EXECUTION COPY
STOCK PURCHASE AGREEMENT, dated as of December 30, 2005, among ACL
SEMICONDUCTORS, INC., a Delaware corporation with executive offices located at
B24-B27, 1/F., Block B, Proficient Industrial Centre, 6 ▇▇▇▇ ▇▇▇▇ Road, Kowloon,
Hong Kong (the "PURCHASER"); CLASSIC ELECTRONICS LTD., a Hong Kong corporation
with executive offices located at B6-B8, 1/F., Block B, Proficient Industrial
Centre, 6 ▇▇▇▇ ▇▇▇▇ Road, Kowloon, Hong Kong ("CLASSIC"), and the HOLDERS OF THE
CAPITAL STOCK OF CLASSIC IDENTIFIED IN SCHEDULE A HERETO (the "SELLERS").
INTRODUCTION
The Purchaser desires to acquire from the Sellers, and the Sellers
desire to sell to the Purchaser, all of the outstanding shares of capital stock
of Classic (the "CLASSIC CAPITAL STOCK"), in exchange for the cancellation of an
aggregate of approximately $4.0 million of indebtedness owed by the Sellers to
Classic as of the date hereof (representing all of the debt owing by the Sellers
to Classic) (the "SELLERS' DEBT"), plus $1.0 million previously paid by
Purchaser to Classic on December 29, 2003 as a non-refundable deposit towards
the consummation of the sale of Classic to the Purchaser through cancellation of
accounts receivable then payable by Classic to Purchaser.
The parties hereto, intending to be legally bound, hereby agree as
follows:
I. DEFINITIONS
"CLOSING" shall have the definition assigned thereto in Section 2.02
hereof.
"CLASSIC" shall have the definition assigned thereto in the
introductory paragraph hereto.
"CLASSIC COMMON STOCK" shall mean the common stock, of HK$1 per share,
of Classic.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, including the rules and regulations of the SEC thereunder.
"HAZARDOUS SUBSTANCE" shall mean any hazardous waste, as defined by 42
U.S.C. ss.6903(5), any hazardous substance, as defined by 42 U.S.C. ss.9601(14),
any pollutant or contaminant, as defined by 42 U.S.C. ss.9601(33), and all toxic
substances, hazardous materials, or other chemical substances regulated by any
other law, rule, or regulation.
"INTANGIBLES" shall mean any patent, patent application, trademark,
trademark application, service ▇▇▇▇, copyright, copyright application,
franchise, trade secret, computer program (in object or source code or
otherwise), or other intangible property or asset.
"LAST CLASSIC BALANCE SHEET" shall mean the balance sheet included in
the Last Classic Financial Statements.
"LAST CLASSIC BALANCE SHEET DATE" shall mean December 30, 2005.
"LAST CLASSIC FINANCIAL STATEMENTS" shall mean the balance sheet,
statement of income, and statement of cash flows, and the notes thereto, of
Classic as of the Last Classic Balance Sheet Date.
"PURCHASER" shall have the definition assigned thereto in the
introductory paragraph hereto.
"PURCHASER INDEMNITEES" shall mean the Purchaser, the Purchaser
Subsidiaries, and their respective officers, directors, employees, counsel,
agents, and stockholders, in each case past, present, or as they may exist at
any time after the date of this Agreement, and each person, if any, who
controls, controlled, or will control any of them within the meaning of Section
15 of the Securities Act or Section 20(a) of the Securities Exchange Act.
"PURCHASER SUBSIDIARIES" shall have the definition assigned thereto in
Section 3.01 hereof.
"RELEASE" shall have the meaning set forth in 42 U.S.C. ss.9601(22).
"RELEASE TIME" shall have the definition assigned thereto in Section
5.01 hereof.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLERS" shall have the definition assigned thereto in the
introductory paragraph hereto.
"TAKEOVER PROPOSAL" shall have the definition assigned thereto in
Section 5.10 hereof.
"TAX RETURNS" shall mean any return, report, document, statement, or
form required to be filed (whether on a consolidated, combined, separate, or
unitary basis) with respect to any Taxes (including any schedules required to be
attached thereto), including, without limitation, information returns, claims
for refund, amended returns, and declarations of estimated Tax.
"TAXES" shall mean all taxes, charges, fees, levies, penalties, or
other assessments imposed by any United States federal, state, local, or foreign
taxing authority, including any interest, penalties, or additions thereto.
II. THE EXCHANGE
SECTION 2.01. TERMS OF THE EXCHANGE.
On the basis of the representations, warranties, covenants,
and agreements contained in this Agreement and subject to the terms and
conditions of this Agreement, each Seller shall sell, assign, transfer, and
convey to the Purchaser at the Closing all of the issued and outstanding shares
of Classic Common Stock set forth opposite his, her, or its respective name in
Schedule A hereto, such shares of Classic Common Stock collectively representing
all of the issued and outstanding capital stock thereof; and, in consideration
therefor, the Purchaser shall cause Classic to cancel the Sellers' Debt.
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SECTION 2.02. THE CLOSING.
The closing of the transactions contemplated by Section 2.01 shall take
place at the offices of Reitler ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC, counsel to the
Purchaser, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00
a.m., local time, on the fifth business day after the date the conditions in
Articles VII and VIII have been satisfied. The closing may occur at such
different place, such different time, or such different date or a combination
thereof as the Purchaser and Sellers agree in writing. The closing of the
transactions contemplated by Section 2.01, is referred to as the "CLOSING". If
the Closing shall not take place by December 31, 2005, then the parties not at
fault shall, in addition to all other rights and remedies available at law or in
equity against the defaulting parties, have the right to cancel and terminate
this Agreement.
SECTION 2.03. TRANSACTIONS AT CLOSING.
(a) At the Closing, each Seller shall deliver or cause to be
delivered to the Purchaser stock certificates of Classic Common Stock owned
beneficially or of record thereby, such shares of Classic Common Stock
collectively representing all of the issued and outstanding capital stock
thereof, registered in the name of the Purchaser.
(b) The shares of capital stock of Classic to be delivered by
the Sellers to the Purchaser shall be "RESTRICTED SECURITIES" as defined in
paragraph (a) of Rule 144 under the Securities Act.
SECTION 2.04. INDEMNITY AGAINST LIABILITIES.
The Sellers, jointly and severally, agrees to indemnify and hold
harmless the Purchaser Indemnitees against any and all losses, liabilities,
damages, and expenses whatsoever (which shall include for all purposes of this
Section 2.04, but not be limited to, reasonable counsel fees and any and all
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with:
(a) any breach of any representation, warranty, covenant, or
agreement of Seller contained in this Agreement; and
(b) if the Closing takes place, any act, alleged act,
omission, or alleged omission occurring at or prior to the Closing (including
without limitation any which arise out of, are based upon, or are in connection
with any of the transactions contemplated hereby.
The foregoing agreement to indemnify shall be in addition to any liability the
Sellers may otherwise have, including liabilities arising under this Agreement.
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III. REPRESENTATIONS AND WARRANTIES OF SELLER AND CLASSIC
The Sellers and Classic, jointly and severally, represents and warrants
to, and agrees with, the Purchaser as follows:
SECTION 3.01. ORGANIZATION AND QUALIFICATION.
Other than as set forth in Schedule 3.01 hereto, Classic has no
subsidiaries or affiliated corporation or owns any interest in any other
enterprise (whether or not such enterprise is a corporation). Classic is a
corporation duly organized, validly existing, and in good standing under the
laws of Hong Kong, with all requisite power and authority, and all necessary
consents, authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to carry on the businesses
in which it is now engaged and the businesses in which it contemplates engaging.
