STOCK SALE AND PURCHASE AGREEMENT
THIS STOCK SALE AND PURCHASE AGREEMENT ("Agreement") is made and entered
into effective as of the _____ day of June, 2010 by and between (a) (i) ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (each of the foregoing
persons is referred to hereinafter as a "Seller" and collectively as the
"Sellers"), each of whom is a shareholder of Twin Air Calypso Limited, Inc. (the
"Company"), a Florida corporation, on the one hand, and (b) AvStar Aviation
Group, Inc., a Colorado corporation ("Purchaser"), on the other hand.
RECITALS:
WHEREAS, for the purchase price provided for herein and subject to the
terms, provisions and conditions set forth herein, Purchaser desires to acquire
from Sellers full right, title and interest in and to all of the outstanding
stock in the Company, free and clear of any security interest, lien, mortgage,
encumbrance, claim, or limitation or restriction on the transfer thereof
(collectively, "Encumbrances"); and
WHEREAS, for the purchase price provided for herein and subject to the
terms, provisions and conditions set forth herein, Sellers desires to sell to
Purchaser full right, title and interest in and to all of the outstanding stock
in the Company;
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises, covenants,
agreements, representations and warranties set forth hereinafter, $10.00 and
other good and valuable consideration (the receipt, adequacy and sufficiency of
which each Seller and Purchaser hereby acknowledges) and subject to the terms,
provisions and conditions hereof, each Seller and Purchaser hereby agrees as
follows:
ARTICLE ONE
SALE AND PURCHASE OF STOCK
1.1 Sale and Purchase of Stock. Each Seller hereby agrees to sell to
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Purchaser at the Closing (as defined herein), and Purchaser hereby agrees to
purchase from each Seller at the Closing, full right, title and interest in and
to the shares set forth to the right of such Seller's name on Schedule 1.1
hereto, free and clear of any and all Encumbrances.
1.2 Purchase Price, and Payment Thereof. The purchase price for the
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outstanding stock in the Company shall be composed of (a) a cash amount equal
to $500,000, $154,000 of which has already been paid and (b) 18 million shares
of the common stock of Purchaser (referred to hereinafter as the "Common
Stock"). Each Seller shall receive the percentages of the cash amount and
numbers of shares of Common Stock set forth to the right of such Seller's name
on Schedule 1.1 hereto. The $346,000 cash amount required by this Section shall
be paid in four installments, the first of which shall be in the amount of
$69,200 and shall be due and payable at the Closing, the second of which shall
be in the amount of $92,266.66 and shall be due and payable 30 days after the
Closing, the third in the amount of $92,266.67 payable 60 days after Closing and
a final one of which shall be in the amount of $92,266.67 and shall be due and
payable 90 days after the Closing, Notwithstanding the above, at first funding
the total amount left unpaid, shall be paid in full, at such funding.
ARTICLE TWO
REPRESENTATIONS, WARRANTIES
AND AGREEMENTS OF SELLERS
2.1 Organization and Standing of Company. The Company is a
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corporation duly organized, validly existing, and in good standing under the
laws of the state of Florida. The Company has full requisite corporate power
and authority to carry on its business as it is now being conducted, and to own,
operate, and lease the properties now owned, operated, or leased by it. The
Company is duly authorized and qualified to carry on its business in the manner
as now conducted in all states and jurisdictions in which authorization and
qualification is required. The disclosure schedule attached hereto (the
"Disclosure Schedule") sets forth a true, correct and complete list of all of
the jurisdictions in which the Company is qualified to do business as a foreign
corporation. The Company has made available to Purchaser as requested true,
correct and complete copies of the contents of such Company's minute book and
other corporate records, which are accurate in all material respects and set
forth fully and fairly all of the Company's material corporate transactions.
2.2 Capitalization of the Company. The authorized capital stock of the
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Company is as follows:
AUTHORIZED ISSUED
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Twin Air Calypso Limited, Inc. 1,000 1,000
All of the issued and outstanding stock of the Company is duly and validly
authorized and issued and is fully paid and non-assessable, and was not issued
in violation of the pre-emptive rights of any current or former shareholder. No
option, warrant, call, subscription, convertible security, or commitment of any
kind obligating the Company to issue any of its stock exists. The Company does
not have in effect any compensation plan applicable to any of its officers,
directors, employees or other persons under which compensation accrued or
payable is determined, in whole or in part, by reference to the related
Company's stock. The Company has not entered into any agreement or commitments
obligating it to repurchase or otherwise acquire any of its stock.
2.3 Subsidiaries and Other Ventures. The Company has no subsidiaries
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or affiliated corporations, or owns any capital stock, bond, or other security
of, or has any equity or proprietary interest in, any corporation, partnership,
joint venture, trust, or unincorporated association.
2.4 Ownership of Stock. Each Seller owns the number of shares being
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sold by such Seller to Purchaser pursuant hereto, as indicated on Schedule 1.1
hereto, free and clear of any Encumbrance. None of the outstanding shares of
stock in the Company owned by a Seller is subject to any voting trust, voting
agreement, or other agreement or understanding with respect to the voting
thereof, nor is any proxy in existence with respect to any such shares.
2.5 Capacity to Enter into Agreement. Each Seller has full right,
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power and authority to execute and deliver this Agreement and all other
agreements, documents and instruments to be executed in connection herewith and
perform such Seller's obligations hereunder and thereunder. When this Agreement
and all other agreements, documents and instruments to be executed by a Seller
in connection herewith are executed by such Seller and delivered to Purchaser,
this Agreement and such other agreements, documents and instruments will
constitute the valid and binding agreements of such Seller enforceable against
such Seller in accordance with their respective terms, except as such
enforceability may be limited by or subject to (a) any bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and (b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.6 Conflicts. The execution, delivery, and consummation of the
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transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
the Company or any Seller is a party or by which the Company or any Seller is
bound or by which any of the assets of the Company or any Seller is bound or
affected, (b) violate any judgment against, or binding upon, the Company or any
Seller or upon the assets of the Company or any Seller, (c) result in the
creation of any lien, charge or encumbrance upon any assets of the Company or
any Seller pursuant to the terms of any such contract, or (d) violate any
provision in the charter documents, bylaws or any other agreement affecting the
governance and control of the Company.
2.7 Consents. No consent, approval or authorization of, or
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declaration, filing or registration with, any governmental or regulatory
authority or any court or other tribunal, and no consent or waiver of any party
to any material contract to which Seller or the Company is a party or is bound
is required to be obtained by Seller or the Company in connection with the
execution, delivery and performance of this Agreement by Seller or the Company,
such that the failure to obtain or make any such consent, approval,
authorization, declaration, filing or registration would materially adversely
affect the consummation of the transactions contemplated by this Agreement.
