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EXHIBIT 2.3.1
STOCK PURCHASE AGREEMENT
dated as of February 12, 2001
among
GLACIER CORPORATION,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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TABLE OF CONTENTS
1. Definitions...............................................................................................1
2. Purchase and Sale of Target Shares........................................................................4
(a) Basic Transaction.......................................................................................4
(b) Purchase Price..........................................................................................4
(c) The Closing.............................................................................................5
3. Representations and Warranties Concerning the Transaction.................................................5
(a) Representations and Warranties of the Sellers...........................................................5
(b) Representations and Warranties of the Buyer.............................................................6
4. Representations and Warranties Concerning the Company.....................................................7
(a) Organization, Qualification, and Corporate Power........................................................7
(b) Capitalization..........................................................................................7
(c) Noncontravention........................................................................................7
(d) Brokers' Fees...........................................................................................8
(e) Title to Assets.........................................................................................8
(f) Subsidiaries............................................................................................8
(g) Financial Statements....................................................................................8
(h) Events Subsequent to Most Recent Fiscal Year End........................................................8
(i) Undisclosed Liabilities................................................................................10
(j) Legal Compliance.......................................................................................11
(k) Tax Matters............................................................................................11
(l) Real Property..........................................................................................11
(m) Intellectual Property..................................................................................11
(n) Tangible Assets........................................................................................12
(o) Inventory..............................................................................................12
(p) Contracts..............................................................................................12
(q) Notes and Accounts Receivable..........................................................................13
(r) Powers of Attorney.....................................................................................13
(s) Insurance..............................................................................................14
(t) Litigation.............................................................................................14
(u) Product Liability......................................................................................14
(v) Employees..............................................................................................14
(w) Employee Benefits......................................................................................15
(x) Guaranties.............................................................................................15
(y) Environmental, Health, and Safety Matters..............................................................15
(z) Certain Business Relationships with the Company........................................................16
(aa) Disclosure.............................................................................................16
(bb) Disclaimer of Other Representations and Warranties.....................................................16
5. Post-Closing Covenants...................................................................................16
(a) General................................................................................................16
(b) Litigation Support.....................................................................................16
(c) Transition.............................................................................................16
(d) Confidentiality........................................................................................17
(e) Payment of Sellers' Legal Fees.........................................................................17
6. Deliveries at Closing....................................................................................17
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(a) Deliveries of the Sellers..............................................................................17
(b) Deliveries of the Buyer................................................................................18
7. Remedies for Breaches of This Agreement..................................................................18
(a) Survival of Representations and Warranties.............................................................18
(b) Indemnification Provisions for Benefit of the Buyer....................................................18
(c) Indemnification Provisions for Benefit of the Sellers..................................................19
(d) Matters Involving Third Parties........................................................................19
(e) Other Indemnification Provisions.......................................................................20
(f) Procedures for Withdrawal from Escrow Account..........................................................20
(g) Specific Indemnification For the Benefit of Buyer......................................................21
8. Tax Matters..............................................................................................21
(a) Tax Periods Ending on or Before the Closing Date.......................................................22
(b) Tax Periods Beginning Before and Ending After the Closing Date.........................................22
(c) Cooperation on Tax Matters.............................................................................22
(d) Certain Taxes..........................................................................................23
9. Miscellaneous............................................................................................23
(a) Press Releases and Public Announcements................................................................23
(b) No Third-Party Beneficiaries...........................................................................23
(c) Entire Agreement.......................................................................................23
(d) Succession and Assignment..............................................................................23
(e) Counterparts; Execution................................................................................24
(f) Headings...............................................................................................24
(g) Notices................................................................................................24
(h) Governing Law..........................................................................................25
(i) Amendments and Waivers.................................................................................25
(j) Severability...........................................................................................25
(k) Expenses...............................................................................................25
(l) Construction...........................................................................................25
(m) Incorporation of Exhibits and Schedules................................................................25
(n) Specific Performance...................................................................................25
(o) Submission to Jurisdiction.............................................................................26
Exhibit A-1 Form of Stolbof Goodwill Agreement
Exhibit A-2 Form of Greer Goodwill Agreement
Exhibit B Form of Opinion of Counsel to Sellers
Exhibit C Form of Opinion of Counsel to Buyer
Sellers' Disclosure Schedule
Company Disclosure Schedule
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
February 12, 2001, by and among GLACIER CORPORATION, a Delaware corporation (the
"Buyer"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual ("Stolbof"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an
individual ("▇▇▇▇▇") (Stolbof and ▇▇▇▇▇ are collectively referred to as the
"Sellers"). Buyer and Sellers are referred to collectively herein as the
"Parties."
