STOCK PURCHASE AGREEMENT BY AND AMONG SPEEDEMISSIONS, INC. JUST, INC. AND MICHAEL DUNCAN STEVE MALMGREN DATED: September 7th, 2005
BY
AND
AMONG
SPEEDEMISSIONS,
INC.
JUST,
INC.
AND
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DATED:
September 7th, 2005
This
STOCK PURCHASE AGREEMENT, dated as of September 7th, 2005, effective as of
September 1, 2005, is entered into by and among Speedemissions, Inc., a Florida
corporation (the “Purchaser”),
Just,
Inc., a Utah corporation d/b/a Just Emissions & Inspections (the
“Company”)
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively, the “Seller”).
RECITALS
A. The
Company owns and operates automotive emissions and safety testing facilities
regulated under the State Implementation Plans of Utah (the “Business”);
B. The
Seller owns of record and beneficially all the issued and outstanding shares
of
capital stock of the Company (the “Company Shares”); and
C. The
Seller desires to sell to the Purchaser, and the Purchaser desires to purchase
from the Seller, the Company Shares, for cash and shares of common stock of
Purchaser in accordance with and subject to the terms and conditions set forth
in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
ARTICLE
1
PURCHASE
AND SALE OF SHARES
1.1 Purchase
and Sale.
The
Seller hereby sells, assigns, transfers, conveys and delivers to the Purchaser,
and the Purchaser hereby purchases from the Seller, the Company Shares free
and
clear of all Liens. The purchase and sale of the Company Shares and the
consummation of the other transactions contemplated by this Agreement (the
“Closing”)
shall
occur at 12:00 noon., on September 7, 2005, or at such other time or on such
other date as the Seller and the Purchaser shall agree, (the “Closing
Date”).
At
the Closing, the Seller shall deliver to the Purchaser one or more stock
certificates representing the Company Shares together with validly completed
stock powers and other instruments of transfer and the Purchaser shall pay
the
Seller the Purchase Price. It is the parties’ intent that the transactions
contemplated hereby shall be deemed effective for all purposes as of September
1, 2005.
1.2 Purchase
Price.
Purchaser shall pay to Seller as the aggregate consideration for the Company
Shares of the following consideration (the “Purchase Price”) cash in the form of
a transfer of immediately available funds in an amount equal to US $2,200,000
due and payable at the Closing. Furthermore, Purchaser shall pay to Seller,
not
later than September 7, 2006: (i) US$100,000, and (ii) such number of shares
of
common stock of Purchaser as shall be equivalent to US $200,000 calculated
by
dividing 200,000 by the average closing price for shares of Purchaser on the
OTC
BB during the five (5) business days prior to September 7, 2005 (“Purchaser’s
Shares”).
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ARTICLE
2
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
Each
Seller, jointly and severally, represents and warrants to the Purchaser as
follows:
2.1 Organization.
The
Company is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Utah with full corporate power and authority
to
carry on its business, and to own, operate and lease its properties and assets.
The Company is duly qualified or licensed to do business and is in good standing
as a foreign corporation in every jurisdiction in which the conduct of its
business, the ownership, or lease of its properties and assets require it to
be
so qualified or licensed except where the failure to be so qualified, licensed
would not have a Seller Material Adverse Effect. True, complete and correct
copies of the Company’s certificate of incorporation and bylaws, and all foreign
qualifications and licenses, as in effect on the date of this Agreement have
been made available to the Purchaser (the “Organizational Documents”). Seller
will not take any action after the date of this Agreement to amend or otherwise
modify the Organizational Documents prior to Closing.
2.2 Capitalization;
Title.
The
authorized shares of capital stock of the Company consist of One Million Five
Hundred Thousand (1,500,000) shares of common stock $1.00 par value (the
“Company Common Stock”) of which One Million Four Hundred Eighty-nine Thousand
(1,489,000) are issued and outstanding and owned by the Seller and constitute
the Company Shares. All the shares of Company Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable. There are
no
outstanding subscriptions, options, warrants, calls, rights, securities,
(including, without limitation, convertible securities), Contracts, commitments,
trusts (voting or otherwise), understandings or arrangements of any kind by
which the Company is bound to issue any additional shares of capital stock
or
rights pursuant to which any Person has a right to purchase shares of the
Company’s capital stock (collectively, a “Company
Option”).
Seller owns all of the Company Shares. Neither the Seller nor any of its
Affiliates is a party to any Contract, commitment, understanding or arrangement
by which any of them is bound or obligated to transfer or assign to any Person
any interest, economic or otherwise, in any of the Company Common Stock to
any
Person. There are no outstanding proxies, agreements, or understandings with
respect to the voting of the shares of the Company Common Stock. Upon payment
of
the Purchase Price to the Seller at the Closing, the Seller will convey good
and
marketable title to the Company Shares to the Purchaser, free and clear of
all
Liens. The assignments, endorsements, powers and other instruments of transfer
delivered by the Seller to the Company at the Closing will be sufficient to
transfer the Seller’s entire interest, legal and beneficial, in the Company
Shares. The Company has no Subsidiaries.
2.3 Authorization.
Each
of
the Seller and the Company has all requisite corporate power and authority
to
execute, perform and deliver this Agreement and the Collateral Agreements to
which it will be a party and to effect and consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
each
of the Seller and the Company of this Agreement has been duly authorized by
all
requisite corporate action and the execution, delivery and performance by each
of the Seller and the Company, as applicable, of the Collateral Agreements
to
which it will be a party will be duly authorized by all requisite corporate
action. No other proceedings by either the Seller or the Company are necessary
to authorize this Agreement and the transactions contemplated hereby and, after
the due authorization of the Collateral Agreements, no other proceedings will
be
necessary to authorize the Collateral Agreements to which either the Seller,
or
the Company will be a party and the transactions contemplated thereby. This
Agreement is and the Collateral Agreements to which the Seller, or the Company
will be a party when duly executed and delivered will be valid and legally
binding obligations of the Seller and the Company, as applicable, enforceable
against the Seller or the Company, as applicable, in accordance with their
respective terms, except to the extent that enforcement of the rights and
remedies created hereby and thereby may be affected by bankruptcy,
reorganization, moratorium, insolvency and similar Laws of general application
affecting the rights and remedies of creditors and by general equity
principles.
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2.4 No
Violation.
(a) Except
for Required Consents, the execution, delivery and performance by each of the
Seller and the Company, as applicable, of this Agreement and the Collateral
Agreements to which the Seller, or the Company will be a party and the
fulfillment of and compliance with the terms hereof by each of the Seller and
the Company, as applicable, do not and will not (i) conflict with or result
in a
breach of the terms, conditions or provisions of, (ii) cause Purchaser or the
Company to become liable for any Taxes, (ii) constitute a default or event
of
default under (with due notice, lapse of time or both), (iii) result in the
creation of any Lien upon the Company’s properties or assets or any of the
Company Shares pursuant to, (iv) give any third party the right to accelerate
any obligation under, or (v) result in a violation of: (A) the organizational
documents of the Seller or the Company, (B) any applicable Law, or otherwise
give Governmental Entity the right or power to revoke, suspend, withdraw,
cancel, terminate or modify any governmental authorization, license or permit
held by the Company or relating to the Company’s business or assets, (C) any
Order or Permit to which the Seller or the Company, or their respective assets,
is subject or (D) any Contract to which the Seller, the Company or their
respective properties are subject, so as to reasonably be expected to have
a
Seller Material Adverse Effect or prevent or delay the consummation of the
transactions contemplated by this Agreement or the Collateral Agreements. Each
of the Seller and the Company, as applicable, has complied with all applicable
regulations and Orders in connection with the execution, delivery and
performance of this Agreement and will so comply in connection with the
Collateral Agreements and the transactions contemplated hereby and
thereby.
(b) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, or notice to any Person is required to be obtained, made or taken
by the Seller, or the Company in connection with the execution and delivery
of
this Agreement or the Collateral Agreements or for the consummation of the
transactions contemplated hereby or thereby by the Seller, or the Company,
except for (i) consents or approvals of third parties, (ii) the Required
Consents (as set forth in Schedule 2.4(b)) and (iii) such consents, approvals,
orders, authorizations, registrations, declarations or filings the failure
of
which to be obtained or made, individually or in the aggregate, would not have
a
Seller Material Adverse Effect.
