EXHIBIT 99.4
STOCK PURCHASE AGREEMENT
Effective as of the 1st day of August, 1997, ▇▇▇▇ ▇▇▇▇ Financial
Corporation, or its assignee (the "Buyer"), agrees to acquire from ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Childers and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. (collectively the "Sellers") all of the outstanding capital stock of
Ideal Travel Concepts, Inc., a Florida corporation (the "Company") for a
purchase price of US $2,150,000, to be paid as set forth as herein. The
Buyer and the Sellers are referred to collectively herein as the "Parties".
The $2,150,000 purchase price will be payable on the Closing Date
(hereinafter defined) subject to the shares of the Company being free and
clear of all liens and encumbrances of any kind or nature whatsoever on the
Closing Date.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulation, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including all reasonable attorneys' fees and court costs.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Affiliated Group" has the meaning set forth in Code Sec. 1504(a).
"Applicable Rate" means the announced prime rate in effect from
time to time at Chase Manhattan Bank, N.A.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could reasonably be expected to
form the basis for any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Paragraph 2.3. below.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
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"Company" has the meaning set forth in the preface above.
"Company Share" means any share of capital stock of the Company, including
the Common Stock and the Preferred Stock.
"Closing Date" is the date of Closing agreed to by the parties provided
it is no later than 30 days after the date of execution of this Stock
Purchase Agreement.
"Confidential Information" means trade secrets and other information not
generally known concerning the Company.
"Disclosure Schedule" has the meaning set forth in Paragraph 4 below.
"Employee Benefit Plan" means a qualified defined contribution
retirement plan or arrangement, which is a Code Section 401(k) Plan, or a
Company or Seller provided retirement plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" has the meaning set forth in Paragraph 4.5 below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in Paragraph 8.3 below.
"Indemnifying Party" has the meaning set forth in Paragraph 8.3 below.
"Intellectual Property" means all (a) trademarks, service marks, trade
dress, logos, trade names, and corporate names and registrations and
applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, -C- mask works and registrations and
applications for registration thereof, (d) computer software, data, and
documentation, (e) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, copyrightable works, financial,
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marketing, and business data, pricing and cost information, business and
marketing plans, and customer and supplier lists and information), (f) other
proprietary rights, and 9g) copies and tangible embodiments thereof (in
whatever form or medium).
"Knowledge or Known" means knowledge a reasonable person would or should
have after reasonable investigation.
"Liability" means any liability, Known or unknown at the time of Closing
(whether absolute or contingent, whether liquidated or unliquidated, and
whether due or to become due), including any liability for Taxes.
"Most Recent Balance Sheet Date" has the meaning set forth on Paragraph 4.5
below.
"Most Recent Fiscal Year End" has the meaning set forth in Paragraph 4.5
below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Party" or "Parties" means the Buyer and/or the Sellers in this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Purchase price" has the meaning set forth in Paragraph 2.2 below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) mechanic's, materialmen's
and similar liens arising by operation of law in the ordinary course of
business with respect to obligations not yet delinquent, (b) liens for Taxes
not yet due and payable, -C- liens arising under worker's compensation,
unemployment insurance, social security, retirement, and similar legislation,
(d) liens arising in connection with sales of foreign receivables, (e) liens
on goods in transit incurred pursuant to documentary letters of credit, (f)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (g) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
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"Sellers" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which another
specified corporation has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, occupation,
premium, environmental (including taxes under Code Sec. 59A), 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.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. Purchase and Sale of Company
2.1. Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Sellers, and the
Sellers agree to sell to the Buyer, all of the issued and outstanding Shares
of the Company for the consideration specified below in this Paragraph 2.
2.2 Purchase Price. The Buyer agrees to issue to the Sellers on the
Closing Date a total of 358,333 shares of restricted Class A Common Stock of
Buyer (the "Purchase Shares") of which ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ each shall be issued 107,500 shares, and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇. Shall be issued 35,833 shares, as adjusted for any
recapitalizations of Company Shares since the effective date of this
Agreement. The price per share of the Purchase Shares is agreed to be $6.00
per share, for a total consideration of $2,150,000.
2.3 The Closing. The closing of the transactions (the "Closing")
contemplated by this Agreement which shall be the same day as the Closing
Date, shall take place at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.L.L.C. in
Seattle, Washington commencing at 11:00 a.m. local time on December 30, 1997
or such other date or place as the Buyer and the Seller may mutually
determine.
2.4 Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Paragraph 7.1 below, (ii) the Buyer will deliver to the
Sellers the various certificates, instruments, and documents referred to in
Paragraph 7.2 below,
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(iii) Sellers will deliver to the Buyer stock certificates representing all
Company Shares, endorsed in blank or accompanied by duly executed assignment
documents, and (iv) the Buyer will instruct its transfer agent to deliver to
the Sellers the Purchase Shares.
3. Representations and Warranties Concerning the Transaction.
3.1 Representations and Warranties of the Sellers. The Sellers,
jointly and severally, represent and warrant to the Buyer that the statements
contained in this Paragraph 3 are correct and complete upon execution of this
Agreement except as set forth in the Schedules attached hereto.
3.1.1 Authorization of Transaction. The Sellers have full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Sellers, enforceable in accordance with its terms
and conditions. The Sellers need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.
3.1.2 Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any statute, regulation, rule, judgment, order,
decree, stipulation, injunction, charge, or other restriction of any
government, governmental agency, or court to which the Sellers or the Company
are subject or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Sellers or
the Company are a party or by which any of themare bound or to which any of
their assets are subject. In addition, all governmental and other consents
and approvals, if any, necessary to permit the confirmation of the
transaction contemplated by this Agreement shall have been received.
3.1.3 Broker's Fees. The Sellers have no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement for which the
Buyer or the Company could become liable or obligated.
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3.1.4 Company Shares. The Sellers hold of record and own
beneficially all of the issued and outstanding Company Shares, free and clear
of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), claims, Taxes, mortgage, pledge,
security interest, encumbrance, charge, other lien, options, warrants,
rights, contracts, calls, commitments, equities, and demands. None of the
Sellers is a party to any option, warrant, right, contract, call, put, or
other agreement or commitment providing for the disposition or acquisition of
any capital stock of the Company 9other than this Agreement). None of the
Sellers is a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of the Company.