Classic is duly qualified to transact the businesses in which it is engaged and
is in good standing as a foreign corporation in every jurisdiction in which its
ownership, leasing, licensing, or use of property or assets or the conduct of
its businesses makes such qualification necessary.
SECTION 3.02. CAPITALIZATION.
The authorized capital stock of Classic consists of 3,000,000 shares of
Classic Common Stock, of which 3,000,000 shares are outstanding. Each of such
outstanding shares of Classic Common Stock is duly authorized, validly issued,
fully paid, and nonassessable, has not been issued and is not owned or held in
violation of any preemptive or similar right of stockholders, and is owned of
record and beneficially by stockholders identified in Schedule 3.02A, in each
case free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts. Except as set forth
in Schedule 3.02B hereto, (a) there is no commitment, plan, or arrangement to
issue, and no outstanding option, warrant, or other right calling for the
issuance of, any share of capital stock of Classic or any security or other
instrument convertible into, or exercisable or exchangeable for, capital stock
of Classic, and (b) there is outstanding no security or other instrument
convertible into, or exercisable or exchangeable for, capital stock of Classic.
SECTION 3.03. FINANCIAL CONDITION.
Seller and Classic have delivered to the Purchaser true and correct
copies of the following: unaudited balance sheet of Classic as of December 30,
2005; the unaudited statement of income and statement of retained earnings, and
statement of cash flows of Classic for the year ended December 30, 2005. Such
balance sheet presents fairly the financial condition, assets, liabilities, and
stockholders' equity of Classic as of its date; such statement of income and
statement of retained earnings presents fairly the results of operations of
Classic for the period indicated; and each such statement of cash flows presents
fairly the information purported to be shown therein. The financial statements
referred to in this Section 3.03 have been prepared in accordance with generally
accepted accounting principles in the United States consistently applied
throughout the periods involved and are in accordance with the books and records
of Classic (including the
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subsidiaries thereof, if any). Except as set forth in Schedule 3.03 hereto,
since Last Classic Balance Sheet Date:
(a) There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities, or, to the best knowledge of the Sellers and Classic, future
prospects of Classic; and Classic has operated consistently in all material
respects with the results of operations referred to in Last Classic Financial
Statements;
(b) Classic has not authorized, declared, paid, or effected
any dividend or liquidating or other distribution in respect of its capital
stock or any direct or indirect redemption, purchase, or other acquisition of
any stock of Classic.
(c) The operations and business of Classic have been conducted
in all respects only in the ordinary course of business consistent with past
practices.
(d) There has been no accepted purchase order or quotation,
arrangement, or understanding for future sale of the products or services of
Classic which in the reasonable expectation of the Sellers or Classic will not
be profitable.
(e) Classic has not suffered an extraordinary loss (whether or
not covered by insurance) or waived any right of substantial value.
(f) Classic has not paid or incurred any tax, other liability,
or expense resulting from the preparation of, or the transactions contemplated
by, this Agreement, it being understood that the Sellers shall have paid or will
pay all such taxes applicable thereto resulting from the transactions
contemplated hereby and in connection therewith.
There is no fact known to any Seller or Classic which materially adversely
affects or in the future (as far as any Seller or Classic can foresee) may
materially adversely affect the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of Classic;
provided, however, that Sellers and Classic express no opinion as to political
or economic matters of general applicability.
SECTION 3.04. TAX AND OTHER LIABILITIES.
Classic has no liability of any nature, accrued or contingent,
including without limitation, liabilities for Taxes and liabilities to customers
or suppliers, other than the following:
(a) Liabilities for which full provision has been made on the
balance sheet included in the Last Classic Balance Sheet; and
(b) Other liabilities arising since the Last Classic Balance
Sheet Date and prior to any Closing in the ordinary course of business (which
shall not include liabilities to customers on account of defective products or
services) which are not inconsistent with the representations and warranties of
Classic or any other provision of this Agreement.
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Without limiting the generality of the foregoing, the amounts, if any, set up as
provisions for Taxes on the Last Classic Balance Sheet are sufficient for all
accrued and unpaid Taxes of Classic, whether or not due and payable and whether
or not disputed, under tax laws, as in effect on the Last Classic Balance Sheet
Date or now in effect, for the period ended on such date and for all fiscal
periods prior thereto. The execution, delivery, and performance of this
Agreement by Classic will not cause any Taxes to be payable (other than those
that may possibly be payable by the Sellers as a result of the sale of the
shares of capital stock of Classic) or cause any lien, charge, or encumbrance to
secure any Taxes to be created either immediately or upon the nonpayment of any
Taxes other than on the properties or assets of the Sellers. The Inland Revenue
Department of Hong Kong has audited and settled or the statute of limitations
has run upon all Tax Returns of Classic and the Seller for all taxable years up
to and including the taxable year of assessment 2002/2003. Each of the Sellers
and Classic has filed all local tax returns required to be filed by it; has
delivered to the Purchaser a true and correct copy of each such return which was
filed in the past six years; has paid (or has established on the Last Classic
Balance Sheet a reserve for) all Taxes, assessments, and other governmental
charges payable or remittable by it or levied upon it or its properties, assets,
income, or franchises which are due and payable; and has delivered to the
Purchaser a true and correct copy of any report as to adjustments received by it
from any taxing authority during the past six years and a statement as to any
litigation, governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect with respect to any such
report or the subject matter of such report. Each Seller and Classic has paid
all taxes payable thereby due on or prior to the date hereof. Except as
disclosed in Schedule 3.04, (i) no agreement extending the time for assessment
of any Taxes has been granted that currently is in effect, (ii) no protests are
pending with respect to any Taxes, and (iii) there are no liens for Taxes (other
than for Taxes that are not yet due and payable). All liabilities of Classic are
set forth in Schedule 3.04.
SECTION 3.05. LITIGATION AND CLAIMS.
Except as described in Schedule 3.05, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal), or
investigation pending or, to the best of the knowledge of each of the Sellers
and Classic, threatened, or in prospect (or any basis therefor known to any
Seller or Classic) with respect to Classic or any of its businesses, properties,
or assets. Classic is not affected by any present or threatened strike or other
labor disturbance nor to the knowledge of any Seller or Classic, is any union
attempting to represent any employee of Classic as collective bargaining agent.
Classic is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree; nor is any Seller or Classic required to
take any action in order to avoid such violation or default.
SECTION 3.06. PROPERTIES.
Classic has good and marketable title in fee simple absolute to all
real properties and good title to all other properties and assets used in its
business or owned by it (except such real and other properties and assets as are
held pursuant to leases or licenses described in Schedule 3.07 or Schedule 3.09
hereto), free and clear of all liens, mortgages, security interests, pledges,
charges, and encumbrances, except such as are listed in Schedule 3.06 hereto.
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(a) All accounts and notes receivable reflected on the Last
Classic Balance Sheet, or arising since the Last Classic Balance Sheet Date,
have been collected, or are and will be good and collectible, in each case at
the aggregate recorded amounts thereof without right of recourse, defense,
deduction, return of goods, counterclaim, offset, or set off on the part of the
obligor, and, if not collected, can reasonably be anticipated to be paid within
180 days of the date incurred.
(b) Classic has not caused or permitted its businesses,
properties, or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce, or process any Hazardous
Substance, except in compliance with all applicable laws, rules, regulations,
orders, judgments, and decrees, and has not caused or permitted the Release of
any Hazardous Substance on or off the site of any property of Classic or any
affiliated person or entity.