WITNESSETH:
A. Sellers own all of the issued and outstanding capital stock of Rocky
Mountain Fresh and Natural, Inc., a Colorado corporation (the "Company").
B. This Agreement contemplates a transaction in which Buyer will
purchase from Sellers, and Sellers will sell to Buyer, all of the issued and
outstanding capital stock of the Company in return for the consideration
described herein.
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 actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses actually incurred by Buyer.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Disclosure Schedule" has the meaning set forth in Section 3(b)
below.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Disclosure Schedule" has the meaning set forth in Section 4
below.
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"Company Share" means any share of the Common Stock, no par value, of
the Company.
"Confidential Information" means any information concerning the
business and affairs of the Company that is not already generally available to
the public.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state and local statutes, regulations, ordinances and other provisions
having the force or effect of law prior to the Closing Date, all judicial and
administrative orders and determinations concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statement" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 7(d) below.
"Indemnifying Party" has the meaning set forth in Section 7(d) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments regarding the foregoing (in whatever form or medium).
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"IPO" means the closing of a firm commitment underwritten initial
public offering pursuant to an effective registration statement under the
Securities Act, covering the offer and sale of common stock of Buyer with
aggregate gross cash proceeds from the offering to Buyer of not less than
$25,000,000, and including terms and conditions acceptable to Buyer.
"Knowledge" means actual knowledge. Statements "to the Knowledge of the
Company" shall mean to the Knowledge of the Sellers and all officers of the
Company.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
4(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(g)
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Disclosure Schedule" has the meaning set forth in Section
3(a) below.
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"Stock Consideration" has the meaning set forth in Section 2(b) below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or 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, stamp, occupation,
premium, windfall profits, environmental, 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.
"Third Party Claim" has the meaning set forth in Section 7(d) below.
2. PURCHASE AND SALE OF COMPANY SHARES.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from each of the Sellers, and each of
the Sellers agrees to sell to Buyer, all of his Company Shares for the
consideration specified below in this Section 2.
(b) Purchase Price. Buyer agrees to pay to Sellers the purchase price
for the Company Shares (the "Purchase Price") by delivery at the Closing of cash
in an amount equal to ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($100,000.00),
which shall be paid as follows:
(i) FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00) shall be
paid into a segregated bank account and disbursed in accordance with
the provisions of Section 7(f) of this Agreement (the "Escrow
Account");
(ii) NINE THOUSAND EIGHT HUNDRED SEVEN AND 76/100 DOLLARS
($9,807.76) shall be paid to the Company's 401(k) Plan for credit to
the accounts of the eight participants affected by the operational
failures described on Schedule 4(i) of the Company's Disclosure
Schedule; and
(iii) FORTY THOUSAND ONE HUNDRED NINETY-TWO AND 24/100 DOLLARS
($40,192.24) shall be payable to the Sellers by wire transfer or
delivery of other immediately available funds, which amount shall be
allocated among the Sellers in proportion to their respective holdings
of Company Shares as set forth in Section 4(b) of the Company
Disclosure Schedule.
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(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC in Denver, Colorado, upon the execution of this Agreement
(the "Closing Date").
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of the Sellers. Each of the Sellers
represents and warrants to the Buyer that the statements contained in this
Section 3(a) are correct and complete as of the date of this Agreement, except
as set forth in the disclosure schedule delivered by Sellers to Buyer on the
date hereof (the "Sellers' Disclosure Schedule").
(i) Authorization of Transaction. Each of the Sellers has full
power and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of Sellers, enforceable in accordance
with its terms and conditions, subject to or limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws and interpretations thereof now or
hereafter in effect relating to, or affecting the rights and remedies
of, persons generally. 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.
(ii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Sellers are subject or, 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 agreement, contract, lease,
license, instrument, or other arrangement to which the Sellers are a
party or by which Sellers are bound or to which any of the Sellers'
assets are subject.
(iii) Brokers' Fees. 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 could become liable or obligated.
