Exhibit 10.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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This Agreement and Plan of Merger and Reorganization ("Agreement") is
made as of the 27th day of March, 2008, by and between ▇▇▇▇▇▇ Associates, Inc.,
a Delaware corporation ("▇▇▇▇▇▇" or the "Company") with its principal business
offices located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Extreme Acquisition Company, Inc., a Delaware corporation ("Sub") and a wholly
owned subsidiary of ▇▇▇▇▇▇ with its principal business offices located at ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, TFB Acquisition Company,
LLC, a Delaware limited liability company ("TFB"), with its principal offices
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and Extreme
Mobile Coatings, Inc., a Delaware corporation ("Extreme") with its principal
business offices located at ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Extreme has been formed to (i) offer franchises for the
operation of mobile coating businesses which provide painting or coating on
various surfaces utilizing a patented system and materials developed by Xiom
Corp. and (ii) operate a mobile coating business in Kentucky (collectively, the
"Business");
WHEREAS, ▇▇▇▇▇▇ is in the business of selling automotive franchises and
administering and supporting full service automotive repair centers (the
"Automotive Business");
WHEREAS, ▇▇▇▇▇▇ desires to acquire the Business from Extreme by way of
a merger of Sub with and into Extreme (the "Merger");
WHEREAS, simultaneously with the Merger, TFB desires to purchase from
▇▇▇▇▇▇, and ▇▇▇▇▇▇ desires to sell to TFB, substantially all of the properties,
rights and assets used by ▇▇▇▇▇▇ in conducting the Automotive Business, all upon
and subject to the terms and conditions hereinafter set forth.
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. The Merger.
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1.1. Merger; Effective Time. At the Effective Time (as
defined below) and subject to the provisions of this Agreement and in accordance
with the provisions of the Delaware General Corporation Law (the "DGCL"), Sub
shall be merged with and into Extreme. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") shall be duly
prepared, executed and acknowledged by Extreme and Sub and thereafter delivered
to the Secretary of State of the State of Delaware for filing, as provided in
the DGCL as soon as practicable on or after the Closing Date (as defined in
Section 1.5). The Merger shall become effective upon the filing of the
certificate of merger with the Secretary of State of the State of Delaware (the
"Effective Time") or at such other date and time as is specified in the
Certificate of Merger.
1.2. Effects of the Merger. At the Effective Time (i) the
separate existence of Sub shall cease and Sub shall be merged with and into
Extreme (Extreme and Sub are sometimes referred to herein as the "Constituent
Corporations" and Extreme is sometimes referred to herein as the "Surviving
Corporation"), (ii) the Certificate of Incorporation of Extreme, as in effect at
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation, (iii) the Bylaws of Extreme as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation and (iv) the
directors and officers of Extreme at the Effective Time of the Merger shall,
from and after the Effective Time, be the directors and officers of the
Surviving Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
By-laws.
1.3. Conversion of Securities. As of the Effective Time,
by virtue of the Merger and without any action on the part of holders of any
shares of the common stock of Extreme (the "Extreme Common Stock") or ▇▇▇▇▇▇ as
the owner of all of the outstanding shares of the common stock of Sub (the "Sub
Common Stock"), the outstanding shares of Extreme Common Stock and the
outstanding shares of Sub Common Stock will be treated in the manner set forth
below:
(a) Exchange Ratio for Extreme Common Stock.
Each share of Extreme Common Stock outstanding immediately prior to the
Effective Time (each an "Old Extreme Share") shall by virtue of the Merger, and
after giving effect to the Reverse Split (as defined in Section 5.19) and Share
Cancellation (as defined in Section 3.2), be converted into 9,364 shares (each,
a "Merger Share") of the common stock, par value $.0001 per share, of ▇▇▇▇▇▇
(the "▇▇▇▇▇▇ Common Stock");
(b) Fractional Shares. Notwithstanding any other
provision of this Agreement, no fractional shares of ▇▇▇▇▇▇ Common Stock will be
issued and any holder of Extreme Common Stock who would otherwise be entitled to
receive a fractional share of ▇▇▇▇▇▇ Common Stock shall receive a number of
shares of ▇▇▇▇▇▇ Common Stock rounded to the nearest whole share;
(c) Adjustment of Exchange Ratio. The Parties
hereto intend that the Shares to be issued to the stockholders of Extreme
pursuant to this Section 1.3 shall represent ninety-four percent (94%) of
▇▇▇▇▇▇'▇ outstanding Common Stock on a Fully Diluted Basis (as defined in
Section 2.3(b) below) at the Effective Time. In the event that the Merger Shares
represent less than ninety-four percent (94%) of ▇▇▇▇▇▇'▇ outstanding Common
Stock on a Fully Diluted Basis, the number of Merger Shares to be issued to the
holders of Extreme Common Stock shall be adjusted at Closing to be equal to
ninety-four percent (94%) of ▇▇▇▇▇▇'▇ outstanding Common Stock on a Fully
Diluted Basis at the Effective Time, and such additional Merger Shares shall be
distributed among the holders of the Old Extreme Shares immediately preceding
the Effective Time on a pro rata basis; and
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(d) Exchange Ratio of Sub Common Stock. Each
share of Sub Common Stock outstanding immediately prior to the Effective Time
shall by virtue of the Merger be converted into one (1) share of Extreme Common
Stock. (each, a "New Extreme Share").
1.4. Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at the offices of
Moritt ▇▇▇▇ Hamroff & ▇▇▇▇▇▇▇▇ LLP, located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, within five (5) days after the date when each of the
conditions set forth in Section 6 shall have been fulfilled (or waived by the
party entitled to waive such condition) or such other time or date or such other
location as the parties may mutually agree (the "Closing Date"), but no later
than June30, 2008 unless the date of closing is extended by written agreement
between the parties, or required for either or both of the parties to comply
with the rules and regulations of the Securities and Exchange Commission (the
"SEC") and other applicable federal and state laws, rules and regulations.
2. Representations and Warranties. Except as set forth in the
corresponding sections or subsections of the disclosure schedule of ▇▇▇▇▇▇
annexed hereto as Appendix I (the "▇▇▇▇▇▇ Disclosure Schedule") or the
disclosure schedule of Extreme annexed hereto as Appendix II (the "Extreme
Disclosure Schedule"; each of the ▇▇▇▇▇▇ Disclosure Schedule and the Extreme
Disclosure Schedule to be sometimes referred to herein as a "Disclosure
Schedule") and, with respect to ▇▇▇▇▇▇, disclosures contained in the forms,
reports, schedules, statements and other documents which ▇▇▇▇▇▇ has filed with
the SEC under the Securities Act of 1933, as amended (the "Securities Act"), and
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(collectively, the "SEC Documents"), Extreme (except for Sections 2.1(b),
2.2(b), 2.2(c),2.3(b), 2.5(b), and references to ▇▇▇▇▇▇ Financial Statements in
Section 2.7), hereby represents and warrants to ▇▇▇▇▇▇, and ▇▇▇▇▇▇ (except for
Sections 2.1(a), 2.2(a), 2.3(a), 2.5(a), 2.25, and references to Predecessor
Financial Statements in Section 2.7), hereby represents and warrants to Extreme,
that:
2.1. Organization, Good Standing and Qualification.
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(a) Extreme is a corporation duly organized,
validly existing as a corporation and in good standing under the laws of
Delaware. Each of its Subsidiaries (as defined below) is a limited liability
company duly formed and validly existing and in good standing under the laws of
the State of Delaware. Extreme and each of its Subsidiaries has all requisite
power and authority to own and operate its properties and assets and to carry on
the Business, and is qualified to do business and is in good standing in each
jurisdiction where the ownership or operation of its properties or conduct of
the Business requires such qualification, except where the failure to be so
qualified or in good standing is not, when taken together with all other such
failures, reasonably likely to have a material adverse effect on its business,
financial condition, operating results or prospects (a "Material Adverse
Effect"). Extreme has made available to ▇▇▇▇▇▇, a complete and correct copy of
its certificate of incorporation and by-laws (the "Extreme Organizational
Documents") and the organizational documents of each of its Subsidiaries, each
as amended to date, together with the Certificate of Conversion of A&C Coatings,
LLC ("A&C") pursuant to which A&C converted into Extreme. The Extreme
Organizational Documents and the organizational documents of each of its
Subsidiaries are in full force and effect.
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(b) ▇▇▇▇▇▇ and each of its Subsidiaries (as
defined below) is a corporation duly organized, validly existing as a
corporation and in good standing under the laws of its respective jurisdiction
of incorporation. ▇▇▇▇▇▇ and each of its Subsidiaries has all requisite power
and authority to own and operate its properties and assets and to carry on its
business, including, but not limited to, the Automotive Business, as presently
conducted and is qualified to do business and is in good standing in each
jurisdiction where the ownership or operation of its properties or conduct of
its business requires such qualification, except where the failure to be so
qualified or in good standing is not, when taken together with all other such
failures, reasonably likely to have a Material Adverse Effect. ▇▇▇▇▇▇ has made
available to Extreme, a complete and correct copy of its certificate of
incorporation and by-laws (the "▇▇▇▇▇▇ Organizational Documents") and the
organizational documents of each of its Subsidiaries, each as amended to date.
The ▇▇▇▇▇▇ Organizational Documents and the organizational documents of each of
its Subsidiaries are in full force and effect.
(c) As used in this Agreement, (i) the term
"Subsidiary" means, with respect to Extreme or ▇▇▇▇▇▇, as the case may be, any
entity, whether incorporated or unincorporated, of which at least fifty percent
of the securities or ownership interests having by their terms ordinary voting
power to elect at least fifty percent of the board of directors or other persons
performing similar functions is directly or indirectly owned by such party or by
one or more of its respective Subsidiaries or by such party and any one or more
of its respective Subsidiaries, (ii) reference to "the other party" means, with
respect to Extreme, ▇▇▇▇▇▇ and means with respect to ▇▇▇▇▇▇, Extreme, and (iii)
the term "Person" means, an association, corporation, estate, general
partnership, governmental entity (or any agency, department or political
subdivision thereof), individual, joint stock company, joint venture, limited
liability company, limited partnership, trust, or any other organization or
entity.
2.2. Capital Structure.
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(a) The authorized capital stock of Extreme
consists of 1,000 shares of Extreme Common Stock, of which 999 shares were
issued and outstanding and no shares were held in treasury as of the date of
this Agreement. All of the outstanding shares of Extreme Common Stock have been
duly authorized and are validly issued, fully paid and nonassessable. All of the
outstanding membership interests in Extreme's Subsidiaries are owned by Extreme
free and clear of any lien, pledge, security interest, claim or encumbrance.
Extreme has no shares of Extreme Common Stock reserved for issuance and there
are no preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or to sell any shares of
capital stock or other securities of Extreme or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of
Extreme or any of Extreme's Subsidiaries, and no securities or obligation
evidencing such rights are authorized, issued or outstanding. Keystone Capital
Resources, LLC, Bluegrass Mobile Powder Coatings, LLC and Xiom Corp.
(collectively, the "Extreme Stockholders") collectively own all of the
outstanding Extreme Common Stock.
