STOCK PURCHASE AGREEMENT
by and between
NEXTGEN ACQUISITION, INC.,
a Delaware corporation ("Buyer"),
NEXTGEN FUEL INC.,
a Delaware corporation (the "Company"),
and
GOLDEN TECHNOLOGY MANAGEMENT, LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
GOSHEN CAPITAL
▇▇▇ ▇▇▇▇▇▇▇
(Collectively, the "Sellers")
Dated: October 12, 2006
TABLE OF CONTENTS
Page
1. TERMS OF ACQUISITION................................................................................1
1.1 Stock Purchase.............................................................................1
1.2 Purchase Price.............................................................................1
1.3 Closing....................................................................................2
(a) Closing Date......................................................................2
(b) Buyer's Delivery of Ancillary Agreements..........................................2
(c) The Sellers' Deliveries of Ancillary Agreements...................................2
1.4 Purchase Price Adjustment..................................................................3
2. REPRESENTATIONS AND WARRANTIES......................................................................3
2.1 Representations and Warranties as to the Company...........................................3
(a) Capitalization....................................................................3
(b) Organization; Good Standing; Power................................................5
(c) Authority; Validity; No Conflicts.................................................5
(d) Interests in Other Entities.......................................................6
(e) Governmental Authorizations; Third-Party Consents.................................6
(f) Projections.......................................................................6
(g) Financial Statements..............................................................6
(h) Absence of Certain Changes........................................................7
(i) Tax Matters.......................................................................9
(j) Litigation.......................................................................10
(k) Compliance with Applicable Laws..................................................11
(l) Environmental Matters............................................................11
(m) Permits..........................................................................11
(n) Title to Properties; Leases......................................................12
(o) Accounts Receivable; Fixed Assets; Inventory. ..................................12
(p) Absence of Undisclosed Liabilities...............................................13
(q) Intellectual Property............................................................13
(r) Domain Names.....................................................................14
(s) Insurance........................................................................14
(t) Bank Accounts; Credit Cards; Corporate Accounts; and Powers of Attorney..........15
(u) Employee Arrangements; ERISA. ..................................................15
(v) Employees........................................................................17
(w) Certain Business Matters.........................................................17
(x) Contracts........................................................................17
(y) Customers........................................................................18
(z) Absence of Certain Business Practices............................................18
(aa) Brokers..........................................................................18
(bb) No Reliance......................................................................18
(cc) Affiliated Transactions..........................................................19
(dd) Disclosure Schedules.............................................................19
TABLE OF CONTENTS
(continued)
2.2 Representations and Warranties of the Sellers.............................................19
(a) Capacity; Validity; No Conflicts.................................................19
(b) Stock Ownership..................................................................20
(c) No Other Representations or Warranties...........................................20
(a) Organization and Power...........................................................19
(b) Authority; Validity; No Conflicts................................................19
(c) Government Approvals.............................................................21
(d) No Outside Reliance; Financial and Business Experience...........................21
(e) Brokers..........................................................................21
(f) Financing........................................................................21
(g) Investment Inten.................................................................22
(h) Litigation.......................................................................22
3. COVENANTS..........................................................................................22
3.1 Investigation by Buyer....................................................................22
3.2 Carry on in Ordinary Course...............................................................23
3.3 Exclusive Dealings........................................................................23
3.4 Consents..................................................................................24
3.5 Supplemental Disclosure...................................................................24
3.6 Public Announcements......................................................................24
3.7 Records...................................................................................24
3.8 Maintenance of Insurance..................................................................24
3.9 Resignations..............................................................................25
3.10 Best Efforts to Close.....................................................................25
4. CONDITIONS TO CLOSING..............................................................................25
4.1 Conditions to Buyer's Obligation to Close.................................................25
(a) Agreements and Conditions........................................................25
(b) Representations and Warranties...................................................25
(c) No Legal Proceedings.............................................................25
(d) The Sellers' and Officer's Certificate...........................................25
(e) Absence of Material Changes......................................................26
(f) Consents.........................................................................26
(g) Ancillary Agreements.............................................................26
(h) Stock Certificates...............................................................26
(i) Resignations.....................................................................26
(j) Secretary's Certificate..........................................................26
(k) Certificates of Status...........................................................26
(l) Other Closing Deliveries.........................................................26
4.2 Conditions to the Sellers' Obligations to Close...........................................26
(a) Agreements and Conditions........................................................26
(b) Representations and Warranties...................................................27
(c) No Legal Proceedings.............................................................27
(d) Officer's Certificate............................................................27
(e) Secretary's Certificate..........................................................27
(f) Purchase Price...................................................................27
(g) Ancillary Agreements.............................................................27
5. FURTHER ASSURANCES.................................................................................27
6. CERTAIN TAX MATTERS. ............................................................................28
6.1 Straddle Period...........................................................................28
6.2 Allocation of Purchase Price..............................................................28
6.3 Tax Periods Ending on or before the Closing Date..........................................28
6.4 Cooperation on Tax Matters................................................................28
6.5 Certain Taxes.............................................................................29
7. SURVIVAL; INDEMNIFICATION. ......................................................................29
7.1 Survival of Representations...............................................................29
7.2 Indemnities of the Company and the Sellers................................................29
7.3 Indemnity of Buyer........................................................................29
7.4 Procedures for Indemnification; Defense...................................................30
7.5 Limitations on Indemnification............................................................30
7.6 Relationship with Purchase Price Adjustment...............................................31
7.7 Indemnification Waiver....................................................................31
7.8 Method of Indemnification.................................................................31
8. NON-COMPETITION; CONFIDENTIALITY...................................................................31
8.1 Non-Competition...........................................................................31
8.2 No Competing Interests....................................................................32
8.3 Non-Solicitation..........................................................................32
8.4 Non-Disruption............................................................................32
8.5 Non-Disparagement.........................................................................32
8.6 Confidentiality...........................................................................32
8.7 Remedies upon Breach......................................................................33
TABLE OF CONTENTS
(continued)
9. MISCELLANEOUS PROVISIONS...........................................................................33
9.1 Execution in Counterparts.................................................................33
9.2 Notices...................................................................................33
9.3 Right to Offset...........................................................................34
9.4 Amendments; Waivers.......................................................................34
9.5 Entire Agreement..........................................................................34
9.6 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial..............................34
9.7 Termination...............................................................................35
9.8 Financing Rights..........................................................................35
9.9 Effects of Termination....................................................................35
9.10 Fees and Disbursements....................................................................36
9.11 Assignment................................................................................36
9.12 Binding Effect; Benefits..................................................................36
9.13 Severability..............................................................................36
9.14 Appointment and Duties of Sellers' Representative.........................................36
9.15 Rules of Construction.....................................................................37
Exhibits
Exhibit A.1 through A.3 -Forms of Consulting Agreement
Exhibit B - Form of Seller Release
Schedules
Schedule 1.1.........Stock Ownership
Schedule 1.2(b)......Allocation of the Purchase Price Among the Sellers
Schedule 2.1(b)......States where the Company is Qualified
Schedule 2.1(d)......Interests in Other Entities
Schedule 2.1(e)......Governmental Authorizations; Third-Party Consents
Schedule 2.1(f)......Projections
Schedule 2.1(g)......Financial Statements
Schedule 2.1(g)(A)...Special Purpose Entities
Schedule 2.1(h)......Absence of Certain Changes
Schedule 2.1(h)(A)...Permitted Liens
Schedule 2.1(i)......Tax Matters
Schedule 2.1(j)......Litigation
Schedule 2.1(l)......Environmental Matters
Schedule 2.1(m)......Permits
Schedule 2.1(n)(i)...Title to Properties
Schedule 2.1(n)(ii)..Leases, etc.
Schedule 2.1(o)(i)...Accounts Receivable
Schedule 2.1(o)(ii)..Machinery and Equipment
Schedule 2.1(p)......Undisclosed Liabilities
Schedule 2.1(q)......Intellectual Property
Schedule 2.1(r)......Domain Names
Schedule 2.1(s)......Insurance
Schedule 2.1(t)......Bank Accounts and Powers of Attorney
Schedule 2.1(u)......Employee Arrangements
Schedule 2.1(v)......Employee Information
Schedule 2.1 (w).....Certain Business Matters
Schedule 2.1(x)......Contracts
Schedule 2.1(y)......Customers
Schedule 2.1(aa).....Brokers
Schedule 2.1(cc).....Affiliated Transactions
Schedule 6.4.........Tax Allocation
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made this 12th day of
October 2006 by and between NextGen Acquisition, Inc., a Delaware corporation
("Buyer"), NextGen Fuel Inc., a Delaware corporation (the "Company"), and Golden
Technology Management, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, Goshen Capital, and
▇▇▇ ▇▇▇▇▇▇▇ (collectively, the "Sellers" and individually, a "Seller").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is principally engaged in the business of developing
and distributing esterifciation and transesterfication biodiesel process
technologies (the "Business");
WHEREAS, the Sellers are the record and beneficial owners of the aggregate
of 890 shares of common stock, par value $0.01 per share, of the Company (the
"Company Stock"), which shares represent all of the issued and outstanding
capital stock of the Company; and
WHEREAS, the Sellers desire to sell their shares of Company Stock to Buyer,
and Buyer desires to purchase all of the Company Stock from the Sellers, in the
manner and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
1. TERMS OF ACQUISITION.
1.1 Stock Purchase. Subject to the terms and conditions of this Agreement,
on the Closing Date (as defined in Section 1.3(a) hereof), each Seller
shall sell, transfer, convey and deliver to Buyer, and Buyer shall
purchase, acquire and accept from each Seller, all right, title and
interest of such Seller, legal and equitable, beneficial and of
record, in and to the number of shares of Company Stock set forth
opposite each Seller's name on Schedule 1.1 hereto under the caption
"Number of Shares Owned." The originally issued certificates
evidencing the Company Stock shall be delivered at the Closing (as
defined in Section 1.3(a) hereof) by the Sellers to Buyer, free and
clear of all liens, mortgages, pledges, charges, claims, security
interests or encumbrances of any nature whatsoever ("Liens"),
accompanied by duly executed stock powers (endorsed in blank) and with
any necessary stock transfer tax stamps affixed thereto.
1.2 Purchase Price.
(a) As the full purchase price for all of the Company Stock (the
"Purchase Price"), Buyer shall pay to the Sellers the
aggregate sum of TWENTY MILLION DOLLARS ($20,000,000.00) in
cash subject to adjustments as provided in Section 1.4
hereof and the holdbacks set forth in Section 1.2(c) hereof.
(b) The Purchase Price shall be allocated among the Sellers in
the manner set forth on Schedule 1.2(b) hereto.
(c) The Purchase Price shall be payable as follows: (i) EIGHTEEN
MILLION DOLLARS ($18,000,000.00) (the "Cash Purchase Price")
of the Purchase Price as adjusted by Section 1.4 hereof less
TWO MILLION DOLLARS ($2,000,000.00) (the "Cash Holdback"),
shall be paid by Buyer at the Closing by wire transfer of
immediately available funds to an account or accounts
designated in writing by ▇▇▇▇ ▇▇▇▇ (the "Sellers' Rep")and
(ii) funds in an amount equal to the sum of the Cash
Holdback plus the Cash Balance, which amount is currently
estimated to be about THREE MILLION TWO HUNDRED THOUSAND
DOLLARS ($3,200,000.00) and defined with precision in
Section 1.4(a) hereof (the "Holdback Amount"), shall be
placed in trust in a separate, segregated account of the
Company (the "Holdback Account"), with such amount being
held and disbursed pursuant to the provisions of Section 7.8
hereof.
1.3 Closing.
(a) Closing Date. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the
offices of Buyer's special counsel on a mutually agreeable
date on or prior to October 20, 2006 and at such time as
shall be agreed upon by Buyer and the Company (the "Closing
Date") or at such other time, date and location as the
parties hereto agree in writing; provided, that all
conditions precedent set forth in Sections 4.1, 4.2 and 9.8
hereof shall have been satisfied or waived; provided,
further, that the Sellers and the Company recognize and
agree that the timing of the Closing must be coordinated
with, and is subject to, the requirements of Buyer's
lender(s) and equity financer(s); provided, further, that
the Buyer shall use commercially reasonable efforts to cause
such lender(s) and equity financer(s) to take all
appropriate actions to close on the Closing Date.
(b) Buyer's Delivery of Ancillary Agreements. Subject to the
terms and conditions of this Agreement, and in addition to
the deliveries set forth in Section 1.2 hereof and provided
for elsewhere herein, at the Closing, Buyer shall or, in
respect of the Consulting Agreements (as defined below),
shall cause the Company to, duly execute and deliver the
Consulting Agreements with ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇ substantially in the forms attached hereto as
Exhibits A.1, A.2 and A.3 (the "Consulting Agreements").
(c) The Sellers' Deliveries of Ancillary Agreements. Subject to
the terms and conditions of this Agreement, and in addition
to the deliveries set forth in Section 1.1 hereof and
provided for elsewhere herein, at the Closing, the Sellers
shall duly execute and deliver the following documents:
(i) the Consulting Agreements; and
(ii) releases from each of the Sellers to the Company and
Buyer, substantially in the form attached hereto as
Exhibit B (the "Seller Releases").
The documents referred to in clauses (i) and (ii) above
are hereinafter collectively referred to as the "Ancillary
Agreements."