2.8 Financial Statements. Seller has delivered to Purchaser, or will
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deliver to Purchaser prior to the Closing, copies of the following financial
statements (hereinafter collectively referred to as the "Financial Statements"):
an unaudited balance sheet of the Company as of May 31, 2010 (singly a "Balance
Sheet" and collectively the "Balance Sheet"), an unaudited statement of income
of the Company for the period from inception ended May 31, 2010 and unaudited
balance sheets and unaudited statements of income of Twin Town Leasing Co.,
d/b/a "Twin Air Calypso" as of and for the periods ended December 31, 2009 and
December 31, 2008. Except as set forth on the Disclosure Schedule,
(a) The Financial Statements present fairly the financial condition of
the Company as at the respective dates thereof, and the results of operations
for the respective periods covered thereby, and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis;
(b) There is no basis for the assertion of any debts, liabilities or
obligations (whether absolute, accrued, contingent, fixed or otherwise, and
whether due or to become due) which might adversely affect the value of the
Company or the use, operation or enjoyment of the assets of the Company that is
not expressly set forth on one of the Balance Sheet; and
(c) The Company is not a party to or bound either absolutely or on a
contingent basis by any agreement of guarantee, surety, indemnification,
assumption or endorsement or any like commitment of the obligations, liabilities
or indebtedness of any other person (whether absolute, accrued, contingent,
fixed or otherwise, and whether due or to become due), which is not expressly
set forth on one of the Balance Sheet.
2.9 Absence of Certain Changes and Events. Except as set forth on the
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Disclosure Schedule, since the date of the Balance Sheet, there has not been:
(a) Financial Change. Any material adverse change in the financial
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condition, operations, business prospects, employee relations, customer
relations, assets, liabilities (whether absolute, accrued, contingent, fixed or
otherwise, and whether due or to become due) or income of the Company, or the
business of the Company, from that shown on the Financial Statements;
(b) Distributions. Any declaration, setting aside, or payment of any
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distribution in respect of the equity interests in the Company, or any direct or
indirect redemption, purchase, or any other acquisition of any such interests;
(c) Incurrence of Debt. Any borrowing of, or agreement to borrow any
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funds or any debt, obligation, or liability (whether absolute, accrued,
contingent, fixed or otherwise, and whether due or to become due) incurred by
the Company (whether or not presently outstanding) except current liabilities
incurred, and obligations under agreements entered into in the ordinary course
of business consistent with past practice;
(d) Creation of Liens. Any Encumbrance created on or in any of the
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Company's properties or assets, except liens for current taxes not yet due and
payable;
(e) Assets. Any sale, assignment, or transfer of the Company's assets,
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except in the ordinary course of business consistent with past practice, any
cancellation of any debts or claims owed to the Company, any capital
expenditures or commitments therefor exceeding in the aggregate $5,000, any
damage, destruction or casualty loss exceeding in the aggregate $5,000 (whether
or not covered by insurance), or any charitable contributions or pledges;
(f) Material Contracts. Any amendment, modification or termination of
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any contract, agreement, license, or arrangement to which the Company is or was
a party or to which any their assets are or were subject, which amendment or
termination has had, or may be reasonably expected to have, an adverse effect on
the financial condition, properties, assets, liabilities (whether absolute,
accrued, contingent, fixed or otherwise, and whether due or to become due),
income or business of the Company; or
(g) Other Material Changes. Any other material transaction by the
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Company or any other event or condition pertaining to, and materially adversely
affecting the operations, assets, liabilities (whether absolute, accrued,
contingent, fixed or otherwise, and whether due or to become due), income or
business of the Company.
2.10 Assets. The Disclosure Schedule sets forth a true, correct and
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complete list of:
(a) All machinery, equipment, computer equipment, appliances, motor
vehicles, fixtures, furniture, furnishings and other tangible personal property
(except as separately described in Section (b) below), of every kind and
description, owned by the Company;
(b) All inventories of raw materials, work-in-process, finished
products, supplies, tools, spare parts, and shipping containers and materials,
held for use in the Company's business;
(c) All cash, cash equivalents, deposits in transit and interests in
bank accounts of the Company, all accounts receivable owed to the Company (the
"Accounts Receivable"), and all bills, notes, and securities of the Company,
together with an aging schedule for the Accounts Receivable; and
(d) All telephone and facsimile numbers (local and toll free), all
Internet domain sites, all e-mail, Internet and website addresses, and all
mailboxes and lockboxes used by the Company.
Except as set forth on the Disclosure Schedule,
(i) The Company shall have at Closing good and indefeasible title to
all of its assets, free and clear of all Encumbrances, except liens for current
taxes not yet due and payable and as otherwise set forth on the Disclosure
Schedule; and
(ii) All assets constituting tangible personal property of the Company
are in a good state of repair and operating condition, ordinary wear and tear
excepted;
(iii) All of the inventories of the Company hereto or acquired
thereafter (including, without limitation, raw materials, spare parts and
supplies, work-in-process, finished goods) consist or will consist of items of a
quality, condition and quantity useable and saleable in the normal course of
business; and
(iv) All of the Accounts Receivable of the Company reflected on the
Disclosure Schedule, or created thereafter are or will be valid, subsisting, and
genuine, arose out of bona fide transactions and are or will be current and
collectible, subject to the reserve for Accounts Receivable (believed to be
uncollectible) established on the Disclosure Schedule.
2.11 Contracts. The Disclosure Schedule contains a true, correct and
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complete list of all contracts, agreements, commitments and leases, whether or
not made in the ordinary course of business, to which the Company is a party or
any of their assets are subject. Except as set forth on the Disclosure Schedule,
(a) All leases, contracts, agreements, arrangement or commitments to
which the Company is a party or either of their assets are subject are in good
standing, valid, and effective; and
(b) There is not, under any such lease, contract, agreement,
arrangement or commitment, any existing or prospective default or event of
default by the Company or event which with notice or lapse of time, or both
would constitute a default; and, to each Seller's best knowledge, no other party
to any such lease, contract, agreement, arrangement or commitment, is in default
or breach thereof nor has any event occurred which with notice or lapse of time
would constitute a breach or default of any of such lease, contract, agreement,
arrangement or commitment.
2.12 Permits. The Disclosure Schedule contains a true, correct and
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complete list of the Company's licenses, permits, certificates of authority,
variances, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any governmental authority. Except as set forth
on the Disclosure Schedule,
(a) The Company holds all licenses, permits and authorizations required
to carry on its business, and all such licenses, permits and authorizations are
in good standing;
(b) The Company is in full compliance with and not in default or
violation with respect to any term or provision of any of its licenses, permits
and authorizations;
(c) The Company has not received any notice of pending, threatened, or
possible violation or investigation in connection with, or loss of, any license,
permit, or authorization of its;
(d) The Company has no knowledge that the issuance of such a notice is
being considered or of any facts or circumstances which form the basis for the
issuance of such a notice; and
(e) No license, permit, or authorization of the Company is affected by
the transactions provided for herein or contemplated hereby.
2.13 Intellectual Property. The Disclosure Schedule contains a listing
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and summary description of all of the Company's patents, trademarks, service
marks, trade names, trade dress, logos, business names, copyrights, and
registered designs, and registrations and applications thereof, trade secrets
and confidential know-how, business information, rights under license
agreements, and other intellectual property, including, but not limited to,
computer programs and software, databases, source code and documentation;
product formulations; drawings; technical specifications; manufacturing data;
and test and development data (the foregoing intellectual property is
collectively referred to hereinafter as the "Intellectual Property"). Except as
set forth on the Disclosure Schedule,
(a) The Company possesses all intellectual property necessary to the
conduct of its businesses;
(b) The loss or expiration of any Intellectual Property or group of
Intellectual Property would not have an adverse effect on the conduct of the
Company's business;
(c) No such loss or expiration is pending or reasonably foreseeable or,
to each Seller's best knowledge, threatened;
(d) The Company owns all right, title, and interest in and to all of
its Intellectual Property;
(e) There have been no claims made against the Company for the
assertion of the invalidity, abuse, misuse, or unenforceability of any
Intellectual Property, and there are no grounds for the same;
(f) The Company has not received any notice of conflict with the
asserted rights of others; and
(g) The conduct of the Company's business has not infringed on any
rights of others and, to each Seller's best knowledge, no other person has
infringed the Intellectual Property.
