AGREEMENT FOR THE PURCHASE OF MEMBERSHIP INTERESTS OF CLG PROPERTIES, LLC
Exhibit 10.19
AGREEMENT
FOR THE PURCHASE OF
MEMBERSHIP
INTERESTS OF
CLG PROPERTIES,
LLC
THIS AGREEMENT FOR THE PURCHASE OF
EQUTY MEMBER SHIP INTERESTS OF GLG PROPERTIES, LLC (the “Agreement”) made
this ________ day of August 2008, by and between CLG Properties, LLC, a
California corporation (“CLG Properties”)(the “Sellers”), Riverhawk Investments,
Inc., a Nevada corporation and wholly owned subsidiary of River Hawk Aviation,
Inc. (“Riverhawk Investments”), for the purpose of setting forth the terms and
conditions upon which the Sellers will sell to Riverhawk Investments
seventy-five percent (75%) of CLG Properties’ issued and outstanding membership
units or equivalents (hereinafter defined).
WITNESSETH:
IN
CONSIDERATION OF the mutual promises, covenants and representations contained
herein, the parties herewith agree as follows:
ARTICLE
I
SALE
OF EQUITY UNITS
1.01 Sale of Equity
Units. Subject to the terms and conditions of this Agreement,
the Sellers agree to sell to Riverhawk Investments, pursuant to Section 4(2) of
the Securities Act of 1933 (the “Securities Act”), seventy-five percent (75%) of
the total issued and outstanding membership units of CLG Properties as of the
date first written above (herein collectively referred from time to time as the
“Equity Units”), and Riverhawk Investments agrees to purchase the Equity Units
for a total sum equal to the actual costs required, commencing from the date of
this Agreement going forward to completion, to complete the refurbishment of the
interior of the GII SP aircraft held in CLG Properties, but in any event not to
exceed Five hundred thousand and 00/100 US Dollars ($500,000.00) (the “Purchase
Price”), and subject to the covenants stated in Section 5.01 and 5.02 of Article
V and to the terms and conditions of this Agreement, generally. The
Purchase Price shall be paid o or prior to the Closing (defined
below).
1.02 Escrow
Agent. The Sellers and Riverhawk Investments shall appoint, at
equally shared expense, an escrow acceptable to both parties (the “Escrow
Agent”), to coordinate the delivery of the Equity Units, all certificates,
corporate books and records thereto (the “Original Documents”), and distribution
of the funds received for the sale of the Equity Units.
1.03 Exchange. It
is agreed that the Purchase Price will be transferred to the Escrow Agent by
Riverhawk Investments as payment in full balance of the Purchase Price prior to,
or upon, the Closing Date (defined below), in exchange for the Equity Units
purchased by way of this Agreement. Upon the completion of the
exchange, the total outstanding Equity Units including those delivered to
Riverhawk Investments plus the current, outstanding Equity Units of CLG
Properties, shall be held in the name(s) and denomination(s) or proportions(s)
as detailed in Schedule A (which
shall show 100% of the issued and outstanding Equity Units of CLG Properties),
and the Original Documents (defined herein) shall be transferred to, and shall
remain with the Escrow Agent until the transaction closes at which point an the
Escrow Agent (i) shall forward the Equity Units and the Original Documents to
Riverhawk Investments along and (ii) shall transfer the Purchase Price to CLG
Properties’ designated account or (iii) such exchange shall occur directly
between the parties at the direction of the Escrow Agent.
1.04 Opening of
Escrow. Upon both the signing of this Agreement and the
receipt, by the Escrow Agent, of payment of the Purchase Price, the escrow shall
be opened and in effect.
1.05 Date of
Closing. The Closing (hereinafter defined) will take place on
or before August 30, 2008 (the “Closing Date”), under the terms described in
Article IV of this Agreement.