(iv) Company Shares. Each of the Sellers holds of record and
owns beneficially the number of Company Shares set forth next to his
name in Section 4(b) of the Company Disclosure Schedule, free and clear
of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, claims, and
demands. Neither of the Sellers is a party to any option, warrant,
purchase right, or other contract or commitment that could require such
Seller to sell, transfer, or otherwise dispose of any capital stock of
the Company (other than this Agreement). Neither 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.
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(b) Representations and Warranties of the Buyer. Buyer represents and
warrants to Sellers that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement, except as set forth in
the disclosure schedule delivered by Buyer to Sellers on the date hereof (the
"Buyer's Disclosure Schedule").
(i) Organization of the Buyer. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has 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 Buyer, enforceable in accordance with its terms
and conditions, subject to or limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws and interpretations thereof now or hereafter in effect
relating to, or affecting the rights and remedies of, persons
generally. 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.
(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, 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) 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 agreement, contract, lease, license, instrument, 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.
(iv) Brokers' 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.
(v) 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.
(vi) Disclaimer of Other Representations and Warranties. The
Buyer represents and acknowledges that it has conducted an independent
investigation of the financial condition, results of operations,
assets, liabilities, properties and operations of the Company. In
making its determination to proceed with the transactions contemplated
by this Agreement, the Buyer has relied on the results of that
independent investigation and the representations and warranties of the
Sellers expressly contained in this Agreement. Such representations and
warranties constitute the sole and exclusive representations and
warranties of Sellers to the Buyer in connection with the transactions
contemplated hereby. Moreover, the Buyer understands, acknowledges and
agrees that
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any other information, disclosures, representations or warranties of
any kind or nature, expressed or implied, are specifically disclaimed
by Sellers, shall not be binding on Sellers, and shall not be and are
not relied upon by Buyer.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The Sellers
represent and warrant to the Buyer that the statements contained in this Section
4 are correct and complete as of the date of this Agreement, except as set forth
in the disclosure schedule delivered by Sellers to Buyer on the date hereof (the
"Company Disclosure Schedule"). Nothing in the Company Disclosure Schedule shall
be deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Company Disclosure Schedule identifies the exception
in reasonable detail. The Company Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) Organization, Qualification, and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the failure to be so
qualified would not have a material adverse effect on the business, operations
or financial condition of the Company. The Company has full corporate power and
authority and, to the Knowledge of the Company, all licenses, permits, and
authorizations necessary to carry on the businesses in which it is engaged and
to own and use the properties owned and used by it. Section 4(a) of the Company
Disclosure Schedule lists the directors and officers of the Company. Sellers
have delivered to 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 have been delivered to Buyer. The Company is not in default under or
in violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the Company
consists of 500,000 Company Shares, of which 5,000 Company Shares are issued and
outstanding. All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the respective Sellers as set forth in Section 4(b) of the Company
Disclosure Schedule. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any
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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 agreement, contract, lease, license, instrument, or
other arrangement to which the Company is a party or by which it 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) except where the violation, conflict, breach,
default, termination, modification, cancellation or failure to give notice would
not have a material adverse effect on the business, operations or financial
condition of the Company. The Company is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. The Company does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. The Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(f) Subsidiaries. The Company does not have any subsidiaries or
affiliated entities.
(g) Financial Statements. Attached as Exhibit A to the Company
Disclosure Schedule are the following financial statements (collectively the
"Financial Statements"): (i) audited balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the fiscal years
ended January 2, 1999 and January 1, 2000 (the latter shall be referred to as
the "Most Recent Fiscal Year End") for the Company; and (ii) unaudited balance
sheets and statements of income, changes in stockholders' equity, and cash flow
(the "Most Recent Financial Statements") as of and for the fiscal year ended
December 31, 2000 (the "Most Recent Fiscal Month End") for the Company. The
Financial Statements described in clause (i) above (including the notes thereto)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Company as of such dates and the results of operations of the Company for
such periods, are correct and complete in all material respects, and are
consistent with the books and records of the Company in all material respects
(which books and records are correct and complete in all material respects). The
Financial Statements described in clause (ii) above have been prepared in a
manner consistent with prior year Financial Statements and on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Company as of such dates and the results of operations of the Company for
such periods, are correct and complete in all material respects, and are
consistent with the books and records of the Company in all material respects
(which books and records are correct and complete in all material respects).