2.14 Employees. The Disclosure Schedule sets forth a true, correct and
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complete list of all of the employees of the Company, their respective dates of
hire, lengths of service, positions and their respective salaries, wage rates
and bonus schedules, as applicable. Except as set forth on the Disclosure
Schedule,
(a) The Company is not a party as an employer to any employment
contract, agreement or understanding which is not terminable at will without any
penalty, liquidated damages or other required payment;
(b) The Company has satisfied (or has made adequate provision for) all
salaries, wages, unemployment insurance premiums, worker compensation payments,
income tax, FICA and other deductions and any like payments required by law
through and with respect to periods prior to the date hereof;
(c) The Company's employees are not unionized, and to each Seller's
best knowledge, there have not been attempts to unionize them; and
(d) There have not been any unfair labor practices complaints, labor
difficulties or work stoppages, or threats thereof, relating to or affecting any
of the Company's activities.
2.15 Employee Benefit Plans. The Disclosure Schedule sets forth a
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true, correct and complete list of all of the Employee Benefit Plans (as defined
below) of the Company. The Company has made true and correct copies of all
governing instruments and related agreements pertaining to such benefit plans
available to Purchaser and its partners as requested. Except as set forth on
the Disclosure Schedule,
(a) None of Company or any of its ERISA Affiliates (as defined below)
sponsors or has ever sponsored, maintained, contributed to, or incurred an
obligation to contribute to, any Employee Pension Benefit Plan (as defined
below);
(b) No individual shall accrue or receive additional benefits, service
or accelerated rights to payments of benefits under any Employee Benefit Plan
including the right to receive any parachute payment, as defined in Section 280G
of the Code (as defined below), or become entitled to severance, termination
allowance or similar payments as a direct result of the transactions
contemplated by this Agreement;
(c) No Employee Benefit Plan has participated in, engaged in or been a
party to any non-exempt Prohibited Transaction (as defined below), and neither
the Company nor any of its ERISA Affiliates has had asserted against it any
claim for taxes under Chapter 43 of Subtitle D of the Code and Sections 4971 et.
seq. of the Code, or for penalties under ERISA Section 502(c), (i) or (1) with
respect to any Employee Benefit Plan nor, to each Seller's best knowledge, is
there a basis for any such claim. No officer, director or employee of the
Company has committed a breach of any material responsibility or obligation
imposed upon fiduciaries by Title I of ERISA with respect to any Employee
Benefit Plan;
(d) Other than routine claims for benefits, there is no claim pending
or, to each Seller's best knowledge, threatened, involving any Employee Benefit
Plan by any person against such plan or the Company or any ERISA Affiliate.
There is no pending or, to each Seller's best knowledge, threatened proceeding
involving any Employee Benefit Plan before the Internal Revenue Service, the
U.S. Department of Labor or any other governmental authority;
(e) There is no material violation of any reporting or disclosure
requirement imposed by ERISA or the Code with respect to any Employee Benefit
Plan;
(f) Each Employee Benefit Plan has at all times prior hereto been
maintained in all material respects, by its terms and in operation, in
accordance with ERISA and the Code. The Company and their ERISA Affiliates have
made full and timely payment of all amounts required to be contributed under the
terms of each Employee Benefit Plan and applicable law or required to be paid as
expenses under such Employee Benefit Plan. Each Employer Benefit Plan intended
to be qualified under Code Section 401(a) has received a determination letter to
that effect from the Internal Revenue Service and no event has occurred and no
amendment has been made that would adversely affect such qualified status;
(g) With respect to any group health plans maintained by the Company or
their ERISA Affiliates, whether or not for the benefit of their employees, the
Company and their ERISA Affiliates have complied in all material respects with
the provisions of Part 6 of Title I of ERISA and 4980B of the Code. The Company
is not obligated to provide health care benefits of any kind to its retired
employees pursuant to any Employee Benefit Plan, including without limitation
any group health plan, or pursuant to any agreement or understanding;
(h) The Company has made available to Purchaser a copy of the three (3)
most recently filed federal Form 5500 series and accountant's opinion, if
applicable, for each Employee Benefit Plan and all applicable Internal Revenue
Service determination letters; and
(i) The Company does not maintain or contribute to, and has never
maintained or contributed to any Multi-Employer Plan (as defined below).
For purposes of this Section 2.15, the following definitions shall apply:
(s) "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of Title
I of ERISA.
(t) "Code" means the Internal Revenue Code of 1986, as amended.
(u) "Employee Benefit Plan means any employee benefit plan, as defined
in Section 3(3) of ERISA, that is sponsored or contributed to by the Company or
any ERISA Affiliate covering employees or former employees of the Company.
(v) "Employee Pension Benefit Plan" means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA.
(w) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(x) "ERISA Affiliate" of any person means any other person that,
together with such person as of the relevant measuring date under ERISA, was or
is required to be treated as a single employer under Section 414 of the Code.
(y) "Prohibited Transaction" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
(z) "Multi-Employer Plan" means a plan defined in Section 3(3) of
ERISA.
2.16 Litigation. Except as set forth on the Disclosure Schedule,
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(a) The Company is not subject to any pending, or to each Seller's best
knowledge, threatened litigation, proceeding or administrative investigation of
any kind or nature (including, without limitation, any matter (including audits)
involving the Internal Revenue Service, or other federal or state taxing
authorities);
(b) The Company is not in default with respect to any judgment, order,
writ, injunction, decree, or award applicable to it or its assets of any court
or other governmental instrumentality or arbitrator; and
(c) Neither the Company nor any Seller has been served with any now
pending suit, action, or legal, administrative, arbitration, or other proceeding
or governmental investigation in which an unfavorable decision, ruling, or
finding would render unlawful or otherwise materially adversely affect the
consummation of the transactions contemplated by this Agreement, and to each
Seller's best knowledge, no such suit, action, or legal, administrative,
arbitration, or other proceeding or governmental investigation has been
instituted or is threatened.
2.17 Compliance with Law. Except as set forth on the Disclosure
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Schedule,
(a) The Company is not in violation of, or in default with respect to,
or in alleged violation of or alleged default with respect to, any applicable
law, rule, regulation, permit, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or instrumentality, including
without limitation, any laws, ordinances, rules, regulations, permits, or orders
relating to the business of the Company, or the business operations and
practices, health and safety, and employment practices of the Company;
(b) The Company is not delinquent with respect to any report, filing or
submission required to be filed with any governmental commission, board, bureau,
agency, or instrumentality, or with any trade association or certification
organization that has in the past certified or endorsed the business of the
Company; and
(c) The Company is not delinquent with respect to any reports, filings
or submissions required by private covenants or agreements to which it is a
party.
