ASSET PURCHASE AND REORGANIZATION AGREEMENT
Exhibit
10.1
This
Asset Purchase and Reorganization Agreement ("Agreement") is made as of the
13th
day of February, 2007, by and between ▇▇▇▇▇▇
Associates, Inc.,
a
Delaware corporation ("▇▇▇▇▇▇") with its principal business offices located
at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Accountabilities,
Inc.,
a
Delaware corporation ("AI") with its principal business offices located at
▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and TFB Acquisition Company,
LLC, a Delaware limited liability company with its principal business offices
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(“TFB”).
WHEREAS,
AI is in the business of providing (i) professional staffing services, primarily
to CPA firms and (ii) information technology/scientific staffing services and
workforce solutions to various businesses (collectively, the
“Business”);
WHEREAS,
▇▇▇▇▇▇ desires to purchase from AI, and AI desires to sell to ▇▇▇▇▇▇
substantially all of the properties, rights and assets used by AI in conducting
the Business, all upon and subject to the terms and conditions hereinafter
set
forth;
WHEREAS,
▇▇▇▇▇▇ is in the business of selling automotive franchises and administering
and
supporting full service automotive repair centers (the “Automotive
Business”);
WHEREAS,
TFB desires to purchase from ▇▇▇▇▇▇, and ▇▇▇▇▇▇ desires to sell to TFB,
substantially all of the properties, rights and assets used by ▇▇▇▇▇▇ in
conducting the Automotive Business, all upon and subject to the terms and
conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the mutual promises hereinafter set forth and
for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Purchase
and Sale and Delivery of the AI Assets.
1.1. Purchase
and Sale of the AI Assets.
(a) AI
Assets.
Subject
to and upon the terms and conditions of this Agreement and excluding the assets
retained by AI as set forth in Section 1.1(b) herein, AI shall sell, transfer,
convey, assign and deliver, to ▇▇▇▇▇▇, and ▇▇▇▇▇▇ shall purchase from AI, free
and clear of all liens and encumbrances (except for Permitted Liens as defined
in Section 2.16), all of the properties, rights and assets, of every kind and
nature, real, personal or mixed, tangible or intangible, wherever located,
which
are owned, leased, licensed or used by AI in the conduct of the Business and
which exist on the “Closing Date” (as defined in Section 1.4 below)
(collectively, the "AI Assets"), including, without limitation, the following
assets:
(i) all
office supplies and similar materials (the "Supplies");
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(ii) all
contracts, agreements, leases, arrangements and/or commitments of any kind,
whether oral or written, relating to the AI Assets (the "AI
Contracts");
(iii) all
customer lists, files, records and documents (including credit information)
relating to customers and vendors of the Business and all other business,
financial and employee books, records, files, documents, reports and
correspondence relating to the Business (collectively, the
"Records");
(iv) all
rights of AI, if any, under express or implied warranties from the suppliers
of
AI in connection with the AI Assets;
(v) all
furnishings, furniture, fixtures, tools, machinery, equipment and leasehold
improvements owned by AI and related to the AI Assets, whether or not reflected
as capital assets in the accounting records of AI (collectively, the "Fixed
Assets");
(vi) all
patents, trademarks, tradenames, service marks, copyrights and applications
therefor which are owned by AI and related to the AI Assets and/or the operation
of the Business;
(vii) all
computers, computer programs, computer databases, hardware and software owned
or
licensed by AI and used in connection with the AI Assets and/or the operation
of
the Business;
(viii) all
municipal, state and federal franchises, licenses, authorizations and permits
of
AI which are necessary to operate or are related to the AI Assets;
(ix) all
prepaid charges, deposits,
sums and fees of
AI
relating to the AI Assets or arising out of the operation of the
Business;
(x) all
claims and rights of AI related to or arising from the AI Assets or arising
out
of the operation of the Business;
(xi) all
cash
and cash equivalents;
(xii) accounts
receivable and rights to payment related to or arising out of the conduct of
the
Business;
(xiii) all
of
the goodwill of the Business; and
(xiv) all
other
assets and properties of any nature whatsoever held by AI either directly or
indirectly, and used in, allocated to, or required for the conduct of the
Business.
(b) Retained
Assets.
Notwithstanding anything to the contrary set forth in this Agreement, the
following assets of AI (the “Retained Assets”) are not included in
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the
sale
of AI Assets contemplated hereby: (i) the Purchase Price (as hereinafter
defined) and the other rights of AI under or relating to this Agreement, (ii)
the corporate minute books, stock records, qualification to conduct business
as
a foreign corporation, and other documents relating to the formation,
maintenance or existence as a corporation of AI, except that AI agrees that
it
will provide copies of any such document from the corporate minute books as
reasonably requested by ▇▇▇▇▇▇ which ▇▇▇▇▇▇ believes are necessary for the
use
and operation of the AI Assets and the conduct of the Business after the Closing
Date, and (iii) any and all properties, rights and assets used in the conduct
of
AI’s payroll debit card business or any business conducted prior to June 2005.
1.2. Purchase
Price.
The
purchase price for the AI Assets (the "Purchase Price") shall be Twelve Million
Five Hundred Thousand (12,500,000) shares (the “Shares”) of ▇▇▇▇▇▇’▇ common
stock, $.0005 par value (the “▇▇▇▇▇▇ Common Stock”), after giving effect to the
Reverse Split (as defined in Section 5.19 below). The Parties hereto intend
that
the Shares to be issued to AI shall represent ninety-six percent (96%) of
▇▇▇▇▇▇’▇ outstanding Common Stock on a Fully Diluted Basis (as defined in
Section 2.3(b) below). In the event that the Shares represent less than
ninety-six percent (96%) of ▇▇▇▇▇▇’▇ outstanding Common Stock on a Fully Diluted
Basis, the number of Shares to be issued to AI shall be adjusted at Closing
to
be equal to ninety-six percent (96%) of ▇▇▇▇▇▇’▇ outstanding Common Stock on a
Fully Diluted Basis at the time of Closing.
1.3. Assumption
of Liabilities.
(a) Assumed
Liabilities.
Effective as of the Effective Date, ▇▇▇▇▇▇ agrees to assume and to pay, perform
and discharge all liabilities and obligations (i) reflected on the Balance
Sheet
of the Business dated as of September 30, 2006 (a copy of which is annexed
as
Exhibit 2.5 to the AI Disclosure Schedule, as defined in Section 2 below),
(ii)
incurred in the ordinary course of business after the date of the Balance Sheet,
(iii) the fees and expenses of AI’s counsel, accountants and other experts and
all other expenses incurred by AI incident to the negotiation, preparation
and
execution of this Agreement and any agreement entered into in connection
herewith and the performance by AI of its obligations hereunder or thereunder
and (iv) arising under AI Contracts on and after the Closing Date and with
respect to the use and operation of the AI Assets by ▇▇▇▇▇▇ after the Closing
Date (the “Assumed Liabilities”).
(b) Liabilities
Retained by ▇▇▇▇▇▇.
Except
for the Assumed Liabilities, ▇▇▇▇▇▇ shall not assume, be liable for or pay,
and
none of the AI Assets shall be subject to, and AI shall retain, be
unconditionally liable for and pay, any liability or obligation (whether known
or unknown, matured or unmatured, stated or unstated, recorded or unrecorded,
fixed or contingent, currently existing or hereafter arising) of AI, without
limitation, the following:
(i) except
as
provided in Section 1.3(a) above, any obligation or liability of AI arising
out
of this Agreement, any agreement entered into in connection herewith or the
transactions contemplated hereby or thereby;
(ii) any
liability or obligation under or in connection with the Retained
Assets.
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1.4. Closing.
The
closing (the “Closing”) of the transactions contemplated by this Agreement shall
take place at the offices of AI in Manalapan, New Jersey, within five (5) days
after the date when each of the conditions set forth in Section 6 shall have
been fulfilled (or waived by the party entitled to waive such condition) or
such
other time or date or such other location as the parties may mutually agree
(the
"Closing Date").
1.5. Allocation
of Purchase Price.
The
Purchase Price shall be allocated among the various AI Assets by mutual
agreement reached by the parties prior to the Closing. The parties covenant
and
agree with each other that this allocation shall be arrived at by arm’s length
negotiation and that none of them will take a position on any income tax return,
before any governmental agency charged with the collection of any income tax
or
in any judicial proceeding that is in any manner inconsistent with the terms
of
this Section 1.5 without the written consent of the other party to this
Agreement. Each of ▇▇▇▇▇▇ and AI covenant and agree to execute and timely file
U.S. Treasury Form 8594 consistent with such agreed upon allocation and upon
a
party’s reasonable request the other party shall execute and file such other
documents as may be necessary to document such allocation.
2. Representations
and Warranties.
Except
as set forth in the corresponding sections or subsections of each of the ▇▇▇▇▇▇
Disclosure Schedule annexed hereto as Appendix I (the "▇▇▇▇▇▇ Disclosure
Schedule") or AI Disclosure Schedule annexed hereto as Appendix II (the "AI
Disclosure Schedule"; each of the ▇▇▇▇▇▇ Disclosure Schedule and the AI
Disclosure Schedule to be sometimes referred to herein as a "Disclosure
Schedule"), as the case may be, AI (except for Sections 2.2(b), 2.3(b), 2.5(b),
references in Section 2.1 below to documents made available by ▇▇▇▇▇▇ to AI
and
references to ▇▇▇▇▇▇ Financial Statements in Section 2.7), hereby represents
and
warrants to ▇▇▇▇▇▇, and ▇▇▇▇▇▇ (except for Sections 2.2(a), 2.3(a), 2.5(a),
references in Section 2.1 below to documents made available by AI to ▇▇▇▇▇▇
and
references to AI Financial Statements in Section 2.7), hereby represents and
warrants to AI, that:
2.1. Organization,
Good Standing and Qualification.
Each of
it and its Subsidiaries (as defined below) is a corporation is duly organized,
validly existing as a corporation and in good standing under the laws of its
respective jurisdiction of incorporation. It and each of its Subsidiaries has
all requisite power and authority to own and operate its properties and assets
and to carry on its business as presently conducted and is qualified to do
business and is in good standing in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing
is not, when taken together with all other such failures, reasonably likely
to
have a material adverse effect on its business, financial condition, operating
results or prospects (a “Material Adverse Effect”). It has made available to
▇▇▇▇▇▇, in the case of AI, and to AI, in the case of ▇▇▇▇▇▇, a complete and
correct copy of its certificate of incorporation and by-laws (the
"Organizational Documents"), each as amended to date. Such Organizational
Documents as so made available are in full force and effect.
As
used
in this Agreement, (i) the term "Subsidiary" means, with respect to AI or
▇▇▇▇▇▇, as the case may be, any entity, whether incorporated or unincorporated,
of which at least fifty percent of the securities or ownership interests having
by their terms ordinary voting power to
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elect
at
least fifty percent of the board of directors or other persons performing
similar functions is directly or indirectly owned by such party or by one or
more of its respective Subsidiaries or by such party and any one or more of
its
respective Subsidiaries, (ii) reference to "the other party" means, with respect
to AI, ▇▇▇▇▇▇ and means with respect to Tilden, AI, and (iii) the term "Person"
means an association, corporation, estate, general partnership, governmental
entity (or any agency, department or political subdivision thereof), individual,
joint stock company, joint venture, limited liability company, limited
partnership, trust, or any other organization or entity.
2.2. Capital
Structure.
(a) The
authorized capital stock of AI consists of 95,000,000 shares of Common Stock,
$.0001 par value (the “AI Common Stock”) of which 13,600,000 shares were issued
and outstanding and no shares were held in treasury as of the date of this
Agreement and 5,000,000 shares of Preferred ▇▇▇▇▇, ▇.▇▇▇▇ par value, of which
no
shares were outstanding as of the date of this Agreement. All of the outstanding
shares of AI Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. AI has no shares reserved for issuance. Each
of
the outstanding shares of capital stock or other securities of each of AI’s
Subsidiaries is owned by AI or a direct or indirect wholly-owned Subsidiary
of
AI, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth in Section 2.2 of the AI Disclosure Schedule,
AI has no shares of AI Common Stock or Preferred Stock reserved for issuance
and
there are no preemptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements, arrangements or commitments to issue or sell any shares
of
capital stock or other securities of AI or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of
AI
or any of its Subsidiaries, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. AI does not have outstanding
any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with its stockholders on any matter ("Voting Debt").