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial
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condition, operations or results of operations of the Company. Without limiting
the generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $10,000 or outside the
Ordinary Course of Business;
(iii) neither the Company, nor, to the Knowledge of the
Company, any third party, has accelerated, terminated, modified, or
cancelled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more
than $10,000 to which the Company is a party or by which it is bound;
(iv) the Company has not imposed any Security Interest upon
any of its assets, tangible or intangible;
(v) the Company has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$10,000 or outside the Ordinary Course of Business;
(vi) 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 $10,000 or outside the
Ordinary Course of Business;
(vii) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving
more than $10,000 singly or $20,000 in the aggregate;
(viii) the Company has not delayed or postponed the payment of
accounts payable or other Liabilities outside the Ordinary Course of
Business;
(ix) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $10,000 or outside the Ordinary Course of
Business;
(x) the Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of the Company;
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(xii) 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, exchange, or
exercise) any of its capital stock;
(xiii) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) the Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property;
(xv) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xvi) the Company has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(xvii) the Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xviii) the Company has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, or employees (or taken any such action with respect to any
other employee benefit plan);
(xix) the Company has not made any other change in employment
terms for any of its directors, officers, or employees outside the
Ordinary Course of Business;
(xx) the Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xxi) 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
(xxii) the Company has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Company does not have any Liability
(and, to the Knowledge of the Company, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business.
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(j) Legal Compliance. To the Knowledge of the Company, the Company, and
its predecessors and Affiliates, has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(k) Tax Matters.
(i) 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 reflected in the Tax Returns have been paid by the
Company. The Company is not currently the beneficiary of any extension
of time within which to file any Tax Return. No claim has ever been
made by an 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, except for inchoate liens for taxes not yet
payable.
(ii) 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, independent contractor, creditor, stockholder, or other
third party.
(l) Real Property.
(i) The Company owns no Real Property.
(ii) Section 4(l)(ii) of the Company 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 Section 4(l)(ii) of the
Company Disclosure Schedule (as amended to date). To the Knowledge of
any of the Sellers, each lease and sublease listed in Section 4(l)(ii)
of the Company Disclosure Schedule is legal, valid, binding,
enforceable, and in full force and effect, except where the illegality,
invalidity, nonbinding nature, unenforceability, or ineffectiveness
would not have a material adverse effect on the financial condition of
the Company.
(m) Intellectual Property.
(i) All Intellectual Property used by the Company is listed in
Section 4(m) of the Company Disclosure Schedule and the Company owns or
has the right to use pursuant to license, sublicense, agreement, or
permission all such Intellectual Property. Each item of Intellectual
Property listed in Section 4(m) of the Company Disclosure Schedule will
be owned or available for use by the Company on identical terms and
conditions immediately subsequent to the Closing hereunder.
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(ii) To the Knowledge of the Company, 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 (and employees
with responsibility for Intellectual Property matters) of the Company
have ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Company must license or refrain
from using any Intellectual Property rights of any third party). To the
Knowledge of any of the Sellers and the directors and officers (and
employees with responsibility for Intellectual Property matters) of the
Company, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Company.
(n) Tangible Assets. The Company owns or leases all buildings,
machinery, equipment, and other tangible assets that the Company deems necessary
for the conduct of its business as presently conducted. Each such tangible asset
is free from defects (patent and latent), has been maintained in accordance with
normal industry practice, and is in good operating condition and repair (subject
to normal wear and tear).
(o) Inventory. The inventory of the Company consists of raw goods,
materials and supplies, manufactured and purchased goods, goods in process, and
finished goods, and, except as provided below in this Section 4(o), all of which
is merchantable and fit for the purpose for which it was procured or
manufactured, and no material portion of which is obsolete, damaged, or
defective (subject to normal spoilage as historically experienced by the
Company).