1.07 Appointment to the
Board. Prior to the Closing Date, the Riverhawk Investments’
parent company, River Hawk Aviation, Inc., shall appoint ▇▇▇▇▇ ▇▇▇▇▇▇▇ to its
Board of Directors.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES
The CLG Properties and the Sellers
hereby represent and warrant to Riverhawk Investments, the
following:
2.01 Organization. CLG
Properties is a limited liability company duly formed in the State of
California and has all necessary corporate powers to conduct
business. All actions taken by the incorporators, directors and/or
shareholders of CLG Properties have been valid and in accordance with the laws
of the State of California.
2.02 Capital. The
authorized Equity Units of CLG Properties currently consists of ____ Equity
Units. At the Closing, seventy five percent (75%) of the all of the
outstanding Equity Units shall be either issued or transferred to Riverhawk
Investments. Additionally, upon Closing, there will be no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements or commitments obligating CLG Properties to issue or to transfer from
treasury any Equity Units, to any party. Furthermore, the Sellers
represent that they have title to, or the authority to direct, all outstanding
shares of Equity Units as fully paid and non-assessable and in accordance with
the State of California corporate law and the applicable securities laws of the
United States.
For the
purposes of this Agreement, an “Equity Unit” means
the basic economic ownership interest in the CLG Properties, which entitles the
holder to the rights and privileges of full membership of the CLG Properties,
including a share of the net profits, net losses, and other tax items of the CLG
Properties, as well as distributions of the CLG Properties’ assets as provided
in this Agreement and the laws of the state of California.
2.03 Financial
Statements. Documents provided to Riverhawk Investments will
include the last compilation of balance sheets and the related statements of
income and retained earnings as reviewed by CLG Properties’ certified
public accountant, or the last completed balance sheets and the related
statements of income and retained earnings prepared by management, as reviewed
by CLG Properties’ certified public accountant for the
period then ended. The financial statements have been prepared in
accordance with generally accepted accounting principles consistently followed
by CLG Properties throughout the course of its business, and fairly present the
financial position of CLG Properties as of the date of the balance sheet
included in the financial statements, and the results of its operations for the
periods indicated. CLG Properties’ corporate representative will
provide full disclosure of all corporate and financial transactions of CLG
Properties since the date of their last prepared by management financial
statements.
2.04 Absence of
Changes. CLG Properties warrants and represents that there
have been no changes in the financial condition or operations of CLG Properties
since the date of the latest financial statements disclosed in accordance with
Section 2.03, except for changes in the ordinary course of business, which
changes have not, in the aggregate, been materially adverse. A list
referred to as “Schedule B” which references the expected existing and ongoing
liabilities at the time of Closing will be provided prior to
Closing. Schedule B will be signed as accepted by Riverhawk
Investments prior to Closing. Any changes to the financial condition,
or absence thereof, will be evidenced by a set of Final Financial Statements, to
be submitted to Riverhawk Investments at the Closing. The Final Financial
Statements shall accurately depict the financial condition of CLG Properties on
that date, and; subsequent thereto, CLG Properties shall not purchase, nor enter
into any contracts to purchase, any assets, nor dispose, assign, transfer, or
encumber any assets shown on the Final Financial Statements without the written
consent of Riverhawk Investments.
2.05 Liabilities. CLG
Properties, at the signing of this Agreement, does not and will not, as of
Closing, have any debt, liability, or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that is
not reflected in the corporate records of CLG Properties submitted to Riverhawk
Investments and/or included in Schedule B. CLG Properties is not
aware of any pending, threatened or asserted claims, lawsuits or contingencies
involving CLG Properties. There is no other dispute of any kind
between CLG Properties and any third party, and no such dispute will exist at
the Closing. At the Closing, all liabilities of CLG Properties will
be assumed by Riverhawk Investments as referenced in 2.04.