2.18 Taxes. The Company has filed, when due, with all appropriate
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governmental agencies, all tax returns, estimates, reports, and statements to be
filed by it (collectively, the "Returns"). Except as set forth on the
Disclosure Schedule,
(a) Each of the Returns is true, complete, proper and accurate in all
respects;
(b) The Company has paid, when due and payable, all requisite income
taxes, sales, use, property and transfer taxes, levies, duties, licenses and
registration fees and charges of any nature whatsoever and workers' compensation
and unemployment taxes, including interest and penalties thereon. The Company
has withheld all tax required to be withheld under applicable tax laws and
regulations, and such withholdings have either been paid to the respective
governmental agencies or set aside in accounts for such purpose;
(c) The tax provision and accruals reflected in each Balance Sheet are
adequate to cover the liability at the date thereof for all taxes not yet due
and payable, including, without limitation, all taxes based on income, sales,
business, or assets, as well as any other taxes;
(d) The Company has not given or been requested to give, or executed,
any extension of time or waiver of any statute of limitations with respect to
federal, state, or other political subdivision income or other tax for any
period;
(e) The Company has not received any notice of deficiency or assessment
issued or proposed deficiency or assessment by the Internal Revenue Service or
any other taxing authority;
(f) There is no pending audit or inquiry of the Company, nor has the
Company received any oral or written notice of any proposed audit or inquiry by
any taxing authority or jurisdiction; and
(g) The Company has delivered to Purchaser as requested true, correct
and complete copies of all Returns.
2.19 Insurance. The Disclosure Schedule contains a true, correct and
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complete list of all insurance policies either maintained by the Company or
maintained by any other person which relates to the Company or its assets in any
manner as of the date hereof (collectively, the "Insurance Policies"). The
Company has heretofore delivered to Purchaser or its partners as requested true,
correct and complete copies of all Insurance Policies requested. Except as set
forth on the Disclosure Schedule,
(a) All Insurance Policies are still in full force and effect, and all
premiums due thereon have been paid;
(b) The Company has complied in all material respects with the
provisions of all of its Insurance Policies;
(c) No claim is pending under any of the Insurance Policies;
(d) The Company has not asserted any claims in excess of $10,000 per
occurrence under any of the Insurance Policies during the three-year period
immediately preceding the date hereof;
(e) There are no outstanding requirements or recommendations by any
insurance company that issued any of the Insurance Policies or by any Board of
Fire Underwriters or other similar body exercising similar functions or by any
governmental authority exercising similar functions which requires or recommends
any changes in the conduct of the business of, or any repairs or other work to
be done on or with respect to any of the properties or assets of, the Company;
and
(f) The Company has not received any notice or other communication from
any such insurance company within the three (3) years preceding the date hereof
canceling or materially amending or materially increasing the annual or other
premiums payable under any of the Insurance Policies, and (to each Seller's best
knowledge) no such cancellation, amendment or increase of premiums is
threatened.
2.20 Environmental Matters. Except as set forth on the Disclosure
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Schedule,
(a) The Company is in compliance with all applicable federal, state and
local laws and regulations relating to pollution control and environmental
contamination including, but not limited to, all laws and regulations governing
the generation, use, collection, treatment, storage, transportation, recovery,
removal, discharge or disposal of Hazardous Materials (as defined below) and all
laws and regulations with regard to record keeping, notification and reporting
requirements respecting Hazardous Materials;
(b) The Company has not received any notice from any governmental
agency with respect to any alleged violation by it of any applicable federal,
state or local environmental or health and safety statutes and regulations in
connection with its operations, nor does any Seller know of any basis for any
investigation or proceeding against it by any federal, state or local
environmental or health and safety enforcement agency in connection with the
operation of the business;
(c) The Company has not received notice of its violation of, or has
been subject to any administrative or judicial proceeding pursuant to, such laws
and regulations, either now or at any time during the past five years, and to
each Seller's best knowledge, there are no such threatened or proposed
violations with respect to such laws and regulations;
(d) There are no permits, licenses, consents, filings or other
approvals necessary or required to be obtained or made by laws and regulations
relating to Hazardous Material, pollution controls and environmental
contamination in connection with the Company's business;
(e) The Company is not a party to any contract or other agreement
relating to the storage, transportation, treatment or disposal of Hazardous
Materials;
(f) There are no claims or facts or circumstances that reasonably could
form the basis for the assertion of any claim relating to environmental matters
involving the Company, including, but not limited to, any claim arising from any
act or omission of the Company or past or present practices of the business of
the Company, or with respect to properties now or previously owned or leased by
the Company, which could be asserted under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.9601-9657 and any
amendments thereto ("CERLA"), or the Resource Conservation and Recovery Act, 42
▇.▇. ▇▇▇▇-▇▇▇▇ and any amendments thereto ("RCRA"), or any other federal, state
or local environmental statute governing the generation, use, treatment,
disposal, discharge, ownership, operation, transportation or storage of
Hazardous Materials;
(g) The Company is not subject to any remedial obligation under
applicable law or administrative order or decree pertaining to environmental,
health or safety statutes or regulations, including, without limitation, CERLA,
RCRA or any similar state statute;
(h) To each Seller's best knowledge, no Hazardous Material or other
substances known or suspected to pose a threat to health or the environment have
been disposed of or otherwise released on or near any real property or
improvements of the Company;
(i) There are no off-site locations where Hazardous Materials
associated in any way with the Company have been generated, used, collected,
treated, stored, transported, recycled, discharged or disposed of; and
(j) To each Seller's best knowledge, after diligent investigation and
inquiry, no real property is owned or leased by the Company that is on any
federal or state "Superfund" list or subject to any environmentally related
liens, and no claim has been made or, to each Seller's best knowledge,
threatened, alleging damages arising from any Hazardous Materials or other
substances known or suspected to pose a threat to health or the environment.
The term "Hazardous Materials" shall mean materials, substances, waste or
by-products defined as "hazardous substances", "hazardous wastes" or "solid
wastes" in CERLA, RCRA or any other federal, state or local environmental
statute or regulation. For the purposes of this representation and warranty,
the term "claim" shall mean any and all claims, demands, causes of action,
suits, proceedings, administrative proceedings, losses, judgments, decrees,
debts, damages, liabilities, costs, and attorneys' fees and other expenses
regarding or against the Company or its assets.
2.21 Finder's Fees. No Seller nor the Company, nor any one acting on
--------------
their behalf, has employed any financial advisor, broker or finder or incurred
any liability for any financial advisory, brokerage or finder's fee or
commission in connection with this Agreement or the transactions contemplated
hereby.
2.22 Transactions with Affiliated Parties. Except as set forth on the
-------------------------------------
Disclosure Schedule,
(a) There are no transactions currently engaged in between any Seller
and any of its Affiliates (as defined below) (other than arrangements governing
remuneration for services provided as officers, directors, or employees). For
purposes of this Agreement, "Affiliate" means, with respect to any Person (as
defined below), any Person that controls, is controlled by or is under common
control with such Person, together with its and their respective members,
managers, partners, venturers, directors, officers, agents, employees, spouses
and legal representatives. A Person shall be presumed to have control of
another Person when it possesses the power, directly or indirectly, to direct,
or cause the direction of, the management or policies of such other Person,
whether through ownership of voting securities, by contract, or otherwise.