(p) Contracts. Section 4(p) of the Company Disclosure Schedule lists
the following contracts and other agreements to which the Company is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $5,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year or involve consideration in excess of $5,000;
(iii) any agreement concerning a partnership or joint venture;
(vi) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$5,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
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(vi) any agreement with any of the Sellers and their
Affiliates (other than the Company);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
financial condition or operations of the Company; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
The Sellers have delivered to Buyer a correct and complete copy of each written
agreement listed in Section 4(p) of the Company Disclosure Schedule (as amended
to date) and a written summary setting forth the material terms and conditions
of each oral agreement referred to in Section 4(p) of the Company Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B) to the Knowledge
of the Company, the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical or similar terms
following the consummation of the transactions contemplated hereby; (C) the
Company is not in breach or default, and to the Knowledge of the Company, no
other 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 agreement; and (D) to the Knowledge of
the Company, no party has repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable of
the Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Company.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
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(s) Insurance. 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 is, or during
the past five years, has been, a party, a named insured, or otherwise the
beneficiary of coverage: (A) to the Knowledge of the Company, the policy is
legal, valid, binding, enforceable, and in full force and effect; (B) to the
Knowledge of the Company, the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical or similar terms
following the consummation of the transactions contemplated hereby; (C) neither
the Company nor, to the Knowledge of the Company, any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (D) to the Knowledge of the
Company, no party to the policy has repudiated any provision thereof. Section
4(s) of the Company Disclosure Schedule describes any self-insurance
arrangements affecting the Company. Section 4(s) of the Company Disclosure
Schedule includes a certificate of insurance maintained by the Company as of the
date of this Agreement.
(t) Litigation. Section 4(t) of the Company Disclosure Schedule sets
forth each instance in which the Company (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to
the Knowledge of the Company, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 4(t) of the Company Disclosure
Schedule could result in any material adverse change in the business, financial
condition, operations or results of operations of the Company. None of Sellers
and the directors and officers (and employees with responsibility for litigation
matters) of the Company have any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against the
Company.
(u) Product Liability. The Company does not have any Liability (and, to
the Knowledge of the Company, there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand giving rise to any Liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product sold or
delivered by the Company.
(v) Employees. To the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for employment matters) of the
Company, no executive, key employee, or group of employees has any plans to
terminate employment with the Company. The Company is not a party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. To the Knowledge of the Company, the Company has not committed any
unfair labor practice. None of the Sellers and the directors and officers (and
employees with responsibility for employment matters) of the Company have any
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.
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(w) Employee Benefits. Each employee compensation arrangement (and each
related trust, insurance contract, or fund) complies in form and in operation in
all material respects with the applicable requirements of ERISA, the Code and
other applicable laws, rules and regulations.
(x) Guaranties. The Company is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
(y) Environmental, Health, and Safety Matters.
(i) The Company, and its predecessors and Affiliates, has
complied and is in compliance with all Environmental, Health, and
Safety Requirements in all material respects.
(ii) Neither the Company, nor its predecessors or Affiliates,
has received any written or oral notice, report or other information
regarding any actual or alleged violation of Environmental, Health, and
Safety Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under the
Environmental, Health, and Safety Requirements.
(iii) None of the following exists at any property or facility
owned or operated by the Company: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills,
surface impoundments, or disposal areas.
(iv) None of the Company, or its respective predecessors or
Affiliates, has treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or
operated any property or facility (and to the Knowledge of the Company
no such property or facility is contaminated by any such substance) in
a manner that has given or would give rise to liabilities, including
any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees,
pursuant to Environmental, Health, and Safety Requirements.
(v) To the Knowledge of the Company, no facts, events or
conditions relating to the past or present facilities, properties or
operations of the Company, or any of its predecessors or Affiliates,
will prevent, hinder or limit continued compliance with any of the
Environmental, Health, and Safety Requirements, give rise to any
investigatory, remedial or corrective obligations pursuant to the
Environmental, Health, and Safety Requirements, or give rise to any
other liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) pursuant to the Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or natural
resources damage.
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(z) Certain Business Relationships with the Company. Other than
employment relationships, none of the Sellers or their Affiliates has been
involved in any business arrangement or relationship with the Company within the
past 12 months, and none of the Sellers and their Affiliates own any asset,
tangible or intangible, which is used in the business of the Company.
(aa) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
(bb) Disclaimer of Other Representations and Warranties. Except as
expressly set forth in Section 3 above or in this Section 4, the Sellers make no
representations or warranties, expressed or implied in respect of the Company,
and any such other representations or warranties are hereby expressly
disclaimed.
5. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary 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 may reasonably request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 7 below). The
Sellers acknowledge and agree that from and after the Closing the Buyer will be
entitled to possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to the Company. Buyer shall
provide copies of all such materials to Sellers upon written request and at
Sellers' expense.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, 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 him or it and his or 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
Section 7 below).
(c) Transition. None of the Sellers will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. Each of the Sellers will refer
all customer inquiries relating to the business of the Company to the Buyer from
and after the Closing.