2.06 Tax
Returns. Within the times and in the manner prescribed by law,
CLG Properties will file all federal, state, and local tax returns required by
law. CLG Properties has paid, or will pay by the Closing, all taxes,
assessments, and penalties due and payable through the date of
Closing. CLG Properties represents that no federal income tax returns
of CLG Properties have been audited by the Internal Revenue
Service. There are no present disputes as to taxes of any nature
payable by CLG Properties as of the Closing, there shall be no taxes of any kind
due or owing except the following: federal excise taxes and segment
fees taxes which come due after August 30, 2008;
employee payroll taxes, if any, which will be due August 30, 2008; a list
referred to as “Schedule C” which references the federal excise taxes, segment
fees taxes and employee payroll taxes payable by Riverhawk Investments upon
closing will be provided prior to Closing. Schedule C will be signed
as accepted by Riverhawk Investments prior to Closing.
2.07 Ability to Carry Out
Obligations. The Sellers have the right, power, and authority
to enter into, and perform their obligations under this
Agreement. The execution and delivery of this Agreement by the
Sellers and the performance by the Sellers of their obligations hereunder will
not cause, constitute, or conflict with or result in (a) any breach or violation
or any of the provisions of or constitute a default under any license,
indenture, mortgage, charter, instrument, articles of incorporation, bylaw, or
other agreement or instrument to which CLG Properties, its officers, directors
or the Sellers are a party, or by which they may be bound, nor will any consents
or authorizations of any party other than those hereto be required, (b) an event
that would cause Riverhawk Investments (and/or assigns) to be liable to any
party, or (c) an event that would result in the creation or imposition of any
lien, charge, or encumbrance on any asset of CLG Properties or upon the shares
of common stock or the convertible note(s) issued by CLG Properties to be
acquired by Riverhawk Investments.
2.08 Full
Disclosure. None of the representations and warranties made
by, or included in, any certificate or memorandum furnished or to be furnished
by the Sellers, CLG Properties, or on their behalf, contain or will contain any
untrue statement of a material fact, or omit any material fact the omission of
which would be misleading.
2.09 Contracts, Leases and
Assets. CLG Properties is a party to the contracts, agreements
and/or leases shown and identified on “Schedule C”, copies of which will be
supplied to buyer prior to Closing. CLG Properties is not a party to
any contract, agreement or lease that is not shown and identified on “Schedule
C”. No person holds a power of attorney from CLG Properties, except
as shown and identified on “Schedule D”, copies of which will be supplied to
buyer.
2.10 Compliance with
Laws. To the best of its knowledge and ability, CLG Properties
has complied with, and is not in violation of any federal, state, or local
statute, law, and/or regulation pertaining to CLG Properties. To the
best of its knowledge and ability, CLG Properties has complied with all
federal and state securities laws in connection with the offer, sale and
distribution of its Equity Units or other securities.
2.11 Litigation. CLG
Properties is not a party to any existing or pending suit, action, arbitration,
or legal, administrative, or other proceeding, or prior, existing or pending
governmental investigation. Furthermore, CLG Properties is not subject to or in
default with respect to any order, writ, injunction, or decree of any federal,
state, local, or foreign court, department, agency, or
instrumentality.
2.12 Conduct of
Business. Prior to the Closing, CLG Properties shall conduct
its business in the normal course, and shall not, without the approval of
Riverhawk Investments, (i) sell, pledge, or assign any assets, (ii) amend its
Certificate of Formation or Operating Agreement, except as to make such
consistent with the conditions and representations of this Agreement, (iii)
declare dividends, redeem or sell stock or other securities, (iv) incur any
liabilities, except in the normal course of business, (v) commit to or issue any
options, warrants or shares of Equity Units in the capital of CLG Properties;
(vi) enter into any debt, loan, debenture or encumbrance arrangement with
respect to CLG Properties or principal shareholders, officers and directors of
CLG Properties, (vii) acquire or dispose of any assets, enter into any contract,
guarantee obligations of any third party, or (viii) enter into any other
transaction not I the ordinary course of business.