(b) The authorized capital stock of ▇▇▇▇▇▇
consists of 30,000,000 shares of ▇▇▇▇▇▇ Common Stock, of which 11,425,903 shares
were issued and outstanding and no shares were held in treasury as of the date
of this Agreement. All of the outstanding shares of ▇▇▇▇▇▇ Common Stock have
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been duly authorized and are validly issued, fully paid and nonassessable. Each
of the outstanding shares of capital stock of each of ▇▇▇▇▇▇'▇ Subsidiaries is
owned by ▇▇▇▇▇▇ or a direct or indirect wholly-owned subsidiary of ▇▇▇▇▇▇, free
and clear of any lien, pledge, security interest, claim or other encumbrance.
▇▇▇▇▇▇ has no shares of ▇▇▇▇▇▇ Common Stock reserved for issuance and there are
no preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or to sell any shares of capital stock or
other securities of ▇▇▇▇▇▇ or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of ▇▇▇▇▇▇ or any of
its Subsidiaries, and no securities or obligation evidencing such rights are
authorized, issued or outstanding.
(c) Sub is a corporation duly organized, validly
existing as a corporation and in good standing under the laws of Delaware, The
authorized capital stock of Sub consists of 1,000 shares of Sub Common Stock, of
which 100 shares were issued and outstanding and no shares were held in treasury
as of the date of this Agreement. All of the outstanding shares of Sub Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. This Agreement is a valid and binding obligation of Sub
enforceable against it in accordance with its terms, subject to the Bankruptcy
and Equity Exception (as defined in Section 2.3(a)). By ▇▇▇▇▇▇'▇ execution of
this Agreement, ▇▇▇▇▇▇, in its capacity as the sole stockholder of Sub, hereby
adopts this Agreement for the purposes of stockholder approval of this Merger
Agreement required by Section 251 of the DGCL. Sub was incorporated on March 13,
2008 for the sole purpose of entering into this Agreement and has conducted no
business other than its organizational activities and entering into this
Agreement.
2.3. Authority; Approval.
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(a) Extreme has all requisite corporate power
and authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and binding
agreement of Extreme enforceable against Extreme in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception"). The members of Extreme have approved this Agreement and
the sale of the Extreme Assets and the other transactions contemplated hereby.
(b) Each of ▇▇▇▇▇▇ and Sub has all requisite
corporate power and authority and each has taken all corporate action necessary
in order to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated by this Agreement, subject only
to approval by the holders of a majority of the outstanding shares of ▇▇▇▇▇▇
Common Stock (the "▇▇▇▇▇▇ Requisite Vote") of the Reverse Split (as defined in
Section 4.19) the ▇▇▇▇▇▇ Charter Amendments (as defined in Section 4.19) and
this Agreement. Subject to the ▇▇▇▇▇▇ Requisite Vote, this Agreement is a valid
and binding agreement of ▇▇▇▇▇▇, enforceable against ▇▇▇▇▇▇ in accordance with
its terms, subject to the Bankruptcy and Equity Exception. The Shares of ▇▇▇▇▇▇
Common Stock, when issued pursuant to this Agreement, will be validly issued,
fully paid and nonassessable, and no stockholder of ▇▇▇▇▇▇ will have any
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preemptive right of subscription or purchase in respect thereof. The Board of
Directors of ▇▇▇▇▇▇ has unanimously approved the Reverse Split, the ▇▇▇▇▇▇
Charter Amendments, this Agreement, and the transactions contemplated hereby.
After giving effect to the Reverse Split, the Shares issued to Extreme pursuant
to this Agreement shall represent 94% of the shares of ▇▇▇▇▇▇ Common Stock
outstanding, on a Fully Diluted Basis, immediately after the Effective Time. For
purposes of this Agreement, the phrase "Fully Diluted Basis" shall mean after
giving effect to the assumed exercise of all outstanding warrants, options and
other rights to acquire ▇▇▇▇▇▇ Common Stock and securities convertible into
▇▇▇▇▇▇ Common Stock, and the assumed conversion of all securities convertible
into ▇▇▇▇▇▇ Common Stock.
2.4. Governmental Filings; No Violations.
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(a) Other than the disclosures, filings and/or
notices (i) required under the Exchange Act or the Securities Act, (ii) to
comply with state securities or "blue-sky" laws (such filings and/or notices of
▇▇▇▇▇▇ being the "▇▇▇▇▇▇ Governmental Consents" and of Extreme being the
"Extreme Governmental Consents"), or (iii) to comply with the DGCL with respect
to the approval and adoption of this Agreement, the Reverse Split and the ▇▇▇▇▇▇
Charter Amendments, no notices, reports or other filings are required to be made
by it with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by it from, any governmental or
regulatory authority, court, agency, commission, body or other governmental
entity ("Governmental Entity"), in connection with the execution and delivery of
this Agreement by it and the consummation by it of the transactions contemplated
hereby, except those that the failure to make or obtain are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect on it or
prevent, materially delay or materially impair its ability to consummate the
transactions contemplated by this Agreement.
(b) The execution, delivery and performance of
this Agreement by it do not, and the consummation by it of the transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, the Extreme Organizational Documents with respect to
Extreme or the ▇▇▇▇▇▇ Organizational Documents with respect to ▇▇▇▇▇▇ or the
organizational documents governing any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on its assets
or the assets of any of its Subsidiaries (with or without notice, lapse of time
or both) pursuant to, any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation ("Contracts") binding upon it or any of its
Subsidiaries or any Law (as defined in Section 2.9) or governmental or
non-governmental permit or license to which it or any of its Subsidiaries is
subject or (C) any change in the rights or obligations of any party under any of
its Contracts, except, in the case of clause (B) or (C) above, for any breach,
violation, default, acceleration, creation or change that, individually or in
the aggregate, is not reasonably likely to have a Material Adverse Effect on it
or prevent, materially delay or materially impair its ability to consummate the
transactions contemplated by this Agreement. Section 2.4(b) of its Disclosure
Schedule sets forth a correct and complete list of its Contracts and Contracts
of its Subsidiaries pursuant to which consents or waivers are or may be required
prior to consummation of the transactions contemplated by this Agreement other
than those where the failure to obtain such consents or waivers is not
reasonably likely to have a Material Adverse Effect on it or prevent or
materially impair its ability to consummate the transactions contemplated by
this Agreement.
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2.5. Financial Statements; SEC Reports.
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(a) Attached as Exhibit 2.5 to the Extreme
Disclosure Schedule are an unaudited balance sheet of A&C (the predecessor of
Extreme) at December 31, 2007, and statements of operations and cash flows of
A&C for each of the two years then ended (or shorter period in which A&C
existed, and related notes thereto (collectively, the "Predecessor Financial
Statements"). The Predecessor Financial Statements have been prepared in
accordance with U.S. generally accepted accounting principles ("GAAP") applied
on a consistent basis during the periods involved (except that no notes to such
Predecessor Financial Statements have been provided) and fairly present the
financial position of A&C as of the dates thereof and the results of its
operations and cash flows for the periods indicated.
(b) Since December 31, 2005, ▇▇▇▇▇▇ has filed
with the Securities and Exchange Commission (the "SEC") all forms, reports,
schedules, statements and other documents required to be filed by it under the
Exchange Act or the Securities Act (as such documents have been amended since
the time of their filing, collectively, the "SEC Documents"). The SEC Documents,
including without limitation any financial statements and schedules included
therein, at the time filed or, if subsequently amended, as so amended, (i) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. The financial
statements of ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Financial Statements") included in the SEC
Documents comply as to form in all material respects with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted under Regulation S-X and/or Item 310 of
Regulation S-K promulgated by the SEC) and fairly present (subject, in the case
of the unaudited statements, to customary year-end audit adjustments) the
financial position of ▇▇▇▇▇▇ as at the dates thereof and the results of its
operations and cash flows for the periods indicated.
2.6. Absence of Certain Changes. Except as expressly
contemplated by this Agreement, since December 31, 2007 (in the case of Extreme)
and September 30, 2007 (in the case of ▇▇▇▇▇▇), there has not been (i) any
change in the financial condition, properties, prospects, business or results of
operations of it and its Subsidiaries, except those changes that are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on it; (ii) any damage, destruction or other casualty loss with respect
to any asset or property owned, leased or otherwise used by it or any of its
Subsidiaries, whether or not covered by insurance, which damage, destruction or
loss is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on it; or (iii) any change by it in accounting principles,
practices or methods. Since December 31, 2007 (in the case of Extreme) and
December 31, 2006 (in the case of ▇▇▇▇▇▇), except as set forth in its SEC
Documents in the case of ▇▇▇▇▇▇, there has not been any increase in the
compensation payable or that could become payable by it or any of its
Subsidiaries to officers or key employees or any amendment of any of its Benefit
Plans (as defined in Section 2.8) other than increases or amendments in the
ordinary course.
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2.7. Litigation and Liabilities. Except as reflected on
the Predecessor Financial Statements or in the notes thereto (in the case of
Extreme) or the ▇▇▇▇▇▇ Financial Statements(in the case of ▇▇▇▇▇▇), there are no
(i) civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the knowledge of its executive
officers, threatened against it or any of its Affiliates (which term, as used in
this Agreement, shall be as defined in Rule 12b-2 under the Exchange Act) or
(ii) obligations or liabilities, whether or not accrued, contingent or
otherwise, including those relating to matters involving any Environmental Law
(as defined in Section 2.10), or any other facts or circumstances, in either
such case, of which its executive officers have actual knowledge that are
reasonably likely to result in any claims against or obligations or liabilities
of it or any of its Affiliates, except for those that are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect on it or
prevent or materially impair its ability to consummate the transactions
contemplated by this Agreement.
2.8. Employee Benefits.
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(a) A copy of each bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, employment,
termination, severance, compensation, medical, health or other plan, agreement,
policy or arrangement that covers employees, officers, directors, former
employees, former officers or former directors of its and its Subsidiaries (its
"Benefit Plans") and any trust agreements or insurance contracts forming a part
of such Benefit Plans has been made available by it to the other party prior to
the date hereof and each such Benefit Plan is described in its SEC Documents in
the case of ▇▇▇▇▇▇.
(b) To its knowledge, all of its Benefit Plans
are in substantial compliance with all applicable law, including the Internal
Revenue Code of 1986, as amended (the "Code"), and the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). None of its Benefit Plans is
a defined benefit plan (as defined in Section 3(35) of ERISA) or a
multi-employer plan (as defined in Section 3(37) of ERISA). Each of its Benefit
Plans that is an "employee pension benefit plan" within the meaning of Section
3(2) of ERISA (a "Pension Plan") and that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service (the "IRS"), and it is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. There is no pending or, to the actual knowledge of its executive
officers, threatened litigation relating to its Benefit Plans. Neither it nor
any Subsidiary has engaged in a transaction with respect to any of its Benefit
Plans that, assuming the taxable period of such transaction expired as of the
date hereof, would subject it or any of its Subsidiaries to a material tax or
penalty imposed by either Section 4975 of the Code or Section 502 of ERISA.