"Person" means an individual, partnership, limited liability company,
association, corporation or other entity;
(b) Except for the ownership of non-controlling interests in securities
of corporations the shares of which are publicly traded, no Seller nor any
Affiliate of a Seller has any investment or ownership interest, directly,
indirectly, or beneficially, in any competitor or potential competitor, major
supplier, or customer of the Company; and
(c) There are no agreements to which any Seller is a party under which
the transactions contemplated by this Agreement (i) will require payment by the
Company or Purchaser to, or any consent or waiver from, any Affiliate of the
Company or Purchaser, or (ii) will impose any other liability, duty, obligation
or responsibility to any Affiliate of the Company under any such agreement.
2.23 Securities Representations. Each Seller believes that he or she
---------------------------
is familiar with the business and financial condition, properties, operations
and prospects of Purchaser, has been given full access to all material
information concerning the condition, properties, operations and prospects of
Purchaser, and he or she has had an opportunity to ask such questions of, and to
receive such information from, Purchaser as he or she has desired and to obtain
any additional information necessary to verify the accuracy of the information
and data received; such Seller has such knowledge, skill and experience in
business, financial and investment matters so that it is capable of evaluating
the merits and risks of an acquisition of the Common Stock; such Seller has
reviewed his, her or its financial condition and commitments and that, based on
such review, such Seller is satisfied that he or she (a) has adequate means of
providing for contingencies, (b) has no present or contemplated future need to
dispose of all or any of the Common Stock to satisfy existing or contemplated
undertakings, needs or indebtedness, (c) is capable of bearing the economic risk
of the ownership of the Common Stock for the indefinite future, and (d) has
assets or sources of income which, taken together, are more than sufficient so
that such Seller could bear the loss of the entire value of the Common Stock;
such Seller is acquiring the Common Stock solely for his, her or its own
beneficial account, for investment purposes, and not with a view to, or for
resale in connection with, any distribution of the Common Stock; such Seller
understands that the Common Stock has not been registered under the Securities
Act of 1933 or any state securities laws and therefore the Common Stock is
"restricted" under such laws; and such Seller has not offered or sold any
portion of the Common Stock and has no present intention of reselling or
otherwise disposing of any portion of the Common Stock either currently or after
the passage of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstance.
2.24 Untrue Statements. This Agreement, the schedules and exhibits
------------------
hereto, and all other documents and information furnished by any Seller or any
Seller's representatives pursuant hereto or in connection herewith do not
include any untrue statement of a material fact or omit to state any material
fact that is necessary to make the statements made herein and therein not
misleading.
ARTICLE THREE
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS
OF PURCHASER
Purchaser hereby represents, warrants, and agrees to and with each Seller:
3.1 Organization and Standing of Purchaser. Purchaser is a corporation
--------------------------------------
duly organized, validly existing and in good standing under the laws of the
state of Colorado. Purchaser has full requisite power and authority to carry on
its business as it is now being conducted, and to own, operate, and lease the
properties now owned, operated, or leased by it. Purchaser is duly authorized
and qualified to carry on its business in the manner as now conducted in each
state in which authorization and qualification is required.
3.2 Capacity to Enter into Agreement. Purchaser has full right, power
---------------------------------
and authority to execute and deliver this Agreement and all other agreements,
documents and instruments to be executed in connection herewith and perform its
obligations hereunder and thereunder. The execution and delivery by Purchaser
of this Agreement and all other agreements, documents and instruments to be
executed by Purchaser in connection herewith have been authorized by all
necessary action by Purchaser. When this Agreement and all other agreements,
documents and instruments to be executed by Purchaser in connection herewith are
executed by Purchaser and delivered to Sellers, this Agreement and such other
agreements, documents and instruments will constitute the valid and binding
agreements of Purchaser or enforceable against Purchaser in accordance with
their respective terms, except as such enforceability may be limited by or
subject to (a) any bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and (b) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
3.3 Conflicts. The execution, delivery, and consummation of the
---------
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Purchaser is a party or by which Purchaser is bound or by which any of the
assets of Purchaser is bound or affected, (b) violate any judgment against, or
binding upon, Purchaser or upon the assets of Purchaser, (c) result in the
creation of any lien, charge or encumbrance upon any assets of Purchaser
pursuant to the terms of any such contract, or (d) violate any provision in any
charter document of Purchaser, or any other agreement affecting the governance
and control of Purchaser.
3.4 Consents. No consent, approval or authorization of, or
--------
declaration, filing or registration with, any governmental or regulatory
authority or any court or other tribunal, and no consent or waiver of any party
to any material contract to which Purchaser is a party or is bound is required
to be obtained by Purchaser in connection with the execution, delivery and
performance of this Agreement by Purchaser, such that the failure to obtain or
make any such consent, approval, authorization, declaration, filing or
registration would materially adversely affect the consummation of the
transactions contemplated by this Agreement.
3.5 Litigation. Purchaser has not been served with any now pending
----------
suit, action, or legal, administrative, arbitration, or other proceeding or
governmental investigation in which an unfavorable decision, ruling, or finding
would render unlawful or otherwise materially adversely affect the consummation
of the transactions contemplated by this Agreement, and to Purchaser's best
knowledge, no such suit, action, or legal, administrative, arbitration, or other
proceeding or governmental investigation has been instituted or is threatened.
3.6 Valid Issuance. Each share of the Common Stock to be issued to a
---------------
Seller pursuant to this Agreement (when issued in accordance with this
Agreement) will be duly and validly authorized and issued, fully paid and
non-assessable.
3.7 Finder's Fees. Neither Purchaser nor anyone acting on its behalf
--------------
has employed any financial advisor, broker or finder or incurred any liability
for any financial advisory, brokerage or finder's fee or commission in
connection with this Agreement or the transactions contemplated hereby.
ARTICLE FOUR
PRE-CLOSING AGREEMENTS
4.1 Interim Business. After the date hereof and until the Closing or
-----------------
the termination of this Agreement in accordance with ARTICLE SIX hereof, unless
otherwise expressly agreed to by Purchaser in writing, each Seller agrees to
cause the Company to conduct its business in the ordinary course consistent with
past practice and shall use reasonable efforts to keep its assets in good repair
and working order except for ordinary wear and tear, maintain any existing
insurance on the assets, and preserve intact the Company's businesses. Without
limiting the generality of the foregoing, after the date hereof and until the
Closing or the termination of this Agreement in accordance with ARTICLE SIX
hereof, unless otherwise expressly agreed to by Purchaser in writing, each
Seller agrees to cause the Company to not to (a) make any acquisition, by means
of a merger or otherwise, of a material amount of assets or securities, other
than acquisitions in the ordinary course consistent with past practice; (b)
agree to any sale, lease, encumbrance or other disposition of a material amount
of assets or securities or any material change in its capitalization, other than
sales or other dispositions in the ordinary course consistent with past
practice; (c) enter into any material contract other than in the ordinary course
of business or agree to any release or relinquishment of any material contract
rights; (d) incur any long-term debt or short-term debt for borrowed money
except for debt incurred in the ordinary course consistent with past practice;
or (e) agree in writing or otherwise to take any of the foregoing actions.