1.4 Purchase Price Adjustment.
(a) On the business day immediately prior to the Closing Date,
the Company shall deliver to Buyer a certificate of the
Company's Chief Executive Officer and its Chief Financial
Officer (the "Estimated Closing Certificate") setting forth:
(i) the aggregate amount of all of the Company's
indebtedness for borrowed money (including any accrued and
unpaid interest thereon), capitalized lease obligations and
all other liabilities and obligations evidenced by notes,
bonds, debentures or similar instruments, together with a
calculation of the prepayment premiums and penalties that
would be required to be paid in order to effect the payment
in full of such indebtedness, liabilities and obligations on
or about the Closing Date, as of such business day
(collectively, the "Debt"), (ii) the cash and cash
equivalents of the Company as of the Closing Date, (the
"Cash Balance"), which amount shall be determined in
accordance with GAAP (as defined herein); and (iii) any
Gross Margin Amount (defined below) that is owed to the
Company as of the Closing Date, including all details as to
how such amount was determined. The Estimated Closing
Certificate shall be accompanied by a balance sheet of the
Company as of the close of business on such business day
(the "Estimated Closing Balance Sheet"). For purposes
hereof, "Gross Margin Amount" shall mean the excess of (A)
all outstanding accounts receivable of the Company as of the
Closing Date for any Systems (as defined below) sold by the
Company prior to the Closing Date (excluding any outstanding
accounts receivable for Systems sold to GreenShift
Corporation, Buyer or any of their respective affiliates or
subsidiaries), over (B) the total costs and expenses to
build the applicable System with respect to each outstanding
accounts receivable, irrespective of whether such costs and
expenses have yet been paid. For purposes of this Agreement,
"Systems" shall mean biodiesel process systems.
(b) The Cash Purchase Price payable at the Closing shall be
adjusted on an estimated basis based on the Estimated
Closing Certificate as follows: (i) reduced by the amount of
$1.00 for each $1.00 of the Debt; (ii) increased by an
amount equal to $1.00 for each $1.00 of the Cash Balance;
and (iii) increased an amount equal to $1.00 for each $1.00
of twenty-five percent (25%) of the Gross Margin Amount.
Notwithstanding anything contained herein to the contrary,
the Company shall retain seventy-five percent (75%) of the
Gross Margin and one hundred percent (100%) of all accounts
receivable for systems sold to GreenShift Corporation, the
Buyer or any of their affiliates or subsidiaries prior to
the Closing, and there shall be no adjustment to the Cash
Purchase Price with respect to same.
2. REPRESENTATIONS AND WARRANTIES.
2.1 Representations and Warranties as to the Company. The Company and the
Sellers (except for ▇▇▇ ▇▇▇▇▇▇▇) hereby, severally and not jointly,
represent and warrant to Buyer as follows:
(a) Capitalization. The authorized capital stock of the Company
consists solely of 1,000 shares of common stock, par value$0.01
per share, of which 890 shares are issued and outstanding. No
shares of capital stock of the Company are held as treasury
stock. All issued and outstanding shares of the Company's common
stock are owned, of record and beneficially, solely by the
Sellers. The number of shares of Company Stock so owned by each
of the Sellers is as set forth on Schedule 1.1 hereto. All shares
of Company Stock have been duly authorized and validly issued and
are fully paid and non-assessable. All prior offerings and
issuances of Company capital stock have been made in accordance
with applicable federal and state securities Laws (as defined in
Section 2.1(k) hereof), except any where the failure to so comply
would not have a Material Adverse Effect (as defined below).
Except as set forth on Schedule 1.1, there are no outstanding
obligations, options, warrants, rights, calls, commitments,
conversion rights, plans or other agreements of any character to
which the Company is a party or by which it is otherwise bound
that provide for the repurchase or issuance by the Company of any
shares of its capital stock or permit any Person (as defined
below) to share or participate in any of the profits, revenues or
sales of the Company. Except as set forth on Schedule 1.1, there
are no preemptive rights, rights of first refusal or first offer,
stock option grant or exercise rights, voting or veto rights,
change of control or similar rights, anti-dilution protections or
other rights that any stockholder, officer, employee or director
of the Company or any other natural person, corporation,
partnership, limited liability company or other entity
(collectively, "Persons" and individually, a "Person") is (or
would be) entitled to invoke as a result of the sale of the
Company Stock pursuant to this Agreement or otherwise. As used in
this Agreement, "Material Adverse Effect" when used in connection
with an entity means any change, event, circumstance, conditions,
occurrences, developments or effects, individually or when
aggregated with other changes, events, circumstances, conditions,
occurrences, developments or effects, that is materially adverse
to the business, properties, assets, liabilities, prospects,
condition (financial or otherwise) or results of operations of
such entity, it being understood that none of the following alone
or in combination shall be deemed, in and of itself, to
constitute a Material Adverse Effect:
(i) changes in GAAP or applicable Laws after the date
hereof;
(ii) changes, events, circumstances, conditions,
occurrences, developments or effects resulting from the
announcement of the execution of this Agreement or of
the pendency of the transactions contemplated hereby;
(iv) changes, events, circumstances, conditions,
occurrences, developments or effects resulting from
compliance by the Company or Buyer with the terms of,
or the taking of any action specifically required to be
taken in, this Agreement (other than the consummation
of the transactions contemplated hereby);
(v) changes in economic, financial, credit or securities
markets, or political conditions generally;
(vi) any act of terrorism or war (whether or not declared);
or
(vii) changes affecting generally the industries in which
the Company or Buyer conduct business;
except, in the case of clauses (v) and (vii) above, to the
extent such changes, events, circumstances, conditions,
occurrences, developments or effects have a materially
disproportionate adverse effect on the Company or Buyer as
compared to other Persons engaged in the same businesses.
(b) Organization; Good Standing; Power. The Company is a corporation
duly organized, validly existing and in good standing under the
Laws of the State of Delaware, and has the requisite corporate
power and authority to own, lease and operate its assets and
properties and to carry on its business as presently conducted by
it. Schedule 2.1(b) hereto sets forth a true and complete list of
all states and other jurisdictions in which the Company is duly
qualified and in good standing to transact business as a foreign
corporation. Except for those set forth on Schedule 2.1(b), there
are no other states or jurisdictions in which the character and
location of the properties owned or leased by the Company and the
conduct of its business make any such qualification necessary,
except any where the failure to be so qualified would not have a
Material Adverse Effect. The Company's minute books contain, in
all material respects, true and complete records of all meetings
and other material actions, including, without limitation,
actions by vote or written consent of the stockholders and the
board of directors of the Company.
(c) Authority; Validity; No Conflicts The execution and delivery by
the Company of this Agreement, the performance by the Company of
its obligations hereunder, and the consummation of the
transactions contemplated thereby, have been duly authorized by
all necessary corporate action on the part of the Company, and
the Company has all necessary corporate power with respect
thereto. This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and
delivery hereof by Buyer, shall be the valid and binding
obligation of the Company, enforceable against it in accordance
with its terms, except to the extent that enforceability thereof
may be limited by general equitable principles (regardless of
whether enforceability is considered in a proceeding at law or in
equity) or the operation of bankruptcy, insolvency,
reorganization, moratorium or similar Laws. Neither the execution
and delivery by the Company of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the
performance by the Company of its obligations hereunder, shall
(or for the purposes of subsections (ii), (iv) and (vi) below,
with the giving of notice or the lapse of time or both, would):
(i) conflict with or violate any provision of the Certificate of
Incorporation or By-Laws of the Company; (ii) give rise to a
conflict, breach or default, or any right of termination,
cancellation or acceleration of remedies or rights, or otherwise
result in a loss of benefits to the Company, under the provisions
of any material note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which the Company
is a party or by which it or any of its properties or assets is
otherwise bound; (iii) violate any Law applicable to the Company
or any of its properties or assets; (iv) result in the creation
or imposition of any Lien upon any of the properties or assets of
the Company; (v) to the Knowledge of the Company and the Sellers,
interfere with or otherwise adversely affect the ability of Buyer
to carry on the Business of the Company as presently conducted;
or (vi) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give rise to any right to
revoke, suspend, terminate or modify any Permit (as defined in
Section 2.1(m) hereof), except, with respect to clauses (ii),
(iii), (iv),(v) or (vi) for such conflicts, violations, breaches,
defaults, triggerings, cancellations, increases or other
occurrences that would not have a Material Adverse Effect.
For purposes of this Agreement, the phrase "the Knowledge of the
Company and the Sellers" or words of similar import relating to
the knowledge or awareness of the Company or any Seller means
facts or other information actually known by any Seller of the
Company, without requirement of further inquiry, as of the date
of this Agreement.
(d) Interests in Other Entities. Except as set forth on Schedule
2.1(d) hereto, the Company does not, directly or indirectly: (i)
own, of record or beneficially, any shares of voting stock or any
other equity securities of any Person; (ii) have any other
ownership or equity or debt interest, of record or beneficially,
in any Person; or (iii) have any obligation or right, fixed or
contingent, to purchase or subscribe for any interest in, advance
or loan monies to, or in any way make an investment in, any
Person or to share any profits or capital investments in other
Person.
(e) Governmental Authorizations; Third-Party Consents. Except as set
forth on Schedule 2.1(e) hereto, no approval, consent, waiver,
exemption, order, authorization or other action by, or notice to
or filing with, any governmental authority or any Person, and no
lapse of a waiting period, is required (so as not to violate or
breach any Law, contract or other agreement) to be obtained by
the Company or any Seller in connection with (or in order to
permit) the execution, delivery or performance by any of them of
this Agreement or any of the Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby,
except, in each case, for any non-compliance, failure to comply
or violation that would not reasonably be expected to have a
Material Adverse Effect (collectively, "Consents").
(f) Projections. The Company and the Sellers have delivered to Buyer
a set of projections for the remainder of calendar year 2006 and
for calendar year 2007, including a certificate setting forth the
underlying assumptions used by the Company and the Sellers in
connection therewith (the "Projections"), a true and complete
copy of which set is attached hereto as Schedule 2.1(f). The
Projections were based on the best estimates of the Company and
were derived from reasonable expectations at the time the
Projections were made and the Buyer herby acknowledges that there
is no guarantee of the achievement of the Projections or the
accuracy of any assumptions upon which such projections were
made. As such, Buyer hereby waives any future claim against the
Company and/or the Sellers related to such Projections and/or
planning assumptions.
(g) Financial Statements. The Company has delivered to Buyer copies
of its (i) audited balance sheet as of December 31, 2005 and the
related audited statements of income (loss), retained earnings
and cash flow for the fiscal year then ended (the "2005 Financial
Statements") and (ii) unaudited balance sheet as of August 23,
2006 (the "2006 Balance Sheet") and the related unaudited
statements of income (loss), retained earnings and cash flow for
the period January 1, 2006 through August 23, 2006 (the "2006
Financial Statements"), and will deliver to Buyer a true and
complete copy of the Estimated Closing Balance Sheet in
accordance with Section 1.4(a) hereof. The 2005 Financial
Statements, the 2006 Financial Statements and the Estimated
Closing Balance Sheet are collectively referred to herein as the
"Financial Statements," and are attached hereto as Schedule
2.1(g). The Financial Statements, including any notes thereto,
were or, with respect to the Estimated Closing Balance Sheet,
will be, prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent
basis (subject to recurring year-end adjustments and the absence
of notes, as applicable) throughout the periods involved. The
books and records of the Company are, in all material respects,
true and complete, have been maintained in accordance with good
business practices, and accurately reflect the basis for the
financial condition and results of operations of the Company as
set forth in its financial statements. Schedule 2.1(g)(A) hereto
sets forth a true and correct list of all Special Purpose
Entities (as defined below) owned directly or indirectly, in
whole or in part, by the Company or its Affiliates (as defined in
Section 2.1(h)(xii) hereof) or in or with respect to which the
Company or any of its Affiliates has a direct or indirect
business relationship or interest of any kind, including any
equity interest, leasing relationship, loan or other financing
relationship, other contractual relationship or other economic
interest, relationship or arrangement, where such interest or
interests are directly or indirectly related to the business of
the Company. For purposes of this Agreement, the term "Special
Purpose Entities" has the meaning given to it under U.S.
accounting rules governing consolidation, including proposed
rules and interpretations of the Financial Accounting Standard
Board, such as those contained in guidance (as proposed or as
finally adopted) interpreting Statement of Financial Accounting
Standard 94, Consolidation of all Majority-Owned Subsidiaries and
Accounting Research Bulletin No. 51, Consolidated Financial
Statements. The Company has employed the accrual method of
accounting for at least the past two (2) years and the Financial
Statements reflect such method of accounting.
(h) Absence of Certain Changes. Except as and to the extent set forth
on Schedule 2.1(h) hereto, since August 23, 2006, the Company has
not:
(i) suffered any Material Adverse Effect;
(ii) incurred any indebtedness for borrowed money or any other
material liabilities or obligations, except those incurred
in the ordinary course of business and consistent with past
practice, in excess of $25,000.00 individually (counting
obligations or liabilities arising from a series of related
or similar transactions, and all periodic installments or
payments under any lease or other agreement providing for
periodic installments or payments, as a single obligation or
liability), and the aggregate of which do not exceed
$50,000.00, or experienced any increase in, or change in any
underlying assumption or method used in calculating, any bad
debt, contingency or other reserve relating to amounts in
excess of $25,000 individually.
