution and the
names of the persons currently authorized to effect transactions in such
accounts or with access to such boxes; and (ii) the names of all persons, firms,
associations, corporations or business organizations holding general or special
powers of attorney from the Company and a description of the terms
thereof.
3.26
Broker’s or Finder’s
Fee. Neither the Company nor any of the Shareholders have
employed, or are liable for the payment of any fee to, any finder, broker,
consultant or similar person in connection with the transactions contemplated
by
this Agreement.
3.27
Customers. Except
as listed on Schedule
3.27, neither the Company nor any Shareholder has received any notice or
has knowledge that any of the Company’s customers intends to terminate or reduce
its commercial relationship with the Company, and no customer
has
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terminated
or materially reduced its commercial relationship with the Company in the last
twelve (12) months.
3.28
Product and Service
Warranty. Except as listed on Schedule
3.28, to the
knowledge of the Shareholders, the Company has no liability (whether known
or
unknown and whether absolute or contingent) for the replacement or rework of
products or services sold or delivered by the Company or other damages in
connection therewith, and no product or service sold or delivered by Company
is
subject to any guaranty, express warranty or other indemnity.
3.29
Inventory. The
inventory of the Company as of November 30, 2007 is as set forth on Schedule 3.29
hereto. There has been no material change in the inventory since that
date other than changes consistent with past practices of the Company in the
ordinary course of business. All inventory of the Company is of a
quality salable in the ordinary course of business consistent with the past
practices, subject to normal allowances for outdated or damaged items, which
allowances are not material. The Company’s current inventory includes sufficient
quantities of raw materials, as consistent with the past practices of the
Company in the ordinary course of business, for the normal operation of the
Business on the Closing Date.
3.30
Accounts Payable and
Receivable. A true, accurate, and complete statement of the
accounts payable and receivable of the Company as of November 30, 2007 is as
set
forth on Schedule
3.30 hereto. There has been no material change in the balance
of accounts payable and accounts receivable since that date other than changes
consistent with past practices of the Company in the ordinary course of
business. All accounts payable and receivable are valid obligations
arising from sales actually made or services actually performed by the Company
in the ordinary course of business. All accounts receivable are
collectible in the ordinary course of business.
3.31
Related
Party
Transactions.
Except as listed on Schedule 3.31, no
Shareholder, nor any entity in which any of the Shareholders, directly or
indirectly, owns any beneficial interest (a “Related Party”), has
any direct or indirect interest in: (i) any contract, arrangement or
understanding with, or relating to the Business or operations of, the Company;
(ii) any loan, arrangement, understanding, agreement or contract for or relating
to indebtedness of the Company; (iii) any property (real, personal or mixed),
tangible or intangible, used in the Business or operations of the Company;
or
(iv) any business or entity that competes with the
Company. Except as listed on Schedule 3.31, the
Company does not owe and is not obligated to pay any of the Shareholders or
any
Related Party any amount, and none of the Shareholders nor any Related Party
has
any claim of any kind against the Company or any affiliate, employee, officer
or
director of the Company.
3.32
Grants. As of
the date hereof, the Company participates in employment reporting activities
related to two grants in which Dansville Properties, LLC is the grant recipient,
the Small Cities grant (the “SC Grant”) and the
Empire State Development grant (the “Empire Grant”) that
are listed on Schedule
3.32. To the Shareholders’ knowledge, the change of ownership
or control and performance of the transactions contemplated by this Agreement
will not affect eligibility for, or the continued receipt or enjoyment of,
such
grants. Purchaser acknowledges that, the Company will have
to satisfy certain requirements after the Closing Date
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(the
“Grant
Requirements”) in order for such grants to remain in
effect. For avoidance of doubt, the Shareholders shall have no
liability or responsibility to the Purchaser if and to the extent that the
benefits of any such grants are lost by reason of any action or failure to
act
on the part of the Purchaser, the Company, or any agent of the Purchaser or
the
Company (other than the execution, delivery and performance of this Agreement),
on or after the Closing Date, with respect to the Grant
Requirements.
3.33
No Omissions or
Misstatements. None of the statements or information included
in this Agreement or in the Schedules hereto, or other documents furnished
or to
be furnished by any of the Shareholders or the Company, or any of their
representatives, contains any untrue statement of a material fact or is
misleading in any material respect or omits to state any material fact necessary
in order to make any of the statements herein or therein not misleading in
light
of the circumstances in which they were made. Shareholders have fully
disclosed to the Purchaser all material facts known to them affecting the
Company.
3.34
Securities
Matters. In connection with the Company’s compliance with
applicable securities laws, the Shareholders acknowledge, understand, agree,
represent and warrant that:
a.
The issuance of the MISCOR Shares to the Shareholders pursuant to this Agreement
has not been and is not being registered under the Securities Act of 1933,
as
amended (“1933 Act”) or any applicable state securities laws, and the Company
has no obligation to register any such MISCOR Shares under such laws. The
Shareholders may be required to hold the MISCOR Shares
indefinitely.
b.
The Shareholders shall not transfer any Shares, or any interest in any Shares,
unless (i) the transfer is registered under the 1933 Act and applicable state
securities laws, or (ii) the Shareholders shall have delivered to the Company
an
opinion of counsel acceptable to the Company to the effect that the transfer
complies with an applicable exemption from such registration.
c.
The Shareholders are acquiring the MISCOR Shares for their own account, not
as a
nominee or agent for or with the funds of another person, for investment
purposes and not with a present view towards resale or other
distribution.
d.