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(d) Confidentiality. Each of the Sellers will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in his
possession. In the event that any of the Sellers is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, that Seller will notify the Buyer
promptly of the request or requirement so that the Buyer may seek an appropriate
protective order or waive compliance with the provisions of this Section 5(d).
If, in the absence of a protective order or the receipt of a waiver hereunder,
any of the Sellers is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, that
Seller may disclose the Confidential Information to the tribunal; provided,
however, that the disclosing Seller shall use his best efforts to obtain, at the
request of the Buyer, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate. The foregoing provisions shall not apply
to any Confidential Information which is generally available to the public
immediately prior to the time of disclosure.
(e) Payment of Sellers' Legal Fees. The Parties agree that the actual
amount of legal fees incurred by Sellers in connection with the transactions
contemplated by this Agreement shall be paid by the Company; provided, however,
that in no event shall the aggregate of all such fees paid by the company exceed
$18,000.
6. DELIVERIES AT CLOSING.
(a) Deliveries of the Sellers. At Closing, Sellers will deliver to
Buyer the following:
(i) agreements for the purchase and sale of their personal
goodwill in the form set forth in Exhibit A-1 and Exhibit A-2 attached
hereto, together with all other agreements contemplated therein (the
"Goodwill Agreements");
(ii) resignations, effective as of the Closing, of each
director and officer of the Company other than those whom the Buyer
shall have specified in writing at least five business days prior to
the Closing;
(iii) documentation evidencing the establishment of the Escrow
Account, together with signature cards requiring the signature of Buyer
and each of the Sellers;
(iv) stock certificates representing all of the Company Shares
held by each respective Seller, endorsed in blank or accompanied by
duly executed assignment documents;
(v) an opinion from counsel to the Sellers, in the form
attached hereto as Exhibit B, addressed to Buyer, and dated as of the
Closing Date; and
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(vi) such other certificates, documents and instruments as
Buyer reasonably requests related to the transactions contemplated
hereby.
(b) Deliveries of the Buyer. At Closing, Buyer will deliver to Sellers
the following:
(i) the Goodwill Agreements;
(ii) executed signature cards pertaining to the Escrow
Account;
(iii) the consideration specified in Section 2(b) above;
(iv) an opinion from counsel to the Buyer, in the form
attached hereto as Exhibit C, addressed to Sellers, and dated as of the
Closing Date.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (unless the damaged Party had Knowledge of any
misrepresentation or breach of warranty or covenant at the time of Closing) and
continue in full force and effect for a period of eighteen months thereafter.
(b) Indemnification Provisions for Benefit of the Buyer. In the event
any of the Sellers breaches any of their representations, warranties, or
covenants contained herein, and, provided that the Buyer makes a written claim
for indemnification against any of the Sellers within the survival period as
stated in Section 7(a) above, then each of the Sellers agrees to indemnify the
Buyer from and against the entirety of any Adverse Consequences (except as
limited immediately below in this Section 7(b)) the Buyer may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or caused
by the breach (or the alleged breach). Notwithstanding the foregoing, each
Seller's duty to indemnify hereunder shall be limited to his respective
ownership of Company Shares as stated in Section 4(b) of the Company Disclosure
Schedule. Sellers shall have no obligation to indemnify the Buyer following
Closing from and against any Adverse Consequences under this Section 7(b) if the
Buyer had actual knowledge of the breach giving rise to the Adverse Consequence
before Closing. Furthermore, Sellers shall have no obligation to indemnify the
Buyer against Adverse Consequences under Section 7(b) until the Buyer has
suffered Adverse Consequences by reason of all such breaches in excess of an
aggregate deductible equal to $15,000 ?(at which point the Sellers will be
obligated to indemnify the Buyer from and against all such Adverse Consequences
relating back to the first dollar). Lastly, there is an aggregate ceiling on the
obligation of Sellers to indemnify the Buyer from and against any and all
Adverse Consequences under Section 7(b) equal to $500,000 ?(after which point
the Sellers will have no obligation to indemnify the Buyer from and against
further such Adverse Consequences).