(iii) subject to subsection (xiii) below, paid, discharged or
satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of
business of liabilities and obligations (x) reflected or
reserved against on the 2006 Balance Sheet or (y) incurred
since the date thereof in the ordinary course of business
and consistent with past practice;
(iv) caused, permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to be
subjected to any material Lien other those Liens set forth
on Schedule 2.1(h)(A) hereto, all of which Liens shall be
released on or prior to the Closing (collectively,
"Permitted Liens");
(v) written off as uncollectible any notes or accounts
receivable, except for write-offs in the ordinary course of
business and consistent with past practice, none of which is
material and all of which together do not exceed $25,000.00
in the aggregate;
(vi) canceled any debts or waived or suffered to lapse any claims
or rights of material value, or sold, transferred or
otherwise disposed of any of its material tangible
properties or assets, except in the ordinary course of
business and consistent with past practice;
(vii) disposed of or, to the Knowledge of the Company and
Sellers, suffered to lapse any right to use any domain name,
web address or item of Intellectual Property (as defined in
Section 2.1(q) hereof) or disclosed to any Person any trade
secret, formula, process or know-how or any other
confidential information relating to the Company;
(viii) granted any increase in the compensation (including any
increase pursuant to any bonus, pension, profit-sharing or
other plan) payable or to become payable to any officer or
employee, and no such increase is customary or required by
any agreement or understanding;
(ix) made any single capital expenditure or commitment in excess
of $25,000.00 for additions to property, plant, equipment or
intangible assets or made aggregate capital expenditures or
commitments in excess of $50,000.00 for additions to
property, plant, equipment or intangible assets;
(x) issued, granted, redeemed or repurchased any shares of its
capital stock or any options, warrants or other rights to
acquire any of its capital stock, or declared, paid or set
aside for payment any dividend or other distribution in
respect of any of its capital stock;
(xi) made any material change in any of its methods of
accounting, other than changes required by GAAP;
(xii) paid, loaned or advanced any amount, or sold, transferred
or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or
arrangement with, any of its officers, directors or
employees or any Seller or any "affiliate" or "associate" of
any of the Company's officers, directors or employees or of
any Seller (as such quoted terms are defined in Rule 405
promulgated under the Securities Act and as used herein,
"Affiliate" and "Associate");
(xiii) paid any amount in respect of indebtedness for borrowed
money, except for regularly scheduled payments of principal
and interest that were required in accordance with the
express terms thereof;
(xiv) acquired any assets or properties other than in the
ordinary course of its business; or
(xv) agreed, orally or in writing, to take any action described
in this Section 2.1(h).
(i) Tax Matters. Except as set forth on Schedule 2.1(i) hereto:
(i) the Company has filed or caused to be filed (on a timely
basis) with the appropriate governmental agencies any
federal, state, local and foreign Tax Returns required to be
filed by it (taking into account applicable extension
periods) and has timely paid in full all Taxes due (other
than Taxes that the Company is contesting in good faith in
appropriate proceedings), except where the failure to do so
would not have a Material Adverse Effect. All such Tax
Returns were true and complete in all material respects as
of the date on which they were filed or as subsequently
amended. For purposes of this Agreement, the term "Tax"
means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Internal Revenue
Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the "Code"), customs,
duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated or other tax, of any kind, whatsoever, including
any interest, penalty or addition thereto, whether disputed
or not, and including any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any
other Person. For purposes of this Agreement, the term "Tax
Return" means any return, declaration, report, claim for
refund, information return or statement relating to Taxes,
including any schedule or attachment thereto and any
amendment(s) thereof.
(ii) the Company is not the beneficiary of any extension of time
within which to file any Tax Return;
(iii) the Company has provided Buyer with true and complete
copies of all Tax Returns filed by it within the past one
(1) year;
(iv) there are no filed or other known Tax Liens upon any
properties or assets of the Company other than any statutory
Liens for Taxes not yet due and payable;
(v) the Company has not waived any statute of limitations in
respect of Taxes or executed or filed with any governmental
authority any agreement extending the period for the
assessment or collection of any Taxes, and it is not a party
to any pending or, to the Knowledge of the Company and the
Sellers, threatened suit, action or proceeding by any
governmental authority for the assessment or collection of
Taxes;
(vi) to the Knowledge of the Company and Sellers, there is no
unresolved claim by a governmental authority in any
jurisdiction where the Company does not file Tax Returns
that the Company is or may be subject to taxation by such
jurisdiction;
(vii)to Knowledge of the Company and Sellers, the Company has not
been notified of any examination or audit with respect to
Taxes with respect to any year since the Company's
inception;
(viii) the Company has timely withheld and paid all Taxes
required by Law to have been withheld and paid in connection
with amounts paid or owing to any employee, independent
contractor, creditor, Seller or other Person, except where
the failure to do would not have a Material Adverse Effect;
(ix) the unpaid Taxes of the Company (A) did not, as of the date
of the 2006 Balance Sheet, exceed the reserve for Tax
liabilities (other than any reserve for deferred Taxes
established to reflect timing differences between book and
Tax income) set forth on the face of the 2006 Balance Sheet
and (B) will not exceed that reserve, as adjusted for the
passage of time through the Closing Date in accordance with
the past custom and practice of the Company in filing its
Tax Returns;
(x) the Company has not filed a consent under Code Section
341(f) concerning collapsible corporations; and the Company
has accurately disclosed on its federal Tax Returns all
positions taken therein that could give rise to a
substantial understatement of Tax within the meaning of Code
Section 6662;
(xi) the Company has not made any payments, is not obligated to
make any payments and is not a party to any plan, program or
agreement that could obligate it to make any payments,
separately or in the aggregate, that will not be fully
deductible: (A) under Code Section 280G or any corresponding
provision of state, local or foreign Tax Law or (B) under
Code Section 162(m) or any corresponding provision of state,
local or foreign Tax Law;
(xii) the Company has not been a United States real property
holding corporation (within the meaning of Code Section
897(c)(2)) at any time during the applicable period
specified in Code Section 897(c)(1)(A)(ii). The Company is
not a party to or otherwise bound by any Tax
indemnification, allocation or sharing agreement. The
Company: (A) has not been a member of an affiliated group
filing a consolidated federal income Tax Return and (B) does
not have any liability for the Taxes of any other Person
under Treasury Regulations Section 1.1502-6 (or any
corresponding provision of state, local or foreign Tax Law),
as a transferee or successor, by contract or otherwise; and
(xiii) the Company will not be required to include any item of
income in, or exclude any item of deduction from, its
taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any: (A) change
in method of accounting for a taxable period ending on or
prior to the Closing Date; (B) "closing agreement," as
described in Code Section 7121 (or any corresponding
provision of state, local or foreign Tax Law); (C)
intercompany transactions or any excess loss account
described in the Treasury Regulations under Code Section
1502 (or any corresponding provision of state, local or
foreign Tax Law); (D) installment sale or open transaction
disposition made on or prior to the Closing Date; or (E)
prepaid amount received on or prior to the Closing Date.
(j) Litigation. Except as set forth on Schedule 2.1(j) hereto, there
are no claims, suits or actions, administrative, arbitration or
other proceedings, or governmental investigations pending or, to
the Knowledge of the Company and the Sellers, threatened against
or affecting, or reasonably likely to adversely affect, the
Company, any of its properties, assets or business or the
transactions contemplated hereby. There are no outstanding
judgments, orders, stipulations, injunctions, decrees or awards
of any court or arbitrator against the Company that have not been
fully satisfied.
(k) Compliance with Applicable Laws. The Company is and has been in
compliance with all material federal, state, local and foreign
laws, statutes, ordinances, rules or regulations, orders,
injunctions, decrees and administrative rulings promulgated by
any court or governmental or regulatory authority (collectively,
"Laws") applicable to the Company, to the conduct of its business
or operations or to the use of its properties or assets,
including, without limitation, all privacy, employment and human
rights Laws. The Company has not received written notice of any
violation or alleged violation of any material Law by the
Company.
(l) Environmental Matters.
(i) Except as set forth on Schedule 2.1(l) hereto and to the
Knowledge of the Company and the Sellers, all activities at
or upon any real property presently or formerly owned,
operated or leased by the Company (the "Facilities") by or
on behalf of the Company and any other Person have been and
are being conducted in compliance with all material Laws
relating to (x) the handling of Hazardous Substances (as
defined below), (y) discharges into the air, soil, surface
water or groundwater and (z) the storage, treatment and
disposal of any Hazardous Substances at or connected with
any activity at the Facilities, except where the failure to
so comply would not have a Material Adverse Effect. Except
as set forth on Schedule 2.1(l), to the Knowledge of the
Company and the Sellers, there have been no environmental
inspections, investigations, studies, audits, tests, reviews
or other analyses conducted in relation to any property or
business now or previously owned, operated or leased by the
Company.
(ii) Except as set forth on Schedule 2.1(l) and to the Knowledge
of the Company and the Sellers, no Hazardous Substance is
present in any medium at any of the Facilities in such a
manner or amount as requires remediation under any
applicable Law. For purposes of this Agreement, the term
"Hazardous Substances" means materials that constitute or
contain hazardous or toxic substances or wastes, pollutants
or contaminants, including, without limitation, petroleum
products, asbestos and polychlorinated biphenyls. Except as
set forth on Schedule 2.1(l), no employee has brought a
claim, or to the Knowledge of the Company and the Sellers,
threatened to bring a claim, against the Company that he was
harmed by workplace exposure to a Hazardous Substance is
there any reasonable basis for such claim. To the Knowledge
of the Company and the Sellers, there are no pending civil,
criminal or administrative claims or proceedings against the
Company under any Law arising out of or relating to the
condition of any of the Facilities or the Company's
activities (or failure to act) thereon.
(m) Permits. A true and complete list of all material governmental
permits, approvals, licenses, certificates, franchises,
authorizations, consents and orders necessary for the operation
of the Business in the manner that it is presently conducted is
set forth on Schedule 2.1(m) hereto (collectively, "Permits").
The Company has all such Permits, except where the failure to
have such Permits would not result in a Material Adverse Effect.
To the Knowledge of the Company and the Sellers, all such Permits
are valid and remain in full force and effect. To the Knowledge
of the Company and the Sellers, the Company has not engaged in
any activity that could reasonably be expected to cause
revocation or suspension of any such Permits and no action or
proceeding seeking or contemplating the revocation or suspension
of any thereof is pending or threatened. To the Knowledge of the
Company and the Sellers, no Permits (except as set forth on
Schedule 2.1(m)) will be required in order to permit the Company
to continue the business substantially in the manner as it is
presently conducted immediately after the consummation of the
transactions contemplated hereby.
(n) Title to Properties; Leases. The assets set forth on the 2006
Balance Sheet are all of the material tangible assets that are
necessary for the conduct of the Business as currently conducted
by the Company. The Company does not, directly or indirectly, own
any real property. Except as set forth on Schedule 2.1(n)(i)
hereto, the Company has good title to, or a valid and, to the
Knowledge of the Company and the Sellers, enforceable (except to
the extent that enforceability thereof may be limited by general
equitable principles or the operation of bankruptcy, insolvency,
reorganization, moratorium or similar Laws) interest in, all of
the properties and assets (personal and mixed, tangible and
intangible, but excluding Intellectual Property which is
addressed in Section 2.1(q)) that it purports to own, including,
without limitation, those properties and assets reflected on the
2006 Balance Sheet, free and clear of all Liens (other than
Permitted Liens). Schedule 2.1(n)(ii) hereto sets forth a true
and complete list, and a brief description, of all (i) leases
(whether by or to the Company), contracts and commitments to
which the Company is a party for the purchase, sale or lease
(whether as lessor or lessee) of any real property and (ii)
leases (whether by or to the Company) and title retention or
conditional sales agreements and similar arrangements (whether as
lessor or lessee) to which the Company is a party with respect to
any material items of personal property, which individually have
annual lease payments in excess of $25,000. All of the leases
required to be set forth on Schedule 2.1(n)(ii) are, assuming the
due authorization, execution and delivery by the other parties
thereto, valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms,
except to the extent that enforceability thereof may be limited
by general equitable principles or the operation of bankruptcy,
insolvency, reorganization, moratorium or similar Laws; there are
no material defaults or breaches by the Company under any of the
leases set forth on Schedule 2.1(n)(ii) and no event has occurred
that (whether with or without notice, lapse of time or both)
would constitute a material default or breach by the Company
thereunder. To the Knowledge of the Company and the Sellers,
there are no material defaults or breaches by any of the other
parties to such leases and no event has occurred that (whether
with or without notice, lapse of time or both) would constitute a
material default or breach thereunder by any of the other parties
thereto. All of the tangible properties (whether owned or leased)
of the Company are located at the real property owned or leased
by the Company, except as set forth on Schedule 2.1(n)(ii).
(o) Accounts Receivable; Fixed Assets; Inventory
(i) Schedule 2.1(o)(i) hereto sets forth a true and complete
list of the Company's accounts receivable as of August 23,
2006 and the individual aging with respect thereto. To the
Knowledge of the Company and the Sellers, all of the
accounts receivable of the Company reflected on Schedule
2.1(o)(i) are good and collectible in the ordinary course of
business at the recorded amounts thereof, less the amount of
the reserves for bad accounts reflected thereon (which
reserves have been established in accordance with GAAP on a
basis consistent with past practice), and are not subject to
any counterclaims or offsets. A true and complete list of
the Company's accounts receivable as of the last business
day immediately preceding the Closing Date, and individual
aging with respect thereto, will be added to Schedule
2.1(o)(i) at the Closing. To the Knowledge of the Company
and the Sellers, the accounts receivable of the Company
required to be added after the date hereof to Schedule
2.1(o)(i) will, as of the date when required to be added, be
good and collectible in the ordinary course of business at
the amounts recorded on the books of account of the Company,
less the amount of the reserves for bad accounts reflected
thereon (which reserves shall have been established in
accordance with GAAP on a basis consistent with prior
practice), and will not be subject to any counterclaims or
offsets.