(c) As of the date hereof, no liability under
Subtitle C or D of Title IV of ERISA (other than the payment of prospective
premium amounts to the Pension Benefit Guaranty Corporation in the normal
course) has been or, to the actual knowledge of its executive officers, is
expected to be incurred by it or any Subsidiary with respect to any ongoing,
frozen or terminated "single-employer plan", within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with it
under Section 4001 of ERISA or Section 414 of the Code (its "ERISA Affiliate")
8
(each such single-employer plan, its "ERISA Affiliate Plan"). It and its
Subsidiaries and ERISA Affiliates have not contributed, or been obligated to
contribute, to a multiemployer plan under Subtitle E of Title IV of ERISA. No
notice of a "reportable event", within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required to
be filed for any of its Pension Plans or any of its ERISA Affiliate Plans within
the 12-month period ending on the date hereof or, to the actual knowledge of its
executive officers, will be required to be filed in connection with the
transactions contemplated by this Agreement.
(d) All contributions required to be made under
the terms of any of its Benefit Plans as of the date hereof have been timely
made or have been reflected on its most recent balance sheet delivered by it to
the other party. Neither any of its Pension Plans nor any of any of its ERISA
Affiliate Plans has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither
it nor its Subsidiaries has provided, or is required to provide, security to any
of its Pension Plans or to any of its ERISA Affiliate Plans pursuant to Section
401(a)(29) of the Code.
(e) Under each of its Pension Plans which is a
single-employer plan and each of its ERISA Affiliate Plans, as of the last day
of the most recent plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan or ERISA Affiliate Plan and there has been no material change in the
financial condition of such Pension Plan or ERISA Affiliate Plan since the last
day of the most recent plan year.
(f) Neither it nor its Subsidiaries have any
obligations for retiree health and life insurance benefits under any of its
Benefit Plans, except as required by applicable law.
(g) The consummation of the transactions
contemplated by this Agreement will not (x) entitle any of its employees,
officers or directors or any employees of its Subsidiaries to severance pay,
directly or indirectly, upon termination of employment, (y) accelerate the time
of payment or vesting or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of its Benefit Plans or (z) result in any breach or violation of, or a
default under, any of its Benefit Plans.
2.9. Compliance with Laws. The businesses of each of it
and its Subsidiaries have not been, and are not being, conducted in violation of
any law, statute, ordinance, regulation, judgment, order, decree, injunction,
arbitration award, license, authorization, opinion, agency requirement or permit
of any Governmental Entity or common law (collectively, "Laws"), except for
violations or possible violations that are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it or prevent
or materially impair its ability to consummate the transactions contemplated by
this Agreement. No investigation or review by any Governmental Entity with
respect to it or any of its Subsidiaries is pending or, to the actual knowledge
of its executive officers, threatened, nor has any Governmental Entity indicated
an intention to conduct the same, except for those the outcome of which are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
9
Effect on it or prevent or materially impair its ability to consummate the
transactions contemplated by this Agreement. To the knowledge of its executive
officers, no material change is required in its or any of its Subsidiaries'
processes, properties or procedures in connection with any such Laws, and it has
not received any notice or communication of any material noncompliance with any
such Laws that has not been cured as of the date hereof, except for such changes
and noncompliance that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it or prevent or materially impair
its ability to consummate the transactions contemplated by this Agreement. Each
of it and its Subsidiaries has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
(collectively, "Permits"), necessary to conduct their business as presently
conducted, except for those the absence of which are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it or prevent
or materially impair its ability to consummate the transactions contemplated by
this Agreement.
2.10. Environmental Matters. Except for such matters that,
alone or in the aggregate, are not reasonably likely to have a Material Adverse
Effect on it, to the knowledge of its executive officers: (i) each of it and its
Subsidiaries has complied with all applicable Environmental Laws (as defined
below); (ii) the properties currently owned or operated by it or any of its
Subsidiaries (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances (as defined
below); (iii) the properties formerly owned or operated by it or any of its
Subsidiaries were not contaminated with Hazardous Substances during the period
of ownership or operation by it or any of its Subsidiaries; (iv) neither it nor
any of its Subsidiaries is subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) neither it nor any of
its Subsidiaries has been associated with any release or threat of release of
any Hazardous Substance; (vi) neither it nor any Subsidiary has received any
notice, demand, letter, claim or request for information alleging that it or any
of its Subsidiaries may be in violation of or liable under any Environmental
Law; (vii) neither it nor any of its Subsidiaries is subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity or is
subject to any indemnity or other agreement with any third party relating to
liability under any Environmental Law or relating to Hazardous Substances; and
(viii) there are no circumstances or conditions involving it or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations, costs or restrictions on the ownership, use, or
transfer of any of its properties pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any Law relating to
pollution (or the clean up of the environment), or the protection of air,
surface water, groundwater, drinking water, land (surface or subsurface), human
health, the environment or any other natural resource or the use, storage,
recycling, treatment, generation, processing, handling, production or disposal
of Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 USC ss.ss.9601 et seq.
and 40 CFR ss.ss.302.1 et seq., and regulations thereunder; the Federal Clean
Air Act, as amended, 42 USC ss.ss.7401 et seq., and regulations thereunder; the
Resource Conservation and Recovery Act, 42 USC ss.ss.6901 et seq., as amended,
and regulations thereunder; and the Federal Water Pollution Control Act, 33 USC
ss.ss.1251 et seq., as amended, and regulations thereunder.
10
As used herein, the term "Hazardous Substance" means any asbestos
containing materials, mono- and polychlorinated biphenyls, urea formaldehyde
products, radon, radioactive materials, any "hazardous substance", "hazardous
waste", "pollutant", "toxic pollutant", "oil" or "contaminant" as used in, or
defined pursuant to any Environmental Law, and any other substance, waste,
pollutant, contaminant or material, including petroleum products and
derivatives, the use, transport, disposal, storage, treatment, recycling,
handling, discharge, release, threatened release, discharge or emission of which
is regulated or governed by any Environmental Law.
2.11. Taxes. It and each of its Subsidiaries have prepared
in good faith and duly and timely filed (taking into account any extension of
time within which to file) all material Tax Returns (as defined below) required
to be filed by any of them and all such filed tax returns are complete and
accurate in all material respects and: (i) it and each of its Subsidiaries have
paid all Taxes (as defined below) that are shown as due on such filed Tax
Returns or that it or any of its Subsidiaries is obligated to withhold or remit
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith or for such amounts that, alone or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on it;
(ii) as of the date hereof, there are not pending or, to the actual knowledge of
its executive officers, threatened in writing, any audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters; and
(iii) there are not, to the actual knowledge of its executive officers, any
unresolved questions or claims concerning its or any of its Subsidiaries' Tax
liability that are reasonably likely to have a Material Adverse Effect on it.
Neither it nor any of its Subsidiaries has any liability with respect to Taxes
in excess of the amounts accrued in respect thereof that are reflected in its
consolidated balance sheet as of December 31, 2007 (in the case of Extreme) and
September 30, 2007 (in the case of ▇▇▇▇▇▇), except such excess liabilities that
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on it.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest with respect to such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
2.12. Labor Matters. Neither it nor any of its Subsidiaries
is the subject of any proceeding asserting that it or any of its Subsidiaries
has committed an unfair labor practice or is seeking to compel it to bargain
with any labor union or labor organization nor is there pending or, to the
knowledge of its executive officers, threatened, nor has there been for the past
five years, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving it or any of its Subsidiaries, except in each case as is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on it.
2.13. Securities Law Compliance. Each outstanding share of
its capital stock and each outstanding option and right to acquire its capital
stock, if any, have been registered under the Securities Act and all applicable
state "blue sky" laws or issued pursuant to applicable exemptions from
registration under the Securities Act or such "blue sky" laws.
11
2.14. No Default. To the knowledge of its executive
officers, neither it nor any of its Subsidiaries is or currently expects to be
in the future, in violation or breach of or in default under, and no conditions
exist that, with the giving of notice or the lapse of time or both, would
constitute a default under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which it or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound except for
such violations, breaches or defaults as are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect on it.
2.15. Related Party Transactions. Since December 31, 2005,
neither it nor any of its Subsidiaries (nor, with respect to Extreme, A&C) has
(a) incurred any obligation to pay commissions or other amounts to any firm of
which any of its directors, officers or stockholders which beneficially own 5%
or more of its outstanding common stock (each a "5% Stockholder") is a partner
or stockholder; (b) cancelled, without payment in full, any notes, loans or
other obligations receivable from any employee, officer, director or 5%
Stockholder, or any member of the families of any thereof, or from any
corporation, partnership or other entity in which any officer, director or 5%
Stockholder, or any member of their families, then has any direct or indirect
interest; (c) sold, assigned or transferred any of its assets to or from any of
its employees, officers, directors, 5% Stockholders or members of their families
for less than fair market value.
2.16. Property. Section 2.16 of its Disclosure Schedule,
and/or its SEC Documents in the case of ▇▇▇▇▇▇, lists all leases of real and
personal property to which it or any of its Subsidiaries is a party, except for
leases of personal property which are not material to its operations. To the
knowledge of its executive officers, it and each of its Subsidiaries (i) has
good and marketable title in fee simple to, or valid existing leases for, all
real property used in the operation or conduct of its business and (ii) owns,
leases or rents all the machinery, equipment, furniture, fixtures and all other
capital assets used in the conduct of its business and has good and marketable
title or valid existing leases for all such machinery, equipment, furniture and
fixtures. All real and personal properties owned by it or any of its
Subsidiaries are owned by it free and clear of all mortgages, liens, charges or
encumbrances of any nature whatsoever except for Permitted Liens (as defined
below). To the knowledge of its executive officers, all leases to which it or
any of its Subsidiaries is a party are valid and effective in accordance with
their terms, and except for defaults not reasonably likely to have a Material
Adverse Effect on it, there is not, under any leases for real or personal
property, any existing default by it or any of its Subsidiaries or, to the best
of its knowledge, by any other party, nor to the best of its knowledge, is there
any event which with notice or lapse of time or both would constitute such a
default. To its knowledge, each such parcel of real property owned or leased by
it or by any Subsidiary is in compliance with all applicable zoning, building,
health and safety laws, ordinances, and regulations and all applicable
Environmental Laws, except where non-compliance would not have a Material
Adverse Effect on it. All real property and fixtures and all personal property
and assets, excluding inventory, used by it or any of its Subsidiaries in its
operations and business are and at the Closing Date will be sufficient to
operate the business of it or its Subsidiaries, as the case may be, as conducted
on the date hereof, and, except for normal wear and tear, will be in as good
12
condition and repair as they were on the date hereof. As used herein, the term
"Permitted Liens" means (i) liens or encumbrances for taxes not yet due or which
are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the owner; (ii)
carrier's, warehousemen's, mechanic's, material men's, repairmen's or other like
liens or encumbrances arising in the ordinary course of business which are not
overdue for a period of more than thirty (30) days or which are being contested
in good faith and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of the owner; and (iii) those liens or
encumbrances described in Section 2.16 of the applicable Disclosure Schedule.