(b) The
authorized capital stock of ▇▇▇▇▇▇ consists of 30,000,000 shares of ▇▇▇▇▇▇
Common Stock, of which 11,425,903 shares were issued and outstanding and no
shares were held in treasury as of the date of this Agreement. All of the
outstanding shares of ▇▇▇▇▇▇ Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. Each of the outstanding shares
of
capital stock of each of ▇▇▇▇▇▇’▇ Subsidiaries is owned by ▇▇▇▇▇▇ or a direct or
indirect wholly-owned subsidiary of ▇▇▇▇▇▇, free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as set forth in its SEC
Documents (as defined in Section 2.5(b)), ▇▇▇▇▇▇ has no shares of ▇▇▇▇▇▇ Common
Stock or ▇▇▇▇▇▇ Preferred Stock reserved for issuance and there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or to sell any shares of capital stock
or
other securities of ▇▇▇▇▇▇ or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving
any
Person a right to subscribe for or acquire, any securities of ▇▇▇▇▇▇ or any
of
its Subsidiaries, and no securities or obligation evidencing such rights are
authorized, issued or outstanding. ▇▇▇▇▇▇ does not have outstanding any Voting
Debt.
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2.3. Corporate
Authority; Approval.
(a) AI
has
all requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, subject only
to approval of this Agreement by the holders of a majority of the outstanding
shares of AI Common Stock (the "AI Requisite Vote"). This Agreement is a valid
and binding agreement of AI enforceable against AI in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception"). The Board of Directors of AI has unanimously approved
this Agreement and the sale of the AI Assets and the other transactions
contemplated hereby.
(b) ▇▇▇▇▇▇
each has all requisite corporate power and authority and each has taken all
corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement, subject only to approval of this Agreement by the holders
of
a majority of the outstanding shares of ▇▇▇▇▇▇ Common Stock (the “▇▇▇▇▇▇
Requisite Vote”). This Agreement is a valid and binding agreement of ▇▇▇▇▇▇,
enforceable against ▇▇▇▇▇▇ in accordance with its terms, subject to the
Bankruptcy and Equity Exception. The Shares of ▇▇▇▇▇▇ Common Stock, when issued
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and no stockholder of ▇▇▇▇▇▇ will have any preemptive right
of
subscription or purchase in respect thereof. The Board of Directors of ▇▇▇▇▇▇
has unanimously approved this Agreement, the acquisition of the AI Assets,
the
issuance of the shares and the other transactions contemplated hereby. After
giving effect to the Reverse Split, the Shares of ▇▇▇▇▇▇ Common Stock issued
to
AI pursuant to this Agreement shall represent 96% of the outstanding shares
of
▇▇▇▇▇▇ Common Stock outstanding, on a Fully Diluted Basis, immediately after
the
Effective Time. For purposes of this Agreement, the phrase "Fully Diluted Basis"
shall mean after giving effect to the assumed exercise of all outstanding
warrants, options and other rights to acquire ▇▇▇▇▇▇ Common Stock and securities
convertible into ▇▇▇▇▇▇ Common Stock, and the assumed conversion of all
securities convertible into ▇▇▇▇▇▇ Common Stock.
2.4. Governmental
Filings; No Violations.
(a) Other
than the filings and/or notices (i) described in Section 4.19
under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or the
filing of a Registration Statement under the Securities Act of 1933, as amended
(the "Securities Act"), (ii) to comply with state securities or "blue-sky"
laws,
(such filings and/or notices of ▇▇▇▇▇▇ being the "▇▇▇▇▇▇ Governmental Consents"
and of AI being the "AI Governmental Consents"), no notices, reports or other
filings are required to be made by it with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by it from, any
governmental or regulatory authority, court, agency, commission, body or other
governmental entity ("Governmental Entity"), in connection with the execution
and delivery of this Agreement by it and the consummation by it of the
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have
a
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Material
Adverse Effect on it or prevent, materially delay or materially impair its
ability to consummate the transactions contemplated by this
Agreement.
(b) The
execution, delivery and performance of this Agreement by it do not, and the
consummation by it of the transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default under, its
Organizational Documents or the Organizational Documents governing any of its
Subsidiaries, (B) a breach or violation of, or a default under, the acceleration
of any obligations or the creation of a lien, pledge, security interest or
other
encumbrance on its assets or the assets of any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") binding upon it or any of its Subsidiaries or any Law (as defined
in Section 2.9) or governmental or non-governmental permit or license to which
it or any of its Subsidiaries is subject or (C) any change in the rights or
obligations of any party under any of its Contracts, except, in the case of
clause (B) or (C) above, for any breach, violation, default, acceleration,
creation or change that, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect on it or prevent, materially delay
or
materially impair its ability to consummate the transactions contemplated by
this Agreement. Section 2.4(b) of its Disclosure Schedule sets forth a correct
and complete list of its Contracts and Contracts of its Subsidiaries pursuant
to
which consents or waivers are or may be required prior to consummation of the
transactions contemplated by this Agreement other than those where the failure
to obtain such consents or waivers is not reasonably likely to have a Material
Adverse Effect on it or prevent or materially impair its ability to consummate
the transactions contemplated by this Agreement.
2.5. Financial
Statements; SEC Reports.
(a)
Attached
as Exhibit 2.5 to the AI Disclosure Schedule are the following financial
statements: balance sheets of the Business at September 30, 2006 and 2005 and
statements of operations of the Business for the fiscal years ended September
30, 2006 and 2005 (the "AI Financial Statements"). The AI Financial Statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except
as
may be indicated in the notes thereto) and fairly present the financial position
of the Business as of the dates thereof and the results of its operations for
the periods indicated. AI has also delivered to ▇▇▇▇▇▇ a copy of AI’s Business
Plan dated September 2006 (the “Business Plan”). The Business Plan, including
the schedules contained therein, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial projections included
with the Business Plan represent the good faith estimate of management of AI
of
the results of operations of AI for the periods presented, based upon
assumptions which management believes are reasonable (it being acknowledged
by
all parties hereto that such projections are not intended as a guaranty of
future results and actual results may vary from the projected
results).
(b) Since
December 31, 2001, ▇▇▇▇▇▇ has filed with the Securities and Exchange Commission
(the "SEC") all forms, reports, schedules, statements and other documents
required to be filed by it under the Exchange Act or the Securities Act (as
such
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documents
have been amended since the time of their filing, collectively, the "SEC
Documents"). The SEC Documents, including without limitation any financial
statements and schedules included therein, at the time filed or, if subsequently
amended, as so amended, (i) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) complied in all material respects
with the applicable requirements of the Exchange Act and the Securities Act,
as
the case may be, and the applicable rules and regulations of the SEC thereunder.
The financial statements of ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Financial Statements") included
in the SEC Documents comply as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q of the SEC) and
fairly present (subject, in the case of the unaudited statements, to customary
year-end audit adjustments) the financial position of ▇▇▇▇▇▇ as at the dates
thereof and the results of its operations and cash flows for the periods
indicated.
2.6. Absence
of Certain Changes.
Except
as expressly contemplated by this Agreement or set forth in Section 2.6 of
its
Disclosure Schedule, since September 30, 2006 (in the case of AI) and December
31, 2005 (in the case of ▇▇▇▇▇▇), there has not been (i) any change in the
financial condition, properties, prospects, business or results of operations
of
it and its Subsidiaries, except those changes that are not, individually or
in
the aggregate, reasonably likely to have a Material Adverse Effect on it; (ii)
any damage, destruction or other casualty loss with respect to any asset or
property owned, leased or otherwise used by it or any of its Subsidiaries,
whether or not covered by insurance, which damage, destruction or loss is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on it; or (iii) any change by it in accounting principles, practices
or
methods. Since September 30, 2006 (in the case of AI) and December 31, 2005
(in
the case of ▇▇▇▇▇▇), except as provided in Section 2.6
of its
Disclosure Schedule (or in its SEC Documents in the case of ▇▇▇▇▇▇), there
has
not been any increase in the compensation payable or that could become payable
by it or any of its Subsidiaries to officers or key employees or any amendment
of any of its Benefit Plans (as defined in Section 2.8) other than increases
or
amendments in the ordinary course.
2.7. Litigation
and Liabilities.
Except
as set forth in Section 2.7
of its
Disclosure Schedule or reflected on the AI Financial Statements or in the notes
thereto (in the case of AI) or the ▇▇▇▇▇▇ Financial Statements, the notes
thereto or the SEC Documents (in the case of ▇▇▇▇▇▇), there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations
or
proceedings pending or, to the knowledge of its executive officers, threatened
against it or any of its Affiliates (which term, as used in this Agreement,
shall be as defined in Rule 12b-2 under the Exchange Act) or (ii) obligations
or
liabilities, whether or not accrued, contingent or otherwise, including those
relating to matters involving any Environmental Law (as defined in Section
2.10), or any other facts or circumstances, in either such case, of which its
executive officers have actual knowledge that are reasonably likely to result
in
any claims against or obligations or liabilities of it or any of its Affiliates,
except for those that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it or prevent or materially impair
its ability to consummate the transactions contemplated by this
Agreement.
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2.8. Employee
Benefits.
(a) A
copy of
each bonus, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, severance, compensation, medical,
health or other plan, agreement, policy or arrangement that covers employees,
officers, directors, former employees, former officers or former directors
of
its and its Subsidiaries (its "Benefit Plans") and any trust agreements or
insurance contracts forming a part of such Benefit Plans has been made available
by it to the other party prior to the date hereof and each such Benefit Plan
is
listed in Section 2.8 of its respective Disclosure Schedule or described in
its
SEC Documents in the case of ▇▇▇▇▇▇.
(b) All
of
its Benefit Plans are in substantial compliance with all applicable law,
including the Code and the Employee Retirement Income Security Act of 1974,
as
amended ("ERISA"). None of its Benefit Plans is a defined benefit plan (as
defined in Section 3(35) of ERISA) or a mutli-employer plan (as defined in
Section 3(37) of ERISA). Each of its Benefit Plans that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan")
and
that is intended to be qualified under Section 401(a) of the Code has received
a
favorable determination letter from the Internal Revenue Service (the "IRS"),
and it is not aware of any circumstances likely to result in revocation of
any
such favorable determination letter. There is no pending or, to the actual
knowledge of its executive officers, threatened litigation relating to its
Benefit Plans. Neither it nor any Subsidiary has engaged in a transaction with
respect to any of its Benefit Plans that, assuming the taxable period of such
transaction expired as of the date hereof, would subject it or any of its
Subsidiaries to a material tax or penalty imposed by either Section 4975 of
the
Code or Section 502 of ERISA.
(c) As
of the
date hereof, no liability under Subtitle C or D of Title IV of ERISA (other
than
the payment of prospective premium amounts to the Pension Benefit Guaranty
Corporation in the normal course) has been or is expected to be incurred by
it
or any Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer plan
of
any entity which is considered one employer with it under Section 4001 of ERISA
or Section 414 of the Code (its "ERISA Affiliate") (each such single-employer
plan, its "ERISA Affiliate Plan"). It and its Subsidiaries and ERISA Affiliates
have not contributed, or been obligated to contribute, to a multiemployer plan
under Subtitle E of Title IV of ERISA. No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any of its Pension Plans
or any of its ERISA Affiliate Plans within the 12-month period ending on the
date hereof or will be required to be filed in connection with the transactions
contemplated by this Agreement.
(d) All
contributions required to be made under the terms of any of its Benefit Plans
as
of the date hereof have been timely made or have been reflected on its most
recent balance sheet delivered by it to the other party. Neither any of its
Pension Plans nor any of any of its ERISA Affiliate Plans has an "accumulated
funding deficiency" (whether or not
9
waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither
it nor its Subsidiaries has provided, or is required to provide, security to
any
of its Pension Plans or to any of its ERISA Affiliate Plans pursuant to Section
401(a)(29) of the Code.