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2.5 Financial
Statements.
(a) True
and
complete copies of the unaudited consolidated balance sheets of the Company
as
of December 31, 2003 and December 31, 2004 and the related unaudited
consolidated statements of income and cash flows for the fiscal years then
ended
(the “Year-End
Financial Statements”)
have
been delivered to the Purchaser. The Year-End Financial Statements have been
prepared in accordance with GAAP and fairly present the consolidated assets,
liabilities and financial position of the Company at the indicated dates and
the
result of operations and cash flows for the periods then ended.
(b) True
and
complete copies of the unaudited consolidated balance sheet of the Company
as of
May 31, 2005 and the related unaudited consolidated statements of income as
of
and for the period then ended (the “Current
Financial Statements”
and
together with the Year-End Financial Statements are referred to as the
“Financial
Statements”),
have
been prepared in accordance with GAAP and present fairly the consolidated
assets, liabilities and financial position of the Company at such date and
the
results of operations for the fiscal quarter then ended subject to normal
recurring year-end adjustments but do not contain footnote disclosure that
if
presented, would not differ materially from those contained in the Year-End
Financial Statements.
(c) As
of the
Closing, the Company has no liabilities, whether accrued or contingent, known
or
unknown, or otherwise other than those shown on the Closing
Statement.
2.6 Absence
of Certain Changes.
Except
as
set forth on Schedule
2.6,
since
December 31, 2004, the Company has conducted and operated the Business in the
ordinary course. Since such date, there has not been any Seller Material Adverse
Effect relating to the assets, operations, liabilities, business, financial
condition, or prospects of the Company, and nothing exists or is contemplated
or
threatened which the Seller reasonably believes is likely to cause such a Seller
Material Adverse Effect in the future.
2.7 Contracts.
(a) Schedule
2.7(a)
contains
a true and complete list of each of the following Contracts or other
arrangements (true and complete copies or, if none, reasonably complete and
accurate written descriptions of which, together with all amendments and
supplements thereto and all waivers of any terms thereof, have been delivered
by
the Seller to Purchaser prior to the execution of this Agreement), to which
the
Company is a party or by which any of the Assets or Properties of the Company
is
bound, and which individually involve the payment, or potential payment,
pursuant to the terms of such Contract, by or to the Company, in one transaction
or a series of transactions, of more than $5,000 (a “Material
Contract”).
(b) Except
as
disclosed in Schedule
2.7(b)
and
except for delivery obligations not more than thirty (30) days past due, the
Company has performed in all material respects all obligations required to
be
performed by it and is not in default in any material respect under or in breach
of nor in receipt of any written notice of any claim of default or breach under
any Material Contract to which it is subject and no event has occurred which
with the passage of time or the giving of notice or both would result in a
default, breach or event of non-compliance by it under any Material Contract
to
which it is subject except for breaches, failures of performance or defaults
that, individually or in the aggregate, would not have a Seller Material Adverse
Effect. Seller has no knowledge of any existing material breach or anticipated
material breach by the other parties to any such Material Contract to which
the
Company is a party.
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2.8 Litigation.
(a) Except
as
set forth in Schedule
2.8(a)
hereto,
there is no Claim pending or, to the best knowledge of the Seller, threatened
against the Company or the Company which, if adversely determined, may have
a
Seller Material Adverse Effect or which challenges or seeks to prevent, enjoin,
alter or materially delay the consummation of any of the transactions
contemplated by this Agreement or the Collateral Agreements.
(b) Except
as
set forth on Schedule
2.8(b)
no
action, demand, requirement or investigation by any Governmental Entity and
no
suit, action or proceeding by any person, in each case with respect to the
Company or its properties, is pending or, to the knowledge of the Seller,
threatened, other than, in each case, those the outcome of which individually
or
in the aggregate may have a Seller Material Adverse Effect or which as of the
date hereof challenges or seeks to prevent, enjoin, alter or materially delay
the consummation of any of the transactions contemplated by this
Agreement.
(c) To
the
knowledge of the Seller, there exists no fact or circumstance that may give
rise
to or serve as the basis for any Claim or other legal proceeding.
(d) Except
as
disclosed on Schedule
2.8(d),
neither
the Seller nor the Company, nor any of their respective shareholders, directors,
officers and employees, is subject to any Order relating in whole or in part
to
the Company’s business, assets and properties.
2.9 Tax
Matters.
(a) Except
as
set forth on Schedule
2.9(a),
the
Company has timely filed, or had filed on its behalf, all material Tax Returns
as to the Company (collectively, the “Company
Tax Returns”)
required to be filed with regard to all taxes, including without limitation,
net
or gross income, property, personal property (tangible and intangible),
franchise, withholding, payroll, employment, unemployment, social security
and
Medicare (including interest, additions to tax and penalties) (collectively
“Taxes”).
All
Company Tax Returns are complete and accurate in all material respects. All
Taxes applicable for all periods prior to and including the Closing Date have
been fully paid or fully reserved against in accordance with GAAP; all Taxes
(applicable to the Company) which are required to be with-held or collected
by
the Company and the Seller have been duly withheld or collected and, to the
extent required, have been timely paid to the proper Federal, state, foreign
or
local authorities (“Taxing
Authorities”)
or
properly segregated or deposited as required by applicable Laws. There are
no
Liens for Taxes upon any property or assets of the Company, except for Liens
for
Taxes not yet due and payable. The charges, accruals and reserves for Taxes
on
the books of the Company are adequate and are at least equal to the Company’s
liability for Taxes.
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(b) With
respect to the Company Tax Returns, the Seller and the Company are is not aware
of any (i) judicial or administrative proceedings, examinations, audits, or
written requests for information currently pending by or with any Taxing
Authority and (ii) issues or unpaid deficiencies relating to such proceedings.
The items relating to the business, properties or operations of the Company
on
the Tax Returns filed by the Company or the Seller as the parent of an
affiliated group of which the Company and the Seller are members for all taxable
years since the Seller has owned the Company (including the supporting schedules
filed therewith), state accurately the information requested with respect to
the
Company and such information was derived from the Company’s books and records.
All Tax Returns files by the Company and the Seller are true, correct and
complete.
(c) No
power
of attorney has been granted by the Company or any related party with respect
to
any matter relating to Taxes of the Company which is currently in force except
as set forth on Schedule
2.9(c).
(d) Neither
the Company nor any related party has executed any waiver of the statute of
limitations on the right of the IRS or any other Taxing Authority to assess
or
collect additional Taxes from the Company or to contest the income or loss
or
any other item with respect to any Company Tax Return.
(e) Neither
the Company nor any related party has taken any action in anticipation of the
Closing not expressly required by this Agreement, and not in accordance with
past practice that would have the effect of deferring any material liability
for
Taxes of the Company to any period (or portion thereof) ending after the Closing
Date without disclosing the nature and amount of such deferral to the
Purchaser.
2.10 Compliance
with Law and Applicable Government Regulations.
Except
as
set forth on Schedule
2.10:
(i) the
Company is, and at all times since June 30, 2000 has been, in full compliance
with all applicable Laws and hold all permits, licenses, variances, exemptions,
orders, registrations and approvals of all Governmental Entities (the
“Permits”)
that
are required to own, lease or operate their assets and to carry on their
businesses,; and (ii) the Company is, and at all times since June 30, 2000
has
been, in full compliance in all respects with the terms of the Permits and
all
applicable Laws. The Company has not received, at any time since June 30, 2000,
any notice or other communication, whether oral or written, from any
Governmental Entity or any other Person regarding: (A) any actual, alleged,
possible or potential violation of any Laws, or (2) any actual, alleged,
possible or potential obligation on the part of the Company to undertake, or
to
bear all or any portion of the cost of any remedial action of any
nature.