(ii) Schedule 2.1(o)(ii) hereto sets forth a true and complete
list of each item of machinery, equipment and other fixed
assets of the Company used or useful in connection with the
operation of the business of the Company (the "Equipment")
having a GAAP book value in excess of $25,000. To the
Knowledge of the Company and the Sellers, each such item of
Equipment is in good operating condition, normal wear and
tear excepted, and is adequate for the use to which it is
being put. Each such item has been maintained, in all
material respects, in accordance with prudent business
practice and no such maintenance has been deferred.
(p) Absence of Undisclosed Liabilities. To the Knowledge of the
Company and the Sellers, the Company does not have any debts,
liabilities, commitments or obligations, whether absolute or
contingent, asserted or unasserted, known or unknown, liquidated
or unliquidated, due or to become due, fixed or unfixed
(collectively, "Liabilities"), including guarantees and
indemnities by the Company of Liabilities of any other Person,
except (i) Liabilities as and to the extent reflected on the 2006
Balance Sheet; (ii) Liabilities incurred by it in the ordinary
course of business and consistent with past practice since the
date of the 2006 Balance Sheet (none of which is a material
Liability for breach of contract, breach of warranty, tort,
infringement, claim, lawsuit or other proceeding) and adequately
reflected on the books and records of the Company; (iii)
obligations not in default under material contracts entered into
by it in the ordinary course of business; and (iv) the
Liabilities set forth on Schedule 2.1(p) hereto.
(q) Intellectual Property. Schedule 2.1(q) hereto sets forth a true
and complete list of all licenses, patents, patents pending,
registered copyrights, trade names, trademarks and service marks
comprising Intellectual Property (as defined below). No Seller
nor, to the Knowledge of the Company or the Sellers, any officer,
director or employee of the Company, or any of their respective
Affiliates or Associates, has any ownership, royalty or other
interest in any of the Intellectual Property. To the Knowledge of
the Company or the Sellers, the Company has either all right,
title and interest in and to, or valid and enforceable rights
under contract to use, all items of Intellectual Property
material to, or necessary to conduct, the business of the Company
as it is presently conducted or contemplated to be conducted,
free and clear of all Liens other than Permitted Liens or Liens
arising as a result of actions by the Buyer, except where the
failure to have such rights, title or interest would not have a
Material Adverse Effect. To the Knowledge of the Company and the
Seller, there are no material restrictions on the direct or
indirect transfer of any contract or other agreement, or any
interest therein, held by the Company in respect of any item of
Intellectual Property. To the Knowledge of the Company and the
Sellers, the Company is not in material default (or, with the
giving of notice or lapse of time or both, would be in default)
under any contract or other agreement to use any item of
Intellectual Property required to be set forth on Schedule
2.1(q). To the Knowledge of the Company and the Sellers, none of
the Intellectual Property infringes or conflicts with, and
neither the Company nor any Seller has received any notice of
infringement of or conflict with, any license, patent, copyright,
trademark, service ▇▇▇▇ or other intellectual property right of
any other Person and, to the Knowledge of the Company and the
Sellers, there is no infringement or unauthorized use by any
Person of any of the Intellectual Property of the Company, except
where such use would not have a Material Adverse Effect. Except
as set forth on Schedule 2.1(q), the validity or enforceability
of any of the Intellectual Property or the title of the Company
thereto has not been questioned in any litigation, governmental
inquiry or proceeding to which the Company is a party and, to the
Knowledge of the Company and the Sellers, no such litigation,
governmental inquiry or proceeding is threatened. To the
Knowledge of the Company and the Sellers, the Company has taken
all commercially reasonable actions necessary and appropriate to
preserve the confidentiality of all trade secrets, proprietary
and other confidential information material to the business and
operations of the Company.
For purposes of this Agreement, the term "Intellectual Property"
means all patents and patent rights, trademarks and trademark
rights, trade names and trade name rights, service marks and
service ▇▇▇▇ rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright
rights, trade dress, business and product names, logos, slogans,
designs, trade secrets, industrial models, proprietary data,
methodologies, computer programs and software (including all
source codes) and related documentation, technical information,
manufacturing, engineering and technical drawings, know-how,
inventions, works of authorship, management information systems,
and all pending applications for and registrations of patents,
trademarks, service marks and copyrights owned by the Company or
used by the Company in the conduct of its business, in each such
case, including all forms (e.g., electronic media, computer
disks) in which such items are recorded.
(r) Domain Names. Schedule 2.1(r) hereto sets forth a true and
complete list of all domain names owned or used by the Company in
the conduct of its business. To the Knowledge of the Company and
the Sellers, no Seller and no officer, director or employee of
the Company or any of their respective Affiliates or Associates
has any ownership or other interest in the domain names. To the
Knowledge of the Company and the Sellers, none of the domain
names materially infringes or conflicts with any trademarks,
trademark rights, trade names, trade name rights, service marks
or other rights of any Person. To the Knowledge of the Company
and the Sellers, the Company has not obtained right or interest
to any domain name in material violation of any Law, including,
without limitation, the Anti-cybersquatting Consumer Protection
Act.
(s) Insurance. Schedule 2.1(s) hereto sets forth a true and complete
list of all policies of insurance under which the Company or any
of its officers or directors (in such capacity) is an insured
party, beneficiary or loss payable payee. True and complete, in
all material respects, copies of all such policies have been
previously provided to Buyer. To the Knowledge of the Company and
the Sellers, such policies are in full force and effect. To the
Knowledge of the Company and the Sellers, the Company is not in
material default with respect to any provision contained in any
such policy, and the Company has not received or given a notice
of cancellation or non-renewal with respect to any such policy.
Except as set forth on Schedule 2.1(s), no claims have been made
by the Company under any such policy, and no event has occurred
and, to the Knowledge of the Company and the Sellers, no state of
facts exists in respect of which the Company is entitled to make
a claim under any such policy.
(t) Bank Accounts; Credit Cards; Corporate Accounts; and Powers of
Attorney. Schedule 2.1(t) hereto sets forth a true and complete
list showing the names of all: (i) banks in which the Company has
an account or safe deposit box and the names of all Persons
authorized to draw thereon and who have access thereto; (ii)
credit card issuers with whom the Company has an account and the
names of all Persons authorized to use such accounts or who have
access thereto; (iii) cellular telephone, phone card or other
corporate accounts with whom the Company has an account and the
names of all Persons authorized to use such accounts or who have
access thereto; and (iv) Persons holding powers of attorney from
the Company. There are no automatic, periodic or scheduled
withdrawals or debits with respect to any of the bank or
corporate accounts required to be set forth on Schedule 2.1(t).
(u) Employee Arrangements; ERISA.
(i) Schedule 2.1(u) hereto sets forth a true and complete list
of all material Benefit Plans. For purposes of this
Agreement, the term "Benefit Plan" means each funded or
unfunded, written employee benefit plan, contract,
agreement, incentive, salary, wage or other compensation
plan or arrangement, including, but not limited to, each
pension and profit sharing plan, savings plan, bonus,
deferred compensation, incentive compensation, stock
purchase, supplemental retirement, severance, change of
control or termination payment, stock option,
hospitalization, medical, life insurance, dental,
disability, salary continuation, vacation, supplemental
unemployment benefit, union contract, employment contract,
consulting agreement, retiree health or life benefit,
severance, change of control or termination payment and each
other employee benefit program, plan, policy or arrangement,
maintained, contributed to, or required to be contributed to
by the Company for the benefit of employees, former
employees, officers, directors, agents or consultants of the
Company, or for or as to which the Company may be
responsible or have any Liability, whether or not subject to
ERISA and whether or not legally binding. For purposes of
this Section 2.1(u), any reference to the term "Company"
shall be deemed also to refer to any entity that is under
common control or affiliated with the Company, within the
meaning of Section 4001 of ERISA and the rules and
regulations promulgated thereunder, or Sections 414(b), (c),
(m) or (o) of the Code. For purposes of this Agreement, the
term "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and all regulations promulgated
thereunder.
(ii) The Sellers and the Company have delivered to Buyer true and
complete copies of each Benefit Plan (including any related
trust agreement), the most recent summary plan descriptions
and all other material employee communications embodying or
relating to any Benefit Plan and the two most recent Form
5500 (including all schedules and accountants' opinions)
with respect to each Benefit Plan which accurately reflect
the terms of such plans. Except as set forth on Schedule
2.1(u), the Company has not announced or otherwise made a
commitment to create any bonus, option, deferred
compensation, pension, profit sharing or retirement plan or
arrangement, severance arrangement or other fringe benefit
plan.
(iii) To the Knowledge of the Company and the Sellers, each of
the Benefit Plans required to be set forth on Schedule
2.1(u) is and has at all times been in compliance with all
applicable provisions of ERISA, the Code and other Laws.
(iv) To the Knowledge of the Company and the Sellers, except as
set forth on Schedule 2.1(u), the execution and delivery of,
and the performance of the transactions contemplated by,
this Agreement will not (either alone or upon the occurrence
of any additional or subsequent event) constitute an event
under any Benefit Plan or individual agreement that will or
may result in any payment (whether of severance pay or
otherwise), acceleration, vesting or increase in benefits
with respect to any employee, former employee, consultant,
agent or director of the Company.
(v) To the Knowledge of the Company and the Sellers, each
Benefit Plan that is a "group health plan" (within the
meaning of Code Section 4980B) has been administered in
compliance with the coverage continuation requirements of
the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), and as provided under Code Section 4980 and any
regulations promulgated or proposed under the Code. To the
Knowledge of the Company and the Sellers, the Company and
each Benefit Plan are in compliance with the requirements of
the Health Insurance Portability and Accountability Act.
(vi) To the Knowledge of the Company and the Sellers, at no time
has the Company contributed to, been required to contribute
to or incurred any Liability to any Benefit Plan that: is a
multiemployer plan, as defined in Section 3(37) of ERISA; is
a multiple employer welfare arrangement, as defined in
Section 3(40) of ERISA; is a multiple employer plan, as
described in Section 210 of ERISA, subject to Title IV of
ERISA; or provides health (other than as required under
COBRA), life or other welfare benefits to former employees,
directors or consultants.
(vii) To the Knowledge of the Company and the Sellers, no event
has occurred nor is any threatened that would constitute a
reportable event (for which any applicable notice
requirement has not been waived) within the meaning of
Section 4043(b) of ERISA with respect to any Benefit Plan
that is an "employee pension benefit plan," as defined in
Section 3(2) of ERISA (each, a "Pension Plan").
(viii) Each Pension Plan that is intended to meet the
requirements of Code Section 401(a) meets, and to the
Knowledge of the Company and the Sellers, since its
inception has met, the requirements for qualification under
Code Section 401(a) and nothing has occurred that would
adversely affect the qualified status of any such Pension
Plan. The Internal Revenue Service (the "IRS") has issued a
favorable determination letter with respect to the
qualification under the Code of each Pension Plan and the
IRS has not taken any action to revoke or suspend any such
letter.
(ix) Those sections of all annual reports heretofore filed with
the IRS or the Department of Labor by or on behalf of every
Benefit Plan that were required to be so certified were
certified without qualification by the accountants or
actuaries of such Benefit Plan.
(x) To the Knowledge of the Company and the Sellers, the Company
has made all contributions required to be made by it to each
Benefit Plan under the terms of the Plan and applicable Law.
To the Knowledge of the Company and the Sellers, to
prohibited transaction (as defined in Code Section 4975 or
Section 406 of ERISA) has occurred with respect to any
Benefit Plan that could subject any Benefit Plan or any
related trust, the Company, any Affiliate, Buyer or any
director, officer or employee of any of them to any Tax or
penalty imposed under Code Section 4975 or Sections 502(i)
or 502(1) of ERISA, directly or indirectly, whether by way
of indemnity or otherwise.
(v) Employees.
(i) Schedule 2.1(v) hereto sets forth a true and correct summary
of the following information for each current employee of
the Company, including each employee on leave of absence,
disability or layoff status: name; job title; employment
status; current compensation rate and any change(s) in
compensation since December 31, 2002.
(ii) Except as set forth on Schedule 2.1(v), the Company has no
union, collective bargaining, employment, management,
severance or consulting agreements or arrangements to which
the Company is a party or by which it is otherwise bound.
(iii) To the Knowledge of the Company and the Sellers, no union
or other labor organization is seeking to organize, or to be
recognized as, a collective bargaining unit of any group of
employees that includes any employees of the Company. There
is no pending or, to the Knowledge of the Company and the
Sellers, threatened representation proceeding or petition,
strike, work stoppage, work slowdown, unfair labor practice
charge or complaint or other material labor dispute
affecting any employee of the Company.
(iv) To the Knowledge of the Company and the Sellers, no Seller
or officer or employee of the Company is a party to or is
otherwise bound by any agreement or arrangement, including
any confidentiality, non-competition or proprietary rights
agreement, with any Person (other than the Company) that in
any way limits or adversely affects or will limit or affect
(A) the performance of his duties as an employee, officer or
director of the Company after the Closing or (B) the ability
of the Company to conduct its business.