(e) Under
each of its Pension Plans which is a single-employer plan and each of its ERISA
Affiliate Plans, as of the last day of the most recent plan year ended prior
to
the date hereof, the actuarily determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial valuation), did not exceed the then current value
of the assets of such Pension Plan or ERISA Affiliate Plan and there has been
no
material change in the financial condition of such Pension Plan or ERISA
Affiliate Plan since the last day of the most recent plan year.
(f) Neither
it nor its Subsidiaries have any obligations for retiree health and life
insurance benefits under any of its Benefit Plans, except as required by
applicable law.
(g) The
consummation of the transactions contemplated by this Agreement will not (x)
entitle any of its employees, officers or directors or any employees of its
Subsidiaries to severance pay, directly or indirectly, upon termination of
employment, (y) accelerate the time of payment or vesting or trigger any payment
of compensation or benefits under, increase the amount payable or trigger any
other material obligation pursuant to, any of its Benefit Plans or (z) result
in
any breach or violation of, or a default under, any of its Benefit
Plans.
2.9. Compliance
with Laws.
Except
as set forth in Section 2.9 of its Disclosure Schedule or in its SEC Documents
in the case of ▇▇▇▇▇▇, the businesses of each of it and its Subsidiaries have
not been, and are not being, conducted in violation of any law, statute,
ordinance, regulation, judgment, order, decree, injunction, arbitration award,
license, authorization, opinion, agency requirement or permit of any
Governmental Entity or common law (collectively, "Laws"), except for violations
or possible violations that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it or prevent or
materially impair its ability to consummate the transactions contemplated by
this Agreement. No investigation or review by any Governmental Entity with
respect to it or any of its Subsidiaries is pending or, to the actual knowledge
of its executive officers, threatened, nor has any Governmental Entity indicated
an intention to conduct the same, except for those the outcome of which are
not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect on it or prevent or materially impair its ability to consummate the
transactions contemplated by this Agreement. To the knowledge of its executive
officers, no material change is required in its or any of its Subsidiaries'
processes, properties or procedures in connection with any such Laws, and it
has
not received any notice or communication of any material noncompliance with
any
such Laws that has not been cured as of the date hereof, except for such changes
and noncompliance that are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it or prevent or materially impair
its ability to consummate the transactions contemplated by this Agreement.
Each
of it and its Subsidiaries has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
(collectively, "Permits"), necessary to conduct their business as presently
conducted, except for those the absence of which are not, individually or in
the
aggregate,
10
reasonably
likely to have a Material Adverse Effect on it or prevent or materially impair
its ability to consummate the transactions contemplated by this Agreement.
Each
of such Permits is listed in Section 2.9 of its Disclosure
Schedule.
2.10. Environmental
Matters.
Except
as disclosed in Section 2.10 of its Disclosure Schedule or in its SEC Documents
in the case of ▇▇▇▇▇▇ and except for such matters that, alone or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on it:
(i) each of it and its Subsidiaries has complied with all applicable
Environmental Laws (as defined below); (ii) the properties currently owned
or
operated by it or any of its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances (as defined below); (iii) the properties formerly owned or operated
by it or any of its Subsidiaries were not contaminated with Hazardous Substances
during the period of ownership or operation by it or any of its Subsidiaries;
(iv) neither it nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party property;
(v)
neither it nor any Subsidiary has been associated with any release or threat
of
release of any Hazardous Substance; (vi) neither it nor any Subsidiary has
received any notice, demand, letter, claim or request for information alleging
that it or any of its Subsidiaries may be in violation of or liable under any
Environmental Law; (vii) neither it nor any of its Subsidiaries is subject
to
any orders, decrees, injunctions or other arrangements with any Governmental
Entity or is subject to any indemnity or other agreement with any third party
relating to liability under any Environmental Law or relating to Hazardous
Substances; and (viii) there are no circumstances or conditions involving it
or
any of its Subsidiaries that could reasonably be expected to result in any
claims, liability, investigations, costs or restrictions on the ownership,
use,
or transfer of any of its properties pursuant to any Environmental
Law.
As
used
herein, the term "Environmental Law" means any Law relating to pollution (or
the
clean up of the environment), or the protection of air, surface water,
groundwater, drinking water, land (surface or subsurface), human health, the
environment or any other natural resource or the use, storage, recycling,
treatment, generation, processing, handling, production or disposal of Hazardous
Materials, including the Comprehensive Environmental Response, Compensation
and
Liability Act of 1980, as amended, 42 USC §§9601 et
seq.
and 40
CFR §§302.1 et
seq.,
and
regulations thereunder; the Federal Clean Air Act, as amended, 42 USC §§7401
et
seq.,
and
regulations thereunder; the Resource Conservation and Recovery Act, 42 USC
§§6901 et
seq.,
as
amended, and regulations thereunder; and the Federal Water Pollution Control
Act, 33 USC §§1251 et
seq.,
as
amended, and regulations thereunder.
As
used
herein, the term "Hazardous Substance" means any asbestos containing materials,
mono- and polychlorinated biphenyls, urea formaldehyde products, radon,
radioactive materials, any "hazardous substance", "hazardous waste",
"pollutant", "Toxic Pollutant", "oil" or "contaminant" as used in, or defined
pursuant to any Environmental Law, and any other substance, waste, pollutant,
contaminant or material, including petroleum products and derivatives, the
use,
transport, disposal, storage, treatment, recycling, handling, discharge,
release, threatened release, discharge or emission of which is regulated or
governed by any Environmental Law.
2.11. Taxes.
It and
each of its Subsidiaries have prepared in good faith and duly and timely filed
(taking into account any extension of time within which to file) all material
Tax
11
Returns
(as defined below) required to be filed by any of them and all such filed tax
returns are complete and accurate in all material respects and: (i) it and
each
of its Subsidiaries have paid all Taxes (as defined below) that are shown as
due
on such filed Tax Returns or that it or any of its Subsidiaries is obligated
to
withhold from amounts owing to any employee, creditor or third party, except
with respect to matters contested in good faith or for such amounts that, alone
or in the aggregate, are not reasonably likely to have a Material Adverse Effect
on it; (ii) as of the date hereof, there are not pending or, to the actual
knowledge of its executive officers threatened in writing, any audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters; and (iii) there are not, to the actual knowledge of its executive
officers, any unresolved questions or claims concerning its or any of its
Subsidiaries' Tax liability that are reasonably likely to have a Material
Adverse Effect on it. Neither it nor any of its Subsidiaries has any liability
with respect to Taxes in excess of the amounts accrued in respect thereof that
are reflected in its consolidated balance sheet as of September 30, 2006, except
such excess liabilities that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on it.
As
used
in this Agreement, (i) the term "Tax" (including, with correlative meaning,
the
terms "Taxes", and "Taxable") includes all federal, state, local and foreign
income, profits, franchise, gross receipts, environmental, customs duty, capital
stock, severance, stamp, payroll, sales, employment, unemployment, disability,
use, property, withholding, excise, production, value added, occupancy and
other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and
any
interest with respect to such penalties and additions, and (ii) the term "Tax
Return" includes all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be
supplied to a Tax authority relating to Taxes.
2.12. Labor
Matters.
Except
as set forth in Section 2.12 of its Disclosure Schedule or in its SEC Documents
in the case of ▇▇▇▇▇▇, neither it nor any of its Subsidiaries is the subject
of
any proceeding asserting that it or any of its Subsidiaries has committed an
unfair labor practice or is seeking to compel it to bargain with any labor
union
or labor organization nor is there pending or, to the knowledge of its executive
officers, threatened, nor has there been for the past five years, any labor
strike, dispute, walkout, work stoppage, slow-down or lockout involving it
or
any of its Subsidiaries, except in each case as is not, individually or in
the
aggregate, reasonably likely to have a Material Adverse Effect on
it.
2.13. Securities
Law Compliance.
Each
outstanding share of its capital stock and each outstanding option and right
to
acquire its capital stock, if any, have been registered under the Securities
Act
and all applicable state "blue sky" laws or issued pursuant to applicable
exemptions from registration under the Securities Act or such "blue sky"
laws.
2.14. No
Default.
Except
as set forth in Section 2.14 of its Disclosure Schedule or in its SEC Documents
in the case of ▇▇▇▇▇▇, neither it nor any of its Subsidiaries is or currently
expects to be in the future, in violation or breach of or in default under,
and
no conditions exist that, with the giving of notice or the lapse of time or
both, would constitute a default under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which it or any of its
Subsidiaries is a party or by which any of them or any of their properties
or
assets may be bound except for such
12
violations,
breaches or defaults as are not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on it.
2.15. Related
Party Transactions.
Except
as set forth in Section 2.15 of its Disclosure Schedule or in its SEC Documents
in the case of ▇▇▇▇▇▇, since December 31, 2004, neither it nor any of its
Subsidiaries has (a) incurred any obligation to pay commissions or other amounts
to any firm of which any of its directors, officers or stockholders which
beneficially own 5% or more of its outstanding common stock (each a "5%
Stockholder") is a partner or stockholder; (b) cancelled, without payment in
full, any notes, loans or other obligations receivable from any employee,
officer, director or 5% Stockholder, or any member of the families of any
thereof, or from any corporation, partnership or other entity in which any
officer, director or 5% Stockholder, or any member of their families, then
has
any direct or indirect interest; (c) sold, assigned or transferred any of its
assets to or from any of its employees, officers, directors, 5% Stockholders
or
members of their families for less than fair market value.
2.16. Property.
Section
2.16 of its Disclosure Schedule or in its SEC Documents in the case of ▇▇▇▇▇▇
lists all leases of real and personal property to which it or any of its
Subsidiaries is a party, except for leases of personal property which are not
material to its operations. It and each of its Subsidiaries (i) has good and
marketable title in fee simple to, or valid existing leases for, all real
property used in the operation or conduct of its business and (ii) owns, leases
or rents all the machinery, equipment, furniture, fixtures and all other capital
assets used in the conduct of its business and has good and marketable title
or
valid existing leases for all such machinery, equipment, furniture and fixtures.
All real and personal properties owned by it or any of its Subsidiaries are
owned by it free and clear of all mortgages, liens, charges or encumbrances
of
any nature whatsoever except for Permitted Liens (as defined below). All leases
to which it or any of its Subsidiaries is a party are valid and effective in
accordance with their terms and except as set forth in Section 2.16 of its
Disclosure Schedule or defaults not reasonably likely to have a Material Adverse
Effect on it, there is not, under any leases for real or personal property,
any
existing default by it or any of its Subsidiaries or, to the best of its
knowledge, by any other party, nor to the best of its knowledge, is there any
event which with notice or lapse of time or both would constitute such a
default. To its knowledge, each such parcel of real property owned or leased
by
it or by any Subsidiary is in compliance with all applicable zoning, building,
health and safety laws, ordinances, and regulations and all applicable
Environmental Laws, except where non-compliance would not have a Material
Adverse Effect on it. All real property and fixtures and all personal property
and assets, excluding inventory, used by it or any of its Subsidiaries in its
operations and business are and at the Closing Date will be sufficient to
operate the business of it or its Subsidiaries, as the case may be, as conducted
on the date hereof, and, except for normal wear and tear, will be in as good
condition and repair as they were on the date hereof. As used herein, the term
“Permitted Liens” means (i) liens or encumbrances for taxes not yet due or which
are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the owner; (ii)
carrier’s, warehousemen’s, mechanic’s, materialmen’s, repairmen’s or other like
liens or encumbrances arising in the ordinary course of business which are
not
overdue for a period of more than thirty (30) days or which are being contested
in good faith and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of the owner; and (iii) those liens or
encumbrances described in Section 2.16 of the applicable Disclosure
Schedule.
13
2.17. Intellectual
Property Rights.