3.1.5 Due Diligence. The Sellers agree to make available to
the Buyer and its agents, officers, and representatives, all information as
the Buyer may reasonably require to permit the Buyer to complete its Due
Diligence review of the Company and this transaction up to and through the
Closing Date.
3.1.6 Consent of third parties. The Sellers shall obtain the
consent of any third parties which may be necessary as the result of this
transaction, including, but not limited to, the transfer of the rights and
obligations of the Company under its Agreements with Airlines Reporting
Corporation (ARC") and the International Airlines Travel Agent Network
("IATAN"); the consent of such of the Company's lessors as are required to
the transaction and the consent of any regulatory authorities or parties to
existing contracts between the third party and the Company or the Sellers,
provided, however, that with respect to the consent of ARC and IATAN, Sellers
shall have up to six months after the Closing Date to obtain such consents.
3.1.7 Seller's Sophistication. The Sellers are persons of
adequate financial sophistication and have such knowledge and experience in
financial and business matters that Sellers have evaluated the merits and
risks of this transaction for Seller's own accounts.
3.1.8 Investment Objective. Sellers are acquiring the Purchase
Shares pursuant to this Agreement for investment for their own account and
not with a view to the sale or distribution of any part thereof. Sellers
have no present intention of selling, granting participation in or otherwise
distributing the same. Sellers acknowledge that the Purchased Shares have
been offered and transferred pursuant to exemptions from registration under
the Securities Act and relevant state securities laws and that the reliance
of the Buyer upon such exemptions is predicated on
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the accuracy of Sellers' representations and warranties herein. Sellers have
no current intention with respect to any such future sale.
3.1.9 Restrictions on Purchased Shares. Sellers acknowledge
and agree that the Purchased Shares are being issued without registration
under the Securities Act or any similar state statute, and will ear the
following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or any state
securities laws in reliance on applicable exemptions therefrom.
Accordingly, the transfer or resale of these shares is restricted and
may only be accomplished when accompanied by an opinion of counsel that
such transfer or resale is exempt from the registration requirements of
the act or state laws."
3.2 Representations and Warranties, of the Buyer. The Buyer represents
and warrants to the Sellers that the statements contained in this Paragraph
3.2 are correct upon execution of this Agreement.
3.2.1 Organization of the Buyer. The Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Utah as of the effective date of this Agreement, and duly
incorporated under the laws of the State of Nevada as of the Closing Date.
3.2.2 Authorization of Transaction. The Buyer has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions. The Buyer need not
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
3.2.3 Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any statute, regulation, rule, judgment, order,
decree, stipulation, injunction, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or
any provision of its charter or bylaws or (B) to the best of Buyer's
knowledge, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any contract,
lease, sublease, license, sublicense, franchise, permit,
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indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the Buyer is a
party or by which it is bound or to which any of its assets is subject.
3.2.4 Broker's Fees. The Buyer has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which Sellers could
become liable or obligated.
3.2.5 Investment. The Buyer is not acquiring the Company
Shares with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act. Buyer represents and warrants it
understands the Company Shares have not been registered under the Securities
Act and, therefore, cannot be resold unless subsequently registered under the
Securities Act or an exemption from regulation is available.
3.2.6 Purchase Shares. The Purchase Shares, when issued, shall
be newly issued shares of Buyer, and shall be delivered free and clear of any
restrictions on transfer (other than restrictions under this Agreement, the
Pledge Agreement, the Securities Act and state securities laws), claims,
taxes, mortgage, pledge, security interest, encumbrance, charge, other lien,
options, warrants, rights, contracts, calls, commitments, equities and
demands.
4. Representations and Warranties of the Sellers Concerning the Company.
The Sellers, jointly and severally, represent and warrant to the Buyer that
the statements contained in this Paragraph 4 are correct and complete upon
execution of this Agreement, except as set forth in the disclosure schedule
delivered by the Sellers to the Buyer on the date hereof and initialed by the
Parties (the "Disclosure Schedule" and as contained in Annex I hereto).
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the material facts of the exception. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) in the Disclosure Schedule of a document, or reference to a document,
as an exhibit, schedule or otherwise part of this Agreement, may not be
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document itself). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this
Paragraph 4.
4.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of Florida. The Company is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the
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nature of its businesses or the ownership or leasing of its properties
requires such qualification except where the failure to qualify will not
individually or in the aggregate have a material adverse effect on the
Company ("no material adverse effect"). The Company has full corporate power
and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it. Paragraph 4.1 of the Disclosure
Schedule lists the directors and officers of the Company. The Sellers have
delivered to the Buyer correct and complete copies of the charter and bylaws
of the Company (as amended to date). The minute books containing the records
of meetings of the stockholders, the board of directors, and any committees
of the board of directors, the stock certificate books, and the stock record
books of the Company are correct and complete. The Company is not in default
under or in violation of any provision of its charter or bylaws.
4.2 Capitalization. The entire authorized capital stock of the Company
consists of 1,000 shares of Common Stock, $1.00 par value, of which 1,000
Company Shares are issued. All of the issued Company Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held
beneficially and of record by the Sellers. There are no outstanding or
authorized options, warrants, rights, contracts, calls, puts, rights to
subscribe, conversion rights, or other agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance, disposition, or acquisition of any of its capital stock. There are
no outstanding or authorized stock appreciation, phantom stock, or similar
rights with respect to the Company. There are no voting trusts, proxies, or
any other agreements or understandings with respect to the voting of the
capital stock of the Company.
4.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any
provision of the charter or bylaws of the Company or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any material contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest, or other
arrangement to which the Company is a party or by which either is bound or to
which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets). The Company does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental
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agency in order for the Parties to consummate the transactions contemplated
by this Agreement.
4.4 Subsidiaries. The company has no Subsidiaries, and owns no interest
in any corporation, partnership, joint venture or other entity.
4.5 Financial Statements. Attached hereto as Exhibit B are the following
financial statements (collectively the "Financial Statements"):
(i) unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal year ended
December 31, 1996 (the "Most Recent Fiscal Year End") as well as for the
Fiscal Years ended 1994 and 1995 for the Company; and
(ii) unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the nine month period
ending September 30, 1997 (the "Most Recent Balance Sheet" or the "Most
Recent Balance Sheet Date") for the Company.