(w) Certain Business Matters. Except as set forth on Schedule 2.1(w)
hereto and to the Knowledge of the Company and the Sellers, (i)
the Company is not a party to or otherwise bound by any material
distributorship, dealership, consulting, sales agency, franchise
or similar agreement; (ii) the Company does not have any
sole-source supplier of significant goods or services (other than
utilities) with respect to which practical alternative sources
are not reasonably available on equivalent terms and conditions;
(iii) the Company neither provides nor is bound by any express
warranties relating to its services and there has been no
assertion of any breach of warranty; and (iv) the Company is not
a party to or otherwise bound by any agreement or arrangement
that limits its freedom to compete in any line of business or any
geographic area or with any Person or that requires it to
transact business exclusively with any Person.
(x) Contracts. Schedule 2.1(x) hereto sets forth a true and complete
list, and brief description, of each contract, purchase order,
agreement, mortgage, note, commitment, obligation and undertaking
(collectively, "Contracts") to which the Company is a party or by
which it is otherwise bound that could involve during its stated
term in excess of $25,000.00 (the "Material Contracts"). True and
complete copies of all Material Contracts required to be set
forth on Schedule 2.1(x) have previously been furnished or made
available to Buyer and, except as set forth on Schedule 2.1(x)
and to the Knowledge of the Company and the Sellers, each of them
is in full force and effect. To the Knowledge of the Company and
the Sellers, neither the Company nor any other Person that is a
party to a Material Contract or is otherwise bound thereby is in
material default or breach thereunder, and no event, occurrence,
condition or act exists that, with the giving of notice or the
lapse of time or both, would give rise to any material default,
breach or right of cancellation thereunder. To the Knowledge of
the Company and the Sellers, there has been no threatened
cancellation of any of the Material Contracts and there are no
material outstanding disputes thereunder. To the Knowledge of the
Company and the Sellers, there are no defaults or breaches in
respect of the Contracts (exclusive of the Material Contracts) by
the Company or any other Person that is a party thereto that,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect. To the Knowledge of the Company
and the Sellers, there are no agreements, understandings or
arrangements with any other Person in respect of the Material
Contracts that (i) give any Person the right to materially
renegotiate or require a material reduction in the price paid to
the Company or the repayment of any amount previously paid, (ii)
provide for the sharing of any revenues or profits by or with the
Company or (iii) provide for discounts, allowances or extended
payment terms.
(y) Customers. Schedule 2.1(y) hereto sets forth a true and correct
list of the name and gross sales for the 12-month period ended
December 31, 2005 and the period January 1, 2006 through August
23, 2006 of each of the Company's ten (10) largest customers (by
gross sales) during each of such periods. To the Knowledge of the
Company and the Sellers, neither the Company has not received any
written notice that any customer required to be set forth on
Schedule 2.1(y) intends or expects to terminate, cancel, limit or
adversely modify its business relationship with the Company or
significantly reduce its level of purchases from the Company in
the 12-month period following the Closing Date.
(z) Absence of Certain Business Practices. Neither the Company, any
Seller or officer or director of the Company nor, to the
Knowledge of the Company and Sellers, any other employee or agent
of the Company has given any improper or illegal gift, bribe,
kickback, gratuity or similar benefit to any customer or supplier
or any employee thereof, any governmental authority or
governmental employee or any other Person in a position to help
or hinder the Company in its business or operations.
(aa) Brokers. Except as set forth on Schedule 2.1(aa) hereto, no
agent, broker, firm or other Person acting on behalf of the
Company or any Seller, or under the authority of any of the
foregoing, is or shall be entitled to a brokerage commission,
finder's fee or similar payment in connection with any of the
transactions contemplated hereby from the Company or any of the
Sellers.
(bb) No Reliance. The representations and warranties of the Company
and Sellers contained in this Agreement and the other agreements
contemplated hereby constitute the sole and exclusive
representations and warranties of the Company and Sellers to
Buyer in connection with the transactions contemplated hereby.
Except for such representations and warranties (in each case, as
modified by the schedules to this Agreement), neither the
Company, the Sellers nor any other Person makes any other express
or implied representation or warranty with respect to the Company
or the transactions contemplated by this Agreement, and the
Company and the Sellers disclaim any other representations or
warranties, whether made by any of its employees, agents or
representatives (including with respect to the distribution to,
or any such Person's reliance on, any information, documents or
other material made available to Parent or their representatives
in any data room, management presentation or in any other form in
expectation of, or in connection with, the transactions
contemplated hereby). Except for such representations and
warranties (in each case, as modified by the schedules to this
Agreement), the Company and the Sellers hereby disclaim all
liability and responsibility for any projection, forecast or
information made, communicated, or furnished (orally or in
writing) to Buyer or any of its Affiliates, officers, directors,
employees, agents or representatives (including opinion,
information, projection, or advice that may have been or may be
provided to any such Person or any director, officer, employee,
agent, consultant, or representative of such Person or any of its
Affiliates). The Buyer acknowledges and agrees that it has not
relied on any representations and warranties other than the
express representations and warranties set forth in this
Agreement and the agreements contemplated hereby in entering into
this Agreement.
(cc) Affiliated Transactions. Except as set forth on Schedule 2.1(cc)
hereto, to the Knowledge of the Company and the Sellers, no
Seller and no director or officer of the Company (or any of their
respective Affiliates or Associates) (i) is a party to or
otherwise a beneficiary of any agreement, transaction or
arrangement (oral or written) with or involving the Company or
any Affiliate or Associate of the Company or (ii) has any claim,
monetary or otherwise, against the Company.
(dd) Disclosure Schedules. All schedules to this Agreement are
integral parts of this Agreement. The schedule shall be arranged
in sections corresponding to the appropriate sections of this
Agreement, as applicable, and Sellers and the Company will use
their commercially reasonable efforts to identify disclosures in
the Disclosure Schedule by referring to a specific section of
this Agreement with cross-references as appropriate; provided,
however that, the failure to repeat an item identified in a
schedule, employ a section reference or cross-reference such item
in another section where such reference would be appropriate
shall not, in and of itself, constitute a breach of a
representation or warrant of the section from which the reference
is omitted if it is readily apparent that such a reference or
cross-reference would have been appropriate.
2.2 Representations and Warranties of the Sellers. Each of the Sellers
(except for ▇▇▇ ▇▇▇▇▇▇▇) hereby represents and warrants to, and
covenants with, severally and not jointly, Buyer as follows:
(a) Capacity; Validity; No Conflicts. Such Seller has the legal
capacity to execute and deliver this Agreement and the Ancillary
Agreements to which it/he shall become a party and to consummate
the transactions contemplated hereby and thereby. This Agreement
and the Ancillary Agreements to which such Seller shall become a
party have been (or will be) duly executed and delivered by such
Seller and are (or will be), assuming the due authorization,
execution and delivery hereof or thereof by the other parties
hereto or thereto, the valid and binding obligations of such
Seller, enforceable against it/him in accordance with their
respective terms, except to the extent that enforceability
thereof may be limited by general equitable principles
(regardless of whether enforceability is considered in a
proceeding at law or in equity) or the operation of bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or
similar Laws. Neither the execution and delivery by such Seller
of this Agreement and the Ancillary Agreements (to the extent
that it/he shall become a party thereto), nor the consummation of
the transactions contemplated hereby or thereby, nor the
performance by such Seller (to the extent that it/he shall become
a party thereto) of his/its obligations hereunder or thereunder,
shall (or, with the giving of notice or the lapse of time or
both, would) (i) give rise to a conflict or default, or any right
of termination or cancellation, under the provisions of any
material note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which such Seller is a party or
by which such Seller is otherwise bound; (ii) materially violate
any Law applicable to such Seller; or (iii) result in the
creation or imposition of any material Lien upon any of the
properties or assets of such Seller, except for such conflicts,
violations, breaches, defaults, triggerings, cancellations,
increases or other occurrences that would not have a Material
Adverse Effect.
(b) Stock Ownership. Such Seller is the sole record holder and
beneficial owner of the number of shares of Company capital stock
(the "Shares") set forth opposite his/its name on Schedule 1.1
hereto, and such Shares are free and clear of all restrictions on
transfer (other than restrictions of general applicability under
the Securities Act and state securities Laws), Liens and Taxes.
Such Seller is not a party to (or has irrevocably waived all
rights under) any option, warrant, right, agreement or commitment
providing for the disposition or acquisition of any Shares (other
than this Agreement) or any other Company capital stock. Except
as set forth on Schedule 1.1, such Seller is not a party to (or
has irrevocably terminated) any voting trust, proxy or other
agreement or understanding with respect to the transfer or voting
of any Shares. The resale of such Shares by such Seller as
provided herein shall, upon the Closing in accordance with and
upon the full satisfaction of the terms and conditions hereof,
vest Buyer with good and marketable title to such Shares, free
and clear of all Liens.
(c) No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 2 or in
Section 3 below, none of the Company, the Sellers or any other
Person makes any other express or implied representation with
respect to the Business, the Company or the Sellers or otherwise
with respect to the subject matter of this Agreement, including,
but not limited to, any implied warranty or representation, and
it is understood and agreed that any estimates, projections or
other predictions in the information provided by or on behalf of
any party to this Agreement to any other party to this Agreement
(or their Affiliates or Associates) are not and shall not be
deemed to be representations or warranties of the Company, the
Sellers or any of their respective Affiliates or Associates.
2.3 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to the Company and the Sellers as follows:
(a) Organization and Power. Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the State
of Delaware, and has full corporate power and authority to own,
lease and operate its assets and properties and to carry on its
business as presently conducted by it.
(b) Authority; Validity; No Conflicts. The execution and delivery by
Buyer of this Agreement and of each of the Ancillary Agreements
to which it shall be a party, the performance by Buyer of its
obligations under this Agreement and such Ancillary Agreements,
and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate
action on the part of Buyer, and Buyer has all necessary
corporate power with respect thereto. This Agreement and the
Ancillary Agreements to which it shall become a party have been
(or will be) duly executed and delivered by Buyer and are or,
when executed and delivered by Buyer, will be the valid and
binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except to the extent that
enforceability thereof may be limited by general equitable
principles or the operation of bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar Laws.
Neither the execution and delivery by Buyer of this Agreement and
the Ancillary Agreements to which it shall become a party, nor
the consummation of the transactions contemplated hereby or
thereby, nor the performance by Buyer of its obligations
hereunder or thereunder, shall (or, with the giving of notice or
the lapse of time or both, would) (i) conflict with or violate
any provision of the Certificate of Incorporation or By-Laws of
Buyer; (ii) violate any Law applicable to Buyer or any of its
properties or assets; (iii) require any consent, approval or
notice under, or materially conflict with or result in a material
violation or breach of, or conflict with or cause a default
under, any material contract or agreement to which Buyer is a
party.
(c) Governmental Approvals. No consent, approval or authorization of,
or declaration or filing with, any federal or state governmental
body or other entity on the part of Buyer that has not been
obtained or made is required in connection with the execution or
delivery by Buyer of this Agreement or any ancillary agreements
contemplated by this Agreement or the consummation by Buyer of
the transactions contemplated hereby or thereby.
(d) No Outside Reliance; Financial and Business Experience. Buyer has
not relied on nor is relying on any statement, representation or
warranty concerning the Company other than those expressly made
in this Agreement. The Buyer has substantial experience in
evaluating and purchasing companies engaged in the Business
similar to the Company and acknowledges that the Buyer can
protect its own interests. The Buyer has such knowledge and
experience in financial and business matters so that the Buyer is
capable of evaluating the merits and risks of its investment in
the Company and the Buyer has conducted due diligence, received
all materials related to the Company and made inquiries to the
Company and the Sellers relating to the transactions contemplated
hereby to its satisfaction.
(e) Brokers. No agent, broker, firm or other Person acting on behalf
of Buyer, or under the authority of any of the foregoing, is or
shall be entitled to a brokerage commission, finder's fee or
similar payment in connection with any of the transactions
contemplated hereby from Buyer.
(f) Financing. Buyer has sufficient capital or access to sufficient
sources of capital that will be sufficient for Buyer to fund the
Purchase Price as of the date of this Agreement and as of the
Closing Date.
(g) Investment Intent. Buyer is acquiring the Shares for investment
purposes and not with a view to distribution thereof and agrees
that it shall not make any sale, transfer or other disposition of
the Shares in violation of any applicable securities law
(h) Litigation. There is no private or governmental action pending,
or, to the knowledge of Buyer, threatened by or against Buyer,
and no judgment, decree or order applicable to Buyer or any of
the assets and properties of Buyer, that could reasonably be
expected to prevent, enjoin, alter or delay any of the
transactions contemplated by this Agreement.