2.17. Intellectual Property Rights. Section 2.17 of its
Disclosure Schedule, and/or its SEC Documents in the case of ▇▇▇▇▇▇, contains an
accurate and complete description of all domestic and foreign patents,
trademarks, trademark registration, service marks, service marks registration,
logos, trade names, assumed names, copyrights and copyright registrations and
all applications therefor, presently owned or held by it or any of its
Subsidiaries or under which it or any of its Subsidiaries owns or holds any
license, or in which it or any of its Subsidiaries owns or holds any direct or
indirect interest, and no others are necessary for the conduct of the present
business of it or any of its Subsidiaries. To the best of its knowledge, no
products, sold by it or any of its Subsidiaries, nor any patents, formulae,
know-how, secrets, trademarks, trademark registrations, service marks, service
marks registration, logos, trade names, assumed names, copyrights, copyright
registrations, or designation used or licensed for use in its business or the
business of any of its Subsidiaries, infringe on any patents, trademarks,
licenses, or copyrights, or any other rights, of any Person. It and each of its
Subsidiaries is the sole owner of, has the sole and exclusive right to use, has
the right and power to sell, and has taken all reasonable measures to maintain
and protect, the patents, trademarks, trademark registrations, logos, trade
names, assumed names, copyrights, copyright registrations, service marks and
service ▇▇▇▇ registrations listed in Section 2.17 of its Disclosure Schedule or
in its SEC Documents in the case of ▇▇▇▇▇▇. No claims have been asserted against
it or any of its Subsidiaries in writing by any person and received by it
challenging the use of any such patents, trademarks, trademark registrations,
service marks, service ▇▇▇▇ registrations, logos, trade names, assumed names,
copyrights and copyright registrations or challenging or questioning the
validity or effectiveness of any such license or agreement, or the use of any
formula, know-how or secrets used in its business or the business of its
Subsidiaries and, to the best of its knowledge, there is no valid basis for any
such claims. To the knowledge of its executive officers, no other party is
infringing on the patents, trademarks, trademark registrations, logos,
tradenames, assumed names, copyrights copyright registrations, service marks and
service ▇▇▇▇ registrations listed in Section 2.17 of its Disclosure Schedule
and/or in the SEC Documents in the case of ▇▇▇▇▇▇.
2.18. Receivables. All of the accounts receivable reflected
on its balance sheet as of December 31, 2007 (in the case of Extreme) and
September 30, 2007 (in the case of ▇▇▇▇▇▇) and all accounts receivable of it
arising since such applicable date, (a) arose from bona fide transactions, (b)
represent bona fide indebtedness of the respective debtors, (c are valid and do
not have original payment terms in excess of 45 days, and (d) to the best of its
knowledge, are not subject to any defense or offset.
13
2.19. Insurance Policies. Section 2.19 of its Disclosure
Schedule contains a true and complete list of all policies of fire, liability,
workers' compensation and other forms of insurance owned by or held by it and
its Subsidiaries, and it has made available for inspection by the other party
true and complete copies of all of such policies. All such policies are in full
force and effect, all premiums with respect thereto covering all periods to the
date of this Agreement have been paid, and no notice of cancellation or
termination has been received with respect to any such policy. To the knowledge
of its executive officers, such policies (a) are sufficient for compliance with
all requirements of law and all agreements to which it is a party, (b) are
valid, outstanding and enforceable policies, (c) will remain in full force and
effect through the Closing Date and (d) will not in any way be affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Neither it nor any of its Subsidiaries had made any material claims
under such insurance policies.
2.20. Contracts. Neither it nor any of its Subsidiaries is
a party to or bound by any written or oral Contract, (i) for the employment of
any officer or individual employee; (ii) with any labor union; (iii) for the
purchase of materials, supplies or equipment involving more than $25,000; (iv)
for the provision of services by it or any of its Subsidiaries involving more
than $25,000 other than in the ordinary course of business; (v) in the nature of
a confidentiality agreement, royalty or license or an agreement for the
acquisition of intangible property rights; (vi) with a governmental agency;
(vii) for the purchase of products for which there is no alternative source of
supply; (viii) in the nature of a non-competition agreement which in any way
restricts the right of it or any of its Subsidiaries to conduct business; (ix)
in the nature of a management agreement; (x) for any quantity discount, volume
purchase, rebate or billback sales arrangement that will continue after the
Effective Time and involves more than $25,000; (xi) in the nature of a note,
bond, mortgage, indenture or loan agreement, or (xii) relating to any matter
which is material to it. To the knowledge of its executive officers, neither it
nor any of its Subsidiaries, as of the date hereof, is a party to or bound by
any contract or contracts which, in its judgment as of the date hereof, either
separately or in the aggregate are contracts which are, or will, have a Material
Adverse Effect on it or any of its Subsidiaries.
2.21. Bank Accounts. Information pertaining to the names
and locations of all banks in which it or any Subsidiary has an account or safe
deposit box and the names of all authorized signatories with respect thereto has
been provided to the other party.
2.22. Subsidiaries. Section 2.22 of its Disclosure
Schedule, and/or its SEC Documents in the case of ▇▇▇▇▇▇, lists each of its
Subsidiaries. It owns of record and beneficially 100% of each class of the
outstanding capital stock of or other interest in each of its Subsidiaries.
2.23. Consents. Neither the execution, delivery or
performance of this Agreement requires the consent or approval of any other
Person or Governmental Entity.
2.24. Broker and Finders. Neither it nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in connection
with the transactions contemplated by this Agreement.
14
3. Transfer of Automotive Business.
-------------------------------
3.1. Purchase and Sale of Automotive Business.
----------------------------------------
(a) ▇▇▇▇▇▇ Assets. Subject to and upon the terms
and conditions of this Agreement and excluding the assets retained by ▇▇▇▇▇▇ as
set forth in Section 3.1(b) herein, at the Closing, ▇▇▇▇▇▇ shall sell, transfer,
convey, assign and deliver, to TFB, and TFB shall purchase from ▇▇▇▇▇▇, all of
the properties, rights and assets, of every kind and nature, real, personal or
mixed, tangible or intangible, wherever located, which are owned, leased,
licensed or used by ▇▇▇▇▇▇ in the conduct of the Automotive Business and which
exist on the Closing Date (collectively, the "Automotive Assets"), including,
without limitation, the following assets:
(i) all office supplies and similar
materials;
(ii) all contracts, agreements, leases,
arrangements and/or commitments of any kind, whether oral or written, relating
to the Automotive Assets, including, but not limited to agreements with
franchisees (the "Automotive Contracts");
(iii) all customer lists, files, records
and documents (including credit information) relating to customers and vendors
of the Automotive Business and all other business, financial and employee books,
records, files, documents, reports and correspondence relating to the Automotive
Business (collectively, the " Automotive Records");
(iv) all rights of ▇▇▇▇▇▇, if any, under
express or implied warranties from the suppliers of ▇▇▇▇▇▇ in connection with
the Automotive Assets;
(v) all furnishings, furniture,
fixtures, tools, machinery, equipment, display racks, stands, and leasehold
improvements owned by ▇▇▇▇▇▇ and related to the Automotive Assets, whether or
not reflected as capital assets in the accounting records of ▇▇▇▇▇▇
(collectively, the "Automotive Fixed Assets");
(vi) all patents, trademarks,
tradenames, service marks, copyrights and applications therefor which are owned
by ▇▇▇▇▇▇ and related to the Automotive Assets and/or the operation of the
Automotive Business;
(vii) all computers, computer programs,
computer databases, hardware and software owned or licensed by ▇▇▇▇▇▇ and used
in connection with the Automotive Assets and/or the operation of the Automotive
Business;
(viii) all municipal, state and federal
franchises, licenses, authorizations and permits of ▇▇▇▇▇▇ which are necessary
to operate or are related to the Automotive Assets;
(ix) all prepaid charges, deposits, sums
and fees of ▇▇▇▇▇▇ relating to the Automotive Assets or arising out of the
operation of the Automotive Business;
(x) all claims and rights of ▇▇▇▇▇▇
related to or arising from the Automotive Assets or arising out of the operation
of the Automotive Business;
(xi) all cash and cash equivalents;
15
(xii) all accounts receivable and rights
to receive payment related to or arising out of the conduct of the Automotive
Business;
(xiii) all of the goodwill of the
Automotive Business;
(xiv) all rights with respect to any
internet address and/or sites of ▇▇▇▇▇▇ and/or the Automotive Business;
(xv) all supplies, inventories, finished
goods and other materials of ▇▇▇▇▇▇ utilized in the conduct of the Automotive
Business;
(xvi) all securities or equity and other
interests in the Subsidiaries of ▇▇▇▇▇▇; and
(xvii) all other assets and properties of
any nature whatsoever, tangible or intangible, held by ▇▇▇▇▇▇ either directly or
indirectly, and used in, allocated to, or required for the conduct of the
Automotive Business.
(b) Retained ▇▇▇▇▇▇ Assets. Notwithstanding
anything to the contrary set forth in this Agreement, the following assets of
▇▇▇▇▇▇ (the "Retained ▇▇▇▇▇▇ Assets") are not included in the sale of Automotive
Assets contemplated hereby: (i) the Automotive Purchase Price (as hereinafter
defined) and the other rights of ▇▇▇▇▇▇ under or relating to this Agreement, and
(ii) the corporate minute books, stock records, qualification to conduct
business as a foreign corporation, and other documents relating to the
formation, maintenance or existence as a corporation of ▇▇▇▇▇▇, except that
▇▇▇▇▇▇ agrees that it will provide copies of any such document from the
corporate minute books as reasonably requested by TFB which TFB believes are
necessary for the use and operation of the Automotive Assets and the conduct of
the Automotive Business after the Closing Date.
3.2. Automotive Purchase Price. The purchase price for the
Automotive Assets (the "Automotive Purchase Price" shall consist of (i) 75,000
shares (after giving effect to the Reverse Split) of ▇▇▇▇▇▇ Common Stock which
shall be surrendered to ▇▇▇▇▇▇ for cancellation at the Closing (the "Share
Cancellation"), (ii) the assumption of liabilities by TFB as contemplated by
Section 3.3 below and (iii) the release of ▇▇▇▇▇▇ by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ from all
claims, liabilities and obligations now existing or which could hereafter arise
as a result of or related to his employment with ▇▇▇▇▇▇, including but not
limited to any obligation of ▇▇▇▇▇▇ to pay amounts to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ under
Section 11 of that certain Employment Agreement between ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ dated January 2000.
3.3. Assumption of Liabilities. Effective as of the
Closing Date, TFB agrees to assume and to pay, perform and discharge all
liabilities and obligations of ▇▇▇▇▇▇, whether now, unknown, absolute or
contingent, existing as of the Closing Date or arising from the conduct of the
Automotive Business on, prior or after the Closing Date, including, but not
limited to, all liabilities and obligations (i) reflected on ▇▇▇▇▇▇'▇ Balance
Sheet dated as of September 30, 2007 (the "▇▇▇▇▇▇ Balance Sheet"), (ii) incurred
after the date of the ▇▇▇▇▇▇ Balance Sheet, (iii) under the Automotive Contracts
and arising out of the use and operation of the Automotive Assets by TFB after
the Closing Date, (iv) arising from taxes of any kind that accrue as a result of
the sale of the Automotive Assets pursuant to this Agreement; and (v) the fees
and expenses of ▇▇▇▇▇▇'▇ counsel, accountants and other experts and all other
16
expenses incurred by ▇▇▇▇▇▇ incident to the negotiation, preparation and
execution of this Agreement and any agreement entered into in connection
herewith and the performance by ▇▇▇▇▇▇ prior to the Closing of its obligations
hereunder (collectively, the "Assumed Automotive Liabilities").