(b) Schedule
2.10(b)
contains
a complete and accurate list of each Permit that is held by the Company or
otherwise relates to the business of, or to any of the assets owned or used
by,
the Company. The Company or the Seller has provided the Purchaser with true,
correct and complete copies of all Permits. No event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure
to
comply with any term or requirement of any Permit listed or required to be
listed in Schedule
2.10(b),
or (B)
result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Permit listed
or
required to be listed in Schedule
2.10(b),
including entering into and consummating the transactions contemplated by this
Agreement.
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2.11 Environmental
Matters.
(a) The
Company is, and at all times has been, in full compliance with, and has not
been
and is not in violation of or liable under, any Environmental Law. Neither
the
Seller nor the Company has any basis to expect, nor has any of them or any
other
Person for whose conduct they are or may be held to be responsible received,
any
actual or threatened order, notice, or other communication from (i) any
Governmental Entity or private citizen acting in the public interest, or (ii)
the current or prior owner or operator of any of the Company’s locations, of any
actual or potential violation or failure to comply with any Environmental Law,
or of any actual or threatened obligation to undertake or bear the cost of
any
Liabilities with respect to any of the locations or any other properties or
assets (whether real, personal, or mixed) in which Seller or the Company has
had
an interest, or with respect to any property or Facility at or to which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by Seller, the Company or any other Person for
whose conduct they are or may be held responsible, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(b) There
are
no Claims pending, or, to the best knowledge of the Seller, threatened against
the Company, which assert any claim or seek any remedial action in connection
with any Environmental Laws or other restrictions of any nature, resulting
from
or arising under or pursuant to any Environmental Law, with respect to or
affecting any of the Company’s locations or any other properties and assets
(whether real, personal, or mixed) in which Seller or the Company has or had
an
interest.
(c) Except
for those matters that, individually or in the aggregate, would not have a
Seller Material Adverse Effect, none of the Company’s properties are subject to
any on-going investigation by, order from or agreement with any Person relating
to (i) any Environmental Law or (ii) any remedial action arising from the
release or threatened release of a Hazardous Substance into the
environment;
(d) The
Company is not subject to any Order alleging or addressing a violation of,
or
liability under, any Environmental Law;
(e) The
Company has not received any written notice to the effect that it is or may
be
liable to any Person as a result of the release or threatened release of a
Hazardous Substance.
2.12 Title
and Related Matters.
Schedule
2.12
contains
a complete and accurate list of all real property, leaseholds, or other
interests therein owned by the Company. The Company owns all of the properties
and assets (whether real, personal, or mixed and whether tangible or intangible)
that they purport to own located in the facilities owned or operated by the
Company or reflected as owned in the books and records of the Company, including
all of the properties and assets reflected in the Financial Statements, and
all
of the properties and assets purchased or otherwise acquired by the Company
since May 31, 2005 (except for personal property acquired and sold since May
31,
2005 in the ordinary course of business and consistent with past practice).
All
properties and assets reflected in the Financial Statements are free and clear
of all Liens and are not, in the case of real property, subject to any rights
of
way, building use restrictions, exceptions, variances, reservations, or
limitations of any nature. As of the Closing, the Company’s bank accounts shall
have balances set forth on a closing statement to be executed by the Purchaser
and the Seller. Furthermore, the Company has inventory of certificates and
stickers having a value of not less than $2,500 on hand at its stores as of
the
Closing Date.
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2.13 Condition
and Sufficiency of Assets.
The
buildings, furniture, computers, structures, fixtures and equipment of the
Company are structurally sound, are in good operating condition and repair,
and
are adequate for the uses to which they are being put, and none of such assets
is in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost. The buildings, furniture,
computers, structures, fixtures and equipment of the Company are sufficient
for
the continued conduct of the Company’s business after the Closing in
substantially the same manner as conducted prior to the Closing.
2.14 Accounts
Receivable.
All
accounts receivable of the Company that are reflected on the Financial
Statements or on the accounting records of the Company as of the Closing Date
(collectively, the "Accounts Receivable") represent or will represent valid
obligations arising from sales actually made or services actually performed
in
the ordinary course of business. Unless paid prior to the Closing Date, the
Accounts Receivable are or will be as of the Closing Date current and
collectible net of the respective reserves shown on the Financial Statements
or
on the accounting records of the Company as of the Closing Date which reserves
are adequate and calculated consistent with past practice and, in the case
of
the reserve as of the Closing Date, will not represent a greater percentage
of
the Accounts Receivable as of the Closing Date than the reserve reflected in
the
Current Financial Statements represented of the Accounts Receivable reflected
therein and will not represent a material adverse change in the composition
of
such Accounts Receivable in terms of aging. Subject to such reserves, each
of
the Accounts Receivable either has been or will be collected in full, without
any set-off, within ninety days after the day on which it first becomes due
and
payable. There is no contest, claim, or right of set-off, other than returns
in
the ordinary course of business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Schedule
2.14
contains
a complete and accurate list of all Accounts Receivable as of the date of the
Current Financial Statements, which list sets forth the aging of such Accounts
Receivable.
2.15 Real
Estate.
(a) Schedule
2.15(a)
contains
a complete and accurate list, as of the date hereof, of the Leased Premises
which list identifies the parcels of real property leased by the Company and
the
2004 revenue generated by each such parcel as a percentage of the 2004 revenue
of the Company. The Purchaser has been provided with a complete and correct
copy
of each Lease. Each Lease is in full force and effect and, to the Seller’s best
knowledge, the Company has not violated, and the landlord has not waived, any
of
the material terms or conditions of any Lease and, to the Seller’s best
knowledge, all the material covenants to be performed by the Company and the
landlord under each Lease have been performed in all material respects. Each
of
the Leased Premises is in good operating condition for its current use and
operation in the Business.
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(b) The
Company does not own any real property.
2.16 Brokers
and Finders.
Neither
the Seller nor the Company has employed any broker, agent or finder or incurred
any liability for any brokerage fees, agents’ commissions or finders’ fees in
connection with the transactions contemplated herein.
2.17 Intellectual
Property.
(a) Except
as
set forth as Schedule
2.17(a),
the
Company owns all of the service marks and trademarks used in the Business
(collectively the “Intellectual
Property”).
The
Seller or an Affiliate has a valid right to grant the licenses to the service
marks and trademarks that it is licensing to the Purchaser pursuant to the
Intellectual Property Agreement (collectively, the “Licensed
Intellectual Property”).
(b) Except
as
set forth in Schedule
2.17(b):
(i) To
the
knowledge of the Seller, the Intellectual Property and the Licensed Intellectual
Property constitutes all the intellectual property rights or other proprietary
rights owned by or licensed to the Company or an Affiliate of the Company for
use in the Business. To the knowledge of the Seller, there exist no restrictions
on the disclosure, use or transfer of the Intellectual Property (other than
the
restrictions imposed in the Intellectual Property Agreement). The consummation
of the transactions contemplated by this Agreement will not alter, impair or
extinguish any Intellectual Property.
(ii) To
the
knowledge of the Seller, none of the acquired Intellectual Property material
to
the operation of the Business has been adjudged invalid or unenforceable in
whole or part.
2.18 Benefit
Plans; Employees.
(a) Except
as
set forth in Schedule
2.18(a),
with
respect to all Business Employees, the Seller does not currently maintain,
contribute to or have any liability under any Benefit Plan. With respect to
each
of the Benefit Plans identified on Schedule
2.18(a),
the
Seller has made available to the Purchaser true and complete copies of the
most
recent summary plan or other written description, as well as all personnel,
payroll, and employment manuals and policies. Each Benefit Plan listed on
Schedule
2.18(a)
has been
operated in compliance with ERISA, the Internal Revenue Code and other
applicable Laws. Each Benefit Plan which is an “employee pension benefit plan”
within the meaning of Section 3(2) of ERISA (“Pension
Plan”)
and
which is intended to be qualified under Section 401(a) of the Code, has received
a favorable determination letter from the Internal Revenue Service and the
Seller is not aware of any circumstances likely to result in revocation of
any
such favorable determination letter. Other than obligations, arrangements,
and
practices that are listed on Schedule
2.18(a),
the
Company has no employee benefit plans, pension plans, welfare plans, or other
obligations, arrangements, or customary practices, whether or not legally
enforceable, to provide benefits, other than salary, as compensation for
services rendered, to present or former directors, employees, or agents,. Each
Benefit Plan can be terminated within thirty (30) days without payment of any
additional contribution or amount and without the vesting or acceleration of
any
benefits promised by such Benefit Plan.