Section
2.17 of its Disclosure Schedule or in its SEC Documents in the case of ▇▇▇▇▇▇
contains an accurate and complete description of all domestic and foreign
patents, trademarks, trademark registration, service marks, service marks
registration, logos, trade names, assumed names, copyrights and copyright
registrations and all applications therefor, presently owned or held by it
or
any of its Subsidiaries or under which it or any of its Subsidiaries owns or
holds any license, or in which it or any of its Subsidiaries owns or holds
any
direct or indirect interest, and no others are necessary for the conduct of
the
present business of it or any of its Subsidiaries. To the best of its knowledge,
no products, sold by it or any of its Subsidiaries, nor any patents, formulae,
know-how, secrets, trademarks, trademark registrations, service marks, service
marks registration, logos, trade names, assumed names, copyrights, copyright
registrations, or designation used or licensed for use in its business or the
business of any of its Subsidiaries, infringe on any patents, trademarks,
licenses, or copyrights, or any other rights, of any Person. It and each of
its
Subsidiaries is the sole owner of, has the sole and exclusive right to use,
has
the right and power to sell, and has taken all reasonable measures to maintain
and protect, the patents, trademarks, trademark registrations, logos, trade
names, assumed names, copyrights, copyright registrations, service marks and
service ▇▇▇▇ registrations listed in Section 2.17 of its Disclosure Schedule
or
in its SEC Documents in the case of ▇▇▇▇▇▇. Except as set forth in Section
2.17
of its Disclosure Schedule or in its SEC Documents in the case of ▇▇▇▇▇▇, no
claims have been asserted against it or any of its Subsidiaries in writing
by
any person and received by it challenging the use of any such patents,
trademarks, trademark registrations, service marks, service ▇▇▇▇ registrations,
logos, trade names, assumed names, copyrights and copyright registrations or
challenging or questioning the validity or effectiveness of any such license
or
agreement, or the use of any formula, know-how or secrets used in its business
or the business of its Subsidiaries and, to the best of its knowledge, there
is
no valid basis for any such claims. Except as set forth in Section 2.17 of
its
Disclosure Schedule or in its SEC Documents in the case of ▇▇▇▇▇▇, no other
party is infringing on the patents, trademarks, trademark registrations, logos,
tradenames, assumed names, copyrights copyright registrations, service marks
and
service ▇▇▇▇ registrations listed in Section 2.17 of its Disclosure Schedule
or
in its SEC Documents in the case of ▇▇▇▇▇▇.
2.18. Receivables.
All of
the accounts receivable reflected on its balance sheet as of September 30,
2006
and all accounts receivable of it arising since September 30, 2006, other than
accounts receivable collected since then in the ordinary course of business
(a)
arose from bona fide transactions, (b) represent bona fide indebtedness of
the
respective debtors, (c) except as set forth in Section 2.18 of its Disclosure
Schedule or in its SEC Documents in the case of ▇▇▇▇▇▇ are valid and do not
have
original payment terms in excess of 45 days, and (d) to the best of its
knowledge, are not subject to any defense or offset.
2.19. Insurance
Policies.
Section
2.19 of its Disclosure Schedule contains a true and complete list of all
policies of fire, liability, workers' compensation and other forms of insurance
owned by or held by it and its Subsidiaries, and it has made available for
inspection by the other party true and complete copies of all of such policies.
All such policies are in full force and effect, all premiums with respect
thereto covering all periods to the date of this Agreement have been paid,
and
no notice of cancellation or termination has been received with respect to
any
such policy. Such policies (a) are sufficient for compliance with all
requirements
14
of
law
and all agreements to which it is a party, (b) are valid, outstanding and
enforceable policies, (c) will remain in full force and effect through the
Closing Date and (d) will not in any way be affected by, or terminate or lapse
by reason of, the transactions contemplated by this Agreement. Except as set
forth in Section 2.19 of its Disclosure Schedule (or in its SEC Documents in
the
case of ▇▇▇▇▇▇), neither it nor any of its Subsidiaries had made any material
claims under such insurance policies.
2.20. Contracts.
(A)
Except as set forth in Section 2.20 of its Disclosure Schedule or in its SEC
Documents in the case of ▇▇▇▇▇▇, neither it nor any of its Subsidiaries is
a
party to or bound by any written or oral Contract, (i) for the employment of
any
officer or individual employee; (ii) with any labor union; (iii) for the
purchase of materials, supplies or equipment involving more than $25,000; (iv)
for the provision of services by it or any of its Subsidiaries involving more
than $25,000 other than in the ordinary course of business; (v) in the nature
of
a confidentiality agreement, royalty or license or an agreement for the
acquisition of intangible property rights; (vi) with a governmental agency;
(vii) for the purchase of products for which there is no alternative source
of
supply; (viii) in the nature of a non-competition agreement which in any way
restricts the right of it or any of its Subsidiaries to conduct business; (ix)
in the nature of a management agreement; (x) for any quantity discount, volume
purchase, rebate or billback sales arrangement that will continue after the
Effective Time and involves more than $25,000; (xi) in the nature of a note,
bond, mortgage, indenture or loan agreement, or (xii) relating to any matter
which is material to it. Except as set forth in Section 2.20 of its Disclosure
Schedule or in its SEC Documents in the case of ▇▇▇▇▇▇, neither it nor any
of
its Subsidiaries, as of the date hereof, is a party to or bound by any contract
or contracts which, in its judgment as of the date hereof, either separately
or
in the aggregate are contracts which are, or will, adversely affect the
business, operations or financial condition of it or any of its
Subsidiaries.
2.21. Bank
Accounts.
Information pertaining to the names and locations of all banks in which it
or
any Subsidiary has an account or safe deposit box and the names of all
authorized signatories with respect thereto has been provided to the other
party.
2.22. Subsidiaries.
Section
2.22 of its Disclosure Schedule or in its SEC Documents in the case of ▇▇▇▇▇▇
lists each of its Subsidiaries. It owns of record and beneficially 100% of
each
class of the outstanding capital stock of or other interest in each of its
Subsidiaries.
2.23. Broker
and Finders.
Neither
it nor any of its officers, directors or employees has employed any broker
or
finder or incurred any liability for any brokerage fees, commissions or finders
fees in connection with the transactions contemplated by this
Agreement.
3. Transfer
of Automotive Business.
3.1. Purchase
and Sale of Automotive Business.
(a) AI
Assets.
Subject
to and upon the terms and conditions of this Agreement and excluding the assets
retained by ▇▇▇▇▇▇ as set forth in Section 3.1(b) herein, at the Closing, ▇▇▇▇▇▇
shall sell, transfer, convey, assign and deliver, to TFB, and TFB shall purchase
from ▇▇▇▇▇▇, free and clear of all liens and encumbrances (except for Permitted
Liens), all of the
15
properties,
rights and assets, of every kind and nature, real, personal or mixed, tangible
or intangible, wherever located, which are owned, leased, licensed or used
by
▇▇▇▇▇▇ in the conduct of the Automotive Business and which exist on the Closing
Date (collectively, the "Automotive Assets"), including, without limitation,
the
following assets:
(i) all
office supplies and similar materials;
(ii) all
contracts, agreements, leases, arrangements and/or commitments of any kind,
whether oral or written, relating to the Automotive Assets, including but not
limited to agreements with franchisees (the "Automotive
Contracts");
(iii) all
customer lists, files, records and documents (including credit information)
relating to customers and vendors of the Automotive Business and all other
business, financial and employee books, records, files, documents, reports
and
correspondence relating to the Automotive Business (collectively, the "
Automotive Records");
(iv) all
rights of ▇▇▇▇▇▇, if any, under express or implied warranties from the suppliers
of the AI in connection with the Automotive Assets;
(v) all
furnishings, furniture, fixtures, tools, machinery, equipment and leasehold
improvements owned by ▇▇▇▇▇▇ and related to the Automotive Assets, whether
or
not reflected as capital assets in the accounting records of the AI
(collectively, the "Automotive Fixed Assets");
(vi) all
patents, trademarks, tradenames, service marks, copyrights and applications
therefor which are owned by ▇▇▇▇▇▇ and related to the Automotive Assets and/or
the operation of the Automotive Business;
(vii) all
computers, computer programs, computer databases, hardware and software owned
or
licensed by ▇▇▇▇▇▇ and used in connection with the Automotive Assets and/or
the
operation of the Automotive Business;
(viii) all
municipal, state and federal franchises, licenses, authorizations and permits
of
▇▇▇▇▇▇ which are necessary to operate or are related to the Automotive
Assets;
(ix) all
prepaid charges, deposits,
sums and fees of
▇▇▇▇▇▇
relating to the Automotive Assets or arising out of the operation of the
Automotive Business;
(x) all
claims and rights of AI related to or arising from the Automotive Assets or
arising out of the operation of the Automotive Business;
(xi) all
cash
and cash equivalents;
(xii) accounts
receivable and rights to payment related to or arising out of the conduct of
the
Automotive Business;
(xiii) all
of
the goodwill of the Automotive Business; and
16
(xiv) all
other
assets and properties of any nature whatsoever held by ▇▇▇▇▇▇ either directly
or
indirectly, and used in, allocated to, or required for the conduct of the
Automotive Business.
(b) Retained
▇▇▇▇▇▇ Assets.
Notwithstanding anything to the contrary set forth in this Agreement, the
following assets of ▇▇▇▇▇▇ (the “Retained ▇▇▇▇▇▇ Assets”) are not included in
the sale of Automotive Assets contemplated hereby: (i) the Automotive Purchase
Price (as hereinafter defined) and the other rights of ▇▇▇▇▇▇ under or relating
to this Agreement, and (ii) the corporate minute books, stock records,
qualification to conduct business as a foreign corporation, and other documents
relating to the formation, maintenance or existence as a corporation of ▇▇▇▇▇▇,
except that ▇▇▇▇▇▇ agrees that it will provide copies of any such document
from
the corporate minute books as reasonably requested by TFB which TFB believes
are
necessary for the use and operation of the Automotive Assets and the conduct
of
the Automotive Business after the Closing Date.
3.2. Automotive Purchase
Price.
(a) The
purchase price for the Automotive Assets (the "Automotive Purchase Price")
shall
be an amount equal to fifty percent (50%) of the amount by which TFB’s income
before taxes for any of the years ending December 31, 2007, 2008 or 2009 exceeds
$500,000 (such excess, the “Profit”) plus (ii) an amount equal to the Net Cash
(as hereinafter defined) being purchased as part of the Automotive Assets.
Profit shall be calculated in accordance with GAAP, except that for purposes
of
determining Profit, in no event shall more than $131,000 of compensation paid
or
payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or members of his family be deducted as an expense
in any year. “Net Cash” shall mean the amount of cash and cash equivalents held
by ▇▇▇▇▇▇ as part of the Automotive Business immediately prior to the Closing
reduced by the amount of all accounts payable and any other liabilities of
the
Automotive Business immediately prior to the Closing.
(b) Within
sixty (60) days after the end of each of the years ending December 31, 2007,
2008 and 2009, TFB shall deliver (i) an income statement for the most recently
completed year which shall have been reviewed by an independent accounting
firm,
(ii) a certificate (a “Profit Certificate”) of the President of TFB setting
forth the calculation of the Profit and the Automotive Purchase Price payable
with respect to such year and (iii) a check payable to ▇▇▇▇▇▇ in the amount
of
the Automotive Purchase Price for such year.
(c) At
any
time during the thirty (30) day period (the “Review Period”) following the
delivery of an income statement and Profit Certificate pursuant to section
3,2(b), ▇▇▇▇▇▇ shall have the right to examine, or have an accountant selected
by ▇▇▇▇▇▇ examine, the books and records of TFB for the purpose of verifying
the
amounts set forth on the income statement and/or Profit Certificate delivered
pursuant to Section 3.2(b). If ▇▇▇▇▇▇ disagrees in any respect with any item
or
amount shown on an income statement and/or Profit Certificate, it shall deliver
a notice (a “Dispute Notice”) to TFB within ten (10) days of the expiration of
the Review Period setting forth in reasonable detail the disputed items. If
▇▇▇▇▇▇ and TFB cannot resolve any such dispute within thirty (30) days of the
delivery of such Dispute Notice, ▇▇▇▇▇▇
17
and
TFB
shall engage a mutually acceptable accounting firm to review the relevant data
and make a determination as to the appropriate treatment of the disputed
item(s). If the parties cannot agree on the accounting firm to be engaged within
forty-five (45) days of the delivery of the Dispute Notice, ▇▇▇▇▇▇ on the one
hand and TFB on the other hand shall designate one accounting firm within
forty-five (45) days of the delivery of the Dispute Notice. The two accounting
firms so designated shall designate a third accounting firm within seventy
(70)
days of the delivery of the Dispute Notice, which shall review the data and
make
the Profit determination required by this Section 3.2. The determination of
the
accounting firm engaged to resolve a dispute under this Section 3.2(c) shall
be
made within ninety (90) days of the delivery of the Dispute Notice and shall
be
conclusive and binding upon the parties hereto.