The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, are
correct and complete, and are consistent with the books and records of the
Company (which books and records are correct and complete).
4.6 Events Subsequent to Most Recent Balance Sheet Date. Since the
Most Recent Balance Sheet Date, there has not been any material adverse
change in the assets, liabilities, business, financial condition, operations,
results of operations, or to the best of Sellers' knowledge, future prospects
of the Company taken as a whole. Without limiting the generality of the
foregoing, since that date:
4.6.1 the Company has been managed and operated in its usual and
customary manner.
4.6.2 the Company has not sold, leased, transferred, or
assigned any material assets, tangible or intangible, in an amount of more
than $15,000 other than for a fair consideration or in the Ordinary Course of
Business;
4.6.3 the Company has not entered into any contract, lease,
sublease, license, or sublicense (or series of related contracts, leases,
subleases, licenses, and sublicenses) either involving more than $15,000 or
outside the Ordinary Course of Business or involving a contract for a term of
more than one year;
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4.6.4 to the best of Sellers' knowledge, no party (including
the Company) has accelerated, terminated, modified, or canceled any contract,
lease, sublease, license, or sublicense (or series of related contracts,
leases, subleases, licenses, and sublicenses) outside the Ordinary Course of
Business involving more than $15,000 to which the Company is a party or by
which the Company is bound;
4.6.5 the Company has not granted any Security any Security
Interest in any of its assets, tangible or intangible;
4.6.6 the Company has not made any capital expenditure (or
series of related capital expenditures) involving more than $15,000 or which
is outside the Ordinary Course of Business;
4.6.7 the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of any other person
(or series of related capital investments, loans, and acquisitions) either
involving more than $15,000 or outside the Ordinary Course of Business;
4.6.8 the Company has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease obligations) either
involving more than $15,000 singly or $15,000 in the aggregate or outside the
Ordinary Course of Business;
4.6.9 the Company has not delayed or postponed (beyond its normal
practice) the payment of accounts payable and other Liabilities;
4.6.10 the Company has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims) either
involving more than $15,000 or outside the Ordinary Course of Business;
4.6.11 the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
4.6.12 there has been no change made or authorized in the charter
or bylaws of the Company;
4.6.13 the Company has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion or exercise) any of
its capital stock;
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4.6.14 the Company has not declared, set aside, or paid, or
otherwise distributed to shareholders, any cash or dividends or any other
distribution with respect to its capital stock or redeemed, purchased, or
otherwise acquired any of its capital stock. Nor shall the Company directly
or indirectly redeem, purchase or otherwise acquire any capital, stock, or
other equity interest in any corporation, partnership or other business
entity without prior written consent of the Buyer (which consent will not be
unreasonably withheld);
4.6.15 the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its property
involving an amount in excess of $15,000;
4.6.16 the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees either
involving more than $15,000 or outside the Ordinary Course of Business giving
rise to any claim or right on its part against the person or on the part of
the person against it;
4.6.17 the Company has not entered into any employment contract
or collective bargaining agreement, written or, to the best of Sellers'
Knowledge, oral, or, modified the terms of any existing such contract or
agreement;
4.6.18 the Company has not granted any increase outside the
Ordinary Course of Business in the base compensation of any of its directors,
officers, and employees;
4.6.19 the Company has not adopted any (A) bonus, (B)
profit-sharing, -C- incentive compensation, (D) pension, (E) retirement, (F)
medical, hospitalization, life, or other insurance, (G) severance, or (H)
contract, or commitment for any of its directors, officers, or employees, or
modified or terminated any existing such plan, contract, or commitment;
4.6.20 the Company has not made any other material change in the
management, capital structure, personnel or employment terms for any of its
directors, officers, and employees outside the Ordinary Course of Business;
4.6.21 the Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
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4.6.22 there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course
of Business involving the Company; and
4.6.23 the Company has not committed to any of the foregoing in
this Paragraph 4.6 except as qualified above.
4.7 Undisclosed Liabilities. The company has no material Liability
(and there is no Basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against the
Company giving rise to any material Liability, except for (i) Liabilities set
forth on the face of the Most Recent Balance Sheet Date (rather than in any
notes thereto) and (ii) Liabilities which have arisen after the Most Recent
Balance Sheet Date in the Ordinary Course of Business (none of which relates
to any breach of contract, breach of warranty, tort, infringement, or
violation of law or arose out of any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand).
4.8 Tax Matters.
4.8.1 The Company has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by the Company (whether or not shown on
any Tax Return) have been paid. The Company is currently not the beneficiary
of any extension of time within which to file any Tax Return. No claim has
been made by any authority in a jurisdiction where the Company does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of the Company that
arose in connection with any failure (or alleged failure) to pay any Tax.
4.8.2 The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party.
4.8.3 Neither the Sellers nor any director or officer (or
employee responsible for Tax matters) of the Company expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of the
Company either (A) claimed or raised by any authority in writing or (B) as to
which any of the Sellers and the directors and officers (and employees
responsible for Tax matters) of the Company has Knowledge based upon personal
contact with any agent of such authority. Since the Company's incorporation,
those Tax Returns have not been audited, nor are those Tax Returns currently
subject to audit.
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4.8.4 The Sellers have made available to the Buyer correct and
complete copies of all federal income Tax Returns since 1994.
4.8.5 The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
4.8.6 The Company has not filed a consent under Code Sec.
341(f) concerning collapsible corporations. The Company has not made any
payments, is obligated to make any payments, nor is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Code Sec. 280G or 162(m). The Company has been
a United States real property holding corporation within the meaning of Code
Sec. 897-C-(1)(A)(ii). The Company has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Sec. 6661.
The Company is not a party to any Tax allocation or sharing agreement. The
Company has never been (or has any Liability for unpaid Taxes because it once
was) a member of an Affiliated Group. The Company has never filed a
consolidated return with any other affiliated company.
4.8.7 The unpaid Taxes of the Company do not exceed the
respected reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
set forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto).