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(b) The
Company has never been nor is it currently a party to any collective bargaining
or other labor Contract. There is not presently pending or existing, and to
the
Seller’s knowledge there is not threatened, (i) any strike, slowdown, picketing,
or work stoppage, or (ii) any application for certification of a collective
bargaining agent. Except as set forth on Schedule
2.18(b),
none of
Business Employees is covered by any union, collective bargaining or other
similar labor agreement.
(c) Schedule
5.2(a)
contains
a complete and accurate list of the information contained thereon for the
Business Employees.
(d) No
Business Employee of the Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his duties as an employee of the Company,
or
(ii) the ability of the Company to conduct its business, including any
Proprietary Rights Agreement with Seller or the Company by any such employee.
To
the best of Seller’s knowledge, no officer or other key employee of the Company
intends to terminate his employment the Company.
2.19 Absence
of Certain Changes and Events.
Except
as
set forth in Schedule
2.19,
since
the date of the Current Financial Statements, the Company has conducted its
businesses only in the ordinary course of business and there has not been
any:
(a) change
in
the Company's authorized or issued capital stock; grant of any stock option
or
right to purchase shares of capital stock of the Company; issuance of any
security convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by the Company of any
shares of any such capital stock; or declaration or payment of any dividend
or
other distribution or payment in respect of shares of capital
stock;
(b) amendment
to the Organizational Documents of the Company;
(c) payment
or increase by the Company of any bonuses, salaries, or other compensation
to
any stockholder, director, officer, or (except in the ordinary course of
business) employee or entry into any employment, severance, or similar Contract
with any director, officer, or employee;
(d) adoption
of, or increase in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company;
(e) damage
to
or destruction or loss of any asset or property of the Company, whether or
not
covered by insurance, materially and adversely affecting the properties, assets,
business, financial condition, or prospects of the Company, taken as a
whole;
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(f) entry
into, termination of, or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit, or similar
agreement, or (ii) any Contract or transaction involving a total remaining
commitment by or to the Company of at least $10,000;
(g) sale
(other than sales of inventory in the ordinary course of business), lease,
or
other disposition of any asset or property of the Company or mortgage, pledge,
or imposition of any lien or other encumbrance on any material asset or property
of the Company, including the sale, lease, or other disposition of any of the
Intellectual Property Assets;
(h) cancellation
or waiver of any claims or rights with a value to the Company in excess of
$10,000;
(i) material
change in the accounting methods used by the Company; or
(j) agreement,
whether oral or written, by the Company to do any of the foregoing.
2.20 Insurance.
(a) Seller
has delivered to Purchaser:
(i) true
and
complete copies of all policies of insurance to which the Company is a party
or
under which the Company, or any director of the Company, is or has been covered
at any time within the five (5) years preceding the date of this
Agreement;
(ii) true
and
complete copies of all pending applications for policies of insurance;
and
(iii) any
statement by the auditor of the Company's financial statements with regard
to
the adequacy of such entity's coverage or of the reserves for
claims.
(b) Schedule
2.20(b)
describes:
(i) any
self-insurance arrangement by or affecting the Company, including any reserves
established thereunder;
(ii) any
contract or arrangement, other than a policy of insurance, for the transfer
or
sharing of any risk by the Company; and
(iii) all
obligations of the Company to third parties with respect to insurance (including
such obligations under leases and service agreements) and identifies the policy
under which such coverage is provided.
(c) Schedule
2.20(c)
sets
forth, by year, for the current policy year and each of the five (5) preceding
policy years:
(i) a
summary
of the loss experience under each policy;
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(ii) a
statement describing each claim under an insurance policy for an amount in
excess of $1,000, which sets forth:
(A) the
name
of the claimant;
(B) a
description of the policy by insurer, type of insurance, and period of coverage;
and
(C) the
amount and a brief description of the claim; and
(iii) a
statement describing
the loss experience for all claims that were self-insured, including the number
and aggregate cost of such claims.
(d) Schedule
2.20(d)
sets
forth:
(i) All
policies to which the Company is a party or that provide coverage to either
Seller, the Company, or any director or officer of an Company:
(A) are
valid, outstanding, and enforceable;
(B) are
issued by an insurer that is financially sound and reputable;
(C) taken
together, provide adequate insurance coverage for the assets and the operations
of the Company for all risks normally insured against by a Person carrying
on
the same business or businesses as the Company;
(D) are
sufficient for compliance with all Legal Requirements and Contracts to which
the
Company is a party or by which any of them is bound;
(E) will
continue in full force and effect following the consummation of the Contemplated
Transactions; and
(F) do
not
provide for any retrospective premium adjustment or other experienced-based
liability on the part of the Company.
(ii) Neither
Seller nor the Company has received (A) any refusal of coverage or any notice
that a defense will be afforded with reservation of rights, or (B) any notice
of
cancellation or any other indication that any insurance policy is no longer
in
full force or effect or will not be renewed or that the issuer of any policy
is
not willing or able to perform its obligations thereunder.
(iii) The
Company has paid all premiums due, and have otherwise performed all of their
respective obligations, under each policy to which the Company is a party or
that provides coverage to the Company or director thereof.
(iv) The
Company have given notice to the insurer of all claims that may be insured
thereby.
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2.21 Certain
Payments.
Neither
the Company nor any director, officer, agent, or employee of the Company, or
to
Seller’s best knowledge any other Person associated with or acting for or on
behalf of the Company, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other payment
to
any Person, private or public, regardless of form, whether in money, property,
or services (i) to obtain favorable treatment in securing business, (ii) to
pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect
of
the Company, or (iv) in violation of any Laws, (b) established or maintained
any
fund or asset that has not been recorded in the books and records of the
Company.
2.22 Disclosure.
(a) No
representation or warranty of Seller in this Agreement and no statement in
the
Schedules or any Exhibits hereto omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) No
notice
or supplement given pursuant to Section 9.4 will contain any untrue statement
or
omit to state a material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they were made, not
misleading.
(c) There
is
no fact known to either Seller that has specific application to either Seller
or
the Company (other than general economic or industry conditions) and that
materially adversely affects or, as far as either Seller can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition,
or
results of operations of the Company (on a consolidated basis) that has not
been
set forth in this Agreement.
2.23 Relationships
With Related Persons.
Neither
Seller nor any Affiliate of Seller or of the Company has, or since June 30,
2002
has had, any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to the Company's
businesses. Neither Seller nor any Affiliate of Seller or of the Company is,
or
since January 1, 2003 has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i)
had
business dealings or a material financial interest in any transaction with
the
Company other than business dealings or transactions conducted in the ordinary
course of business with the Company at substantially prevailing market prices
and on substantially prevailing market terms, or (ii) engaged in competition
with the Company with respect to any line of the products or services of Company
(a "Competing Business") in any market presently served by such Company. Except
as set forth in Schedule
2.23,
neither
Seller nor any Affiliate of Seller or of the Company is a party to any Contract
with, or has any claim or right against, the Company.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The
Purchaser represents and warrants to the Seller and the Company as
follows:
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3.1 Corporate
Organization.
The
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Florida with full corporate power and authority
to carry on its business, and to own, operate and lease its properties and
assets. The Purchaser is duly qualified or licensed to do business and is in
good standing as a foreign corporation in every jurisdiction in which the
conduct of its business, the ownership or lease of its properties require it
to
be so qualified or licensed except where the failure to be so qualified,
licensed or would not have a material adverse effect on the ability of the
Purchaser to perform its obligations under this Agreement and the Collateral
Agreements (a “Purchaser
Material Adverse Effect”).