3.3. Assumption
of Liabilities.
Effective as of the Closing Date, TFB agrees to assume and to pay, perform
and
discharge all liabilities and obligations of ▇▇▇▇▇▇, whether now, unknown,
absolute or contingent, existing as of the Closing Date or arising from the
conduct of the Automotive Business on, prior or after the Closing Date,
including, but not limited to, all liabilities and obligations (i) reflected
on
▇▇▇▇▇▇’▇ Balance Sheet dated as of September 30, 2006 (the “▇▇▇▇▇▇ Balance
Sheet”), (ii) incurred in the ordinary course of business after the date of the
▇▇▇▇▇▇ Balance Sheet, (iii) under the Automotive Contracts and arising out
of
the use and operation of the Automotive Assets by TFB after the Closing Date
(collectively, the “Assumed Automotive Liabilities”).
3.4. Allocation
of Automotive Purchase
Price.
The
Automotive Purchase Price shall be allocated among the various Automotive Assets
by mutual agreement of the parties prior to the Closing Date. The parties
covenant and agree with each other that this allocation was arrived at by arm’s
length negotiation and that none of them will take a position on any income
tax
return, before any governmental agency charged with the collection of any income
tax or in any judicial proceeding that is in any manner inconsistent with the
terms of this Section 3.4 without the written consent of the other party to
this
Agreement. Each of TFB and ▇▇▇▇▇▇ covenant and agree to execute and timely
file
U.S. Treasury Form 8594 consistent with such allocation and upon a party’s
reasonable request the other party shall execute and file such other documents
as may be necessary to document such allocation.
3.5. Representations
of TFB.
TFB
hereby represents and warrants to ▇▇▇▇▇▇ and AI that (a) it is a limited
liability duly formed, validly existing as a limited liability company and
in
good standing under the laws of Delaware, (b) it has all requisite power and
authority and has taken all action necessary in order to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby,
(c) this Agreement is a valid and binding obligation of TFB enforceable against
it in accordance with its terms, subject to the Bankruptcy and Equity Exception
and (d) it was formed on February 8, 2007 for the purpose of acquiring the
Automotive Assets and has conducted no business other than its organizational
activities and entering into this Agreement.
4. Closing
Deliveries.
4.1. By
AI
with respect to Sale of AI Assets.
AI shall
deliver to ▇▇▇▇▇▇ at the Closing each of the following documents:
18
(a) a
▇▇▇▇ of
Sale in the form attached hereto as Exhibit
A,
duly
executed by AI;
(b) an
Assignment and Assumption of Contracts and Liabilities executed by AI evidencing
AI's assignment and ▇▇▇▇▇▇'▇ assumption of the Assumed Liabilities contemplated
by Section 1.3 hereof in the form attached hereto as Exhibit
B
(the
"Assignment and Assumption Agreement");
(c) cross
receipt executed by AI, in the form of Exhibit
C
("Cross
Receipt");
(d) a
certificate executed by the Chief Executive Officer of AI that all
representations and warranties made herein by AI are true and correct and that
all terms, conditions and provisions of this Agreement have been performed
and
complied with at the time of Closing;
(e) a
certificate from the secretary of AI attesting to the accuracy of resolutions
to
be attached thereto approved by the Board of Directors of AI authorizing the
sale of the AI Assets and providing incumbency information for the individual
signing this Agreement on behalf of AI;
(f) such
certificates or other documents as may be reasonably requested by ▇▇▇▇▇▇,
including, without limitation, certificates of legal existence, good standing
and certified charter documents from the Secretary of State of Delaware, and
certificates of the Chief Executive Officer of AI with respect to minutes,
resolutions, by-laws and any other relevant matters concerning AI in connection
with the transactions contemplated by this Agreement.
4.2. By
▇▇▇▇▇▇ with respect to Purchase of AI Assets.
▇▇▇▇▇▇
shall deliver to AI at the Closing each of the following documents:
(a) a
certificate representing the Shares;
(b) the
Assignment and Assumption Agreement (Exhibit
B),
executed by ▇▇▇▇▇▇;
(c) the
Cross
Receipt (Exhibit C), executed by ▇▇▇▇▇▇;
(d) a
certificate executed by the Chief Executive Officer of ▇▇▇▇▇▇ that all
representations and warranties made herein are true and correct and that all
terms, conditions and provisions of this Agreement have been performed and
complied with at the time of Closing; and
(e) a
certificate of the secretary of ▇▇▇▇▇▇ attesting to the accuracy of the
resolutions to be attached thereto approved by the Board of Directors of ▇▇▇▇▇▇
approving the
19
purchase
of the AI Assets and providing incumbency information for the individual signing
this Agreement on behalf of ▇▇▇▇▇▇.
(f) such
certificates or other documents as may be reasonably requested by AI, including,
without limitation, certificates of legal existence, good standing and certified
charter documents from the Secretary of State of Delaware, and certificates
of
an officer of ▇▇▇▇▇▇ with respect to directors’ resolutions, by-laws and other
matters.
4.3. By
▇▇▇▇▇▇ with respect to Automotive Sale.
▇▇▇▇▇▇
shall deliver to TFB at the Closing each of the following
documents:
(a) a
▇▇▇▇ of
Sale in the form attached hereto as Exhibit
D,
duly
executed by TFB;
(b) an
Assignment and Assumption of Contracts and Liabilities executed by TFB
evidencing ▇▇▇▇▇▇’▇ assignment and TFB’s assumption of the Assumed Automotive
Liabilities contemplated by Section 3.3 hereof in the form attached hereto
as
Exhibit
E
(the
“Automotive Assignment and Assumption Agreement”);
(c) cross
receipt executed by ▇▇▇▇▇▇, in the form of Exhibit
F
(the
“Automotive Cross Receipt”);
(d) such
certificates or other documents as may be reasonably requested by TFB,
including, without limitation, certificates of legal existence, good standing
and certified charter documents from the Secretary of State of Delaware, and
certificates of the Chief Executive Officer of ▇▇▇▇▇▇ with respect to minutes,
resolutions, by-laws and any other relevant matters concerning ▇▇▇▇▇▇ in
connection with the transactions contemplated by this Agreement.
4.4. By
TFB, with respect to the Automotive Assets.
TFB
shall deliver to ▇▇▇▇▇▇ at the Closing, each of the following
documents:
(a) the
Automotive Assignment and Assumption Agreement (Exhibit
E),
executed by TFB;
(b) the
Automotive Cross Receipt (Exhibit F), executed by TFB;
(c) such
certificates or other documents as may be reasonably requested by ▇▇▇▇▇▇,
including, without limitation, certificates of legal existence, good standing
and certified charter documents from the Secretary of State of Delaware, and
certificates of an officer of TFB with respect to directors’ resolutions,
by-laws and other matters.
5. Covenants.
Except
as expressly contemplated or permitted by this Agreement, or to the extent
that
the other party shall otherwise consent in writing, during the period from
the
date of this Agreement and continuing until the Closing, each of AI and ▇▇▇▇▇▇
agrees as to itself and its Subsidiaries that:
20
5.1. Ordinary
Course.
It and
its Subsidiaries shall carry on their businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
use
all reasonable efforts to preserve intact their present business organizations,
keep available the services of their present officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with them so that their goodwill and ongoing business shall not be
impaired in any respect on the Closing Date; provided, however that (A) nothing
contained in this Agreement shall prohibit AI from negotiating or entering
into
(i) any transaction in which it acquires a controlling interest in another
entity or any assets of another entity or (ii) a transaction in which it makes
an equity investment in another entity, (iii) a business combination with
another entity which results in the stockholders of AI immediately prior to
such
business combination owning a controlling interest in the surviving entity
or
(iv) issuing additional equity securities or debt securities convertible into
equity securities.
5.2. Dividends;
Changes in Stock.
Except
to the extent contemplated by this Agreement it shall not, nor shall any of
its
Subsidiaries, nor shall it or any of its Subsidiaries propose to, (i) declare
or
pay any dividends on or make other distributions in respect of any of its
capital stock or other outstanding securities or interests, except for dividends
or distributions to AI or ▇▇▇▇▇▇ or a Subsidiary that is wholly owned (directly
or indirectly) by a Subsidiary that is wholly owned (directly or indirectly)
by
AI or ▇▇▇▇▇▇, (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in
replacement of, in lieu of or in substitution for shares of its capital stock,
or (iii) repurchase, redeem or otherwise acquire, or permit any Subsidiary
to
repurchase, redeem or otherwise acquire, any shares of its capital
stock.
5.3. Issuance
of Securities.
Neither
it nor any of its Subsidiaries, shall issue, deliver or sell, or authorize
or
propose the issuance, delivery or sale of, any shares of its capital stock
of
any class, any Voting Debt or any securities convertible into, or any rights,
warrants, calls, subscriptions or options to acquire, any such shares, Voting
Debt or convertible securities, other than (i) the issuance of shares of common
stock as contemplated by Section 2,2 of the AI Disclosure Schedule, (ii) the
issuance of shares of ▇▇▇▇▇▇ Common Stock upon the exercise of warrants and
stock options identified in SEC Documents and in accordance with the terms
of
such warrants and stock options or (iii) the issuance by AI of any additional
equity securities or debt securities convertible into equity
securities.
5.4. Governing
Documents.
Except
as contemplated by this Agreement, it and its Subsidiaries shall not amend
or
propose to amend their Organizational Documents.
5.5. No
Acquisitions.
Except
as permitted by Section 5.1, neither it nor any of its Subsidiaries shall,
acquire or agree to acquire by merging or consolidating with, or by purchasing
an equity interest in or portion of the assets of, or by any manner, any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets.
21
5.6. No
Dispositions.
It shall
not, nor shall any of its Subsidiaries sell, lease, license, encumber or
otherwise dispose of, or agree to sell, lease, license, encumber or otherwise
dispose of any of its assets, except in the ordinary course of business or
as
otherwise permitted pursuant to Section 4.1.
5.7. Indebtedness.
Except
for borrowings in the ordinary course of business under credit arrangements
existing on the date of this Agreement, it shall not, nor shall any of its
Subsidiaries, incur (which shall be deemed to include entering into credit
agreements, lines of credit or similar arrangements) any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of it or any
of
its Subsidiaries or guarantee any debt securities of others except as permitted
by Section 5.1 or 5.3.
5.8. Other
Actions.
It shall
not, nor shall any of its Subsidiaries, take any action that would or is
reasonably likely to result in any of its representations and warranties set
forth in this Agreement being untrue or in its failure to perform covenants
it
is obliged to perform hereunder or in any of the conditions to the Closing
set
forth in Section 6 not being satisfied.
5.9. Advice
of Changes; Filings.
Except
as prohibited by the terms of any confidentiality agreement to which it is
a
party, it shall confer on a regular and frequent basis with the other party,
report on operational matters and promptly advise the other party in writing
of
any change or event having (in either case), or which, insofar as can reasonably
be foreseen could have (in either case), a Material Adverse Effect on it and
its
Subsidiaries (financial or otherwise) or their respective businesses,
properties, prospective results of operations or net worth. It shall promptly
provide the other party (or its counsel) copies of all filings made by it or
any
of its Subsidiaries with any Federal, state or foreign Governmental Entity
in
connection with this Agreement and the transactions contemplated hereby or
which
are material to the operation of the business conducted by it or any such
Subsidiary.
5.10. Notice
of Untrue Facts.
It will
promptly advise the other party if, at any time before the Proxy
Statement/Prospectus (as defined in Section 5.19) is mailed to the stockholders
of AI or before the meeting of AI’s stockholders held pursuant to Section 5.19
hereof, the Proxy Statement/Prospectus as the same relates to it, contains
any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements contained therein,
in
light of the circumstances under which they were made, not
misleading.