Shareholder ▇▇▇▇▇▇▇▇▇▇▇▇ alone represents that he is an “accredited investor” as
that term is defined in Rule 501(a) of Regulation D under the 1933
Act. Each Shareholder has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
an
investment in the MISCOR Shares.
e.
The Shareholders are not executing this Agreement and acquiring the MISCOR
Shares as a result of any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or any other general solicitation.
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f.
The Shareholders have conducted their own due diligence examination of MISCOR’s
business, management, financial condition, results of operations, properties
and
prospects. In connection with such investigation, the Shareholders
and their representatives (i) have reviewed the Company’s SEC filings, including
but not limited to its periodic reports, proxy statements, and all financial
statements and exhibits included therein or incorporated by reference, (ii)
have
been given an opportunity to ask questions, to the extent Shareholders
considered necessary, and have received answers from, officers of the Company
concerning the business, finances and operations of the Company and information
relating to the offer and sale of the MISCOR Shares, and (iii) have received
or
had an opportunity to obtain such additional information as they deem necessary
to make an informed investment decision with respect to their acquisition of
the
MISCOR Shares and to verify the accuracy and completeness of information
received from the Company.
g.
MISCOR has not made any and makes no representation or warranty, express or
implied, other than the express representations and warranties of the Company
in
Article 5, and in particular makes no representation or warranty with respect
to
any other documents or information provided or made available to the
Shareholders or their representatives regarding the Company or the MISCOR
Shares. For purposes of the transactions contemplated by this Agreement and
the
other Transaction Documents, the Shareholders may rely only on the express
representations and warranties of the Company in Article 5, and that the
Shareholders are not entitled to rely on any representation or warranty of
the
Company that Shareholders know before Closing is not accurate or
complete.
h.
Until such time as the resale of the MISCOR Shares has been registered under
the
1933 Act and applicable state securities laws or otherwise may be sold pursuant
to an exemption from registration, certificates evidencing the MISCOR Shares
may
bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates
evidencing such Shares):
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
FEDERAL SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY
STATE. THE SHARES MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS THEY
HAVE FIRST BEEN SO REGISTERED OR UNLESS THE COMPANY RECEIVES A WRITTEN OPINION
FROM LEGAL COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.”
i.
MISCOR
is relying upon the truth and accuracy of, and the Shareholders’ compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Shareholders set forth herein to determine the
availability of exemptions from the registration requirements of the 1933 Act
and applicable securities laws and the eligibility of the Shareholders to
acquire the MISCOR Shares pursuant to this Agreement.
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j. Each
of the Shareholders is a resident of the State of New York. The
Shareholders acknowledge and agree that the offer and sale of the MISCOR Shares
has occurred in the State of New York.
Article
IV. Representations and Warranties of Purchaser
Purchaser
hereby represents and
warrants to the Shareholders as follows:
4.01
Organization and
Qualification. Purchaser is a corporation duly organized and validly
existing under the laws of the State of Indiana. Purchaser has full
power and authority, and all licenses, permits, and authorizations necessary,
to
consummate the transaction contemplated by this Agreement.
4.02
Authority. Purchaser
has the full right, power and authority to execute, deliver and carry out the
terms of this Agreement and all documents and agreements necessary to give
effect to the provisions of this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and consummation of this
Agreement, and all other agreements and documents executed in connection
herewith by Purchaser have been duly authorized by all necessary corporate
action on the part of Purchaser. No other action, consent or approval
on the part of Purchaser or any other person or entity, is necessary to
authorize the due and valid execution, delivery and consummation of this
Agreement and all other agreements and documents executed in connection hereto
by Purchaser.
4.03
Enforceability. This
Agreement and all other agreements and documents executed in connection herewith
by Purchaser shall constitute the valid and binding obligations of Purchaser
and
are enforceable in accordance with their respective terms, except as the
enforcement hereof (or thereof) may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights in general
or
by general principles of equity.
|
|
4.04
|
Corporate
Action
|
. Purchaser
has
taken all corporate action required
to enter into and
performits obligations
pursuant to this
Agreement and to issue and sell the Purchaser
Shares,
except that (a) Purchaser has not
completed the process of increasing the number of authorized shares available
for issuance, which is a necessary precondition to Purchaser issuing the
Purchaser Shares, and which process is expected to be completed on or around
February 7, 2008 and (b) Purchaser represents that it will promptly take all
such action, including taking a vote of its shareholders, as may be necessary
or
appropriate in order to increase the number of its authorized
shares. The
Purchaser
Shares,
when issued, sold and delivered in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid, non-assessable and are notsubject to preemptive
rights
, rights of first
refusal or other
preferential rights in any present or future shareholders of the Company, will
not be subject to any lienor
encumbrance of any natureand will not conflict
with any provision
of any agreement or instrument to which the Company is a party or by which
it or
its property is bound.
4.05
Absence of
Default. The execution, delivery and consummation of this
Agreement, and all other agreements and documents executed in connection
herewith by Purchaser, will not constitute a violation of, or be in conflict
with, and will not, with or without
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the
giving of notice or the passage of time, or both, result in: (i) a
breach of, constitute a default under, create (or cause the acceleration of
the
maturity of) any debt, indenture, obligation or liability affecting Purchaser
or
its business; (ii) the creation or imposition of any security interest, lien,
charge or other encumbrance upon Purchaser, or otherwise adversely affect
Purchaser or its business under: (A) any term or provision of its Articles
of
Incorporation or Bylaws; (B) any contract, lease, purchase order,
agreement, document, instrument, indenture, mortgage, pledge, assignment,
permit, license, approval or other commitment to which Purchaser is a party
or
by which Purchaser is bound; (C) any judgment, decree, order, regulation or
rule
of any court or regulatory authority; (D) any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or governmental
authority or arbitration tribunal to which Purchaser is subject; or (iii) a
violation of or conflict with any term or provision of the Articles of
Incorporation or Bylaws of the Purchaser. The Purchaser is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any governmental or regulatory agency
or
any other third party in order for it to consummate the transactions
contemplated by this Agreement.