3.2 Authorization.
The
Purchaser has all requisite corporate power and authority to execute, perform
and deliver this Agreement and the Collateral Agreements to which it is or
will
be a party and to effect and consummate the transactions contemplated hereby
and
thereby. The execution, delivery and performance by the Purchaser of this
Agreement has been duly authorized by all requisite corporate action and the
execution, delivery and performance by the Purchaser of the Collateral
Agreements to which the Purchaser will a party will be duly authorized by all
requisite corporate action. No other proceedings by the Purchaser are necessary
to authorize this Agreement and the transactions contemplated hereby, and after
the authorization of the Collateral Agreements, no other proceedings will be
necessary to authorize the Collateral Agreements to which the Purchaser will
be
a party and the transactions contemplated thereby. This Agreement is and the
Collateral Agreements to which the Purchaser will be a party when duly executed
and delivered will be valid and legally binding obligations of the Purchaser,
and enforceable against the Purchaser, in accordance with their respective
terms, except to the extent that enforcement of the rights and remedies created
hereby and thereby may be affected by bankruptcy, reorganization, moratorium,
insolvency and similar Laws of general application affecting the rights and
remedies of creditors and by general equity principles.
3.3 No
Violation.
(a) The
execution, delivery and performance by the Purchaser of this Agreement and
the
Collateral Agreements to which the Purchaser is or will be a party and the
fulfillment of and compliance with the terms hereof and thereof by the Purchaser
do not and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default or event of default
under (with due notice, lapse of time or both) or (iii) result in a
violation of (A) the organizational documents of the Purchaser, (B) any
applicable Law or (C) any Law to which the Purchaser is subject. The Purchaser
has complied with all applicable Regulations and Orders in connection with
the
execution, delivery and performance of this Agreement and will so comply in
connection with the Collateral Agreements and the transactions contemplated
hereby and thereby.
(b) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, or notice to any Person is required to be obtained, made or taken
in connection with the execution and delivery of this Agreement or the
Collateral Agreements by the Purchaser or for the consummation of the
transactions contemplated hereby or thereby and except for such consents,
approvals, orders, authorizations, registrations, declarations or filings the
failure of which to be obtained or made, individually or in the aggregate,
would
not have a Purchaser Material Adverse Effect or delay the consummation of any
of
the transactions contemplated by this Agreement.
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3.4 Brokers
and Finders.
The
Purchaser has not employed any broker, agent or finder or incurred any liability
for any brokerage fees, agents’ commissions or finders’ fees in connection with
the transactions contemplated herein, except for Triton Realty, the fees and
expenses of which shall be the exclusive responsibility of
Purchaser.
3.5 Purchaser
Shares
(a) The
Purchaser Shares have been duly and validly authorized and, when issued and
paid
for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(b) All
corporate action on the part of the Company, its directors and stockholders
necessary for the authorization, sale, issuance and delivery of the Purchaser
Shares contemplated herein has been taken. The issuance and sale of the
Purchaser Shares contemplated hereby will not give rise to any preemptive rights
or rights of first refusal on behalf of any person.
(c) No
consent, approval, authorization or other order of any governmental authority
or
other third-party is required to be obtained by the Company in connection with
the authorization, issue and sale of the Purchaser Shares, except such filings
as may be required to be made with the U.S. Securities and Exchange Commission
(the “SEC” or the “Commission”), the National Association of Securities Dealers,
Inc. (the “NASD”) and the Nasdaq and with any state or foreign blue sky or
securities regulatory authority.
(d) All
material reports required to be filed by the Company within the two years prior
to the date of this Agreement under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), have been duly filed with the Commission, complied
at the time of filing in all material respects with the requirements of their
respective forms and, except to the extent updated or superseded by any
subsequently filed report, to the best of the Purchaser’s knowledge, were
complete and correct in all material respects as of the dates at which the
information was furnished, and contained (as of such dates) no untrue statements
of a material fact nor omitted to state any material fact necessary in order
to
make the statements contained therein, in light of the circumstances under
which
they were made, not misleading.
(e) The
Company is not an “investment company” within the meaning of such term under the
Investment Company Act of 1940, as amended, and the rules and regulations of
the
Commission thereunder.
(f) Since
December 31, 2004, there have not been any Purchaser Material Adverse Effect
in
the assets or liabilities, or in the business or condition, financial or
otherwise, of the Purchaser’s business and, to the best knowledge of the
Purchaser, nothing exists or is contemplated or threatened which the Purchaser
reasonably believes is likely to cause such a Purchaser Material Adverse Effect
in the future.
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ARTICLE
4
CERTAIN
COVENANTS
4.1 Post-Closing
Access and Cooperation.
From
and after the Closing Date, the Purchaser agrees, and agrees to cause the
Company, to permit the Seller to have reasonable access, during normal business
hours, to the Company’s books and records, to the extent that such books and
records relate to a Pre-Closing Period, for the purpose of enabling the Seller
to: (i) prepare the Tax Returns specified in Section 2.9(a); (ii) investigate
or
contest any Tax Matter which the Seller has the authority to conduct under
Section 2.9(b); and (iii) evaluate any claim for indemnification under Article
7. From and after the Closing Date, the Seller shall provide the Purchaser
with
reasonable access, during normal business hours, to any records and files of
the
Seller and its affiliates as the Purchaser or the Company reasonably required
in
order to (i) prepare tax returns, (ii) investigate or contest any tax
issue, and (iii) comply with any Law. the Purchaser shall, within 30 days
following a written request by the Seller, provide to the Seller such
information as is necessary to enable the Seller to substantiate research tax
credits for U.S. federal income tax purposes.
4.2 Collateral
Agreements.
On
or
prior to the Closing Date, the Purchaser shall execute and deliver to the
Seller, and the Seller shall execute and deliver to the Purchaser the Collateral
Agreements, substantially in the form attached hereto as Exhibit
4.2.
ARTICLE
5
OTHER
AGREEMENTS
Each
of
the parties hereto, as applicable, further agrees as follows:
5.1 Further
Assurances.
Subject
to the terms and conditions of this Agreement, each of the parties hereto at
its
own expense, shall use its reasonable efforts, to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary and proper
under applicable Laws to consummate and make effective as promptly as possible
the transactions contemplated by this Agreement and shall cooperate with each
other in connection with the foregoing, including without limitation using
all
reasonable efforts (a) to obtain all necessary waivers, consents, and approvals
from other parties to loan agreements, leases, mortgages and other contracts,
(b) to obtain all necessary consents, approvals and authorizations as may be
reasonably requested by Purchaser in connection with the assignment of Contracts
or otherwise, or as are required to be obtained under any Laws, (c) to lift
or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby,
and (d) to fulfill all conditions to the obligations of the parties under this
Agreement or the Collateral Agreements.
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5.2 Business
Employees.
(a) Schedule
5.2(a)
contains
a complete and accurate list of all the employees of the Company as of the
date
specified on such list (the “Business
Employees”),
showing for each Business Employee the position held and the annual base
salary.
(b) As
of the
Closing Date, the Purchaser agrees to continue to employ all Business Employees
(including those absent due to vacation, holiday, illness, leave of absence
or,
short-term disability or other approved leave of absence (including under the
Family and Medical Leave Act or workers’ compensation), but excluding any
Business Employees on long-term disability). The Purchaser shall indemnify,
defend and hold harmless the Seller and its Affiliates from any and all claims,
causes of actions, charges or suits asserted or brought by any Business Employee
arising out of or in connection with the employment or the failure to continue
the employment, or the termination of employment, of any Business Employee
not
in accordance with the terms of this Agreement, including claims for severance
or other separation benefits and employment discrimination claims to extent
caused by Purchaser’s action or inaction.
(c) The
following employees of the Company shall be guaranteed the continued employment
for one (1) year following the Closing with the current salary and benefits:
(i)
▇▇▇ ▇▇▇▇, General Manager; (ii) ▇▇▇▇▇ Small, Office Manager; and (iii) ▇▇▇▇
▇▇▇▇▇, double licensed in all store for service and maintenance jobs; provided,
however, that such employees may be terminated for “cause”. “Cause” shall exist
if any of such employees (a) fails to perform assigned responsibilities, (b)
engages in illegal conduct or gross misconduct, (c) is indicted or convicted
of
a felony or enters a guilty or nolo contendre plea with respect thereto, (d)
materially breaches any of the Company’s written employment policies, (e)
habitually uses narcotics or alcohol, or (f) engages in fraud in connection
with
the business of the Company or misappropriation of the Company’s funds or
property.