(c) Attached as Schedule 3.06(c) is a true and complete list
of all real and other properties and assets owned by Classic or leased or
licensed by Classic from or to a third party (including inventory, but not
including Intangibles), including with respect to such properties and assets
leased or licensed by Classic, a description of such lease or license. All such
real and other properties and assets (including Intangibles) owned by Classic
are reflected on the Last Classic Balance Sheet (except for acquisitions
subsequent to the Last Classic Balance Sheet Date and prior to the Closing which
are either noted in Schedule 3.06(c) or are approved in writing by the
Purchaser). All real and other tangible properties and assets owned, leased, or
licensed by Classic are in good and usable condition (reasonable wear and tear
which is not such as to affect adversely the operation of the business of
Classic excepted).
(d) No real property owned, leased, or licensed by Classic
lies in an area which is, or to the knowledge of any Seller or Classic will be,
subject to zoning, use, or building code restrictions which would prohibit, and
no state of facts relating to the actions or inaction of another person or
entity or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent, the continued effective
ownership, leasing, licensing, or use of such real property in the business in
which Classic is now engaged or the business in which it contemplates engaging.
(e) The real and other properties and assets (including
Intangibles) owned by Classic or leased or licensed by Classic from a third
party constitute all such properties and assets which are necessary to the
business of Classic as presently conducted or as it contemplates conducting.
SECTION 3.07. CONTRACTS AND OTHER INSTRUMENTS.
Schedule 3.07 accurately and completely sets forth all contracts,
agreements, instruments, leases, licenses, arrangements, or understandings with
respect to Classic. Seller has furnished to the Purchaser (a) the certificate of
incorporation or formation (or other charter document) and by-laws of Classic
and all amendments thereto, as presently in effect and (b) the following: (i)
true and correct copies of all contracts, agreements, and instruments referred
to in Schedule 3.07; (ii) true and correct copies of all leases and licenses
referred to in Schedule 3.06 or Schedule 3.08; and (iii) true and correct
written descriptions of all supply, distribution, agency, financing, or other
arrangements or understandings referred to in Schedule 3.07. Neither Classic
nor, to the
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knowledge of any Seller or Classic, any other party to any such contract,
agreement, instrument, lease, or license is now or expects in the future to be
in violation or breach of, or in default with respect to complying with, any
material term thereof, and each such contract, agreement, instrument, lease, or
license is in full force and is the legal, valid, and binding obligation of the
parties thereto and is enforceable as to them in accordance with its terms. Each
such supply, distribution, agency, financing, or other arrangement or
understanding is a valid and continuing arrangement or understanding; neither
any Seller or Classic, nor any other party to any such arrangement or
understanding has given notice of termination or taken any action inconsistent
with the continuance of such arrangement or understanding; and the execution,
delivery, and performance of this Agreement will not prejudice any such
arrangement or understanding in any way. Classic enjoys peaceful and undisturbed
possession under all leases and licenses under which it is operating. Classic is
not party to or bound by any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other restriction,
which has had or, to the knowledge of any Seller, or Classic, may in the future
have a material adverse effect on the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects of
Classic or the Purchaser. Classic has not engaged within the last five years in,
is not engaging in, and does not intend to engage in any transaction with, and
has not had within the last five years, does not now have, and does not intend
to have any contract, agreement, instrument, lease, license, arrangement, or
understanding with, any stockholder, any director, officer, or employee of
Classic (except for employment agreements listed in Schedule 3.07 and employment
and compensation arrangements described in Schedule 3.08(a), in each case with
such directors, officers, and employees who are not relatives or affiliates
described in the next clause), any relative or affiliate of any stockholder or
of any such director, officer, or employee, or any other corporation or
enterprise in which any stockholder, any such director, officer, or employee, or
any such relative or affiliate then had or now has a 5% or greater equity or
voting or other substantial interest, other than those listed and so specified
in Schedule 3.07. The stock ledgers and stock transfer books and the minute book
records of Classic relating to all issuances and transfers of stock thereby and
all proceedings of the stockholders and the Board of Directors and committees
thereof of Classic since its incorporation made available to the Purchaser's
counsel are the original stock ledgers and stock transfer books and minute book
records of Classic or exact copies thereof. Classic is not in violation or
breach of, or in default with respect to, any term of its certificate of
incorporation or other charter document or by-laws. Classic is not a member of a
customer or user organization or of a trade association.
SECTION 3.08. EMPLOYEES.
(a) Classic does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan or has any obligation to or customary arrangement with employees
for bonuses, incentive compensation, vacations, severance pay, sick pay, sick
leave, insurance, service award, relocation, disability, tuition refund, or
other benefits, whether oral or written, except as set forth in Schedule
3.08(a). Classic has furnished to Purchaser true and correct copies, of all
documents evidencing plans, obligations, or arrangements referred to in Schedule
3.08(a) (or true and correct written summaries of such plans, obligations, or
arrangements to the extent not evidenced by documents) and true and correct
copies of all documents evidencing trusts, summary plan descriptions, and any
other summaries or descriptions relating to any such plans.
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(b) Schedule 3.08(b) contains a true and correct statement of
the names, relationship with Classic, present rates of compensation (whether in
the form of salary, bonuses, commissions, or other supplemental compensation now
or hereafter payable), and aggregate compensation for the fiscal year ended
March 31, 2005 of (i) each director, officer, or other employee of Classic and
(ii) all sales agents, dealers, or distributors of Classic. Since March 31,
2005, Classic has not changed the rate of compensation of any of its directors,
officers, employees, agents, dealers, or distributors, nor has any Employee
Benefit Plan or program of Classic been instituted or amended to increase
benefits thereunder.
(c) Classic has not extended or maintained credit, arranged
for the extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer (or equivalent
thereof) thereof.
SECTION 3.09. PATENTS, TRADEMARKS, ET CETERA.
Classic does not own or have pending, and is not licensed or otherwise
permitted to use, Intangibles, other than as described in Schedule 3.09. Each
Intangible is validly issued and is currently in force and uncontested in all
jurisdictions in which it is used or in which such use is contemplated. Schedule
3.09 contains a true and correct listing of: (a) all Intangibles which are owned
(either in whole or in part), used by, or licensed to Classic or which otherwise
relate to the businesses of Classic, and a description of each such Intangible
which identifies its owner, registrant, or applicant; (b) all contracts,
agreements, instruments, leases, and licenses and identification of all parties
thereto under which Classic owns or uses any Intangible (whether or not under
license from third parties), together with the identification of the owner,
registrant, or applicant of each such Intangible; (c) all contracts, agreements,
instruments, leases, and licenses and identification of all parties thereto
under which Classic grants the right to use any Intangible; (d) all validity,
infringement, right-to-use, or other opinions of counsel (whether in-house or
outside) which concern the validity, infringement, or enforceability of any
Intangible owned or controlled by a party other than Classic which relates to
the businesses, properties, or assets of Classic. Except as specified in
Schedule 3.09, to the knowledge of the Seller and Classic: (e) Classic is the
sole and exclusive owner or licensee of, and (other than those exclusively
licensed by Classic to a third party) has the right to use, all Intangibles; (f)
no Intangible is subject to any order, judgment, decree, contract, agreement,
instrument, lease, or license restricting the scope of the use thereof; (g)
during the last five years, neither the Seller nor Classic has been charged
with, or has charged others with, unfair competition, infringement of any
Intangible, or wrongful use of confidential information, trade secrets, or
secret processes; and (h) Classic is not using any patentable invention,
confidential information, trade secret, or secret process of others. There is no
right under any Intangible necessary to the businesses of Classic as presently
conducted or as it contemplates conducting, except such as are so designated in
Schedule 3.09. Except as described in Schedule 3.09, Classic has not infringed,
is not infringing, and has not received notice of infringement in respect of the
Intangibles or asserted Intangibles of others, nor has Classic been advised by
counsel or others that it is infringing or may infringe the Intangibles or
asserted Intangibles of others if any currently contemplated business activity
is effectuated. To the knowledge of the Seller and Classic, there is no
infringement by others of Intangibles of Classic. As far as the Seller and
Classic can reasonably foresee, there is no Intangible or asserted Intangible of
others that may materially adversely affect the financial condition, results of
operations,
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businesses, properties, assets, liabilities, or future prospects of Classic. All
material contracts, agreements, instruments, leases, and licenses pertaining to
Intangibles to which Classic is a party, or to which any of its businesses,
properties, or assets are subject, are in compliance in all material respects
with all laws, rules, regulations, orders, judgments, and decrees binding on
Classic or to which any of its businesses, properties, or assets are subject.