4.06
Litigation and
Investigations. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which Purchaser has knowledge
or
received any notice of assertion against Purchaser, which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated by this Agreement.
4.07
SEC
Filings; Financial
Statements. Each registration statement, report, proxy
statement or information statement (as defined in Regulation 14C under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of
Purchaser prepared by it since December 31, 2006, in the form (including
exhibits and any amendments thereto) filed with the U.S. Securities and Exchange
Commission (the "SEC") (collectively,
the "Purchaser
Reports"), at the time filed with the SEC (i) complied as to form in
all material respects with the applicable requirements of the Securities Act,
the Exchange Act, and the rules and regulations thereunder and (ii) did not
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. Each of the consolidated balance sheets
included in or incorporated by reference into the Purchaser Reports (including
the related notes and schedules) fairly presents in all material respects the
consolidated financial position of Parent as of its date, and each of the
consolidated statements of income, retained earnings and cash flows included
in
or incorporated by reference into the Purchaser Reports (including any related
notes and schedules) fairly presents in all material respects the results of
operations, retained earnings or cash flows, as the case may be, of Parent
for
the periods set forth therein, in each case in accordance with GAAP consistently
applied throughout the periods indicated, except as may be noted therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments, the lack of footnotes or condensed or summary
formats). Except as disclosed in writing to the Company or otherwise
publicly disclosed by Purchaser, since the date of the most recent Purchaser
Report, (a) there has not been a Material Adverse Effect, and Purchaser has
not
incurred any liabilities or obligations of a nature that would require such
liabilities or obligations to be reflected on, or reserved against in, a balance
sheet or in the notes thereto prepared in accordance with GAAP as historically
applied by Purchaser except liabilities or
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obligations
incurred in the ordinary course of business which have not had a Material
Adverse Effect.
4.08
Broker’s or Finder’s
Fee. Purchaser has not employed, nor is Purchaser liable for
the payment of any fee to any finder, broker, consultant or similar person
in
connection with the transactions contemplated by this Agreement.
4.09
No Omissions or
Misstatements. None of the statements or information included
in this Agreement or the Schedules hereto, or other documents furnished or
to be
furnished by Purchaser to the Shareholders, or any of their representatives,
contains any untrue statement of a material fact or is misleading in any
material respect or omits to state any material fact necessary in order to
make
any of the statements herein or therein not misleading in light of the
circumstances in which they were made.
Article
V. Related Agreements and Conditions to Close
5.01
Related
Agreements.
(a)
At the Closing, each Shareholder shall enter into an ancillary
non-competition/non-solicitation agreement with the Company, for a term of
three
(3) years from the Closing Date, which agreements are attached hereto as Exhibit 5.01(a)(1),
Exhibit
5.01(a)(2), Exhibit 5.01(a)(3),
Exhibit
5.01(a)(4), and Exhibit
5.01(a)(5).
(b)
At the Closing, the Company and the Landlord shall enter into the New
Lease.
(c)
At the Closing, the Company shall enter into a mutual services contract with
LMCIC and LMC Power, including a provision by which LMCIC shall provide the
Company with a credit of One Hundred Thousand Dollars ($100,000.00) toward
the
provision of services to the Company by LMCIC, which agreement is attached
hereto as Exhibit
5.01(c).
(d)
At the Closing, the Landlord, Purchaser and the Company (with the consent of
the
Purchaser) shall enter into an agreement pursuant to which the Company shall
use
its commercially reasonable efforts to satisfy certain reporting requirements
and other requirements made known to it with respect to the SC Grant and the
Empire Grant, and shall receive certain benefits of the Empire Grant, which
agreement is attached hereto as Exhibit
5.01(d).
(e)
Each of ▇▇▇▇▇▇▇▇▇▇▇▇, Coll and Rizzieri hereby agree that, for one (1) year
following the Closing Date, for no additional consideration, they will make
themselves reasonably available at the current business premises of the Company
for consultations with Company and Purchaser employees to facilitate the
transition of Company management and other reasonable related assistance;
provided that ▇▇▇▇▇▇▇▇▇▇▇▇, Coll and Rizzieri shall not, collectively, be
required to devote more than fifty (50) hours in any one month nor more than
six
hundred (600) hours in the aggregate to such consultation.
5.02
Conditions to Obligations
of
Shareholders. All obligations of Shareholders under this
Agreement are subject to the fulfillment, at or prior to the Closing, of the
following conditions, any one or more of which may be waived in writing by
the
Shareholder
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Representative:
(a)
All representations and warranties made by Purchaser in this Agreement qualified
as to materiality shall be true and correct, and those not so qualified shall
be
true and correct in all material respects, in each case, as of the date of
this
Agreement and as of the Closing as though made at and as of the Closing, except
to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be
true
and correct in all material respects, on and as of such earlier date). Purchaser
shall have delivered to the Shareholder Representative a certificate of its
President, signed and dated as of the Closing Date, to the foregoing
effect.
(b)
Purchaser shall have delivered all documents and agreements described in Section
5.01 and Article VII, and otherwise performed in all material respects all
obligations required under this Agreement and any other agreements referenced
herein to be performed by it on or prior to the Closing Date. Purchaser shall
have delivered to the Shareholder Representative a certificate of its President,
signed and dated as of the Closing Date, to the foregoing effect.