3.4. Allocation of Automotive Purchase Price. The
Automotive Purchase Price shall be allocated among the various Automotive Assets
by mutual agreement of the parties prior to the Closing Date. The parties
covenant and agree with each other that this allocation shall be arrived at by
arm's length negotiation and that none of them will take a position on any
income tax return, before any governmental agency charged with the collection of
any income tax or in any judicial proceeding that is in any manner inconsistent
with the terms of this Section 3.4 without the written consent of the other
party to this Agreement. Each of TFB and ▇▇▇▇▇▇ covenant and agree to execute
and timely file U.S. Treasury Form 8594 consistent with such allocation and upon
a party's reasonable request the other party shall execute and file such other
documents as may be necessary to document such allocation.
3.5. Representations of TFB. TFB hereby represents and
warrants to ▇▇▇▇▇▇ and Extreme that (a) it is a limited liability duly formed,
validly existing as a limited liability company and in good standing under the
laws of Delaware, (b) it has all requisite power and authority and has taken all
action necessary in order to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, (c) this Agreement is a valid
and binding obligation of TFB enforceable against it in accordance with its
terms, subject to the Bankruptcy and Equity Exception and (d) it was formed for
the purpose of acquiring the Automotive Assets and has conducted no business
other than its organizational activities and entering into this Agreement.
4. Closing Deliveries.
------------------
4.1. By Extreme with respect to Merger. Extreme shall
deliver at the Closing each of the following documents:
(a) a cross receipt duly executed by Extreme, in
a form mutually satisfactory to ▇▇▇▇▇▇ and Extreme ("Cross Receipt"), to ▇▇▇▇▇▇;
(b) certificates evidencing the Old Extreme
Shares marked "Cancelled" to ▇▇▇▇▇▇;
(c) certificates evidencing the New Extreme
Shares to ▇▇▇▇▇▇;
(d) a certificate duly executed by the Chief
Executive Officer of Extreme that all representations and warranties made herein
by Extreme are true and correct and that all terms, conditions and provisions of
this Agreement have been performed and complied with at the time of Closing, to
▇▇▇▇▇▇;
(e) a certificate duly executed by the secretary
of Extreme attesting to the accuracy of resolutions to be attached thereto
approved by the Board of Directors and stockholders of Extreme authorizing the
execution, delivery and performance of this Agreement and providing incumbency
information for the individual signing this Agreement and each other agreement,
certificate or other document contemplated by this Agreement on behalf of
Extreme, to ▇▇▇▇▇▇;
17
(f) such certificates or other documents as may
be reasonably requested by ▇▇▇▇▇▇, including, without limitation, certificates
of legal existence, good standing and certified formation documents from the
Secretary of State of Delaware, and certificates of an officer of Extreme with
respect to directors' resolutions and any other relevant matters concerning
Extreme in connection with the transactions contemplated by this Agreement.
4.2. By ▇▇▇▇▇▇ with respect to Merger. ▇▇▇▇▇▇ shall
deliver at the Closing each of the following documents:
(a) certificates representing the Merger Shares
to the shareholders of Extreme;
(b) the Cross Receipt duly executed by ▇▇▇▇▇▇,
to Extreme;
(c) a certificate duly executed by the Chief
Executive Officer of ▇▇▇▇▇▇ that all representations and warranties made herein
by ▇▇▇▇▇▇ are true and correct and that all terms, conditions and provisions of
this Agreement have been performed and complied with at the time of Closing, to
Extreme;
(d) a certificate duly executed by the secretary
of ▇▇▇▇▇▇ attesting to the accuracy of the resolutions to be attached thereto
approved by the Board of Directors and stockholders of ▇▇▇▇▇▇ authorizing the
execution, delivery and performance of this Agreement, approval of the Reverse
Split and approval of the ▇▇▇▇▇▇ Charter Amendments; and providing incumbency
information for the individual signing this Agreement and each other agreement,
certificate or other document contemplated by this Agreement on behalf of
▇▇▇▇▇▇, to Extreme;
(e) such certificates or other documents as may
be reasonably requested by Extreme, including, without limitation, certificates
of legal existence, good standing and certified charter documents from the
Secretary of State of Delaware, and certificates of an officer of ▇▇▇▇▇▇ with
respect to directors' resolutions, by-laws and other matters.
4.3. By ▇▇▇▇▇▇ with respect to Automotive Sale. ▇▇▇▇▇▇
shall deliver to TFB at the Closing each of the following documents:
(a) a ▇▇▇▇ of Sale in a form mutually
satisfactory to Extreme, ▇▇▇▇▇▇ and TFB;
(b) an Assignment and Assumption of Contracts
and Liabilities duly executed by TFB evidencing ▇▇▇▇▇▇'▇ assignment and TFB's
assumption of the Assumed Automotive Liabilities contemplated by Section 3.3
hereof in a form mutually satisfactory to Extreme, ▇▇▇▇▇▇ and TFB (the
"Automotive Assignment and Assumption Agreement");
(c) a cross receipt duly executed by ▇▇▇▇▇▇, in
a form mutually satisfactory to Extreme, ▇▇▇▇▇▇ and TFB (the "Automotive Cross
Receipt");
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(d) the resignations contemplated by Section
5.18, duly executed by the applicable officer and directors;
(e) such certificates or other documents as may
be reasonably requested by TFB, including, without limitation, certificates of
legal existence, good standing and certified charter documents from the
Secretary of State of Delaware, and certificates of the Chief Executive Officer
of ▇▇▇▇▇▇ with respect to minutes, resolutions, by-laws and any other relevant
matters concerning ▇▇▇▇▇▇ in connection with the transactions contemplated by
this Agreement.
4.4. By TFB with respect to the Automotive Sale. TFB shall
deliver at the Closing, each of the following documents:
(a) the Automotive Assignment and Assumption
Agreement, duly executed by TFB, to ▇▇▇▇▇▇;
(b) the Automotive Cross Receipt, duly executed
by TFB, to ▇▇▇▇▇▇;
(c) An Independent Sales Representative
Agreement in a form mutually satisfactory to Extreme, ▇▇▇▇▇▇ and TFB (the "Sales
Representative Agreement"), duly executed by TFB, to Extreme;
(d) a release with respect to the matters
contemplated by clause (iii) of Section 3.2 in a form satisfactory to Extreme,
duly executed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
(e) certificates representing 75,000 shares of
▇▇▇▇▇▇ Common Stock (after giving effect to the Reverse Split), duly endorsed
for transfer or accompanied by stock powers duly executed in blank, to ▇▇▇▇▇▇
for cancellation;
(f) such certificates or other documents as may
be reasonably requested by ▇▇▇▇▇▇, including, without limitation, certificates
of legal existence, good standing and certified charter documents from the
Secretary of State of Delaware, and certificates of an officer of TFB with
respect to members' resolutions, by-laws and other matters concerning TFB in
connection with the transactions contemplated by this Agreement, to ▇▇▇▇▇▇.
4.5. By Extreme, with respect to the Automotive Sale:
Extreme shall deliver to TFB at the Closing the Sales Representative Agreement,
duly executed by Extreme.
5. Covenants. Except as expressly contemplated or permitted by
this Agreement, or to the extent that the other party shall otherwise consent in
writing, during the period from the date of this Agreement and continuing until
the Effective Time, each of Extreme and ▇▇▇▇▇▇ agrees as to itself and its
Subsidiaries that:
5.1. Ordinary Course. It and its Subsidiaries shall carry
on their businesses in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted and use all reasonable efforts to
preserve intact their present business organizations, keep available the
services of their present officers and employees and preserve their
relationships with customers, suppliers and others having business dealings with
them so that their goodwill and ongoing business shall not be impaired in any
19
respect on the Closing Date; provided, however that nothing contained in this
Agreement shall prohibit Extreme from issuing additional equity securities or
debt securities convertible into equity securities.
5.2. Dividends; Changes in Stock. Except to the extent
contemplated by this Agreement it shall not, nor shall any of its Subsidiaries,
nor shall it or any of its Subsidiaries propose to, (i) declare or pay any
dividends on or make other distributions in respect of any of its capital stock
or other outstanding securities or interests, except for dividends or
distributions to Extreme or ▇▇▇▇▇▇ or a Subsidiary that is wholly owned
(directly or indirectly) by a Subsidiary that is wholly owned (directly or
indirectly) by Extreme or ▇▇▇▇▇▇, (ii) split, combine or reclassify any of its
capital stock or equity interests or issue or authorize or propose the issuance
of any other securities in replacement of, in lieu of or in substitution for
shares of its capital stock or equity interests, or (iii) repurchase, redeem or
otherwise acquire, or permit any Subsidiary to repurchase, redeem or otherwise
acquire, any shares of its capital stock or equity interests.
5.3. Issuance of Securities. Neither it nor any of its
Subsidiaries, shall issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock of any class or
equity interests, or any securities convertible into, or any rights, warrants,
calls, subscriptions or options to acquire, any such shares or convertible
securities, other than (i) the issuance of shares of ▇▇▇▇▇▇ Common Stock upon
the exercise of warrants and stock options identified in SEC Documents and/or
Section 2.2(b) of the ▇▇▇▇▇▇ Disclosure Schedule in accordance with the terms of
such warrants and stock options or (ii) the issuance by Extreme of any
additional equity securities or debt securities convertible into equity
securities.
5.4. Governing Documents. Except as contemplated by this
Agreement, it and its Subsidiaries shall not amend or propose to amend the
▇▇▇▇▇▇ Organizational Documents, with respect to ▇▇▇▇▇▇, and the Extreme
Organizational Documents, with respect to Extreme.
5.5. No Acquisitions. Neither it nor any of its
Subsidiaries shall, acquire or agree to acquire by merging or consolidating
with, or by purchasing an equity interest in or portion of the assets of, or by
any manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets.
5.6. No Dispositions. It shall not, nor shall any of its
Subsidiaries sell, lease, license, encumber or otherwise dispose of, or agree to
sell, lease, license, encumber or otherwise dispose of any of its assets, except
in the ordinary course of business.
5.7. Indebtedness. Except for borrowings in the ordinary
course of business under credit arrangements existing on the date of this
Agreement, it shall not, nor shall any of its Subsidiaries, incur (which shall
be deemed to include entering into credit agreements, lines of credit or similar
arrangements) any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of it or any of its Subsidiaries or guarantee any
debt securities of others except as permitted by Section 5.1 or 5.3.
20
5.8. Other Actions. It shall not, nor shall any of its
Subsidiaries, take any action that would or is reasonably likely to result in
any of its representations and warranties set forth in this Agreement being
untrue or in its failure to perform covenants it is obliged to perform hereunder
or in any of the conditions to the Closing set forth in Section 5 not being
satisfied.