3. COVENANTS. The Sellers, the Company and Buyer hereby covenant and
agree as follows:
3.1 Investigation by Buyer.
(a) From the date hereof until the earlier of the Closing Date and
the termination of this Agreement in accordance with its terms:
Buyer may, through its representatives (including its counsel,
accountants, lenders, and consultants), make such reasonable
investigations of the properties, offices and operations of the
Company and such audit of the financial condition of the Company
as it reasonably deems necessary or advisable in connection with
the transactions contemplated hereby, including, without
limitation, any investigations enabling it to familiarize itself
with such properties, offices, operations and financial
condition; provided, however, that to extent the Buyer becomes
aware of a fact or receives information through the course of its
investigation that would result in the breach of a representation
or warranty of the Company or the Sellers or cause the Company or
the Sellers to be unable to fulfill a covenant hereunder and the
Buyer does not promptly notify the Company and the Sellers of
such fact or information, the Buyer shall not be entitled to any
indemnification related thereto or to make a claim for any such
breach or failure hereunder. The Company and the Sellers shall
permit Buyer and its authorized representatives, upon reasonable
advance notice to the Company or the Sellers, to have reasonable
access during normal business hours to the premises and to all
books and records and Tax Returns of the Company, and Buyer shall
have the right to make copies thereof and excerpts therefrom with
the prior consent of the Company. In connection with such review,
Buyer and its representatives may contact and communicate with
key employees, suppliers, customers, lenders and creditors of the
Company with the prior consent of the Company. The Company and
the Sellers shall timely furnish Buyer with such financial and
operating data and other information with respect to the Company
and its operations as Buyer may from time to time reasonably
request.
(b) With the prior consent of the Company, representatives of Buyer
shall be entitled to hold meetings and conferences during normal
working hours with the Company's employees upon reasonable notice
to the Company, to explain and answer questions about the
conditions, policies and benefits of employment by Buyer.
Further, the Company and the Sellers shall reasonably cooperate
with Buyer in communicating to the Company's employees any
information concerning employment by Buyer and shall encourage
the Company's employees to remain in the employment of the
Company after the Closing. The Sellers shall be entitled to have
one or more representatives attend such meetings.
3.2 Carry on in Ordinary Course. From the date hereof until the earlier of
the Closing Date and the termination of this Agreement in accordance
with its terms, (x) the Company shall, and the Sellers shall cause the
Company to, conduct the Business and operations of the Company
diligently and as heretofore conducted and they shall use their
commercially reasonable efforts to preserve the present relationships
between the Company and its suppliers, distributors, customers and
other Persons having business relationships with it; and (y) the
Company shall not, except with Buyer's prior written consent, which
shall not be unreasonably withheld: (i) declare, make or pay any
distributions or dividends on or in respect of its capital stock or
make any payments to the Sellers other than salaries (and expressly
excluding any bonuses) due in the ordinary course of business; (ii)
make or grant any increases in salary or other compensation or bonuses
to employees or grant any employee any severance or termination pay or
establish, adopt, enter into or amend in any material respect any
Benefit Plan; (iii) make any general adjustment in the type or hours
of work of its employees outside of the ordinary course of business;
(iv) enter into or materially amend any material agreement,
arrangement or transaction with any Seller or any Associate or
Affiliate of the Company or of any Seller; (v) permit or engage in any
of the actions or transactions set forth in Sections 2.1(h) or 2.1(cc)
hereof (if and to the extent not otherwise covered by this Section
3.2); (vi) acquire, exchange, lease, license or dispose of any
material properties or assets of the Company, other than in the
ordinary course of business; (vii) issue or grant any shares of
capital stock, options, warrants or other securities, whether or not
such are then exercisable for, convertible into or exchangeable for
shares of capital stock or such other securities; (viii) amend or
repeal any of its organizational documents; (ix) incur any
indebtedness outside of the ordinary course of business in excess of
$25,000 or grant or permit any of its assets or property including,
without limitation, any Intellectual Property, to become subject to,
any Lien (other than Permitted Liens); (x) terminate or materially
amend any agreement set forth on Schedule 2.1(x) hereto or enter into
any agreement or arrangement that would, if in effect as of the date
hereof, otherwise be required to be set forth on such Schedule 2.1(x);
(xi) discount, collect or write-off any accounts or notes receivables,
other than in the ordinary course of business; (xii) operate the
business of the Company outside of the ordinary course of business,
except as may be specifically required by this Agreement; or (xiii)
enter into any agreement or arrangement to take any of the foregoing
actions.
3.3 Exclusive Dealings. From the date hereof until the earlier of the
Closing Date and the termination of this Agreement in accordance with
its terms, the Company and the Sellers shall not, and shall cause the
Company's directors, officers, employees, agents, Affiliates and
Associates not to, directly or indirectly, solicit or initiate the
submission of proposals from, or solicit, encourage, entertain or
enter into any arrangement, agreement, letter of intent or
understanding with, or engage in any negotiations with, or furnish any
information to, any Person, other than Buyer or any representative(s)
or agent(s) thereof, with respect to the direct or indirect
acquisition of all or any material portion of the Business,
operations, properties or assets of the Company or any of its
securities. Should the Company, any Seller or any of their respective
Affiliates or Associates, during such period, receive any offer or
inquiry relating to any such acquisition, or obtain information that
such an offer is likely to be made, it/he will provide Buyer with
immediate written notice thereof.
3.4 Consents. The Sellers and the Company shall use their commercially
reasonable best efforts to obtain in writing, on or prior to the
Closing Date, all Consents required to be set forth on Schedule 2.1(e)
hereto. To the extent that any of such Consents are not obtained by
the Closing Date, the Sellers will continue to use their commercially
reasonable best efforts thereafter to obtain them. All Consents shall
be in writing and copies thereof shall be delivered to Buyer promptly
after the Company's receipt thereof. In addition, the Sellers and the
Company shall obtain and deliver to Buyer on or prior to the Closing
Date lender final payoff letters in respect of, and documents
releasing all security interests in and pledges on (including UCC-3
termination statements) all assets and properties of the Company
securing, the Debt, which letters and agreements shall be irrevocable
effective subject only to the payment of the Debt.
3.5 Supplemental Disclosure. The parties hereto agree that, with respect
to the representations and warranties made by them in this Agreement,
they shall have a continuing obligation up through the Closing
promptly to provide detailed disclosure to the other party(ies) hereto
with respect to any matter hereafter arising or discovered that, if
existing or known at the date of this Agreement or on the Closing
Date, would otherwise have been required to be set forth or described
on the schedules hereto; provided, however, that none of such
disclosure shall be deemed to modify, amend or supplement the
representations and warranties made in this Agreement or the schedules
hereto unless the other party(ies) hereto shall have so consented in
writing, which consent shall not be unreasonably withheld.
3.6 Public Announcements. The Sellers, the Company and Buyer agree that
they will consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement
or the transactions contemplated hereby and any press release or any
public statement shall be subject to the mutual agreement of the
parties, except as may be required by the disclosure obligations of a
party or parties under applicable securities Laws or other Laws.
3. Records. On or prior to the Closing Date, the Company and the Sellers'
Rep shall deliver or cause to be delivered to Buyer or make readily
available to Buyer at the Company's office all original agreements,
documents, books, stock ledgers, minutes, correspondence, and
corporate and other records and files, including records and files
stored on computer disks or tapes or any other storage medium
(collectively, the "Records") in the possession or control of the
Company or any of the Sellers relating to the Company. Subsequent to
the Closing Date, Buyer shall allow Sellers and their Affiliates,
agents and representatives, at Sellers' sole cost and expense, to have
reasonable access to (upon reasonable prior notice), and to make
copies of, the Records, to the extent reasonably necessary to enable
Sellers to investigate and defend any claims and to perform similar
matters. Buyer will maintain the Records for the relevant periods of
time as may be required by law; but in any event no less than six (6)
years.
3.8 Maintenance of Insurance. From the date hereof until the earlier of
the Closing Date and the termination of this Agreement in accordance
with its terms, the Company shall maintain in full force and effect
its current insurance policies, unless simultaneously with any
termination or lapse thereof, replacement policies shall be in full
force and effect that provide coverage for the same risks and at
levels and amounts equal to or greater than the coverage provided
under such policies as of the date hereof.
3.9 Resignations. On or before the Closing Date, the Company and the
Sellers' Rep shall cause to be delivered to Buyer duly executed
resignations, effective as of the Closing, of those officers and
directors of the Company as shall be requested by Buyer on or before
the Closing Date.
3.10 Best Efforts to Close. Each of the parties hereto shall use his/its
commercially reasonable best efforts to satisfy, or to cause to be
satisfied, all conditions to his/its obligation to close the
transactions contemplated hereby that are within the control of such
party. If all of the conditions to a party's obligation to close
hereunder shall have been satisfied, such party shall diligently
proceed to close.
4 CONDITIONS TO CLOSING.
4.1 Conditions to Buyer's Obligation to Close. The obligation of Buyer to
close the transactions contemplated by this Agreement is subject to
the satisfaction of each of the following conditions, any one or more
of which may be waived by Buyer in writing at or prior to the Closing:
(a) Agreements and Conditions. On or before the Closing Date, the
Sellers and the Company shall have complied with and duly
performed all agreements, covenants and conditions on their part
to be complied with and performed pursuant to or in connection
with this Agreement on or before the Closing Date.
(b) Representations and Warranties. The representations and
warranties of the Sellers and the Company contained in this
Agreement shall be true and complete on and as of the Closing
Date (except for representations and warranties that speak as of
a specific date prior to the Closing Date which need only be true
and correct as of such earlier date), with the same force and
effect as though such representations and warranties had been
made on and as of the Closing Date; provided, however, that this
condition shall be deemed satisfied unless any and all
inaccuracies in the representations and warranties, in the
aggregate, result in a Material Adverse Effect (ignoring for the
purposes of this subsection 4.1(b) any qualifications by Material
Adverse Effect or otherwise by material adversity and any
materiality qualification or words of similar import contained in
such representations and warranties).
(c) No Legal Proceedings. No court or governmental suit, action or
proceeding shall have been instituted or overtly threatened to
materially restrain or prohibit the transactions contemplated
hereby, and, as of the Closing Date, there will be no court or
governmental action or proceeding pending or threatened against
or affecting the Company that involves a demand for any judgment
or Liability, whether or not covered by insurance, that could
reasonably be expected to have a Material Adverse Effect.
(d) The Sellers' and Officer's Certificate. Buyer shall have received
a certificate dated the Closing Date and executed by the Sellers
and an authorized executive officer of the Company to the effect
that the conditions set forth in Sections 4.1(a), 4.1(b) and
4.1(c) hereof shall have been satisfied.
(e) Absence of Material Changes. The Company shall have not
experienced any material adverse change in its business,
operations, assets, prospects or condition (financial or
otherwise) since August 23, 2006.
(f) Consents. All Consents required to be set forth on Schedule
2.1(e) hereto shall have been obtained and delivered to Buyer,
except to the extent the failure to obtain such Consents would
not have a Material Adverse Effect.
(g) Ancillary Agreements. Buyer shall have received all of the
Ancillary Agreements, duly executed and delivered by the Sellers
to the extent that they are parties thereto.
(h) Stock Certificates. Buyer shall have received the originally
issued stock certificates evidencing all of the Company Stock,
with duly executed stock powers attached and in proper form for
transfer.
(i) Resignations. Buyer shall have received the resignations of all
of the officers and directors of the Company requested by Buyer
pursuant to Section 3.9 hereof.
(j) Secretary's Certificate. Buyer shall have received a certificate,
dated the Closing Date and executed by the Secretary of the
Company, certifying the incumbency and signatures of the officers
of the Company authorized to act on behalf of the Company in
connection with the transactions contemplated hereby and
attaching and certifying as true and complete copies of (i) the
resolutions duly adopted by the Board of Directors of the Company
authorizing and approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby and (ii) the Certificate of Incorporation and By-Laws of
the Company, each as may have been amended up through the Closing
Date.
(k) Certificates of Status. Buyer shall have received certificates
from the Secretary of State of the State of Delaware and of each
jurisdiction set forth on Schedule 2.1(b) hereto, stating that
the Company has filed its most recent annual report, has not
filed a certificate of dissolution or withdrawal and is in good
standing in each such jurisdiction.
(l) Other Closing Deliveries. Buyer shall have received at or prior
to the Closing such other documents, instruments and certificates
as Buyer may reasonably request in order to effectuate the
transactions contemplated hereby.
4.2 Conditions to the Sellers' Obligations to Close. The obligations of
the Sellers to close the transactions contemplated by this Agreement
are subject to the satisfaction of each of the following conditions,
any one or more of which may be waived by the Sellers' Rep in writing
at or prior to the Closing:
(a) Agreements and Conditions. On or before the Closing Date, Buyer
shall have complied with and duly performed all agreements,
covenants and conditions on its part to be complied with and
performed pursuant to or in connection with this Agreement on or
before the Closing Date.
(b) Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall be true and
complete on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been
made on and as of the Closing Date (except for representations
and warranties that speak as of a specific date prior to the
Closing Date which need only be true and correct as of such
earlier date) provided, however, that this condition shall be
deemed satisfied unless any and all inaccuracies in the
representations and warranties, in the aggregate, result in a
Material Adverse Effect (ignoring for the purposes of this
subsection 4.2(b) any qualifications by Material Adverse Effect
or otherwise by material adversity and any materiality
qualification or words of similar import contained in such
representations and warranties).
(c) No Legal Proceedings. No court or governmental suit, action or
proceeding shall have been instituted or overtly threatened to
materially restrain or prohibit the transactions contemplated
hereby.
(d) Officer's Certificate. The Sellers shall have received a
certificate dated the Closing Date and executed by an authorized
executive officer of Buyer to the effect that the conditions set
forth in Sections 4.2(a) , 4.2(b) and 4.2(c) hereof shall have
been satisfied.