4.9 Tangible Assets. The Company owns or leases all tangible assets
necessary for the conduct of its businesses as presently conducted and as
presently proposed to be conducted. Each such tangible asset is free from
Security Interests and defects (patent and latent), has been maintained in
accordance with normal industry practice is in good operating condition and
repair (subject to normal wear and tear), and, is suitable for the purposes
for which it presently is used.
4.10 Owned Real Property. The Company owns no real property.
4.11 Intellectual Property
4.11.1 The Company owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of the Company as presently
conducted and as presently proposed to be conducted, a list and description
of which is included in Paragraph 4.11 of the Disclosure
14
Schedule. The Company owns no patents and has not applied for any patent
application, patent disclosure or patent improvement. Each item of
Intellectual Property owned or used by the Company immediately prior to the
Closing hereunder will be owned or available for use by the Company on
identical terms and conditions immediately subsequent to the Closing
hereunder. The Company has taken all reasonably necessary action to protect
each item of Intellectual Property that it owns or uses.
4.11.2 The Company has not interfered with, infringed upon,
misappropriated, or, otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the Sellers and the directors
and officers 9and employees with responsibility for Intellectual Property
matters) of the Company has never received any charge, complaint, claim, or
notice alleging any such interference, infringement, misappropriation, or
violation. To the best of Sellers' knowledge, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of the Company.
4.11.3 The Sellers have delivered to the Buyer correct and
complete copies of all registrations, applications, licenses, agreements, and
permissions (as amended to date) and has made available to the Buyer correct
and complete copies of all other written documentation evidencing ownership
and prosecution (if applicable) of each such item. With respect to each item
of Intellectual Property that the Company owns or uses:
4.11.3.1 the identified owner possess all right, title, and
interest in and to the item;
4.11.3.2 the item is not subject to any outstanding judgment,
order, decree, stipulation, injunction, or charge;
4.11.3.3 no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand is pending or, is threatened which
challenges the legality, validity, enforceability, use, or ownership of the
item; and
4.11.3.4 The Company has never agreed to indemnify any person
or entity for or against any interference, infringement, misappropriation, or
other conflict with respect to the item.
15
4.11.4 Paragraph 4.11 of the Disclosure Schedule also identifies
each item of Intellectual Property that any third party owns and that the
Company uses pursuant to license, sublicense, agreement, or permission. The
Sellers have supplied the Buyer with correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each such item of used Intellectual Property:
4.11.4.1 the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable, and in
full force and effect;
4.11.4.2 the license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and is and
will be in full force and effect on identical terms following the Closing;
4.12 Real Property Leases. Paragraph 4.13 of the Disclosure Schedule
lists and describes briefly all real property leased or subleased to the
Company. The Sellers have delivered to the Buyer correct and complete copies
of the leases and subleases listed in Paragraph 4.13 of the Disclosure
Schedule (as amended to date). With respect to each lease and sublease
listed in Paragraph 4.13 of the Disclosure Schedule:
4.12.1 the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
4.12.2 the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
following the Closing;
4.12.3 no party to lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
4.12.4 no party to the lease or sublease has repudiated any
provision thereof;
4.12.5 there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
16
4.12.6 the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;
4.12.7 all premises leased or subleased thereunder have received
all approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and regulations;
4.12.8 all premises leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of said
premises; and
4.12.9 the owner of the premises leased or subleased has good
and marketable title to the parcel of real property, free and clear of any
Security Interest, easement, covenant, or other restriction, except for (A)
installments of special easements not yet delinquent and (B) recorded
easements, covenants, and other restrictions which do not impair the current
use, occupancy, or value, or the marketability of title, of the property
subject thereto.
4.13 Contracts. Paragraph 4.14 of the Disclosure Schedule lists the
following contracts, agreements, and other arrangements, written or oral, to
which the Company is a party;
4.13.1 any arrangement (or group of related arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of $15,000 per annum;
4.13.2 any arrangement (or group of related arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of $15,000 per annum;
4.13.3 any arrangement concerning a partnership or joint
venture;
4.13.4 any arrangement (or group of related arrangements) under
which it has created, incurred, assumed, or guaranteed (or may create, incur,
assume, or guarantee0 indebtedness (including capitalized lease obligations)
involving more than $15,000 or under which it has imposed (or may impost) a
Security Interest on any of its assets, tangible or intangible;
17
4.13.5 any arrangement concerning confidentiality or
noncompetition;
4.13.6 any arrangement involving the Sellers;
4.13.7 any arrangement with any of its directors, officers, and
employees in the nature of a collective bargaining agreement, employment
agreement, or severance agreement;
4.13.8 any material arrangement under which the consequences of
a default or termination is likely to have a material adverse effect on the
assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company; or
4.13.9 any other arrangement (or group of related arrangements)
either involving more than $15,000 or not entered into in the ordinary Course
of Business.
The Sellers have delivered to the Buyer a correct and complete copy of each
arrangement listed in Paragraph 4.14 of the Disclosure Schedule. With
respect to each arrangement so listed: (A) the arrangement is legal, valid,
binding, enforceable, and in full force and effect; (B) the arrangement will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing; (-C-no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under the arrangement; and (D) no party has repudiated any
provision of the arrangement. No unfilled customer order or commitment
obligating the Company to process, manufacture, or deliver products or
perform services will result in a loss to the Company upon completion of
performance. No purchase order or commitment of the Company is in excess of
normal requirements, nor are prices provided therein in excess of current
market prices for the products or services to be provided thereunder. No
supplier of the Company has indicated within the past year that it will stop,
or decrease the rate of, supplying materials, products, or services to it and
no customer of the Company has indicated within the past year that it will
stop, or decrease the rate of, buying materials, products, or services from
it.
4.14 Notes and Accounts Receivable. All notes and accounts receivable
as of the Most Recent Balance Sheet Date are reflected properly on the
Company's books and records, are valid receivables subject to no setoffs or
counterclaims and are presently current and collectible, subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet.
4.15 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
18
4.16 Insurance. Paragraph 4.17 of the Disclosure Schedule sets the
forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the Company
has been a party, a named insured, or otherwise the beneficiary of coverage
at any time within the past 2 years:
4.16.1 the name, address, and telephone number of the agent;
4.16.2 the name of the insurer, the name of the policyholder,
and the name of each covered insured;
4.16.3 the policy number and the period of coverage;
4.16.4 the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated and
operate) of coverage; and
4.16.5 a description of any retroactive premium adjustments or
other loss-sharing arrangements.