4.2 Information. After the date hereof and until the Closing or the
-----------
termination of this Agreement in accordance with ARTICLE SIX hereof, each Seller
shall (a) promptly give, or cause the Company to give, to Purchaser and its
authorized representatives access during regular business hours to the Company's
books, records, properties, personnel and to such other information as Purchaser
reasonably request, and (b) cause its the Company's officers to furnish to
Purchaser with such financial and operating data and other information with
respect to the business and properties of the Company as Purchaser may
reasonably request.
4.3 Reasonable Efforts. After the date hereof and until the Closing or
------------------
the termination of this Agreement in accordance with ARTICLE SIX hereof, each
Seller and Purchaser shall use all reasonable efforts to cause all conditions to
Closing set forth in ARTICLE FIVE within their power to be satisfied on or prior
to July 15, 2010 (the "Latest Closing Date").
4.4 Exclusivity. After the date hereof and until the Closing or the
-----------
termination of this Agreement in accordance with ARTICLE SIX hereof (the
"Standstill Period"), no Seller nor any of its Affiliates (as defined in Section
2.22 above) shall (whether directly or indirectly through advisors, agents,
employees or other intermediaries), (i) solicit, initiate or take any action
knowingly to encourage the submission of inquiries, proposals or offers which
constitute or would reasonably be expected to lead to (A) any acquisition or
purchase by any person or entity other than Purchaser (a "Third Party") of any
of the consolidated assets or outstanding equity securities of the Company, (B)
any merger, consolidation, business combination, sale of substantially all
assets, re-capitalization, liquidation, dissolution or similar transaction
involving the Company and any Third Party, or (C) any fund raising or financing
activities involving the Company or its assets and any Third Party (any of the
transactions described in clauses (A), (B), or (C) is referred to hereinafter as
a "Transaction"), (ii) enter into or participate in any discussions or
negotiations with any Third Party regarding a Transaction, or furnish to any
Third Party any information with respect to Company's business, properties or
assets in furtherance of any proposal to effect a Transaction or (iii) enter
into any agreement, understanding or arrangement with any Third Party regarding
a Transaction. If any Seller, the Company or any of their Affiliates takes any
action described in clause (i), (ii) or (iii) hereinabove with a Third Party
during the Standstill Period, all Sellers involved shall, in addition to any
damages, losses and liabilities arising from such action, promptly reimburse
Purchaser for all Purchaser Expenses (as defined below). For purposes hereof,
"Purchaser Expenses" means all reasonable out-of-pocket expenses and fees
(including, without limitation, fees and expenses payable to all banks,
investment banking firms, other financial institutions and other persons and
their respective agents and counsel in connection with the formation of
Purchaser and/or in connection with Purchaser's fund raising activities and all
fees of counsel, accountants, experts and consultants to Purchaser) actually
incurred or accrued by Purchaser or on its behalf in connection with its
formation and fund raising activities. Moreover, each Seller further agrees and
acknowledges that Purchaser does not have an adequate remedy at law for the
breach or threatened breach by a Seller, the Company or any of their Affiliates
of the covenants contained in clause (i), (ii) or (iii) hereinabove with a Third
Party during the Standstill Period, and therefore each Seller specifically
agrees that Purchaser, in addition to other remedies which may be available to
it hereunder, may file a suit in equity to enjoin such Seller, the Company that
is involved or any of their Affiliates from such breach or threatened breach,
and that in this connection, Purchaser need not prove irreparable harm as a
condition to the granting of injunctive relief.
ARTICLE FIVE
CONDITIONS TO CLOSING
5.1 Conditions to Purchaser's Obligations. The obligations of
----------------------------------------
Purchaser at the Closing are subject, at Purchaser's election, to the
satisfaction on or prior to Closing of each of the conditions set forth below.
(a) Each of the representations and warranties of each Seller contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing as if each such representation and warranty was made at and as of
the Closing (except for representations and warranties that speak as of a
specific date or time, which need only be true and correct as of such date or
time), each Seller shall have performed in all material respects all agreements
and covenants required by this Agreement to be performed by such Seller prior to
or at the Closing, and at the Closing there shall be delivered to Purchaser
customary bring-down certificates (each dated as of the Closing, signed by each
Seller) to the foregoing effects; and
(b) No suit or other proceeding by any third party shall be pending
before any court or governmental agency seeking to restrain, prohibit or declare
illegal, or seeking substantial damages from Purchaser in connection with, the
transactions contemplated by this Agreement; and
(c) The business, legal, technical and financial due diligence of the
Company's business shall have been completed and shall be satisfactory to
Purchaser in its sole discretion, Purchaser hereby acknowledging that it has
conducted and completed a certain amount of due diligence through the date of
this Agreement; and
(d) The legal research and analysis as to the availability and
anticipated perfection of exemptions from all applicable Federal and state
securities offering registration requirements relating to the issuance of the
Common Stock to Sellers shall have been completed and shall be satisfactory to
Purchaser in its sole discretion; and
(e) All third party and other consents required for the transfer of
shares in accordance with this Agreement shall have been obtained; and
(f) There shall not have been any material adverse change in the
financial condition, operations, business prospects, employee relations,
customer relations, assets, liabilities (accrued, absolute, contingent, or
otherwise) or income of Seller, or the business of Seller; and
(g) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have entered into an Employment Agreements
in the form of Exhibit 5.1(g) hereto (the "Employment Agreement"); and
(h) Sellers shall have delivered to Purchaser, or cause to have been
delivered to Purchaser, the other items required to be delivered to Purchaser in
accordance with of Section 7.2 hereof.
5.2 Conditions to Sellers' Obligations. The obligations of each Seller
----------------------------------
at the Closing are subject, at the election of Sellers holding a majority of the
outstanding shares in each of the Company, to the satisfaction on or prior to
Closing of each of the conditions set forth below.
(a) Each of the representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing as if each such representation and warranty was made at and as of
the Closing (except for representations and warranties that speak as of a
specific date or time, which need only be true and correct as of such date or
time), Purchaser shall have performed in all material respects all agreements
and covenants required by this Agreement to be performed by it prior to or at
the Closing, and at the Closing there shall be delivered to Seller customary
bring-down certificates (each dated as of the Closing, signed by Purchaser) to
the foregoing effect; and
(b) No suit or other proceeding by any third party shall be pending
before any court or governmental agency seeking to restrain, prohibit or declare
illegal, or seeking substantial damages from any Seller in connection with, the
transactions contemplated by this Agreement; and
(c) Purchaser shall have delivered to Seller, or cause to have been
delivered to Seller, the items required to be delivered to Seller in accordance
with of Section 7.3 hereof.
ARTICLE SIX
TERMINATION
6.1 Termination by Purchaser. This Agreement and the transactions
--------------------------
contemplated hereby may be terminated at Purchaser's sole election prior to
Closing by Purchaser's giving written notice to Seller of Purchaser's election
to so terminate in any of the following instances:
(a) If any condition set forth in Section 5.1 is not satisfied in any
respect or waived by Purchaser on or before the Closing or if the Closing has
not occurred before the end of business hours on the Latest Closing Date (as
defined in Section 4.3), other than due to a breach of this Agreement by
Purchaser;
(b) If any proceeding seeking to restrain, prohibit or declare illegal,
or seeking substantial damages from Purchaser in connection with, the
transactions contemplated by this Agreement has been brought by or before any
federal, state or local court or governmental agency or instrumentality, and
such action has not been dismissed before the end of business hours on the date
of the Closing.