5.3 Non-Solicitation
of Employees.
(a) None
of
the Seller, the Company, any of their representatives or any of their Affiliates
will at any time prior to 12 months from the Closing Date, directly or
indirectly, solicit the employment of any Business Employee without the
Purchaser’s prior written consent. The term “solicit the employment” shall not
be deemed to include generalized searches for employees through media
advertisements, employment firms or otherwise that are not focused on Persons
employed by the Purchaser or any successor. This restriction shall not apply
to
any Transferred Employee whose employment with the Purchaser or its successor
is
involuntarily terminated by the Purchaser or its successor after the
Closing.
(b) None
of
the Purchaser, any of its representatives or any of its Affiliates will at
any
time prior to 12 months from the Closing Date, directly or indirectly, solicit
the employment, of any employee of the Seller who is employed by the Seller
or
the Company. The term “solicit the employment” shall not be deemed to include
generalized searches for employees through media advertisements, employment
firms or otherwise that are not focused on Persons employed by the Seller.
This
restriction shall not apply to any employee whose employment with the Seller
or
the Company or their successors is involuntarily terminated by the Seller after
the Closing.
5.4 Non-Competition.
For the
period ending on the third anniversary of the Closing Date, neither the Seller
nor any Affiliate, officer, director, or shareholder of Seller shall compete,
directly or indirectly, with Purchaser in the Wasatch Front, Utah trade area
as
defined by the appropriate administrative agency in the State of Utah. For
purposes hereof, “compete” means providing motor vehicle emissions testing
services by or through stationary or mobile testing units and
facilities.
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ARTICLE
6
CLOSING
6.1 Closing.
At
the
Closing, the following transactions shall take place:
(a) the
Seller shall deliver or cause to be delivered to the Purchaser, against payment
by the Purchaser to the Seller of the Purchase Price:
(i) certificate
or certificates representing the Company Shares together with a duly executed
stock power and other duly executed instruments of transfer;
(ii) all
the
documents, certificates and instruments required to be delivered, or caused
to
be delivered, by the Seller and the Company.
(iii) the
Collateral Agreements executed by the Seller or the Company, as
applicable;
(iv) executed
resignations of all of the members of the Board of Directors of the
Company;
(v) the
Company’s stock records and corporate minute book; and
(vi) a
closing
statement setting forth the payments and disbursements required to be made
in
connection with the Closing.
(b) The
Purchaser shall deliver or cause to be delivered to the Seller, against delivery
of the certificate or certificates representing the Company Shares duly endorsed
for transfer to the Purchaser:
(i) wire
transfer funds to an account designated in writing by the Seller (not less
than
one business days prior to the Closing Date) in the total amount of
$2,200,000;
(ii) all
the
documents required to be delivered, or caused to be delivered, by the Purchaser;
and
(iii) a
closing
statement setting forth the payments and disbursements required to be made
in
connection with the Closing.
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ARTICLE
7
SURVIVAL
OF TERMS; INDEMNIFICATION
7.1 Survival
of Representations and Warranties.
The
representations and warranties of the Purchaser and the Seller contained in
this
Agreement and in any Collateral Agreement shall survive the Closing solely
for
purposes of this Article 10 and such representations and warranties shall
terminate at the close of business on the date that is thirty six (36) months
after the Closing Date, except with respect to those representations and
warranties relating to fraud, and any representation and warranty contained
in
Sections 2.1, 2.2, 2.3, 2.4, 2.8, 2.9, 2.11 and 2.12 of this Agreement, all
of
which shall survive indefinitely. Neither the Seller nor the Purchaser shall
have any liability whatsoever with respect to any such representations or
warranties after such date; provided, however, that any representation,
warranty, covenant or agreement contained in this Agreement that would otherwise
terminate will continue to survive if notice of any claim shall have been timely
given under Section 9.4 hereof on or prior to such termination date until the
related claim for indemnification has been satisfied or otherwise resolved
as
provided in this Article 7, but only with respect to matters specifically
described in such notice(s).
7.2 General
Agreement to Indemnify.
(a) Subject
to subsection (e) and (f) of this Section 7.2, the Seller, jointly and
severally, and the Purchaser shall indemnify, defend and hold harmless the
other
party hereto, any Affiliate thereof, and any director, officer or employee
of
such other party or Affiliate thereof (each an “Indemnified
Party”)
from
and against any and all claims, actions, suits, proceedings, liabilities,
obligations, losses, and damages, amounts paid in settlement, interest, costs
and expenses (including reasonable attorney’s fees, court costs and other
out-of-pocket expenses incurred in investigating, preparing or defending the
foregoing) (collectively, “Losses”)
incurred or suffered by any Indemnified Party to the extent that the Losses
arise by reason of, or result from (i) subject to Section 7.1, any breach
of any representation or warranty of such party contained in this Agreement
or
any Collateral Agreement or (ii) the breach by such party of any covenant
or agreement of such party contained in this Agreement or any Collateral
Agreement to the extent not waived by the other party.
(b) Whether
or not the indemnifying party chooses to defend or prosecute any Third-Party
Claim the Seller and the Purchaser shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials and appeals, as may
be
reasonably requested in connection therewith.
(c) The
amount of the Indemnifying Party’s liability under this Agreement shall be net
of any applicable insurance proceeds actually received by, and other savings,
including Tax savings, that actually reduce the overall impact of the Losses
upon, the Indemnified Party. In computing the amount of any such Tax savings,
the Indemnified Party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising from the
receipt of any indemnity payment hereunder or the incurrence of any payment
of
any indemnified Loss. The indemnification obligations of each party hereto
under
this Article 7 shall inure to the benefit of the directors, officers and
Affiliates of the other party hereto on the same terms as are applicable to
such
other party.
(d) The
Indemnifying Party’s liability for all claims made under Section 7.2(a) shall be
subject to the following limitations:
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(i) the
Indemnified Party shall have no liability for any individual item where the
Loss
relating thereto is less than $20,000 and
(ii) the
Indemnifying Party’s aggregate liability for all such claims shall not exceed
$2,500,000.
(e) The
indemnification provided in this Article 7 shall be the sole and exclusive
remedy after the Closing Date for damages available to the parties to this
Agreement for breach for Losses identified under Section 7.2(a); provided,
this
exclusive remedy for damages does not preclude a party from bringing an action
for specific performance, injunctive relief, or other equitable remedies to
require a party to perform its obligations under this Agreement or any
Collateral Agreement.
(f) Notwithstanding
anything contained in this Agreement to the contrary, no party shall be liable
to the other party for:
(i) any
indirect, special, punitive, exemplary or consequential loss or damage
(including any loss of revenue or profit) arising out of this Agreement;
provided,
that
the foregoing shall not be construed to preclude recovery by the Indemnified
Party in respect of Losses directly incurred from Third Party Claims;
or
(ii) any
Loss
due to failure to obtain Required Consents.
(g) All
parties shall employ their reasonable efforts to mitigate their
damages.
7.3 General
Procedures for Indemnification.
(a) The
Indemnified Party seeking indemnification under this Agreement shall promptly
notify the party against whom indemnification is sought (the “Indemnifying
Party”)
of the
assertion of any claim, or the commencement of any action, suit or proceeding
by
any Third Party, in respect of which indemnity may be sought hereunder and
shall
give the Indemnifying Party such information with respect thereto as the
Indemnifying Party may reasonably request, but failure to give such notice
shall
not relieve the Indemnifying Party of any liability hereunder (unless the
Indemnifying Party has suffered material prejudice by such failure). The
Indemnifying Party shall have the right, but not the obligation, exercisable
by
written notice to the Indemnified Party within thirty days of receipt
of
notice from the Indemnified Party of the commencement of or assertion of any
claim, action, suit or proceeding by a third party in respect of which indemnity
may be sought hereunder (a “Third-Party
Claim”),
to
assume the defense and control the settlement of such Third-Party Claim that
(i) involves (and continues to involve) solely money damages or
(ii) involves (and continues to involve) claims for both money damages
and
equitable relief against the Indemnified Party that cannot be severed, where
the
claims for money damages are the primary claims asserted by the Third Party
and
the claims for equitable relief are incidental to the claims for money
damages.