4.17 Litigation. The Company is not subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge and is not a
party or, has not been threatened to be made a party to any charge,
complaint, action, suit, proceeding, hearing, or investigation of or in any
court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator.
4.18 Employees. None of the directors and officers (and employees with
responsibility for employment matters) of the Company, no key employee or
group of employees has any plans to terminate employment with the Company,
except as otherwise required by Buyer at Closing. The company is not a party
to or bound by any collective bargaining agreement, nor has either
experienced any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes. The Company has not committed any
unfair labor practice. The Sellers and the directors and officers (and
employees with responsibility for employment matters) of the Company have no
Knowledge of any organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of the Company.
There are no outstanding severance obligations of the Company on or before
the date of execution of this Agreement.
19
4.19 Employee Benefits. Paragraph 4.20 of the Disclosure Schedule lists
each Employee Pension Benefit Plan and Employee Welfare Benefit Plan that the
Company maintains or to which the Company contributes for the benefit of any
current or former employee of the Company.
4.19.1 Each Employee Pension Benefit Plan and Employee Welfare
Benefit Plan (and each related trust or insurance contract) complies in form
and in operation in all respects with the applicable requirements of ERISA
and the Code.
4.19.2 All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's, and summary Plan
Descriptions) have been filed or distributed appropriately with respect to
each Employee Pension Benefit Plan and Employee Welfare Benefit Plan. The
requirements of Part 6 of Subtitle Be of Title I of ERISA and of Code Sec.
4980B have been met with respect to each Employee Welfare Benefit Plan.
4.19.3 All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been paid to
each Employee Pension Benefit Plan and all contributions for any period
ending on or before the Closing Date which are not yet due have been paid to
each Employee Pension Benefit Plan or accrued in accordance with the past
custom and practice of the Company. All premiums or other payments owed by
the employer for all periods ending on or before the Closing Date have been
paid with respect to each Employee Welfare Benefit Plan.
4.19.4 Each Employee Pension Benefit Plan meets the requirements
of qualified plan" under Code Sec. 401 (a) and a determination letter is
being applied for with the IRS.
4.19.5 There have been no Prohibited Transactions with respect
to any Employee Pension Benefit Plan and Employee Welfare Benefit Plan. No
Fiduciary has any Liability for breach of fiduciary duty or any other failure
to act or comply in connection with the administration or investment of the
assets of any Employee Pension Benefit Plan and Employee Welfare Benefit
Plans. No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the administration or the
investment of the assets of any Employee Pension Benefit Plan and Employee
Welfare Benefit Plan (other than routine claims for benefits) is pending
or, to the knowledge of the Sellers and the directors and officers (and
employees with responsibility for
20
employee benefits matters) of the Company, threatened. The Sellers and the
directors and officers (and employees with responsibility for employee
benefits matters) of the Company have no knowledge of any Basis for any such
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
or demand.
4.19.6 The Sellers have delivered to the Buyer correct and
complete copies of the plan documents and summary plan descriptions, Form
5500 Annual Reports, and all related trust agreements, insurance contracts,
and other funding agreements which implement each Employee Benefit Plan.
The Company does not contribute to, have never contributed to, nor has
ever been required to contribute to any Multiemployer Plan or has any
Liability (including withdrawal Liability) under any Multiemployer Plan. The
Company has not incurred, and the Sellers and the directors and officers (and
employees with responsibility for employee benefits matters) of the Company
have no reason to expect that the Company will incur, any Liability to the
PBGC (other than PBGC prenium payments) or otherwise under Title IV of ERISA
(including any withdrawal Liability) or under the Code with respect to any
Employee Pension Benefit Plan that the Company (as described in Code Section
414(b)(c) or (m), contributes, has ever contributed, and has never been
required to contribute to any Employee Welfare Benefit Plan providing health,
accident, or life insurance benefits to former employees, their spouses, or
their dependents (other than in accordance with Code Sec. 4980B).
4.20 Guarantees. The Company is not a guarantor and is not otherwise
liable for any Liability or obligation (including indebtedness) of any other
person.
4.21 Environment, Health, and Safety.
4.21.1 No charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or commenced against
the Company alleging any failure to comply with any such law or regulation.
The Company has complied with all laws (including rules and regulations
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning the environment, public health and safety, and
employee health and safety.
4.21.2 The Company has no Liability (and there is no Basis related
to the past or present operations, properties, or facilities of the Company
for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Company giving rise to
any Liability) under the Comprehensive Environment Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act of 1976,
the Federal Water Pollution Control Act of 1972, the Clean Air Act of 1970,
the Safe drinking Water Act of 1974, the Toxic Substances Control Act of
1976, the Refuse Act of 1986 (each as amended), or any other law (or rule or
regulation thereunder) of any federal, state, local, or foreign government
(or agency thereof),
21
concerning release or theatened release of hazardous substances, public
health and safety, or pollution or protection of the environment.
4.21.3 The Company has no Liability (and the Company has not
handled or disposed of any substance, arranged for the disposal of any
substance, or owned or operated any property or facility in any manner that
could form the Basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand (under the common
law or pursuant to any statute) against the Company giving rise to any
Liability) for damage to any site, location, or body of water (surface or
subsurface) or for illness or personal injury.
4.21.4 The Company has no Liability (and there is no Basis for
any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the Company giving rise to any
Liability) under the Occupational Safety and Health Act, as amended, or any
other law (or rule or regulation thereunder) of any federal, state, local, or
foreign government (or agency thereof) concerning employee health and safety.
4.21.5 The Company has no Liability (and the Company has not
exposed any employee to any substance or condition that could form the Basis
for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand (under the common law or pursuant to
statute) against the Company giving rise to any Liability) for any illness of
or personal injury to any employee.
4.21.6 The Company has obtained and been in compliance with all
of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, local, and foreign laws (including rules, regulations, codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges
thereunder) relating to public health and safety, worker health and safety,
and pollution or protection of the environment, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or
wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
4.21.7 All properties and equipment used in the business the
Company have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1, 2-transdichloroethylene dioxins, dibenzofurans, and
Extremely Hazardous Substances.