(c)
No order of any court or administrative agency shall be in effect which
restrains or prohibits the transactions contemplated hereby, and there shall
not
have been threatened, nor shall there be pending, any action or proceeding
by or
before any court or governmental agency or other regulatory or administrative
agency or commission, challenging any of the transactions contemplated by this
Agreement.
(d)
The Shareholder Representative shall have received such other certificates,
instruments and documents, reasonably satisfactory in form and substance to
the
Shareholder Representative, in confirmation of the representations and
warranties of Purchaser or in furtherance of the transactions contemplated
by
this Agreement as the Shareholder Representative or its counsel may reasonably
request.
(e)
The Company shall have delivered to the Shareholder Representative, with respect
to each obligation of the Company guaranteed in whole or in part by each
Shareholder and listed on Schedule 2.03(b)
attached hereto, either (i) a release of such guaranty or (b) evidence
satisfactory to the Shareholder Representative that such obligation has been
satisfied.
5.03
Conditions to Obligations
of
Purchaser. All obligations of Purchaser under this Agreement
are subject to the fulfillment, at or prior to the Closing, of the following
conditions, any one or more of which may be waived in writing by
Purchaser:
(a)
All representations and warranties made by Shareholders in this Agreement
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, in each case,
as
of the date of this Agreement and as of the Closing as though made at and as
of
the Closing, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of
such
earlier date). Shareholders shall have delivered
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to
Purchaser a certificate, signed and dated as of the Closing Date, to the
foregoing effect.
(b)
Each of the Shareholders shall have delivered all documents and agreements
to
which he is a party or signatory described in Section 5.01 and Article VI,
and
each of the Shareholders shall have otherwise performed in all material respects
all obligations required under this Agreement and in any agreement referenced
herein to be performed by him on or prior to the Closing Date. The Shareholders
shall have delivered to Purchaser a certificate, signed and dated as of the
Closing Date, to the foregoing effect.
(c)
No order of any court or administrative agency shall be in effect which
restrains or prohibits the transactions contemplated hereby, and there shall
not
have been threatened, nor shall there be pending, any action or proceeding
by or
before any court or governmental agency or other regulatory or administrative
agency or commission, challenging any of the transactions contemplated by this
Agreement.
(d)
All consents, waivers, authorizations and approvals required in connection
with
the execution, delivery and performance of this Agreement, as contemplated
hereby, shall have been duly obtained and/or assumed, including but not limited
to any consent or authorization necessary under any contract between the Company
and any third-party, with respect to the change in ownership and control
contemplated hereby.
(e)
Purchaser shall have received certificates representing the Shares, free and
clear of all Liens and duly endorsed for the transfer of such Shares to
Purchaser, together with such other certificates, instruments and documents,
reasonably satisfactory in form and substance to Purchaser, in confirmation
of
the representations and warranties of each Shareholder or in furtherance of
the
transactions contemplated by this Agreement as Purchaser or its counsel may
reasonably request.
(g)
All consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other regulatory
body
or any other third party (including lenders and lessors) required in connection
with the execution, delivery and performance of this Agreement shall have been
obtained or made.
(h)
On or prior to the Closing Date, there shall have been no loss, damage or
destruction to the Assets which materially impairs the use or the value of
the
Assets or the Company. The Company shall not have suffered any material adverse
change in its financial condition, results of operations, assets, liabilities,
or business, except such changes as reflect or result from losses of the Company
that are consistent in amount with its losses during prior periods.
(i)
Purchaser shall have received (i) final state and local tax lien and Uniform
Commercial Code financing statement searches disclosing all Liens on the assets
of the Company; and (ii) written releases from the holders of any such Liens
with respect thereto.
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Article
VI. Deliveries by Shareholders at Closing
At
Closing, the Shareholders shall
deliver to Purchaser the following documents in form and substance reasonably
satisfactory to Purchaser:
6.01
Documents Relating to
Title. Shareholders shall execute, acknowledge, deliver and
cause to be executed, acknowledged and delivered to Purchaser:
(a)
Stock certificates, registered in the name of the Shareholders, free and clear
of all Liens, duly endorsed by Shareholders or with stock powers attached,
representing all of the issued and outstanding capital stock of the
Company;
(b)
The resignation of each member of the Board of Directors and each officer of
the
Company effective as of the Closing;
(c)
The Shareholders and the Company shall have delivered to Purchaser an opinion
of
legal counsel, dated the Closing Date, in the form of Exhibit
6.01(c);
(d)
The Shareholders shall have entered into an agreement terminating any and all
existing shareholders, stock purchase and transfer restriction and similar
agreements, in a form acceptable to Purchaser.
(e)
The Shareholders and the Company shall have entered into all related agreements
identified in Section 5.01.
(f)
The Shareholders shall have delivered all instruments and documents necessary
to
release any and all Liens on the Shares and/or Assets, including appropriate
UCC
financing statement amendments and termination statements.
6.02
Corporate Existence and
Certified Corporate Resolution. Shareholders shall deliver to
Purchaser a certificate of good standing for Company from the Nevada Secretary
of State, issued within fifteen (15) days of the Closing Date, together with
certificated copy of the corporate resolutions of the Company authorizing the
transactions contemplated herein.
6.03
Third-Party Consents and
Releases. Shareholders shall deliver to Purchaser all
consents, estoppels, approvals, releases, filings and authorizations of
third-parties that are necessary or advisable for the legal and proper
execution, delivery and consummation of this Agreement and the transactions
contemplated hereunder, including, but not limited to, (i) releases from all
holders of Liens with respect to the Assets and/or the Shares and (ii) pay-off
letters in respect of indebtedness set forth on Schedule 2.03(b)
which is to be repaid as of the Closing with the Capital Advance, as provided
for in Section 2.03(b).