5.9. Advice of Changes; Filings. Except as prohibited by
the terms of any confidentiality agreement to which it is a party, it shall
confer on a regular and frequent basis with the other party, report on
operational matters and promptly advise the other party in writing of any change
or event having (in either case), or which, insofar as can reasonably be
foreseen could have (in either case), a Material Adverse Effect on it and its
Subsidiaries (financial or otherwise) or their respective businesses,
properties, prospective results of operations or net worth. It shall promptly
provide the other party (or its counsel) copies of all filings made by it or any
of its Subsidiaries with any Federal, state or foreign Governmental Entity in
connection with this Agreement and the transactions contemplated hereby or which
are material to the operation of the business conducted by it or any such
Subsidiary.
5.10. Notice of Untrue Facts. It will promptly advise the
other party if, at any time before the Information Statement (as defined in
Section 4.20) is mailed to the stockholders of Extreme or before the Effective
Time, the Information Statement as the same relates to it, contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
5.11. Employee Benefit Plans. It and its Subsidiaries will
not, without the prior written consent of the other, (i) enter into, adopt,
amend (except as may be required by law or otherwise permitted or contemplated
by this Agreement) or terminate any Benefit Plan or other employee benefit plan
or any agreement, arrangement, plan or policy between it or a Subsidiary of it
and one or more of its directors, officers or employees; or (ii) increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan and arrangement as in effect as of
the date hereof (including, without limitation, the granting of stock options,
stock appreciation rights or performance units), except for reasonable increases
in salary in the ordinary course of business, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
5.12. Acquisitions of Property. During the period from the
date of this Agreement until the Effective Time, it agrees as to itself and its
Subsidiaries that it will not, without the prior written consent of the other
party, acquire or lease any additional real or personal property, including,
without limitation, capital equipment or inventories, except for real or
personal property which will not exceed $25,000 in the aggregate.
5.13. Consents Without Any Condition. It shall not make any
agreement or reach any understanding not approved in writing by the other party
as a condition for obtaining any consent, authorization, approval, order,
license, certificate, or permit required for the consummation of any of the
transactions contemplated by this Agreement.
21
5.14. No Related Transaction. Neither it nor any of its
Subsidiaries shall enter into or become a party to any contract, lease,
agreement or transaction with any member of its board of directors, any of its
officers or management employees or any of its Subsidiaries or with any business
organization owned or controlled by any of them, from the date of the execution
of this Agreement to the Closing Date except in the ordinary course of business
or as contemplated by this Agreement.
5.15. Legal Requirements. It will take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on itself with respect to the transactions contemplated by this
Agreement (which actions shall include, without limitation, furnishing all
information required in connection with approvals of or filings with any
Governmental Entity and filing initial notices and obtaining an administrative
consent order or otherwise satisfying the requirements of any state or federal
environmental laws with respect to properties owned, leased, or operated by it
or any of its Subsidiaries on or before the date of this Agreement and through
the Closing Date, to the extent such properties are subject to such laws) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or any of their Subsidiaries
in connection with the transactions contemplated by this Agreement. It will, and
will cause its Subsidiaries to, take all reasonable actions necessary to obtain
(and will cooperate with the other party obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party, required to be obtained or made by ▇▇▇▇▇▇,
Extreme or any of their Subsidiaries in connection with the transactions
contemplated by this Agreement or the taking of any action contemplated thereby
or by this Agreement; provided, that except as otherwise provided to the
contrary in this Agreement, neither ▇▇▇▇▇▇ or any of its Subsidiaries nor
Extreme or any of its Subsidiaries shall be obliged to expend funds or commit to
expend funds or undertake any other obligation to obtain any consent,
authorization, order, approval or exemption, required to be obtained by any
other person or entity not its parent or Subsidiary, as the case may be.
5.16. Access to Information. Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which it is
subject, it shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives of the other
party, access, during normal business hours until the earlier of the Closing or
the date of the termination of this Agreement, to all of its properties, books,
contracts, commitments and records and, during such period, it shall (and shall
cause each of its Subsidiaries to) furnish promptly to the other (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request.
5.17. Additional Agreements; Best Efforts. It will use its
best efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest Tilden with full title to
all properties, assets, rights, approvals, immunities and franchises of the
22
Business, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
5.18. Additional Covenants of ▇▇▇▇▇▇. During the period
from the date of this Agreement and continuing until the Closing, ▇▇▇▇▇▇ agrees
that (except as expressly contemplated or permitted by this Agreement or to the
extent that Extreme shall otherwise consent in writing):
(a) SEC Reports. ▇▇▇▇▇▇ shall duly and timely
file all reports and other documents required to be filed by it with the SEC and
will deliver complete and accurate copies thereof to Extreme at the time of
filing. None of such reports and other documents will contain at the time of
filing any untrue statement of a material fact or omit to state any material
fact (excluding any such misstatement or omission made in reliance upon
information provided by Extreme) required to be stated therein or necessary to
make the statements therein not misleading, and all of such reports shall comply
as to form in all material respects with all of the applicable rules and
regulations promulgated under the Exchange Act and the Securities Act, as the
case may be.
(b) Resignation of Directors and Officers.
Consistent with applicable law, ▇▇▇▇▇▇ shall procure prior to the Closing Date
(a) resignations of each of its officers which shall be effective at the
Effective Time and (b) resignations of each of ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
as directors of ▇▇▇▇▇▇ and shall cause ▇▇▇▇▇▇'▇ Board of Directors, prior to the
effectiveness of such resignations and prior to the Closing Date, to (i) appoint
as officers, effective as of the Effective Time, such individuals as may be
designated by Extreme prior to the Closing and (ii) elect to the Board of
Directors of ▇▇▇▇▇▇, effective as of the Effective Time, such number of
individuals as shall be designated by Extreme prior to the Closing. ▇▇▇▇▇▇
agrees that during the three (3) year period following the Closing, its Board of
Directors will include ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in each Board of Directors' slate of
nominees proposed to the stockholders of ▇▇▇▇▇▇ for election to such Board of
Directors and recommend to such stockholders the election of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to
such Board.
5.19. ▇▇▇▇▇▇ Stockholder Consent. ▇▇▇▇▇▇ shall provide to
Extreme the names of and contact information with respect to holders of not less
than a majority of the outstanding shares of the ▇▇▇▇▇▇ Common Stock, and
Extreme shall solicit from such holders a written consent which shall provide
for the adoption and approval of (i) this Agreement and transactions
contemplated hereby, (ii) a one-for-seventeen reverse split of the ▇▇▇▇▇▇ Common
Stock (the "Reverse Split") and (iii) amendments to the Certificate of
Incorporation of ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Charter Amendments") so as to result in
such Certificate of Incorporation, as amended, reading as set forth in the form
of Amended and Restated Certificate of Incorporation attached Exhibit A hereto.
5.20. Schedule 14C Information Statement and Related
Matters.
(a) As promptly as practicable after the date of
this Agreement, and approval of this Agreement, the Reverse Split and the ▇▇▇▇▇▇
Charter Amendments by the holders of a majority of the outstanding voting power
of each class of the voting securities of ▇▇▇▇▇▇, ▇▇▇▇▇▇ and Extreme shall
prepare, and ▇▇▇▇▇▇ shall file with the SEC, a Schedule 14C Information
23
Statement to be sent to the stockholders of ▇▇▇▇▇▇ in connection with the
transactions contemplated hereby. ▇▇▇▇▇▇ and Extreme shall use reasonable best
efforts to cause the Information Statement to be cleared by the SEC as soon
after filing as practicable and (i) ▇▇▇▇▇▇ shall mail the Information Statement
in substantially the form cleared by the SEC to its stockholders at least twenty
(20) days prior to the Closing Date. ▇▇▇▇▇▇ and Extreme shall make all other
necessary filings with respect to this Agreement and the transactions
contemplated hereby under the Securities Act of 1933 and the Securities Exchange
Act of 1934 and the rules and regulations of the SEC thereunder.
(b) Extreme shall take such action as may be
necessary to ensure that the information to be supplied by Extreme for inclusion
in the Information Statement shall not at the time the Information Statement is
mailed to ▇▇▇▇▇▇'▇ stockholders contain any untrue statement of a material fact
or omit to state any material fact required to be stated in the Information
Statement or necessary in order to make the statements in the Information
Statement, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Closing any event relating to Extreme or
any of its Affiliates, officers or directors should be discovered by Extreme
that should be set forth in an amendment or supplement to the Information
Statement, Extreme shall promptly so inform ▇▇▇▇▇▇.
(c) ▇▇▇▇▇▇, Sub and TFB shall take such action
as may be necessary to ensure that the information to be supplied by it for
inclusion in the Information Statement shall not at the time the Information
Statement is mailed to ▇▇▇▇▇▇'▇ stockholders contain any untrue statement of a
material fact or omit to state any material fact required to be stated in the
Information Statement or necessary in order to make the statements in the
Information Statement, in light of the circumstances under which they were made,
not misleading. If at any time prior to the Closing any event relating to
▇▇▇▇▇▇, Sub or TFB or any of their respective Affiliates, officers, directors or
members should be discovered by any such party, that should be set forth in an
amendment or supplement to the Information Statement, the party discovering same
shall promptly so inform Extreme.
5.21. Insurance Coverage. ▇▇▇▇▇▇ shall have obtained the
Insurance Coverage described in Section 6.2(d) and such Insurance Coverage shall
be in effect as of the Closing Date.
5.22. Audit Costs. In the event that the Closing shall not
have occurred prior to the earlier of the date upon which ▇▇▇▇▇▇'▇ auditor fees
for the audit conducted with respect to the year ended December 31, 2007 are due
or April 15, 2008 for any reason other than a breach by ▇▇▇▇▇▇ of its
obligations under this Agreement or the failure to obtain the ▇▇▇▇▇▇ Requisite
Vote within fourteen (14) days of the date of this Agreement, Extreme shall be
liable for and pay the fees incurred by ▇▇▇▇▇▇ with respect to the audit of
▇▇▇▇▇▇'▇ 2007 financial statements.
6. Conditions.
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6.1. Conditions to Each Party's Obligation to Close
Transaction. The respective obligations of each party to effect the Transactions
contemplated by this Agreement shall be subject to the satisfaction prior to the
Closing Date of the following conditions:
24
(a) ▇▇▇▇▇▇ shall have received all state
securities or "Blue Sky" permits and other authorizations necessary to issue the
Merger Shares pursuant to this Agreement or such issuances shall be exempt from
registration or qualification under all applicable state securities or "blue
sky" laws.
(b) No temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the transactions contemplated by this Agreement shall be in effect.
(c) The consents set forth in Section 2.23 of
each of the Disclosure Schedules shall have been obtained.
(d) The Information Statement shall have been
mailed to ▇▇▇▇▇▇'▇ stockholders at least twenty (20) days prior to the Closing
Date.
6.2. Conditions of Obligations of ▇▇▇▇▇▇. The obligations
of ▇▇▇▇▇▇ to effect the transactions contemplated by this Agreement are subject
to the satisfaction of the following conditions unless, to the extent permitted
below, waived by ▇▇▇▇▇▇:
(a) The representations and warranties of
Extreme set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement, and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and ▇▇▇▇▇▇ shall have received a certificate
signed on behalf of Extreme by a managing member of Extreme to such effect.