5.11. Employee
Benefit Plans.
It and
its Subsidiaries will not, without the prior written consent of the other,
(i)
enter into, adopt, amend (except as may be required by law or otherwise
permitted or contemplated by this Agreement) or terminate any Benefit Plan
or
other employee benefit plan or any agreement, arrangement, plan or policy
between it or a Subsidiary of it and one or more of its directors, officers
or
employees; or (ii) increase in any manner the compensation or fringe benefits
of
any director, officer or employee or pay any benefit not required by any plan
and arrangement as in effect as of the date hereof (including, without
22
limitation,
the granting of stock options, stock appreciation rights or performance units),
except for reasonable increases in salary in the ordinary course of business,
or
enter into any contract, agreement, commitment or arrangement to do any of
the
foregoing.
5.12. Acquisitions
of Property.
During
the period from the date of this Agreement until the Effective Time, it agrees
as to itself and its Subsidiaries that it will not, without the prior written
consent of the other party, acquire or lease any additional real or personal
property, including, without limitation, capital equipment or inventories,
except for real or personal property which will not exceed $25,000 in the
aggregate; provided, however, that this Section 5.12 shall not prohibit AI
from
consummating any transaction in accordance with Section 5.1.
5.13. Consents
Without Any Condition.
It shall
not make any agreement or reach any understanding not approved in writing by
the
other party as a condition for obtaining any consent, authorization, approval,
order, license, certificate, or permit required for the consummation of any
of
the transactions contemplated by this Agreement.
5.14. No
Related Transaction.
Neither
it nor any of its Subsidiaries shall enter into or become a party to any
contract, lease, agreement or transaction with any member of its board of
directors, any of its officers or management employees or any of its
Subsidiaries or with any business organization owned or controlled by any of
them, from the date of the execution of this Agreement to the Closing Date
except in the ordinary course of business.
5.15. Legal
Requirements.
It will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the transactions
contemplated by this Agreement (which actions shall include, without limitation,
furnishing all information required in connection with approvals of or filings
with any other Governmental Entity and filing initial notices and obtaining
an
administrative consent order or otherwise satisfying the requirements of any
state or federal environmental laws with respect to properties owned, leased,
or
operated by it or any of its Subsidiaries on or before the date of this
Agreement and through the Closing Date, to the extent such properties are
subject to such laws) and will promptly cooperate with and furnish information
to each other in connection with any such requirements imposed upon any of
them
or any of their Subsidiaries in connection with the transactions contemplated
by
this Agreement. It will, and will cause its Subsidiaries to, take all reasonable
actions necessary to obtain (and will cooperate with the other party obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity or other public or private third party, required to be
obtained or made by Tilden, AI or any of their Subsidiaries in connection with
the transactions contemplated by this Agreement or the taking of any action
contemplated thereby or by this Agreement; provided, that except as otherwise
provided to the contrary in this Agreement, neither ▇▇▇▇▇▇ or any of its
Subsidiaries nor AI or any of its Subsidiaries shall be obliged to expend funds
or commit to expend funds or undertake any other obligation to obtain any
consent, authorization, order, approval or exemption, required to be obtained
by
any other person or entity not its parent or Subsidiary, as the case may
be.
5.16. Access
to Information.
Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which it is subject, it shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives
23
of
the
other party, access, during normal business hours during the period prior to
the
Closing, to all of its properties, books, contracts, commitments and records
and
during such period, it shall (and shall cause each of its Subsidiaries to)
furnish promptly to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Unless otherwise required by law, it will hold any such
information which is nonpublic in confidence in accordance with the terms of
the
Non-Binding Letter of Intent between AI and ▇▇▇▇▇▇, and in the event of
termination of this Agreement for any reason it shall promptly return all
nonpublic documents obtained from the other party, and any copies made of such
documents, to such other party.
5.17. Additional
Agreements; Best Efforts.
It will
use its best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, subject to the appropriate vote of its
stockholders described in Section 5.19, including cooperating fully with the
other party. In case at any time after the Closing Date any further action
is
necessary or desirable to carry out the purposes of this Agreement or to vest
Tilden with full title to all properties, assets, rights, approvals, immunities
and franchises of the Business, the proper officers and directors of each party
to this Agreement shall take all such necessary action.
5.18. Additional
Covenants of ▇▇▇▇▇▇.
During
the period from the date of this Agreement and continuing until the Closing,
▇▇▇▇▇▇ agrees that (except as expressly contemplated or permitted by this
Agreement or to the extent that AI shall otherwise consent in
writing):
(a) SEC
Reports.
▇▇▇▇▇▇
shall duly and timely file all reports and other documents required to be filed
by it with the SEC and will deliver complete and accurate copies thereof to
AI
at the time of filing. None of such reports and other documents will contain
at
the time of filing any untrue statement of a material fact or omit to state
any
material fact (excluding any such misstatement or omission made in reliance
upon
information provided by AI) required to be stated therein or necessary to make
the statements therein not misleading, and all of such reports shall comply
as
to form in all material respects with all of the applicable rules and
regulations promulgated under the Exchange Act and the Securities Act, as the
case may be.
(b) Resignation
of Directors.
Consistent with applicable law, ▇▇▇▇▇▇ shall procure prior to the Closing Date,
resignations of each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ as
directors of ▇▇▇▇▇▇ and shall cause ▇▇▇▇▇▇’▇ Board of Directors, prior to the
effectiveness of such resignations and prior to the Closing Date, to elect
to
the Board of Directors of ▇▇▇▇▇▇, effective as of the Closing Date, such number
of individuals as shall be designated by AI prior to the Closing.
5.19. Registration
Statement, Joint Proxy Statement/Prospectus and Related
Matters.
24
(a) As
promptly as practicable after the date of this Agreement, ▇▇▇▇▇▇ and AI shall
prepare, and ▇▇▇▇▇▇ shall file with the SEC, a joint proxy statement/prospectus
(the “Proxy Statement/Prospectus”) to be sent to (i) the stockholders of AI in
connection with the meeting of AI’s stockholders (the “AI Stockholders’ Meeting)
to vote on the approval of the sale of the AI Assets hereunder and the other
transactions contemplated hereby and (ii) the stockholders of ▇▇▇▇▇▇ in
connection with the meeting of ▇▇▇▇▇▇’▇ stockholders (the “▇▇▇▇▇▇ Stockholder
Meeting”) to vote on (A) the acquisition of the AI Assets, the issuance of
▇▇▇▇▇▇ Common Stock in connection therewith, the sale of the Automotive Assets
to TFB, and the other transactions contemplated hereby and (B) a
one-for-twenty-five (1-for-25) reverse split (the “Reverse Split) of the ▇▇▇▇▇▇
Common Stock (the “▇▇▇▇▇▇ Stockholder Proposals”). In connection therewith,
▇▇▇▇▇▇ shall prepare and file with the SEC a registration statement on Form
S-4
pursuant to which the shares of ▇▇▇▇▇▇ Common Stock to be issued pursuant to
this Agreement will be registered with the SEC (the “Registration Statement”),
and in which the Proxy Statement/Prospectus will be included as a prospectus.
▇▇▇▇▇▇ shall use reasonable best efforts to cause the Registration Statement
to
become effective as soon after filing as practicable. The Proxy Statement/
Prospectus shall include the unanimous recommendation of the board of directors
of AI in favor of the sale of the AI Assets hereunder and the other transactions
contemplated hereby and the unanimous recommendation of the board of directors
of ▇▇▇▇▇▇ in favor of the ▇▇▇▇▇▇ Stockholder Proposals. ▇▇▇▇▇▇ shall make all
other necessary filings with respect to this Agreement and the transactions
contemplated hereby under the Securities Act of 1933 and the Securities Exchange
Act of 1934 and the rules and regulations of the SEC thereunder.
(b) AI
shall
take such action as may be necessary to ensure that (i) the information to
be
supplied by AI for inclusion in the Registration Statement shall not at the
time
the Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact required to be stated in the Registration Statement
or necessary in order to make the statements in the Registration Statement,
in
light of the circumstances under which they were made, not misleading, and
(ii)
the information supplied by AI for inclusion in the Proxy Statement/Prospectus
shall not, on the date the Proxy Statement/Prospectus is first mailed to
stockholders of AI or ▇▇▇▇▇▇ , and at the time of the AI’s Stockholders’ Meeting
and ▇▇▇▇▇▇’▇ Stockholders’ Meeting, contain any statement that, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material
fact
necessary in order to make the statements made in the Proxy Statement/Prospectus
not false or misleading, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation
of
proxies for AI’s Stockholders’ Meeting or ▇▇▇▇▇▇’▇ Stockholders’ Meeting that
has become false or misleading. If at any time prior to the Closing any event
relating to AI or any of its Affiliates, officers or directors should be
discovered by AI that should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement/Prospectus, AI shall promptly
so inform ▇▇▇▇▇▇.
(c) ▇▇▇▇▇▇
and TFB shall take such action as may be necessary to ensure that (i) the
information to be supplied by it for inclusion in the Registration Statement
shall not at the time the Registration Statement is declared effective by the
SEC contain any
25
untrue
statement of a material fact required to be stated in the Registration Statement
or necessary in order to make the statements in the Registration Statement,
in
light of the circumstances under which they were made, not misleading, and
(ii)
the information supplied by it for inclusion in the Proxy Statement/Prospectus
shall not, on the date the Proxy Statement/Prospectus is first mailed to
stockholders of AI or ▇▇▇▇▇▇, and at the time of AI’s Stockholders’ Meeting and
▇▇▇▇▇▇’▇ Stockholders’ Meeting, contain any statement that, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements made in the Proxy Statement/Prospectus not
false
or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for AI’s Stockholders’ Meeting that has become false or misleading. If
at any time prior to the Closing any event relating to ▇▇▇▇▇▇ or TFB or any
of
their respective Affiliates, officers or directors should be discovered by
▇▇▇▇▇▇ or TFB, as the case may be, that should be set forth in an amendment
to
the Registration Statement or a supplement to the Proxy Statement/Prospectus,
the party discovering same shall promptly so inform AI.
(d) From
and
after the Closing and so long as necessary in order to permit AI’s Affiliates
(as such term is defined in Rule 501 promulgated under the Securities Act of
1933) to sell the shares of ▇▇▇▇▇▇ Common Stock received by them under this
Agreement pursuant to Rule 145 and, to the extent applicable, Rule 144 under
the
Securities Act, ▇▇▇▇▇▇ will use reasonable best efforts to file on a timely
basis all reports required to be filed by it pursuant to Section 13 or 15(d)
of
the Securities Exchange Act of 1934, referred to in paragraph (c)(1) of Rule
144
under the Securities Act (or, if applicable, ▇▇▇▇▇▇ will use reasonable best
efforts to make publicly available the information regarding itself referred
to
in paragraph (c)(2) of Rule 144).
(e) AI
and
▇▇▇▇▇▇ shall each call a meeting of stockholders to be held as promptly as
practicable for the purpose of voting in the case of AI, on the sale of the
AI
Assets pursuant to this Agreement and the other transactions contemplated
hereby, and, in the case of ▇▇▇▇▇▇, upon the ▇▇▇▇▇▇ Stockholders’ Proposals. AI
and ▇▇▇▇▇▇ will, through their respective boards of directors, recommend to
their respective stockholders approval of such matters and will coordinate
and
cooperate with respect to the timing of such meetings and shall use reasonable
best efforts to hold such meetings on the same day and as soon as practicable
after the date hereof. Unless the relevant board of directors shall have
withdrawn its recommendation under Section 5.19(a), each of AI and ▇▇▇▇▇▇ shall
use reasonable efforts to solicit from its stockholders proxies in favor of
such
matters.
5.20. Insurance
Coverage.
▇▇▇▇▇▇
shall use its best efforts to procure the Insurance Coverage described in
Section 6.2(c) at a cost of less than $50,000 per annum.
6. Conditions.
6.1. Conditions
to Each Party’s Obligation to Close Transaction.