22
4.21.8 All products labeling of the Company has been in
conformity with applicable laws (including rules and regulations thereunder).
4.21.9 No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste ever has been buried, stored, spilled,
leaked, discharged, emitted, or released on any real property that the
company ever has owned or that the Company leases or ever has leased.
4.22 Legal Compliance.
4.22.1 The Company has complied with all laws (including rules
and regulations thereunder) of federal, state, local, and foreign governments
(and all agencies thereof), and no charge, compliant, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has been filed
or commenced against the Company alleging any failure to comply with any such
law or regulation.
4.22.2 The Company has complied with all applicable laws
(including rules and regulations thereunder) relating to the employment of
labor, employee civil rights, and equal employment opportunities.
4.22.3 The Company has not violated in any respect or received a
notice or charge asserting any violation of the ▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇ Act,
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Act, or the Federal Trade Commission Act, each as amended.
4.22.4 The Company has not;
4.22.4.1 made or agreed to make any contribution, payment, or
gift of funds or property to any governmental official, employee, or agent
where either the contribution, payment, or gift or the purpose thereof was
illegal under the laws of any federal, state, local, or foreign jurisdiction;
4.22.4.2 established or maintained any unrecorded fund or
asset for any purpose, or made any false entries on any books or records for
any reason; or
4.22.4.3 made or agreed to make any contribution, or
reimbursed any political gift or contribution made by any other person, to
any candidate for federal, state, local, or foreign public office.
4.22.5 The Company has filed in a timely manner all reasonably
required reports, documents, and other materials it was required to file (and
the information contained therein was correct and complete in all respects)
under all applicable laws (including rules and regulations thereunder) except
for reports, documents
23
and other materials, the failure of which to file would not have material
Adverse Consequences.
4.22.6 The Company has possession of all material records and
documents it was reasonably required to retain under all applicable laws
(including rules and regulations thereunder).
4.23 Certain Business Relationships with the Company. The Sellers and
their Affiliates do not own any property or right, tangible or intangible,
which is used in the business of the Company.
4.24 Broker's Fees. The Company has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by the Agreement.
4.25 Disclosure. Without limiting the foregoing, subject to the
exceptions above, the representations and warranties contained in this
Paragraph 4 do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information contained
in this Paragraph 4 not misleading.
5. Pre-closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
5.1 General. Each of the Parties will use its best efforts to take all
action and to do all things necessary, proper, or advisable to consummate and
make effective the transactions contemplated by this Agreement (including
satisfying the closing conditions set forth in Paragraph 7 below).
5.2 Notices and Consents. The Sellers will cause the Company to give
any notices to third parties, and will cause the Company to use its best
efforts to obtain any third party consents, that the Buyer may request in
connection with the matters pertaining to the Company disclosed or required
to be disclosed in the Disclosure Schedule. Each of the Parties will take
any additional action (and the Seller will cause the Company to take any
additional action) that may be necessary, proper, or advisable in connection
with any other notices to, filings, with, and authorizations, consents, and
approvals of governments, governmental agencies, and third parties that they
may be required to give, make, or obtain.
5.3 Operation of Business. The Sellers will not cause or permit the
Company to engage in any practice, take any action, embark on any course of
inaction, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Sellers will
not cause or permit the Company to engage in any practice, take any action,
embark on any course of inaction, or enter into any transaction of the sort
described in Paragraph 4.6 above.
24
5.4 Preservation of Business. Sellers will use their best endeavors to
ensure that the Company has kept its business and properties substantially
intact, including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, licensees, suppliers,
customers, and employees.
5.5 Full Access. The Sellers will permit, and the Sellers will cause
the Company to permit, representatives of the Buyer to have full access at
all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, books,
records, contracts, Tax records, and documents of or pertaining to the
Company.
5.6 Notice of Developments. The Sellers will give prompt written
notice to the Buyer of any material development affecting the assets,
Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company taken as a whole. Each Party
will give prompt written notice to the others of any material development
affecting the ability of the Parties to consummate the transactions
contemplated by this Agreement. No disclosure by any Party pursuant to this
Paragraph 5.6, however, shall prevent or cure any misrepresentation, breach
of warranty, or breach of covenant. However, any such disclosure prior to the
Closing Date, will, if so identified by the Sellers, constitute additions to
the Disclosure Schedule or the Exception Schedule, for the purpose of
updating the representations and warranties made by the Sellers on the
Closing Date and shall be deemed part of such Schedule.
5.7 Exclusivity. The Sellers will not (and the Sellers will cause the
Company not to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any person relating to any (A) liquidation,
dissolution, or recapitalization, (B) acquisition or purchase of securities
or assets, or (C) similar transaction or business combination involving the
Company or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person to do or
seek any of the foregoing. The Sellers will not be entitled to enter into
negotiations with any other third party.
5.8 Earnings Since August 1, 1997. All revenues of the Company since
August 1, 1997 have been retained by the Company except for expenditures of
the Company in the ordinary course of business. The Company has made no
payment nor transferred any property, right or benefit of any kind or nature
whatsoever, directly or indirectly, to any of the Sellers or their
Affiliates, except for salary to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as a President of the Company.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
25
6.1 General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
(unless the requesting Party is entitled to indemnification therefor under
Paragraph 8 below). The Sellers acknowledge and agree that from and after
the /closing the Buyer will be entitled to possession, upon reasonable
request as to time and place, of all documents, books, records, agreements,
and financial data relating to the Company.
6.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any charge, compliant, action,
suit, proceeding, hearing, investigation, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company, each of the other Parties
will cooperate with it and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their
books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending party is entitled to
indemnification therefor under Paragraph 8 below).
6.3 Transition. The Sellers will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor,
licensee, customer, supplier, or other business associate of the Company from
maintaining the same business relationships with the Company after closing as
they maintained with the Company prior to the Closing. The Sellers will
refer all customer inquiries relating to the business of the Company to
either the Buyer or the Company from and after the Closing.
6.4 Employees. After the Closing Date, Buyer shall bear all costs and
shall be responsible for any claims by Employees, including severance costs
in the event of termination or material change in the terms and conditions of
employment of any employee.