(b) The
Indemnifying Party or the Indemnified Party, as the case may be, shall have
the
right to participate in (but not control), at its own expense, the defense
of
any Third-Party Claim that the other party is controlling, as provided in this
Agreement.
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20
-
(c) The
Indemnifying Party, if it has assumed the defense of any Third-Party Claim
as
provided in this Agreement, shall not consent to a settlement of, or the entry
of any judgment arising from, any such Third-Party Claim without the Indemnified
Party’s prior written consent (which consent shall not be unreasonably withheld)
unless such settlement or judgment relates solely to monetary damages. The
Indemnifying Party shall not, without the Indemnified Party’s prior written
consent, enter into any compromise or settlement that (i) commits the
Indemnified Party to take, or to forbear to take, any action or (ii) does
not provide for a complete release by such Third Party of the Indemnified Party.
The Indemnified Party shall have the sole and exclusive right to settle any
Third-Party Claim, on such terms and conditions as it deems reasonably
appropriate, to the extent such Third-Party Claim involves equitable or other
non-monetary relief against the Indemnified Party, and shall have the right
to
settle any Third-Party Claim involving money damages for which the Indemnifying
Party has not assumed the defense pursuant to this Section 7.3 with the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed.
In
the
event an Indemnified Party shall claim a right to payment pursuant to this
Agreement, such Indemnified Party shall send written notice of such claim to
the
Indemnifying Party. Such notice shall specify the basis for such claim. As
promptly as possible after the Indemnified Party has given such notice, and
subject to the limitations set forth in Section 9.4, the Indemnified Party
and
the Indemnifying Party shall establish the merits and amount of such claim
by
mutual agreement.
(d) Purchaser
shall have the option and right, in its sole discretion, to withhold and offset
any amounts for which it is entitled to indemnification from the Seller
hereunder against amounts owed to Seller pursuant to Section 1.2 hereof, by
giving Seller written notice thereof stating the nature and amount of the of
the
claim. First, Purchaser shall offset such amounts against the Purchaser Shares
until exhausted, and thereafter against the remaining cash consideration to
be
paid.
ARTICLE
8
DEFINITIONS
8.1 Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means,
with regard to any Person, any Person which, directly or indirectly controls,
is
controlled by, or is under common control with, such Person. “Control”
(including, with correlative meaning, the terms “controlled by” and “under the
common control with”), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by Contract or otherwise.
“Benefit
Plans”
means
each employee benefit plan within the meaning of Section 3(3) of ERISA covering
employees or former employees of Company that Company or Seller maintains or
to
which Company or Seller contributes (or, with respect to any employee pension
benefit plan as defined in Section 3(2) of ERISA has maintained or
contributed to in the last three years) or to which Company is a party or by
which it is otherwise bound.
-
21
-
“Best
Knowledge of the Seller”
means
the actual knowledge of any of the senior executive officers of the Seller’s
management, after reasonable due diligence and inquiry.
“Business”
shall
have the meaning ascribed to that term in the recitals.
“Business
Employees”
shall
have the meaning ascribed to that term in Section 5.2.
“Claim”
means
any action, claim, lawsuit, demand, suit, inquiry, hearing, investigation,
notice of a violation, litigation, proceeding, arbitration, or other dispute,
whether civil, criminal, administrative or otherwise.
“Closing”
shall
have the meaning ascribed to that term in Section 1.1.
“Closing
Date”
shall
have the meaning ascribed to that term in Section 1.1.
“Collateral
Agreements”
means
one or more of the following, as context may dictate, all in substantially
the
form attached hereto as Exhibit
4.2:
the
Seller Release Agreement, the Intellectual Property Rights Agreement and
the
Transition Services Agreement.
“Company”
shall
have the meaning ascribed to that term in the preamble.
“Company
Option”
shall
have the meaning ascribed to that term in Section 2.2.
“Company
Shares”
shall
have the meaning ascribed to that term in the preamble.
“Company
Tax Returns”
shall
have the meaning ascribed to that term in Section 2.9(a).
“Contract”
means
any agreement, contract, commitment, instrument or other binding arrangement
or
understanding, whether written or oral.
“Current
Financial Statements”
shall
have the meaning ascribed to that term in Section 2.5(b).
“Environmental
Law”
means
any and all applicable laws or regulations or other requirements of any
Governmental Entity concerning the protection of human health or the
environment.
“Financial
Statements”
shall
have the meaning ascribed to that term in Section 2.5(b).
“GAAP”
means
United States generally accepted accounting principles, consistently applied,
as
in effect on the date of this Agreement. Under this Agreement, all accounting
terms not specifically defined herein shall be interpreted, all accounting
determinations made and all financial statements prepared in accordance with
GAAP.
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22
-
“Governmental
Entity”
means
any domestic (federal or state), foreign or supranational court, administrative
agency or commission, or other governmental or regulatory body, agency,
authority or tribunal.
“Hazardous
Materials”
means
all explosive or regulated radioactive materials, hazardous or toxic substances,
wastes or chemicals, petroleum (including crude oil or any fraction thereof)
or
petroleum distillates, asbestos or asbestos-containing materials, and all other
materials or chemicals regulated under any Environmental Law.
“Indebtedness”
with
respect to any Person means any obligation of such Person for borrowed
money.
“Intellectual
Property”
shall
have the meaning ascribed to that term in Section 2.17(a).
“Law”
means
any national, federal, state, provincial or local law, statute, ordinance,
rule,
regulation, code, order, judgment, injunction or decree of any
country.
“Leased
Premises”
means
all real property, including buildings, fixtures and improvements thereon,
that
is leased by the Company from a third party which real property is identified
on
Schedule 2.15(a).
“Licensed
Intellectual Property”
shall
have the meaning ascribed to that term in Section 2.17(a).
“Lien”
means
any security interest, lien, mortgage, pledge, hypothecation encumbrance, Claim,
easement, restriction on transfer or otherwise, or interest of another Person
of
any kind or nature, whether perfected, unperfected or inchoate.
“Material
Contract”
shall
have the meaning ascribed to that term in Section 2.7(a).
“Order”
means
any judgment decree, order, injunction, stipulation, rule, consent of or by
a
Governmental Entity.
“Pension
Plan”
shall
have the meaning ascribed to that term in Section 2.18(a).
“Permits”
shall
have the meaning ascribed to that term in Section 2.10.
“Permitted
Liens”
means
(i) statutory Liens not yet delinquent, (ii) such imperfections or
irregularities of title, Liens, easements, charges or encumbrances as do not
materially detract from or interfere with the present use of the properties
or
assets subject thereto or affected thereby, otherwise impair present business
operations at such properties, or do not materially detract from the value
of
such properties and assets, and (iii) Liens reflected in the Financial
Statements or the notes thereto.
“Person”
means
any corporation, partnership, joint venture, organization, business entity,
Authority or natural person.
“Purchaser”
shall
have the meaning ascribed to that term in the preamble.
-
23
-
“Purchase
Price”
means
the amount payable pursuant to Section 1.2 hereof.
“Purchaser
Material Adverse Effect”
means
any change, effect, event, occurrence, condition, development or state of facts
that is, or may be, materially adverse to the business, assets, results of
operations or financial condition of the Purchaser, taken as a
whole.
“Release”
means
any spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching, emanation or migration in, into, onto, or through the
environment.
“Required
Consents”
shall
mean the items specified as such on Schedule
2.4(b).
“Seller”
shall
have the meaning ascribed to that term in the preamble.