6.04
Releases and Estoppel
Certificates. Shareholders shall deliver to Purchaser a
release and cancellation of all pre-Closing contractual arrangements between
the
Company and LMCIC; LMC Power Systems, Inc.; the Landlord; and/or any Shareholder
or Related Party, which agreement is attached hereto as Exhibit
6.04(a). Shareholders shall also deliver to
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Purchaser
a general release of the Company from any and all other liability or claims
that
may have existed prior to the Closing Date, which release agreements are
attached hereto as Exhibit 6.04(b)(1),
Exhibit
6.04(b)(2), Exhibit 6.04(b)(3),
Exhibit
6.04(b)(4), and Exhibit
6.04(b)(5).
6.05
Additionally Requested
Documents; Post-Closing Assistance. At the reasonable request
of Purchaser at Closing and at any time or from time to time thereafter,
Shareholders shall cooperate with Purchaser to put Purchaser in actual
possession and operating control of the Company, execute and deliver such
further instruments of sale, conveyance, transfer and assignment as Purchaser
may reasonably request in order to effectively convey, transfer and assign
the
same to Purchaser and take such other actions as Purchaser may reasonably
request to release Purchaser and the Company from all obligation and liability
with regard to any obligation or liability retained or assumed by Shareholders
and to otherwise effectuate the intent of this Agreement and the transactions
contemplated hereby.
Article
VII. Deliveries by Purchaser at Closing
At
Closing, Purchaser shall deliver or
cause to be delivered to the Shareholder Representative the following in a
form
and substance reasonably satisfactory to the Shareholder
Representative:
7.01
Corporate Existence and
Certified Board Resolutions. Purchaser shall deliver to the
Shareholder Representative a certificate of existence of the Purchaser from
the
Indiana Secretary of State, together with a certified copy of the resolutions
of
the Board of Directors of Purchaser authorizing the execution, delivery,
consummation and performance of this Agreement and the transactions contemplated
hereby, together with all other documents executed in connection
herewith.
7.02
Third-Party
Consents. Purchaser shall deliver to the Shareholder
Representative all consents, approvals, releases, filings and authorizations
of
third-parties that are necessary or advisable for the legal and proper
execution, delivery, consummation and performance of this Agreement and the
transactions contemplated hereunder.
7.03
The Purchaser shall have delivered to the Shareholders an opinion of legal
counsel, dated the Closing Date, in the form of Exhibit
7.03.
7.04
Related
Agreements. Purchaser shall execute and deliver to the
Shareholder Representative all related agreements identified in Section
5.01.
Article
VIII. Survival of Provisions and Indemnification
8.01
Survival. The
respective
representations, warranties and covenants of each of the parties contained
in
this Agreement, or any schedule, exhibit, certificate, document or agreement
delivered pursuant hereto, shall be deemed to have been relied upon by the
parties hereto and shall survive the Closing, and the consummation of the
transactions contemplated hereby as follows: (a) the representations
and
warranties contained in
Sections 3.01, 3.02,
3.03,
and
3.04, 4.01,
4.02,
and 4.03 shall
survive indefinitely and shall not
terminate; (b)
the representations
and
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warranties
contained in
Sections 3.18,
3.19. 3.20, 3.21 and 3.22 shall survive the Closing until 90
days
following the expiration of the applicable statute of limitations with respect
to the particular matter that is the subject matter thereof and (c)
all other representations and
warranties shall survive for a period of two (2) years after the Closing Date;
provided,
that any representation or warranty in
respect of which indemnity may be sought under this Article VIII,
and the indemnity with respect
thereto, shall survive the time at which it would otherwise terminate pursuant to this Section
8.01if notice of the breach
thereof giving rise to such right or potential right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to
such
time. The covenants and agreements of the parties contained in this
Agreement shall remain operative and in full force and shall survive until
the
performance by the applicable party hereto of such covenant and
agreement. No investigation by the parties made heretofore or
hereafter shall affect the representations and warranties of the parties
contained in or made pursuant hereto.
8.02
Indemnification by
Shareholders. Subject to the other provisions of this Article,
Shareholders shall, jointly and severally (except as to the representations
contained in Section 3.03, as to which the Shareholders shall indemnify the
Purchaser severally and not jointly), promptly indemnify, defend, and hold
harmless Purchaser and its shareholders, directors, officers, employees, agents,
successors and assigns from and against any and all claims, liabilities, losses,
costs, and expenses (including reasonable costs of investigation, court costs
and attorneys and other legal fees actually incurred) and other damages
(collectively, “Losses”) based upon,
attributable to, or resulting from (a) any breach by any Shareholder or the
Shareholders of any of representation or warranty contained in this Agreement
or
any certificate or document of Shareholders delivered pursuant to this
Agreement; (b) any failure by such Shareholder to perform any covenant or
obligation contained in this Agreement. Subject to the other
provisions of this Article, Shareholders shall, jointly and severally, promptly
indemnify, defend, and hold harmless Purchaser and its shareholders, directors,
officers, employees, agents, successors and assigns from and against any and
all
Losses imposed under or pursuant to any Environmental Laws (including any loss
of use of any of the Assets) arising from or related to any condition, act
or
omission by any Shareholder, the Company or any affiliate or predecessor thereof
or related to the operations of the Company or any predecessor thereof at any
real property currently or formerly owned, operated or leased by the Company
or
any predecessor thereof, whether known or unknown, accrued or contingent, to
the
extent existing on or prior to the Closing Date, including any Losses
(including, but not limited to, those relating to remediation) imposed pursuant
to common law associated with a release of Hazardous Substance, Pollutant or
Contaminant on or prior to the Closing Date.