2.13 Corporate Documents.
Copies of Each of the following documents, which are true, complete and correct
in all material respects, will be submitted by or on behalf of seller at or
before the Closing:
|
(i)
|
Certificate
of Formation;
|
|
(ii)
|
Operating
Agreement;
|
|
(iii)
|
Unanimous
Consent of it members to this
transaction;
|
|
(iv)
|
List
of current members, officers and/or directors effective on the Closing
date;
|
|
(v)
|
Balance
Sheet together with other financial statements, if any, described in
Section 2.03;
|
|
(vi)
|
Secretary
of State Filing Receipt or other documentation to show
good standing;
|
|
(vii)
|
Copies
of all federal and state income tax returns, if available or
representation that there are no taxes
owing;
|
|
(viii)
|
Unit
register and certificates, if any, of CLG
Properties;
|
|
(ix)
|
Certificate
of Manager(s) of CLG Properties, with respect to accuracy of
representations and warranties in Article II
herein;
|
|
(x)
|
Corporate/minute
book of CLG Properties with all updated entries and
filings;
|
2.14 Closing
Documents. All minutes, consents or other documents pertaining
to CLG Properties to be delivered at the Closing shall be valid and in
accordance with the laws of the State of California.
2.15 Title. The
Sellers have good title to the shares of Equity Units being sold to Riverhawk
Investments, pursuant to this Agreement. The shares will be, at the
Closing, free and clear of all liens, security interests, pledges, charges,
claims, encumbrances and restrictions of any kind. Except as provided
in this Agreement, the Sellers and CLG Properties are not parties to any
agreement which offers or grants to any person the right to purchase or acquire
any of the shares of Equity Units. The Sellers and CLG Properties are
not aware of any applicable local, state or federal law, rule, regulation, or
decree which would, as a result of the purchase of the shares of Equity Units by
Riverhawk Investments impair, restrict or delay voting rights with respect to
the shares of Equity Units delivered by the Sellers. The Sellers
shall act in good faith at all times and act expediently to complete the
transaction contemplated herein.
2.16 Representations. All
representations shall be true as of the Closing and all such representations
shall survive the Closing for a period of two (2) years.
|
|
ARTICLE
III
|
|
|
INVESTMENT
INTENT
|
3.01 Transfer
Restrictions. The
Sellers and Riverhawk Investments agree that the Equity Units being acquired
pursuant to this Agreement may not be sold, pledged, assigned, hypothecated or
otherwise transferred, unless such shares are registered under or in compliance
with Rule 144 of the Securities Act of 1933 or other exemption from registration
under the Act.
ARTICLE
IV
CLOSING
4.01 Closing. The
Closing of the transaction will occur not later than August 30, 2008 at 4:00 pm
Pacific Standard [Daylight] Time, at which time the Original Documents and all
corporate records of CLG Properties have been approved by Riverhawk Investments
and received by the Escrow Agent, and the Purchase Price has been delivered (the
“Closing”) to the Escrow Agent, as follows.
4.02 Documents to be Delivered at
Closing. As part of the Closing, those documents listed in
section 2.13 of this Agreement, as well as the following documents, in form
reasonably acceptable to counsel to the parties, shall be delivered to the
Escrow Agent:
(a) By
the Sellers:
|
(i)
|
100%
is the issued and outstanding Equity
Units;
|
|
(ii)
|
copies
of all of the business and corporate records of CLG Properties
that are in the possession of the Sellers or CLG Properties along with
representations that there are no outstanding debts and/or debentures;
and
|
|
(iii)
|
such
other documents of CLG Properties that are executed in the normal course
of business.
|
|
(iv)
|
CLG
Properties amended operating agreement reflecting this
Agreement.
|
(b) By
Riverhawk Investments;
|
(i)
|
Cash
representing the Purchase Price incurred between the date of this
Agreement and the Closing Date; and
|
|
(ii)
|
The
personal guarantees of the three individuals signing this Agreement on
behalf of Riverhawk Investments for the remainder of the Purchase Price,
if any.
|
ARTICLE
V
COVENANTS
SUBSEQUENT TO CLOSING
5.01 Government
Approvals. CLG Properties and Riverhawk Investments will
cooperate as necessary to file certificates formalizing the business combination
contemplated herein with the State of California and the State of Nevada, and in
obtaining all necessary Federal Aviation Agency (FAA) as it may relate to this
Agreement and Riverhawk’s ownership interests in any CLG Properties
aircraft.