Except as set forth in Schedule 3.09, Classic did not register any trademark,
tradename or service ▇▇▇▇, design, or name used by Classic to identify its
products, businesses, or services. Neither any stockholder of Classic, any
director, officer, or employee of Classic, any relative or affiliate of any
stockholder of Classic, any Seller, any such director, officer, or employee, nor
any other corporation or enterprise in which any stockholder of Classic, any
such director, officer, or employee, or any such relative or affiliate had or
now has a 5% or greater equity or voting or other substantial interest,
possesses any Intangible which relates to the businesses of Classic.
SECTION 3.10. QUESTIONABLE PAYMENTS.
Neither any Seller, Classic, any director, officer, agent, employee, or
other person associated with or acting on behalf of any Seller or Classic, nor
any stockholder of Classic has, directly or indirectly: 0 used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made any false
or fictitious entry on the books or records of any Seller or Classic; made any
bribe, rebate, payoff, influence payment, kickback, or other unlawful payment;
given any favor or gift which is not deductible for federal income tax purposes;
or made any bribe, kickback, or other payment of a similar or comparable nature,
whether lawful or not, to any person or entity, private or public, regardless of
form, whether in money, property, or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already obtained.
SECTION 3.11. COMPLIANCE WITH LAW AND GOVERNMENT REGULATIONS.
Classic is in compliance with, and is not in violation of, applicable
local or foreign statutes, laws and regulations (including without limitation,
any applicable building, zoning or other law, ordinance or regulation) affecting
its properties or the operation of its business. Classic is not subject to any
order, decree, judgment or other sanction of any court, administrative agency or
other tribunal.
SECTION 3.12. LEGAL PROCEEDINGS AND HISTORY.
Except as otherwise disclosed in Schedule 3.12, no officer, director or
affiliate of Classic, has been, within the five years ending on the Closing Date
a party to any bankruptcy petition against such person or against any business
of which such person was affiliated; convicted in a criminal proceeding or
subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses); subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily
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enjoining, barring, suspending or otherwise limiting their involvement in any
type of business, securities or banking activities; or found by a court of
competent jurisdiction in a civil action, by the SEC or the Commodity Futures
Trading Commission (or the equivalent of either of the foregoing in any other
jurisdiction) to have violated a federal, state, or other securities or
commodities law, and the judgment has not been reversed, suspended or vacated.
SECTION 3.13. OTHER INFORMATION.
Neither any Seller nor Classic knows of any material adverse
information regarding the current or prospective operations of Classic which has
not been disclosed herein or in a schedule hereto.
SECTION 3.14. AUTHORITY.
(a) Each Seller is an individual who has reached the age
majority in his state of residence and has all requisite power and authority to
execute, deliver, and perform this Agreement. All necessary proceedings of each
Seller have been duly taken to authorize the execution, delivery, and
performance by such Seller of this Agreement. This Agreement has been duly
authorized, executed, and delivered by each Seller, constitutes the legal,
valid, and binding obligation of each Seller, and is enforceable as to each
Seller in accordance with its terms.
(b) Classic has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of
Classic have been duly taken to authorize the execution, delivery, and
performance thereby of this Agreement. This Agreement has been duly authorized,
executed, and delivered by Classic, constitutes the legal, valid, and binding
obligation of Classic, and is enforceable as to Classic in accordance with its
terms.
(c) Except as otherwise set forth in this Agreement, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by any Seller
or Classic for the execution, delivery, or performance of this Agreement
thereby. No consent of any party to any material contract, agreement,
instrument, lease, license, arrangement, or understanding to which any Seller or
Classic is a party, or to which it or any of his, her, or its respective
businesses, properties, or assets are subject, is required for the execution,
delivery, or performance of this Agreement (except such consents referred to in
Schedule 3.07); and the execution, delivery, and performance of this Agreement
will not (if the aforementioned consents are obtained prior to the Closing)
violate, result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or call a
default under, entitle any party to receive rights or privileges that such party
was not entitled to receive before this Agreement was executed under, or create
any obligation on the part of any Seller or Classic to which it was not subject
immediately before this Agreement was executed under, any term of any such
material contract, agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of the certificate
of incorporation (or equivalent charter document) or by-laws (or equivalent
charter document) of Classic, or (if the provisions of this Agreement are
satisfied) violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on any Seller or Classic or to
which any of its respective
11
businesses, properties, or assets are subject
SECTION 3.15. STATUS OF SHARES.
The shares of capital stock of Classic to be acquired by Purchaser from
the Sellers are validly authorized and validly issued, fully paid, and
nonassessable and have not been issued, owned or held in violation of any
preemptive or similar right of stockholders.
SECTION 3.16. INSURANCE.
All policies of fire and other insurance against casualty and other
losses and public liability insurance carried by Classic are described in
Schedule 3.16 (including the risks covered and limits of such policies) and are
in full force and effect. All premiums in respect of such policies for which
premium notices have been received have been paid in full as the same become due
and payable. Classic has not failed to give any notice or present any claim
under any insurance policy in due and timely fashion. There are no actual claims
or claims threatened in writing against Classic which could come within the
scope of such coverage nor are any such policies currently threatened with
cancellation. There are no outstanding requirements or recommendations by any
insurance company that issued a policy with respect to any of the respective
assets, the businesses, or operations of Classic or by governmental authority
other body requiring or recommending any repairs or other work to be done on, or
with respect to, any of the assets of Classic or requiring or recommending any
equipment or facilities to be installed on any premises from which the
businesses of Classic is conducted or in connection with any of the respective
assets thereof. Neither any Seller nor Classic has any knowledge of any material
proposed increase in applicable insurance rates or of any conditions or
circumstances applicable to the businesses thereof that might result in such
increases. No such policy is terminable by virtue of the transactions
contemplated by this Agreement.
SECTION 3.17. OWNERSHIP STATUS.
The shares of capital stock of Classic to be acquired by Purchaser from
the Sellers are owned of record and beneficially solely by respective Seller as
described in Schedule A hereto, free and clear of any security interest, pledge,
mortgage, lien (including, without limitation, environmental and tax liens),
charge, encumbrance, adverse claim, preferential arrangement or restriction of
any kind, including, without limitation, any restriction on the use, voting,
transfer (except as otherwise provided herein), receipt of income or other
exercise of any attributes of ownership. Such shares are not subject to any
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to interests therein.
There are no voting trusts, member agreements, proxies, or other agreements or
understandings in effect with respect to the voting or transfer of any of the
shares of capital stock of Classic.
SECTION 3.18. ACQUISITION HISTORY.
Each Seller acquired the shares of capital stock of Classic to be
acquired by Purchaser from such Seller from Classic in a transaction not
involving a public offering and, on the date of the acquisition thereof, such
Seller paid the full purchase price therefor.
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SECTION 3.19. COMPLETENESS OF DISCLOSURE.
No representation or warranty by any Seller or Classic in this
Agreement contains or, and at the Closing Date will contain, an untrue statement
of material fact or omits or, at such date, will omit to state a material fact
required to be stated therein or necessary to make the statements made not
misleading.
IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to, and agrees with, the
Sellers:
SECTION 4.01. ORGANIZATION.