(b) Extreme shall have performed in all material
respects all obligations, covenants and agreements required to be performed by
it under this Agreement at or prior to the Closing Date, and ▇▇▇▇▇▇ shall have
received a certificate signed on behalf of Extreme by the managing member of
Extreme to such effect.
(c) Extreme shall have delivered to ▇▇▇▇▇▇ all
documents required to be delivered by it pursuant to Section 4.1.
(d) ▇▇▇▇▇▇ shall have obtained prior to and have
in effect as of the Closing Date directors' and officers' liability insurance
and fiduciary liability insurance providing for not less than $5,000,000 of
coverage with respect to claims arising from facts or events that occurred prior
to, as of or after the Closing Date, including, but not limited to, all actions
of the Board of Directors with respect to or in any manner related to the
transactions contemplated by this Agreement, including the Merger, the Reverse
Split, ▇▇▇▇▇▇ Charter Amendments and sale of the Automotive Business (the
"Insurance Coverage").
(e) The holders of a majority of the outstanding
voting power of each class of voting securities of ▇▇▇▇▇▇ Common Stock shall
have approved this Agreement and the transactions contemplated hereby, including
the Reverse Split, the ▇▇▇▇▇▇ Charter Amendments, and the Reverse Split shall
have become effective.
25
6.3. Conditions of Obligations of Extreme. The obligation
of Extreme to effect the transactions contemplated by this Agreement is subject
to the satisfaction of the following conditions unless waived by Extreme:
(a) The representations and warranties of ▇▇▇▇▇▇
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement, and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except as otherwise contemplated by this
Agreement, and Extreme shall have received a certificate signed on behalf of
▇▇▇▇▇▇ by the President and the Chief Financial Officer of ▇▇▇▇▇▇ to such
effect.
(b) The representations and warranties of TFB
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent such representations
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except as otherwise contemplated by this Agreement and Extreme
shall have received a certificate signed on behalf of TFB by the managing member
of TFB to such effect.
(c) ▇▇▇▇▇▇ shall have performed in all material
respects all obligations, covenants and agreements required to be performed by
it under this Agreement at or prior to the Closing Date, and Extreme shall have
received a certificate signed on behalf of ▇▇▇▇▇▇ by the President and the Chief
Financial Officer of ▇▇▇▇▇▇ to such effect.
(d) TFB shall have performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Extreme shall have received a certificate
signed on behalf of TFB by the managing member of TFB to such effect.
(e) ▇▇▇▇▇▇ shall have procured prior to the
Closing Date the resignation of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as President of ▇▇▇▇▇▇, and the
termination of its employment agreements with each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and all
other officers and employees of ▇▇▇▇▇▇.
(f) Each of ▇▇▇▇▇▇ and TFB shall have delivered
all documents required to be delivered by it pursuant to Sections 4.2, 4.3 and
4.4.
(g) The holders of a majority of the outstanding
voting power of each class of voting securities of ▇▇▇▇▇▇ Common Stock shall
have approved this Agreement and the transactions contemplated hereby, including
the Merger, the sale of the Automotive Assets, the Reverse Split, the ▇▇▇▇▇▇
Charter Amendments, and the Reverse Split shall have become effective.
6.4. Conditions of Obligations of TFB. The obligation of
TFB to effect the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions unless waived by TFB:
(a) The representations and warranties of
Extreme set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except as otherwise contemplated by this
Agreement.
26
(b) Extreme shall have performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date.
(c) ▇▇▇▇▇▇ shall have obtained and have in
effect the Insurance Coverage.
(d) Extreme shall have delivered all documents
required by Section 4.1 and ▇▇▇▇▇▇ shall have delivered all documents required
to be delivered by it pursuant to Sections 4.2 and 4.3.
7. Post-Closing Agreements. Extreme and ▇▇▇▇▇▇ agree that from
and after the Closing Date:
7.1. Further Assurances and Data.
---------------------------
(a) At any time and from time to time after the
Closing Date, at TFB's reasonable request and without further consideration,
▇▇▇▇▇▇ shall execute and deliver such instruments of sale, transfer, conveyance,
assignment and confirmation, and take such other action, all at TFB's sole cost
and expense, as TFB may reasonably request to more effectively transfer, convey
and assign to TFB, and to confirm TFB's title to, all the Automotive Assets, to
put TFB in actual possession and operating control thereof, to assist TFB in
exercising all rights with respect thereto, and to carry out the purpose and
intent of this Agreement. Immediately after the Closing Date, ▇▇▇▇▇▇ shall, to
the extent applicable, authorize the release to TFB of all files pertaining to
the Automotive Assets held by any federal, state, county or local authorities,
agencies or instrumentalities. ▇▇▇▇▇▇ and TFB will cooperate in communications
with suppliers and customers to accomplish the transfer of the Automotive Assets
to TFB.
(b) Each of the parties hereby agrees that from
and after the Closing Date, as to any monies received that rightfully belong to
the other party, they shall remit such monies promptly to the other party.
(c) TFB shall have the right, for a period of
three (3) years following the Closing Date, to have reasonable access to those
books, records and accounts, including financial and tax information,
correspondence, employment records and other records that may, at that time, be
in the possession of ▇▇▇▇▇▇ to the extent that any of the foregoing relates to
the Automotive Assets and is needed by TFB in order to comply with its
obligations under applicable securities, tax, environmental, employment or other
laws and regulations.
7.2. Limits on Sales to Affiliates. For a period of
twenty-four (24) months following the Closing Date, ▇▇▇▇▇▇ shall not issue any
shares of ▇▇▇▇▇▇ Common Stock or securities convertible into or exercisable for
▇▇▇▇▇▇ Common Stock to any Affiliate (as that term is defined in Rule 501(a)
promulgated under the Securities Act of 1933) of Extreme or ▇▇▇▇▇▇ except
pursuant to the exercise of any stock option or warrant or conversion of a
convertible security outstanding as of the date of this Agreement.
27
7.3. Consents. ▇▇▇▇▇▇ and TFB will use their commercially
reasonable best efforts to obtain by the Closing Date, consents from each
landlord relating to all Real Property Leases identified on Section 2.16 of the
▇▇▇▇▇▇ Disclosure Schedule, consenting to the assumption of each such Real
Property Lease by TFB, and any other consents required under any Contract or
otherwise in connection with the transactions contemplated by this Agreement. To
the extent that any interest in any of the ▇▇▇▇▇▇ Assets is not capable of being
assigned, transferred, conveyed or registered without the consent, waiver or
authorization of, or registration with, a third person (including, but not
limited to, a governmental, regulatory or administrative authority), or if such
assignment, transfer, conveyance, registration or attempted assignment,
transfer, conveyance or registration would constitute a breach of any ▇▇▇▇▇▇
Asset, or a violation of any law, statute, decree, rule, regulation or other
governmental edict or is not immediately practicable, this Agreement shall not
constitute an assignment, transfer or conveyance of such interest, or an
attempted assignment, transfer or conveyance of such interest (such interests
being hereinafter collectively referred to as "Restricted Automotive
Interests"). The entire beneficial interest in any Automotive Assets subject to
a restriction as described above, and any other interest in such Automotive
Assets which are transferable notwithstanding such restriction, shall be
transferred from ▇▇▇▇▇▇ to TFB as provided in Section 3.1(a). To the extent that
any required consents, waivers, authorizations and registrations are not
obtained, or until the impracticalities of transfer referred to therein are
resolved, ▇▇▇▇▇▇ shall (i) provide to TFB, at the request of TFB, the benefits
of any Restricted Automotive Interests, (ii) cooperate in reasonable and lawful
arrangements designed to provide such benefits to TFB and (iii) enforce, at the
request of TFB for the account of TFB, any rights of ▇▇▇▇▇▇ arising from any
Restricted Automotive Interests (including the right to elect to terminate in
accordance with the terms thereof upon the advice of TFB).
7.4. Director and Officer Indemnification. From and after
the Closing Date, ▇▇▇▇▇▇ and its Subsidiaries shall not amend, repeal or
otherwise modify the provisions with respect to indemnification set forth in
their respective charters or by-laws (or comparable organizational documents) as
in effect on the Closing Date or as shall become effective upon the
effectiveness of the ▇▇▇▇▇▇ Charter Amendments, in any manner that would
adversely affect the rights thereunder of individuals who, on or prior to the
Closing Date, were directors, officers, employees or agents of ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary with respect to actions or failure to act prior to the
Closing, unless such modification is required by law (and then only to the
minimum extent required by law).
7.5. Director and Officer Liability Insurance. ▇▇▇▇▇▇
shall, for a period of three years from the Closing Date, maintain in effect the
Insurance Coverage for each of the three (3) years following the Closing Date,
provided that the premium cost of the Insurance Coverage shall be no greater
than $50,000 for each year of coverage. In the event that the annual premium
cost shall exceed $50,000 for any year within such three year period, ▇▇▇▇▇▇
shall maintain the maximum amount of Insurance Coverage that can be obtained for
a premium of $50,000 for such year. All Insurance Coverage during such three
year period shall cover all periods under which Insurance Coverage was first
obtained and, in the event that ▇▇▇▇▇▇ changes insurance providers during such
three year period, any new Insurance Coverage shall include "tail" coverage for
all periods covered by the predecessor Insurance Coverage.
28
7.6. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as Director. For each of the three (3)
years following the Closing Date, ▇▇▇▇▇▇ shall use its best efforts to cause
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to be included in each Board of Directors' slate of nominees
proposed to the stockholders of ▇▇▇▇▇▇ for election to ▇▇▇▇▇▇'▇ Board of
Directors and recommend to such stockholders the election of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to
such Board.
8. Indemnification and Related Procedures.
--------------------------------------
8.1. Indemnification. TFB agrees to defend, indemnify and
hold harmless ▇▇▇▇▇▇ and its officers, directors, employees, managers, members,
agents, advisers and representatives (collectively, the "Indemnitees") from and
against, and pay or reimburse the Indemnitees for, any and all claims, demands,
liabilities, obligations, losses, fines, costs, expenses, royalties, litigation,
deficiencies or damages (whether absolute, accrued, contingent or otherwise and
whether or not resulting from third party claims), including interest and
penalties with respect thereto and out-of-pocket expenses and reasonable
attorneys' and accountants' fees and expenses incurred in the investigation or
defense of any of the same or in asserting, preserving or enforcing any of their
respective rights hereunder (collectively, "Losses", and each individually, a
"Loss"), resulting from or arising out of:
(a) the Assumed Automotive Liabilities;
(b) any transaction, liability or obligation,
whether absolute or contingent, that occurs or arises out of the operations of
the Automotive Business or the use of Automotive Assets on, prior to or after
the Closing Date;
(c) Any taxes arising out of the operations of
▇▇▇▇▇▇ prior to the Closing Date or out of the operation of the Automotive
Business or the use of the Automotive Assets prior to the Closing Date.