8.03
Indemnification by
Purchaser. Subject to the other provisions of this Article,
Purchaser shall promptly indemnify, defend, and hold harmless Shareholders
from
and against any and all Losses based upon, attributable to, or resulting from
(a) any breach by Purchaser of any covenant, obligation, representation or
warranty contained in this Agreement or any certificate or document of Purchaser
delivered pursuant to this Agreement; (b) the operations of Purchaser and the
Business after the Closing Date; and (c) any claim, action, suit or proceeding
relating to any of the foregoing.
8.04
Rules Regarding
Indemnification. The obligations and liabilities of each party
which may be subject to indemnification liability hereunder (the “Indemnifying Party”)
to the
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38
other
party (the “Indemnified Party”)
shall be subject to the following terms and conditions:
(a)
Claims by
Non-Parties. Within twenty (20) days (or such earlier time as
might be required to avoid prejudicing the Indemnifying Party’s position) after
receipt of notice of commencement of any action evidenced by service of process
or other legal pleading, or with reasonable promptness after the assertion
of
any claim by a third party, the Indemnified Party shall give the Indemnifying
Party written notice thereof together with a copy of such claim, process or
other legal pleading, and the Indemnifying Party shall have the right to
undertake the defense thereof by representatives of its own choosing and at
its
own expense, subject however to the rights of any insurance company insuring
against liabilities related to the subject party claim to appoint
counsel. The failure by any Indemnified Party so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have to such Indemnified Party with respect to any claim made
pursuant to this Section. Notwithstanding the foregoing, the
Indemnified Party may participate in the defense with counsel of its own choice
and at its own expense (provided that the Indemnifying Party will bear the
expense of counsel for the Indemnified Party if the Indemnified Party could
have
an inconsistent or conflicting interest from that of the Indemnifying Party
or
one or more legal defenses that are different from or additional to those
available to the Indemnifying Party). Further:
(i)
If the Indemnifying Party, by the thirtieth (30th) day after receipt of notice
of any such claim (or, if earlier, by the tenth (10th)
day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the Indemnified Party, upon further
notice to the Indemnifying Party, will have the right to undertake the defense,
compromise or settlement of such claim on behalf of or for the account and
risk
of the Indemnifying Party and at the Indemnifying Party’s expense, subject to
the right of the Indemnifying Party to assume the defense of such claim at
any
time prior to settlement, compromise or final determination
thereof.
(ii)
Notwithstanding anything to the contrary contained in this Agreement, the
Indemnifying Party shall not settle any claim without the consent of the
Indemnified Party unless such settlement involves only the payment of money
and
the claimant provides to the Indemnified Party a release from all liability
in
respect of such claim. If the settlement of the claim involves more than the
payment of money, the Indemnifying Party shall not settle the claim without
the
prior consent of the Indemnified Party, which consent shall not be unreasonably
withheld.
(iii)
The Indemnified Party and the Indemnifying Party will each cooperate with all
reasonable requests of the other for the purpose of defending against any
claims.
(iv)
The Indemnifying Party shall make all payments pursuant to the indemnification
provisions contained in this Section 8.04(a) within ten (10) business days
after
final determination of the amount thereof.
(b)
Claims by a
Party. In the event any Indemnified Party should have a claim
for indemnification against any Indemnifying Party that does not involve a
third
party claim, the Indemnified Party shall deliver notice of such claim with
reasonable promptness to the
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Indemnifying
Party. The failure by any Indemnified Party so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have to such Indemnified Party with respect to any claim made
pursuant to this Section 8.04(b). If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days following its receipt
of
such notice that the Indemnifying Party disputes its liability to the
Indemnified Party under this Article IX, or the amount thereof, the claim
specified by the Indemnified Party in such notice shall be conclusively deemed
a
liability of the Indemnifying Party under this Article IX, and the Indemnifying
Party shall pay the amount of such loss to the Indemnified Party on demand
or,
in the case of any notice in which the amount of the claim (or any portion
of
the claim) is estimated, on such later date when the amount of such claim (or
such portion of such claim) becomes finally determined. If the
Indemnifying Party has timely disputed its liability with respect to such claim,
the Indemnifying Party and the Indemnified Party shall negotiate in good faith
to resolve such dispute or pursue such remedies as may be available hereunder,
at law or in equity.
(c)
The right to indemnification,
payment of damages or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being acquired) at
any
time, whether before or after the execution and delivery of this Agreement
or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver
of
any condition based on the accuracy of any representation or warranty, or on
the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of damages, or other remedy based on
such
representations, warranties, covenants, and obligations.
(d)
Notwithstanding anything in this Agreement to the contrary, the Shareholders
shall not be responsible for any Loss pursuant to this Article VIII unless
and
until the aggregate amount of all of such Losses shall exceed $110,000, in
which
case the Shareholders shall, jointly and severally, be liable for the entire
Loss in excess of $110,000.
(e)
The rights of the Purchaser for indemnification pursuant to this Article VIII
shall be the sole and exclusive remedy of the Purchaser for (a) any breach
by
any Shareholder or the Shareholders of any of representation or warranty
contained in this Agreement or any certificate or document of Shareholders
delivered pursuant to this Agreement, (but excluding claims for breaches of
any
of the Related Agreements listed in Section 5.01), and (b) any failure by any
Shareholder to perform any covenant or obligation contained in this
Agreement.