The Purchaser is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, with all requisite power
and authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and filings
with, all federal, state, local, and other governmental authorities and all
courts and tribunals, to own, lease, license, and use its properties and assets
and to carry on the business in which it is now engaged and the business in
which it contemplates engaging.
SECTION 4.02. AUTHORITY TO BUY.
The Purchaser has all requisite power and authority to execute,
deliver, and perform this Agreement. All necessary corporate proceedings of the
Purchaser have been duly taken by the Purchaser to authorize the execution,
delivery, and performance of this Agreement. This Agreement has been duly
authorized, executed, and delivered by the Purchaser, is the legal, valid, and
binding obligation of the Purchaser, and is enforceable as to the Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency, and
other laws affecting creditors' rights generally. Except as set forth in Article
VII, no consent, authorization, approval, order, license, certificate, or permit
of or from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by Purchaser
or any Purchaser Subsidiary for the execution, delivery, or performance by
Purchaser of this Agreement. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which Purchaser or
any Purchaser Subsidiary is a party, or to which it or any of its respective
business, properties, or assets are subject, is required for the execution,
delivery, or performance of this Agreement to; and the execution, delivery, and
performance of this Agreement will not violate, result in breach of, conflict
with, or (with or without the giving of notice or the passage of time or both)
entitle any party to terminate or call a default under, entitle any party to
rights and privileges that such party was not receiving or entitled to receive
immediately before this Agreement was executed under, or create any obligation
on the part of Purchaser or any Purchaser Subsidiary that it was not paying or
obligated to pay immediately before this Agreement was executed under, any term
of any such contract, agreement, instrument, lease, license, arrangement, or
understanding, or (if the conditions in Article VII are satisfied) violate or
result in a breach of any term of the certificate of incorporation (or other
charter document) or by-laws of Purchaser or any Purchaser Subsidiary, or
violate, result in a breach of, or conflict with any law, rule, regulation,
order, judgment, or decree binding on Purchaser or any Purchaser Subsidiary or
to which it or any
13
of its respective businesses, properties, or assets are subject.
SECTION 4.03. NON-DISTRIBUTIVE INTENT; RESTRICTED SECURITIES.
The Purchaser is acquiring the shares of capital stock of Classic for
its own account (and not for the account of others) for investment and not with
a view to the distribution or resale thereof in violation of the Securities Act.
The Purchaser understands that it may not sell or otherwise dispose of such the
shares, or any securities issuable in respect thereof, in the absence of either
an effective registration statement under the Securities Act or an exemption
from the registration provisions of the Securities Act. The Purchaser
acknowledges being informed that the shares of Classic Common Stock acquired
thereby shall be unregistered, shall be "RESTRICTED SECURITIES" as defined in
paragraph (a) of Rule 144 under the Securities Act, and must be held
indefinitely unless (a) they are subsequently registered under the Securities
Act, or (b) an exemption from such registration is available. The Purchaser
further acknowledges that Classic does not have an obligation to currently
register such securities for the account of the Purchaser.
SECTION 4.04. ACCESS TO INFORMATION.
By virtue of the Purchaser's position, it has access to the same kind
of information which would be available in a registration statement filed under
the Securities Act. The Purchaser acknowledges that it has been afforded access
to all material information which they have requested relevant to their decision
to acquire the shares of Classic Common Stock and to ask questions of Classic's
management and that, except as set forth herein, neither Seller or Classic nor
anyone acting on behalf of the Seller or Classic, has made any representations
or warranties to the Purchaser which have induced, persuaded, or stimulated the
Purchaser to acquire such shares of Classic Common Stock.
SECTION 4.05. SOPHISTICATION.
Either alone, or together with their investment advisor(s), the
Purchaser has the knowledge and experience in financial and business matters to
be capable of evaluating the merits and risks of the prospective investment in
the shares of Classic Common Stock, and the Purchaser is and will be able to
bear the economic risk of the investment in such shares of Classic Common Stock.
V. COVENANTS OF THE SELLERS AND CLASSIC
Each Seller and Classic, jointly and severally, covenant and agree
that, unless the Purchaser will otherwise approve in writing:
SECTION 5.01. ENCUMBRANCES.
Until the earlier of the Closing and the rightful abandonment or
termination of this Agreement (the "RELEASE TIME"), neither any Seller nor
Classic shall take any action which shall cause the shares of Classic Common
Stock to become subject to security interest, pledge, mortgage, lien (including,
without limitation, environmental and tax liens), charge, encumbrance, adverse
claim, preferential arrangement or restriction of any kind, including, without
limitation, any restriction on the use, voting, transfer (except as otherwise
provided herein), receipt of income
14
or other exercise of any attributes of ownership, and shall take no action to
dispose of or otherwise transfer any such securities.
SECTION 5.02. DIVIDENDS AND DISTRIBUTIONS.
Until the Release Time, Classic shall not, and no Seller shall
authorize Classic to, authorize, declare, or pay any dividend or liquidating or
other distribution or stock split in respect of the outstanding shares of
Classic Common Stock.
SECTION 5.03. ISSUANCES OF SECURITIES.
Until the Release Time, no share of capital stock of Classic or warrant
for any such share, right to subscribe to or purchase any such share, or
security convertible into, or exchangeable or exercisable for, any such share,
shall be issued or sold by Classic or any Seller.
SECTION 5.04. MERGERS AND ACQUISITIONS.
Until the Release Time, Classic shall not, and no Seller shall
authorize Classic to, consummate any merger or acquisition of Classic with or by
any person or entity, whether by means of reverse or forward triangular merger,
sale or acquisition of assets, sale-leaseback transaction, license, or
otherwise.
SECTION 5.05. ACCESS.
Until the Release Time, Classic will, and the Sellers shall cause
Classic to, afford the officers, employees, counsel, agents, investment bankers,
accountants, and other representatives of the Purchaser and lenders, investors,
and prospective lenders and investors free and full access to the plants,
properties, books, and records of Classic, will permit them to make extracts
from and copies of such books, and records and will from time to time furnish
the Purchaser with such additional financial and operating data and other
information as to the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of Classic as the Purchaser
from time to time may reasonably request.
SECTION 5.06. CONDUCT OF BUSINESS.
Until the Release Time, each Seller and Classic will conduct its
respective affairs so that at the Closing no representation or warranty of any
Seller or Classic will be inaccurate in any respect, no covenant or agreement of
any Seller or Classic will be breached in any respect, and no condition in this
Agreement will remain unfulfilled in any respect by reason of the actions or
omissions of any Seller or Classic. Except as otherwise requested by the
Purchaser in writing, until the Release Time, each Seller will, and will cause
Classic to, use their best efforts to preserve the business operations of
Classic intact, to keep available the services of their present personnel, to
preserve in full force and effect the contracts, agreements, instruments,
leases, licenses, arrangements, and understandings of Classic, and to preserve
the good will of their suppliers, customers, and others having business
relations with any of them. Until the Release Time, each Seller will conduct the
business and operations of Classic in all respects only in the ordinary course.
Until the Release Time, each Seller and Classic shall continue in full force and
effect all policies of insurance and indemnity relating to
15
Classic and the business and assets thereof.
SECTION 5.07. ADVICE OF CHANGES.
Until the Release Time, each Seller and Classic will immediately advise
the Purchaser in a detailed written notice of any fact or occurrence or any
pending or threatened occurrence of which it obtains knowledge and which (if
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or a
Schedule or an Exhibit hereto, which (if existing and known at any time prior to
or at the Closing) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which (if existing
and known at the time of the Closing) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
SECTION 5.08. CONFIDENTIALITY.