(e) Secretary's Certificate. The Sellers shall have received a
certificate, dated the Closing Date and executed by the Secretary
of Buyer, certifying the incumbency and signatures of the
officers of Buyer authorized to act on behalf of Buyer in
connection with the transactions contemplated hereby and
attaching and certifying as true and complete copies of (i) the
resolutions duly adopted by the Board of Directors of Buyer
authorizing and approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby and (ii) the Certificate of Incorporation and By-Laws of
Buyer, each as may have been amended up through the Closing Date.
(f) Purchase Price. Buyer shall have delivered the Purchase Price in
accordance with Section 1.2 hereof.
(g) Ancillary Agreements. The Sellers shall have received, as
applicable, the Employment Agreement and the Consulting
Agreements, duly executed and delivered by the Company.
5 FURTHER ASSURANCES. From time to time on and after the Closing Date,
and without any further consideration, the Sellers shall execute and
deliver such other instruments of conveyance, assignment, transfer and
delivery and take such other actions as Buyer may reasonably request
in order more effectively to transfer to and to place Buyer in
possession or control of, all of the rights, properties, assets and
businesses intended to be transferred hereby, to assist in the
collection and enforcement of any and all such rights, properties and
assets and to enable Buyer to exercise and to enjoy all of the rights
and benefits of the Company with respect thereto.
6 CERTAIN TAX MATTERS.
6.1 Straddle Period. In the case of any taxable period that includes, but
does not end on, the Closing Date (a "Straddle Period"), the amount of
any Taxes based on or measured by receipts of the Company and any
sales, use, real property and other similar Taxes for the Pre-Closing
Tax Period shall be determined based on an interim closing of the
books as of the close of business on the Closing Date and the amount
of other Taxes of the Company for a Straddle Period that relate to the
Pre-Closing Tax Period shall be deemed to be the amount of such Tax
for such entire Straddle Period multiplied by a fraction, the
numerator of which shall be the number of days in the taxable period
ending on the Closing Date and the denominator of which shall be the
total number of days in such Straddle Period.
6.2 Allocation of Purchase Price. Buyer, the Company and the Sellers agree
that the Purchase Price and the liabilities of the Company (plus other
relevant items) will be allocated among the assets of the Company for
all purposes (including Tax and financial accounting) in a manner
consistent with the fair market values thereof set forth in the Tax
Allocation Schedule to be agreed upon by the Sellers and Buyer and
attached hereto at or prior to the Closing as Schedule 6.4. Buyer, the
Company and the Sellers will file all Tax Returns (including amended
returns and claims for refund) and information reports in a manner
consistent with such Tax Allocation Schedule and shall not take any
position inconsistent with the allocation for Tax purposes, except as
and to the extent required by applicable Law.
6.3 Tax Periods Ending on or before the Closing Date. Buyer shall prepare
(or cause to be prepared) and file (or cause to be filed) all Tax
Returns for the Company for all periods ending on or prior to the
Closing Date that are filed after the Closing Date and all Straddle
Period Tax Returns. Buyer shall permit the Sellers to review and
comment on each such Tax Return described in the immediately preceding
sentence prior to filing.
6.4 Cooperation on Tax Matters.
(a) Buyer, the Company and the Sellers shall cooperate, as and to the
extent reasonably requested by any other party, in connection
with the filing of Tax Returns and any audit, litigation or other
proceeding with respect to Taxes pursuant to this Section 6. Such
cooperation shall include the retention and (upon the other
party's request) the provision of records and information that
are reasonably relevant to any such audit, litigation or other
proceeding and making employees or representatives available on a
mutually convenient basis to provide additional information and
explanation of any materials provided hereunder. The Company
(after the Closing) shall (i) retain all books and records with
respect to Tax matters pertinent to the Company relating to any
taxable period beginning before the Closing Date until the
expiration of the applicable statute of limitations for the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority and (ii) give
the Sellers' Rep reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the
Sellers' Rep so directs in writing, the Company shall allow the
Sellers' Rep to take possession of such books and records.
(b) Each of Buyer and the Sellers shall, upon request from the other
party, use reasonable best efforts to obtain any certificate or
other document from any governmental authority or other Person as
may be necessary to mitigate, reduce, defer or eliminate any Tax
that could be imposed (including, but not limited to, any with
respect to the transactions contemplated hereby).
6.5 Certain Taxes. All transfer (including real property), documentary,
sales, stamp, registration and other similar Taxes and fees (including
any penalties and interest) incurred in connection with this Agreement
(including any corporate-level gains Tax triggered by the sale of the
Company Stock and any similar Tax imposed by States or subdivisions)
shall be paid by the Sellers when due, and the Sellers will, at their
own expense, file all necessary Tax Returns and other documentation
with respect to all such transfer, documentary, sales, stamp,
registration and other similar Taxes and fees. If required by
applicable Law, Buyer will, and will cause its Affiliates to, join in
the execution of any such Tax Returns and other documentation.
7 SURVIVAL; INDEMNIFICATION.
7.1 Survival of Representations. Buyer shall be entitled to rely upon the
representations, warranties, covenants and agreements of the Company
and the Sellers. All representations and warranties contained in this
Agreement (including the Schedules hereto) and in all certificates
(including the Estimated Closing Certificate) required hereby to be
delivered shall be deemed to be representations and warranties
hereunder and shall survive the Closing Date for a period of one (1)
year; provided, however, that (i) any such representations and
warranties shall survive the time(s) that they would otherwise
terminate with respect to claims of which written notice has been
given as provided in this Agreement prior to such termination; and
(ii) such time limitation shall not apply to the representations and
warranties contained in (A) Sections 2.1(i), 2.1 (l), 2.1(q), and
2.1(u) hereof, which shall survive until the expiration of the
applicable statute of limitations (including any extension(s)
thereof), and (B) Sections 2.1(a), 2.1(c), 2.2(a), 2.2(b) and 2.3(b)
hereof, which shall survive indefinitely.
7.2 Indemnities of the Company and the Sellers. Subject to the limitations
set forth in this Article 7, the Sellers shall jointly and severally
indemnify, defend and hold harmless following the Closing Date, Buyer
and its Affiliates and their respective directors, officers,
stockholders, agents, successors and permitted assigns from and
against, and shall pay and reimburse the foregoing Persons for, any
and all Losses relating to or arising out of the breach (or alleged
breach if asserted by a third party) of any representation, warranty,
covenant or agreement of any of the Sellers or the Company contained
in this Agreement, subject to the limitations below.
7.3 Indemnity of Buyer. Subject to the limitations set forth in this
Article 7, Buyer shall indemnify, defend and hold harmless following
the Closing Date, the Sellers and the Company and their heirs, legal
beneficiaries and permitted assigns from and against, and shall pay
and reimburse the foregoing Persons for, any and all Losses relating
to or arising out of the breach (or alleged breach if asserted by a
third party) of any representation, warranty, covenant or agreement of
Buyer contained in this Agreement, subject to the limitations below.
7.4 Procedures for Indemnification; Defense. If any party (the
"Indemnitee") receives notice of any claim or the commencement of any
action or proceeding with respect to which the other party (or
parties) is obligated to provide indemnification (the "Indemnifying
Party") pursuant to Sections 7.2 or 7.3 hereof, the Indemnitee shall
give the Indemnifying Party written notice thereof within a reasonable
period of time following the Indemnitee's receipt of such notice. Such
notice shall describe the claim in reasonable detail and shall
indicate the amount (estimated if appropriate) of the Losses that have
been or may be sustained by the Indemnitee. The failure to so provide
such notice shall not affect the Indemnifying Party's obligations
hereunder, unless such Party is materially prejudiced as a result
thereof. The Indemnifying Party may, subject to the other provisions
of this Section 7.4, compromise or defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel, any
such matter involving the asserted liability of the Indemnitee in
respect of a third-party claim. If the Indemnifying Party shall elect
to compromise or defend such asserted liability, it shall, within
thirty (30) days (or sooner, if the nature of the asserted liability
so requires), notify the Indemnitee of its intention to do so and the
Indemnitee shall reasonably cooperate, at the request and reasonable
expense of the Indemnifying Party, in the compromise of, or defense
against, such asserted liability. The Indemnifying Party shall not be
released from any obligation to indemnify the Indemnitee hereunder
with respect to a claim without the prior written consent of the
Indemnitee, which shall not be unreasonably withheld, unless the
Indemnifying Party shall deliver to the Indemnitee a duly executed
agreement settling or compromising such claim with no monetary
liability to or injunctive relief against the Indemnitee and a
complete release of the Indemnitee with respect thereto, which
agreement shall not limit or impair the Indemnitee's ability to
conduct its business. The Indemnifying Party shall have the right,
except as provided below in this Section 7.4, to conduct and control
the defense of any third-party claim made for which it has been
provided notice hereunder. All costs and fees incurred with respect to
any such claim shall be borne by the Indemnifying Party. The
Indemnitee shall have the right to participate, but not control, at
its own expense, the defense or settlement of any such claim;
provided, that if the Indemnitee and the Indemnifying Party shall have
conflicting or different claims or defenses, the Indemnifying Party
shall not have control of such conflicting or different claims or
defenses and the Indemnitee shall be entitled to appoint a separate
counsel for such claims and defenses at the cost and expense of the
Indemnifying Party; provided, further, that if the Indemnifying Party
shall not assume and pursue in a timely and diligent manner the
defense of any third-party claim, the Indemnifying Party shall cede
control of such claim and the Indemnitee shall be entitled to appoint
a counsel of its choice for such defense, at the cost and expense of
the Indemnifying Party. If the Indemnifying Party shall choose to
defend any claim, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its
control that are reasonably required for such defense.
7.5 Limitations on Indemnification. Notwithstanding any provision
contained in this Agreement to the contrary, no Indemnitee shall be
entitled to assert any claim for indemnification in respect of
breach(es) of representations and warranties under Sections 7.2 or 7.3
hereof until such time as all claims for indemnification by such
Person (and all related Indemnitees) hereunder shall exceed $100,000
(the "Basket"), but then all such claims shall be recoverable in full;
provided, however, that the aggregate dollar amount of Buyer's and the
Sellers' indemnification obligations hereunder may not exceed the
Holdback Amount (the "Claims Limitation"), except (i) if the
Indemnifying Party shall have provided information to Buyer or to the
Company and the Sellers, as the case may be, in connection herewith or
made any representation or warranty contained herein that, in either
case, was fraudulent or made in bad faith or (ii) for breaches of
Section 8 hereof, in either of which event the Claims Limitation shall
not apply, which in the case of (i) and (ii) above, claims shall be
limited to the Purchase Price.
7.6 Directors and Officers Indemnification. The certificate of
incorporation and by-laws of the Company shall contain provisions no
less favorable with respect to indemnification, advancement of
expenses and exculpation of present and former directors and officers
of the Company and its Subsidiaries than are set forth in the
Company's Certificate of Incorporation and Bylaws as of the date of
this Agreement, which provisions shall not be amended, modified or
repealed for a period of six (6) years time from the Closing Date in a
manner that would adversely affect the rights thereunder of
individuals who, at or prior to the Closing Date, were officers or
directors of the Company, unless such amendment, modification or
repeal is required by applicable law after the Closing Date.
7.7 Method of Indemnification. The Buyer and Sellers hereby agree and
acknowledge that any indemnification payments pursuant to Section 7.2
hereof shall be paid or reimbursed to Buyer (and its related
Indemnitees) solely from the funds held in the Holdback Account. The
Holdback Amount shall remain in the Holdback Account for a period of
no more than TWELVE (12) MONTHS following the Closing Date.
Notwithstanding anything to the contrary herein, the parties
acknowledge that following the Closing, the Sellers, or any one of
them, may undertake to assist the Company and the Buyer in the
collection and receipt of accounts receivable of the Company, and to
the extent, the Sellers, the Company and the Buyer successfully
collect an aggregate of at least SEVEN MILLION FIVE HUNDRED THOUSAND
DOLLARS ($7,500,000) in gross revenues (the "Gross Revenue Target"),
the Company shall promptly distribute any and all remaining Holdback
Amounts held in the Holdback Account to Sellers via wire transfer to
an account designated by the Sellers' Rep and any rights to
indemnification under Section 7.2 shall expire and no longer be
enforceable as of the date the Company meets the Gross Revenue Target.
8 NON-COMPETITION; CONFIDENTIALITY.
8.1 Non-Competition. Following the Closing Date and for a period of five
(5) years thereafter (the "Restricted Period"), the Sellers and their
respective Affiliates and Associates shall not, directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be employed or
retained by, render services to, provide financing (equity or debt) or
advice to, or otherwise be connected in any manner with any business
that at any time competes in the Business, anywhere throughout the
world; provided, however, that nothing contained herein shall prevent
the purchase or ownership by a Seller of less than 5% of the
outstanding equity securities of any class of securities of a company
registered under Section 12 of the Securities and Exchange Act of
1934, as amended.
8.2 No Competing Interests. Each Seller hereby represents and warrants to
Buyer that neither he nor any Affiliate or Associate has any ownership
or other interest in any business or activity that competes or can
reasonably be expected to compete directly with the Business. Each
Seller hereby represents and warrants to Buyer that neither he nor any
Affiliate or Associate has or shares with the Company any ownership or
similar interest in any asset or property (including any intellectual
property) that is being (or has been in the past 12-month period) used
in connection with the operation of the Company's Business.