The
respective obligations of each party to effect the Transactions contemplated
by
this Agreement shall be subject to the satisfaction prior to the Closing Date
of
the following conditions:
26
(a) This
Agreement and the transactions contemplated hereby shall have been approved
and
adopted by the affirmative vote of the holders of a majority of the outstanding
shares of AI Common Stock.
(b) This
Agreement and the transactions contemplated hereby, shall have been approved
and
adopted by the affirmative vote of the holders of a majority of the outstanding
shares of ▇▇▇▇▇▇ Common Stock.
(c) ▇▇▇▇▇▇
shall have received all state securities or “Blue Sky” permits and other
authorizations necessary to issue the ▇▇▇▇▇▇ Common Stock pursuant to this
Agreement.
(d) No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions contemplated by
this
Agreement shall be in effect.
(e) The
consents set forth in Section 2.4 of each of the Disclosure Schedules shall
have
been obtained.
(f) The
Registration Statement shall have become effective under the Securities Act,
no
stop order suspending the effectiveness of the Registration Statement shall
then
be in effect, and no proceedings for that purpose shall then be threatened
by
the SEC or shall have been initiated by the SEC and not concluded or
withdrawn.
6.2. Conditions
of Obligations of ▇▇▇▇▇▇.
The
obligations of ▇▇▇▇▇▇ to effect the transactions contemplated by this Agreement
are subject to the satisfaction of the following conditions unless, to the
extent permitted below, waived by ▇▇▇▇▇▇:
(a) The
representations and warranties of AI set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement, and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement, and ▇▇▇▇▇▇ shall have
received a certificate signed on behalf of AI by the President and Chief
Financial Officer of AI to such effect.
(b) AI
shall
have performed in all material respects all obligations, covenants and
agreements required to be performed by it under this Agreement at or prior
to
the Closing Date, and ▇▇▇▇▇▇ shall have received a certificate signed on behalf
of AI by the president and Chief Financial Officer of AI to such
effect.
(c) ▇▇▇▇▇▇
shall have obtained and have in effect at the Closing directors’ and officers’
liability insurance and fiduciary liability insurance providing not less than
$500,000 of coverage with respect to claims arising from facts or events that
occurred at or before the Closing Date (the “Insurance Coverage”).
27
6.3. Conditions
of Obligations of AI.
The
obligation of AI to effect the transactions contemplated by this Agreement
is
subject to the satisfaction of the following conditions unless waived by
AI:
(a) The
representations and warranties of ▇▇▇▇▇▇ and TFB set forth in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date,
except as otherwise contemplated by this Agreement and AI shall have received
a
certificate signed on behalf of ▇▇▇▇▇▇ by the President and the Chief Financial
Officer of ▇▇▇▇▇▇ to such effect.
(b) ▇▇▇▇▇▇
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and AI
shall have received a certificate signed on behalf of ▇▇▇▇▇▇ by the President
and the Chief Financial Officer of ▇▇▇▇▇▇ to such effect.
(c) TFB
shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and AI shall have
received a certificate signed on behalf of TFB by the President of TFB to such
effect.
(d) The
holders of a majority of the outstanding shares of ▇▇▇▇▇▇ Common Stock shall
have approved the Reverse Split and the Reverse Split shall have become
effective.
(e) The
cost
of the Insurance Coverage shall not exceed $50,000 per annum.
6.4. Conditions
of Obligations of TFB.
The
obligation of TFB to effect the transactions contemplated by this Agreement
is
subject to the satisfaction of the following conditions unless waived by
TFB:
(a) The
representations and warranties of AI set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
(except to the extent such representations speak as of an earlier date) as
of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
(b) AI
shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.
(c) ▇▇▇▇▇▇
shall have obtained and have in effect the Insurance Coverage.
7. Post-Closing
Agreements.
AI,
▇▇▇▇▇▇ and TFB, as the case may be, agree that from and after the Closing
Date:
28
7.1. Further
Assurances and Data.
(a) At
any
time and from time to time after the Closing Date, at ▇▇▇▇▇▇'▇ reasonable
request and without further consideration, AI shall execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation, and
take
such other action, all at ▇▇▇▇▇▇'▇ sole cost and expense, as ▇▇▇▇▇▇ may
reasonably request to more effectively transfer, convey and assign to ▇▇▇▇▇▇,
and to confirm ▇▇▇▇▇▇'▇ title to, all the AI Assets, to put ▇▇▇▇▇▇ in actual
possession and operating control thereof, to assist ▇▇▇▇▇▇ in exercising all
rights with respect thereto, and to carry out the purpose and intent of this
Agreement. Immediately after the Closing Date, AI shall, to the extent
applicable, authorize the release to ▇▇▇▇▇▇ of all files pertaining to the
AI
Assets held by any federal, state, county or local authorities, agencies or
instrumentalities. AI and ▇▇▇▇▇▇ will cooperate in communications with suppliers
and customers to accomplish the transfer of the AI Assets to
▇▇▇▇▇▇.
(b) At
any
time and from time to time after the Closing Date, at TFB's reasonable request
and without further consideration, ▇▇▇▇▇▇ shall execute and deliver such
instruments of sale, transfer, conveyance, assignment and confirmation, and
take
such other action, all at TFB’s sole cost and expense, as TFB may reasonably
request to more effectively transfer, convey and assign to TFB, and to confirm
TFB’s title to, all the Automotive Assets, to put TFB in actual possession and
operating control thereof, to assist TFB in exercising all rights with respect
thereto, and to carry out the purpose and intent of this Agreement. Immediately
after the Closing Date, ▇▇▇▇▇▇ shall, to the extent applicable, authorize the
release to TFB of all files pertaining to the Automotive Assets held by any
federal, state, county or local authorities, agencies or instrumentalities.
▇▇▇▇▇▇ and TFB will cooperate in communications with suppliers and customers
to
accomplish the transfer of the Automotive Assets to TFB.
(c) The
parties agree that from and after the Closing Date, as to any monies received
that rightfully belong to the other party, they shall remit such monies promptly
to the other party.
(d) Each
party shall have the right, for a period of three (3) years following the
Closing Date, to have reasonable access to those books, records and accounts,
including financial and tax information, correspondence, employment records
and
other records that may, at that time, be in the possession of the other party
to
the extent that any of the foregoing relates to the AI Assets and is needed
by
such party in order to comply with its obligations under applicable securities,
tax, environmental, employment or other laws and regulations.
7.2. Cooperation
in Litigation.
Each
party hereto will reasonably cooperate with the other in the defense or
prosecution of any litigation or proceeding already instituted or which may
be
instituted hereafter against or by such party relating to or arising out of
the
use of the AI Assets prior to the Closing Date (other than litigation arising
out of the transactions contemplated by this Agreement). The party requesting
such cooperation shall pay the out-of-pocket expenses (including legal fees
and
disbursements) of the party providing such cooperation and of its officers,
directors, employees, other personnel and agents reasonably incurred in
29
connection
with providing such cooperation, but shall not be responsible to reimburse
the
party providing such cooperation for such party's time spent in such cooperation
or the salaries or costs of fringe benefits or similar expenses paid by the
party providing such cooperation to its officers, directors, employees, other
personnel and agents while assisting in the defense or prosecution of any such
litigation or proceeding.
7.3. Consents.
(a) AI
and
▇▇▇▇▇▇ will use their commercially reasonable best efforts to obtain by the
Closing Date, consents from each landlord relating to all Real Property Leases
identified on Section 2.16 of the AI Disclosure Schedule, consenting to the
assumption of each such Real Property Lease by ▇▇▇▇▇▇, and any other consents
required under any Contract or otherwise in connection with the transactions
contemplated by this Agreement. To the extent that any interest in any of the
AI
Assets is not capable of being assigned, transferred, conveyed or registered
without the consent, waiver or authorization of, or registration with, a third
person (including, but not limited to, a governmental, regulatory or
administrative authority), or if such assignment, transfer, conveyance,
registration or attempted assignment, transfer, conveyance or registration
would
constitute a breach of any AI Asset, or a violation of any law, statute, decree,
rule, regulation or other governmental edict or is not immediately practicable,
this Agreement shall not constitute an assignment, transfer or conveyance of
such interest, or an attempted assignment, transfer or conveyance of such
interest (such interests being hereinafter collectively referred to as
“Restricted Interests”). The entire beneficial interest in any AI Assets subject
to a restriction as described above, and any other interest in such AI Assets
which are transferable notwithstanding such restriction, shall be transferred
from AI to ▇▇▇▇▇▇ as provided in Section 1.1(a). To the extent that any
required consents, waivers, authorizations and registrations are not obtained,
or until the impracticalities of transfer referred to therein are resolved,
AI
shall (i) provide to ▇▇▇▇▇▇, at the request of ▇▇▇▇▇▇, the benefits of any
Restricted Interests, (ii) cooperate in reasonable and lawful arrangements
designed to provide such benefits to ▇▇▇▇▇▇ and (iii) enforce, at the
request of ▇▇▇▇▇▇ for the account of ▇▇▇▇▇▇, any rights of AI arising from
any
Restricted Interests (including the right to elect to terminate in accordance
with the terms thereof upon the advice of ▇▇▇▇▇▇).
(b) ▇▇▇▇▇▇
and TFB will use their commercially reasonable best efforts to obtain by the
Closing Date, consents from each landlord relating to all Real Property Leases
identified on Section 2.16 of the ▇▇▇▇▇▇ Disclosure Schedule, consenting to
the
assumption of each such Real Property Lease by TFB, and any other consents
required under any Contract or otherwise in connection with the transactions
contemplated by this Agreement. To the extent that any interest in any of the
▇▇▇▇▇▇ Assets is not capable of being assigned, transferred, conveyed or
registered without the consent, waiver or authorization of, or registration
with, a third person (including, but not limited to, a governmental, regulatory
or administrative authority), or if such assignment, transfer, conveyance,
registration or attempted assignment, transfer, conveyance or registration
would
constitute a breach of any ▇▇▇▇▇▇ Asset, or a violation of any law, statute,
decree, rule, regulation or other governmental edict or is not immediately
practicable, this Agreement shall not constitute an assignment, transfer or
conveyance of such interest, or an attempted assignment, transfer or conveyance
of such interest (such interests being hereinafter collectively referred to
as
“Restricted Automotive Interests”). The entire beneficial interest in any
Automotive Assets subject to a restriction as described above, and any other
30
interest
in such Automotive Assets which are transferable notwithstanding such
restriction, shall be transferred from ▇▇▇▇▇▇ to TFB as provided in
Section 3.1(a). To the extent that any required consents, waivers,
authorizations and registrations are not obtained, or until the impracticalities
of transfer referred to therein are resolved, ▇▇▇▇▇▇ shall (i) provide to
TFB, at the request of TFB, the benefits of any Restricted Automotive Interests,
(ii) cooperate in reasonable and lawful arrangements designed to provide
such benefits to TFB and (iii) enforce, at the request of TFB for the
account of TFB, any rights of ▇▇▇▇▇▇ arising from any Restricted Automotive
Interests (including the right to elect to terminate in accordance with the
terms thereof upon the advice of TFB).
7.4. Director
and Officer Indemnification.
From and
after the Closing Date, ▇▇▇▇▇▇ and its Subsidiaries shall not amend, repeal
or
otherwise modify the provisions with respect to indemnification set forth in
their respective charters or by-laws (or comparable organizational documents)
as
in effect on the Closing Date, in any manner that would adversely affect the
rights thereunder of individuals who, on or prior to the Closing Date, were
directors, officers, employees or agents of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary
with
respect to actions or failure to act prior to the Closing, unless such
modification is required by law (and then only to the minimum extent required
by
law).
7.5. Director
and Officer Liability Insurance.
The
Company shall, for a period of six years from the Closing Date, maintain in
effect directors’ and officers’ liability insurance and fiduciary liability
insurance policies as shall be in effect at the Closing; provided, however,
that
in no event shall the Company be required to expend in any one year in excess
of
$50,000 for such insurance. If the cost of maintaining such policies during
such
six year period exceeds $50,000 in any one year, TFB shall have the right to
pay
such excess cost and in such case ▇▇▇▇▇▇ shall be required to keep such
insurance policies in effect.