Each Seller and Classic shall insure that all confidential information
which any Seller, Classic, any of their respective officers, directors,
employees, counsel, agents, investment bankers, or accountants, or any
stockholder of Classic, any of their respective counsel, agents, investment
bankers, or accountants may now possess or may hereafter create or obtain
relating to the financial condition, results of operations, business,
properties, assets, liabilities, or future prospects of Classic, the Purchaser,
or any Purchaser Subsidiary, any affiliate of any of them, or any customer or
supplier of any of them or any such affiliate shall not be published, disclosed,
or made accessible by any of them to any other person or entity at any time or
used by any of them except in preparation for the Closing without the prior
written consent of the Purchaser; provided, however, that the restrictions of
this sentence shall not apply (a) as may otherwise be required by law, (b) as
may be necessary or appropriate in connection with the enforcement of this
Agreement, or (c) to the extent such information shall have otherwise become
publicly available. Each Seller shall, and shall cause all other such persons
and entities to, deliver to the Purchaser all tangible evidence of such
confidential information to which the restrictions of the foregoing sentence
apply at the Closing or the earlier rightful termination of this Agreement.
SECTION 5.09. PUBLIC STATEMENTS.
Before any Seller or Classic shall release any information concerning
this Agreement or any document contemplated thereby or in connection therewith,
or the transactions contemplated thereby or in connection therewith, which is
intended for or may result in public dissemination thereof, it shall cooperate
with the Purchaser, shall furnish drafts of all documents or proposed oral
statements to the Purchaser for comments, and shall not release any such
information without the written consent of the Purchaser. Nothing contained
herein shall prevent any Seller or Classic from releasing any information to any
governmental authority if required to do so by law.
SECTION 5.10. OTHER PROPOSALS.
Until the Release Time, neither any Seller nor Classic shall, or shall
authorize or permit any officer, director, employee, counsel, agent, investment
banker, accountant, or other representative of
16
any Seller or of Classic, directly or indirectly, to: (a) initiate contact with
any person or entity in an effort to solicit any Takeover Proposal (as such term
is defined in this Section 5.10); (b) cooperate with, or furnish or cause to be
furnished any non-public information concerning the business, properties, or
assets of any Seller or Classic to, any person or entity in connection with any
Takeover Proposal; (c) negotiate with any person or entity with respect to any
Takeover Proposal; or (d) enter into any agreement or understanding with the
intent to effect a Takeover Proposal. Seller will immediately give written
notice to the Purchaser of the details of any Takeover Proposal of which any of
them becomes aware. As used in this Section 5.10, "TAKEOVER PROPOSAL" shall mean
"any proposal, other than as contemplated by this Agreement, (e) for a merger,
consolidation, reorganization, other business combination, or recapitalization
involving any Seller or Classic, for the acquisition of a 5% or greater interest
in the equity or in any class or series of capital stock of Classic, for the
acquisition of the right to cast 5% or more of the votes on any matter with
respect to Classic, or for the acquisition of a substantial portion of any of
the assets of Classic other than in the ordinary course of the business of
Classic, or (f) the effect of which may be to prohibit, restrict, or delay the
consummation of any of the transactions contemplated by this Agreement or impair
the contemplated benefits to the Purchaser of any of the transactions
contemplated by this Agreement."
SECTION 5.11. CONSENTS WITHOUT ANY CONDITION.
Neither any Seller nor Classic shall make any agreement or reach any
understanding not approved in writing by the Purchaser as a condition for
obtaining any consent, authorization, approval, order, license, certificate, or
permit required for the consummation of the transactions contemplated by this
Agreement.
SECTION 5.12. NON-COMPETITION, NON-SOLICITATION, AND
CONFIDENTIALITY.
Each Seller shall use his best efforts to cause any officers,
directors, and employees of Classic and other persons employed by, or associated
with, either Seller or Classic as shall be designated by Purchaser, to execute
and deliver to the Purchaser and Classic a non-competition, non-solicitation,
and confidentiality agreement in a form reasonably acceptable to Purchaser.
SECTION 5.13. FUTURE NAME.
No Seller will use or adopt, or cause or give permission to any person
or entity to use or adopt, a name containing any of "Classic" or words similar
to or susceptible of confusion with the word or any combination or abbreviation
thereof.
SECTION 5.14. TAX FILINGS.
Each Seller and Classic shall timely prepare and file any declaration
or filing necessary to comply with any transfer tax statutes that require any
such filing before the Closing.
SECTION 5.15. CERTAIN ACTIONS.
Neither any Seller, Classic, nor any officer, director, employee,
counsel, agent, investment banker, accountant, or other representative of
Classic shall, directly or indirectly, take any action the effect of which may
be to prohibit, restrict, or delay the consummation of the transactions
17
contemplated by this Agreement or impair the contemplated benefits to the
Purchaser of the transactions contemplated by this Agreement.
VI. COVENANTS OF THE PURCHASER
The Purchaser covenants and agrees that, unless the Sellers will
otherwise approve in writing:
SECTION 6.01. CONFIDENTIALITY.
Purchaser and the Purchaser Subsidiaries shall insure that all
confidential information which Purchaser, any Purchaser Subsidiaries, any of
their respective officers, directors, employees, counsel, agents, investment
bankers, or accountants, or any stockholder of Purchaser, any of their
respective counsel, agents, investment bankers, or accountants may now possess
or may hereafter create or obtain relating to the financial condition, results
of operations, business, properties, assets, liabilities, or future prospects of
Seller, any affiliate of any of them (other than Classic following the Closing),
or any customer or supplier of any of them or any such affiliate shall not be
published, disclosed, or made accessible by any of them to any other person or
entity at any time or used by any of them except in preparation for the Closing
without the prior written consent of the Sellers; provided, however, that the
restrictions of this sentence shall not apply (a) as may otherwise be required
by law, (b) as may be necessary or appropriate in connection with the
enforcement of this Agreement, or (c) to the extent such information shall have
otherwise become publicly available. Purchaser shall, and shall cause all other
such persons and entities to, deliver to the Sellers all tangible evidence of
such confidential information to which the restrictions of the foregoing
sentence apply at the Closing or the earlier rightful termination of this
Agreement.
SECTION 6.02. PUBLIC STATEMENTS.
Before the Purchaser shall release any information concerning this
Agreement or any document contemplated thereby or in connection therewith, or
the transactions contemplated thereby or in connection therewith, which is
intended for or may result in public dissemination thereof, it shall cooperate
with the Sellers, shall furnish drafts of all documents or proposed oral
statements to the Sellers for comments, and shall not release any such
information without the written consent of the Sellers. Nothing contained herein
shall prevent the Purchaser from releasing any information to any governmental
authority if required to do so by law.
SECTION 6.03. CONSENTS WITHOUT ANY CONDITION.
Neither Purchaser nor any Purchaser Subsidiary shall make any agreement
or reach any understanding not approved in writing by the Sellers as a condition
for obtaining any consent, authorization, approval, order, license, certificate,
or permit required for the consummation of the transactions contemplated by this
Agreement.
SECTION 6.04. CONDUCT OF BUSINESS.
Until the Release Date, the Purchaser will conduct its affairs so that
on the Closing Date no representation or warranty of the Purchaser will be
inaccurate, no covenant or agreement of the
18
Purchaser will be breached, and no condition in this Agreement will remain
unfulfilled by reason of the actions or omissions of the Purchaser.
SECTION 6.05. CERTAIN ACTIONS.
Neither the Purchaser, any Purchase Subsidiary, nor any officer,
director, employee, counsel, agent, investment banker, accountant, or other
representative of Purchaser or any Purchaser Subsidiary, shall, directly or
indirectly, take any action the effect of which may be to prohibit, restrict, or
delay the consummation of the transactions contemplated by this Agreement or
impair the contemplated benefits to the Sellers of the transactions contemplated
by this Agreement.