ARTICLE
VI
REMEDIES
6.01 Arbitration. Any
controversy of claim arising out of, or relating to, this Agreement, or the
making, performance, or interpretation thereof, shall be settled by arbitration
in the State of NC, in accordance with the Rules of the American Arbitration
Association then existing, and judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the
controversy.
6.02 Termination. In
addition to any other remedies, on or before the Closing date, Riverhawk
Investments may terminate this agreement only if any of the warranties detailed
herein have been breached.
6.03 Indemnification. The
Sellers and CLG Properties singly, jointly and severally, agree to indemnify
Riverhawk Investments against all actual losses, damages and expenses caused by
(i) any material breach of this Agreement by them or any material
misrepresentation of the Sellers contained herein, or (ii) any misstatement of a
material fact or omission to state a material fact required to be stated herein
or otherwise necessary to make the statements herein not
misleading.
6.04 Indemnification
Non-Exclusive. The foregoing indemnification provision is in
addition to, and not derogation of any statutory, equitable or common law remedy
any party may have for breach of representation, warranty, covenant or
agreement.
ARTICLE
VII
CONFIDENTIALITY
7.01 Confidential
Information. Each party hereto will treat all non-public,
confidential and trade secret information received from the other party as
confidential, and such party shall not disclose or use such information in a
manner contrary to the purposes of this Agreement. Moreover, all such
information shall be returned to the other party in the event this Agreement is
terminated.
ARTICLE
VIII
MISCELLANEOUS
8.01 Captions and
Headings. The article and paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit, or add to the meaning of any provision of this
Agreement.
8.02 No Oral
Change. This Agreement and any provision hereof, may not be
waived, changed, modified, or discharged, orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought.
8.03 Non
Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision hereof
shall not be deemed a waiver of such breach or failure, and (iii) no waiver by
any party of one breach by another party shall be construed as a waiver with
respect to any other or subsequent breach.
8.04 Time of
Essence. Time is of the essence of this Agreement and of each
and every provision hereof.
8.05 Entire
Agreement. This Agreement, including any and all attachments
hereto, if any, contains the entire Agreement and understanding between the
parties hereto, and supersedes all prior agreements and
understandings.
8.07 Counterparts. This
Agreement may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Facsimile signatures will be acceptable
to all parties.
8.08 Notices. All
notices, requests, demands, and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given on the date of service
if served personally on the party to whom notice is to be given, or on the third
day after mailing if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid, or on the second day if
faxed, and properly addressed or faxed as follows:
If to CLG
Properties:
CLG Properties, LLC
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy
to:
______________________
______________________
______________________
______________________
______________________
If to Riverhawk
Investments:
River
Hawk Aviation
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy
to:
The ▇▇▇▇ Law Group, PLLC
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇,
Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
8.09 Binding
Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
8.10 Effect of
Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall be true and
correct as of the closing and shall survive the Closing of this Agreement for
two (2) years post closing.
8.11 Mutual
Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein.
[The
remainder of this page intentionally left blank; signature page
follows]
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as
of the date first above written.
CLG
Properties, LLC
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its:
President
Riverhawk
Investments, Inc.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its:
Director
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Its:
Director
/s/ ▇▇▇▇▇ ▇▇▇▇
By: ▇▇▇▇▇
▇▇▇▇
Its:
Director
Schedule
A
to the
Agreement for the Purchase of Shares of Equity Units of CLG Properties, LLC by
and between CLG Properties, LLC, the security holders of CLG Properties, LLC,
Riverhawk Investments and. In accordance with Section 1.01 of this
Agreement, at Closing the Equity Units of CLG Properties, LLC, shall be
delivered with to Riverhawk Investments and held by the following individuals or
entities in the respective denominations, representing 100% of the issued Equity
Units of CLG Properties:
Named
Shareholder
% of Outstanding Equity Units
1. ▇▇▇▇▇
▇▇▇▇▇▇▇ 25%
2. Riverhawk
Investments,
Inc.
75%