6.5 Services to Company. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
shall continue to make their services available to the Company in order to
increase the business of the Company in a manner consistent with their
projections; as and to whatever extent requested by Buyer.
6.6 Bonds and Security. The Buyer acknowledges that the Sellers have
indemnification obligations under the Company's arrangements with ARC and
IATAN (the "Airline Appointments"). Sellers and Buyer shall cooperate to
transfer to Buyer the obligations and liabilities under the Company's Airline
26
Appointments as quickly as reasonably possible after the Closing without
interruption of the Company's business or operations.
7. Conditions to Obligation to Close
7.1 Conditions to Obligation of the Buyer: The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
7.1.1 the representations and warranties set forth in Paragraph 3.1
and Paragraph 4 above shall be true and correct in all material respects at
and as of the Closing Date; and there shall have been, between the Most
Recent Balance Sheet Date and the Closing Date, no material adverse change in
the condition, financial or otherwise of the Company; the assets, liabilities
and income statements being in substantially the same condition as is
reflected in the Most Recent Balance Sheet Date and in the event there is an
adverse change, at the sole and exclusive option of Buyer, this Agreement
shall be null and void.
7.1.2 the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing Date;
7.1.3 the Company shall have obtained all the necessary third party
consents before the closing Date;
7.1.4 no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction wherein an unfavorable judgment, order,
decree, stipulation, injunction, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect either the Company or the right of the Buyer to
own, operate, or control the Company shares or the Company (and no such
judgment, order, decree, stipulation, injunction, or charge shall be in
effect);
7.1.5 the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Paragraph 7.1,
7.1.1 to 7.1.4 is satisfied in all respects;
7.1.6 the Buyer shall have received from counsel to the Sellers an
opinion with respect to the matters set forth in Exhibit D attached hereto,
addressed to the Buyer and dated as of the Closing Date;
7.1.7 the Buyer shall have received the resignations, effective as
of the closing, of each director and officer of the Company, other than ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ as President;
27
7.1.8 the Buyer shall have received releases (in form and substance
satisfactory to Buyer) executed by the Sellers and each director and officer
of the Company releasing any and all claims by such persons against the
Company;
7.1.9 the Sellers shall have delivered to the Company assignments
(in form and substance reasonably satisfactory to the Buyer) executed by the
Sellers assigning any and all rights of the Sellers in Intellectual Property
owned or used by the Company; and
7.1.10 the Sellers shall deliver a Disclosure Schedule which Sellers
shall represent and warrant sets forth the following information with respect
to the Company: (A) the basis of the Company in its assets; and (B) the
amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution allocable
to the Company.
The Buyer may waive any condition specified in this Paragraph 7.1 if it executes
a writing so stating at or prior to the Closing.
7.2 Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by it is connection
with the Closing is subject to satisfaction of the following conditions:
7.2.1 the representations and warranties set forth in Paragraph 3.2
above shall be true and correct in all material respects at and as of the
Closing Date;
7.2.2 the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the closing;
7.2.3 no action, su8it, or proceeding shall be pending before any
court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction wherein an unfavorable judgment, order,
decree, stipulation, injunction, or charge would (A) prevent consummation of
any of the transactions contemplated by this Agreement or (B) cause any of
the transactions contemplated by this Agreement to be rescinded following
consummation (and no such judgment, order, decree, stipulation, injunction,
or charge shall be in effect);
7.2.4 all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all conditions to be
satisfied at or prior to the Closing (including the conditions described in
Paragraph 6.7), and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
satisfactory in form and substance to the Sellers;
28
7.2.5 the buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in this Paragraph 7.2
is satisfied in all respects;
The Sellers may waive any condition specified in this Paragraph 7.2 if it
executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
8.1 Survival. All of the representations and warranties of the Sellers
contained in this Agreement shall survive the Closing hereunder.
8.2 Indemnification Provisions for Benefit of the buyer. The Sellers,
jointly and severally, agree to indemnify the Buyer from and against the
entirety of any Adverse Consequences the Buyer or the company may suffer
through and after the Closing Date for all claims for indemnification arising
from (I) any breach of a representation, warranty or covenant of Sellers
hereunder; (ii) any Liability of the Company arising on or before the closing
Date (including Liabilities disclosed herein), or (iii) any Liability of the
Buyer arising as a result of having entered into the transactions
contemplated hereby.
8.3 Matters Involving Third Parties. If any third party shall notify
any Party (the "Indemnified Party") with respect to any matter which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Paragraph 8, then the Indemnified party
shall notify the Indemnifying Party thereof promptly in writing; provided,
however, that no delay on the part of the Indemnified party in notifying the
Indemnifying party shall relieve the Indemnifying party from any liability or
obligation hereunder unless (and then solely to the extent) the Indemnified
Party has given notice of the matter that the Indemnifying Party is assuming
the defense thereof, (A) the Indemnifying Party will defend the Indemnified
Party against the matter with counsel of its choice reasonably satisfactory
to the Indemnified Party, (B) the Indemnified Party may retain separate
co-counsel to the extent the Indemnified party reasonably concluded that the
counsel the Indemnifying Party has selected has a conflict of interest or the
Indemnified Party and the Indemnifying Party have a conflict of interest) (C)
the Indemnified party will not consent to the entry of any judgment or enter
into any settlement with respect to the matter without the written consent of
the Indemnifying Party (not to be withheld - unreasonaly), and (D) the
Indemnifying Party will not consent to the entry of any judgment with respect
to the matter, or enter into any settlement which does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the
written consent of the Indemnified Party (not to be withheld unreasonably).
In the event no Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, however, the Indemnified
Party may
29
defend against, or enter into any settlement with respect to, the matter in
any manner it reasonably may deem appropriate.
8.4 Determination of Loss. The Parties shall make appropriate
adjustments for the time cost of money (using the Applicable Rate as the
discount rate) in determining the amount of loss for purposes of this
Paragraph 8. All indemnification payments under this Paragraph 8 shall be
deemed adjustments to the Purchase Price, determined based on the value of
the Company Shares as of September 1, 1997.
8.5 Other Remedies provisions. Any statutory or common law remedy any
Party may have based on fraud or intentional misrepresentation shall survive
and be in addition to the Indemnification Provisions noted above.