VII. CONDITIONS TO OBLIGATIONS OF THE SELLERS AND CLASSIC
The obligations of the Sellers and Classic and under this Agreement are
subject, at the option of the Sellers, to the following conditions:
SECTION 7.01. ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH
CONDITIONS.
All representations and warranties of the Purchaser contained in this
Agreement shall be accurate when made and, in addition, shall be accurate as of
the Closing Date as though such representations and warranties were then made in
exactly the same language by the Purchaser and regardless of knowledge or lack
thereof on the part of the Purchaser or changes beyond its control; as of the
Closing Date, the Purchaser shall have performed and complied with all covenants
and agreements and satisfied all conditions required to be performed and
complied with by it at or before such date, respectively, by this Agreement; and
the Sellers shall have received a certificate executed by the Chief Executive
Officer of the Purchaser, dated such date, to that effect.
SECTION 7.02. SCHEDULES.
Prior to the Closing, Purchaser shall deliver to the Seller and Classic
the Schedules and other documents required to be delivered thereby pursuant to
the terms of this Agreement.
SECTION 7.03. OTHER CLOSING DOCUMENTS.
The Purchaser shall have delivered to the Sellers at or prior to the
Closing Date such other documents (including certificates of officers of the
Purchaser) as the Sellers may reasonably request in order to enable the Sellers
to determine whether the conditions to their obligations under this Agreement
have been met and otherwise to carry out the provisions of this Agreement.
SECTION 7.04. REVIEW OF PROCEEDINGS.
All actions, proceedings, instruments, and documents required to carry
out this Agreement and each of the documents contemplated thereby or in
connection therewith and all other related legal matters shall be subject to the
reasonable approval of the Sellers and Classic, and Purchaser shall have
furnished such counsel such documents as such counsel may have reasonably
requested for the purpose of enabling them to pass upon such matters.
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SECTION 7.05. LEGAL ACTION.
There shall not have been instituted or threatened any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated hereby, or any document contemplated thereby or in
connection therewith, or to obtain substantial damages with respect thereto.
SECTION 7.06. NO GOVERNMENTAL ACTION.
There shall not have been any action taken, or any law, rule,
regulation, order, or decree proposed, promulgated, enacted, entered, enforced,
or deemed applicable to the transactions contemplated by, or in connection with,
any of the Transaction Agreements by any federal, state, local, foreign, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the sole judgment of
the Sellers in good faith, (a) makes any of the transactions contemplated hereby
illegal, (b) results in a delay in the ability of the Sellers or the Purchaser
to consummate any of the transactions contemplated hereby, (c) requires the
divestiture by the Purchaser of a material portion of the business of either the
Purchaser and the Purchaser Subsidiaries taken as a whole, or of Classic, (d)
imposes material limitations on the ability of the Purchaser effectively to
exercise full rights of ownership with respect to the properties and assets
purported to be sold pursuant to this Agreement, or (e) otherwise prohibits,
restricts, or delays consummation of any of the transactions contemplated hereby
or impairs the contemplated benefits to the Purchaser of any of the transactions
contemplated hereby.
SECTION 7.07. GOVERNMENTAL APPROVAL.
The parties to this Agreement shall have obtained at or prior to the
Closing all required consents and unconditional written approvals of all
federal, state, local, foreign, or other governmental agencies having the legal
or administrative right or obligation to consent to, or approve, this Agreement
and to the execution, delivery, and performance hereof.
SECTION 7.08. CONTRACTUAL CONSENTS NEEDED.
The parties hereto shall have obtained at or prior to the Closing all
consents required for the consummation of the transactions contemplated hereby,
or in connection herewith, from any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which any of them
is a party, or to which any of them or any of their respective businesses,
properties, or assets are subject.
SECTION 7.09. DUE DILIGENCE REVIEW.
The Sellers shall conduct a due diligence review of the Purchaser,
including, without limitation, a review of the schedules delivered by the
Purchaser pursuant hereto and the documents referenced therein delivered prior
to the Closing Date, and shall be reasonably satisfied with the result of such
review.
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VIII. CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser and under this Agreement are subject,
at the option of the Purchaser, to the following conditions:
SECTION 8.01. ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH
CONDITIONS.
All representations and warranties of the Sellers and Classic contained
in this Agreement shall be accurate when made and, in addition, shall be
accurate as of the Closing Date as though such representations and warranties
were then made in exactly the same language by the Sellers and Classic and
regardless of knowledge or lack thereof on the part of any Seller or Classic or
changes beyond its control; as of the Closing Date, each Seller and Classic
shall have performed and complied with all covenants and agreements and
satisfied all conditions required to be performed and complied with by them at
or before the Closing Date by this Agreement; and the Purchaser shall have
received certificates executed by each Seller and by the chief executive officer
and the chief financial officer of Classic, dated the Closing Date to that
effect.
SECTION 8.02. SCHEDULES.
Prior to the Closing, the Sellers and Classic shall deliver to
Purchaser the Schedules and other documents required to be delivered thereby
pursuant to the terms hereof.
SECTION 8.03. OTHER CLOSING DOCUMENTS.
The Sellers and Classic shall have delivered to the Purchaser at or
prior to the Closing Date such other documents (including certificates of the
Sellers and officers of Classic) as the Purchaser may reasonably request in
order to enable the Purchaser to determine whether the conditions to its
obligations under this Agreement have been met and otherwise to carry out the
provisions of this Agreement.
SECTION 8.04. REVIEW OF PROCEEDINGS.
All actions, proceedings, instruments, and documents required to carry
out this Agreement and each of the documents contemplated thereby or in
connection therewith and all other related legal matters shall be subject to the
reasonable approval of counsel to the Purchaser, and the Sellers and Classic
shall have furnished such counsel such documents as such counsel may have
reasonably requested for the purpose of enabling them to pass upon such matters.
SECTION 8.05. LEGAL ACTION.
There shall not have been instituted or threatened any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Agreement, or any document contemplated
thereby or in connection therewith, or to obtain substantial damages with
respect thereto.
SECTION 8.06. NO GOVERNMENTAL ACTION.
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There shall not have been any action taken, or any law, rule,
regulation, order, or decree proposed, promulgated, enacted, entered, enforced,
or deemed applicable to the transactions contemplated by, or in connection with,
this Agreement by any federal, state, local, foreign, or other governmental
authority or by any court or other tribunal, including the entry of a
preliminary or permanent injunction, which, in the sole judgment of the
Purchaser in good faith, (a) makes any of the transactions contemplated by this
Agreement illegal, (b) results in a delay in the ability of the Seller or the
Purchaser to consummate any of the transactions contemplated hereby, (c)
requires the divestiture by the Purchaser of a material portion of the business
of either the Purchaser and the Purchaser Subsidiaries taken as a whole, or of
Classic, (d) imposes material limitations on the ability of the Purchaser
effectively to exercise full rights of ownership with respect to the properties
and assets purported to be sold pursuant to this Agreement, or (e) otherwise
prohibits, restricts, or delays consummation of any of the transactions
contemplated hereby impairs the contemplated benefits to the Purchaser of any of
the transactions contemplated hereby.
SECTION 8.07. GOVERNMENTAL APPROVAL.
The parties to this Agreement shall have obtained at or prior to the
Closing all required consents and unconditional written approvals of all
governmental agencies having the legal or administrative right or obligation to
consent to, or approve, this Agreement and to the execution, delivery, and
performance thereof.
SECTION 8.08. CONTRACTUAL CONSENTS NEEDED.
The parties hereto shall have obtained at or prior to the Closing all
consents required for the consummation of the transactions contemplated hereby,
or in connection herewith, from any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which any of them
or any Purchaser Subsidiary is a party, or to which any of them or any of their
respective businesses, properties, or assets are subject.