(f)
Purchaser shall indemnify and hold the Shareholders and each member of the
LMC
Creditor Group harmless from and with respect to all obligations of the
Corporation listed on Schedule 8.04(f).
Article
IX. Miscellaneous
9.01
Preparation of Tax
Returns. The Shareholders shall be responsible for preparing
and filing, within the times and in the manner prescribed by law (subject,
however, to filing under any extension), all Tax Returns of the Company for
any
tax period ending on or
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before
the Closing Date that are required to be filed after the Closing Date, and
pay
all Taxes shown thereon. The Shareholders covenant that any Tax
Returns of the Company for any tax period ending on or before the Closing Date
that are filed after the Closing Date will be complete, correct and filed
consistently with the Company’s prior Tax Returns. All Tax Returns
that are required to be filed pursuant to this Section shall not be filed
without the prior approval of Purchaser, which approval shall not be
unreasonably withheld or delayed. Purchaser shall give the
Shareholders and their representatives reasonable access to the books and
records of the Company, during normal business hours and upon reasonable notice,
for the purpose of preparing such returns.
9.02
Assignment. No
Shareholder may assign any rights (other than the right to receive money) or
delegate any obligations under this Agreement without the prior written consent
of Purchaser, and any prohibited assignment or delegation will be null and
void.
9.03
Other
Expenses. Except as otherwise provided in this Agreement, each
Shareholder shall pay his or her own expenses, together with any and all
expenses of the Company, incurred in connection with the negotiation, execution,
and implementation of the transactions contemplated under this Agreement, and
Purchaser shall pay all of its expenses incurred in connection with the
negotiation, execution, and implementation of the transactions contemplated
under this Agreement.
9.04
Notices. All
notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given: (a) if delivered personally, on the date
received, (b) if delivered by overnight courier, on the day after mailing,
or
(c) if mailed, four (4) days after mailing by first class certified mail, return
receipt requested and with postage prepaid. Any such notice shall be
sent as follows:
|
If
to any
Shareholder:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇
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▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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with
a copy to:
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Boylan,
Brown, Code, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Attn: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
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To
Purchaser:
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attn: ▇▇▇▇
▇. ▇▇▇▇▇▇▇, President and CEO
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▇▇▇▇▇
▇. ▇▇▇▇▇, General Counsel
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with
a copy to:
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▇▇▇▇▇▇/Wink
LLP
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▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attn: ▇▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
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▇▇▇▇▇
▇▇▇▇▇▇▇, Esq.
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and
a copy to:
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▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇ LLP
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600
1st Source Bank Center
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▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attn: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Esq.
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9.05
Controlling Law and
Jurisdiction. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws. The parties
expressly agree that the Indiana state courts located in St. ▇▇▇▇▇▇ County,
Indiana (or if there is exclusive federal jurisdiction, the United States
District Court for the Northern District of Indiana) shall have exclusive
jurisdiction and venue over any dispute arising out of this
Agreement. To the extent not otherwise subject to the jurisdiction of
such courts, the Purchaser and each Shareholder hereby agrees to waive any
objection to jurisdiction and to subject itself to the jurisdiction of such
courts. The parties also hereby agree to accept service of process by
Federal Express or similar overnight courier to the applicable notice address
set forth in Section 9.04.
9.06
Shareholder Representative.
(a)Each
Shareholder hereby irrevocably appoints ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (the “Shareholder
Representative”) as such Shareholder’s representative, attorney-in-fact
and agent, with full power of substitution to act in the name, place and stead
of such Shareholder with respect to the transfer of such Shareholder’s Shares to
Purchaser in accordance with the terms and provisions of this Agreement and
to
act on behalf of such Shareholder in any amendment of or litigation or
arbitration involving this Agreement and to do or refrain from doing all such
further acts and things, and to execute all such documents, as such Shareholder
Representative shall deem necessary or appropriate in conjunction with any
of
the transactions contemplated by this Agreement, including the
power:
(i)
to take all action necessary or desirable in connection with the waiver of
any
condition to the obligations of the Shareholders to consummate the transactions
contemplated by this Agreement;
Page
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38
(ii)
to negotiate, execute and deliver all ancillary agreements, statements,
certificates, statements, notices, approvals, extensions, waivers, undertakings,
amendments and other documents required or permitted to be given in connection
with the consummation of the transactions contemplated by this Agreement (it
being understood that such Shareholder shall execute and deliver any such
documents which the Shareholder Representative agrees to execute);
(iii)
to terminate this Agreement if the Shareholders are entitled to do
so;
(iv)
to give and receive all notices and communications to be given or received
under
this Agreement and to receive service of process in connection with the any
claims under this Agreement, including service of process in connection with
arbitration; and
(v)
to take all actions which under this Agreement may be taken by the Shareholders
and to do or refrain from doing any further act or deed on behalf of the
Shareholder which the Shareholder Representative deems necessary or appropriate
in his sole discretion relating to the subject matter of this Agreement as
fully
and completely as such Shareholder could do if personally present.
(b)
If ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ becomes unable to serve as Shareholder Representative,
such other person or entity as may be designated by a majority of the
Shareholders, shall succeed as the Shareholder Representative.
9.07
Headings. Any
paragraph headings in this Agreement are for convenience of reference only
and
shall not be considered or referred to in resolving questions of
interpretation.
9.08
Benefit. This
Agreement shall be binding upon and shall inure to the exclusive benefit of
the
parties hereto and their respective heirs, legal representatives, successors
and
assigns. This Agreement is not intended to, nor shall it, create any
rights in any other party.