“Seller
Material Adverse Effect”
means
any change, effect, event, occurrence, condition, development or state of facts
that is, or may be, materially adverse to the business, assets, results of
operations or financial condition of the Company, taken as a whole.
“Subsidiary”
means
any Person in which the Company, directly or indirectly, beneficially owns
more
than fifty percent (50%) of any the equity interest in, or the voting control
of, such Person.
“Tax
Return”
means
any return, report or similar statement required to be filed with respect to
any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax.
“Taxes”
shall
have the meaning ascribed to that term in Section 2.9(a).
“Taxing
Authorities”
shall
have the meaning ascribed to that term in Section 2.9(a).
“Year-End
Financial Statements”
shall
have the meaning ascribed to that term in Section 2.5(a).
ARTICLE
9
MISCELLANEOUS
PROVISIONS
9.1 Amendment
and Modification.
Subject
to applicable Law, this Agreement may be amended, modified and supplemented
only
by written agreement of the parties hereto, at any time with respect to any
of
the terms contained herein.
9.2 Rules
of Interpretation.
Unless
otherwise expressly provided, for purposes of this Agreement, the following
rules of interpretation shall apply:
|
(a)
|
Calculation
of Time Period.
When calculating the period of time before which, within which or
following which any act is to be done or step taken pursuant to this
Agreement, the date that is the reference date in calculating such
period
shall be excluded. If the last day of such period is a non-Business
Day,
the period in question shall end on the next succeeding Business
Day.
|
-
24
-
|
(b)
|
Gender
and Number.
Any reference in this Agreement to gender shall include all genders,
and
words imparting the singular number only shall include the plural
and vice
versa.
|
|
(c)
|
Headings.
The provision of a Table of Contents, the division of this Agreement
into
Articles, Sections and other subdivisions and the insertion of headings
are for convenience of reference only and shall not affect or be
utilized
in construing or interpreting this Agreement. All references in this
Agreement to any “Section” are to the corresponding Section of this
Agreement unless otherwise
specified.
|
|
(d)
|
Herein.
The words such as “herein,”“hereinafter,”“hereof,” and “hereunder” refer
to this Agreement as a whole and not merely to a subdivision in which
such
words appear unless the context otherwise
requires.
|
|
(e)
|
Including.
The word “including” or any variation thereof means “including,
without
limitation”
and shall not be construed to limit any general statement that it
follows
to the specific or similar items or matters immediately following
it.
|
|
(f)
|
Schedules
and Exhibits.
The Schedules and Exhibits attached to this Agreement shall be construed
with and as an integral part of this Agreement to the same extent
as if
the same had been set forth verbatim herein. Any matter disclosed
by the
Seller on any one Schedule shall be deemed disclosed for purposes
of all
other Schedules if reasonably apparent that such matter is relevant,
and
to the extent any matter disclosed on any Schedule conflicts with
any
representation, warranty or covenant of the Seller contained in this
Agreement, the Seller shall not have any liability with respect such
representation, warranty or
covenant.
|
9.3 Waiver
of Compliance; Consents.
Any
failure of any party hereto to comply with any obligation, covenant, agreement
or condition herein may be waived in writing by the other parties hereto, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing.
9.4 Notices.
All
notices, requests demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
delivered by hand or four days after mailing, first class certified mail with
postage paid, or when delivered by overnight receipted courier
service:
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25
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| (a) |
If
to the Seller, to:
|
▇▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with
copies to:
▇▇▇▇▇▇
▇.
▇▇▇▇▇, Esq.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
or
to
such other person or address as the Seller shall furnish by notice to the
Purchaser in writing.
| (b) |
If
to the Purchaser, to:
|
Speedemissions,
Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, CEO
with
a
copy to:
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Small, P.C.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or
to
such other person or address as the Purchaser shall furnish by notice to the
Company or Parent in writing.
9.5 Assignment.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without
the
prior written consent of the other parties.
9.6 Governing
Law.
The
Agreement shall be governed by the internal law of the State of Georgia, without
regard to the principles of the conflict of laws thereof.
-
26
-
9.7 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
9.8 Entire
Agreement.
This
Agreement, including the schedules and exhibits hereto and the documents,
certificates and instruments referred to herein, embodies the entire agreement
and understanding of the parties hereto in respect of the transactions
contemplated by this Agreement and supersedes all prior agreements,
representations, warranties, promises, covenants, arrangements, communications
and understandings, oral or written, express or implied, between the parties
with respect to such transactions. There are no agreements, representations,
warranties, promises, covenants, arrangements or understandings between the
parties with respect to such transactions, other than those expressly set forth
or referred to herein.
9.9 Binding
Effect.
This
Agreement shall not be construed so as to confer any right or benefit upon
any
Person other than the signatories to this Agreement and each of their respective
successors and permitted assigns.
9.10 Delays
or Omissions.
No
delay
or omission to exercise any right, power or remedy accruing to any party hereto,
upon any breach or default of any other party under this Agreement, shall impair
any such right, power or remedy of such party nor shall it be construed to
be a
waiver of any such breach or default, or an acquiescence therein, or of or
in
any similar breach or default thereafter occurring; nor shall any waiver of
any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. All remedies, either under this Agreement
or by law or otherwise afforded to any party, shall be cumulative and not
alternative.
9.11 Severability.
Unless
otherwise provided herein, if any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
9.12 Expenses.
Except
as
otherwise set forth herein, each party hereto shall bear all of its own
expenses, including, without limitation, legal fees and expenses, with respect
to this Agreement and the transactions contemplated hereby.
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27
-
9.13 Public
Announcement.
Prior
to
the signing of this Agreement, the Seller and the Company and the Purchaser
have
prepared a release announcing the transaction contemplated hereby. Except for
such press release, neither the Seller and the Company nor the Purchaser shall,
without the approval of the other, make any press release or other announcement
concerning the existence of this Agreement or the terms of the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so legally obligated, in which case the other party shall be advised
and the parties shall use their reasonable best efforts to cause a mutually
agreeable release or announcement to be issued; provided,
that
the foregoing shall not preclude communications or disclosures necessary to
comply with required federal securities Law disclosure obligations.
(Signature
page follows)
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28
-
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the day and year first above
written.
|
PURCHASER:
|
||
|
SPEEDEMISSIONS,
INC.
|
||
|
By: /s/
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
|
||
|
Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
|
||
|
Title:
President/CEO
|
||
|
COMPANY:
|
||
|
JUST,
INC.
|
||
|
By: /s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
Title:
President
|
||
|
SHAREHOLDERS:
|
||
|
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇
|
||
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
||
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
-
29
-
Disclosure
Schedule - Exhibit to Sales Agreement
|
Schedule
2.4 (b)
|
None
|
|
Schedule
2.6
|
Not
applied.
|
|
Schedule
2.7 (a)
|
No
such contracts, all liabilities are being paid out of closing
proceeds.
|
|
Schedule
2.7 (b)
|
Not
applied.
|
|
Schedule
2.8 (a)
|
Ford
Motor lawsuit, copies of pleadings have been provided to Purchaser
- case
has been dormant, $30,000 to be held for two years in reserve in
escrow
with ▇▇▇ ▇▇▇▇▇.
|
|
Schedule
2.8 (b)
|
Nothing
|
|
Schedule
2.8 (d)
|
Nothing
|
|
Schedule
2.9 (a)
|
All
liability will be paid out of escrow, per the terms of the Closing
Statement
|
|
Schedule
2.9 (c)
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
& ▇▇▇▇▇
|
|
|
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
|
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
|
Schedule
2.10
|
Nothing
|
|
Schedule
2.10 (b)
|
All
outstanding permits have been disclosed on attached
list.
|
|
Schedule
2.12
|
All
real property leases have been provided.
|
|
Schedule
2.14
|
No
accounts receivable
|
|
Schedule
2.17 (a)
|
None
|
|
Schedule
2.18 (a)
|
None
|
|
Schedule
2.18 (b)
|
None
|
|
Schedule
5.2 (a)
|
A
complete list of all current employees is attached.
|
|
Schedule
2.19
|
None
|
|
Schedule
2.23
|
None
|
-
1
-