SECTION 8.09. DUE DILIGENCE REVIEW.
Prior to the date of the Closing, Purchaser shall conduct a due
diligence review of the Sellers and Classic, including a review of the Schedules
and the documents referenced therein of each Seller and Classic delivered prior
to the date hereof and prior to the date of the Closing, and shall be reasonably
satisfied with the result of such review.
SECTION 8.10. PERSONNEL.
▇▇. ▇▇▇ ▇▇▇▇ shall at the Closing be actively engaged in the
performance of their existing duties for Seller and Classic and shall not have
evidenced any intention not to engage in comparable employment with Classic
after the Closing.
SECTION 8.11. MATERIAL ADVERSE CHANGES.
There shall not have been any material adverse change in the condition
(financial or otherwise), operations, business, assets, liabilities, earnings or
prospects of Classic since the date hereof.
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SECTION 8.12. COMPENSATION ARRANGEMENTS.
Classic shall have paid, cancelled, or terminated deferred
compensation, severance payments, employment agreements to which it is a party,
except as otherwise provided herein and all stock options, warrants or rights to
acquire securities of Classic shall have been terminated.
IX. MISCELLANEOUS
SECTION 9.01. BROKERAGE FEES
No entity is entitled to assert any right to fees, commissions, or
other compensation on account of employment as a broker or finder, or
performance of services as a broker or finder, in connection with or as a result
of any of the transactions contemplated by this Agreement.
SECTION 9.02. FURTHER ACTIONS
At any time and from time to time, each party agrees, at its or his
expense, to take such actions and to execute and deliver such documents as may
be reasonably necessary to effectuate the purposes of this Agreement.
SECTION 9.03. AVAILABILITY OF EQUITABLE REMEDIES.
Since a breach of the provisions of this Agreement could not adequately
be compensated by money damages, any party shall be entitled, either before or
after the Closing, in addition to any other right or remedy available to it, to
an injunction restraining such breach or a threatened breach and to specific
performance of any such provision of this Agreement, and in either case no bond
or other security shall be required in connection therewith, and the parties
hereby consent to the issuance of such an injunction and to the ordering of
specific performance.
SECTION 9.04. SURVIVAL.
The covenants, agreements, representations, and warranties contained in
or made pursuant to this Agreement shall survive the Closing and any delivery of
the consideration described in Section 2.01 hereof by the parties hereto,
irrespective of any investigation made by or on behalf of any party. The
statements contained in any document executed by any Seller or Classic relating
hereto or thereto or delivered to the Purchaser in connection with the
transactions contemplated hereby or thereby, or in any statement, certificate,
or other instrument delivered by or on behalf of any Seller or Classic, pursuant
hereto or thereto or delivered to the Purchaser in connection with the
transactions contemplated hereby or thereby shall be deemed representations and
warranties, covenants and agreements, or conditions, as the case may be, of any
Seller hereunder for all purposes of this Agreement (including all statements,
certificates, or other instruments delivered pursuant hereto or thereto or
delivered in connection with the transactions contemplated hereby or thereby).
The statements contained in any document executed by the Purchaser relating
hereto or thereto or delivered to any Seller in connection with the transactions
contemplated hereby or thereby, or in any statement, certificate, or other
instrument delivered by or on behalf of the Purchaser, pursuant hereto or
thereto or delivered to any Seller in connection with the transactions
contemplated hereby or thereby shall be deemed representations and warranties,
covenants and agreements, or conditions, as
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the case may be, of the Purchaser hereunder for all purposes of this Agreement
(including all statements, certificates, or other instruments delivered pursuant
hereto or thereto or delivered in connection with the transactions contemplated
hereby or thereby).
SECTION 9.05. MODIFICATION.
This Agreement and the Schedules and Exhibits hereto set forth the
entire understanding of the parties with respect to the subject matter hereof
(except as provided in Section 9.04), supersede all existing agreements among
them concerning such subject matter, and may be modified only by a written
instrument duly executed by each party with the approval of the Board of
Directors or by an officer of each corporate party.
SECTION 9.06. NOTICES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested (or by the most nearly comparable method if mailed from or to
a location outside of the United States) or by Federal Express, Express Mail, or
similar overnight delivery or courier service or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the
party to whom it is to be given at the address of such party set forth in the
preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 9.06)
with a copy to each of the other parties hereto. Any notice given to any
corporate party shall be addressed to the attention of the Corporate Secretary.
Notice to the estate of any party shall be sufficient if addressed to the party
as provided in this Section 9.06. Any notice or other communication given by
certified mail (or by such comparable method) shall be deemed given at the time
of certification thereof (or comparable act), except for a notice changing a
party's address which will be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 9.06 shall be deemed given
at the time of receipt thereof. A copy of any notice to Purchaser shall
simultaneously be delivered in accordance with this Section 9.06 to Reitler
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 9.07. WAIVER.
Any waiver by any party of a breach of any term of this Agreement shall
not operate as or be construed to be a waiver of any other breach of that term
or of any breach of any other term of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver must be in writing and, in the case of a corporate
party, be authorized by a resolution of the Board of Directors or by an officer
of the waiving party.
SECTION 9.08. BINDING EFFECT.
Except as otherwise provided in this Section 9.08, no party hereto may
sell, assign, transfer, or otherwise convey any of its rights or delegate any of
its duties under this Agreement without the
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prior written consent of the other, other than by will or the laws of descent
and distribution.
SECTION 9.09. NO THIRD PARTY BENEFICIARIES.
This Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement (except as
provided in Section 2.04).
SECTION 9.10. SEPARABILITY.
If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
SECTION 9.11. HEADINGS.
The headings in this Agreement are solely for convenience of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
SECTION 9.12. COUNTERPARTS; GOVERNING LAW.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. It shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles of
conflict of laws. Any action, suit, or proceeding arising out of, based on, or
in connection with this Agreement or the transactions contemplated hereby may be
brought in the United States District Court or the courts of the State of New
York, in each case located in the City of New York, New York, and each party
covenants and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such action, suit, or proceeding, any claim that it or he is
not subject personally to the jurisdiction of such court, that its or his
property is exempt or immune from attachment or execution, that the action,
suit, or proceeding is brought in an inconvenient forum, that the venue of the
action, suit, or proceeding is improper, or that this Agreement or the subject
matter hereof may not be enforced in or by such court.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ACL SEMICONDUCTORS, INC.
BY: /S/ ▇▇▇▇▇-▇▇▇ ▇▇▇▇
---------------------
NAME: ▇▇▇▇▇-▇▇▇ ▇▇▇▇
TITLE: CEO
CLASSIC ELECTRONICS, LTD.
BY: /S/ ▇▇▇ ▇▇▇▇
---------------------
NAME: ▇▇▇ ▇▇▇▇
TITLE: DIRECTOR
/S/ ▇▇▇ ▇▇▇▇
---------------------
NAME: ▇▇▇ ▇▇▇▇
/S/ ▇▇▇▇ ▇▇▇ KIN
---------------------
NAME: ▇▇▇▇ ▇▇▇ KIN
SCHEDULE A
SELLERS:
▇▇. ▇▇▇ ▇▇▇▇, a Hong Kong resident and whose residential address is situated at
6D Wah Yan Court, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, NT, Hong Kong; and
SHARES OWNED BY ▇▇. ▇▇▇▇ 2,999,999 SHARES
▇▇. ▇▇▇▇ ▇▇▇ ▇▇▇, a Hong Kong resident and whose residential address is situated
at Rm 1822, ▇▇▇▇ ▇▇▇▇ House, Heng On Estate, Ma On Shan, NT, Hong Kong
SHARES OWNED BY ▇▇. ▇▇▇▇ ▇▇▇ ▇▇▇: 1 SHARE
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