9.09
Partial
Invalidity. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
9.10
Waiver. Neither the
failure nor any delay on the part of any party hereto in exercising any rights,
power or remedy hereunder shall operate as a waiver thereof, or of any other
right, power or remedy; nor shall any single or partial exercise of any right,
power or remedy preclude any further or other exercise thereof, or the exercise
of any other right, power or remedy. No waiver of any of the provisions of
this
Agreement shall be void unless it is in writing and signed by the party against
which it is sought to be enforced.
9.11
Counterparts and
Facsimiles. This Agreement may be executed simultaneously in
two or more counterparts each of which shall be deemed an original and all
of
which together shall constitute but one and the same instrument. The
signature page to this Agreement and all other documents required to be executed
at Closing may be delivered by facsimile and the signatures thereon shall be
deemed effective upon receipt by the intended receiving party.
Page
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38
9.12
Expenses. Except as
otherwise provided in this Agreement, the Shareholders and Purchaser shall
each
bear its own expenses incurred in connection with the negotiation and execution
of this Agreement and each other agreement, document and instrument contemplated
by this Agreement and the consummation of the transactions contemplated hereby
and thereby, it being understood that in no event shall the Company bear any
of
such costs and expenses.
9.13
Interpretation of
Representations. Each representation and warranty made in this
Agreement or pursuant hereto is independent of all other representations and
warranties made by the same parties, whether or not covering or related to
similar matters, and must be independently and separately
satisfied.
9.14
Reliance by
Purchaser. Notwithstanding the right of Purchaser to
investigate the Business, assets and financial condition of the Company,
Purchaser has the unqualified right to rely upon, and has relied upon, each
of
the representations and warranties made by the Shareholders in this Agreement
or
made in writing pursuant hereto.
9.15
Mutual
Drafting. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any
provision of this Agreement.
9.16
Entire
Agreement. This Agreement, including the Schedules and
Exhibits hereto, which are hereby incorporated herein by reference, and the
ancillary agreements intended to be executed in connection with the closing
of
the transaction contemplated hereby, constitute the entire agreement between
the
parties hereto with regard to the matters contained herein and therein, and
it
is understood and agreed that all previous undertakings, negotiations, term
sheets and agreements between the parties are merged herein. This Agreement
may
not be modified orally, but only by an agreement in writing signed by Purchaser
and the Shareholder Representative.
[Remainder
of page intentionally left blank.]
Page
35 of
38
IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement on the date or dates indicated
below, effective as of the date first above written.
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“Shareholders”
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“Purchaser”
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▇▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇▇▇, President and CEO
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Date:
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Date:
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▇▇▇▇▇▇
▇▇▇▇▇▇
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Date:
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Date:
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▇▇▇▇▇▇▇▇
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Date:
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Date:
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Page
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List
of Schedules
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Schedule
2.03:
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Debt
to be Paid at Closing
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Schedule
3.01:
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Organization;
Articles & Bylaws
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Schedule
3.03:
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Ownership
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Schedule
3.06:
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Financial
Statements
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Schedule
3.07:
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Operations
since 12/31/06
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Schedule
3.08:
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Other
Liabilities
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Schedule
3.09:
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Employment
Claims
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Schedule
3.10:
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Licenses
& Permits
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Schedule
3.11:
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Assets
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Schedule
3.12:
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Insurance
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Schedule
3.13:
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Bonded
Projects
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Schedule
3.14:
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Intellectual
Property
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Schedule
3.15:
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Certain
Contracts
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Schedule
3.17:
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Litigation
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Schedule
3.18:
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Environment,
Health & Safety
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Schedule
3.20:
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Tax
Matters
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Schedule
3.21:
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Employment
Agreements
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Schedule
3.22:
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Employee
Benefit Plans
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Schedule
3.23:
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Compliance
With Laws
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Schedule
3.25:
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Bank
Accounts
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Schedule
3.27:
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Termination
or Reduction of Customers
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Schedule
3.28:
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Warranty
Claims
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Schedule
3.29:
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Inventory
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Schedule
3.30:
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Accounts
Payable; Accounts Receivable
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Schedule
3.31:
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Related
Party Transactions
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Schedule
3.32:
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Grant
Requirements
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Schedule
8.04(f):
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Indemnification |
Page
37 of
38
List
of Exhibits
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Exhibit
3.16:
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Lease
Agreement
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Exhibit
5.01(a)(1):
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▇▇▇▇▇▇▇▇▇▇▇▇
Non-Compete
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Exhibit
5.01(a)(2):
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Rizzieri
Non-Compete
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Exhibit
5.01(a)(3):
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Coll
Non-Compete
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Exhibit
5.01(a)(4):
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▇▇▇▇▇
Non-Compete
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Exhibit
5.01(a)(5):
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▇▇▇▇▇▇
Non-Compete
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Exhibit
5.01(c):
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Mutual
Services Agreement
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Exhibit
5.01(d):
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Grant
Sharing Agreement
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Exhibit
6.01(c):
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Opinion
of Shareholders’ Counsel
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Exhibit
6.04(a):
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Prior
Contract Termination Agreement
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Exhibit
6.04(b)(1):
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▇▇▇▇▇▇▇▇▇▇▇▇
Release Agreement
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Exhibit
6.04(b)(2):
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Rizzieri
Release Agreement
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Exhibit
6.04(b)(3):
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Coll
Release Agreement
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Exhibit
6.04(b)(4):
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▇▇▇▇▇
Release Agreement
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Exhibit
6.04(b)(5):
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▇▇▇▇▇▇
Release Agreement
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Exhibit
7.03:
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Opinion
of Purchaser’s Counsel
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Page 38 of 38