Notwithstanding that this Section 6.1 permits Purchaser to terminate this
Agreement upon the occurrence of the instance described in Section 6.1(a),
Purchaser may, in lieu of terminating this Agreement, seek to consummate the
sale and purchase provided for hereby, and assert any cause of action
(including, without limitation, any and all claims for indemnification) that
Purchaser may otherwise have against Seller for the failure to fulfill the
condition as herein set forth.
6.2 Termination by Sellers. This Agreement and the transactions
------------------------
contemplated hereby may be terminated at the sole election of Sellers holding a
majority of the outstanding shares in the Company, prior to Closing by such
Seller's giving written notice to Purchaser of such Seller's election to so
terminate in any of the following instances:
(a) If any of the conditions set forth in Section 5.2 are not satisfied
in any respect or waived by Seller on or before the Closing, or if the Closing
has not occurred before the end of business hours on the Latest Closing Date (as
defined in Section 4.3), other than due to a breach of this Agreement by Seller;
or
(b) If any proceeding seeking to restrain, prohibit or declare illegal,
or seeking substantial damages from Seller in connection with, the transactions
contemplated by this Agreement has been brought by or before any federal, state
or local court or governmental agency or instrumentality, and such action has
not been dismissed before the end of business hours on the date of the Closing.
6.3 Mutual Termination. The Sellers and Purchaser may terminate this
-------------------
Agreement at any time by mutual written consent.
6.4 Effect of Termination. If this Agreement is terminated pursuant to
----------------------
any of Section 6.1, 6.2 or 6.3, this Agreement shall become wholly void and of
no force or effect, without any liability or further obligation on the part of
any Seller or Purchaser or any shareholder, director, officer, partner, or any
director, officer or principal of any partner, except for liabilities of a party
hereto to another arising from a breach of this Agreement prior to termination
in accordance with either of Section 6.1 or 6.2 and except that the provisions
set forth in this Section 6.4, ARTICLE TEN hereof or any other ancillary
agreement that the parties have entered into, shall survive termination of this
Agreement.
ARTICLE SEVEN
CLOSING
7.1 Closing. Subject to ARTICLES FIVE AND SIX hereof, the closing (the
-------
"Closing") of the sale and purchase of the stock pursuant to this Agreement
shall occur at the offices of Purchaser (or such other place as Seller and
Purchaser shall agree upon in writing), at such time and on such date as Seller
and Purchaser may agree, as soon as practicable after the conditions set forth
in ARTICLE FIVE have been satisfied or waived. All transactions contemplated at
the Closing shall be deemed to be effective as of midnight on the day preceding
the date of Closing.
7.2 Sellers' Deliveries. At the Closing, Sellers shall deliver:
--------------------
(a) All stock certificates representing all outstanding shares in the
Company, properly endorsed or accompanied by duly executed stock powers in good
form; and
(b) A certificate of each Seller (dated as of the Closing) certifying
that each of the representations and warranties of each Seller contained in this
Agreement is true and correct in all material respects at and as of the Closing
as if each such representation and warranty was made at and as of the Closing
(except for representations and warranties that speak as of a specific date or
time, which need only be true and correct as of such date or time) and that each
Seller has performed in all material respects all agreements and covenants
required by this Agreement to be performed by them prior to or at the Closing;
and
(c) Copies of all required third party consents to the sale of the
shares that are required and have been obtained; and
(d) The Employment Agreement; and
(e) Releases in the form of Exhibit 7.2(e) hereto, one executed by
Purchaser and each Seller; and
(f) Letters of Resignation signed by each Seller (other than ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇) whereby each such Seller resigns from any seat that he or she may hold
on the Board of Directors of the Company and all offices he or she may hold with
the Company.
Simultaneously with the deliveries provided for above, Sellers shall take
all reasonable steps as may be required to put Purchaser in actual possession
and operating control of the Company's assets.
7.3 Purchaser's Deliveries. At the Closing, Purchaser shall deliver:
-----------------------
(a) A stock certificate to each Seller representing the number of
restricted shares of Common Stock that such Seller is to receive in accordance
with Schedule 1.1 hereto; and
(b) Certificates of appropriate authorized officers of Purchaser (dated
as of the Closing) certifying that each of the representations and warranties of
Purchaser contained in this Agreement is true and correct in all material
respects at and as of the Closing as if each such representation and warranty
was made at and as of the Closing (except for representations and warranties
that speak as of a specific date or time, which need only be true and correct as
of such date or time) and that Purchaser has performed in all material respects
all agreements and covenants required by this Agreement to be performed by them
prior to or at the Closing; and
(d) The Employment Agreement.
ARTICLE EIGHT
CERTAIN POST-CLOSING AGREEMENTS
8.1 Further Assurances. Following the date hereof, each party shall
-------------------
execute and deliver such other documents, and take such other actions, as may be
reasonably requested by the other party to vest in Purchaser full right title
and interest in and to the stock in the Company being acquired pursuant hereto,
to complete the transactions contemplated by this Agreement and to allow each
party fully to enjoy and exercise the rights accorded to and acquired by it
under this Agreement or any other agreement entered into pursuant hereto.
8.2 Publicity. The parties hereto shall jointly prepare any press
---------
release or other public announcement relating to this Agreement, except that the
foregoing shall not prevent any party hereto or any affiliate thereof from
issuing any press release required by applicable law.
8.3 Covenant Not to Compete. In further consideration of Purchaser's
-------------------------
purchase of the outstanding shares in the Company and other independent valuable
consideration (the receipt of which each Seller hereby acknowledges), each
Seller hereby agrees as follows:
(a) For a period of five (5) years from the date of the closing of the
sale and purchase of the outstanding stock in the Company pursuant hereto (the
"Restricted Period"), such Seller shall not directly or indirectly, acting alone
or in any capacity with any other business entity: (i) engage within the state
of Florida in the non-scheduled charter airline business or the aircraft
maintenance business; (ii) solicit, deal, negotiate, enter into an arrangement,
contract or attempt to do any of the foregoing, in any respect pertaining to the
non-scheduled charter airline business or the aircraft maintenance, with any
person who was a customer of the Company during the two (2) year period prior to
the date hereof, or attempt to cause any such person not to continue its
business relationship with the Company; (iii) induce or attempt to influence,
directly or indirectly, any person employed by the Company immediately prior to
the date hereof to terminate his, her or its employment or contractual
relationship, or (iv) disclose to any person, firm, or corporation any trade
secrets or proprietary data relating to, or any details relating to the methods
of operation of the Company's, including, without limitation, the customer lists
and contents of other business records, or otherwise attempt to take any form of
advantage of such information.
(b) Notwithstanding the foregoing provisions, each Seller shall be
permitted to own up to five percent (5%) of the publicly traded securities,
whose securities are registered under Section 12 or who file reports under
Section 15(d) of the Securities Exchange Act of 1934, of any company, even those
engaged in the non-scheduled charter airline business or the aircraft
maintenance business.
(c) Each Seller hereby specifically acknowledges and agrees that the
temporal and other restrictions contained in (a) immediately above are
reasonable and necessary to protect the business that Purchaser is purchasing
through the purchaser of the outstanding stock in the Company, and that the
enforcement of the provisions of this section will not work an undue hardship on
him, her or it.