8.3 Non-Solicitation. During the Restricted Period, the Sellers and their
respective Affiliates and Associates shall not, directly or
indirectly, hire, engage, offer to hire, divert, entice away, solicit
or in any other manner persuade or attempt to persuade (a
"Solicitation") any Person who is, or was, at any time within the
12-month period prior to such Solicitation, an officer, director,
employee, agent, licensor, licensee, customer, or supplier of Buyer or
the Company to discontinue, terminate or adversely alter his or its
relationship therewith.
8.4 Non-Disruption. During the Restricted Period, the Sellers and their
respective Affiliates and Associates shall not, directly or
indirectly, interfere with, disrupt or attempt to disrupt any present
or prospective relationship, contractual or otherwise, between Buyer
or any of its Affiliates, on the one hand, and any of its customers,
contractees, suppliers or employees, on the other hand; provided,
however, notwithstanding anything to the contrary, the Sellers and
their respective Affiliates and Associates shall be permitted to
engaged in business relations with such customers, contractees,
suppliers or employees for products or services unrelated to the
Business of the Company so long as such engagement is non-disruptive
in accordance with the foregoing.
8.5 Non-Disparagement. From and after the Closing Date, the Sellers and
their respective Affiliates and Associates shall not at any time,
directly or indirectly, disparage or make any statement or publication
that is intended to or has the effect of disparaging, impugning or
injuring the reputation or business interests of the Company or Buyer
and any of its Affiliates or any of their respective products,
services, officers or employees regardless of any perceived truth of
such statement or publication.
8.6 Confidentiality. From and after the Closing Date, the Sellers and
their respective Affiliates and Associates shall not at any time,
directly or indirectly, use, exploit, communicate, disclose or
disseminate any Confidential Information (as defined below) in any
manner whatsoever (except disclosure to their personal financial or
legal advisors and as may be required under legal process by subpoena
or other court order; provided, that the Sellers will take reasonable
steps to provide Buyer with sufficient prior written notice in order
to contest such requirement or order). Notwithstanding the foregoing,
the Sellers (and each employee, representative or other agent of the
Sellers) may disclose to any and all Persons the tax treatment and tax
structure of the transaction contemplated hereby; provided, however,
that neither the Sellers nor any employee, representative or agent
thereof may disclose any information that is not necessary to
understanding the tax treatment and tax structure of the transactions
(including the identity of the parties and any information that could
lead another to determine the identity of the parties) or any other
information to the extent that such disclosure could result in a
violation of any federal or state securities Law.
For purposes of this Agreement, "Confidential Information" means any
and all information (oral or written) relating to the Company and/or
Buyer and its Affiliates or any of their operations or activities,
including, but not limited to, the terms of this Agreement,
information relating to trade secrets, plans, promotion and pricing
techniques, procurement and sales activities and procedures,
proprietary information, business methods and strategies (including
acquisition strategies), software, software codes, advertising, sales,
marketing and other materials, customers and supplier lists, data
processing reports, customer sales analyses, invoice, price lists or
information, and information pertaining to any lawsuits or
governmental investigation, except such information that is in the
public domain (such information not being deemed to be in the public
domain merely because it is embraced by more general information that
is in the public domain), other than as a result of a breach of any of
the provisions hereof.
8.7 Remedies upon Breach. Each Seller acknowledges and agrees that: (i)
Buyer (and the Company) would be irreparably injured in the event of a
breach by any Seller of any of the obligations under this Section 8;
(ii) monetary damages would not be an adequate remedy for such breach;
(iii) Buyer (and the Company) shall be entitled (without the need to
post any bond) to injunctive relief, in addition to any other remedy
that they may have, in the event of any such breach; and (iv) the
existence of any claims that any Seller may have against Buyer (and
the Company), whether under this Agreement, any Ancillary Agreement or
otherwise, shall not be a defense to (or reason for the delay of) the
enforcement by Buyer (and the Company) of any of their rights or
remedies under this Agreement.
9 MISCELLANEOUS PROVISIONS.
9.1 Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same document.
9.2 Notices. All notices, requests, demands and other communications that
are required or may be given pursuant to the terms of this Agreement
shall be in writing and shall be delivered personally, sent by
facsimile transmission, delivered by a recognized overnight courier or
express mail service for next business day delivery (and requiring
proof or delivery or receipt) or posted in the United States mail by
registered or certified mail, with postage pre-paid, return receipt
requested, and shall be deemed given when so delivered personally,
sent by facsimile transmission with electronic confirmation of
receipt, the next day after delivered to such overnight courier or
express mail service or three (3) business days after the date of
mailing, as follows:
(a) If to Buyer (and following the with a copy to (which shall not
Closing, the Company) to: constitute notice):
NextGen Acquisition, Inc. ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ One Newark Center
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Tel. No.: ▇▇▇.▇▇▇.▇▇▇▇ Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇ Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Tel No.: ▇▇▇.▇▇▇.▇▇▇▇
Tel. No. ▇▇▇.▇▇▇.▇▇▇▇
Fax No.: ▇▇▇.▇▇▇.▇▇▇▇
(b) If to the Sellers (and prior to the with a copy to (which shall
not Closing, the Company): constitute notice):
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
Golden Technology Management, LLC ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Tel. No.: __________ Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: __________ Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Any party may, by notice given in accordance with the provisions of
this Section 9.2 to the other parties, designate another address or
individual for receipt of notices hereunder.
9.3 Consent and Acknowledgement of Surrender of Option to Purchase Common
Stock. Each of the Company, Sellers and the Buyer hereby acknowledge,
approve, ratify and consent to the surrender of an option to purchase
shares of common stock of the Company by Clarkson University to the
Company immediately prior to the execution date of this Agreement, and
the Company hereby agrees to record such surrender on its books and
records.
9.4 Amendments; Waivers. This Agreement may be amended or modified at any
time and any provision(s) hereof waived, but only by a written
instrument executed by all of the parties hereto.
9.5 Entire Agreement. This Agreement (together with the Ancillary
Agreements) constitute the entire agreement between the parties hereto
with respect to the subject matter hereof, and supersede all prior
term sheets, agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.
9.6 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement and the legal relations among the parties hereto shall be
governed by and construed in accordance with the laws of the State of
New York (without giving effect to the conflict of laws principles
thereof. The parties hereby consent to the exclusive jurisdiction of
the federal and New York courts located in Manhattan (NYC) and agree
that service of process by certified mail, return receipt requested,
shall, in addition to any other methods permitted by applicable Law,
constitute personal service for all purposes hereof.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION THAT SUCH
PARTY MAY HAVE BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE
OR FORUM NON CONVENIENS AND HEREBY IRREVOCABLY WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY
KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE ANCILLARY
AGREEMENTS.
9.7 Termination. Subject to the provisions of Section 9.9 hereof, this
Agreement may be terminated at any time prior to the Closing Date by
any of the following:
(a) By the mutual written agreement of Buyer and the Company;
(b) By either Buyer or the Company, if the Closing shall not have
occurred on or before November 15, 2006, or such later date as
the parties may agree upon, upon written notice by such
terminating party; provided that at the time such notice is
given, a material breach of this Agreement by such terminating
party shall not be the principal reason for the failure of the
Closing to occur;
(c) By Buyer, by written notice to the Company and the Sellers, if
there has been a material violation or breach of any of the
Sellers' or the Company's covenants or agreements made herein or
if any representation or warranty of the Sellers or the Company
contained herein is materially inaccurate or misleading;
(d) By the Company, by written notice to Buyer, if there has been a
material violation or breach of any of Buyer's covenants or
agreements made herein or if any representation or warranty of
Buyer contained herein is materially inaccurate or misleading; or
9.8 Financing Rights. The obligation of Buyer to close the transactions
contemplated by this Agreement is subject to Buyer receiving, prior to
the Closing Date, all approvals and funding, under financing
facilities or arrangements maintained or to be entered into by Buyer
and its Affiliates, necessary in order to effectuate this Agreement
and to consummate the transactions contemplated hereby. If Buyer is
unable to obtain such approvals and/or Buyers financing sources are
unable to close on said financing within 10 days after the Closing
Date, Buyer may upon written notice by Buyer to the Company either:
(i) terminate this Agreement, which such notice shall include a
break-up fee (the "Break-Up Fee") in the amount of ONE HUNDRED FIFTY
THOUSAND DOLLARS ($150,000.00); or (ii) waive this contingency and
proceed to the Closing. In the event Buyer fails to advise Company in
writing of the satisfaction of the contingency in this Section 9.8
prior to the date specified above, such contingency shall be deemed to
have not been satisfied or waived and Buyer shall be deemed to have
exercised its option to terminate this Agreement pursuant to this
Section 9.8, and in such instance Buyer shall pay the Break-Up Fee to
the Company.
9.9 Effects of Termination. If this Agreement shall be terminated as
provided in Section 9.7 or Section 9.8 hereof, then this Agreement
shall forthwith become void and there shall be no liability or
obligation on the part of the parties hereto (or any of their
respective stockholders, officers, directors, employees, legal
beneficiaries, successors or Affiliates). Notwithstanding any
termination of this Agreement, the provisions of Section 3.6 and this
Section 9 shall survive.
9.10 Fees and Disbursements. Buyer and the Sellers (and not the Company)
shall pay all costs and expenses, including the fees and disbursements
of any counsel and accountants retained by them, incurred by them in
connection with the preparation, execution, delivery and performance
of this Agreement and the transactions contemplated hereby, whether or
not the transactions contemplated hereby are consummated.
9.11 Assignment. This Agreement may not be assigned by the Company or the
Sellers without the prior written consent of Buyer; provided, however,
that (i) Buyer may assign or delegate any or all rights or obligations
hereunder to an Affiliate prior to Closing if necessary in connection
with its financing or Tax planning in respect of the transactions
contemplated hereby and (ii) Buyer may assign any and all of its
rights hereunder to any lenders that provide financing to it in
connection with the transactions contemplated hereby and in any
related transactions; provided, further, that Buyer may assign or
delegate any or all of its rights or obligations hereunder, including
its rights under Sections 7 and 8 hereof, to any subsequent purchaser
of the Business, the Company, Buyer or all or substantially all of
Buyer's or the Company's assets.
9.12 Binding Effect; Benefits. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns. Except
as provided in Sections 7.2 and 7.3 hereof, nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person
other than the parties hereto, and their respective heirs, legal
representatives, successors and permitted assigns, any rights,
remedies, obligations or liabilities under, in connection with or by
reason of this Agreement.
9.13 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or
unenforceability, and without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
9.14 Appointment and Duties of Sellers' Representative.
(a) Each Seller hereby irrevocably appoints ▇▇▇▇ ▇▇▇▇ to act as the
"Sellers' Rep" on its/his behalf hereunder and under all other
agreements and certificates contemplated by this Agreement,
including, without limitation, and any certificates required to
be delivered pursuant to Section 4.1 hereof and to perform
its/his obligations hereunder and thereunder. Each Seller hereby
irrevocably authorizes the Sellers' Rep to take such actions on
its/his behalf and to exercise such powers as are provided to the
Sellers' Rep by the terms and provisions of this Agreement,
together with such actions and powers as are reasonably
incidental thereto and hereby waives any claims, causes of action
or other rights of recovery related to any performance or action,
or failure to perform or act, or any other actions or inactions
whatsoever hereunder by the Sellers' Rep. ▇▇▇▇ ▇▇▇▇ hereby
accepts such appointment as Sellers' Rep.
(b) Buyer may rely upon written instructions from the Sellers' Rep
with respect to the giving of any notices to any Seller as an
"Indemnitee" or "Indemnifying Party" hereunder or otherwise in
connection with this Agreement. Buyer shall not be liable for any
acts or omissions of the Sellers' Rep in connection with the
performance by the Sellers' Rep of his obligations hereunder.
Each Seller hereby irrevocably appoints the Sellers' Rep as
its/his agent for purposes of the first sentence of this
subsection (b).
9.15 Rules of Construction.
(a) Words used herein, regardless of the number and gender used,
shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires; as used herein, unless the
context shall clearly indicate otherwise, the words "hereof,"
"herein," "hereinafter" and "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and, as used herein, the
words "and" and "or" shall, unless the context shall clearly
indicate otherwise, be construed as "and/or."
(b) A reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or as
it may from time to time be, amended, modified or re-enacted.
(c) The terms "Dollars" and "$" mean United States dollars.
(d) All references to any Person shall mean and include the
successors and permitted assigns of such Person, and all
references to "including" and "include" shall be understood to
mean "including, without limitation," (and, for purposes of the
Agreement and the Ancillary Agreements, the parties agree that
the rule of ejusdem generis shall not be applicable to limit a
general statement that is followed by or referable to an
enumeration of specific matters to matters similar to the matters
specifically mentioned).
(e) The table of contents, lists of schedules and exhibits and
section headings used in this Agreement are for convenience of
reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement is between financially sophisticated and
knowledgeable parties and is entered into by such parties in
reliance upon the economic and legal bargains contained herein,
the language used in this Agreement has been negotiated by the
parties hereto and their representatives and shall be interpreted
and construed in a fair and impartial manner without regard to
such factors as the party who prepared, or caused the preparation
of, this Agreement or the relative bargaining power of the
parties.
[Signatures Appear on the Following Page]
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement the day and year first above written.
NEXTGEN ACQUISITION, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman
NEXTGEN FUEL INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
Title: Chairman
GOLDEN TECHNOLOGY MANAGEMENT, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
Title:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title:
GOSHEN CAPITAL
By: /s/ ▇▇▇▇ Blend
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Name: ▇▇▇▇ Blend
Title: Managing Member
▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇, Individually