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(c) Indemnification Provisions for Benefit of the Sellers. In the event
the Buyer breaches any of its representations, warranties, or covenants
contained herein, and, provided that any of the Sellers makes a written claim
for indemnification against the Buyer within the survival period as stated in
Section 7(a) above, then the Buyer agrees to indemnify each of the Sellers from
and against the entirety of any Adverse Consequences (except as limited
immediately below in this Section 7(c)) such Seller may suffer through and after
the date of the claim for indemnification (including any Adverse Consequences
such Seller may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach). Buyer shall have no obligation to indemnify the
Sellers following Closing from and against any Adverse Consequences under this
Section 7(c) if such Seller had actual knowledge of the breach giving rise to
the Adverse Consequence before Closing. Furthermore, Buyer shall have no
obligation to indemnify Sellers against Adverse Consequences under Section 7(c)
until Sellers have suffered Adverse Consequences by reason of all such breaches
in excess of an aggregate deductible equal to $15,000 ?(at which point the Buyer
will be obligated to indemnify the Sellers from and against all such Adverse
Consequences relating back to the first dollar). Lastly, there is an aggregate
ceiling on the obligation of Buyer to indemnify the Sellers from and against any
and all Adverse Consequences under Section 7(c) equal to $500,000 ?(after which
point the Buyer will have no obligation to indemnify the Sellers from and
against further such Adverse Consequences).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 7, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof
in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party is prejudiced thereby.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
15 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse
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to the continuing business interests of the Indemnified Party, and (E)
the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7(d)(ii)
above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not
to be unreasonably withheld), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be unreasonably withheld).
(iv) In the event any of the conditions in Section 7(d)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into
any settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (C) the Indemnifying Parties will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 7.
(e) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy (including without limitation any such remedy
arising under Environmental, Health, and Safety Requirements) any Party may have
with respect to the Company or the transactions contemplated by this Agreement.
Each of the Sellers hereby agrees that he will not make any claim for
indemnification against the Company by reason of the fact that he was a
director, officer, employee, or agent of any such entity or was serving at the
request of any such entity as a partner, trustee, director, officer, employee,
or agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against such Seller pursuant to
this Agreement.
(f) Procedures for Withdrawal from Escrow Account.
(i) If Buyer gives a written notice (an "Offset Notice") to
Sellers and Sellers' Attorney pursuant to Section 9(g) hereof (i)
stating that Buyer is entitled to indemnification pursuant to Article 7
of this Agreement and (ii) specifying in reasonable detail the facts
upon which such indemnification is based, and the amount of such claim,
and such Offset Notice
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is not objected to in good faith by either of the Sellers in writing to
the Buyer and Buyer's Attorney within twenty days after receipt of the
Offset Notice (the "Objection Period"), then, on the fifth business day
following the end of the Objection Period, each of the Sellers and
Buyer shall execute a check drawn on the Escrow Account and payable to
Buyer in the amount so specified in the Offset Notice.
(ii) In the event any Seller objects to any Offset Notice
delivered by Buyer, such Seller shall deliver to Buyer and Buyer's
Attorney, prior to the expiration of the Objection Period, a written
notice specifying in reasonable detail the basis for such objection (an
"Objection Notice"). Commencing not later than ten (10) days after
delivery of an Objection Notice, Sellers and Buyer will proceed in good
faith to negotiate a resolution of such dispute, and if not resolved
through negotiation within thirty (30) days thereafter, such dispute
shall be resolved fully and finally by arbitration in accordance with
subsection (iii) of this Section 7(f).
(iii) Any controversy or claim arising out of or relating to
Section 7(f) of this Agreement shall be settled by arbitration before
one arbitrator in accordance with the Commercial Arbitration Rules of
the American Arbitration Association in the City and County of Denver,
Colorado. In the event Buyer prevails, Sellers and Buyer shall execute
a check drawn on the Escrow Account and payable to Buyer in the amount
of the arbitration award. The successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred
in said action or proceeding (as determined by the arbitrator), in
addition to any other relief to which such party may be entitled. The
cost of the arbitrator shall be paid one-half by Sellers and one-half
by Buyer.
(iv) On the fifth business day following the date that is
eighteen months after the Closing Date (the "Offset Payment Date"),
Sellers and Buyer shall execute checks drawn on the Escrow Account and
made payable to Sellers (75% to Stolbof and 25% to ▇▇▇▇▇) in an amount
equal to the then amount of the Escrow Account unless (i) any amounts
subject to Offset Notices have not yet been paid, in which case such
amounts shall be retained in the Escrow Account until the expiration of
the applicable Objection Period (if neither of the Sellers objects to
the Offset Notice prior to the expiration of the Objection Period) or
resolution of any dispute relating thereto, or (ii) any claims are then
pending, in which case an amount equal to the aggregate dollar amount
of such claims as shown in the applicable Offset Notice shall be
retained in the Escrow Account until resolution of such claims.