8. Indemnification.
TFB
agrees to defend, indemnify and hold harmless ▇▇▇▇▇▇ and its officers,
directors, employees, managers, members, agents, advisers and representatives
(collectively, the “Indemnitees”) from and against, and pay or reimburse the
Indemnitees for, any and all claims, demands, liabilities, obligations, losses,
fines, costs, expenses, royalties, litigation, deficiencies or damages (whether
absolute, accrued, contingent or otherwise and whether or not resulting from
third party claims), including interest and penalties with respect thereto
and
out-of-pocket expenses and reasonable attorneys’ and accountants’ fees and
expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any of their respective rights hereunder
(collectively, “Losses”, and each individually, a “Loss”), resulting from or
arising out of:
(a) the
Assumed Automotive Liabilities;
(b) any
transaction, liability or obligation, whether absolute or contingent, that
occurs or arises out of the operations of the Automotive Business or the use
of
Automotive Assets on, prior to or after the Closing Date;
(c) Any
taxes
arising out of the operations of ▇▇▇▇▇▇ prior to the Closing Date or out of
the
operation of the Automotive Business or the use of the Automotive
Assets.
31
8.2. Indemnification
Procedures.
In the
case of any claim asserted by a third party against a party entitled to
indemnification under this Agreement (the “Indemnified Party”), notice shall be
given by the Indemnified Party to the party required to provide indemnification
(the “Indemnifying Party”) promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and the Indemnified
Party shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any claim or any litigation resulting therefrom,
provided,
that
(i) counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
and the Indemnified Party may participate in such defense at such Indemnified
Party’s expense, and (ii) the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such failure results
in a lack of actual notice to the Indemnifying Party and such Indemnifying
Party
is materially prejudiced as a result of such failure to give notice. Except
with
the prior written consent of the Indemnified Party, no Indemnifying Party,
in
the defense of any such claim or litigation, shall consent to entry of any
judgment or enter into any settlement that provides for injunctive or other
nonmonetary relief affecting the Indemnified Party or that does not include
as
an unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim
or
litigation. In no event shall a party guilty of fraud or willful misconduct
be
entitled to indemnity with respect to any matter involving such fraud or willful
misconduct. In the event that the Indemnified Party shall in good faith
determine that the Indemnified Party may have available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such claim or any
litigation relating thereto, the Indemnified Party shall have the right at
all
times to take over and assume control over the defense, settlement, negotiations
or litigation relating to any such claim at the sole cost of the Indemnifying
Party, provided,
that if
the Indemnified Party does so take over and assume control, the Indemnified
Party shall not settle such claim or litigation without the written consent
of
the Indemnifying Party, such consent not to be unreasonably withheld. In the
event that the Indemnifying Party does not accept the defense of any matter
as
above provided, the Indemnified Party shall have the full right to defense
against any such claim or demand, and shall be entitled to settle or agree
to
pay in full such claim or demand, subject to the written consent of the
Indemnifying Party such consent not to be unreasonably withheld. In any event,
except to the extent that they have an interest adverse to the other, the
parties hereto shall cooperate in the defense of any claim or litigation subject
to this Section 8 and the records of each shall be available to the other with
respect to such defense.
9. Transfer
and Sales Tax.
Notwithstanding any provisions of law imposing the burden of such taxes on
AI,
▇▇▇▇▇▇ or TFB, as the case may be, (i) ▇▇▇▇▇▇ shall be responsible for and
shall
pay (a) all sales, bulk sales, use and transfer taxes, and (b) all governmental
charges, if any, upon and due in connection with the sale or transfer of any
of
the AI Assets hereunder and (ii) TFB shall pay (a) all sales, bulk sales, use
and transfer taxes and (b) all governmental charges, if any, upon and due in
connection with the sale or transfer of any of the Automotive Assets
hereunder.
10. Termination.
32
10.1. Time
of Termination.
This
Agreement may be terminated at any time prior to the Closing, whether before
or
after approval of the matters presented in connection with the transactions
contemplated by this Agreement by the stockholders of AI:
(a) By
mutual
consent of ▇▇▇▇▇▇ and AI.
(b) (i)
By
either ▇▇▇▇▇▇ or AI if there shall be a material breach of any representation,
warranty, covenant, obligation or agreement on the part of the other party
set
forth in this Agreement which breach shall not have been cured, in the case
of a
representation or warranty, prior to the Closing, or in the case of a covenant,
obligation or agreement, within two (2) business days following receipt by
the
breaching party of notice of such breach; or (ii) by either ▇▇▇▇▇▇ or AI if
any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the transactions contemplated by this Agreement
shall have become final and non-appealable.
(c) By
either
▇▇▇▇▇▇ or AI if (i) the stockholders of AI do not approve the transactions
contemplated by this Agreement or (ii) the stockholders of ▇▇▇▇▇▇ do not approve
the transactions contemplated by this Agreement.
(d) By
AI if
the stockholders of ▇▇▇▇▇▇ do not approve the Reverse Split.
(e) By
▇▇▇▇▇▇
if the board of directors of AI withdraws or adversely modifies its
recommendation that AI’s stockholders approve the sale of the AI Assets and the
other transactions contemplated hereby.
(f) By
AI, if
the board of directors of ▇▇▇▇▇▇ withdraws or adversely modifies its
recommendations that ▇▇▇▇▇▇’▇ stockholders approve the ▇▇▇▇▇▇ Stockholder
Proposals.
10.2. Effect
of Termination.
In event
of a termination of this Agreement by either AI or ▇▇▇▇▇▇ as provided in Section
10.1, this Agreement shall forthwith become void; provided, however, that no
such termination shall relieve any party hereto from any liability for breach
of
this Agreement.
10.3. Remedies
Not Exclusive.
No
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute or
otherwise, including, without limitation, the remedy of specific performance.
The election of any one or more remedies by ▇▇▇▇▇▇ or AI shall not constitute
a
waiver of the right to pursue other available remedies.
11. Notices.
Any
notices or other communications required or permitted hereunder shall be in
writing and shall be sufficiently given if delivered personally or sent by
facsimile (with transmission confirmed), Federal Express, registered or
certified mail, return receipt
33
requested,
postage prepaid, addressed as follows or to such other address or facsimile
number of which the parties may have given notice:
|
To
AI:
|
With
a copy to:
|
|
Accountabilities,
Inc.
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
|
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
|
|
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
|
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
|
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
|
|
|
To
▇▇▇▇▇▇:
|
|
|
▇▇▇▇▇▇
Associates, Inc.
|
▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
|
|
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
▇▇▇▇▇▇▇▇▇
Ball ▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
&
▇▇▇▇▇▇▇▇▇▇, LLP
|
|
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
|
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇, Esq.
|
|
|
▇
▇▇▇▇ ▇▇▇▇▇
|
|
|
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
|
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
Unless
otherwise specified herein, such notices or other communications shall be deemed
received (a) on the date delivered, if delivered personally, by facsimile or
by
Federal Express; or (b) three business days after being sent, if sent by
registered or certified mail.
12. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors and assigns, except that neither party
may assign its obligations hereunder without the prior written consent of the
other party hereto.
13. Entire
Agreement; Amendments; Attachments.
13.1. Entire
Agreement; Amendment.
This
Agreement, all schedules and exhibits hereto, and all agreements and instruments
to be delivered by the parties pursuant hereto represent the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior oral and written, and all
contemporaneous oral negotiations, commitments and understandings between such
parties. ▇▇▇▇▇▇ and AI, by the consent of their respective Boards of Directors,
or officers authorized by such Boards, may amend or modify this Agreement,
in
such manner as may be agreed upon, by a written instrument executed by ▇▇▇▇▇▇
and AI.
34
13.2. Attachments.
If the
provisions of any schedule or exhibit to this Agreement are inconsistent with
the provisions of this Agreement, the provisions of this Agreement shall
prevail. The exhibits and schedules attached hereto or to be attached hereafter
are hereby incorporated as integral parts of this Agreement.
14. Expenses.
Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the parties in aacordance with the terms of the letter
agreement of even date herewith among AI, ▇▇▇▇▇▇, TFB and ▇▇▇▇▇▇
▇▇▇▇▇▇▇..
15. Legal
Fees.
In the
event that legal proceedings are commenced by any party hereto against any
other
party hereto in connection with this Agreement or the transactions contemplated
hereby, the party which does not prevail in such proceedings shall pay the
reasonable attorneys' fees and costs incurred by the prevailing party in such
proceedings.
16. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without regard to conflicts of law principles.
17. Section
Headings.
The
section headings are for the convenience of the parties and in no way alter,
modify, amend, limit, or restrict the contractual obligations of the
parties.
18. Severability.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
19. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which, when taken together, shall be one and
the
same document.
20. Public
Disclosure.
Neither
party shall make any public statement about, nor issue any press release
concerning this Agreement or the transactions contemplated hereby without first
consulting with the other party hereto as to the form and substance of any
such
press release or public disclosure; provided, however, that nothing in this
Section 18 shall be deemed to prohibit any party hereto from making any
disclosure that its counsel deems necessary or advisable in order to satisfy
such party's disclosure obligation imposed by law.
21. Employees; WARN
Act.
(a) Effective
on the Closing Date, AI shall terminate the employment of all employees engaged
in the Business (the “Terminated Employees”), and shall terminate any employment
agreements with such Terminated Employees. As of the Closing Date, ▇▇▇▇▇▇ shall
offer employment to all of the Terminated Employees (such hired persons being
the “Hired Employees”), at initial salaries and with initial benefits comparable
to those immediately prior to the termination. For the purposes of determining
and measuring benefits provided to any given Hired Employee by ▇▇▇▇▇▇, each
Hired Employee will be given credit for the Hired Employee’s term of service to
AI. For a period of at least forty-five (45) days from and after the Effective
Date, ▇▇▇▇▇▇ shall employ substantially all, but in no event less than 70%,
of
the Hired
35
Employees
and shall not terminate more than 50 full time employees who were employed
by AI
as of the Closing Date. ▇▇▇▇▇▇ shall be liable and responsible for any
obligations under the Worker Adjustment and Retraining Notification Act, as
amended (the “WARN
Act”),
arising out of ▇▇▇▇▇▇’▇ breach of this Section 21 with respect to the Hired
Employees.
(b) Effective
on the Closing Date, ▇▇▇▇▇▇ shall terminate the employment of all employees
engaged in the Business (the “Terminated Automotive Employees”), and shall
terminate any employment agreements with such Terminate Automotive Employees.
As
of the Closing Date, TFB shall offer employment to all of the Terminated
Automotive Employees (such hired persons being the “Hired Automotive
Employees”), at initial salaries and with initial benefits comparable to those
immediately prior to the termination. For the purposes of determining and
measuring benefits provided to any given Hired Automotive Employee by TFB,
each
Hired Automotive Employee will be given credit for the Hired Automotive
Employee’s term of service to ▇▇▇▇▇▇. For a period of at least forty-five (45)
days from and after the Effective Date, TFB shall employ substantially all,
but
in no event less than 70%, of the Hired Automotive Employees and shall not
terminate more than 50 full time employees who were employed by ▇▇▇▇▇▇ as of
the
Closing Date. TFB shall be liable and responsible for any obligations under
WARN, arising out of TFB’s breach of this Section 21 with respect to the Hired
Automotive Employees.
36
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as
of the date first above written.
AI:
ACCOUNTABILITIES,
INC.
By:
/s/
▇▇▇▇ Hartley__________
Name:
▇▇▇▇ ▇▇▇▇▇▇▇
Title:
President
▇▇▇▇▇▇:
▇▇▇▇▇▇
ASSOCIATES, INC.
By:
/s/
▇▇▇▇▇▇ Baskind________
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
President
TFB:
TFB
ACQUISITION COMPANY, LLC
By:
/s/
▇▇▇▇▇▇
Baskind_________
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
President
The
Schedules and Exhibits to the Asset Purchase and Reorganization Agreement are
not presented herein or delivered herewith. Copies of the Schedules and Exhibits
swill be provided to the Securities and Exchange Commission upon
request