(d) Each Seller further agrees that in the event either the duration,
geographical scope, or any other restriction, or portion thereof, set forth in
(a) immediately above is held to be overly restrictive and unenforceable in any
court proceeding, the court may reduce or modify such restrictions to those
which it deems reasonable and enforceable under the circumstances and the
parties agree that the restrictions of (a) immediately above will remain in full
force and effect as reduced or modified.
(e) Each Seller further agrees and acknowledges that Purchaser does not
have an adequate remedy at law for the breach or threatened breach by him, her
or it of the covenants contained in (a) immediately above, and each Seller
therefore specifically agrees that Purchaser, in addition to other remedies
which may be available to it hereunder, may file a suit in equity to enjoin such
Seller from such breach or threatened breach.
(f) Each Seller further agrees, in the event that any provision of (a)
immediately above is held to be invalid or against public policy, the remaining
provisions of (a) immediately above and the remainder of this Section shall not
be affected thereby.
(g) Each Seller further agrees that the running of the Restricted
Period shall be tolled for any period of time during which such Seller is in
violation of this Section.
ARTICLE NINE
SURVIVAL AND INDEMNITY
9.1 Survival of Representations and Warranties. All of the
----------------------------------------------
representations and warranties made by the parties hereto in this Agreement or
pursuant hereto, shall be continuing and shall survive the closing hereof and
the consummation of the transactions contemplated hereby, notwithstanding any
investigation at any time made by or on behalf of any party hereto.
9.2 Indemnification by Sellers. Sellers shall, jointly and severally,
---------------------------
protect, indemnify and hold harmless Purchaser, and Purchaser's directors,
officers, employees, agents, affiliates, successors and assigns, from any and
all demands, claims, actions, causes of actions, lawsuits, proceedings,
judgments, losses, damages, injuries, liabilities, obligations, expenses and
costs (including costs of litigation and attorneys' fees), arising from any
breach of any agreement, representation or warranty made by any of them in this
Agreement.
9.3 Indemnification by Purchaser. Purchaser shall protect, indemnify
------------------------------
and hold harmless each Seller, and each Seller's legal representatives, heirs,
beneficiaries, successors and assigns, from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and attorneys' fees), arising from any breach of any agreement,
representation or warranty made by it in this Agreement.
ARTICLE TEN
MISCELLANEOUS
10.1 Notices. Any notices, requests, demands, or other communications
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herein required or permitted to be given shall be in writing and may be
personally served or sent by United States mail and shall be deemed to have been
given if personally served, when served, or if mailed, when deposited in the
mail and shall be deemed to have been received if personally served, when
served, or if mailed, on the third business day after deposit in the United
States mail with postage pre-paid by certified or registered mail and properly
addressed. As used in this Agreement, the term "business day" means days other
than Saturdays, Sundays, and holidays recognized by Federal banks. For purposes
of this Agreement, the addresses of the parties hereto shall be the addresses as
set forth on the signature pages of this Agreement until a party subsequently
notifies the other party in writing of a change of address.
10.2 Counterparts. This Agreement may be executed in any number of
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counterparts and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one and the
same instrument.
10.3 Amendments and Waivers. This Agreement may be amended, modified,
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or superseded only by written instrument executed by all parties hereto. Any
waiver of the terms, provisions, agreements, covenants, representations,
warranties, or conditions hereof shall be made only by a written instrument
executed and delivered by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right to enforce the same. No waiver by any party of
any condition, or of the breach of any term, provision, agreements, covenant,
representation, or warranty contained in this Agreement in one or more instances
shall be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or the breach of any
other term, provision, agreements, covenant, representation, or warranty.
10.4 Time of Essence. Time is of the essence in the performance of
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this Agreement.
10.5 Captions. The captions contained in this Agreement are solely for
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convenient reference and shall not be deemed to affect the meaning or
interpretation of any Article, Section, or paragraph hereof.
10.6 Entire Agreement. This Agreement (including the schedules and
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exhibits hereto, the Financial Statements, and all supporting agreements
referred to herein, all of which are by this reference fully incorporated into
this agreement) sets forth the entire agreement and understanding of the parties
with respect to the transactions contemplated hereby, and supersedes all prior
agreements, arrangements, and understandings relating to the subject matter
hereof.
10.7 Assignment, and Successors and Assigns. No party hereto may
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assign any of its rights, interests or obligations under this Agreement without
the prior written consent of the other parties. Notwithstanding the preceding,
Purchaser may assign all or part of this Agreement and its rights hereunder to a
wholly-owned subsidiary or to a person who acquires substantially all of the
assets of Purchaser and who assumes all of the obligations of Purchaser
hereunder, provided in each such case that no such assignment shall release
Purchaser from its duties and obligations hereunder. All of the terms,
provisions, agreements, covenants, representations, warranties, and conditions
of this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, legal
representatives, permitted assigns, and successors.
10.8 Knowledge, Gender, and Certain References. Whenever a
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representation or warranty made herein is made to the best of any entity's
knowledge, such representation or warranty is based only on the actual knowledge
or belief of the entity's management without any independent investigation on
the part of such management or any other person although such management has no
reason to believe that the representation or warranty made was not true as of
the date which it speaks. Whenever from the context it appears appropriate,
each term stated in either the singular or the plural shall include both the
singular and the plural, and pronouns stated in the masculine or the neuter
gender shall include the masculine, the feminine and the neuter gender. The
terms "hereof," "herein," or "hereunder" shall refer to this Agreement as a
whole and not to any particular Article, Section, or paragraph hereof.
10.9 Applicable Law and Draftsmanship. This Agreement has been
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executed in ▇▇▇▇▇▇ County, Texas. THIS AGREEMENT SHALL BE GOVERNED EXCLUSIVELY
BY ITS TERMS AND BY THE LOCAL, INTERNAL LAWS OF THE STATE OF TEXAS. Each party
hereto hereby acknowledges and agrees that it has consulted legal counsel in
connection with the negotiation of this Agreement and that it has bargaining
power equal to that of the other parties hereto in connection with the
negotiation and execution of this Agreement. Accordingly, the parties hereto
agree that the rule of contract construction that an agreement shall be
construed against the draftsman shall have no application in the construction or
interpretation of this Agreement.
10.10 Severability. If any term, provision, agreements, covenant, or
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restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
agreements, covenants and restrictions shall remain in full force and effect and
shall in no way be affected, impaired, or invalidated.
10.11 Costs, Expenses and Fees. Each party hereto agrees hereby
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to pay all costs, expenses, and fees incurred by it in connection with the
transactions contemplated hereby, including, without limitation, all attorneys'
and accountants' fees.
[SIGNATURES TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"SELLERS"
___________________________________ ___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address: ________________________ Address: _____________________
________________________ _____________________
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ________________________
________________________
"PURCHASER"
AVSTAR AVIATION GROUP, INC.,
a Colorado corporation
By:_________________________________
Name:______________________________
Its:_________________________________
Address: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 1.1***
PERCENTAGE PERCENTAGE OF
NAME OF NUMBER OF OF CASH ACQUISITION
SELLER SHARES BEING SOLD TO BE RECEIVED SHARES TO BE
RECEIVED
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 650* 32.5% 32.5%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 350 35.0% 35.0%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 650* 32.5% 32.5%
* Such Seller's joint interest in these shares