8.6 Effect of Director and Officer Indemnification on Sellers'
Indemnification Obligation. For the purposes of this Paragraph 8, any claim
for indemnification asserted by any of Sellers' partners, affiliates, or
employees relating to service as a current or former director or officer or
employee of the Company against the Company (either based on a contractual
right, on the Company 's Articles of Incorporation or Bylaws or on applicable
state law) arising out of claims related to acts or omissions occurring on or
before Closing shall be indemnified by Sellers.
8.7 Buyer's Rights.
8.7.1 The rights and remedies of the Buyer in respect to a breach of
any of the representations and warranties set forth in this Agreement will
not be affected by the closing of this transaction; by any investigation made
by or on behalf of Buyer into the affairs of the Company; by the giving of
any extension of time by Buyer to any person; or by any other cause
whatsoever except a specific waiver or release by Buyer in writing and any
such waiver or release will not prejudice or affect any remaining rights or
remedies of Buyer.
8.7.2 Without restricting the rights of Buyer or the ability of
Buyer to claim damages on any basis available to it, in the event that any of
the terms, conditions, representations and warranties of this Agreement are
breached or found to have been breached, Sellers shall be liable to pay
Buyer, on demand, for any loss or damage resulting from any breach of any
such representations and warranties, together with all costs and expenses
reasonably incurred by Buyer and the Company as a result of such breach,
including reasonably incurred by Buyer and the Company as a result of such
breach, including reasonable attorney's fees. Any loss shall be reduced by
any amounts recoverable by Buyer from any
30
third party. If as a result of any of the aforesaid breaches, Buyer becomes
entitled under the terms set forth to demand written payment from Sellers,
such payment shall be made within ten (10) days after such written demand.
8.7.3 The rights conferred on Buyer by this Agreement are in
addition and without prejudice to any other rights and remedies available to
Buyer; and no exercise or failure to exercise a right under this Agreement or
otherwise or to invoke a remedy will constitute a waiver of that right or
remedy by Buyer.
9. Miscellaneous.
9.1 Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the Buyer and the
Sellers; provided, however, that any party may make any public disclosure it
believes in good faith is required by law or regulation (in which case the
disclosing Party will advise the other Party prior to making the disclosure).
9.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
9.3 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and superedes
any prior understandings, agreements, or representations by or among the
Parties, written or oral, that may have related in any way to the subject
matter hereof.
9.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of his or its rights, interests, or obligations hereunder without the
prior written approval of the other Party; provided, however, that the Buyer
may (i) assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder 9in any or all of which cases the Buyer
nonetheless shall remain liable and responsible for the performance of all of
its obligations hereunder).
9.5 Counterparts and Facsimile. This Agreement may be executed in one
or more counterparts, including facsimile, each of which shall be deemed an
original but all of which together will constitute one and the same
instrument.
31
9.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. A notice required or permitted
to be given by one party to another under this Agreement must be in writing
and is treated as being duly given if it is;
(a) left at that other party's address;
(b) sent by pre-paid mail to that other party's address;
(c) transmitted by telex to that other party's address; or
(d) transmitted by facsimile to that other party's address.
A notice given to a party in accordance with the preceding sub-clause
is treated as having been duly given and received:
(a) IN THE CASE OF Paragraph (a) when delivered;
(b) In the case of Paragraph (b), on the fifth business day after
posting;
(c) In the case of Paragraph -C-, on the day of transmission (if a
business day) or if not a business day, on the next business day provided
that party's answer back is received;
(d) In the case of Paragraph 9d), on the day of transmission (if a
business day), or, if not a business day, on the next business day provided
the sender of the facsimile receives a transmission report confirming that
the fax has been received by the recipient.
Any party may change the address to which notices are to be delivered or
sent by giving the other party notice in the manner herein set forth.
If to the Buyer: Copy to:
▇▇▇▇ ▇▇▇▇ Financial Corporation ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, PLLC
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
32
If to the Sellers: Copy to:
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
9.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Washington, without
giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Washington or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Washington.
9.9 Resolution of Disputes. The parties agree that, in the event of a
dispute between them, arising from, concerning or in any way related to this
Agreement, the Parties shall undertake good faith efforts to negotiate the
resolution of the matter amicably between them for a period of no longer than
thirty (30) days following written notice of the dispute provided by either
Party. If these negotiations prove to be unsuccessful for any reason, either
the Buyer or the Sellers may initiate legal proceedings.
9.10 Amendments and Waivers. No amendment of any provision of the
Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
9.11 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction. If the final judgment of
a court of competent jurisdiction declares that any term or provision hereof
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid
33
and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the expiration
of the time within which the judgment may be appealed.
9.12 Expenses. Each of the Parties and the Company will bear
its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions
contemplated hereby. The Sellers agree that the Company has not
borne and will not bear any of the Sellers' third party costs and
expenses (including any of its legal fees and expenses) in
connection with this Agreement or any of the transactions
contemplated hereby. However, any stamp duty due as a result of
this transaction shall be borne by the Buyer.
9.13 Construction. The language used in this Agreement will
be deemed to be the language chosen by the Parties to express their
mutual intent, and no rule of strict construction shall be applied
against any Party. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires
otherwise. The Parties intend that such representation, warranty,
and covenant contained herein shall have independent significance.
If any Party has breached any representation, warranty, or covenant
contained herein in any respect the fact that there exists another
representation, warranty, or covenant reisting to the same subject
matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact
that the Party is in breach of the first representation, warranty,
or covenant.
9.14 Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are
Incorporated herein by reference and made a part hereof.
9.15 Specific Performance. Each of Sellers and Buyer
acknowledges and agrees that the other Party would be damaged
irreparably in the event any of the provisions of this Agreement
are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Sellers and Buyer
agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement
and to enforce especially this Agreement and the terms and
provisions hereof in any action institute in addition to any other
remedy to which they may be entitled at law or in equity, subject
to the agreements regarding venue in Paragraph 9.8 above.
9.16 Currency. All dollar amounts used in this Agreement are
in United States dollars.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SELLERS: BUYER:
▇▇▇▇ ▇▇▇▇ FINANCIAL CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. By /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------ : President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ --------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.