8.2. Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided, that (i)
counsel for the Indemnifying Party who shall conduct the defense of such claim
or litigation shall be reasonably satisfactory to the Indemnified Party, and the
Indemnified Party may participate in such defense at such Indemnified Party's
expense, and (ii) the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such failure results
in a lack of actual notice to the Indemnifying Party and such Indemnifying Party
is materially prejudiced as a result of such failure to give notice. Except with
the prior written consent of the Indemnified Party, no Indemnifying Party, in
the defense of any such claim or litigation, shall consent to entry of any
judgment or enter into any settlement that provides for injunctive or other
nonmonetary relief affecting the Indemnified Party or that does not include as
an unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. In no event shall a party guilty of fraud or willful misconduct be
29
entitled to indemnity with respect to any matter involving such fraud or willful
misconduct. In the event that the Indemnified Party shall in good faith
determine that the Indemnified Party may have available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such claim or any
litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement, negotiations
or litigation relating to any such claim at the sole cost of the Indemnifying
Party, provided, that if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such claim or litigation without
the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defense against any such claim or demand, and shall be
entitled to settle or agree to pay in full such claim or demand, subject to the
written consent of the Indemnifying Party such consent not to be unreasonably
withheld. In any event, except to the extent that they have an interest adverse
to the other, the parties hereto shall cooperate in the defense of any claim or
litigation subject to this Section 8 and the records of each shall be available
to the other with respect to such defense.
9. Transfer and Sales Tax. Notwithstanding any provisions of law
imposing the burden of such taxes on ▇▇▇▇▇▇ or TFB, as the case may be, TFB
shall pay (a) all sales, bulk sales, use and transfer taxes and (b) all
governmental charges, if any, upon and due in connection with the sale or
transfer of any of the Automotive Assets hereunder.
10. Employees; WARN Act. Effective on the Closing Date, ▇▇▇▇▇▇
shall terminate the employment of all employees engaged in the Automotive
Business (the "Terminated Automotive Employees"), and shall terminate any
employment agreements with such Terminated Automotive Employees. As of the
Closing Date, TFB shall offer employment to all of the Terminated Automotive
Employees (such hired persons being the "Hired Automotive Employees"), at
initial salaries and with initial benefits comparable to those immediately prior
to the termination. For the purposes of determining and measuring benefits
provided to any given Hired Automotive Employee by TFB, each Hired Automotive
Employee will be given credit for the Hired Automotive Employee's term of
service to ▇▇▇▇▇▇. For a period of at least forty-five (45) days from and after
the Effective Date, TFB shall employ substantially all, but in no event less
than 70%, of the Hired Automotive Employees and shall not terminate more than 50
full time employees who were employed by ▇▇▇▇▇▇ as of the Closing Date. TFB
shall be liable and responsible for any obligations under WARN, arising out of
TFB's breach of this Section 21 with respect to the Hired Automotive Employees.
11. Termination.
-----------
11.1. Time of Termination. This Agreement may be terminated
at any time prior to the Closing, whether before or after approval of the
matters presented in connection with the transactions contemplated by this
Agreement by the stockholders of Extreme:
(a) By mutual consent of ▇▇▇▇▇▇ and Extreme.
30
(b) (i) By either ▇▇▇▇▇▇ or Extreme if there
shall be a material breach of any representation, warranty, covenant, obligation
or agreement on the part of the other party set forth in this Agreement which
breach shall not have been cured, in the case of a representation or warranty,
prior to the Closing, or in the case of a covenant, obligation or agreement,
within two (2) business days following receipt by the breaching party of notice
of such breach; or (ii) by either ▇▇▇▇▇▇ or Extreme if any permanent injunction
or other order of a court or other competent authority preventing the
consummation of the transactions contemplated by this Agreement shall have
become final and non-appealable.
(c) By Extreme if there shall be a material
breach of any representation, warranty, covenant, obligation or agreement on the
part of TFB set forth in this Agreement which breach shall not have been cured,
in the case of a representation or warranty, prior to Closing, or in the case of
a covenant, obligation or agreement, within two (2) business days, following
receipt by the breaching party of notice of such breach
(d) By Extreme if the stockholders of ▇▇▇▇▇▇ do
not approve and adopt this Agreement, the Reverse Split and the ▇▇▇▇▇▇ Charter
Amendments on or prior to April 7, 2008.
(e) In accordance with Section 14.3.
11.2. Effect of Termination. In event of a termination of
this Agreement by either Extreme or ▇▇▇▇▇▇ as provided in Section 8.1, this
Agreement shall forthwith become void; provided, however, that no such
termination shall relieve any party hereto from any liability for breach of this
Agreement.
11.3. Remedies Not Exclusive. No remedy conferred by any of
the specific provisions of this Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given under this Agreement or now or hereafter
existing at law or in equity or by statute or otherwise, including, without
limitation, the remedy of specific performance. The election of any one or more
remedies by ▇▇▇▇▇▇ or Extreme shall not constitute a waiver of the right to
pursue other available remedies.
12. Notices. Any notices or other communications required
or permitted hereunder shall be in writing and shall be sufficiently given if
delivered personally against written receipt therefor, or sent by facsimile
(with transmission confirmed), a nationally recognized overnight delivery
service (such as UPS, DHL, U.S.P.S. Priority Mail, Federal Express), registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows or to such other address or facsimile number of which the parties may
have given notice:
To Extreme: With a copy to:
----------- ---------------
Extreme Coatings, Inc. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
31
To ▇▇▇▇▇▇ or TFB: With a copy to:
----------------- ---------------
▇▇▇▇▇▇ Associates, Inc. ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally, or by
facsimile; (b) on the first Business Day following delivery to the overnight
service; Federal Express; or (c) three business days after being sent, if sent
by registered or certified mail.
13. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns, except that neither party may assign its obligations
hereunder without the prior written consent of the other party hereto.
14. Entire Agreement; Amendments; Attachments.
-----------------------------------------
14.1. Entire Agreement; Amendment. This Agreement, all
schedules and exhibits hereto, and all agreements and instruments to be
delivered by the parties pursuant hereto represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersede all prior oral and written, and all contemporaneous oral
negotiations, commitments and understandings between such parties. ▇▇▇▇▇▇ and
Extreme, by the consent of their respective Board of Directors and members, or
officers authorized by such Board or members, may amend or modify this
Agreement, in such manner as may be agreed upon, by a written instrument
executed by ▇▇▇▇▇▇ and Extreme.
14.2. Attachments. If the provisions of any schedule or
exhibit to this Agreement are inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall prevail. The exhibits and
schedules attached hereto or to be attached hereafter are hereby incorporated as
integral parts of this Agreement.
14.3. Update of Disclosure Schedules. During the ten (10)
day period commencing with the date of this Agreement, each of Extreme and
▇▇▇▇▇▇ shall have the opportunity to modify and update its Disclosure Schedule,
and any revised or new information contained in the modified and updated
Disclosure Schedule (each, a "New Disclosure") shall be deemed to have been
included in the applicable Disclosure Schedule as of the date of this Agreement;
provided, however, that if any such New Disclosure relates to a matter which has
had or could reasonably be expected to have a Material Adverse Effect on the
party making the New Disclosure or on the ability of such party to complete the
transactions contemplated by this Agreement, the other party shall have the
right to terminate this Agreement by written notice provided within five (5)
days of the making of such New Disclosure.
32
15. Expenses.
--------
(a) Except as provided in Section 3.3 and
Section 15(b), each party shall bear its own costs and expenses associated with
the negotiation, execution and delivery of this Agreement and all other
agreements contemplated by this Agreement and the consummation of the
transactions contemplated by this Agreement.
(b) In the event that this Agreement is
terminated for any reason other than a termination by (i) Extreme pursuant to
section 11.1(b) due to a breach of the Agreement by ▇▇▇▇▇▇, (ii) Extreme
pursuant to Section 11.1(c) due to a breach of the agreement by TFB, (iii)
Extreme pursuant to Section 11.1(d) due to a failure of ▇▇▇▇▇▇ to obtain the
▇▇▇▇▇▇ Requisite Vote, or (iv) ▇▇▇▇▇▇ if Extreme is not in breach of the
Agreement, then Extreme shall reimburse ▇▇▇▇▇▇ for $55,000 in expenses and all
reasonable attorneys fees and expenses incurred by ▇▇▇▇▇▇ in connection with the
preparation, negotiation and execution of the Merger Agreement and the
Transactions.
16. Legal Fees. In the event that legal proceedings are commenced
by any party hereto against any other party hereto in connection with this
Agreement or the transactions contemplated hereby, the party which does not
prevail in such proceedings shall pay the reasonable attorneys' fees and costs
incurred by the prevailing party in such proceedings to the extent determined by
a court of competent jurisdiction.
17. Governing Law; Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to conflicts of law principles. The parties agree to the exclusive
jurisdiction of the federal and state courts located in the County of Nassau,
State of New York with respect to all matters relating to this Agreement.
18. Section Headings. The section headings are for the convenience
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
19. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which, when
taken together, shall be one and the same document.
21. Public Disclosure. Neither party shall make any public
statement about, nor issue any press release concerning this Agreement or the
transactions contemplated hereby without first consulting with the other party
hereto as to the form and substance of any such press release or public
disclosure; provided, however, that (a) nothing in this Section 21 shall be
deemed to prohibit any party hereto from making any disclosure that its counsel
deems necessary or advisable in order to satisfy such party's disclosure
obligation imposed by law and that (b) ▇▇▇▇▇▇ and Extreme may each continue such
communications with employees, customers, suppliers, franchises, lenders,
lessors, shareholders, members, and other particular groups as maybe legally
required or necessary in order to continue to operate its business in the
ordinary course and not inconsistent with the best interests of the other party
or the prompt consummation of the transaction.
33
22. Confidentiality. Each of ▇▇▇▇▇▇ and Extreme shall hold in
confidence and cause its officers, directors, employees, representatives, agents
and advisors not to disclose or use any Confidential Information (as defined
below) and not disclose the same to any third person without the prior consent
of the other party. If this Agreement is terminated or dissolved for any reason,
the receiving party will promptly return to the other party all Confidential
Information furnished by the other party, including all copies and summaries
thereof and will not make use of such Confidential Information at any time
thereafter. As used herein, "Confidential Information" means any information
identified as such in writing by the disclosing party. The provisions of this
Section 18 shall survive the Closing or any termination of this Agreement.
23. Exclusivity.
-----------
(a) ▇▇▇▇▇▇ will not, prior to the Closing Date
or the termination of this Agreement, solicit, initiate, or encourage the
submission of any proposal or offer from any person relating to any acquisition
of the assets of, or any securities of, or any merger, consolidation or business
combination with ▇▇▇▇▇▇, or any other corporate transaction inconsistent with
the transactions provided for herein.
(b) Extreme will not prior to the Closing Date
or the termination of this Agreement, solicit, initiate, or encourage the
submission of any proposal or offer from any person relating to any acquisition
of the assets of, or any securities of, or any merger, consolidation or business
combination with Extreme, or any other corporate transaction inconsistent with
the transactions provided for herein.
(c) The provisions of this Section 23 shall
survive the termination of this Agreement.
[SIGNATURE PAGE FOLLOWS]
34
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
EXTREME:
EXTREME MOBILE COATINGS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇:
▇▇▇▇▇▇ ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
ACQUISITION SUB:
EXTREME ACQUISITION COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
TFB ACQUISITION COMPANY, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Member
35