(g) Specific Indemnification For the Benefit of Buyer. Notwithstanding
anything contained herein to the contrary, Sellers shall indemnify Buyer from
and against the entirety of any Adverse Consequences Buyer may suffer as a
result of the facts and circumstances described on Schedule 4(i) of the Company
Disclosure Schedule (pertaining to the Company's 401(k) Plan), which
indemnification obligations shall be without any deductible, ceiling or other
form of limitation, and which indemnification obligations shall survive for the
applicable statute of limitations relating to the subject matter thereof.
8. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Buyer and Sellers for certain tax matters following
the Closing Date:
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(a) Tax Periods Ending on or Before the Closing Date. Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Company for all periods ending on or prior to the Closing Date which are
filed after the Closing Date. Buyer shall permit Sellers to review and comment
on each such Tax Return described in the preceding sentence prior to filing.
Sellers shall reimburse Buyer for Taxes of the Company with respect to such
periods within fifteen (15) days after payment by Buyer or the Company of such
Taxes to the extent such Taxes are not reflected in the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face of the Most
Recent Balance Sheet.
(b) Tax Periods Beginning Before and Ending After the Closing Date.
Buyer shall prepare or cause to be prepared and file or cause to be filed any
Tax Returns of the Company for Tax periods which begin before the Closing Date
and end after the Closing Date. Sellers shall pay to Buyer within fifteen (15)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Taxable period ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
shown on the face of the Most Recent Balance Sheet. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall (x) in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Taxable period multiplied by a fraction the numerator of
which is the number of days in the Taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire Taxable period, and
(y) in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Company.
(c) Cooperation on Tax Matters.
(i) Buyer, the Company and Sellers shall cooperate fully, as
and to the extent reasonably requested by any other Party, in
connection with the filing of Tax Returns pursuant to this Section and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other Party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The Company and Sellers agree (A) to retain all books and
records with respect to Tax matters pertinent to the Company relating
to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified
by Buyer or Sellers, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into
with any taxing authority,
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and (B) to give the other Party reasonable written notice prior to
transferring, destroying or discarding any such books and records and,
if the other Party so requests, the Company or Sellers, as the case may
be, shall allow the other Party to take possession of such books and
records.
(ii) Buyer and Sellers further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including,
but not limited to, with respect to the transactions contemplated
hereby).
(d) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by Sellers
when due, and Sellers will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
9. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Buyer and the Sellers;
provided, however, that Buyer shall be permitted to disclose such matters as are
required by applicable law in connection with the preparation and filing of any
registration statement under the Securities Act of 1933, as amended, and
provided further, that any Party may make any public disclosure it believes in
good faith is required by applicable law.
(b) 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.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties with respect to
the subject matter hereof and supersedes any prior understandings, agreements,
or representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
(d) 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 Buyer and Sellers; 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 (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
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(e) Counterparts; Execution. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. The Parties shall be
entitled to rely on delivery by facsimile machine of an executed copy of this
Agreement and acceptance of such facsimile signatures shall be equally effective
to create a valid and binding agreement between the Parties in accordance with
the terms hereof.
(f) 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.
(g) Notices. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if sent by nationally recognized
overnight courier, by telecopy, or by registered or certified mail, return
receipt requested and postage prepaid, addressed as follows:
If to Sellers: With a copy to:
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Minor & ▇▇▇▇▇, P.C.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Facsimile: (303) 320-6330
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Buyer: With a copy to:
Glacier Corporation ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Or to such other address as the Party to whom notice is to be given may have
furnished to the other Parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
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(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and 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.
(j) 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.
(k) Expenses. Each of the Parties and the Company will bear his or 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' costs and expenses (including any of their legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby
except to the extent set forth in Section 5(e) of this Agreement.
(l) Construction. 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
word "including" shall mean including without limitation. The Parties intend
that each 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 relating 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. All
references herein to the masculine gender are deemed to include the feminine
gender.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties 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 Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set
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forth in Section 9(o) below), in addition to any other remedy to which
they may be entitled, at law or in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Denver, Colorado, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER:
GLACIER CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
SELLERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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